Q I was involved in a now-closed receivership. I want access to some of the records of the entity that was in receivership and some emails and information I believe was sent to the receiver or her counsel. I contacted the former receiver. She said the entity’s records she had have been destroyed and if I want emails or information she or her counsel have, I would have to subpoena them and pay for the cost of locating and producing the items. Is this appropriate?

A Probably. It depends on what the order approving the receiver’s final account and report, or other orders, state about record retention and production. A receiver is not public storage. Once the case is over, the receiver should not be obligated to keep, maintain or produce records or information obtained from the entity or property in receivership, or generated during the case. At the end of the case, the receiver should ask the court to instruct the receiver concerning disposition of the receivership’s records, both physical and digital. In some cases, it may be appropriate to turn them over to the defendant (for example, when the defendant cures a default or settles with the plaintiff). In other cases, it may be appropriate to turn them over to the plaintiff (for example, in government enforcement or fraud cases, or in partnership or corporate disputes when the plaintiff is successful). In many cases no party wants the records and it is appropriate for the court to order the receiver to abandon them. In such cases, the receiver needs to determine whether he or she can simply throw them away or whether they need to be shredded or otherwise destroyed. The receiver should also ask the court to authorize the receiver to reserve funds for such purpose or direct one or more of the parties to advance funds for such purpose.

Even if the receiver has destroyed the records obtained from a receivership entity or generated during the case, the receiver and the professionals are likely to have their own records relating to the case, hard copies and/or digital. Once the case is over, and the receiver has been discharged, the former receiver should not have to bear the burden of searching for or producing requested documents or information. It is, therefore, appropriate for the receiver to ask the court to provide, in the order discharging the receiver, that anyone seeking information or documents from the receiver, or the professionals, must pay for the time and cost of production. The Eighth Circuit in United States v. Kelly, 70 F4th 482, 487 (8th Cir. 2023) approved a district court order which required requesting parties to pay the costs that would be incurred by the former receiver producing records.

Receivers should consider including the following language in their final account and report orders to cover this issue:

“If anyone contacts the receiver, an employee of the receiver, or the receiver’s professionals; or the receiver, his employees, or the receiver’s professionals are served with subpoenas or court orders, that require attendance and/or preparation or production of information and/or documents, for any purpose whatsoever, related to the receivership, the assets or entities in receivership, or the services of the receiver, his employees, or his professionals in this matter, including, but not limited to, discovery, deposition, hearing or trial, the requesting party or entity shall pay, in advance, the estimated fees and costs associated with the requested services and/or production, portal to portal.”

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Q I am a defendant in a receivership, where the receiver has moved to sell my property. If the court approves the sale, I want to appeal. My attorney says an order approving the sale cannot be directly appealed and I will have to wait until the end of the case, which could be years from now. Is this correct?

A It depends on whether your case is in federal or state court. In the Fifth Circuit case SEC v. Barton, 2023 WL 4060191, the defendant appealed the district court’s order approving the receiver’s sale of the defendant’s home, for the purpose of recouping funds for defrauded investors. The Circuit held the order was a non-appealable interlocutory order and dismissed the appeal. 28 U.S.C. §1292 (a)(2) states appellate courts, in receivership cases, only have jurisdiction over appeals from: “Interlocutory orders appointing receivers, or refusing orders to wind up receiverships or to take steps to accomplish the purposes thereof, such as directing sales or other disposal of property.” The Circuit held since the order was not an order appointing the receiver or refusing to windup the receivership, the order was not appealable. It was simply an order entered in the normal course of a receivership. “We consider generally the sale of real property in the ordinary cause of a receivership.” Id. In so holding, the Circuit assumed that the language: “or to take steps to accomplish the purposes thereof,” in the statute refers to “refusing orders to wind up receiverships,” and is not an independent basis for appellate jurisdiction. The Ninth Circuit concurs. In SEC v. American Principals Holdings, Inc., 817 F.2d 1349, 1350 (9th Cir. 1987) it explains: “The paragraph is not a model of clear expository writing. The ambiguity is whether the language means “orders to take steps,” as appellant urges, or “orders refusing to take steps,” as appellees urge. The appellees’ interpretation, however, requires less grammatical torture of the statute than the interpretation offered by the appellant.” The Circuit also references a prior opinion and Wright & Miller, that the statute is written to permit interlocutory appeals from orders that refuse to take steps to accomplish the purpose of the receivership, not steps to accomplish the purposes of thereof. Id. at 1351. But see, United States v. “A” Manufacturing Co, 541 F.2d 504 (5th Cir. 1976) (permitting an appeal from a receiver’s sale). The Fifth Circuit in Barton, supra, simply ignores its own prior decision in “A” Manufacturing, which seems to be an aberration.

The situation is different if your case is in California state court, where the general rule is orders approving a receiver’s sale are appealable. One of the leading cases, City of Riverside v. Horspool, 223 Cal. App. 4th 670 (2014) (Horspool), points out that, at first blush, [p]rocedurally, the order approving the sale of the property is not appealable because such an order is not included in the list of appealable interlocutory orders found in Code of Civil Procedure section 904.1.” Id. at 683. However, the Horspool Court found such orders are appealable for a few reasons. Many courts and practitioners cite its conclusion that “an order approving the sale of assets is final and appealable” as the law. While that is sort of true, that is not exactly what the court said. It said: “Thus it has been held that an order approving the sale of assets is final and appealable as a final determination in a special proceeding.” Id. (emphasis added). All of the cases the court cites for this statement were special proceedings. Indeed, Horspool itself was a special proceeding: a Health and Safety Code, nuisance abatement case. “As a general rule, a special proceeding is confined to the type of case which was not, under the common law or equity practice, either an action at law or suit in equity.” Tidewater Associated Oil Co. v. Superior Court, 43 Cal. 815, 822 (1955). See, Cal. Civ. Proc. Code §§ 22 and 23.

The appealability of asset sale orders is not limited to special proceedings, however, if the order satisfies the “collateral order doctrine.” Horspool held the receiver’s sale did. “[A]n interlocutory judgment is nevertheless appealable to the extent that it requires as a collateral matter, the immediate payment of money or the performance forthwith of an act.” Horspool Id. This statement, however, is a short-hand, incomplete, statement of the doctrine. Under the collateral order doctrine, an order is appealable if: “(1) it is collateral to the subject matter of the litigation; (2) it is final as to the collateral matter; and (3) it directs the payment of money by the appellant or the performance of an act by or against the appellant.” Marsh v. Mountain Zephyr Inc., 43 Cal. App. 4th 289, 297-298 (1996) [emphasis added]. An ordered sale of an appellant’s property, to pay a receiver’s fees, satisfies these requirements because it would “deprive her of a portion of the property or the proceeds derived from a sale thereof.” Fish v. Fish, 216 Cal. 14,16 (1932); see also, California etc. Assn. v. Superior Court, 8 Cal. App. 711 (1908)(writ of prohibition to restrain receiver from selling personal property denied because the order approving the sale was appealable).

Superficially, it might appear that the federal rule is better for a receiver. The receiver avoids having to deal with an appeal of the sale and the sale is only appealable at the end of the case, after the receiver’s final report is approved and the receiver discharged. By then the affected party may no longer be interested in appealing or the issues in dispute may have been resolved. Also, because the receiver has been discharged, it may no longer be the receiver’s problem. What this misses, however, and why California’s rule may be preferable, is that a buyer (and more important the buyer’s title company) will not know, maybe for years, whether the sale is final. Also, because the receiver is gone, the buyer may have to defend the appeal itself. Under the California rule, all parties know, within at least 60 days, if the order is being appealed, and the receiver is likely still present to possibly deal the any appeal. This certainty should make it easier for California receivers to close sales. Note: if the sale closes, before an appellant obtains a stay, the appeal may be moot. Cal. Civ. Proc. Code §917.4; Horspool, supra, at 685. (“Additionally, this issue is moot because the sale became final due to William’s inaction in obtaining an undertaking to stay the trial court proceedings.”). Federal courts agree. U.S. v. Antiques Ltd. Partnership, 760 F.3d 668,673 (7th Cir. 2014)(“[I]n the absence of a stay, or some other circumstance that would cast a cloud over the receiver’s sale…a closed sale (that is, a sale that has been executed, not just contracted for) of a debtor’s assets can’t be reopened.”).

*Peter A. Davidson is a Partner of Ervin Cohen & Jessup LLP a Beverly Hills Law Firm. His practice includes representing Receivers and acting as a Receiver in State and Federal Court.