Morris vs. Newman

mandatory waiver, while permitting Defendant to enforce the agreement insofar as it mandated arbitration of Plaintiff’s individual PAGA claim. (See Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 662.)

The Agreement is not substantively unconscionable.

The matter is STAYED pending arbitration.

Arbitration Status Review set for 8/25/2027 at 1:30 PM. The parties are ORDERED to file a Joint Status Report 5 days prior.

Clerk to give notice.

10 Morris vs. Motion for Appointment of Receiver and Issuance of Newman Preliminary Injunction 30-2025- Plaintiff Paula Sue Morris’s Motion to Appoint Receiver and 01508723-CU- Issuance of Preliminary Injunction is GRANTED. OR-CJC Plaintiff’s request for judicial notice of (ROA 42) of Wyoming court filings is GRANTED.

Defendant’s evidentiary objections to the Declarations of Stephen J. Thomas and Erik Perkowski are OVERRULED.

In the complaint, Plaintiff alleges a scheme by Defendants to fraudulently take her equity and control of a condominium in Laguna Beach. Plaintiff claims Defendants encumbered the property with over $2 million in secured debt while failing to make payments for 16 months, resulting in a notice of default and delinquent property taxes and HOA dues. A foreclosure sale of the property is scheduled for 9/2/2026. (Thomas Reply Decl., ¶ 4.)

Plaintiff seeks appointment of a receiver to preserve and sell the property to avoid a below-market foreclosure sale. The secured lender which has initiated foreclosure proceedings, Core Lending, supports the appointment of a receiver to conduct a market sale. Plaintiff requests appointment of Richardson C. Griswold, an experienced court-appointed receiver and real estate broker.

Plaintiff also seeks a preliminary injunction preventing Defendants from transferring or further encumbering the property or allowing the foreclosure sale to proceed.

Defendants oppose the motion on the grounds, (1) the lender is the driving force behind appointment of the receiver, (2) Plaintiff was largely responsible for or knowingly consented to the alleged encumbrances and/or waste of the property, (3) Plaintiff relies on

false/nonexistent legal authorities generated by AI, and (4) the preliminary injunction is unsupported by legal authority or a showing of likelihood of success on the merits.

The court disregards Plaintiff’s legal authorities, finding the declaration of Stephen J. Thomas (ROA 102) admits the attributions are not fully supported by the cases cited.

Appointment of Receiver

Code of Civil Procedure section 564(b) states in part,

“(b) A receiver may be appointed by the court in which an action or proceeding is pending, or by a judge of that court, in the following cases:

[¶¶]

(1) In an action by a vendor to vacate a fraudulent purchase of property, or by a creditor to subject any property or fund to the creditor's claim, or between partners or others jointly owning or interested in any property or fund, on the application of the plaintiff, or of any party whose right to or interest in the property or fund, or the proceeds of the property or fund, is probable, and where it is shown that the property or fund is in danger of being lost, removed, or materially injured.

[¶]

(9) In all other cases where necessary to preserve the property or rights of any party.”

Defendants argue receivership is a drastic and expensive remedy which is unnecessary because Defendant Newman has engaged in good faith efforts to sell the property, which have been harmed by Plaintiff’s recording of a lis pendens, and because Plaintiff has not exhausted other remedies such as mediation/arbitration, marketing and status reporting, and/or an undertaking. (Amended Opp., pp. 5-10.) Defendants contend, “Granting the Motion strips the majority holders of a residence and an actively marketed asset, thirteen months before trial, to the benefit of a non-party lender that already has a complete statutory remedy. Denying it costs Plaintiff nothing: her claims proceed to trial intact, the foreclosure statutes protect any surplus, and her contractual payout date remains February 1, 2029.” (Id. at p. 15.)

However, Defendants do not deny the property must be sold.

Plaintiff maintains although Newman may be able to find a buyer, he lacks authority to bind the entity that owns the property, Newmor LLC, a Wyoming corporation which holds title to the subject property. The LLC is the subject of a default judgment of the Wyoming Chancery Court holding the LLC did not have a validly appointed manager and Newman lacks authority/capacity under Wyoming law to exercise rights or assert control over real property. (Thomas Decl., Ex. B.) However, Defendants contend Newman was not properly served with the Wyoming lawsuit and while the default judgment voids a specified “Written Consent,” it does not void Exhibit B to the Operating Agreement, which independently designates Newman as manager. (Thomas Decl., Ex. C.)

Plaintiff has shown that appointment of a receiver is necessary under Code of Civil Procedure sections 564, subdivisions (b)(1) and/or (9). The foreclosure sale is set to occur on 9/2/2026 and the Wyoming proceedings, at minimum, raise a substantial question regarding Newman’s authority to conduct a sale of the property. Resolving such questions may require further litigation in Wyoming or California, which will not likely be resolved before the foreclosure sale occurs. Moreover, Plaintiff has presented evidence Defendants have not taken reasonable steps to avoid default, comply with property tax, insurance, and HOA obligations which failures provide independent grounds to appoint a receiver to facilitate orderly marketing and sale of the property.

Defendants contend the proposed order is defective because it authorizes sale of the property without prior court order, contrary to Code of Civil Procedure section 568.5 which states, “A receiver may, pursuant to an order of the court, sell real or personal property in the receiver’s possession upon the notice and in the manner prescribed by Article 6 (commencing with Section 701.510) of Chapter 3 of Division 2 of Title 9. The sale is not final until confirmed by the court.”

Plaintiff shall submit an amended proposed order that complies with Code of Civil Procedure section 568.5 by requiring Court confirmation before finalizing the sale, and amends paragraph 6(a) to specify the receiver’s control of bank accounts only with regard to bank accounts directly related to and necessary to conduct the receiver’s management and sale of the property.

Preliminary Injunction

Code of Civil Procedure section 526(a) provides in part,

“(a) An injunction may be granted in the following cases:

(1) When it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any part thereof, consists in restraining the commission or continuance of the act complained of, either for a limited period or perpetually.

(2) When it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.

(3) When it appears, during the litigation, that a party to the action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual.

(4) When pecuniary compensation would not afford adequate relief.

(5) Where it would be extremely difficult to ascertain the amount of compensation which would afford adequate relief.”

In deciding whether to issue a preliminary injunction, the court must consider two interrelated factors: (1) the likelihood that the moving party will prevail on the merits, and (2) whether the harm the moving party will likely suffer if the motion is denied outweighs the harm the opposing party is likely to suffer if the motion is granted. (Ketchens v. Reiner (1987) 194 Cal.App.3d 470, 474.) “These two showings operate on a sliding scale: ‘[T]he more likely it is that [the party seeking the injunction] will ultimately prevail, the less severe must be the harm that they allege will occur if the injunction does not issue.’ [Citation.]” (Integrated Dynamic Solutions, Inc. v. VitaVet Labs, Inc. (2016) 6 Cal.App.5th 1178, 1183.

Plaintiff seeks an order “enjoining and restraining Defendant(s), and all persons acting in concert with them, from transferring, encumbering, concealing, dissipating, wasting, or otherwise disposing of the property and/or assets at issue, and from interfering with the receiver's performance of duties.”

Plaintiff has presented evidence showing Defendants have not taken reasonable steps to avoid default and comply

with property tax, insurance, and HOA obligations. Plaintiff will likely suffer harm if a below-market foreclosure sale occurs, damaging her equity interest. On the other hand, Defendants have not presented evidence they will suffer substantial harm if the proposed injunction is granted because they do not oppose in principle the sale of the property and have not shown the injunction will preclude any specific acts which are necessary to avoid alleged harm.

Plaintiff to submit proposed order.

Clerk to give notice.