Can a Magistrate Appoint a Receiver?

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QUESTION:  Can a magistrate appoint a receiver?

ANSWER: While an arbitrator cannot appoint a receiver, Marsh v. Williams, 23 Cal. App 4th 238 (1994), a magistrate can.

A district judge may designate a magistrate judge to hear and determine any non-dispositive civil matter. 20U.S.C. § 636(b)(1)(A). With respect to dispositive motions, a district judge may designate a magistrate judge to conduct hearings, including evidentiary hearings, and to submit to the district judge proposed findings of fact and recommendations.28 U.S.C. § 636(b)(1)(B). Dispositive motions include those specifically identified in 28 U.S.C. § 363(b)(1)(A), such as motions for injunctive relief and motions for summary judgment, as well as other motions not specifically identified in the statute to the extent they are dispositive of a claim or defense. A number of unreported decisions have held that a magistrate judge has authority to appoint a receiver in the pre-judgment context because a receiver is a pre-judgment remedy and is not dispositive of the rights of the parties, nor is the appointment ofa receiver specifically excepted by the limitations set forth in §636(b)(1)(A). JP Morgan Chase Bank, N.A. v. Heritage Nursing Care, Inc., et al., 2007 WL 2608827(N. D. Ill) (limited financial receiver to monitor financial activity); Home Loan & Investment Bank v. Lauday, Inc., 2011 WL 441693 (E. D. N. Y.) (rents receiver); Fleet Development Ventures, LLC v. Brisker, 2006 WL2772686 (D. Conn.) (receiver over corporation due to mismanagement, misappropriation of funds and board deadlock).In the Fleetcase, the court specifically noted that a motion to appoint a receiver is not a motion for injunctive relief nor is it one of the other specified motions listed in 28 U.S.C. §636(b)(1)(A) which limits the authority of magistrates.

28 U.S.C. § 636(b) only deals with prejudgment matters involving civil cases or post-trial matters in criminal cases. 28U.S.C. § 636(b)(3) however provides: “A magistrate may beassigned such additional duties as are not inconsistent with the Constitution and the laws of the United States.” In Bache Halsey Stuart Shields Inc., v. Killop, 585 F. Supp. 390 (E. D. Mich.1984), the district court affirmed the magistrate’s appointment of a post-judgment receiver to aid in the collection of a judgment, finding that a magistrate’s authority in the post-judgment context comes from the “additional duties” clause of §636. The court also found that the appointment of a receiver in the post-judgment context is not a “dispositive matter” because a judgment has already been entered. In the case, the judgment debtors argued that the order should not be affirmed because of the prohibition of a magistrate issuing orders relating to injunctive relief. The court specifically found the appointment of the receiver in the post-judgment context did not constitute the exercise of injunctive powers, even though the order authorized the receiver to take charge of the defendant’s earnings. The court stated that the term injunctive relief as used in § 636(b)(1)(A) refers to a coercive order that compels or prohibits particular conduct and establishes the rights and obligations of the parties. As indicated, the court felt because there was a judgment, the order did not establish the rights and obligations of the parties.

Most orders appointing receivers have specific injunctive relief provisions in them. Sometimes those orders relate to the turnover of property, prohibit interference with the receiver, or stay litigation. In those situations, while a magistrate can appoint the receiver, it might be better to have the magistrate make findings and recommendations so that the order is issued by the district court, which clearly has authority to issue injunctive relief. Alternatively, one could obtain two orders, with the magistrate issuing the order appointing the receiver and designating his or her powers and duties, and a separate order issued by the district court with regard to any injunctive provisions. This might be best when it is necessary to have the receiver appointed without the delay that may occur in having the magistrate make findings and recommendations and then waiting for the district court to review them and enter an order.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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