Can I Be Sued By a Creditor in Nevada as a Receiver Appointed by the Court in California?

by Ervin Cohen & Jessup LLP

QUESTION: I am a receiver appointed by a court in California in a contentious case. One of creditors has threatened to sue me in Nevada were he is located. How can this creditor sue me? I am a receiver appointed by the Court!

ANSWER: Welcome to the gritty world of receiverships. While you are a court appointed receiver, and may personally have quasi-judicial immunity, you can still be sued. Your question is unclear as to why the creditor wants to sue you and whether he intends to sue you in your official capacity as receiver or individually. Generally, receivers do have quasi-judicial immunity for any actions brought against them in their individual capacity, unless their activities exceeded the scope of their order of appointment (the distinction between personal liability and official liability will not be discussed here). Assuming the creditor wants to sue you in your official capacity, the creditor needs to first obtain permission to do so from the court which appointed you. McCarthy v. Poulsen, 173 Cal. App. 3rd 1212, 1219 (1985); Ostrowski v. Miller, 226 Cal App. 2d 79, 83 (1964). C.C.P. §568 used to provide that a receiver cannot be sued without the permission of the receivership court. The statute was amended in 1982 and the express prohibition was deleted. However, the courts have subsequently held that this deletion did not affect the rule requiring court permission to sue a receiver. Vitug v. Griffin, 214 Cal. App. 3rd 488, 493 (1989). It has been repeatedly stated that the purpose of the rule is to promote judicial economy by prohibiting the receiver and the receivership estate from a multiplicity of lawsuits and because, in most cases, claimants can obtain appropriate relief within the receivership case. If you are sued without permission being obtained, you need to raise that at the first opportunity, either by demurrer or motion to dismiss; otherwise this requirement can be deemed waived. Vitug supra. A creditor cannot evade the permission requirement by suing outside the receivership court. Merryweather v. U.S., 12 F. 2d 407, 408 (9th Cir. 1926) [“The court which holds the estate and administers must decide whether it will determine for itself all claims against the receiver, or will permit suits to be brought and determined in other courts. And as said by Justice Gray in Porter v. Sabin, supra. * * * No suit, unless authorized by statute, can be brought against the receiver without the permission of the court which appointed him.”]. Some courts require an evidentiary showing that the claims have merit before permission will be granted. See, for example, Federal Deposit Insurance Corp. v. J.D.L. Assoc., 866 F. Supp. 76 (D. Conn. 1994). Other courts, however, merely require allegations. Although you can never stop someone from suing you, you may be able to convince the court that any action brought against you should be litigated in the receivership court, before the judge who appointed you, who is most familiar with the receivership proceeding.

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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