Water for Commerce Fund Management, LLC v. Refreshing USA, LLC et al

Filing 23

MEMORANDUM AND ORDER denying 4 Motion to Appoint Receiver. Signed by Magistrate Judge Brooks G. Severson on 8/29/24. (df)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
WATER FOR COMMERCE FUND
MANAGEMENT, LLC,
Plaintiff,
Case No. 24-2368-DDC-BGS
v.
REFRESHING USA, LLC, et al.,
Defendant.
MEMORANDUM & ORDER DENYING
MOTION FOR THE APPOINTMENT OF RECEIVER
NOW BEFORE THE COURT is Plaintiff’s ex parte “Motion for the Appointment of a
Receiver.” (Doc. 4.) For the reasons stated herein, as well as those stated orally by the Court during
the hearing on the ex parte motion, Plaintiff’s motion is DENIED without prejudice.
The appointment of a receiver is an extraordinary remedy and is normally limited to
situations where fraud, waste, or irreparable injury are occurring. See First Federal Savings & Loan
Ass’n v. Moulds, 202 Kan. 557, 561–62, 451 P.2d 215, 219–20 (1969); Browning v. Blair, 169 Kan. 139,
145, 218 P.2d 233, 238 (1950); Gage v. First Fed. Sav. & Loan Ass’n of Hutchinson, Kan., 717 F. Supp.
745, 750 (D. Kan. 1989). It is within the Court’s discretion to appointment of receiver. Dreymoor
Fertilizers Overseas Pte. Ltd. v. AVAgro, LLC, No. 20-MC-0105-EFM-GEB, 2021 WL 5082288, at *1
(D. Kan. Nov. 2, 2021).
In making this determination, this Court has considered the following factors: “(1) the
existence of a valid claim by the moving party; (2) the probability that fraudulent conduct has
occurred or will occur to frustrate the claim; (3) imminent danger that property will be lost,
concealed, or diminished in value; (4) inadequacy of available legal remedies; (5) lack of a less drastic

equitable remedy; and (6) the likelihood that appointment of a receiver will do more harm than
good.” Id., at *2.
Courts in this District have also looked to Kansas law to determine whether a receiver
should be appointed. See Board of Trustees, Sheet Metal Workers’ Nat’l Pension Fund v. Acme Invs. & Jones
Serv., LLC, No. 23-205- DDC-ADM, 2023 WL 6516412, at *2 (D. Kan. Oct. 5, 2023). Pursuant to
K.S.A. §60-1304, a party seeking the appointment of a receiver must specify the general character
and probable value of the property for which the appointment is sought, as well as the estimated
annual income generated by the property, if known. Notice to opposing counsel and the
opportunity to be heard for all interested parties is also necessary “unless the judge shall, after the
introduction of evidence and a record of the proceedings is made, make a finding that immediate
and irreparable injury is likely to result… .” Id. Thus, if such a finding is made, an ex parte Order
may be entered without the involvement of the opposing party.
In this instance, the Court finds that Plaintiff has not provided specific evidence to establish
the likelihood of immediate and irreparable injury. Rather, based on the evidence presented to the
Court, which consisted of the Complaint filed in this matter, all injury is speculative in nature.
For these reasons, as well as those stated orally by the Court during the hearing on the ex
parte motion, Plaintiff’s motion (Doc. 4) is DENIED without prejudice to refiling once
Defendants are given the opportunity to appear and be heard on the issue. Prior to filing any such
renewed motion, Plaintiff is required to make a good faith effort to confer with Defendants and/or
defense counsel to determine if Defendants will consent to the appointment of a receiver.
IT IS SO ORDERED.
Dated August 29, 2024, at Wichita, Kansas.
/s/ BROOKS G. SEVERSON
Brooks G. Severson
United States Magistrate Judge