Wells Fargo Bank, N.A., as Trustee for the Registered Holders of Merrill Lynch Mortgage Trust 2005-LC1, Commercial Mortgage Pass-Through Certificates, Series 2005-LC1 et al v. Remy & Associates, L.L.C.

Filing 9

ORDER granting 2 Motion to Appoint Receiver and other Relief. Signed by District Judge George Caram Steeh. (MBea)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Wells Fargo Bank, N.A., as Trustee
for the Registered Holders of Merrill
Lynch Mortgage Trust 2005-LC1,
Commercial Mortgage Pass-Through
Certificates, Series 2005-LC1,
By and through
LNR Partners, LLC, its special servicer,

Plaintiff,
v.
REMY & ASSOCIATES, L.L.C., a Michigan
limited liability company,
Defendant.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

No. 16-cv-11364
Hon. George Caram Steeh

ORDER APPOINTING RECEIVER AND OTHER RELIEF

Plaintiff Wells Fargo Bank, N.A., as Trustee for the Registered Holders of
Merrill Lynch Mortgage Trust 2005-LC1, Commercial Mortgage Pass-Through
Certificates, Series 2005-LC1 (“Wells Fargo” or “Plaintiff”) filed a verified
complaint in this action seeking the appointment of a receiver over certain real
property located in Rochester Hills, Oakland County, Michigan (the “Complaint”).
This Court having reviewed Plaintiff’s Complaint and Ex Parte Motion for

4829-9685-3808.2

Appointment of a Receiver and for Preliminary Relief (the “Motion”), having
reviewed objections, by Defendant thereto, and being fully advised in the premises;
IT IS ORDERED THAT:
This Order should be entered to protect the respective parties’ respective
interests in the Mortgaged Property (defined below) and income therefrom as
follows:
1.

Plaintiff’s Motion seeking appointment of a receiver is GRANTED.

2.

NAI Farbman (the “Receiver”) is appointed as the Receiver over the

“Mortgaged Property,” which means:
a.

The shopping center located in Rochester Hills, Oakland
County, Michigan (“Mortgaged Property”), on which
Plaintiff holds a Mortgage and which is more fully
described in the Mortgage, a copy of which is attached to
Plaintiff’s Complaint in this matter and incorporated by
reference, together with all buildings, structures, and
improvements on the Mortgaged Property;

b.

All fixtures of every kind or nature located in or upon or
attached to, or used or intended to be used in connection
with, the operation of the Mortgaged Property;

c.

All of the collateral and assets of Defendant, as described
in the Mortgage attached to Plaintiff’s Complaint
including, but not limited to, all machinery, apparatus
and equipment, materials, supplies, articles of personal
property used in connection with or with the operation of
the Mortgaged Property;

d.

All the cash, rent, royalties, issues, revenues, income,
profits and other benefits of the Mortgaged Property and
the facilities thereon as more particularly described in the
Assignment of Leases and Rents filed with the
2

4829-9685-3808.2

Complaint, under present or future contracts, occupancy
agreements, agreements for reimbursement, or otherwise,
together with all accounts due or to become due as
income in connection with the operations of the
Mortgaged Property (“the Rents”) all as more fully
described in the Mortgage and Loan Documents attached
to Plaintiff’s Complaint, as defined therein;
e.

f.

All books, records, accounts or documents which in any
way relate to the Mortgaged Property, the Rents, or the
operations of the Mortgaged Property, and copies of all
documents Defendant is legally obligated to retain;

g.

All other property, estate, right, title and interest as
described in the Mortgage and the other Loan Documents
attached to and referred to in Plaintiff’s Complaint; and

h.

3.

All permits, licenses and other contracts pertaining to the
Mortgaged Property and the operations of the Mortgaged
Property;

All bank accounts maintained by Defendant concerning
the Mortgaged Property, including any operating
accounts, escrow accounts, insurance-proceed accounts,
cash management accounts, and/or security deposit
accounts.

The Receiver will manage the day-to-day operations of the Mortgaged

Property.
4.

Defendant and its officers, directors, employees, partners, trustees,

agents, representatives and/or any entity controlled by Defendant are directed to
cooperate with the Receiver in the transition of the management of the Mortgaged
Property and shall make immediately available to the Receiver all of Defendant’s
records concerning the Mortgaged Property, including the Defendant’s EIN, so that

3
4829-9685-3808.2

the Receiver may adequately account for any revenue collected or owing through
the date the Receiver is appointed, including, but not limited to, all:
a.

Leases including communication/correspondence files;

b.

A current rent-roll as well as tenant contact names and
telephone numbers;

c.

A current aged accounts receivable/delinquency report;

d.

The occupant ledgers;

e.

Documents identifying and summarizing all pending
litigation;

f.

All operating licenses;

g.

Documents
pertaining
leases/renewals;

h.

All existing service contracts;

i.

All pending bids for contractor work;

j.

Copies of all on-site employee payroll records and
employee files and applications to include number of
employees on health or dental program by coverage
(single, single plus, or family coverage), gender and age
of each employee;

k.

All documents, books, records and computer files and
records concerning the rents, profits, finances, issues, and
operation and management of the Mortgaged Property,
including, but not limited to, accounts with any financial
institutions;

l.

Such other records pertaining to the management of the
Mortgaged Property as may be reasonably requested by
the Receiver;

m.

All keys, access keys, cards, codes and passwords;

4
4829-9685-3808.2

to

all

pending

new

n.

All security deposits, security deposit accounts and an
accounting for all security deposits;

o.

A list of all utilities and utility accounts;

p.

All insurance policies for the Mortgaged Property;

q.

Correspondence relating in any way to the Mortgaged
Property;

r.

Surveys, site plans, specifications, floor plans, drawings,
measurements, etc.;

s.

Documents identifying and summarizing
litigation (excluding this action);

t.

All documents, books, records and computer files,
computer equipment, software, management files,
equipment, furniture, appliances, vending machines,
supplies of Defendant, websites, social medial accounts
(including but not limited to Facebook, Twitter, or
Instagram), other online accounts, online services, and
email accounts, and all passwords needed to access all
software, websites, email accounts, social media and
other online accounts, and computer files, e-mail
accounts maintained at the on-site management office(s)
(and all off–site financial records) of Defendant including
the office at the site including, but not limited to, all
records concerning all Mortgaged Property income and
revenue and the operation and management of the
Mortgaged Property, including but not limited to access
information, if any, to operate the systems of the
Mortgaged
Property
(i.e.,
security
system,
communication systems; HVAC control systems, etc.).
To the extent that any of the foregoing computer files,
software and/or information is maintained at an off-site
location, or on a computer system not owned by
Defendant, or is otherwise stored in a manner that the
Receiver cannot have unrestricted access, based on
security or confidentiality concerns of Defendant and any
related entity, relating to non-Defendant property,
5

4829-9685-3808.2

existing

information, software or licensing limitations, Defendant
shall provide an accurate list of all such information
which is maintained in off-site locations, or on a
computer system not owned by Defendant, or otherwise
in a form or manner that cannot be made completely
available to the Receiver. To the extent that any of the
software utilized by Defendant or related entities cannot
be used by the Receiver, Defendant shall take all action
reasonably necessary to extract data requested by the
Receiver from the applicable software programs and
make copies of such information available to the
Receiver;
u.
5.

All information relating to tax appeals including files,
attorney retainer agreements and pleadings; and

The release of employee payroll records and files, described in

Paragraph 3(j) above, to the Receiver is authorized by this Order.
6.

Immediately upon entry of this Order, the Receiver has the authority

to operate the Mortgaged Property.
7.

Defendant and any third parties receiving notice of this Order shall

also surrender to the Receiver all monies that they currently or later possess (and/or
that is or becomes subject to their control) which to their actual knowledge
constitutes revenue, profits, Rents and/or income collected from the operation of
the Mortgaged Property, including any money held in accounts maintained by
Defendant at any financial institution that has originated from the Mortgaged
Property.

6
4829-9685-3808.2

8.

Immediately upon entry of this Order and continuing until expiration

or termination of the receivership, the Receiver is authorized to take any and all
actions the Receiver deems reasonable and appropriate to take possession of, to
exercise full control over, and to prevent waste and to preserve, manage, maintain,
secure, and safeguard the Mortgaged Property, including, but not limited to, all
cash on hand, bank accounts, credit card receipts and other credit and charge card
documents, bank deposits, utility deposits, contract deposits, other cash collateral,
payment and performance bonds, as well as all Mortgaged Property, and take such
other actions as may be necessary and appropriate to take possession, to exercise
full control, to prevent waste and to preserve, secure and safeguard the receivership
property, including taking possession of and copying, if necessary: all books,
records, notes, memoranda, loan documents, deeds, bills of sale, canceled checks,
check ledgers, calendar notes, diary notes, notes, records, ledgers, electronically
stored data, tape recordings, computer discs, or any other financial documents or
financial information in whatever form belonging to Defendant that relate to the
Mortgaged Property.

Without limiting the generality of the foregoing, the

Receiver shall:
a.

Take all action determined by the Receiver to be
necessary or appropriate to safeguard and preserve all
tangible and intangible assets of the Mortgaged Property
and all licenses used in connection with the operation of
the Mortgaged Property;

7
4829-9685-3808.2

b.

Collect all revenues, profits, income, Rents, and issues
from the Mortgaged Property;

c.

Allow the Plaintiff and its counsel access to the
Mortgaged Property at reasonable times to inspect the
Mortgaged Property and all books and records thereof;

d.

Collect any unpaid or delinquent rents, revenues, issues,
profits and other uncollected receivables pertaining to the
Mortgaged Property, including, but not limited to, any
and all recoveries, awards, and other payments in
connection with any litigation with respect to the
Mortgage Property, regardless of when accrued, and to
prosecute eviction proceedings;

e.

Enforce, terminate, or approve any contracts and/or
agreements regarding the Mortgaged Property, subject to
Plaintiff’s approval;

f.

Accept or reject executory contracts;

g.

Retain, hire, or discharge on-site employees;

h.

Establish pay rates of on-site employees and to pay all
withholding taxes regarding such employees that accrued
after the entry of this Order;

i.

Manage, maintain and operate the Mortgaged Property,
including without limitation, the payment from funds
received as Receiver of all of the following (collectively
the “Operating Expenses”):
(i) all ordinary and
necessary operating expenses arising from the operation
by the Receiver of the Mortgaged Property for the period
after entry of this Order until expiration or termination of
the receivership; (ii) all current real and personal
property taxes and assessments (and delinquent taxes,
with the prior written consent of Plaintiff); and (iii) all
premiums of hazard, liability and other insurance policies
upon the Mortgaged Property for term of the
receivership;

8
4829-9685-3808.2

j.

Market the Mortgaged Property for sale through a related
entity; and Plaintiff and/or Receiver shall file a motion in
this Court seeking approval in the event that the Receiver
seeks to enter into any purchase agreements for the sale
of the Mortgaged Property;

k.

Access any accounts maintained by Defendant at any
financial institution with funds that originated from the
Mortgaged Property;

l.

Open new bank accounts in the name of the Receiver as
necessary to carry out the obligations of the Receiver
hereunder, and be added to any accounts of Defendant
relating to the Mortgaged Property;

m.

Endorse any and all checks that Receiver may receive
that are payable to Defendant and which represent
payment of amounts due and owing in connection with
the operation of the Mortgaged Property; and

n.

Retain professionals including attorneys and accountants
and replace attorneys and accountants in the Receiver’s
discretion.

However, the Receiver shall not be responsible for the preparation
and/or filing of any income tax returns on behalf of the Defendant.
9.

The Receiver shall receive reasonable compensation for its services,

payable from the funds collected from operation of the Mortgaged Property. The
Receiver shall receive as reasonable compensation:
 A receivership fee of $750 per month;
 A monthly management fee equal to the greater of $1,750 per month
or 3.25% of effective gross income;

9
4829-9685-3808.2

 Leasing commissions equal to 6% of aggregate base rent for years 1 –
5, 3% for years 6 – 10;
 A fee for renewals equal to 2.5% of aggregate base rent.
 The Receiver shall not be entitled to compensation for: (a) travel
expenses; (b) senior management presence on-site; (c) coordination of
receivership services, such as filing receivership reports with the court
or appearing in court in connection with the case;
 The Receiver shall not be entitled to a disposition fee to coordinate the
sale of the Mortgaged Property if such a sale occurs.
10.

Defendant and third parties receiving notice of this Order shall

cooperate with the Receiver in obtaining all insurance relating to the operation and
management of the Mortgaged Property, including but not limited to fire, extended
coverage, property damage, general and professional liability, and workers’
compensation. The Receiver shall be named as an additional insured on all such
policies. The Receiver shall have the right to possess and control all of Defendant’s
right, title and interest in and to all proceeds from any claims made or to be made
under any insurance policy maintained by Defendant with respect to the Mortgaged
Property.
11.

Should the Receiver not have sufficient funds to pay all of the

Operating Expenses for the Mortgaged Property, Plaintiff may, in its sole
10
4829-9685-3808.2

discretion (without being under any obligation to do so except as to the Receiver’s
compensation and payment for professionals described in Paragraph 9), advance its
own funds to pay such Operating Expenses as Plaintiff may elect to have paid.
The repayment of all such funds advanced by Plaintiff shall be secured by the
Mortgaged Property and under the Mortgage. If such funds are advanced by
Plaintiff subsequent to any mortgage foreclosure sale, such amounts advanced may
be added to Plaintiff’s credit bid as and to the extent permitted by applicable law.
In the event that the Mortgaged Property is insured under blanket policies
maintained by the property manager of the Mortgaged Property, Defendant shall
cooperate with the Receiver to obtain separate insurance for the Mortgaged
Property.
12.

Should the Receiver have funds in excess of the anticipated Operating

Expenses, including an appropriate reserve in an amount to be approved by
Plaintiff, for the Mortgaged Property, the Receiver shall provide all such funds, on
a monthly basis, to Plaintiff. All such funds shall be applied to the amount owed to
Plaintiff by the Defendant under the Mortgage for the Mortgaged Property. To the
extent that there are any funds that exceed amounts due to Plaintiff under the Loan
Documents, such funds shall be subject to further order of the Court.
13.

Neither Plaintiff nor the Receiver shall be liable for any claim,

obligation, liability, action, cause of action, cost or expense of Defendant or the

11
4829-9685-3808.2

Mortgaged Property arising out of or relating to events or circumstances occurring
prior to this Order, including without limitation, any contingent or unliquidated
obligations and any liability from the performance of services rendered by third
parties on behalf of Defendant, and any liability to which Defendant is currently or
may ultimately be exposed under any applicable laws pertaining to the ownership,
use or operation of the Mortgaged Property and operation of Defendant’s business
(collectively all of the foregoing is referred to as “Pre-Receivership Liabilities”).
Neither the Plaintiff nor the Receiver shall be obligated to advance any funds to
pay any Pre-Receivership Liabilities. Notwithstanding the foregoing, with the
prior written consent of Plaintiff (but not otherwise), Receiver may pay from funds
collected from operation of the Mortgaged Property Pre-Receivership Liabilities in
the ordinary course of business and that are not payable to Defendant or
Defendant’s insiders, affiliates, partners, related companies, parent companies,
owners or those entities with common ownership and/or control. No service
provider to the Property shall refuse to provide service to the Property on account
of any Pre-Receivership Liabilities. The Receiver shall not be responsible for any
security deposit refunds for which the Defendant has not transferred the
appropriate funds.
14.

The Receiver shall submit to this Court for its in-camera inspection

and serve on the parties who have filed appearances a monthly accounting of all

12
4829-9685-3808.2

receipts and disbursements concerning the performance of its duties under this
Order, and a final accounting within 90 days after termination of the receivership.
15.

The Receiver may resign upon thirty days written notice or sooner

upon a motion for cause. The Receiver may be removed from duties under this
Order upon a motion for cause. If the Receiver is removed or resigns, the Receiver
shall turn over to Plaintiff or its designee all of the Mortgaged Property unless
otherwise ordered by the Court.
16.

The Receiver shall submit a final accounting for approval by the

Court within ninety days after the termination of the receivership or the Receiver’s
removal or resignation.
17.

The Receiver shall have the power to enter into, modify, extend,

terminate, and/or enforce leases and other contracts, and charge and collect rent in
connection with the Mortgaged Property in the ordinary course of business;
provided, however, in so doing the Receiver shall not concede, settle, compromise
or pay any Pre-Receivership Liabilities in excess of $5,000.00 without written
consent of Plaintiff and Defendant.
18.

The Receiver and its employees, agents and attorneys shall have no

liability in connection with any liabilities, liens or amounts owed to any of
Defendant’s creditors because of its duties as receiver. Nothing in this Order shall

13
4829-9685-3808.2

grant any rights to trade creditors or general unsecured creditors, whose rights shall
be solely in accordance with Michigan law.
19.

The Receiver and its employees, agents, and attorneys shall have no

liability for any claim asserted against it relating to the Receiver’s duties under this
Order, except for claims due to their gross negligence, gross or willful misconduct,
malicious acts and/or the failure to comply with this Court’s orders.
20.

The Receiver is authorized, in its discretion, to operate the Mortgaged

Property under any and all existing agreements that are currently in place between
the Defendant and any third party, as well as any of Defendant’s plans and
specifications, cost estimates, reports, permits, licenses, certificates of occupancy,
development rights, warranties, guaranties, telephone exchanges, trademarks, the
name of the Mortgaged Property, and any intangible rights relating to the
Mortgaged Property.
21.

This Court shall retain jurisdiction over this action, the Mortgaged

Property and the parties for the purpose of giving such other relief upon proper
showing as is consistent with this Order and substantial justice. Unless otherwise
ordered by this Court, the receivership shall terminate with respect to any of the
Mortgaged Property upon the earliest of: (a) upon sale of the Mortgaged Property;
or (b) the expiration of the applicable redemption period following foreclosure of
the Mortgaged Property. The Receiver may, from time to time, upon notice to all

14
4829-9685-3808.2

parties who have appeared in this action, apply to this Court for further and other
instructions and for further powers necessary to enable the Receiver to fulfill its
duties under this Order.
22.

Until further Order of this Court or until Defendant’s interest in the

Mortgaged Property is extinguished through foreclosure and the Plaintiff’s
subsequent possession of the Mortgaged Property, Defendant, its partners, agents
and employees, and all other persons with notice of this Order (other than
Receiver), are restrained and enjoined from directly or indirectly transferring,
encumbering,

removing,

expending,

distributing,

concealing,

destroying,

mutilating, damaging, erasing, altering, disposing of or otherwise diminishing or
causing harm to any of the Mortgaged Property, or any part of the Mortgaged
Property, all fixtures, machinery, equipment, engines, boilers, incinerators,
building materials, appliances, and goods of every nature, and all articles of
personal property located in, or on, or used, or intended to be used in connection
with the Mortgaged Property, all proceeds from the operations of the Mortgaged
Property, including all revenue, income and profits and all documents relating in
any way to the Defendant’s business practices or finances or the Mortgaged
Property. No security is required prior to issuance of this injunction. This Order
does not impact or modify Plaintiff’s rights to foreclose the Mortgaged Property or
Defendant’s right of redemption.

15
4829-9685-3808.2

23.

Except by leave of this Court and except with respect to Plaintiff’s

claims contained in the Complaint and Plaintiff’s right to foreclose its Mortgage on
the Mortgaged Property, during the pendency of the receivership, Defendant and
all other persons, creditors and entities (other than Plaintiff) are stayed from taking
any action to establish or enforce any claim, right or interest for, against, on behalf
of, in, or in the name of Defendant, the Receiver, receivership assets, or the
Receiver’s duly authorized agent acting in their capacities as such, including but
not limited to, the following actions:
a.

Commencing, prosecuting, litigating or enforcing suit,
except that the actions may be filed to toll any applicable
statute of limitations;

b.

Accelerating the due date of any obligation or claimed
obligation, enforcing any lien upon, or taking or
attempting to take possession of, or retaining possession
of, property of Defendant that relates in any way to the
Mortgaged Property, or attempting to foreclose, forfeit,
alter or terminate any of Defendant’s interest in the
Mortgaged Property, whether such acts are part of a
judicial proceeding or otherwise;

c.

Using self-help or executing or issuing, or causing the
execution or issuance of any court attachment, subpoena,
replevin, execution or other process for the purpose of
impounding or taking possession of or interfering with,
or creating or enforcing a lien upon the Mortgaged
Property; and

d.

Doing any act or thing to interfere with the Receiver
taking control, possession or management of the property
subject to the receivership, or to in any way interfere with
the Receiver or the duties of the Receiver, or to interfere
16

4829-9685-3808.2

with the exclusive jurisdiction of this Court over the
Mortgaged Property.
This paragraph does not prevent Plaintiff from commencing litigation that does not
relate to the Mortgaged Property, including litigation related to any guaranty or
indemnity claims.

This paragraph does not stay the commencement or

continuation of an action or proceeding by a governmental unit to enforce such
governmental unit’s police or regulatory power.
24.

The Court finds that Plaintiff in seeking to obtain a receiver is

engaged in a workout activity, as that term is defined by M.C.L.A. § 324.20101a,
and its actions in seeking appointment of a receiver are intended to protect the
value and marketability of its collateral. Further, Plaintiff’s actions in seeking the
appointment of a receiver do not amount to participation in management as that
term is defined in CERCLA, 42 U.S.C. § 9601(a)(20).
25.

The Receiver shall post a $50,000.00 bond with this Court to secure

performance of its duties under this Order.

Dated: May 11, 2016
s/George Caram Steeh
U.S. DISTRICT JUDGE

17
4829-9685-3808.2