Crabar/GBF, Inc. v. Wright et al

Filing 693

MEMORANDUM AND ORDER The plaintiff's motion to appoint Trenten P. Bausch as receiver for Mark Wright (filing 670 ) is granted. Trenten P. Bausch is appointed to serve as receiver over Mark Wright's transferable interests in 121 Court, L LC, and 11616 "I" Street, LLC. The Clerk of the Court is directed to add Trenten P. Bausch to this case as an interested party and provide him with notice of this order via CM/ECF. Mark Wright shall fully cooperate with the receivership in all matters. Ordered by Senior Judge John M. Gerrard. (LRM)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
CRABAR/GBF, INC.,
Plaintiff,

8:16-CV-537

vs.
MEMORANDUM AND ORDER
MARK WRIGHT et al.,
Defendants.
This matter comes before the Court on plaintiff Crabar/GBF, Inc.'s
motion to appoint Trenten P. Bausch as a receiver for the defendant, Mark
Wright (filing 670), pursuant to Fed. R. Civ. P. 66. The Court heard argument
in open court on December 19, 2023, to determine whether a receiver should
be appointed, the scope of any receivership, and whether a bond should be
posted. See filing 678.
The history of this case is well-documented. Most recently, the Court
granted Crabar's application for a charging order, and the Court issued a lien
pursuant to Neb. Rev. Stat. § 21-142 on Wright's transferable interest in two
LLCs—121 Court, LLC, and 11616 "I" Street, LLC. Filing 665. Recognizing the
complexity of Crabar's collection efforts, this Court ordered Crabar to pursue
appointing a receiver to effectuate the charging order.
Appointment of Receiver
"A receiver is an extraordinary equitable remedy that is only justified in
extreme situations." Morgan Stanley Smith Barney LLC v. Johnson, 952 F.3d
980 (quoting Aviation Supply Corp. v. R.S.B.I. Aerospace, Inc., 999 F.2d 314,
316 (8th Cir. 1993)). Such a remedy is soundly in the Court's discretion. Id. at
981; see also 12 C. Wright & A. Miller, Fed. Prac. & Proc. § 2983. While

receiverships are based on federal law and federal equitable principles, courts
may look to state laws for guidance. Fed. R. Civ. P. 66; Morgan Stanley, 952
F.3d at 980 (quoting 12 Wright & Miller § 2983). Nebraska enacted the Revised
Uniform LLC Act, which provides that a receiver may be appointed to
"effectuate the collection of distributions pursuant to a charging order." § 21142(b). No formula determines when a receiver should be appointed, but the
factors to consider are:
[A] valid claim by the party seeking the appointment; the
probability that fraudulent conduct has occurred or will occur to
frustrate that claim; imminent danger that property will be
concealed, lost, or diminished in value; inadequacy of legal
remedies; lack of a less drastic equitable remedy; and likelihood
that appointing the receiver will do more good than harm.
Id. at 981 (quoting Aviation Supply Corp., 999 F.2d at 316-17).
Three of these factors are clearly met here. Morgan Stanley Smith
Barney LLC v. Johnson, No. 12-cv-1101, 2018 WL 4654711, at *2 (D. Minn.
Sept. 27, 2018), aff'd, 952 F.3d 980. Crabar has a valid judgment against Mark
Wright (filing 589), Crabar's attempts to secure payment through conventional
means under Fed. R. Civ. P. 69 have been largely unsuccessful (see, e.g., filing
643; filing 633), and appointing a receiver will do more good than harm. See id.
Crabar has also presented evidence of fraud. Fraudulent conduct is but one
factor outlined above, and the Court can consider it, now and in the future. See
Morgan Stanley, 952 F.3d at 981.
Mark Wright's behavior thus far indicates a receiver is necessary. Based
on the factors set forth by the Eighth Circuit in Morgan Stanley, the Court's
federal equitable powers under Fed. R. Civ. P. 66, and statutory guidance in
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Neb. Rev. Stat. § 21-142(b), the Court will exercise its discretion and appoint a
receiver in this case. Morgan Stanley, 952 F.3d at 981, 984.
Scope of Receivership and Bond
This Court intends to hold Wright to his representations regarding the
sale of the property owned by 121 Court, LLC. Wright has indicated that the
due diligence period will end on January 4, 2024, and that closing will likely
occur on February 3, 2024. Filing 686-1 at 2. Wright further represents that he
holds approximately $8.5 million in equity and will receive approximately that
much at the conclusion of the sale. Filing 686-1 at 3. The sale of the property
ostensibly covers the value of the judgment against Wright—approximately
$3.9 million including the judgment, attorney's fees, interest, and taxed costs.
Filing 589; filing 624.
Crabar requested a broad receivership to cover all of Mark Wright's
assets, beyond those subject to the charging order. But, holding Wright to his
sworn representations, only a limited receivership is warranted at this time.
The Court will not hesitate, if recommended by the recevier, to broaden the
receivership to include examining other assets available to pay the judgment,
whether based on Wright's behavior or if the pending sale goes sour.
The Court has also considered whether to require the applicant for the
receiver to post a bond. See Neb. Rev. Stat. § 25-1084. The potential damages
under the narrow receivership are limited only to attorney costs on appeal and
the receiver's hourly rates. The parties appear to agree that a bond is not
required for a narrow receivership, so the Court will not impose one at this
time. If the receivership expands, this Court reserves judgment on whether a
bond shall be posted. Accordingly,

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IT IS ORDERED:
1.

The plaintiff's motion to appoint Trenten P. Bausch as
receiver for Mark Wright (filing 670) is granted.

2.

Trenten P. Bausch is appointed to serve as receiver over
Mark Wright's transferable interests in 121 Court, LLC, and
11616 "I" Street, LLC.

3.

The Clerk of the Court is directed to add Trenten P. Bausch
to this case as an interested party and provide him with
notice of this order via CM/ECF.

4.

The receiver shall have the power to examine the assets of
121 Court, LLC, and 11616 "I" Street, LLC. The receiver
shall examine and closely monitor the pending sale of
property held by 121 Court, LLC, including the due diligence
and closing periods.

5.

When the receiver's examination is complete, and the
pending sale by 121 Court, LLC, has concluded (one way or
the other), the receiver shall make further recommendations
to the Court with respect to the scope of the receivership,
whether the receivership should terminate, and any action
necessary to effectuate Crabar's execution of judgment
against Mark Wright, including any asset liquidation.

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6.

Mark Wright shall fully cooperate with the receivership in
all matters.

Dated this 22nd day of December, 2023.
BY THE COURT:
John M. Gerrard
Senior United States District Judge

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