Senate Bill No. 489

Introduced by Senator Fuller

February 21, 2013

An act to amend Section 564 of the Code of Civil Procedure, and to amend Section 855 of the Public Utilities Code, relating to water and sewer system corporations.

LEGISLATIVE COUNSEL’S DIGEST

SB 489, as introduced, Fuller. Water corporations: sewer system corporations: appointment of receiver.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including water corporations and sewer system corporations. Whenever the commission determines that a water corporation or sewer system corporation is unable or unwilling to adequately serve its ratepayers or has actually or effectively been abandoned by its owners or is unresponsive to the rules or orders of the commission, existing law authorizes the commission to petition the superior court for the county within which the corporation has its principal office or place of business for the appointment of a receiver to assume possession of the corporation’s property and to operate its system upon such terms and conditions as the court prescribes.

This bill would instead authorize the commission to appoint a receiver to assume possession of the corporation’s property and to operate its system upon such terms and conditions as the commission prescribes. The bill would make other conforming changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 564 of the Code of Civil Procedure is
amended to read:

564.  

(a) A receiver may be appointed, in the manner provided
in this chapter, by the court in which an action or proceeding is
pending in any case in which the court is empowered by law to
appoint a receiver.

(b) A receiver may be appointed by the court in which an action
or proceeding is pending, or by a judge begin delete thereof end delete begin insert of that court end insert , in
the following cases:

(1) In an action by a vendor to vacate a fraudulent purchase of
property, or by a creditor to subject any property or fund to the
creditor’s claim, or between partners or others jointly owning or
interested in any property or fund, on the application of the
plaintiff, or of any party whose right to or interest in the property
or fund, or the proceeds begin delete thereof end delete begin insert of the property or fund end insert , is probable,
and where it is shown that the property or fund is in danger of
being lost, removed, or materially injured.

(2) In an action by a secured lender for the foreclosure of a deed
of trust or mortgage and sale of property upon which there is a lien
under a deed of trust or mortgage, where it appears that the property
is in danger of being lost, removed, or materially injured, or that
the condition of the deed of trust or mortgage has not been
performed, and that the property is probably insufficient to
discharge the deed of trust or mortgage debt.

(3) After judgment, to carry the judgment into effect.

(4) After judgment, to dispose of the property according to the
judgment, or to preserve it during the pendency of an appeal, or
pursuant to the Enforcement of Judgments Law (Title 9
(commencing with Section 680.010)), or after sale of real property
pursuant to a decree of foreclosure, during the redemption period,
to collect, expend, and disburse rents as directed by the court or
otherwise provided by law.

(5) Where a corporation has been dissolved, as provided in
Section 565.

(6) Where a corporation is insolvent, or in imminent danger of
insolvency, or has forfeited its corporate rights.

(7) In an action of unlawful detainer.

(8) At the request of the Public Utilities Commission pursuant
to Section begin delete 855 or end delete 5259.5 of the Public Utilities Code.

(9) In all other cases where necessary to preserve the property
or rights of any party.

(10) At the request of the Office of Statewide Health Planning
and Development, or the Attorney General, pursuant to Section
129173 of the Health and Safety Code.

(11) In an action by a secured lender for specific performance
of an assignment of rents provision in a deed of trust, mortgage,
or separate assignment document. The appointment may be
continued after entry of a judgment for specific performance if
appropriate to protect, operate, or maintain real property
encumbered by a deed of trust or mortgage or to collect rents
therefrom while a pending nonjudicial foreclosure under power
of sale in a deed of trust or mortgage is being completed.

(12) In a case brought by an assignee under an assignment of
leases, rents, issues, or profits pursuant to subdivision (g) of Section
2938 of the Civil Code.

(c) A receiver may be appointed, in the manner provided in this
chapter, including, but not limited to, Section 566, by the superior
court in an action brought by a secured lender to enforce the rights
provided in Section 2929.5 of the Civil Code, to enable the secured
lender to enter and inspect the real property security for the purpose
of determining the existence, location, nature, and magnitude of
any past or present release or threatened release of any hazardous
substance into, onto, beneath, or from the real property security.
The secured lender shall not abuse the right of entry and inspection
or use it to harass the borrower or tenant of the property. Except
in case of an emergency, when the borrower or tenant of the
property has abandoned the premises, or if it is impracticable to
do so, the secured lender shall give the borrower or tenant of the
property reasonable notice of the secured lender’s intent to enter
and shall enter only during the borrower’s or tenant’s normal
business hours. Twenty-four hours’ notice shall be presumed to
be reasonable notice in the absence of evidence to the contrary.

(d) Any action by a secured lender to appoint a receiver pursuant
to this section shall not constitute an action within the meaning of
subdivision (a) of Section 726.

(e) For purposes of this section:

(1) “Borrower” means the trustor under a deed of trust, or a
mortgagor under a mortgage, where the deed of trust or mortgage
encumbers real property security and secures the performance of
the trustor or mortgagor under a loan, extension of credit, guaranty,
or other obligation. The term includes any successor in interest of
the trustor or mortgagor to the real property security before the
deed of trust or mortgage has been discharged, reconveyed, or
foreclosed upon.

(2) “Hazardous substance” means any of the following:

(A) Any “hazardous substance” as defined in subdivision (h)
of Section 25281 of the Health and Safety Code.

(B) Any “waste” as defined in subdivision (d) of Section 13050
of the Water Code.

(C) Petroleum including crude oil or any fraction thereof, natural
gas, natural gas liquids, liquefied natural gas, or synthetic gas
usable for fuel, or any mixture thereof.

(3) “Real property security” means any real property and
improvements, other than a separate interest and any related interest
in the common area of a residential common interest development,
as the terms “separate interest,” “common area,” and “common
interest development” are defined in Section 4095, 4100, and 4185
of the Civil Code, or real property consisting of one acre or less
that contains 1 to 15 dwelling units.

(4) “Release” means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing into the environment, including continuing
migration, of hazardous substances into, onto, or through soil,
surface water, or groundwater.

(5) “Secured lender” means the beneficiary under a deed of trust
against the real property security, or the mortgagee under a
mortgage against the real property security, and any successor in
interest of the beneficiary or mortgagee to the deed of trust or
mortgage.

SEC. 2.  

Section 855 of the Public Utilities Code is amended
to read:

855.  

Whenever the commission determines, after notice and
hearing, that any water or sewer system corporation is unable or
unwilling to adequately serve its ratepayers or has been actually
or effectively abandoned by its owners, or is unresponsive to the
begin delete the end delete rules or orders of the commission, the commission may begin delete petition
the superior court for the county within which the corporation has
its principal office or place of business for the appointment of end delete
begin insert appoint end insert a receiver to assume possession of its property and to
operate its system upon begin delete such end delete begin insert the end insert terms and conditions begin delete as end delete begin insert that end insert the
begin delete court end delete begin insert commission end insert shall prescribe. The begin delete court end delete begin insert commission end insert may
require, as a condition to the appointment of begin delete such end delete begin insert the end insert receiver, that
a sufficient bond be given by the receiver and conditioned upon
compliance with the orders of the begin delete court and the end delete commission, and
the protection of all property rights involved. The begin delete court end delete begin insert commission end insert
shall provide for disposition of the facilities and system in like
manner as any other receivership proceeding in this state.