IN RE BAH

SAMUEL BUFFORD, Bankruptcy Judge

This adversary proceeding came on for trial on January 12 and 13, 2006. Plaintiff Abdoulaye Bah appeared through his counsel John Fuchs. Defendant Martin Goldberg appeared through his counsel Helen Ryan Frazer.

The court has severed for later trial the issue of the quantification of damages, except as to the claim arising from Goldberg's failure to obtain insurance, failing to safeguard the property as to which he took possession, and the failure to pay storage fees for the property.

After the conclusion of plaintiff's case (except on the severed issue of damages), defendant made a motion under Rule 52(c), as applicable in adversary proceedings in bankruptcy under Rule 7052, for judgment on partial findings. After hearing the testimony of the witnesses and examining the exhibits admitted into evidence, and considering the pleadings and files in this adversary proceeding and the underlying bankruptcy case, the court makes the following findings of fact and conclusions of law in support of its judgment on partial findings.

Philip C. and Georgette Restaino brought a case in San Diego Superior Court against Bah and Jack Naiman in 2001. The San Diego litigation was based on a claim of a partnership between the Restainos and Bah. This court has previously ruled that there was no such partnership.

Defendant Martin Goldberg was appointed by the San Diego Superior Court in that case to take possession of partnership property by order of October 18, 2001. Because there was no partnership, there was no partnership property, and no property that Goldberg, as receiver, had an obligation to take possession of or to administer. Goldberg did, nonetheless, take possession of two storage lockers for some eight months that contained more than a hundred artworks belonging to Bah. The San Diego litigation ended with the filing of this bankruptcy case and the imposition of the automatic stay.

In due course Bah brought this Adversary Proceeding no. 03-01438 against the Restainos, Naiman and Goldberg, which was consolidated with Adversary Proceeding no. 03-01298. All of the parties except Goldberg have settled. On a summary judgment motion, the court found that the only triable claim against Goldberg is for breach of fiduciary duty, which is claimed in four respects:

1. He failed to take possession of alleged partnership property in possession of the Restainos and Naiman;

2. He failed to obtain insurance as required by the San Diego Superior Court order of October 18, 2001;

3. He failed to safeguard the property as to which he took possession; and

4. He failed to pay the storage fees for the property.

Plaintiff alleges that Goldberg had a duty, pursuant to the San Diego court order appointing him as receiver, to take possession of certain artworks in the possession of the Restainos and Jack Naiman. The court finds that, because there was no partnership property, Goldberg had no such duty under that order.

Debtor also alleges that Goldberg had a duty to take possession of these artworks under a settlement stipulation signed by the parties on March 28, 2002 and approved by the San Diego court on May 15, 2002. The court finds that this document, in substance, is a stipulation negotiated and signed by the parties, which was submitted to the San Diego court for its approval. The court gave its approval by stating at the bottom of the stipulation, "It is so ordered." This was nothing more than an approval of the stipulation. In consequence, the parties had the power to modify the stipulation among themselves.

In fact, the parties did modify the stipulation on the same day that they signed it. After signing the stipulation, they met with Goldberg, and discussed the fact that Goldberg had no funds to pay for storage costs, insurance or other costs of administering his receivership. The Restainos declined and refused to advance any funds for these purposes. In consequence, the parties orally decided and agreed that Goldberg would not take possession of the artworks in the possession of the Restainos and Naiman. Although not included in the submission to the San Diego court, this agreement relieved Goldberg of any obligation to take possession of these artworks under the stipulation approved by the court. While the court approval of the stipulation came after this supplemental agreement, the subsequent court approval did not negate the oral agreement.

Goldberg had an obligation to store properly and to safeguard the property belonging to Bah as to which he did take possession, so long as he remained in possession, in the same manner as the owner would. See, e.g., Vitug v. Griffin, 214 Cal. App. 3d. 488, 496, 262 Cal. Rptr. 588 (1989). Bah testified at trial that one artwork was so damaged by rats when he retook possession of the property in the storage lockers that it was and is now essentially worthless. He further testified that the artwork was worth $25,000.

This particular piece of art (along with the others) had been stored in one of the lockers for several years prior to Goldberg's appointment as receiver. The evidence is very tenuous that this damage occurred while Goldberg was in possession of the artworks. Nobody testified as to the condition of this piece on the date that Goldberg took possession of the storage bins. Bah was not a good housekeeper: on that date the storage bins were dirty, there were spider cobwebs and a certain amount of insect infestation of the art objects. The lockers were not airtight: insects, birds and rodents had access to them.

Much or all of the damage caused by the rats could have occurred prior to Goldberg's watch over the property. The court finds the evidence insufficient to hold Goldberg responsible for this damage.

The order of October 18, 2001 appointing Goldberg as receiver imposed on him an obligation to purchase insurance for the property of which he took possession. Goldberg failed to do so. The order further required Goldberg to go back to the court if he had insufficient funds or had other difficulties in obtaining insurance. Again, Goldberg failed to do so.

However, the only item of damage alleged to result from the lack of insurance is the damage caused by the rats to one artwork. Because the court cannot conclude that this happened during Goldberg's possession of this artwork, the court cannot conclude that the lack of insurance caused damage to Bah.

In addition, it is far from certain that, if the damage caused by the rats had occurred while the artwork was in Goldberg's possession, and he had purchased insurance, the insurance would have covered this damage. Any such conclusion is mere conjecture and speculation. In consequence, the court finds no damage resulting from Goldberg's failure to obtain insurance over the artwork as to which he took possession.

On the storage fee issue, the court finds that Goldberg has been fully heard. Goldberg had an obligation to pay the storage expenses of the property in his possession. According to the evidence at trial, these storage fees totaled $5,456. Goldberg testified that he intended to pay these fees, but did not receive a bill from the storage company to pay. Instead, the bill went to Bah, who paid the storage charges. It is now time for Goldberg to reimburse Bah for these expenses. Bah is entitled to recover $5,456 from Goldberg for these charges.

Goldberg did not receive funds to cover these storage charges in the receivership. Lacking such funds, he had a duty to bring to the attention of the San Diego court this issue, and to seek instructions. He did not do so. In consequence, these charges are a personal expense of Goldberg to the extent that receivership assets are insufficient to cover these expenses. The court takes no position on whether Goldberg may recover these expenses from the Restainos (plaintiffs in the San Diego action).

Goldberg has made a motion for dismissal of the pending claims on the grounds of judicial immunity. No hearing on this motion has been properly noticed before the court as of yet. Judicial immunity does not excuse Goldberg from paying the storage charges for the property in his possession. Accordingly, this defense does not apply to the storage charges. Because of the court's resolution of the remaining issues, it does not otherwise reach the jurisdictional arguments.

For the foregoing reasons, the court finds that the Rule 52(c) motion should be granted in full. The motion is granted in Goldberg's favor, dismissing all of the complaint against him with one exception. As to the $5,456 in storage fees, the court finds that judgment should be granted to the plaintiff.

In light of the foregoing findings, the court finds it unnecessary to hear further testimony in the case.