August 28, 2020

Notice & Hearing and Bonds for Ex Parte Receivership Appointment.

A court may only issue an order under the Act after notice and a hearing, pursuant to Section 33-2602, except:

(1)  That it may issue an order without notice if the circumstances so require;

(2)  That it may issue an order after notice but without a hearing if the circumstances so require;

(3)  That it may issue an order without notice and hearing if no objection has been filed by an “interested party”.

The Court has broad discretion in determining if circumstances exist which justify the entry of an order on any issue in a proceeding under the Act without notice or without a hearing.  Of course, that discretion is bounded by the requirements of due process as imposed by the United States Constitution and the Arizona Constitution. See Boddie v. Connecticut, 401 U.S. 371, 377, 91 S.Ct. 780, 785, 28 L.Ed.2d 113 (1971) (holding that “due process [ordinarily] requires, at a minimum, that .  .  . persons forced to settle their claims of right and duty through the judicial process must be given a meaningful opportunity to be heard.”).

Nothing in the Act abrogates the applicability of Rule 66 to proceedings brought under the Act.   Accordingly, the requirements in that rule[1] as to ex parte applications for the appointment of a receiver necessarily govern requests seeking such relief under Section 33-2603[2].  That means that a court may only appoint a receiver under Section 33-2605 without notice if it sets a hearing on the application within 10 days after the entry of the order appointing the receiver and it requires the moving party to post a bond in an amount sufficient to cover the possible damages and costs that may be suffered by the defendant as a result of the receivership prior to a hearing on the matter.   See Rule 66(a)(3) & (4).

[1]  The requirements in A.R.S. §12-1242 and Rule 66(a) that the moving party file an application supported by an affidavit necessarily apply to a proceeding under the Act.

[2] The Arizona legislature elected not to include Section 6(c) of UCRERA which has a bonding requirement similar to Rule 66(c) & (d) except that the imposition of a bond is left to the discretion of the court under UCRERA while it is mandatory under Rule 66.  The author has located nothing in the legislative history explaining the reasons for not adopting this provision.  There is a minor difference between Rule 66 and UCRERA §6/Section 33-2603.  The rule requires a hearing on the receivership application even if no objection is filed.   However, Section 33-2602(B)(3) does not require the court to hold a hearing on an unopposed motion.

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