City of Desert Hot Springs v. CA CFK CA4/2

California Court of Appeal·Decided March 23, 2026·No. E082805·Unpublished

Opinion

Filed 3/23/26 City of Desert Hot Springs v. CA CFK CA4/2 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION TWO

CITY OF DESERT HOT SPRINGS, Plaintiff and Respondent, E082805 v. (Super.Ct.No. CVPS2104940) CA CFK, LLC, OPINION Defendant and Appellant;

RICHARDSON GRISWOLD, Receiver and Respondent.

APPEAL from the Superior Court of Riverside County. Kira L. Klatchko, Judge.

Affirmed.

Prometheus Civic Law and Matthew Sean Harrison for Defendant and Appellant.

Stream Kim Hicks Wrage & Alfaro, Theodore K. Stream, and Krystal N. Lyons for Plaintiff and Respondent City of Desert Hot Springs.

Richardson C. Griswold, in pro. per.; and Jarrod Ready for Receiver and Respondent.

Defendant and appellant CA CFK, LLC (CA CFK) purchased a dilapidated property that was under receivership, and the property was sold to a third party after CA CFK breached an abatement compliance agreement between it and plaintiff and respondent City of Desert Hot Springs (the City). CA CFK appeals from the order

allowing the receiver to list the property for sale and the later order approving the sale.

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We affirm.

I. BACKGROUND

A company called Yeh Dynasty owned a 98-room hotel located in Desert Hot Springs (the property). In 2021, the City filed this lawsuit, suing Yeh Dynasty and its owner Charles Yeh and seeking, among other things, the appointment of a receiver over the property to oversee abatement. The City alleged that local gangs had “taken root” at the hotel, “using it as a waystation for stolen vehicles, illegal firearms, and illegal drugs.” Before filing suit, the City had issued a Notice of Public Nuisance and Order to Abate, and the complaint sought appointment of a receiver pursuant to section 17980.7,

1 Undesignated statutory references are to the Health and Safety Code.

subdivision (c). The trial court appointed respondent Richardson Griswold as the receiver.

The receiver sought authorization to list the property for sale. He stated that the hotel could be rehabilitated, demolished, or sold, and that neither rehabilitation nor demolition was financially feasible. As to rehabilitation, the cheapest bid he received was for $4.5 million, but the most a lender would lend for rehabilitation was $3.4 million. As to demolition, the receiver estimated that the bare land the property sat on was worth less than the cost of demolishing the property. The trial court authorized the listing.

Later, the receiver sought confirmation of the sale to a buyer who submitted a $1 million bid. Before the trial court confirmed the sale, however, Yosef Suh, through his company CA CFK, offered to purchase the property for $1.5 million. Suh stated that he has known Yeh for many years and was familiar with the property’s history. The trial court confirmed the property sale to CA CFK, and the sale closed in December 2022.

As part of the sale, CA CFK and the City signed a compliance agreement. The agreement provided that CA CFK would abate the property and that CA CFK would be bound by the court’s earlier receivership order, which generally ordered defendants (at the time, just Yeh and Yeh Dynasty) to turn over possession of the property and prohibited interfering with the receivership. The compliance agreement also contained

2 Section 17980.7 provides that “[i]f the owner fails to comply within a reasonable time with the terms” of an abatement order issued under section 17980.6, then under subdivision (c), “[t]he enforcement agency . . . may seek and the court may order, the appointment of a receiver for the substandard building.”

certain deadlines for the abatement work, such as a site inspection within 30 days of closing and permit applications within 90 days of the site inspection.

Three months after the site inspection, CA CFK’s project manager requested a 90-

day extension from the City, which it denied. After the receiver noted CA CFK’s breach of the compliance agreement to the court and sought further instructions, CA CFK and the City signed an amendment to the compliance agreement. The amended agreement contained the following terms, repeatedly stating that noncompliance would be deemed material breaches:

“Buyer agrees to complete the following tasks according to the schedule as set forth below:

“1. June 16, 2023—Buyer shall obtain all necessary permits, including but not limited to a Demolition Permit, from the City to remove the exterior rock façade from the building on the Property, install and maintain adequate landscaping, resurface and repair the surface and features in the parking lot, and start demolition of all interior walls and floors as-needed to allow a qualified engineer to conduct a complete structural analysis of the building on the Property. Nothing in this Agreement shall be construed to guarantee the Buyer any permits. The failure of the Buyer to secure permits or complete the tasks described in this provision shall constitute a material breach of this Agreement. [¶ . . . ¶]

“3. August 16, 2023—Buyer shall submit a complete set of buildings plans to rehabilitate the Property, including but not limited to, engineering, architectural, mechanical, electrical, plumbing, Title 24 requirements. The Buyer must formally

submit said plans through City-approved procedures, and pay fees as required by the City. The Buyer’s failure to submit said plans shall constitute a material breach of this Agreement. The Buyer's submission of plans in a manner other than approved by the City shall constitute a material breach of this Agreement. The Buyer’s failure to submit complete or adequate plans shall constitute a material breach of this Agreement. The City, in its sole discretion, shall determine whether the plans submitted by the Buyer, if any, are complete and adequate, including for the purpose of ensuring the completion of the Abatement Work.

“4. October 16, 2023—the Buyer must secure all necessary permits from the City, as determined by the City in its sole discretion, to begin the Abatement Work. As part of this process, the Buyer must complete any and all plan corrections as required by the City, in its sole discretion. Nothing in this Agreement shall be construed to guarantee the Buyer any permits nor to compel the City to issue any permits. The Buyer’s failure to secure all necessary permits or complete plan corrections shall constitute a material breach of this Agreement.”

CA CFK applied for the first of such permits on June 16, 2023, and the City issued it the following month. After the receiver informed the trial court of the delay and noted his concern that he did not believe CA CFK would meet the August deadline, the court authorized the receiver to contact the engineers CA CFK hired to discuss abatement plans.

Two months later, in September 2023 (i.e., after the August deadline had passed), the receiver informed the court that CA CFK had not even executed its contracts with its engineers yet. The receiver noted that the engineers required approximately $50,000 in retainer fees to execute the contracts. The receiver had asked CA CFK why the contracts had not been signed or the retainer fees paid, but CA CFK had not responded. The receiver believed it was thus “imperative” that CA CFK demonstrate proof of funds necessary to complete the property abatement and asked that the trial court require CA CFK to show it had at least $5 million. The $5 million amount was based on the earlier, $4.5 million bid to rehabilitate and adjusted upward for inflation and the scope of work excluded from that earlier bid. The trial court ordered the receiver to execute the

engineering contracts and pay the retainer fees and ordered CA CFK to demonstrate

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