Tjalas et al v. Ruark et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Titus Tjalas, et al.,
Plaintiffs,
v.
Kevin Reese Ruark, et al.,
Defendants.
No. CV-24-01641-PHX-MTL
ORDER
This matter is before the Court on Plaintiffs’ Amended Motion to Appoint Receiver.
(Doc. 93.) The motion is fully briefed. (Docs. 93, 103, 106.) The Court finds it appropriate
to decide the motion without oral argument or an evidentiary hearing. For the following
reasons, the Court grants the motion in part and will appoint a receiver over Atlantic Home
Health Care LLC and Atlantic Home Health Care LLC dba Haven Home Health Care LLC.
I. BACKGROUND
This is a Civil Racketeer Influenced and Corrupt Organizations Act (“RICO”) case
“predicated on mail fraud, wire fraud, and financial institution fraud.” 18 U.S.C. § 1961 et
seq.; (Doc. 90 at 1). Plaintiffs Act Now Management LLC, Act Now Health Care Solutions
LLC, Atlantic Home Health Care LLC, Atlantic Home Health Care LLC dba Haven Home
Health Care LLC, and Titus Tjalas (formerly known as Kirk Tjalas) allege that a slew of
defendants
engaged in a several years’ long pattern and practice of unlawfully sweeping
funds from the bank account(s) of Plaintiff[s] Atlantic Home Health Care,
LLC (“AHHC 1”) and/or Atlantic Home Health Care, LLC dba Haven Home
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Health Care, LLC (“AHHC 2”) into the bank accounts of multiple other
insider entities to deplete the funds of AHHC 1 and AHHC2 simultaneously
leaving Plaintiffs with significant tax liabilities and tax liens and with a loss
of millions of dollars in income.
(Doc. 90 at 1.)
Plaintiffs commenced this action on July 3, 2024. (Doc. 1.) On September 18, 2025,
this Court granted Defendant Brian Friedberg’s Motion to Adopt the Motion to Strike and
Motion to Adopt Reply to Motion to Strike (Docs. 53, 69), granted the other Defendants’
Motion to Strike (Doc. 51), and struck Plaintiffs’ first amended complaint (Doc. 17). (Doc.
88.)
On October 24, 2025, Plaintiffs filed a second amended complaint (“SAC”). (Doc.
90.) Plaintiffs also filed an Amended Motion to Appoint Receiver (Doc. 93) on October
30, 2025. Plaintiffs request that a receiver be appointed for AHHC 1 and AHHC 2
(collectively, the “Atlantic Companies”), and Defendant Haven EEOI Holdings, LLC
(“Haven EEOI”). (Doc. 93 at 1-2.)
On December 1, 2025, Defendants Jamin Ruark, Lauren Ratiani, Haven Holdings
MI LLC, Haven EEOI, and Charis Healthcare Holdings LLC (the “Haven Defendants”)
and Defendants Kevin Ruark, Janice Ruark, the Charis Foundation Inc., Matthew and
Breeana Saagman, and Absolutely Haven LLC (the “Charis Defendants”) jointly
responded in opposition. (Doc. 103.)
On December 8, 2025, Plaintiffs filed their reply. (Doc. 106.)
II. LEGAL STANDARD
Federal Rule of Civil Procedure 66 “governs the appointment of a receiver in federal
court.” Off. Depot Inc. v. Zuccarini, 596 F.3d 696, 701 (9th Cir. 2010); see also Can. Life
Assurance Co. v. LaPeter, 563 F.3d 837, 843 (9th Cir. 2009). Rule 66 provides:
These rules govern an action in which the appointment of a receiver is sought
or a receiver sues or is sued. But the practice in administering an estate by a
receiver or a similar court-appointed officer must accord with the historical
practice in federal courts or with a local rule. An action in which a receiver
has been appointed may be dismissed only by court order.
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Fed. R. Civ. P. 66.
Appointment of “a receiver is an extraordinary equitable remedy, which should be
applied with caution.” Can. Life, 563 F.3d at 844 (quotation marks omitted). A motion for
appointment of a receiver should be “granted only in cases of clear necessity to protect
plaintiff’s interests in the property.” Solis v. Matheson, 563 F.3d 425, 437 (9th Cir. 2009)
(citation omitted). A district court has “broad powers and wide discretion” in deciding
whether to appoint a receiver. See SEC v. Lincoln Thrift Ass’n, 577 F.2d 600, 606 (9th Cir.
1978); see also Can. Life, 563 F.3d at 845. And the “power of a district court to impose a
receivership or grant other forms of ancillary relief does not in the first instance depend on
a statutory grant of power . . . . [but] derives from the inherent power of a court of equity
to fashion effective relief.” SEC v. Wencke, 622 F.2d 1363, 1369 (9th Cir. 1980).
Although “there is no precise formula for determining when a receiver may be
appointed,” the Ninth Circuit directs courts to consider:
(1) whether [the party] seeking the appointment has a valid claim;
(2) whether there is fraudulent conduct or the probability of fraudulent
conduct, by the defendant;
(3) whether the property is in imminent danger of being lost, concealed,
injured, diminished in value, or squandered;
(4) whether legal remedies are inadequate;
(5) whether the harm to plaintiff by denial of the appointment would
outweigh injury to the party opposing appointment;
(6) the plaintiff’s probable success in the action and the possibility of
irreparable injury to plaintiff’s interest in the property; and,
(7) whether [the] plaintiff’s interests sought to be protected will in fact be
well-served by receivership.
Can. Life, 563 F.3d at 844 (alterations in original) (citation and quotation marks omitted).
No single factor is dispositive, and courts may “consider a host of relevant factors.”
Id. at 845.
III. DISCUSSION
Applying the Canada Life Factors, the Court evaluates whether Plaintiffs have
demonstrated that appointment of a receiver is appropriate in this case.
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A. Valid Claim
The first factor is whether Plaintiffs have a valid claim. Id. at 844. The Court
previously held in its Order denying Defendants’ motions to strike the SAC that Plaintiffs
state a plausible claim for relief that satisfies Rule 9’s heightened pleading standard. (Doc.
108 at 5); Fed. R. Civ. P. 9; see Magma Holding, Inc. v. Au-Yeung, No. 2:20-cv-00406-
RFB-BNW, 2020 WL 2025365, at *9 (D. Nev. Apr. 26, 2020) (finding first factor weighed
in favor of appointing receiver where court determined that the movant “pled legally
plausible claims for civil conspiracy, unjust enrichment, alter ego, and injunctive relief for
an accounting of the property at issue”).*
But the mere fact of a valid claim in this lawsuit is not enough to appoint a receiver
with managerial authority. “Because a receivership is a serious interference with the
opposing party’s property rights, including possession or control, the party seeking the
receivership must show . . . ‘some legally recognized right in that property that amounts to
more than a mere claim against [the opponent].’” Metro. Life Ins. Co. v. Gicana, No. CV
16-08317-RSWL (RAOx), 2019 WL 4316515, at *3 (C.D. Cal. Aug. 2, 2019) (second
alteration in original) (quoting 12 Wright & Miller, Fed. Prac. & Proc. Civ. § 2383 (3d ed.,
Apr. 2019 update)), report and recommendation adopted, 2019 WL 5102461 (C.D. Cal.
Oct. 11, 2019).
Here, Plaintiffs Act Now Management LLC, Act Now Health Care Solutions LLC,
and Tjalas allege a 50% membership interest in AHHC 1, and Act Now Health Care
Solutions LLC and Tjalas allege a 50% membership interest in AHHC 2. (Doc. 90 ¶¶ 8,
11.) The Charis Defendants and the Haven Defendants do not dispute that at least one of
these plaintiffs has a membership interest in the Atlantic Companies. (See Doc. 109 ¶¶ 8,
11; Doc. 110 ¶¶ 8, 11.) Plaintiffs do not appear to have alleged a similar interest in Haven
EEOI, and in their briefing, indicate they do not have such an interest in that entity. (Doc.
* The Court rejects Defendants’ argument that Plaintiffs have filed three separate lawsuits
based on the same operative facts of this case. The first federal lawsuit was dismissed
without prejudice for lack of diversity jurisdiction, Tjalas v. Ruark, No. CV-24-00462-
PHX-DLR, 2024 WL 1142075 (D. Ariz. Mar. 15, 2024), and the state court action was
voluntarily dismissed, Tjalas v. Ruark, CV2024-006092 (Maricopa Cnty., Super. Ct., Jul.
2, 2024). Thus, Plaintiffs’ allegations have never been heard on the merits.
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93 at 10.)
Because the Court has previously determined that Plaintiffs have stated a valid claim
and because it appears undisputed that at least one of the plaintiffs has a property interest
in the Atlantic Companies, the Court finds this factor to weigh in favor of appointing a
receiver.
B. Fraudulent Conduct
The second factor is whether Plaintiffs have presented evidence of Defendants’
alleged fraudulent conduct. See Can. Life, 563 F.3d at 844. “This factor does not require
actual fraud be established, and non-fraudulent conduct can give rise to an inference of
fraud.” KS StateBank Corp. v. Peters, No. CV-25-02576-PHX-ROS, 2025 WL 3294967,
at *4 (D. Ariz. Nov. 26, 2025).
Plaintiffs allege numerous supposed fraudulent activities by Defendants, including
(1) transferring all of the patients and income into a company in which Plaintiffs have no
interest, (2) diverting tens of millions of dollars to various entities, (3) failing to pay payroll
taxes, and (4) “continuing to book all income under [the] Atlantic Companies (despite
having removed all of Atlantic Companies’ income earning assets)” and “booking all
payments by [Haven] EEOI to the IRS or DOJ on behalf of [the] Atlantic Companies (using
income earned from Atlantic Companies’ patients) as ‘loans’ from [Haven] EEOI to
Atlantic Companies.” (Doc. 93 at 10-11.) However, most of Plaintiffs’ supporting evidence
is from Plaintiff Tjalas’ affidavit and his account of events in the SAC. (See id. at 10-11;
Doc. 93-1.)
In response, the Haven and Charis Defendants do not dispute that the SAC “alleges
a sprawling, fraudulent criminal conspiracy.” (Doc. 103 at 5.) Rather, they argue that Tjalas
is the bad actor because of a prior case resulting in a settlement between Plaintiffs and some
of the Defendants with the Department of Justice (“DOJ”) for nearly $10 million. (Id. at 4-
5.) Plaintiffs argue this settlement included a penalty provision that doubles the financial
penalty if the Atlantic Companies default on the settlement payment, otherwise fail to
comply with the settlement agreement, or are found to have provided false financial
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information to the DOJ. (See Doc. 103 at 4-5; Doc. 93 at 4-5); Doc. 36, Cass v. Atl. Home
Health Care LLC, No. CV-20-00202-TUC-AMM (D. Ariz. Feb. 13, 2024) (containing
settlement agreement). The defendants in that case allegedly violated the False Claims Act,
31 U.S.C. § 3729, and unlawfully billed the United States for in-home patient care that was
never provided. See Doc. 1, Cass (May 11, 2020).
The Court cannot definitively determine at this stage whether Defendants have
engaged in fraudulent conduct and/or continued to engage in fraudulent conduct that would
deprive Plaintiffs of their alleged property rights. See Semiserve, Inc. v. Semicon Servs.,
LLC, No. SACV 14-02009-JLS (DFMx), 2015 WL 12914382, at *6 (C.D. Cal. June 17,
2015) (“Because the parties[] heavily dispute the circumstances surrounding the
transactions and accounting decisions that serve as the basis for Plaintiffs’ Motion, the
Court cannot definitively determine at this stage whether Defendant has engaged in
fraudulent conduct . . . .”). This uncertainty would ordinarily cause this factor to be neutral
or weigh against appointing a receiver. But in their answers, the Haven and Charis
Defendants appear to admit that some transfers were made out of the Atlantic Companies
but allege that the “distributions” were proper in light of actions taken by Tjalas. (See Doc.
109 ¶¶ 151-54; Doc. 110 ¶¶ 151-54.) The Court also notes that the Haven Defendants have
asserted counterclaims, cross-claims, and third-party claims and allege that patients and
funds were illegally recruited from the Atlantic Companies and Haven EEOI after Tjalas
allegedly stole proprietary and confidential information. (Doc. 110 at 68-69.)
As stated, given the complexity of the fraud allegations in this matter and because
the record is presently undeveloped, the Court cannot determine if Plaintiffs’ fraud
allegations have merit. But it appears evident from the parties’ pleadings that they generally
agree that something—whether patients, funds, or otherwise—has been taken from the
Atlantic Companies but disagree about who is culpable for such actions and who had the
lawful ability to do it. As another court reasoned in similar circumstances:
At this stage, this Court need not determine who is telling the truth. Both
Plaintiff and Defendants point to movements of money out of the business.
The second and third Canada Life factors, which go to the probability of
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fraud and the danger that the property may be lost, concealed, injured,
diminished in value, or squandered, respectively, would support the
appointment of a receiver regardless of whether Plaintiff is or Defendants are
ultimately found to be the bad actor. There is ongoing misconduct by
someone, which weighs in favor of a court-appointed neutral receiver to
oversee the business until the Court can determine who is at fault.
Rio Verde Plantas, LLC v. O&S Holdings, LLC, No. 3:25-CV-00098-JR, 2025 WL
1141184, at *2 (D. Or. Apr. 17, 2025).
Therefore, the Court finds this factor to weigh in favor of appointing a receiver.
C. Imminent Danger of Property Being Lost, Concealed, Injured,
Diminished in Value, or Squandered
The third factor considers whether Plaintiffs have established that the property is in
“imminent danger of being lost, concealed, injured, diminished in value, or squandered.”
Can. Life, 563 F.3d at 844 (quotation marks omitted). Plaintiffs allege that Defendants
“already removed all of Atlantic Companies’ remaining patients and income earning
capacity into their insider entity [Haven] EEOI” while this case was pending. (Doc. 93 at
11.) Plaintiffs also allege that Defendants Jamin Ruark and Matthew Saagman entered
“multiple predatory and usurious loans selling a percentage of Atlantic Companies’ non-
existent weekly income.” (Id.); see Atl. Home Health Care LLC v. Wynwest Advance LLC,
No. 25-cv-04365-RFL (N.D. Cal.). In the Northern District of California case, Defendants
Jamin Ruark and Matthew Saagman are the plaintiffs and they allege that they were victims
of unlawful lending practices for loans they took out on behalf of Atlantic Home Health
Care LLC. (See Doc. 93-4 at 9-33.)
In response, Defendants allege that Plaintiffs waited too long to seek relief and that
the alleged danger is speculative. (Doc. 103 at 5-6.) However, the action in the Northern
District of California commenced in May 2025, so Plaintiffs were likely not on notice of
the imminent danger of the alleged loan fraud until recently. Also, Defendants Jamin Ruark
and Matthew Saagman admitted that their actions of entering predatory loans would cause
at least one of the Atlantic Companies to “suffer imminent risk of business failure.” (Doc.
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106 at 5; Doc. 93-4 at 26.) Further, according to the allegations in the SAC in this action,
that tax liens have been imposed in the aftermath of the alleged unlawful transfers and that
the Atlantic Companies have been left insolvent and unable to pay tax liabilities also
support that the property is in danger of being lost, injured, or diminished in value. See 54
Dyer LP v. Ambruso, No. 2:21-CV-09306-SVW-SK, 2022 WL 1840344, at *8 (C.D. Cal.
Mar. 21, 2022) (“[T]hat the [tax] liens continue to accrue without any sort of payment
weighs in favor of a receivership.” (emphasis omitted)); Cal. Bank & Tr. v. Shilo Inn, No.
1:12-CV-00141-CWD, 2012 WL 1883474, at *6 (D. Idaho May 22, 2012) (finding this
factor weighed in favor of a receiver where the defendant did “not dispute that it . . . failed
to pay property taxes for two years, and ha[d] not paid its loan obligations since October
of 2011, thereby raising the question of mismanagement if it lacks the resources to meet
its continuing obligations, or at worst, diversion of funds for other purposes”).
On the other hand, it is unclear whether the property is in imminent danger of being
lost, injured, or diminished in value. According to the SAC, the alleged transfers of patients
and money from the Atlantic Companies occurred years ago, and there is nothing to
indicate that (1) there are any other patients or funds to transfer or (2) any action has been
taken on the liens in the time since the alleged transfers occurred. (See also Doc. 93 at 5
(“The transfer of patients to [Haven] EEOI began on or around December 2023 and
continued through June 2024 . . . .”); id. (“As of today, Atlantic Companies no longer have
any patients, assets, or earning capacity—it has all been swept to Jamin’s entities.”); id. at
11 (“Defendants have already removed all of Atlantic Companies’ remaining patients and
income earning capacity into their insider entity [Haven] EEOI—out of the reach of
Plaintiffs.”) (emphasis added).) And Plaintiffs only assume “it is likely Defendants will
simply transfer Atlantic Companies’ patients, assets, and earning capacity through their
many organizations until they can no longer be traced.” (Id. at 6.) Plaintiffs’ argument that
the property is in imminent danger of being lost could therefore reasonably be interpreted
as speculative, which does not support receivership. See Metro. Life Ins., 2019 WL
4316515, at *4 (holding that the movant had “not shown that the property [was] in
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imminent danger of being diminished” because although funds were withdrawn, the
movant did not argue that funds were “currently” being withdrawn).
In addition, Plaintiffs waited months to file their initial motion to appoint a receiver,
again suggesting a lack of imminency. See Giancaspro v. Network Travel Experiences,
Inc., No. CV 22-5745-JFW(Ex), 2022 WL 19569513, at *3 (C.D. Cal. Nov. 3, 2022)
(denying motion to appoint receiver even against allegations that the defendants were
“moving assets and revenues offshore” in part because the plaintiff “waited nearly seven
weeks after filing his Complaint to file his Motion for Receiver”); McCool v. Wilson, No.
EDCV 19-2499 PSG (KKx), 2020 WL 5044193, at *4 (C.D. Cal. Apr. 29, 2020) (“[T]he
fact that Denise delayed for more than a month in seeking the appointment of a receiver
undercuts her assertion that this crisis warrants extraordinary relief . . . .”).
That said, the allegations of patients, funds, and/or information being transferred
from the Atlantic Companies to affiliated entities—which the parties do not appear to
dispute as to some of the transfers—suggests that if the parties in this case “were to have
access to the [Atlantic Companies], there is a possibility that [property] could be concealed
or lost by transfer . . . in response to the litigation in this case.” Magma Holding, 2020 WL
2025365, at *10. And the recent activity of entering into loans that put at least one of the
Atlantic Companies in imminent risk of failure adds to this risk.
Accordingly, the Court finds this factor weighs in favor of appointing a receiver.
D. Inadequate Legal Remedies
The fourth factor is “whether legal remedies are inadequate.” Can. Life, 563 F.3d at
844. Plaintiffs appear to argue that this factor necessarily weighs in their favor because the
Arizona receiver statute, A.R.S. § 12-1241, does not require that a party seeking a receiver
make any showing on this point. (Doc. 93 at 12.) The Court rejects this argument because
federal law, not state law, applies to appointments of a receiver in federal court. See Can.
Life, 563 F.3d at 842 (“Not only does Rule 66 require application of the federal rules in an
action where the appointment of a receiver is sought, it specifically indicates a normative
standard for uniform administration of receiverships in accordance with the historical
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practice in federal courts.” (quotation marks omitted)); see also Zuccarini, 596 F.3d at 701
(“Rule 66 prevails over any state law to the extent it applies.”). That Arizona law does not
require a party moving for a receiver to show that legal remedies are inadequate is thus of
no matter here.
Plaintiffs also allege that the evidence that Defendants entered predatory loans and
transferred assets from the Atlantic Companies means they cannot be trusted with the
assets, and no legal remedy is adequate to prevent further harm to Plaintiffs. (Doc. 93 at
12-13.) In response, Defendants argue that the legal remedies are adequate because
monetary damages are an adequate remedy to Plaintiffs should Defendants be liable. (Doc.
103 at 6.)
The compensatory and equitable relief Plaintiffs seek in this case would generally
weigh against a finding that the legal remedies sought are inadequate. See Semiserve, 2015
WL 12914382, at *6 (“Plaintiffs’ FAC seeks compensatory damages, exemplary damages,
and an accounting, in addition to injunctive relief. Therefore, Plaintiffs themselves suggest
that, at least to a certain extent, damages can compensate them for their injuries.”).
Additionally, Plaintiffs only speculate that all the disputed assets will be diminished prior
to conclusion of the litigation. This is also typically insufficient to show an inadequate
remedy. See Zhou v. Fu, No. 3:24-CV-01944-AB, 2025 WL 1099101, at *3 (D. Or. Apr.
11, 2025) (finding this factor weighed against appointing a receiver where “Plaintiffs
speculate[d] that all the assets [would] be gone prior to conclusion of the litigation”).
But, as discussed above, Defendants Jamin Ruark and Matthew Saagman admitted
that their actions of entering predatory loans would cause Plaintiffs to suffer imminent risk
of business failure. This suggests that the property has a likelihood of being diminished
and Plaintiffs may not be able to receive proper monetary damages if they prevail. (Doc.
93 at 12-13); see HSBC Bank USA, Nat’l Ass’n v. ZNM Holdings, Inc., No. SACV 09-
01000-JVS (MLGx), 2010 WL 11558087, at *3 (C.D. Cal. Apr. 19, 2010) (“Even if
judgment is entered in favor of HSBC, this does not account for the current state of the
property interest and the fact that the interest may become worthless before final resolution
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of the case.”). Additionally, Plaintiffs “seek[] to ensure that the value [they] allegedly
retain[] in these companies is not mismanaged or squandered by [the defendants] through
improper financial transactions.” Magma Holding, 2020 WL 2025365, at *10.
Accordingly, the Court finds that this factor ultimately weighs in favor of appointing
a receiver.
E. Balance of Harms
The fifth factor is whether the harm to Plaintiffs by denial of the appointment
outweighs injury to Defendants. Can. Life, 563 F.3d at 844. Plaintiffs argue that they will
be harmed because Defendants will “waste, diminish, and misappropriate assets” prior to
the conclusion of this case. (Doc. 93 at 13.) Plaintiffs state that Defendants will not be
harmed by appointment of a receiver because a receiver will “simply comply with the law
and not permit improper disbursement of funds or improper or wasteful use of transfer of
assets.” (Id.) In response, Defendants argue that a receivership “could cripple Haven
EEOI’s business and otherwise cause the Defendants irreparable financial harm.” (Doc.
103 at 6.) Defendants further argue that they would be unable to pay the nearly $10 million
dollars in debt owed to the United States pursuant to the DOJ and IRS settlements. (Id.)
The Court finds that Defendants do not demonstrate how a receivership will cripple Haven
EEOI’s business. (See id.)
Thus, the Court finds this factor weighs in favor of appointing a receiver.
F. Probability of Success and Irreparable Injury to Interest
The sixth factor is Plaintiffs’ probability of success in this action and the “possibility
of irreparable injury to [P]laintiffs’ interest in the property.” Can. Life, 563 F.3d at 844.
The Court cannot fully determine the probability of Plaintiffs’ success in this action or if
there will be irreparable injury to their interest due to a lack of an established record at this
stage of the case. Also, as Defendants note (Doc. 103 at 7), “monetary injury is not
normally considered irreparable,” L.A. Mem’l Coliseum Comm’n v. Nat’l Football League,
634 F.2d 1197, 1202 (9th Cir. 1980). Additionally, Plaintiffs have not shown that any of
the alleged transfers of patients or funds caused irreparable injury or, in other words, injury
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that cannot be compensated by damages or other relief to which they are entitled if they
prevail. See Zhuhai Dingfu Phase I Indus. Energy Conservation Inv. Fund, LP v. Zhang,
No. 8:23-cv-02059-MRA-JDE, 2025 WL 2093411, at *2 (C.D. Cal. July 16, 2025)
(“Petitioner fails to show that the result of Respondent’s alleged asset transfers is indeed
irreparable prejudice. Petitioner makes no showing, for example, that Respondent’s assets
will be beyond this Court’s jurisdiction, and speculative injury cannot be the basis for a
finding of irreparable harm.” (citation modified)).
Accordingly, the Court finds this factor to either be neutral or weigh slightly against
appointing a receiver.
G. Interest Well-Served
The seventh and final Canada Life factor is whether Plaintiffs have shown that the
interests they seek to protect will in fact be well-served by receivership. Can. Life, 563
F.3d at 844. “Federal Practice and Procedure highlights a number of well-established
contexts in which [] receivership[s] [are] thought to be appropriate,” such as where (1) “a
secured creditor, lienholder, or mortgagee seeks receivership to end a foreclosure suit or
any other action to enforce one or more outstanding liens”; (2) “a judgment creditor seeks
a remedy for taking possession of a judgment debtor’s property”; (3) “a judgment creditor
seeks to set aside allegedly fraudulent conveyances by the judgment debtor”; (4) “a
judgment creditor has had execution issued and returned unsatisfied”; or (5) “a judgment
creditor is otherwise attempting to preserve property until its claim can be satisfied.” Tryke
Mgmt. Servs. LLC v. Linx Card Inc., No. CV-19-05324-PHX-SRB, 2020 WL 9258369, at
*5 (D. Ariz. Feb. 27, 2020) (alterations in original) (quotation marks omitted). “Central to
each of these well-established contexts is that the party seeking receivership demonstrates
the existence of more than a mere claim.” Id. (quotation marks omitted).
Plaintiffs argue that a “receiver will prevent any further waste and misuse of the
assets, ensure the opportunity for a proper accounting, and protect Plaintiffs’ legal and
equitable rights and remedies in the assets.” (Doc. 93 at 15.) In response, Defendants argue
that it would be out of the ordinary to appoint a receiver because Plaintiffs have claims for
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money damages, and Plaintiffs are not the judgment creditor or a secured creditor. (Doc.
103 at 7-8.) Defendants are correct that most contexts in which receiverships are
appropriate involve judgment creditors. See Tryke Mgmt. Servs., 2020 WL 9258369, at *5.
However, appointing a receiver for executing judgment is just one scenario where
appointing a receiver may be necessary.
For the reasons discussed above, the Court agrees with Plaintiffs that a receiver will
prevent further waste and misuse of assets. Thus, this factor weighs in favor of appointing
a receiver.
H. The Canada Life Factors Conclusion
On balance, the Court finds that the Canada Life factors weigh in favor of
appointing a receiver. While the appointment of a receiver is an “extraordinary equitable
remedy,” it is appropriate here. Can. Life, 563 F.3d at 844-45. The appointment of a
receiver is supported by a majority of the Canada Life factors in this case and there is “clear
necessity to protect plaintiff’s interests in the property.” Solis, 563 F.3d at 437 (citation
omitted). Therefore, Plaintiffs’ Motion for Appointment of Receiver will be granted.
Although Defendants argue that a bond should be required if a receiver is appointed,
Defendants’ cited authority does not persuade the Court that such is required in these
circumstances. (Doc. 103 at 8.) Thus, the Court denies Defendants’ request for a bond.
Also, the Court agrees with Plaintiffs that James E. Cross, Esq. is qualified to be appointed
receiver in this action. (Doc. 93 at 15.)
That said, the question remains as to which entities will be subject to receivership.
Plaintiffs request a receiver over the Atlantic Companies and Haven EEOI. Although the
Court agrees that a receiver is warranted over the Atlantic Companies, Plaintiffs have not
met their burden of showing that a receivership is warranted over Haven EEOI. Appointing
a receiver over the Atlantic Companies would likely preclude affiliated entities from using
their inside access or control to further take any remaining patients, funds, or information,
whether lawful or not. But Plaintiffs have not demonstrated that there is a similar need for
a receiver to manage Haven EEOI or that the same harm would result from permitting
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Haven EEOI to continue to control its operations such that Plaintiffs have no adequate
remedy besides a receivership. See Power Support (USA), Inc. v. Power Support, Ltd., No.
CV 12-10900 BRO (FFMx), 2013 WL 12113231, at *5 (C.D. Cal. June 7, 2013) (finding
that the “drastic relief [of receivership was] unwarranted” in part because the entity had
“every incentive to maintain the company’s assets and grow them” and the alleged conduct
could be “remedied by money damages”); (see Doc. 103 at 7 (stating that “Defendants have
met their obligations under the U.S. and IRS Settlements; i.e., the original obligation of
$22,982,944 has been reduced to 9,566,565.23”)). The allegations and argument in support
of receivership pertaining to Haven EEOI are speculative at best. (See Doc. 93 at 11-12
(“If a receiver is not appointed to control the Atlantic Companies’ assets that have been
illegally diverted to [Haven] EEOI and to control the flow of income, Defendants could
further dissipate Atlantic Companies’ assets beyond the Court’s reach . . . .” (emphasis
added)).) There is thus not the “clear necessity” to appoint a receiver over Haven EEOI
that is present with regard to the Atlantic Companies. See Solis, 563 F.3d at 437 (citation
omitted).
The Court will therefore appoint a receiver over the Atlantic Companies but not
over Haven EEOI. To the extent additional evidence is obtained over the course of
litigation establishing an imminent need for a receiver over Haven EEOI, Plaintiffs may
renew their motion as to Haven EEOI. See, e.g., FTC v. Noland, No. CV-20-00047-PHX-
DWL, 2020 WL 954958, at *15 (D. Ariz. Feb. 27, 2020) (rejecting request to modify an
injunction to allow two affiliates to continue operating because the “receiver’s report
[made] clear that [the] businesses [were] hopelessly entangled . . . and observe[d] no
corporate formalities” such that there was “no practical way to disaggregate them”).
IV. CONCLUSION
Accordingly,
IT IS ORDERED granting in part Plaintiffs’ Amended Motion to Appoint Receiver
(Doc. 93).
. . . .
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IT IS FURTHER ORDERED appointing James E. Cross, Esq. as receiver for
Atlantic Home Healthcare, LLC dba Haven Home Health and Atlantic Home Healthcare,
LLC.
IT IS FURTHER ORDERED that the parties must meet and confer and submit a
proposed order setting forth the terms of the receivership no later than April 16, 2026.
IT IS FINALLY ORDERED that if the parties are unable to agree on the terms of
receivership, each party may submit a proposed order.
Dated this 26th day of March, 2026.
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