Ocean Blue Investments I, LLC v. Saeed Farkondehpour, et al.

(Stanley Mosk Courthouse: Dept. 833) August 20, 2026 DEPARTMENT 833 LAW AND MOTION RULINGS

Case No. BC709417 v. Hearing: August 20, 2026 Location: Stanley Mosk Courthouse Department: 833 Saeed Farkondehpour, et al. Judge: Joseph Lipner [Tentative] Order on the Receiver's Motion for Instructions Re Final Accounting Issues

INTRODUCTION

This action arises from multiple disputes over real property. For the reasons stated below, the court now issues further instructions to the Receiver regarding the final accounting issues. These include the following:

· Defendant Saeed Farkhondehpour ("Farkhondehpour") owes $345,934.91 to the Nemans for underpayment of interest which was covered by the Nemans.

· The Nemans will not be required to pay $860,267 to cover the loan Farkhondehpour made to Medallion, Inc.

· Farkhondehpour is not entitled to credits as a result of the Receiver paying property taxes.

· Farkhondehpour should get no reimbursement for expenses that his trust incurred on behalf of the Medallion

· Farkhondehpour will be charged $152,460 for security deposits.

· Farkhondehpour will pay $9,130.08 for expenses that were not reimbursed.

· Farkhondehpour shall pay Ocean Blue $237,543.01 to balance the capital accounts.

· The Court declines to make any decision on how costs should be allocated until the time of the Receiver's Final Report and Account.

The Court sets an OSC: Receiver Status Conference Hearing for December 9, 2026 at 09:30AM.

FACTS AND PROCEDURAL HISTORY

This action arises from multiple disputes over real property. In June 2018, Plaintiffs Ocean Blue Investments I, LLC ("Ocean Blue"), Morad Behrooz Neman ("Neman"), Sion Neman, and Hersel Neman (collectively, "Plaintiffs" or the "Nemans") filed a complaint against Defendant Farkhondehpour and related entities ("Defendants") for various causes of action related to their business ventures and investments in real estate.

In September 2018, the court granted Defendant's motion to compel arbitration and stayed this litigation. An arbitration was held before Hon. Charles W. McCoy Jr. (Ret.), who rendered the March 9, 2021 Partial Final Award and the February 4, 2022 Final Award ("Final Award"). Among other things, the Final Award called for the division of a property known as the Medallion. (Alsbrook Decl., P. 2.)

Judge McCoy refers to two parcels on the property known as Medallion: Medallion Land and Medallion Building. (Alsbrook Decl., P. 2.) Consistent with the arbitration award, Ocean Blue received the Medallion Building, while the entity owned by Defendant Farkhondehpour, Illusion Holdings, LLC ("Illusion") took Medallion Land. (Alsbrook Decl., P. 2.)

The court (Beckloff, J.) appointed Blake Alsbrook (the "Receiver") as receiver to effectuate the arbitration award. Subsequently, the court entered orders expanding the receivership and directed the Receiver to, among other things, take sole possession and control over the Medallion Land and Medallion Building; obtain financial information concerning the receivership properties; and retain a CPA and oversee his preparation of financial statements for the Medallion. (See Court Order filed April 21, 2025 at 1; Alsbrook Decl. P.P. 3-7.)

Starting in 2022, the Receiver retained a certified public accountant, Dominic LoBuglio, to review financials associated with Medallion and prepare financial statements necessary for the preparation of or amendment to 2022 tax returns for Medallion. The CPA's report and conclusions took extra time because Farkhondehpour had been responsible for the management of Medallion through March 31, 2022. (Lobuglio Decl., P.P. 2-4.)

Farkhondehpour's accountant failed to provide the Receiver's accountant with much of the requested documentary evidence or adequate explanations. (Lobuglio Decl., P.P. 4-5.) According to the Receiver's accountant, Farkhondehpour and his accountant engaged in questionable accounting practices, as they managed Medallion, prior to the Receiver. These questionable accounting practices included (a) operating without a bank account for several months; (b) failing to maintain proper capital accounts for the purported tenancy-in-common; (c) paying Farkhondehpour directly instead of through tenancy-in-common bank accounts; (d) making numerous year-end adjustments or corrections while refusing to explain such adjustments or accepting responsibility. (Lobuglio Decl., P. 8.)

Farkhondehpour and his accountant also failed to provide comprehensive explanations of the QuickBooks file balance sheet accounts, profit and loss statement accounts, capital account transactions, and journal entries. (Lobuglio Decl., P. 9.) Farkhondehpour and his accountant also did not explain why the finances of the tenancy in common were commingled with an S corporation named The Medallion, Inc. (Lobuglio Decl., P. 10.)

On September 5, 2024, the separation of the Medallion Land and Medallion Building real properties became complete. (Alsbrook Decl., P. 8.) In April 2025, the Court directed the parties to mediation, and reserved accounting issues for arbitration if mediation was unsuccessful. Farkhondehpour refused to attend arbitration as the Court ordered.

On October 22, 2025, the court (Goorvitch, J.) held a hearing on an order to show cause ("OSC") re: why the court should not order arbitration on certain remaining accounting issues, and the parties were directed to meet-and-confer regarding a stipulation to attend arbitration. (Minute Order filed October 22, 2025.)

On February 18, 2026, the court held a hearing and determined that, because of Defendant's refusal to attend arbitration, it should schedule an OSC re: why it should not decide all remaining accounting issues. The court ordered the Receiver to file a report and recommendation concerning all outstanding accounting issues. The court (Goorvitch, J. and Lipner, J.) authorized the parties to file responses to the Receiver's reports and also supplemental oppositions to the Receiver's reply. (Minute Orders filed February 18, 2026 and May 19, 2026.)

EVIDENTIARY OBJECTIONS

Farkhondehpour raised 5 objections to evidence submitted by the Receiver and his accountant. The Court overrules all of the objections.

JUDICIAL NOTICE

The Court grants Farkhondehpour's requests for judicial notice.

DISCUSSION

A. The Court May Decide the Final Accounting Issues in the Receivership Proceedings

"A receiver is an officer and agent of the appointing court and is under the direct control and supervision of the court." (County of Sonoma v. Quail (2020) 56 Cal.App.5th 657, 672.) " Section 568 of the Code of Civil Procedure --first enacted in 1872--gives a receiver appointed under section 564 very broad powers." (SunTrust, supra, 32 Cal.App.5th at p. 659, 244 Cal.Rptr.3d 118.)

Specifically, "[t]he receiver has, under the control of the court, power to bring and defend actions in his own name, as receiver; to take and keep possession of the property, to receive rents, collect debts, to compound for and compromise the same, to make transfers, and generally to do such acts respecting the property as the court may authorize." (Code Civ. Proc., Sec. 568, italics added.) (County of Sonoma, supra, 56 Cal.App.5th at 672.)

Plaintiffs "request that the Court accept and adopt the CPA's Second Revised Report and Conclusions, and enter all accounting determinations consistent therewith." (Plaintiffs' Response 2:26-28.) Defendants "request that the Court adopt their recommendations and proposed adjustments as stated herein and in Ms. Kinsel's declaration and report." (Oppo. 15-16.) Therefore, the parties have stipulated that the court may rule on the accounting issues presented with the Receiver's motion.

Costs, fees, and expenses associated with a receiver are within the sound discretion of the trial court. (Luchs v. Ormsby (1959) 171 Cal.App.2d 377, 389.) The amount of fees awarded to a receiver is in the sound discretion of the trial court and in the absence of a clear showing of an abuse of discretion, a reviewing court is not justified in setting aside an order fixing fees. (Southern California Sunbelt Developers, Inc. v. Banyan Limited Partnership (2017) 8 Cal.App.5th 910, 922.) When a party makes the appointment of a receiver necessary, it is proper to impose costs, fees, and expenses on that party. (Ibid.)

As a general rule, the costs of a receivership are primarily a charge upon the property in the receiver's possession and are to be paid out of said property. (City of Sierra Madre v. SunTrust Mortgage, Inc. (2019) 32 Cal.App.5th 648, 657.)

B. Underpayment of Interest

The Arbitration Award called for the division of the loan, which is a joint obligation of Illusion and Ocean Blue, held by First Credit Bank ("Medallion Loan") that encumbers the Medallion Building and the Medallion Land. (Alsbrook Decl., P. 9.) Specifically, the Arbitration Award found that the parties are bound by the 2017 Spreadsheet agreement (the "2017 Spreadsheet"), which assigned $24,692,038 of the balance of the Medallion Loan to Ocean Blue and $4,592,038 of the balance to Illusion. (Alsbrook Decl., P.P. 9a, 9b.)

While the 2017 Spreadsheet allocated a balance of $29,284,07, in reality the balance of the Medallion Loan at the time was approximately $31,000,000. (Alsbrook Decl., P. 11.) The Nemans had previously agreed, pursuant to the 2015 Medallion Agreement, to pay down $3,000,000 of the Medallion Loan balance. (Alsbrook Decl., P. 11.) At the time of the 2017 Spreadsheet, however, the Nemans had only paid $1,000,000. Thus, as noted by Judge McCoy, approximately $2,000,000 of the loan balance was in dispute. (Alsbrook Decl., P. 11.)

In the March 7, 2022 order, the court (Beckloff, J.) directed the Receiver to supervise the division of the Medallion Loan pursuant to the terms of the Arbitration Award. In the September 16, 2022 order, the Court (Beckloff, J.) directed the Receiver to meet-and-confer with the parties regarding the division of the Medallion Loan. These orders authorized the Receiver to propose a division of the Medallion Loan, consistent with the Arbitration Award, and to request further instructions from the Court with respect to such proposal.

In its April 21, 2025 Order, this Court (Goorvitch. J.) determined that responsibility for the remaining part of the Neman loan should be divided equally between the Nemans and Farkhondehpour. (Alsbrook Decl., P. 12.) The question now turns to who should pay the interest on the remaining part of the Neman loan.

The Receiver argues that for a number of years, Farkhondehpour was not making payments sufficient to cover the total amount of interest owed on his portion of the loan. (Alsbrook Decl., P. 21.) During this entire period, the Nemans covered the entire shortfall thereby paying more interest than owed on their portion. (Alsbrook Decl., P. 21.) The Receiver has calculated that Farkhondehpour owes $345,934.91 to the Nemans for underpayment of interest which was covered by them. (Alsbrook Decl., P. 21; Lobuglio Decl., P. 23.)

The Receiver argues, and the Court agrees, that conceptually, it makes sense to require Farkhondehpour to pay the interest that had been covered by the Nemans, because otherwise the Nemans would be subject to a double penalty: Defendants correctly note that, in response to a prior, ex parte application filed by the Nemans, the Receiver reported that the Nemans should be responsible for interest accruing on the additional $2,000,000 loan balance, given that Judge McCoy determined that it was the Nemans' responsibility to pay that amount and that they breached the 2015 Medallion Agreement by failing to do so.

However, after more carefully reviewing Judge McCoy's Final Award, he specifically addressed the Nemans' failure to pay $2,000,000 toward the Medallion Loan and determined it to be a breach of contract, and penalized the Nemans accordingly, ordering that they pay $1,000,000 directly to the Farkhondehpour parties. (Ex. 2 p. 75.) After discussing this matter with his accountant, the Receiver realized that, by requiring that they pay $1,000,000 directly to Farkhondehpour, Judge McCoy was accomplishing the same thing as if the Nemans had paid down the loan by $2,000,000, because the Nemans were equally responsible for the loan.

As such, if the Nemans were required to pay $1,000,000 to Farkhondehpour and pay down an additional $2,000,000 of loan balance, they would be subjected to a double penalty. Accordingly, the Receiver suggests that the $2,000,000 in remaining loan balance should be divided evenly between the parties. (May 20, 2026 Receiver Reply to Defendant's Opposition.)

Farkhondehpour argues that the Receiver previously admitted to the Court (Beckloff, J. and Goorvitch, J.) that the Neman's are responsible for interest on the $2 million principal. (May 7, 2026 Opposition, 4:12-13.) Additionally, Farkhondehpour argues that Judge Beckloff previously ruled in March 2024 that the Nemans should bear interest incurred on the $2,000,000 loan balance. (March 24, 2026 Receiver Motion, 9:26-28; May 7, 2026 Opposition, 4:6-7)

Farkhondehpour's argument does not account for one key bit of information: Judge Beckloff's ruling occurred prior to this Court's (Goorvitch, J.) decision on April 21, 2025 to split the payment of the loan. (March 24, 2026 Receiver Motion, 9:28.) Because the underlying facts regarding the payment of the loan has changed, the Court does not believe Judge Beckloff's denial of the Neman's application acts as a bar to the Court revisiting the interest issue.

Farkhondehpour also gives several legal arguments why the Court cannot require a payment of $345,934.91 to the Nemans. First, Farkhondehpour argues that the Nemans did not seek reconsideration of Judge Beckloff's previous order under Code of Civil Procedure Section 1008. (May 7, 2026 Opposition, 5:21-6:16.) Second, Farkhondehpour argues that only Judge Beckloff can reconsider the interest order.

First, as noted above, the Court concludes that it is not reconsidering Judge Beckloff's order, which was made to address a different situation than the one now facing the Court. Second, even if it were to be considered a reconsideration of the prior order, such reconsideration is permitted. Farkhondehpour's contrary arguments are incorrect. Le Francois v. Goel (2005) 35 Cal.4th 1094, 1108 allows the Court to reconsider rulings on its motion and even allows parties to ask the Court to reconsider rulings. However, a party cannot file a written motion to reconsider if it does not satisfy the requirements of Code of Civil Procedure Section 1008. (Ibid.)

Here, Judge Goorvitch asked the Receiver to submit briefing addressing all outstanding accounting issues. (Minute Order of February 21, 2026.) This was not an affirmative motion made by the Receiver; this was a request by the Court to address accounting issues, which include the question of payment of interest. Farkhondehpour has had months to address the interest question and was given supplemental briefing to address the interest question as well.

There is also no requirement that the same judge hear a motion for reconsideration when the original judge is unavailable. As the case that Farkhondehpour explains, when the judge who made the initial ruling is unavailable to reconsider the motion, a different judge may entertain the reconsideration motion. (In re Marriage of Oliverez (2015) 238 Cal.App.4th 1242, 1248.) Judge Beckoff is no longer available to hear a motion for reconsideration; another judge can hear such a motion.

Farkhondehpour next argues that the Nemans must bear all interest payments as a form of damages because "additional interest thus is the direct, mathematical consequence of the $2 million in unpaid principal, and the interest 'flow[s] directly and necessarily from [the Neman's] breach of contract' or it is a 'natural result of [their] breach." (May 7, 2026 Opposition, 9:27-10:5.)

Farkhondehpour's rendition of the facts is incomplete. The interest accruing on the principal $2,000,000 loan balance is not the result of the Plaintiffs' breach, but rather because both Plaintiffs and Defendants entered into a contractual loan agreement to borrow money that bears mortgage interest. One portion of the loan belongs to Plaintiffs and they must bear their own interest. The other belongs to Defendants and they must bear their own interest.

The principal balance of $1,000,000 has been allocated to Defendants by Judge Goorvitch, and it is difficult to understand how or why they should not be responsible for contractual interest accruing on their principal. If Defendants were not required to pay interest, could they opt to never pay down the principal and require the Nemans to pay the interest on the loan into perpetuity? That would be an absurd result.

Next, Farkhondehpour argues that Nemans must bear the interest as damages arising from their own breach. (July 9, 2026 Supplemental Opposition, 1:19-2:11.) Farkhondehpour conflates breach damages with contractual interest on loan principal. The arbitration fully compensated Defendants for the breach by awarding $1,000,000; the interest accrued because the parties borrowed under the Medallion loan, and once this Court determined Defendants owned an additional $1,000,000 of principal, the corresponding interest must follow.

Farkhondehpour also personally attacks the Receiver, arguing that he is only presented the Neman's position, omitting Farkhondehpour's position, and concealing past statements he has made to Judge Goorvitch and Judge Beckloff. (May 7, 2026 Opposition, 7:11-7:14.) Farkhondehpour suggests the Receiver is not complying with his ethical obligations and is seeking to mislead the Court. (May 7, 2026 Opposition, 7:15-8:6.)

The attacks on the Receiver are baseless. In his declaration, the Receiver noted (1) that Judge Beckloff previously denied an Application by the Nemans to require Farkhondehpour to make interest payments moving forward; and (2) Farkhondehpour has not yet had an opportunity to brief the issue of interest and the Receiver will await Farkhondehpour's briefing before making a final recommendation to the Court. (March 24, 2026 Receiver Motion, 9:26-10:4.) The Receiver specifically flagged that he was awaiting to hear from Farkhondehpour before making a final recommendation.

Finally, Farkhondehpour argues that the proposed interest adjustment was decided in arbitration and cannot be relitigated here. (July 9, 2026 Supplemental Opposition 1:10-2:11.) The interest issue did not arise until this Court allocated ownership of the disputed principal, which occurred after arbitration. Claim preclusion bars only claims that were litigated or could have been litigated in the prior proceeding, however, it "is not a bar to claims that arise after the initial complaint is filed" or to "new rights acquired pending the action which might have been, but which were not, required to be litigated." (Allied Fire Protection v. Diede Construction, Inc. (2005) 127 Cal.App.4th 150, 155.)

The interest issue cannot be precluded here, where the operative facts necessary to allocate the disputed mortgage interest did not arise until 2025 when Judge Goorvitch allocated ownership of the disputed principal. Based on all of the evidence before the Court, Farkhondehpour owes $345,934.91 to the Nemans for underpayment of interest which was covered by the Nemans.

C. Defendants' Loan to Medallion

Farkhondehpour argues that the Nemans should pay $860,287 to cover the loan Farkhondehpour made to the Medallion, Inc. Farkhondehpour is referencing a loan agreement with a joint venture entity named The Medallion Inc., formed for purposes of managing the jointly owned property: "The Farkhondehpour GC Irrevocable Trust loaned The Medallion Inc. $1,010,287 in 2015." (Farkhondehpour Decl., P. 2.)

The Medallion Inc. is not a party to this case and was not a party to the arbitral proceeding before Judge McCoy. Therefore, the Court cannot require Nemans to cover the loan. Additionally, "[t]here is no promissory note, no evidence of loan funding, and no receipt of loan proceeds anywhere in the Medallion joint venture's QuickBooks accounting system, which dates back to 2004. The only entry related to this loan was recorded in QuickBooks on December 31, 2020, and the CPA's description of the adjustment labels it as Adjust Client 2020 TB to Tax Return." (Lobuglio Reply Decl., P. 10.)

Farkhondehpour also argues that the loan was addressed in arbitration, and because the Nemans did not contest the existence of the loan in arbitration, they cannot now contest it. The Court has not been able to find any mention of the loan in the Final Arbitration Award and the Court has not been able to determine that the loan was actually or necessarily decided as part of the arbitration such that res judicata might apply. The fact that the loan may have appeared on balance sheets reviewed during the arbitration does not establish that this specific issue was litigated or submitted for determination

Thus, the Court concludes that the Nemans will not be required to pay $860,267 to cover the loan Farkhondehpour made to Medallion, Inc.

D. Property Taxes

The Receiver paid property taxes totaling $251,955.13 in 2022 and 2023. (Alsbrook Decl., P. 23.) The property taxes were made for parcels ultimately awarded to the Nemans. (Alsbrook Decl., P. 23.) The Receiver believes all of the property tax payments made during the receivership were properly made from joint funds. (Alsbrook Decl., P. 23.)

Farkhondehpour asserts he should be credited for property taxes paid by the Receiver with joint funds. (Kinsel Decl., P. 12.) Farkhondehpour asserts the credit should total $68,290.86, including one payment of $33,781.23, and one payment of $34,509.63. (Kinsel Decl., P. 17.)

This proposal is completely unrealistic. The $33,781.23 payment was for delinquent property taxes that Defendants failed to pay from 2021. (Alsbrook Decl., P. 23.) Farkhondehpour presents no competent evidence to the contrary. The $34,509.63 payment was made toward a parcel of real property with an APN ending in 029. (Alsbrook Decl., P. 23.) Funds from that parcel did not begin to be distributed to the Nemans until 2023, as reported to the parties. Moreover, prior to turnover to the Nemans, the Receiver was collecting parking revenue generated from Parcel 29 and used those funds to pay various expenses.

The Court sees no reason to doubt the Receiver's analysis of property taxes.

E. Legal Fees

Farkhondehpour requests reimbursement for expenses that his trust incurred on behalf of the Medallion. (Farkhondehpour Decl., P. 19.) However, the legal bills attached to Defendants' accountant's declaration state that Investment Consultants, LLC, Saeed Farkhondehpour and Illusion Holdings, who are all Defendants, are the clients, not The Medallion Inc. Second, The Medallion Inc, is not a party to this action, so the relief cannot be granted.

F. Security Deposits

Prior to the transfer of Farkhondehpour's 50% interest in Medallion to the Nemans, Farkhondehpour and the Nemans shared liability equally because of their 50%/50% ownership of Medallion. (Alsbrook Decl., P. 20.) When real estate rental property is sold or transferred, the liability for tenants' security deposits is transferred to or assumed by the buyer or transferee. (Alsbrook Decl., P. 20.)

In this case, the Nemans became liable for Farkhondehpour's 50% share of the tenant's security deposits in addition to their 50% share of these deposits. (Alsbrook Decl., P. 20.) Such transfer or assumption of liability is normally handled in escrow by charging the seller or transferor and crediting the buyer or transferee. (Alsbrook Decl., P. 20.) Because this property transfer was not handled by an escrow, but by me recording deeds, the transfer of liability should be accomplished by adjustment of the loan allocation. (Alsbrook Decl., P. 20.)

The receiver argues that Farkhondehpour should be charged $152,460 (50% of a total $304,920 in deposits). (Alsbrook Decl., P. 20.) Farkhondehpour argues that this charge is not necessary because (1) Farkhondehpour transferred all remaining funds in the Medallion's bank account to the Receiver when he took over the Medallion; (2) The Neman's have apparently not been returning tenant deposits based on over two dozen complaints from tenants; and (3) if the Neman's provide supporting documentation showing that they have been paid tenant deposits more than the amount the Neman's claim they received, Farkhondehpour is willing to pay such amounts provided they are legitimate. (May 7, 2026 Opposition, 14:16-25.)

This argument is unrealistic. As the Receiver states, security deposits are an ongoing liability and the parties did not segregate tenant deposits that could then be turned over to Plaintiffs. Moreover, the funds turned over to the Receiver by Farkhondehpour were admittedly COVID relief checks, not tenant deposits. Farkhondehpour will be charged $152,460 for security deposits.

G. Payment of Expenses

The Nemans have made various payments for expenses that were not reimbursed, totaling $18,260.17. (Alsbrook Decl., P. 22.) Since the Nemans are no longer partners with Farkhondehpour, they are due reimbursement directly from Farkhondehpour for 50% of this amount ($9,130.08). (Alsbrook Decl., P. 22.)

Farkhondehpour did not raise this issue in the opposition papers. Therefore, the Court determines that Farkhondehpour shall pay $9,130.08 for expenses that were not reimbursed.

H. Equalization Payments

The accountant who worked with the receiver suggests that Farkhondehpour should pay Ocean Blue $237,543.01 to balance the capital accounts. (Lobuglio Decl., P. 14.) Farkhondehpour did not raise this issue in the opposition papers. Therefore, the Court determines that Farkhondehpour shall pay Ocean Blue $237,543.01 to balance the capital accounts.

I. Costs of Administration

The Receiver has incurred $73,045.44 in fees and costs and his CPA has incurred $58,145.41 in costs. (Alsbrook Decl., P.P. 24, 26.) Farkhondehpour argues costs should be allocated equally, since accounting adjustments were "complicated" and required a substantial amount of time by everyone involved in this matter. May 7, 2026 Opposition, 15:3-4.)

The Court declines to make any decision on how costs should be allocated until the time of the Receiver's Final Report and Account.

CONCLUSION

The Court now issues further instructions to the Receiver regarding the final accounting issues. These include the following:

· Farkhondehpour owes $345,934.91 to the Nemans for underpayment of interest which was covered by the Nemans.

· The Nemans will not be required to pay $860,267 to cover the loan Farkhondehpour made to Medallion, Inc.

· Farkhondehpour is not entitled to credits as a result of the Receiver paying property taxes.

· Farkhondehpour should get no reimbursement for expenses that his trust incurred on behalf of the Medallion

· Farkhondehpour will be charged $152,460 for security deposits.

· Farkhondehpour will pay $9,130.08 for expenses that were not reimbursed.

· Farkhondehpour shall pay Ocean Blue $237,543.01 to balance the capital accounts.

· The Court declines to make any decision on how costs should be allocated until the time of the Receiver's Final Report and Account.

IT IS SO ORDERED.

Dated: August 20, 2026 ______________________ Joseph Lipner Superior Court Judge | Home -->)" -->