Opinion
A149113 A150785 A150903 A151294 A151848 A151865 A151903 A151978 A151979 A151980 A152835 A153035 A154121 A154122 A154124 A154125 A154619 A154834 A156485 A157199 A157386 A157388 A157856
10-23-2019
ARNOLD LEONG, Plaintiff and Respondent, v. WARREN HAVENS, Defendant and Appellant; SUSAN UECKER, as Receiver, etc., Real Party in Interest and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. 2002-070640)
Arnold Leong and Warren Havens have been involved, for over 17 years, in contentious litigation regarding the ownership and control of two entities holding licenses issued by the Federal Communications Commission (FCC or the Commission). Twelve years after the action was compelled to arbitration, the trial court appointed a receiver and granted a preliminary injunction restraining Havens from interfering with the receivership (the Receivership Order). (See Code Civ. Proc., § 1281.8.) In a prior unpublished opinion, Leong v. Havens (Aug. 23, 2017, A147027), this Division affirmed the Receivership Order.
Undesignated statutory references are to the Code of Civil Procedure.
In the time since the Receivership Order was entered, Havens has appealed from a multitude of trial court orders involving the receivership, including the 23 orders involved herein, while also continuing to willfully disobey the Receivership Order. Susan Uecker, acting as receiver for the receivership entities, moved to consolidate Havens's 23 different appeals and dismiss them under the disentitlement doctrine. We agree the equities balance in favor of dismissal and grant the motion.
BACKGROUND
In addition to the exhibits filed in support and in opposition to the motion, the background is taken from the prior judicial opinion (A147027) and the records filed with this court in that appeal and in a related writ proceeding (A150411), of which we take judicial notice. (Evid. Code §§, 452, 459.) Havens also asks us to take judicial notice of the documents attached as exhibits to his declaration in opposition. His unopposed request for judicial notice is granted, in part, with the exception of exhibit 4 of "part 2." (Ibid.)
A.
In 1999 and 2001, Leong and Havens entered into written limited liability company agreements establishing Verde Systems LLC (Verde) and Telesaurus Holdings GB LLC (Telesaurus). The primary business of both Verde and Telesaurus is the acquisition and transfer of valuable radio spectrum licenses for the development of wireless networks. Leong alleges he invested over a million dollars in the enterprise under an oral agreement that he and Havens would share ownership and control "50-50." Havens later disavowed the existence of any such agreement and, in 2002, Leong sued Havens, seeking declaratory relief, dissolution, an accounting, and damages on breach of contract, fraud, and breach of fiduciary duty causes of action. After arbitration was compelled, Leong amended his complaint to add six entities (all eight entities are referred to collectively as the Receivership Entities) as alter ego defendants.
In April 2015, in an administrative proceeding before the Commission to which Havens and two of the Receivership Entities were parties, Administrative Law Judge Richard L. Sippel found that Havens and the two entities "engaged in patterns of egregious behavior that . . . warrant a separate proceeding in which several issues as to the character qualification of [Havens] and the [Receivership Entities] to hold Commission licenses are examined." The order certified "such deliberate transgressions, together with an account of [Havens's] history of disruptive disregard of orders and otherwise contemptuous behavior, to the Commission for determination as to whether a separate proceeding should be designated to decide whether [Havens] and his companies qualify to hold [Commission] licenses."
On Leong's motion in response to that order, the trial court appointed Uecker as receiver to "take control and possession of all property and assets of [the Receivership Entities]." The Receivership Order also granted a preliminary injunction, which enjoins Havens from engaging in certain conduct. As relevant here, the trial court prohibited Havens from, among other things, "interfering in any manner with the discharge of the receiver's duties under [the Receivership Order]," "[c]ommunicating with the FCC regarding the FCC Licenses or the Receivership Entities," and "[c]ommencing, prosecuting, continuing to enforce, or enforcing any suit or proceeding in the name of the Receivership Entities . . . or otherwise acting on behalf of the Receivership Entities." (Italics added.) At a hearing less than two weeks after the Receivership Order issued, the Honorable Frank Roesch orally clarified that the restraint on communicating with the Commission did not enjoin Havens from communicating with the Commission about licenses not owned by one of the Receivership Entities or about personal sanctions against him.
Havens appealed from the Receivership Order. A different panel of this Division affirmed on the merits. In November 2017, our Supreme Court denied Havens's petition for review. (Leong v. Havens (A147027, Aug. 23, 2017), review denied Nov. 15, 2017.)
B.
Havens's disregard for the trial court's orders began while the former appeal (A147027) was pending. Neither the order appointing a receiver nor the prohibitory portions of the injunction were automatically stayed pending appeal. (§ 917.5 [order appointing receiver is not stayed unless an undertaking is given, in an amount fixed by trial court]; Kettenhofen v. Superior Court (1961) 55 Cal.2d 189, 191 ["appeal stays a mandatory but not a prohibitory injunction"].) Havens did not perfect a stay under section 917.5. Nor did he seek a writ of supersedeas from this court. (Cal. Rules of Court, rule 8.824; § 923; Ironridge Global IV, Ltd. v. ScripsAmerica, Inc. (2015) 238 Cal.App.4th 259, 267-268.)
Nonetheless, four months after entry of the Receivership Order, Havens filed a petition in the United States Bankruptcy Court for the District of Delaware seeking Chapter 11 reorganization for receivership entity Skybridge Spectrum Foundation (Skybridge). In May 2016, the Delaware bankruptcy court granted Leong's motion to dismiss the Chapter 11 filing. Havens filed an appeal of the dismissal order, which remains pending before the United States District Court for the District of Delaware.
In June 2016, the receiver filed a motion to enjoin Havens "from making any submissions to the [Commission] without the approval of the [r]eceiver or [the trial c]ourt." The filing prompting the receiver's motion indicated it was made by Havens individually and as a "Member and Assignee" of one of the Receivership Entities. In response, Judge Roesch denied the receiver's requested order on the grounds it would constitute an unconstitutional prior restraint of speech. Instead, Judge Roesch entered an order (the July 2016 Order) making clear Havens could ask the receiver to make certain communications to the Commission or move the superior court to instruct the receiver. The July 2016 Order made clear that Havens "is not to communicate with the [Commission] or to any other person or entity in a manner that might lead to the recipient of the communication to infer that the communication from [Havens] may be on behalf of any Receivership Entity."
Undeterred, in August 2016, Havens, purportedly acting for himself and on behalf of Skybridge and a non-Receivership Entity, Polaris PNT PBC (Polaris), filed a petition for involuntary bankruptcy of an entity he called the "Leong Partnership." Havens identified the Commission licenses "held by Susan Uecker as Receiver" as the principal assets of the "Leong Partnership." Havens also asserted the bankruptcy petition was filed "to meet an urgent need for protection of" the Receivership Entities. Havens also argued, to Judge Roesch, that "the involuntary bankruptcy filing against the Leong Partnership affects the Receivership Entities" and created an automatic bankruptcy stay. Three days after his initial filing, Havens dismissed Skybridge as a petitioner in the involuntary bankruptcy action. When the bankruptcy court granted summary judgment in Leong's favor on Havens's and Polaris's involuntary bankruptcy petition, Havens filed an appeal that remains pending before the Ninth Circuit Court of Appeals.
The Honorable Robert B. Freedman found Havens in contempt. Because Havens conceded knowing of the preliminary injunction portion of the Receivership Order before filing the involuntary bankruptcy petition, Judge Freedman found Havens "knowingly chose to violate" and "willfully disobeyed" the prohibition against interfering with the receiver's discharge of her duties. For this and another act of purported contempt (involving a September 2016 filing with the Commission), Judge Freedman imposed a 10-day jail sentence and a fine of $2,000 payable to the trial court. Judge Freedman also ordered Havens to pay the receiver's fees and costs.
Havens filed a petition for writ of habeas corpus/prohibition/certiorari (A150411) with this court. Ultimately, this Division concluded the most reasonable construction of the trial court's orders permitted Havens to communicate with the Commission on his own behalf as long as he clearly indicated he was not speaking on behalf of any Receivership Entity. Therefore, this Division concluded the trial court erred in finding Havens's September 2016 Commission filing violated a court order and issued an alternative writ. The trial court complied with the alternative writ and the writ was discharged. With respect to the involuntary bankruptcy petition, however, this Division did not disturb that portion of the contempt judgment, concluding Havens had not "persuasively demonstrated an entitlement to writ relief regarding that count."
In June 2018, Havens took another tack to disrupt the receivership. Despite having previously (in 2015) unsuccessfully attempted to remove the case to federal court, Havens filed another notice of removal. The notice of removal was filed on the same day as his opposition to the receiver's motion for approval of a proposed asset sale. Havens later argued, in two separate Commission filings, that by filing a removal notice he was able to unilaterally return control of the Receivership Entities to himself. The district court remanded the matter, on alternate grounds of untimeliness and lack of subject matter jurisdiction, to the superior court on September 7, 2018.
Shortly before the Receivership Order was entered in 2015, Havens removed the case to federal court on the theory it presents a Commission licensing dispute—purportedly triggering federal question jurisdiction. The district court remanded the matter to superior court, on an expedited basis, concluding it "was fundamentally a state court dispute" concerning only issues of business ownership and control.
Less than two weeks later, Havens filed a third notice of removal. This time he noted his plan to file a "motion to dissolve the State Court receivership . . . because there is no valid basis in federal (or state) law for a receivership." The day before the hearing on the remand motion, Havens filed an "Emergency Petition For Writ of Mandamus," seeking to disqualify the district court judge who had presided over his previous removal attempt. The petition was denied and again the district judge remanded the case to superior court. The district judge warned, "I think that a reasonable person aware of the facts would conclude that these successive notices were filed for the purpose of frustrating other parties' right to obtain relief in the state courts. And it needs to stop."
Next, Havens filed an untimely peremptory challenge to Judge Roesch (§ 170.6), which was denied. Thereafter, Havens repeatedly sought to disqualify Judge Roesch for cause (§ 170.3) by filing challenges immediately before noticed hearings on the receiver's pending motions. Each challenge for cause was stricken as unsupported.
On November 20, 2018, the trial court granted the receiver's motion for approval of a sale of spectrum assets to AeroNet. The next day, Havens filed a petition asking the Commission to deny the receiver's application for approval of the proposed transfer. In support of his petition, Havens continued to argue the Receivership Order was void. On December 3, 2018, the trial court granted an ex parte motion filed by the receiver and ordered Havens to withdraw his petition. Havens complied. But Havens later filed a petition for reconsideration with the Commission. In his petition for reconsideration, Havens made clear he was submitting the petition solely for himself and Polaris, "and not for the Receiver . . . or the Receivership Entities." He also argued the trial court's December order was "void" and, because he had filed a notice of appeal from that order (A156485), automatically stayed to the extent it involved a mandatory injunction.
On May 21, 2019, Judge Roesch granted another ex parte motion filed by the receiver and ordered Havens to withdraw his petition for reconsideration. Presumably on the basis this order was automatically stayed when Havens filed an appeal (A157388) from the May 21st order, Havens ignored Judge Roesch's order and filed a reply brief with the Commission. In purported justification of his actions to Judge Roesch, Havens asserted that this court's prior ruling (on his writ petition challenging the contempt findings) allows him to personally oppose the receiver's actions before the Commission so long as he is clear he is not doing so on behalf of the Receivership Entities. In response, Judge Roesch pointed out that this court's alternative writ said absolutely nothing to abrogate the prohibition on interference with the receiver's discharge of duties.
Although we need not decide the issue for purposes of deciding this motion, Havens contends the trial court's December and May orders requiring him to withdraw certain filings with the Commission are mandatory injunctions that are automatically stayed when appealed. (See Hayworth v. City of Oakland (1982) 129 Cal.App.3d 723, 727-728 [mandatory injunctions are automatically stayed by filing notice of appeal].) We assume he is correct that the most recently appealed orders are stayed. However, his willful violation of these most recent orders is not the only issue. Havens does not explain why these filings with the Commission are not evidence of his continuing willful violation of the Receivership Order itself.
C.
Havens has now appealed from, among others, 23 different trial court orders involving the receivership. By the time the receiver filed the instant motion, 10 of the appeals had already been consolidated into two groups: one involving Havens's appeals from orders granting the receiver's motions for approval of asset sales (lead case is A150785, consolidated with A150903, A151848, A151865, A151903, A151978, and A151979), and the other involving Havens's appeals from orders approving the receiver's accounts and fees (lead case is A149113, consolidated with A151294 and A151980). The remaining 13 appeals involve orders requiring Havens to withdraw his filings with the Commission (A156485, A157388); orders regarding the receiver's instructions (A152835 and A157386); an order granting the receiver's motion for approval of a release (A153035); orders allowing the receiver to pay claims (A154122); additional orders approving the receiver's accounts and fees (A154121, A154124, A154834, A157199, A157856); an additional order granting the receiver's motion for approval of an asset sale (A154125); and an order approving the receiver's receipt of funds in satisfaction of a judgment (A154619).
DISCUSSION
A.
We begin by addressing the receiver's motion to consolidate and Havens's motion to strike. The test for consolidation is whether at least one common issue is presented by multiple appeals. (Pacific Legal Foundation v. California Coastal Com. (1982) 33 Cal.3d 158, 165, fn. 3.) The receiver has shown all 23 appeals involve the same underlying trial court action and a common issue - disentitlement. Thus, we grant the receiver's motion to consolidate all 23 appeals for purposes of this decision.
We assume Havens's motion to strike the receiver's motion to dismiss is properly before us, even though it is not presented by a separately filed motion. However, because he presents no valid basis to strike the receiver's motion, we deny Havens's motion to strike and turn to the receiver's motion to dismiss.
B.
The receiver argues the appeals should be dismissed because Havens should not be allowed to seek the aid of this court while continuing to willfully disobey the Receivership Order. Havens opposes the motion to dismiss, arguing primarily, and without supporting evidence, that there is insufficient evidence he has violated any court order. Havens's arguments are unpersuasive.
1.
Under the disentitlement doctrine, "[a]n appellate court has the inherent power to [stay or] dismiss an appeal by a party that refuses to comply with a lower court order." (Gwartz v. Weilert (2014) 231 Cal.App.4th 750, 757.) The doctrine is "a discretionary tool that may be used to dismiss an appeal when the balance of the equitable concerns makes dismissal an appropriate sanction." (Ibid.) Similar to the equitable defense of unclean hands, the rationale underlying the doctrine is that a party to an action cannot seek the aid and assistance of an appellate court while standing in an attitude of contempt to the legal orders and processes of the courts of this state. (Id. at p. 757 & fn. 5.) "Dismissal is not ' "a penalty imposed as a punishment for criminal contempt. It is an exercise of a state court's inherent power to use its processes to induce compliance" ' with a presumptively valid order." (Say & Say v. Castellano (1994) 22 Cal.App.4th 88, 94.)
The doctrine " 'is particularly likely to be invoked where the appeal arises out of the very order (or orders) the party has disobeyed.' " (Ironridge Global IV, Ltd. v. ScripsAmerica, Inc., supra, 238 Cal.App.4th at p. 265.) However, this is not a prerequisite for application. (In re E.M. (2012) 204 Cal.App.4th 467, 477.)
2.
Havens does not affirmatively deny having repeatedly and willfully violated the Receivership Order. He only makes a conclusory and unsupported assertion that there is "[n]o . . . motion in Case Below to find Havens violated any court order." Havens is wrong.
First, a judgment of contempt is not required before an appeal may be dismissed under the disentitlement doctrine. (TMS, Inc. v. Aihara (1999) 71 Cal.App.4th 377, 379.) "An appellate court may dismiss an appeal where the appellant has willfully disobeyed the lower court's orders or engaged in obstructive tactics." (Gwartz v. Weilert, supra, 231 Cal.App.4th at pp. 757-758.)
Second, Havens has been convicted of contempt for filing the involuntary bankruptcy petition and that portion of the contempt judgment remains undisturbed after writ review. Nonetheless, it is essentially undisputed that Havens remains in willful violation of the Receivership Order. In particular, Havens continues to pursue an appeal involving the same involuntary bankruptcy proceeding underlying his contempt conviction. He also continues to pursue a Chapter 11 bankruptcy appeal on behalf of a Receivership Entity, in clear violation of both the prohibition on Havens's interference with the receiver's performance of her duties and the prohibition on acting on behalf of a Receivership Entity. In his declaration in opposition to the motion to dismiss, Havens does not present evidence showing he has taken any action since the motion was filed to remedy his disobedience.
In all of Haven's 23 appeals, the challenged orders arise out of the Receivership Order that Havens has repeatedly and willfully disobeyed. Havens may have various legal theories for why compliance with the Receivership Order is not required, but "[i]t was not up to [him] to decide to ignore the court's order[s] under [his] privately held belief [they are] invalid." (Blumberg v. Minthorne (2015) 233 Cal.App.4th 1384, 1392.)
Havens's repeated attempts at removal and disqualification cement the inference that his disobedience of the Receivership Order is willful and further demonstrate his goal is obstruction of the legal process. Havens's actions quite clearly indicate "that not only is [he] determined to set at naught the authority of the trial court, but that [his] attitude will be the same toward any judgment or order made by this court in disposing of [his numerous] appeal[s]." (Knoob v. Knoob (1923) 192 Cal. 95, 97.)
The disentitlement doctrine has been invoked in circumstances similar to, albeit less egregious than, those before this court. (See Alioto Fish Co. v. Alioto (1994) 27 Cal.App.4th 1669 ; Say & Say v. Castellano, supra, 22 Cal.App.4th at p. 94 [when appellant "remains 'flagrantly and persistently in defiance of court orders' . . . [t]his is a more than adequate ground for dismissing the appeal"].) "The right to appeal 'must not be lightly forfeited . . . where a doubt exists as to a litigant's conduct being contumacious or willful.' " (Alioto, supra, at p. 1685.) Here, however, there is absolutely no doubt. The Receivership Order was not stayed pending appeal and has now been affirmed on appeal. Havens has been found in contempt for willfully violating that order and served five days in jail for contempt, and he nonetheless continues to repeatedly and willfully flout it - at the very least by maintaining the Skybridge bankruptcy appeal and the involuntary bankruptcy appeal.
There is no reason to believe Havens's compliance would be induced were we to merely stay the appeals under threat of dismissal. Lesser sanctions (including jail time) have been unsuccessful in curbing Havens's obdurate behavior. Accordingly, we dismiss all 23 appeals noticed for dismissal in the receiver's motion.
Havens is advised that further appeals arising out of the Receivership Order will be at risk of dismissal, pursuant to the disentitlement doctrine, unless he demonstrates compliance with the orders of this court and any other court from which the appeal is taken.
DISPOSITION
The appeals are consolidated for decision and dismissed. Havens shall bear the receiver's costs on appeal.
/s/_________
BURNS, J. WE CONCUR: /s/_________
SIMONS, Acting P. J. /s/_________
NEEDHAM, J.