Friday, April 5, 2013
Court of Appeal Clarifies Application of Disentitlement Doctrine
Panel Says Rule Applies to Evasion of Sister-State Court Orders
By KENNETH OFGANG, Staff Writer
The Court of Appeal for this district yesterday dismissed an appeal by the defendants in a civil action, on the ground they had violated New York court orders obtained by the plaintiffs in an effort to enforce the unstayed California judgment.
“In dismissing defendants’ appeal under the disentitlement doctrine, we hold that the doctrine applies to noncompliance with and contempt of New York trial court orders, which noncompliance and contempt directly affect and frustrate the enforcement of a California judgment,” Justice Richard Mosk wrote for Div. Five.
The appeal was brought by Ampton Investments, Inc. and Laurence Strenger, the company’s chief executive officer and general counsel. According to Ampton’s website, Strenger is a graduate of Columbia University and the University of Chicago Law School, and lived in Los Angeles prior to starting the New York-based company.
State Bar records show Strenger has been an active member since 1974.
The plaintiffs, Herbert W. Stoltenberg and others, obtained a judgment of more than $8.5 million against the defendants. Because the defendants did not seek to stay the judgment, the plaintiffs initiated enforcement proceedings in New York.
New York Contempt
After registering the judgment, the plaintiffs served Ampton with a subpoena for financial information. After the defendants did not comply with the subpoena, or with an order compelling a response, the New York trial judge held them in contempt.
The plaintiffs then filed a dismissal motion in the Court of Appeal, based on the disentitlement doctrine. Analogous to the fugitive disentitlement doctrine in criminal law, the doctrine in its civil application permits dismissal of appeals where the appellant has impeded enforcement of the orders being appealed.
The defendants responded to the motion by arguing that the doctrine cannot be applied to frustration of out-of-state court orders, and that, even if it could, it should not apply in this case because the New York orders were not final.
Similar California Cases
Mosk noted that the doctrine had been applied in California to similar cases, where judgment debtors were frustrating efforts at enforcement of the judgment while they were appealing, such as by refusing to answer post-judgment interrogatories, to appear for judgment debtor examination, or to deposit assets pursuant to an order in a partnership dissolution.
The fact that the conduct occurred in another jurisdiction does not compel a different result when the effect is to frustrate the enforcement of a California judgment, Mosk said. “There is no basis in logic or law to support the conclusion that we should treat a New York trial court’s orders differently than ones entered in this state,” the justice wrote, citing the Constitution’s Good Faith and Credit Clause and an implementing statute, 28 U.S.C. Sec. 1738.
The plaintiffs, Mosk noted, could have sought to enforce the California by propounding interrogatories seeking information about the defendants’ New York assets, in which case the disentitlement doctrine would have applied to failure to comply with California trial court orders compelling responses. That the same type of interrogatories were served under New York process and ordered responded to by a New York court is not a “meaningful distinction” and does not dictate a different result, he wrote.
Mosk noted that the dismissal would not be final for 30 days, so the defendants can comply with the New York orders and seek reinstatement of the appeal. “But we do not suggest or imply how we might act upon such a request or petition,” he warned.
The defendants were represented on appeal by James G. McCarney of Akerman Senterfitt and Robert T. Sturgeon of Sheppard, Mullin, Richter & Hampton. The plaintiffs’ attorneys were Richard A. Love and Kathleen M. Erskine of Love & Erskine and Marc J. Poster of Greines, Martin, Stein & Richland.
The case is Stoltenberg v. Ampton Investments, Inc.,
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