Pierce v. Belnap CA4/3

Filed 12/21/15 Pierce v. Belnap CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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 THREE
CONNIE L. PIERCE et. al.,
Respondents, G051433
v. (Super. Ct. No. 30-2014-00712251)
TIMOTHY BELNAP et. al., OPINION
Appellants.
Appeal from a judgment of the Superior Court of Orange County, Franz E.
Miller, Judge. Motion to dismiss appeal granted. Appeal dismissed.
Brown Wegner McNamara and Stephen M. McNamara for Respondents.
Catanzarite Law Corporation, Kenneth J. Catanzarite and Brandon E.
Woodward for Appellants.
* * *
THE COURT:*
Respondents Connie Pierce and her dental corporation (collectively, Pierce)
filed a motion to dismiss the appeal under the disentitlement doctrine. Essentially, Pierce
argues appellant Timothy Belnap’s repeated willful disobedience of orders of the
bankruptcy court and the trial court justify dismissal of the appeal. We agree.
BACKROUND
The underlying case involves the nasty dissolution of a dental partnership
between Pierce and Timothy Belnap and his dental corporation (collectively, Belnap).
Pierce filed for binding arbitration to dissolve the dental partnership, and for damages for
breach of contract, breach of fiduciary duty, and other claims.
On Feb. 25, 2014, after a nine-day arbitration, the arbitrator issued an
interim order in favor of Pierce, awarding her approximately $500,000, and setting forth
numerous specific orders for the winding up of the partnership. These included that
neither partner would copy any computer/electronic records until patients were equitably
allocated between them, both partners would have equal access to patient appointments,
patient records and all partnership records until winding up was done, and the partners
would deposit all receipts into the partnership bank account. The partners were also
ordered to refrain from “lobbying” patients regarding their choice of dentist.
Belnap’s efforts to thwart confirmation of arbitration award
On March 12, 2014, the arbitrator issued a final award (Award),
incorporating all the terms of the interim order. The same day the Award issued, Belnap
filed a lawsuit against Pierce in San Diego County, seeking to “set aside the written
agreements that were the subject of [the Arbitrator’s] interim order.”
On March 24, 2014, Pierce filed a petition to confirm the Award in Orange
County Superior Court. Rather than respond with a petition to vacate the Award, Belnap
___________________________________________________
* Before O’Leary, P.J., Aronson, J., and Thompson, J.
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filed a demurrer based on the pendency of the San Diego action as well as various
challenges to the Orange County Superior Court’s jurisdiction. Belnap then filed in San
Diego County Superior Court a petition to vacate the Award.
Pierce objected to the San Diego petition to vacate on the ground it violated
the venue provisions of Code of Civil Procedure section 1292.2. The trial judge in
Orange County agreed and overruled the demurrer, stating a party that has submitted to
arbitration cannot “derail the arb[itrator’s] tentative decis[ion] by filing an action in
another county[.]” The trial court denied Pierce’s request for sanctions, however, finding
that although the demurrer “was not meritorious and may have been the wrong vehicle, . .
. it was not frivolous.” The trial court continued the hearing on the petition to confirm
the Award so Belnap could dismiss the San Diego petition to vacate and refile it in
Orange County.
On June 23, 2014, the petition to confirm and the petition to vacate were set
for hearing in Orange County Superior Court. The trial court issued a tentative ruling
granting the petition to confirm, but one hour before the hearing, Belnap gave notice he
had filed a Chapter 11 bankruptcy petition for his dental corporation, a partner in the
dental partnership.
Belnap’s contempt citation for willful violation of bankruptcy court order
Pierce obtained from the bankruptcy court partial relief from the automatic
stay, allowing the dental partnership to wind up its affairs and the trial court to rule on the
pending petitions to confirm and vacate the Award. The trial court entered judgment
confirming the Award on October 24, 2014.
The winding up of the partnership and the bankruptcy proceeded
simultaneously. Belnap filed a plan in bankruptcy court agreeing he would cease
operating his dental practice and vacate the partnership premises on January 31, 2015.
Belnap stated in the plan he would sell his share of the patient charts and files for
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$145,000 to his son-in-law, a dentist with whom he had been practicing, and pay
creditors from the sale proceeds.
On January 29, 2015, the bankruptcy court entered an order (the premises
order) stating, “‘No patient files are to be taken off the Premises by anyone until further
Order of this Court.’” Belnap promptly violated the premises order, removing
approximately 1,300 patient files. On February 9, 2015, Pierce moved ex parte in the
bankruptcy court for an order to show cause why Belnap should not be held in contempt
and the case dismissed for failure to comply with the premises order. After considering
Belnap’s opposition, the bankruptcy court set the matter for hearing.
In a tentative ruling issued in advance of the February 26 hearing, the
bankruptcy court stated its finding “this case should be dismissed for bad faith.” 1 The
ruling went on to explain in detail why the facts “weigh in favor of finding a bad faith
filing. Belnap’s violation of the [premises] Order was egregious because the Court had
only recently held a hearing on the issuance of that Order . . . . Belnap was not acting for
the benefit of the estate but instead personally stealing the records for his own benefit.
Belnap is now clearly thwarting state court litigation in a two party dispute about the
partnership for no valid bankruptcy purpose since he is misusing debtor property to
benefit his personal practice and his son in law’s practice.”
At the hearing, Belnap consented to the tentative ruling the case should be
dismissed. The bankruptcy court ordered dismissal, but retained jurisdiction over the
question whether Belnap should be sanctioned and ordered Belnap to show cause at a
subsequent hearing why he should not be held in contempt and sanctioned for violating
the premises order. After conducting the hearing, the bankrupty court issued an order
1 Pierce filed a request for judicial notice of two documents from the bankruptcy court
file attached as exhibits to the request: certified copies of the order awarding civil
contempt sanctions against Belnap and the amended tentative ruling specifically adopted
in that order. The court grants the request and takes judicial notice of the two documents.
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finding Belnap in contempt of court for “knowingly and intentionally violating [the
premises order].” The bankruptcy court sanctioned Belnap over $16,000, payable to
Pierce.
Belnap’s numerous violations of the Award
In support of the motion to dismiss, Pierce submitted a declaration
establishing Belnap violated numerous specific provisions of the Award. According to
the declaration, during the winding up process Belnap violated the Award in the
following respects: (1) Belnap copied patient records from the dental partnership
computers (violating Award, § 4(f)), (2) transferred the dental partnership’s license for its
management software, Dentrix, to his son-in-law, without paying any compensation to
Pierce (violating Award, § 4(f)), (3) unilaterally closed the dental partnership bank
account (violating Award, § 4(l)), and (4) continued to lobby existing patients to follow
him rather than Pierce (violating Award, § 4(m)).
Belnap did not dispute these facts in his opposition to the motion to
dismiss, but rather filed scattershot evidentiary objections to the relevant portions of
Pierce’s declaration (¶ 3&4).2 We find all of Belnap’s evidentiary objections lack merit,
and accordingly overrule them. Pierce’s declaration thus stands as undisputed evidence
Belnap committed numerous, specific violations of the Award.
Belnap’s violation of orders to appear for judgment debtor exam
Pierce asserts Belnap twice disobeyed court orders to appear for a judgment
debtor’s exam, causing the superior court to issue two bench warrants for his arrest, the
first in the amount of $5000 and the second for $50,000. In response, Belnap argues that
while he missed the first scheduled judgment debtor’s exam, he appeared at the second.
2 Belnap raised all the following objections to paragraphs 3 and 4 of the declaration:
hearsay, Evidence Code section 1523 [testimony inadmissible to prove content of
writing], “argumentative, is rank speculation, lacks foundation, states facts not in
evidence, and misstates facts.”
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Additionally, he contends his failure to appear at a continued judgment debtor’s exam,
resulting in issuance of the $50,000 bench warrant, was essentially “no harm, no foul”
because his counsel provided all the information requested by Pierce’s counsel for
determining the extent of Belnap’s assets, and the trial court quashed the outstanding
warrant.
DISCUSSION
Pierce argues the appeal should be dismissed under the disentitlement
doctrine because Belnap repeatedly violated orders of the trial court and the bankruptcy
court. The argument has merit.
In Stoltenberg v. Ampton Investments, Inc. (2013) 215 Cal.App.4th 1225(Stoltenberg), the court summarized the disentitlement doctrine and its application as
follows: “An appellate court has the inherent power, under the ‘disentitlement doctrine,’
to dismiss an appeal by a party that refuses to comply with a lower court order.
[Citations.] As the Supreme Court observed in MacPherson v. MacPherson [(1939)] 13
Cal.2d [271,] 277, ‘A party to an action cannot, with right or reason, ask the aid and
assistance of a court in hearing his demands while he stands in an attitude of contempt to
legal orders and processes of the courts of this state. [Citations.]’ [¶] . . . No formal
judgment of contempt is required; an appellate court ‘may dismiss an appeal where there
has been willful disobedience or obstructive tactics. [Citations.]’” (Stoltenberg, supra,
215 Cal.App.4th at pp. 1229-1230.)
A recent decision by this court illustrates application of the doctrine where,
as here, an appellant willfully disobeys court orders. In Blumberg v. Minthorne (2015)
233 Cal.App.4th 1384 (Blumberg) a trustee-defendant used funds from her family trust to
buy property, taking title in her personal capacity. The trial court found the defendant
had mishandled the trust funds and ordered her to re-convey the property to the trust and
prepare and file an accounting. The defendant defied the orders: She failed to file an
accounting and conveyed the property to her daughter rather than the trust. The
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defendant appealed the trial court orders and argued they were stayed pending the appeal.
(Id. at pp. 1388-1389.)
The appellate court found the defendant’s flagrant violation of the trial
court’s orders “despicable” and dismissed the appeal. (Blumberg,supra, 233 Cal.App.4th
at p. 1391.) The court noted an appellate court has “inherent power” to dismiss under the
disentitlement doctrine when a party “refuses to comply with a lower court order.” (Id. at
p. 1390.) Finding the appellant had disobeyed two court orders, the court concluded such
willful disobedience justified dismissal of the appeal. (Id. at p. 1391; see also Stone v.
Bach (1978) 80 Cal.App.3d 442, 448 [appeal dismissed under disentitlement doctrine
where, after court divided assets of dissolved partnership, appellant defied orders to
deposit partnership funds into trustee account and to submit to judgment debtor’s exam].)
In the instant case, Belnap engaged in both the “‘willful disobedience’” and
the “‘obstructive tactics’” that justify dismissal under the disentitlement doctrine.’”
(Stoltenberg, supra, 215 Cal.App.4th at p. 1230.) As for obstructive tactics, Belnap
employed numerous improper procedural moves to thwart confirmation of the arbitration
award against him, including filing the San Diego lawsuit and petition to vacate the
Award, as well as the bankruptcy petition, which the bankruptcy court found to be a bad
faith filing.
As for willful disobedience, the bankruptcy court found Belnap committed
an “egregious” violation of the premises order, stealing the partnership’s patient files for
his personal benefit. The bankruptcy court further found Belnap was “clearly thwarting
state court litigation in a two party dispute about the partnership[.]” Belnap also violated
numerous provisions of the Award (copying electronic records, transferring to his son-in-
law the partnership’s license to its management software, closing the partnership’s bank
account and lobbying patients to join him). He also twice failed to comply with orders
related to the judgment debtor’s exam, resulting in the issuance of two bench warrants.
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The court in Stoltenberg, supra, 215 Cal.App.4th 1225, summed up the
situation well: “Such willful disobedience and obstruction of presumptively valid orders
can, and in this case does, provide a basis upon which to dismiss the appeal under the
disentitlement doctrine.” (Id. at p. 1232.)
We are unmoved by Belnap’s assertion dismissal of the appeal as to his
dental corporation is unfair because only he, not his wholly owned corporation, defied
court orders and was sanctioned. Nor does Belnap gain traction by attempting to
distinguish factually the many disentitlement cases cited by Pierce. While the cited case
undoubtedly involve distinctive behavior on the part of the respective appellants, all the
cases share a crucial common denominator: The appellant in each willfully disobeyed
court orders, as did Belnap. We conclude Belnap’s conduct merits dismissal of this
appeal.
DISPOSITION
The motion to dismiss the appeal is granted. The appeal is dismissed.
Pierce is awarded costs on appeal.
.
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