Mid-Kansas Wound Specialists, P.A. v. Martin

NOT DESIGNATED FOR PUBLICATION
No. 123,066
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
MID-KANSAS WOUND SPECIALISTS, P.A.
and EMERGENCY SERVICES, P.A.,
Appellees,
v.
THOMAS A. MARTIN;
WE, LLC; TAME, LC; TAME IV, LC; TAME VII, LLC,
Appellants,
and
NANCY MARTIN; NANCY MARTIN, TRUSTEE OF THE NANCY MARTIN LIVING TRUST;
THOMAS MARTIN, TRUSTEE OF THE THOMAS MARTIN LIVING TRUST;
MARCO LC; TAME II, LC; TAME III, LC; TAME V, LC; TAME VI, LLC;
NANCY'S LC; VACATIONS, LLC; and MICHAEL MARTIN,
Defendants.
MEMORANDUM OPINION
Appeal from Sedgwick District Court; DAVID L. DAHL, judge. Opinion filed July 1, 2021. Appeal
dismissed.
Christopher Joseph, of Joseph, Hollander & Craft LLC, of Lawrence, Christopher M. McHugh,
of the same firm, of Kansas City, Missouri, and Carrie E. Parker, of the same firm, of Topeka, for
appellants.
Todd E. Shadid, of Klenda Austerman LLC, of Wichita, for appellees.
Before POWELL, P.J., ATCHESON, J., and RICHARD WALKER, S.J.
PER CURIAM: The Sedgwick County District Court held Thomas A. Martin and
four of his affiliated business entities—defendants in a sprawling, multimillion dollar
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civil action—in contempt and imposed money sanctions against them for violating
pretrial orders requiring them to disclose assets and to report certain types of financial
transactions. The defendants have appealed the contempt citation. But, as the plaintiffs
argue and the record shows, the defendants have paid the sanctions and, thus, have
acquiesced in the contempt judgment. A party cannot both acquiesce in a judgment and
appeal it as wrongfully entered. Kansas law treats those as mutually exclusive courses of
actions. We, therefore, dismiss this appeal.
FACTUAL AND PROCEDURAL BACKGROUND
Given our resolution of this appeal, much of the factual and procedural history of
both the underlying litigation and the allied contempt proceeding recede into the
background of the loosely informative though legally irrelevant. In 2017, Mid-Kansas
Wound Specialists, P.A., and Emergency Services, P.A., sued Martin, his ex-wife Nancy,
and a number of Martin's corporations to recover millions of dollars Nancy embezzled
from them over the course of her employment. The plaintiffs have taken a default
judgment against Nancy for $11 million. As of this appeal, the suit remained unresolved
against Martin and the other defendants. We neither offer nor intend to intimate any
views whatsoever about the merits of plaintiffs' underlying claims against the defendants.
The record suggests Martin has assets worth a good deal more than the judgment
against Nancy. This litigation has been contentious, and Martin appears to have tested the
district court's patience more than a few times with dilatory maneuvers and a
lackadaisical attitude toward discovery. We again have no opinion on the root cause of
those apparent problems and no reason to parcel responsibility between lawyer and client.
The record on appeal indicates Martin has changed lawyers at least a couple of times
during the litigation. At the plaintiffs' request, the district court entered an order requiring
Martin and various business entities to disclose their assets and prohibiting them from
disposing of at least some of those assets without notice and, if requested, judicial
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approval. For purposes of this appeal, the details of those requirements have no
immediate legal significance.
Plaintiffs filed a motion asking the district court to find Martin and several of the
businesses in contempt for violating the pretrial order. The district court held an
evidentiary hearing spread over three nonconsecutive days between October 2018 and
October 2019. After receiving proposed findings of fact and conclusions of law from the
parties, the district court entered a lengthy order on March 6, 2020, finding Martin and
WE, LLC; Tame, LLC; Tame VI, LLC; and Tame VII, LLC in contempt and imposed
sanctions requiring them to pay the plaintiffs: (1) about $55,000, reflecting an improper
disbursal of assets, that would be a credit against any judgment the plaintiffs might
ultimately obtain against the defendants in the underlying litigation; (2) $25,000 for
incomplete and dilatory compliance with the pretrial order; and (3) reasonable attorney
fees and costs for bringing the contempt motion and otherwise seeking compliance with
the pretrial order. The district court ordered Martin and those entities to tender $79,921 to
the clerk of the district court to be disbursed to the plaintiffs if they obtained a judgment
or settlement in the underlying case and otherwise half to the plaintiffs with half returned
to those defendants. The district court ordered Martin to pay the plaintiffs $50,000 for
transferring assets in violation of the pretrial order; the payment would be credited
against any judgment the plaintiffs obtain. The district court also imposed additional
monetary sanctions if Martin and the corporations didn't make the required payments
within three months, six months, or nine months of the entry of the March 6 contempt
order.
Martin and the four corporate entities found to be in contempt are united in interest
and have been represented by the same lawyers in the underlying litigation and in the
contempt proceedings. Going forward in this opinion, we refer to them collectively as the
contempt defendants.
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The contempt defendants filed a notice of appeal challenging the district court's
March 6 order. See K.S.A. 20-1205 (party adjudicated in contempt may appeal ruling);
see also In re J.T.R., 47 Kan. App. 2d 91, 94, 271 P.3d 1262 (2012) (civil contempt order
appealable independent of and without final judgment in underlying litigation). The
district court then set an appeal bond of $300,000 that the contempt defendants could post
half in cash and half through a surety. See K.S.A. 20-1205 (district court may stay
contempt judgment upon posting approved bond). In the meantime, the plaintiffs had
issued garnishments to third parties managing brokerage accounts for Martin to seize any
of his assets they held to satisfy the monetary sanctions imposed in the contempt order.
Martin filed a motion to halt the garnishments. The district court held a hearing on the
motion on June 4—the day before the first monetary sanction for noncompliance would
go into effect—at which the lawyers made arguments for their respective clients. The
district court declined to forestall the garnishments.
At the hearing, the contempt defendants' lawyer informed the district court he
received $250,000 from Martin before the garnishments were issued and was holding that
money in the firm's trust account. He represented the garnishments effectively froze the
accounts, preventing Martin from accessing funds in them in excess of the contempt
sanctions. The plaintiffs' lawyer questioned whether the garnishments would have that
effect and declined to release the garnishments. Neither side presented evidence on that
point or anything else during the hearing.
Sometime after the June 4 hearing, the contempt defendants paid the sanctions and
attorney fees, thus satisfying the contempt judgment. The record indicates the total
amount was a little less than the $250,000 Martin had given his lawyers before the
hearing. Nevertheless, the contempt defendants perfected and continued to pursue this
appeal of the contempt order.
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LEGAL ANALYSIS
In their opening brief, the contempt defendants argue the district court's order had
characteristics of a criminal contempt punishment rather than civil contempt sanctions
and they had not been afforded constitutional due process and other procedural
protections required in a criminal contempt proceeding. See In re Marriage of Shelhamer,
50 Kan. App. 2d 152, 156, 323 P.3d 184 (2014); Baker v. Miller, No. 117,520, 2018 WL
4655897, at *10 (Kan. App. 2018) (unpublished opinion) (Atcheson, J., concurring)
(defendant accorded greater procedural protections in criminal contempt adjudication
than in civil contempt adjudication). In their countering brief, plaintiffs submit the
contempt defendants had acquiesced in the contempt order and, therefore, their appeal
should be dismissed. They, of course, also address the contempt defendants' substantive
arguments. The contempt defendants offered a reply brief explaining why they had not
met the legal test for acquiescence even though they paid the contempt sanctions.
Given the briefing, both sides have had the opportunity to address acquiescence,
so the issue has been fairly joined, and we may consider it. We do not see any material
conflict about the circumstances bearing on acquiescence. The issue, then, presents a
question of law we may take up without a remand to the district court to assess
inconsistent testimony or to resolve other disputed evidence. See State v. Arnett, 290
Kan. 41, 47, 223 P.3d 780 (2010) (appellate court exercises unlimited review over
question of law); State v. Mejia, 58 Kan. App. 2d 229, 231-32, 466 P.3d 1217 (2020)
(When the material facts are undisputed, an issue presents a question of law.).
Conceptually, the acquiescence doctrine is easy to state, and that statement seems
both logical and fair: A prevailing party cannot accept the benefits of a judgment and
then complain about errors in the judgment on appeal; likewise, a losing party cannot
voluntarily satisfy the burdens of an adverse judgment and continue complaining on
appeal about errors in the judgment. Alliance Mortg. Co. v. Pastine, 281 Kan. 1266,
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1271, 136 P.3d 457 (2006); Security National Bank of Kansas City v. Tripwire
Operations Group, LLC, 55 Kan. App. 2d 295, 299-300, 412 P.3d 1030 (2018). Kansas
appellate courts treat the simultaneous acceptance of or compliance with a judgment and
pursuit of an appeal attacking the judgment as impermissibly inconsistent legal positions.
See Varner v. Gulf Ins. Co., 254 Kan. 492, 495, 866 P.2d 1044 (1994); Security National
Bank, 55 Kan. App. 2d at 299-300. Despite the comparative ease in defining
acquiescence abstractly, the appellate courts have not fashioned a predictive analytical
test to be applied across cases. Rather, acquiescence cutting off an appeal turns on the
facts of a given case—ad hoc resolutions tending to impede the development of cohesive
standards. Younger v. Mitchell, 245 Kan. 204, 209, 777 P.2d 789 (1989) (acquiescence
depends upon case-specific facts); Security National Bank, 55 Kan. App. 2d at 299-300
(same); cf. Law, Avoiding a Quagmire: Acquiescence in a Judgment as a Bar to Appeal,
89 J.K.B.A. 30, 32 (September/October 2020) (some Kansas appellate cases on
acquiescence "may be impossible to reconcile").
Drawing on that situationally developed authority, we conclude a judgment debtor
does not acquiesce in a judgment by failing to post a supersedeas bond the district court
has set at the judgment debtor's request. Cf. Vap v. Diamond Oil Producers, Inc., 9 Kan.
App. 2d 58, 61, 671 P.2d 1126 (1983) (failure to request supersedeas bond evidence of
acquiescence); 9 Kan. App. 2d at 62 (Foth, C.J., concurring) (failure to post bond set by
district court not indicative of acquiescence). Conversely, the judgment debtor's failure to
oppose in some fashion a garnishment yielding funds satisfying the judgment amounts to
acquiescence precluding appeal. 9 Kan. App. 2d at 61-62; 9 Kan. App. 2d at 62 (Foth,
C.J., concurring). The Younger court similarly recognized that a judgment debtor actively
resisting a garnishment does not acquiesce in the judgment. 245 Kan. at 207-08. Paying a
judgment typically amounts to acquiescence cutting off any appeal. See Huet-Vaughn v.
Kansas State Bd. of Healing Arts, 267 Kan. 144, 147, 978 P.2d 896 (1999); Cybertron
International, Inc. v. Capps, No. 122,439, 2022 WL 128842, at *8 (Kan. App. 2022)
(unpublished opinion).
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Here, the record on acquiescence presents competing considerations, and we
recognize the circumstances do not cut definitively one way or the other. Weighing
against acquiescence, Martin asked the district court to halt the garnishments, albeit
unsuccessfully. He requested a supersedeas bond, and the district court set one. But
Martin did not post the bond. The contempt order contained additional financial penalties
if Martin did not make the required payments by specified dates. Martin avoided those
penalties by satisfying the requirements of the contempt order. The appellate courts have
recognized that a party need not risk a contempt citation by refusing to comply with an
order, and compliance under such a coercive threat typically would not amount to
acquiescence cutting off an appeal. In re Metcalf Assocs.-2000, 42 Kan. App. 2d 412,
423-24, 213 P.3d 751 (2009). A touchstone for acquiescence is the voluntariness of the
payment. See Younger, 245 Kan. at 206; Security National Bank, 55 Kan. App. 2d at 300.
On the other side of the acquiescence ledger, Martin did make the payments
required in the contempt order after failing to persuade the district court to set aside the
garnishments. Tendering the required performance and payments looks and sounds a lot
like acquiescence. At that point, Martin was no longer resisting the garnishments and
complied with the order to avoid the seizure of the money in his accounts—a course of
conduct we view as more acquiescent than that of the corporate defendant in Vap when it
simply allowed a garnishment to go forward without objection and, thereby, acquiesced
in the judgment. We have nothing in the record explaining why Martin paid the amounts
rather than have the accounts garnished. But the decision necessarily entailed a conscious
choice presumably made on some assessment, however rudimentary, of comparative
costs and benefits.
Martin never asked the district court to stay the contempt order without a
supersedeas bond to allow him to appeal. From the tenor of the June 4 hearing, we
reasonably infer the district court would not have been especially enamored of such a
request. And the law does not require a party to undertake a futile act. Anderson v.
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Dugger, 130 Kan. 153, 156, 285 P. 546 (1930) ("The law does not require the
performance of a futile or useless act."); Allen v. Attorney Gen. of State of Maine, 80 F.3d
569, 573 (1st Cir. 1996) ("The law, after all, should not require litigants to engage in
empty gestures or to perform obviously futile acts."). But our after-the-fact surmise
doesn't really excuse Martin from having taken the comparatively minimal step of at least
inquiring of the district court.
More to the point and of more significance, Martin did not ask the district court to
modify the $300,000 supersedeas bond. At the June 4 hearing, Martin's lawyer was in a
position to immediately post a $250,000 cash bond. But he never offered that alternative
to the district court or the plaintiffs. A cash bond of that size under the district court's
immediate control might have had advantages over trying to collect $150,000 from a
surety in no hurry to pay were Martin to lose on appeal and resist satisfying the judgment.
Again, Martin never took that entirely reasonable step in seeking a bond modification.
Along that same line, Martin's lawyer informed the district court that the garnishments
had frozen specific accounts—a point of contention. Even so, the lawyer did not
represent that Martin's considerable wealth was otherwise so illiquid he could not secure
an additional $50,000 to post the original supersedeas bond. For that reason, we also do
not see the additional payment due on June 5 to be coercive in a way that forced Martin
to satisfy the original financial obligations in the contempt order rather than permitting
the garnishments to go forward, attempting to negotiate changes to the supersedeas bond,
or posting the initial bond.
For purposes of this appeal, we assume Martin might have faced additional
contempt sanctions if the garnishments had not yielded funds to cover the payments
required by the order and he had not posted a satisfactory bond. But that's no more than
an entirely speculative harm on these facts. Martin satisfied the contempt judgment
before the plaintiffs even sought additional and more coercive sanctions. See Baker, 2018
WL 4655897, at *10 (Atcheson, J., concurring) (party otherwise able to comply with
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district court order may face financial penalties or incarceration as civil contempt
sanctions until agreeing to comply). Had the plaintiffs taken that step, Martin's
compliance with the original order under the gun of such a legal threat might not have
constituted acquiescence. See Martin v. Phillips, 51 Kan. App. 2d 393, 400, 347 P.3d
1033 (2015). We need not rule on that wholly remote hypothetical. By the same token,
however, it cannot advance Martin's argument on appeal against acquiescence.
A defendant's voluntary payment of a money judgment does not constitute
acquiescence in a divisible, nonmonetary form of relief (like an injunction) imposed in
the same judgment that can be reviewed on appeal independently of the money award.
See Brown v. Combined Ins. Co. of America, 226 Kan. 223, 231, 597 P.2d 1010 (1979);
Richardson v. Murray, 54 Kan. App. 2d 571, 586, 402 P.3d 588 (2017). But that
exception to the acquiescence doctrine does Martin no good. The contempt sanctions in
the district court's order were both of a kind and interlocking. No part of the contempt
order remained open after Martin paid the sanctions.
Under the particular facts here, we find Martin acquiesced in the contempt order
the district court entered on March 6, 2020, when he made the required payments after
the June 4, 2020 hearing. Martin then faced no immediately coercive threat of harsher
sanctions. He could have allowed the garnishments to proceed rather than pay. He neither
sought a modification of the supersedeas bond the district court set nor categorically
established he could not post the bond. The constellation of circumstances depicts
acquiescence of the kind that cuts off the right to appeal, since Martin chose to satisfy the
burdens imposed on him in the contempt judgment.
We, therefore, dismiss Martin's appeal. Given this disposition of the contempt
proceeding, we have no need (and no legal reason) to address the substantive challenges
Martin has raised. So we offer no opinion about them.
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Appeal dismissed.
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