Filed 10/18/19 Li v. Yan CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIRST APPELLATE DISTRICT

DIVISION THREE

CHARLES LI,

Plaintiff and Respondent,

v.

DEMAS YAN,

Defendant and Appellant.

A155731

(City & County of San Francisco

Super. Ct. No. CGC14537574)

Demas Yan appeals from a post-judgment order appointing a receiver. We will dismiss the appeal.

FACTUAL BACKGROUND

We draw much of the background facts of this case from our prior appellate decision, and briefly set out these facts for context only. (See Pacific Gas & Electric Co. v. City and County of San Francisco (2012) 206 Cal.App.4th 897, 907, fn. 10; Stephenson v. Drever (1997) 16 Cal.4th 1167, 1170, fn. 1.)

Yan entered into an agreement in 2000 with Tony Fu to develop a residential building on 23rd Avenue in San Francisco (hereafter “the property”). Fu assigned his ownership interest in the property to Charles Li. Li sued Yan in 2004 to enforce his rights under the assignment and also filed a claim against Yan in Yan’s bankruptcy proceedings. When Yan disputed the validity of the assignment from Fu to Li, Li sued Fu alleging fraud. Yan, then a law student, convinced Li to dismiss his case against Yan and the bankruptcy claim so the two of them could join forces against Fu. After Li dismissed his case against Yan with prejudice and also the bankruptcy clam, Yan sued Li for malicious prosecution while still assisting Li in his action against Fu. In January 2009, after Yan was admitted to the California Bar, Li retained Yan to represent him in the suit against Fu. During a settlement conference, however, a mediator opined the assignment from Fu was enforceable against Yan, and Yan had undisclosed conflicts of interest in his representation of Li.

Li then hired a new attorney and sued Yan in March 2010 for professional negligence and related claims. Following a 2012 bench trial, Li prevailed and obtained a judgment against Yan. In 2016, the trial court entered a fourth amended judgment, awarding Li damages, prejudgment interest, attorney fees, costs, and post-judgment interest totaling $1,086,001.12. While trying to enforce that judgment, Li learned Yan transferred the property to a wholly owned limited liability company (LLC) in 2007. Then, in 2012, Yan transferred his ownership interest in that LLC to relatives, allegedly to repay debts. In late 2013 the property was transferred to a newly formed LLC with the same owners as the last.

In February 2014, Li brought an action against Yan, Yan’s parents and two brothers-in-law, and the two LLCs, seeking to set aside the transfers as fraudulent and alleging violations of Civil Code sections 3439.04 and 3439.05. Alleging the property conveyances between the defendants were done to prevent Li from satisfying the judgment from the 2010 case the complaint sought an order declaring them void to the extent necessary to satisfy that judgment, as well as an order enjoining the sale, encumbrance, damaging, impairing, or disposal of the property.

Default was entered against Yan and the LLCs. The remaining defendants (Yan’s relatives) proceeded to trial where a jury returned special verdicts against all of them, finding them liable for fraud. The trial court then entered default judgments against Yan and the two LLCs, and judgments against the remaining defendants. The court set aside the conveyances as fraudulent, and declared “[f]or the purpose of satisfying plaintiff’s Underlying Judgment, and for that purpose only, Demas Yan is . . . the sole owner of all legal and equitable title or interest in the Subject Property.” The judgment ordered all defendants to collect all rents, pay all reasonable expenses and taxes, and render an accounting upon Li’s request. The judgment enjoined all defendants from selling or transferring the property without a court order. The court awarded Li attorney fees in the amount of $802,059.50 and amended the judgment to incorporate it. Yan and the other defendants filed an appeal and, in an unpublished decision issued on May 31, 2018, this court ordered that the amended judgment be modified to provide that the attorney fee award was imposed solely against Yan. This court then affirmed the judgment in all other respects.

In June 2018, Li moved for an order appointing a receiver, the genesis of this appeal. The trial court granted this unopposed motion and appointed a receiver for the property on July 26, 2018. Among other things, the appointment order required all defendants to turn over possession of the property (including rents and property management funds) to the receiver, and enjoined all defendants from interfering in any manner with the discharge of the receiver’s duties, which included managing the property and its accounts and potentially selling the property.

On August 20, 2018, Yan filed a motion to set aside the order appointing a receiver pursuant to Code of Civil Procedure section 473, subdivision (d). While Yan did not include the complete motion in his appendix, his notice of motion (which is in his appendix) argued that the order was void “for lack of jurisdiction over the person of the defendant and/or for lack of due process.” Accompanying the motion was Yan’s declaration stating he became personally aware of the order appointing the receiver on August 1, 2018 after receiving an email from Li’s attorney purporting to be a notice of entry of order. He then reviewed the trial court’s docket, which showed that the notice of Li’s motion was served only on Albert Boasberg, who Yan claimed was not his attorney in this action and not authorized to be served on his behalf. Boasberg also filed a declaration stating that he was the attorney for defendants other than Yan, that Yan did not retain him for post-judgment proceedings in the action, and that he told Li’s attorney he was not representing any of the defendants post-judgment.

Li opposed Yan’s motion to set aside the appointment order, arguing Yan had no right to participate in post-judgment proceedings or to be served with Li’s motion because default was entered against Yan. Furthermore, Boasberg was listed as counsel of record for the defendants, and Li served Boasberg with both Li’s motion and the resulting order appointing a receiver. Li cited to supporting evidence which is not included in Yan’s appendix.

On October 15, 2018, the trial court denied Yan’s motion to set aside the order on three separate and independent grounds: “First, Mr. Yan is in default status now and was at the time the motion for appointment of receiver was filed, so he had no right to contest the appointment of a receiver. Second, Mr. Yan’s counsel of record, Mr. Boasberg, was served with all relevant papers on a timely basis. Third, Mr. Yan has failed to provide any grounds for opposing the appointment of a receiver.”

Yan filed a notice of appeal on October 17, 2018.

DISCUSSION

Li filed a motion to dismiss this appeal under the doctrine of disentitlement. Li argues dismissal is warranted because Yan refuses: (1) to pay sanctions that Division Two of this court imposed in a related appeal that it found to be frivolous (Li v. Yan (Jan. 28, 2016, A140798) [nonpub. opn.]), and to pay sanctions imposed by the trial court in 2013, 2015, and 2017; and (2) to abide by post-judgment discovery orders to produce his tax returns that have twice been affirmed by Division Two of this court. (Li v. Yan (2016) 247 Cal.App.4th 56; Li v. Yan (Jun. 27, 2018, A151549) [nonpub. opn.].)

We agree that Yan’s willful disobedience of the post-judgment discovery orders to produce his tax returns justifies dismissal of this appeal.

“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.] . . . ‘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.’ ” (Stoltenberg v. Ampton Investments, Inc. (2013) 215 Cal.App.4th 1225, 1229–1230 (Stoltenberg).) The equitable rationale underlying the doctrine is as follows: “ ‘ “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. [Citation.]” [Citation.] . . . [¶] Appellate disentitlement “is not a jurisdictional doctrine, but a discretionary tool that may be applied when the balance of the equitable concerns make it a proper sanction . . . .” [Citation.]’ [Citation.] No formal judgment of contempt is required; an appellate court ‘may dismiss an appeal where there has been willful disobedience or obstructive tactics.’ ” (Id. at p. 1230.)

Here, Li sets out the facts underlying Yan’s refusal to comply with orders to produce his tax returns and provides a declaration from counsel in support. These facts include that Li obtained a court order for Yan to produce his tax returns to aid Li in enforcing the judgment obtained in the 2010 case. After Division Two of this court affirmed the order to produce the tax returns in 2016, Yan continued to refuse to comply, leading Li to obtain an order to show cause why Yan should not be held in contempt. After the trial court discharged the order to show cause and gave Yan one last chance to comply, he still did not do so and instead filed yet another appeal challenging the order to produce his tax returns. In 2018, Division Two of this court again ordered Yan to comply, and to this date, Yan refuses to do so.

Yan does not deny he is willfully failing to produce his tax returns and he makes no attempt to justify his disobedience. His sole argument is that the doctrine of disentitlement is inapplicable because he has not violated any order in this particular underlying action, or frustrated the enforcement of the judgment or order appointing a receiver entered in the underlying action. Yan, however, presents no reasoned argument and cites no authority supporting these arguments. Case law establishes that application of the disentitlement doctrine “is not limited to cases in which the appellant is in violation of the order from which he or she appeals” (In re E.M. (2012) 204 Cal.App.4th 467, 477 (E.M.)), or to cases where the order being disobeyed was entered in the same case giving rise to the appeal. (Stoltenberg, supra, 215 Cal.App.4th at pp. 1232–1234.)

Yan also fails to acknowledge the 2014 case arises from the judgment obtained in the 2010 case and Yan’s efforts to frustrate enforcement of that judgment. We see no reason why the disentitlement doctrine should not apply under these facts. Essentially, Yan is asking for relief this case (which Li had to file in order to stop Yan from further frustrating efforts to enforce the judgment obtained in the 2010 case) while at the same time egregiously flouting the trial court’s orders (which we have twice affirmed) aimed at enforcing the judgment in the 2010 case. (E.M., supra, 204 Cal.App.4th at p. 477 [“the disentitlement doctrine is not only applicable to disobedience of the order being appealed; it also applies to ‘egregious’ conduct that frustrates the juvenile court from carrying out its orders”]; Stone v. Bach (1978) 80 Cal.App.3d 442, 444 [“ ‘[I]t would be a flagrant abuse of the principles of equity and of the due administration of justice to consider the demands of a party who becomes a voluntary actor before a court and seeks its aid while he stands in contempt of its legal orders and processes’ ”].)

Given the facts here, we conclude the balance of all equitable concerns justifies applying the disentitlement doctrine to this appeal. (Stoltenberg, supra, 215 Cal.App.4th at p. 1230 [the disentitlement doctrine “ ‘is based upon fundamental equity and is not to be frustrated by technicalities’ ”].)

DISPOSITION

The appeal is dismissed. Li shall be entitled to recover his costs on appeal.

 

_________________________

Fujisaki, Acting P. J.

WE CONCUR:

_________________________

Petrou, J.

_________________________

Wick, J.*