Fund for PAID and David Kline v. Bernard Nash, etal

• Court: Court of Appeals of Virginia
• Decided: April 9, 1996
• Docket: 2243954
• Status: Unpublished

Opinion

COURT OF APPEALS OF VIRGINIA

Present: Judges Coleman, Willis and Overton Argued at Alexandria, Virginia

FUND FOR PRIVATE ASSISTANCE IN INTERNATIONAL DEVELOPMENT and DAVID KLINE

v. Record No. 2243-95-4 MEMORANDUM OPINION * BY JUDGE JERE M. H. WILLIS, JR. BERNARD NASH, ET AL. APRIL 9, 1996

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY Rosemarie Annunziata, Judge

R. Frances O'Brien (Flott, Rosner & O'Brien, on briefs), for appellants.

Edward G. Modell for appellees.

The Fund for Private Assistance in International Development

(PAID) and its President, David Kline, appeal from a final decree

of the trial court finding them in contempt of the trial court's

and commissioner's discovery orders and awarding Bernard Nash and

other creditors (Nash) $22,000 in damages, assessed jointly and

severally against PAID and Kline. PAID and Kline contend that

the trial court erred (1) in finding them in contempt, (2) in

awarding $22,000 in attorney's fees, and (3) in holding PAID and

Kline jointly and severally liable for the contempt sanction. We

affirm.

PAID is a non-profit charity formed under the laws of

Washington, D.C. Its purpose is to provide financial assistance

* Pursuant to Code § 17-116.010 this opinion is not designated for publication. to organizations in underdeveloped countries. Kline is its

President and CEO. PAID leased office space in Washington, D.C.

from Nash.

In March 1994, Nash obtained judgment in the Superior Court

of the District of Columbia against PAID and Kline in the amount

of $136,000. Because PAID had moved its office to Vienna,

Virginia, Nash docketed the judgment in Fairfax County. Nash

garnished Account No. 100-13-911 at Patriot National Bank

(Patriot account). PAID contended that this account was exempt

from garnishment because it did not belong to PAID, but to Bridge

International (Bridge). Bridge is a Virginia non-profit foundation. Its purpose is

to purchase pharmaceuticals and to sell or donate them in

underdeveloped countries. Bridge sublet office space from PAID.

In January 1993, Bridge's founder resigned. In August, 1993,

Kline was appointed Bridge's acting executive officer for the

sole purpose of maintaining the viability of Bridge. He became a

signatory on the Patriot account from January through July 1994.

Bridge was dissolved in December, 1994.

On December 8, 1994, the trial court heard the motion by

PAID and Bridge to dismiss the garnishment of the Patriot

account. The court found the account to be subject to

garnishment, denied the exemption, and authorized Nash to serve

PAID and Kline with debtor's interrogatories inquiring as to

funds transferred into and out of the Patriot account. On

- 2 - January 31, 1995, Nash, PAID, and Kline appeared before a

commissioner for the debtor's interrogatories. PAID produced no

documents at that time. It argued that the December 8 order did

not require it to reveal sources of funds passing into the

Patriot account or the destinations of funds leaving the account,

because the donors of those funds had contracts with PAID

containing confidentiality clauses.

On February 3, 1995, the trial court ordered the names of

the donors to be disclosed under an order of confidentiality and

ordered Kline to produce all documents showing the purpose of the

transfers from Bridge to PAID. This was memorialized by an order

entered February 20, 1995. On February 15, PAID produced the

Patriot account bank records but not Bridge's corporate records

relating to the transfers from Bridge to PAID. Before the

commissioner, Kline composed a list, known as the "A-O list," of

all the documents the commissioner ordered PAID to produce.

On March 2, 1995, Nash wrote PAID requesting documents in

addition to those on the "A-O list." PAID objected to this

further document production. On March 13, 1995, Nash requested

the commissioner to find PAID and Kline in contempt. In the

commissioner's report of April 7, he recommended that the trial

court find PAID and Kline in contempt for "failure to produce

those documents listed on the attached list lettered A-O,"

specifically, "those records relating to Patriot Acct. No. 100-13-911, which have been repeatedly ordered including those

- 3 - records held by Bridge International."

On April 27, 1995, the trial court conducted a hearing on a

contempt rule against PAID and Kline. Immediately prior to the

hearing, PAID produced further documents which were responsive to

the "A-O list" and the March 2 letter. The trial court found

that PAID and Kline "willfully and improperly failed to fully

respond to debtor's interrogatories and . . . produce documents

required to be produced by the Court's orders, and by the

Commissioner's orders." The court held PAID and Kline in

contempt and assessed $22,000 in damages against them, jointly

and severally. This was the amount that the trial court found to

represent the reasonable value of attorney's fees incurred by

Nash in requiring PAID and Kline to comply with the trial court's

orders. PAID and Kline contend that the trial court erred in finding

them in contempt. Contending that there was no valid decree and

no willful violation upon which a finding of contempt could be

based, they argue that the December 8, 1994 order was merely

directive and provided no basis for contempt. See Winn v. Winn,

218 Va. 8, 10, 235 S.E.2d 307, 309 (1977). They further argue

that the February 20, 1995 order is invalid on its face because

it requires them to act beyond their power and to produce records

of a non-party corporation. However, the trial court rejected

this argument. Its order was not appealed. The order was a

valid exercise of the trial court's jurisdiction. Disobedience

- 4 - is not an acceptable substitute for appeal.

"A trial court 'has the authority to hold [an] offending

party in contempt for acting in bad faith or for willful

disobedience of its order.'" Alexander v. Alexander, 12 Va. App.

691, 696, 406 S.E.2d 666, 669 (1991) (quoting Carswell v.

Masterson, 224 Va. 329, 332, 295 S.E.2d 899, 901 (1982)). The

record supports the trial court's exercise of discretion in

finding PAID and Kline, as President of PAID, in contempt of

court. We find no abuse of the trial court's discretion in its

award of attorneys' fees. "[I]t is within the discretion of the

trial court to include, as an element of damages assessed against

the defendant found guilty of civil contempt, the attorneys' fees

incurred in the investigation and prosecution of the contempt

proceedings." Arvin, Inc. v. Sony Corp. of America, 215 Va. 704,

706, 213 S.E.2d 753, 755 (1975) (citation omitted).

Citing Arvin, PAID and Kline contend that the trial court

erred in holding them jointly and severally liable for the

contempt sanction. Arvin, however, did not address this point.

In Arvin, Arvin, Inc., an authorized dealer of Sony products,

consented to a final decree enjoining it from offering Sony

trademark goods at less than the prices stipulated in fair trade

contracts. Following entry of the decree, Arvin, Inc. and its

president violated the decree 99 times. The court found Arvin,

Inc. "intentionally, willfully, and flagrantly violated the

court's injunction." The court held Arvin, Inc. in contempt and

- 5 - imposed a sanction of attorneys' fees. The court did not,

however, impose a sanction against Arvin, Inc.'s president even

though it found he had personally violated the decree. The

court's authority to impose such a sanction was not an issue in

the case.

The record supports the trial court's determination to hold

Kline in contempt. The court's disclosure order was directed to

Kline personally. Kline acted personally in failing to comply

with that order. His conduct was not a mere exercise of his

responsibility as president of PAID. Rather, it represented a

personal effort on his part to frustrate the relief granted Nash

by the trial court. The judgment of the trial court is affirmed.

Affirmed.

- 6 -