Party Discovery: JASON EVERETT THOMPSON et al VS. DEAN GREGORY ASIMOS

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                                SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO

Document Scanning Lead Sheet
Feb-23-2017 4:24 pm

Case Number: CGC-11-514980
Filing Date: Feb-23-2017 4:24
Filed by: MELISSA DONG

Image: 05757237
REMITTITUR FILED

JASON EVERETT THOMPSON et al VS. DEAN GREGORY ASIMOS

001005757237

Instructions:
Please place this sheet on top of the document to be scanned.COURT OF APPEAL, FIRST APPELLATE DISTRICT
350 MCALLISTER STREET
SAN FRANCISCO, CA 94102
DIVISION 4

Office of the County Clerk
San Francisco County Superior Court

Juvenile Division
375 Woodside Avenue F
San Francisco, CA 94127 “/

FEB 23 2017
JASON EVERETT THOMPSON et al., CLE
Plaintiffs, Cross-defendants and Respondents. oe RK E ee
Vv.
DEAN ASIMOS,

Defendant, Cross-complainant and Appellant,
ve

A140096
San Francisco County No. CGC11514980

* * REMITTITUR * *

I, Diana Herbert, Clerk of the Court of Appeal of the State of California, for the First Appellate
District, do hereby certify that the attached is a true and correct copy of the original opinion or decision
entered in the above-entitled cause on December 15, 2016 and that this opinion has now become final.

ppellant__ Respondent to recover costs
Each party to bear own costs
___Costs are not awarded in this proceeding
___See decision for costs determination

Witness my hand and the Seal of the Court affixed at my office this FEB 92 2017
Very truly yours,

Diana Herbert

Clerk of the Court

M. Alfaro

Deputy Clerk

P.O. Report:
Marsden Transcript:
Boxed Transcripts:
Exhibits:

None of the above:

NI ||

rem1ue

oll sj
J tees petal oe aA?ai

Filed 12/15/16

COPY

CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT
DIVISION FOUR

JASON EVERETT THOMPSON et al., Eee 19 2016

Plaintiffs, Cross-defendants and Diana Herbert, Cierk
Respondents, A140096 by. Deputy Clerk|
v.
DEAN ASIMOS, (City &C San Franci

: ity ounty of San Francisco

Defendant, Cross-complainant and Super. Ct. No. CGC-11-514980)

Appellant.

Jason Everett Thompson founded a consulting firm and operated it as a sole
proprietorship under the dba Wired Real Estate Group (WREG) with the aim of advising

clients in a niche internet infrastructure industry called “colocation,” sometimes, but not

always, performing services that required WREG to have a real estate broker’s license.

Because Thompson did not have a broker’s license when he founded WREG, he decided

to collaborate with someone who did, Dean Asimos. To memorialize the terms of their

collaboration, Thompson and Asimos adapted a standard form independent contractor

agreement typically used by real estate brokers and agents.

* Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is
certified for publication with the exception of parts I.B.3, II.A., and II.B.3.c.

1The form agreement Thompson and Asimos used turned out to be a poor fit for the
unique business context in which WREG operated. A series of disputes arose between
the two of them concerning, among other things, alleged underpayment of commissions
and alleged failure to comply with regulatory requirements governing real estate
brokerage. These disputes led to litigation, with the parties suing each other on various
breach of contract and business tort theories. After a bench trial, Thompson prevailed in
all respects, obtaining a substantial damages award, plus an award of attorney fees.
Asimos took nothing, and now appeals from the judgment.

In the published portion of this opinion, we affirm the trial court’s rejection of all
of Asimos’s claims against Thompson and its determination of liability against Asimos
for breach of contract, but vacate the damages award and remand for recalculation and
clarification of the amount awardable. In the unpublished portions of the opinion we
deny Thompson’s motion to dismiss the appeal under the appellate disentitlement
doctrine, and affirm the trial court’s liability findings against Asimos on Thompson’s
claims for unfair competition and trademark infringement.

I BACKGROUND

Ina terse four-page Statement of Decision, the trial court framed the business
context giving rise to this lawsuit as follows: While “most real estate agents deal with
residential or commercial property[,] [Thompson] deals with the highly specialized kind
of real estate needed to house the hardware which makes the internet work. He does
business under the name Wired Real Estate Group. Initially Wired Real Estate Group
was a consulting business. Thompson sold his advice and was paid an hourly rate, an
activity not regulated by the California Department of Real Estate (DRE).” A great deal
is packed into these background observations about the business setting. To illuminate
how the business circumstances bear on our analysis of the trial court’s disposition of the

parties’ claims, we begin with a summary of the evidence presented at trial.A. Evidence Presented at Trial
1. Thompson’s Consulting Business, WREG

Thompson, a civil engineer with a background in the power plant industry,
testified that in the early 2000s, he was working for Equinix, a company operating in
what was then a nascent internet-infrastructure industry called “colocation services.”
Colocation, according to Thompson, means multitenancy; and colocation data services
means advice and consulting offered to companies involved in managing or locating
themselves in “data centers,” buildings which house computer servers and other
networking equipment, all of which must be powered, connected to the internet, and
cooled in a highly specialized way.

According to Thompson, companies needing large-scale internet storage (i.e.,
“cloud”) capability and high-speed broadband access to the internet tend to cluster
together in data center colocation arrangements under the umbrella of “management
services agreements.” To advise such companies, Thompson left Equinix to start his own
independent colocation services consulting business. In 2005, when he left Equinix,
Thompson was not set up to take advantage of real estate brokerage opportunities in his
colocation services consulting practice. He was a licensed real estate agent, but he was
not a licensed real estate broker.

In 2008, Thompson met Asimos, a real estate broker whose expertise was mostly
in residential real estate. Asimos had little knowledge of colocation services, but he did
have a real estate broker’s license. Seeing the potential for mutual advantage, Thompson
and Asimos, after brief discussion, “pretty quickly” agreed to enter into what would
become a two-year business collaboration.

On June 4, 2008, Thompson and Asimos signed the first of two successive
independent contractor agreements governing their relationship (the “ICAs”), the first
covering the period from inception through December 31, 2008, and the second,
negotiated in March 2010 but covering the period January 1, 2009 through September 30,
2010. The renewal contract included two written amendments, added as attachments, and

made a number of revisions to the body of the contract. The most significant among these

3revisions was language broadening the scope of what the parties considered to be
commission-generating transactions covered by the ICAs.

Just before he and Asimos signed their first contract, Thompson established a sole
proprietorship known by the dba WREG. At the same time, he issued a press release,
displaying in the release the trademarked name, WREG, and announcing that he was
bringing a new consultant onto “the Wired Real Estate Group team.” He also filed a
fictitious business name statement for WREG in the City and County of San Francisco
and opened a bank account in WREG’s name at Wells Fargo Bank.

2. The Issue of DRE Regulation

On the topic of DRE regulation, the trial testimony of Thompson and Asimos was
in accord on three basic points. First, a real estate broker has supervising responsibility
over an agent on all real estate transactions for which the agent utilizes the broker’s
license. Second, if the agent operates through an entity, the broker must register the
name of that entity with DRE under the broker’s license. And, third, commissions on all
real estate transactions requiring a broker’s license must be paid directly to the broker,
who then distributes the agreed share of commissions to the agent.

Although there was no dispute between Thompson and Asimos as to what the
applicable DRE rules were, they disagreed on how these rules applied to WREG.
Thompson testified that the consulting aspects of WREG’s business do not involve the
“[sale], lease or exchange” of real property (“licensed” deals, in his terminology), and
thus do not require a real estate broker’s license. Because most colocation data services
consulting involves brokering of “personal property” or “service[s],” Thompson testified,
most of WREG’s consulting business is not regulated by DRE.

According to Thompson, Asimos recognized that most of WREG’s consulting
business was “separate and apart” from its business conducted under the ICAs because he
showed no interest in it. To ensure full disclosure of anything Asimos wished to know
about WREG?’s activities, Thompson testified that he regularly sent Asimos detailed
“pipeline reports” showing the status of leads, pending deals, and closed transactions for

all WREG business. Thompson claimed to have “spent a lot of time explaining these

4things” to Asimos, but rather than ask follow-up questions, Asimos complained that the
pipeline reports had “too much information” and seemed to have “trouble understanding”
them.

Asimos, on the other hand, claimed Thompson never disclosed enough about
WREG’s consulting activities. He said Thompson “never told [him] that he planned to
do business [himself] as [WREG] as a consultant.” He claimed he expected from the
outset that all WREG business would run through him, as indicated by the fact that
Thompson assigned him the right to use the WREG name. Asimos testified that, shortly
after signing the 2008 ICA, he obtained his own dba for WREG in San Mateo County,
and sought to register that dba with DRE by sending in the required DRE registration
form. To collect and distribute expected WREG revenues, Asimos testified that he
established a bank account at Bank of America. He claimed to have been unaware that
Thompson had a separate dba for WREG and a separate bank account, and said he was
“shocked” when Thompson began sending him commission checks directly, since the
money flow, in his view, was supposed to be the opposite by DRE regulation.

3. Meager Commission Revenue and DRE Compliance Problems

In a harbinger of problems to come, 2008 produced no commission revenue at all
for Asimos. Thompson described that year as a challenging one due to the recession. At
the time, Thompson testified, WREG was pursuing many deals, some on the consulting
side, and some “licensed” deals; a few of the consulting deals were completed, but none
of the “licensed” deals closed, which is why Asimos received no commission revenue in
2008. On the unregulated side of his business, Thompson said he began discussions in
the fall of 2008 with Astound Broadband LLC (Astound) about a colocation arrangement
with Amazon, but that deal did not close until late April 2009.

Thompson testified that, in 2009, one of the reasons he was willing to negotiate
renewal terms expanding the defined scope of the commission-generating deals covered
by the ICA was because his collaboration with Asimos had generated so little for Asimos
to that point. The renewal terms did produce an increase for Asimos in commissions

received on WREG transactions from the zero commissions received in 2008, but only a

5modest one. Despite the broadened definition of commission-generating deals, Asimos
received only $8,437.17 in commissions in 2009 and 2010.

In total, over the entire course of the Thompson-Asimos collaboration under the
ICAs, Thompson testified there were only four commission-generating WREG deals
covered by the ICA out of hundreds of leads shown on Thompson’s pipeline reports.
These deals were for, respectively, I2B, Astound, Travelport and Internap. Of these,
Thompson testified, only the I2B deal required the services of a real estate broker.
According to Thompson, the Astound, Travelport and Internap deals were not “licensed”
deals.

Thompson testified that, after the I2B deal closed in November 2009, there was a
delay in obtaining the commission payment because of confusion over WREG’s DRE
registration status. In his trial testimony, Asimos claimed he mailed DRE a registration
form for WREG in August 2008, but never followed up to confirm that WREG had been
properly registered. Asimos explained that he sent a second registration form for WREG
to DRE—he thought perhaps the first had been lost in the mail—but it was not until
November 2009 that he was able to confirm WREG was properly registered.

4. The Dispute with Astound Broadband

In addition to the difficulties Thompson had in collecting WREG’s commission
from 12B, a second problem with payment of commissions owed arose, but this one
proved more difficult to resolve. In February 2010, the DRE sent a “corrective action”
letter to Asimos advising him that Thompson was not properly registered with DRE
under Asimos’s broker’s license. Thompson suspected that Astound Broadband, whose
colocation deal with Amazon had recently closed, might have made an anonymous
complaint about this issue to DRE.

When the Astound-Amazon colocation deal closed, Astound took the position it
would only pay a small fraction of the commission WREG had earned, claiming
Thompson had limited or no involvement in the Amazon negotiations. Thompson hired a
lawyer, Bill Gutierrez of the law firm, Carr McClellan, and on Gutierrez’s advice,

eventually decided to sue Astound for recovery of WREG’s commission. Although
6Gutierrez made efforts to resolve the matter without suing, “[i]t became evident very
early [on] that Astound was going to use real estate licensing as one of their primary
defenses.”

Thompson testified that even though he viewed the Astound deal as one not
requiring a broker’s license, he said “I was advised by [Gutierrez] that that was a risk.”
In light of the legal uncertainty around whether a real estate broker’s license was required
for the transaction, Gutierrez felt it would be best to “present” the case with Asimos as
the plaintiff. Although Asimos was initially reluctant to involve himself in the collection
effort, he eventually agreed to assist. At that point, Gutierrez began representing both
Asimos and Thompson jointly, and in October 2009 filed a lawsuit against Astound,
naming “Dean Asimos dba Wired Real Estate Group” as the sole plaintiff.

When asked at trial to describe the legal defenses Astound pursued in the course of
the litigation, Gutierrez confirmed that Astound had checked the DRE records,
discovered that WREG had not been registered with DRE at the time its deal with
Amazon closed, and used that issue as “a central defense.” He also confirmed that lack
of involvement by Thompson in the Amazon negotiations was one of the arguments
Astound made, but after investigating the issue, he said, he concluded there was no merit
to that argument. The lack-of-license issue, on the other hand, “gave strength to the
defense” and in light of that “it was not a sure thing” WREG would prevail.

While the Astound lawsuit was pending, in May 2010—only two months after
Thompson and Asimos had finalized their negotiation of renewal terms—Thompson gave
Asimos notice of termination, ending their collaboration under the ICAs. Shortly
thereafter, in June 2010, Thompson obtained his own real estate broker’s license. The
end of the Thompson-Asimos collaboration led to a series of post-termination disputes.
Thompson, for his part, demanded that Asimos immediately cease using the WREG dba
he had obtained in San Mateo County and cease holding himself out publicly as WREG’s
broker. Asimos, for his part, demanded various records from Thompson, including bank
statements for the WREG Wells Fargo account so that he could determine the extent of

what he believed were “unlicensed” activities that posed a risk to his broker’s license.

7These post-termination disputes were the focal point of the evidence at trial.
Asimos accused Thompson of hiding information from him, failing to pay commissions
due on undisclosed WREG transactions, and carrying out his WREG consulting activities
as an “illegal” side business in violation of DRE regulations. Thompson denied hiding
anything from Asimos, claimed he had always been open with Asimos about the extent of
WREG?’s consulting activities, and said the existence of separate bank accounts for
WREG—one maintained by Asimos, one maintained by Thompson—simply reflected the
fact that both men recognized the money flow for commissions on “licensed” deals was
to be handled differently than on unregulated deals.

5. Astound Settlement, Termination of ICAs, and Filing of This Lawsuit

Because of the post-termination disputes between Thompson and Asimos,
Gutierrez had the two of them sign a conflict waiver in June 2010. The conflict waiver
provided, among other things, that any settlement proceeds in the Astound case would be
placed in a Carr McClellan trust account and distributed “(1) in accordance with your
joint written instructions; or (2) in accordance with the terms of any order or judgment of
an arbitrator or court.”

The Astound case eventually did settle, in May 2011, for $155,000—a substantial
discount from the $366,000 that Thompson calculated WREG’s commission to be. Both
Asimos and Thompson consented to the settlement. Of the total $155,000 in settlement
proceeds paid by Astound, approximately $55,000 in attorney fees went to Carr
McClellan and the net proceeds, $102,911, were deposited into a client trust account
maintained by Carr McClellan.

The decision whether to settle for something less than the full value of the claim,
as Thompson saw it, was a matter of “judgment.” According to Thompson, “because
[Astound’s] primary defense was real estate licensing, . . . [it] could delay and run up the
costs of our litigation to the point where [the case] would have no value.” And since
there was a non-negligible risk “of someone not understanding the regulations or making
these kinds of defenses,” he ultimately agreed to take less than half of what he thought he

was owed.In August 2011, a few months after the Astound case settled, Asimos filed a
Chapter 13 bankruptcy petition. In his bankruptcy petition, Asimos did not list any
amount for the Astound settlement as an asset of his bankruptcy estate. He testified that
“T explained this to my counsel, exactly what was going on in regards to potential
litigation and this—the litigation from . . . Astound, and that there was going to be a court
action to resolve that dispute. [{] So it was in question whether or not that really was an
asset, or a liability, or neither.”

As of the fall of 2011, Thompson and Asimos remained in a stand-off as to the
distribution of funds out of the Carr McClellan trust account.

B. Procedural History

1. Claims Asserted and the Court’s Tentative Decision

On October 11, 2011, Thompson filed the complaint in this action, asserting
claims for trademark infringement, unfair competition under the Lanham Act (15 U.S.C.
§ 1125, subd. (a)), unfair competition under section 17200 of the Business and
Professions Code, trade libel, breach of contract, and for declaratory relief. Thompson’s
breach of contract claim, pleaded in four distinct counts, alleged improper use of the
WREG name and trademark, failure to pay commissions, failure to register the WREG
dba with DRE, and failure to advise Thompson properly on the requisites for DRE
regulatory compliance. Asimos answered and filed a cross-complaint. The cross-
complaint alleged causes of action for breach of contract, breach of covenant of good
faith and fair dealing, fraud, an accounting, and a declaration of constructive trust.

After a bench trial, on February 15, 2013 the trial court filed a four-page Tentative
Decision finding that “Thompson is the prevailing party. The court grant[ed] judgment in
favor of Thompson and against Asimos for $316,105, with prejudgment interest to be
calculated at the time of judgment. The court further order[ed] a permanent injunction
prohibiting Asimos’ use in any way of the service mark Wired Real Estate Group and
similar marks such as WiredRE, and WREG, and directing Asimos to cancel all of his
registrations of the Wireless Real Estate Group mark and similar marks.” The Tentative
Decision found, further, that Asimos’s continued use of the WREG trademark and

9business identity constituted unfair competition under both California law and the
Lanham Act, but awarded only token damages. And it concluded “Thompson is to
recover his costs of suit, including attorney fees to be determined on noticed motion. [{]
Asimos is to take nothing on his cross-complaint . .. .”

2. Statement of Decision, Judgment and Permanent Injunction

Only Thompson made a formal request under section 632 of the Code of Civil
Procedure! for a statement of decision. That request specifies a single issue for
determination in the statement of decision: “How should the funds being held in trust for
the parties by Mr. Gutierrez’s law firm, the attorneys who prosecuted the lawsuit against
Astound Broadband LLC for the parties, be distributed forthwith (after deduction of any
fees and costs to which Mr. Gutierrez’s firm is entitled)?”? In response to this request,
the trial court filed its Proposed Statement of Decision on May 30, 2013. The only
substantive revision to its earlier Tentative Decision was the addition of the following
language:

“The parties have asked the court to issue a statement of decision which includes
directions for distribution of the $155,000 which Mr. Gutierrez holds. In an effort to
satisfy the parties’ request, the court reasons as follows[:] If the Astound transaction had
gone smoothly, distribution of the proceeds would have been governed by the parties’
second contract, calling for 85% ($311,100) to Thompson. Asimos’ breach caused the

transaction not to go smoothly. As part of an effort to put Thompson in the situation he

! All statutory references are to the Code of Civil Procedure unless otherwise
designated.

? At oral argument in this court, Asimos’s counsel, Jessica Barsotti, conceded that
she did not file a section 632 request on her client’s behalf, but stated that at the close of
the trial evidence she made an oral, on-the-record request for a statement of decision
addressing the claims alleged in the complaint and the cross-complaint, without
specifying any particular issue. Even if such a generalized request was made—we have
not located one in the trial transcript—it would not have complied with section 632,
which requires that the requesting party “shall specify those controverted issues as to
which the party is requesting a statement of decision.”

10would be in were it not for Asimos’ breach, Mr. Gutierrez should distribute the Astound
funds which he holds entirely to Thompson, after deduction for any fees and expenses to
which Mr. Gutierrez and his law firm are entitled.” The court also revised its disposition
paragraph, ordering that Thompson’s damages award, “when combined with funds to be
distributed from Mr. Gutierrez’s account, total $311,100, plus $250 token damages for
service mark infringement.” There was no explanation for the reduction in damages by
$5,005 from $316,105.

The court entered judgment on August 23, 2013, awarding Thompson $311,100 in
damages from commissions he was owed on the Astound deal, $250 for trademark
infringement, and $138,688 in prejudgment interest, plus costs of suit and attorney fees.
Fees were awarded later, on motion, in an amount of $181,250. All totaled, Thompson
came away with an aggregate monetary award of $631,288. In addition to monetary
relief, the court issued a separate permanent injunction the same day prohibiting Asimos
from using the service mark WREG and requiring him to cancel all of his registrations of
the WREG mark and any similar marks. Asimos recovered nothing on his cross-
complaint. This timely appeal from the judgment followed.

3. Thompson’s Motions for Dismissal of this Appeal

During the pendency of the appeal, Thompson has repeatedly charged Asimos
with contempt in connection with the funds held in the Carr McClellan trust account. In
the permanent injunction, Asimos was ordered to “cooperate immediately” in the
distribution to Thompson of the funds held in that account. The permanent injunction
instructed Asimos to “sign immediately any documents reasonably necessary to
effectuate the distribution of the Astound settlement funds to plaintiff Jason Everett
Thompson.” On October 23, 2013, when Asimos filed his notice of appeal, he had not
yet signed a stipulation releasing the Astound funds to Thompson, as required by the

permanent injunction.

3 Since the court entered judgment without changing its May 30, 2013 Proposed
Statement of Decision, we refer to the Proposed Statement of Decision below, throughout
the opinion, simply as the “Statement of Decision.”

11On Thompson’s motion, in November 2013 the trial court issued an order to show
cause re contempt (OSC) requiring Asimos to show why a judgment of contempt should
not be entered against him. At the hearing, the court found that Asimos was not in
contempt, but ordered him again to sign the necessary documents to authorize release of
the Astound funds. Following the hearing, Asimos signed the stipulation authorizing
release of the funds, but added a written addendum saying he was signing “under protest”
and that his signature did not authorize a “transfer of assets.”* Because of the addition of
this language to the authorization, Carr McClellan stated that it could not transfer the
funds.

On November 19, 2013, Thompson filed a motion to dismiss the appeal based on
the appellate disentitlement doctrine, citing Asimos’s failure to comply with the trial
court’s injunction. This court denied that motion in January 2014, concluding that
“ ‘where a doubt exists’ ” as to whether an appellant’s conduct is contumacious, an
appellate court “ ‘will tolerate temporarily’ ” disruptive behavior.> When, by August 21,
2015, Asimos still had not signed an unqualified authorization for Carr McClellan to
release the Astound funds, Thompson filed a second motion for an OSC re contempt,
which the trial court granted. In his opposition to this second motion instituting contempt
proceedings, Asimos argued his appeal of the injunction stayed enforcement of the

injunction.®

4 Asimos took the position that because his bankruptcy proceedings were still
pending, he was entitled to delay the distribution of funds to ensure that the bankruptcy
trustee would not attempt to claim the Astound funds as an asset of the bankruptcy estate.
The trustee wrapped up the bankruptcy proceedings, found that Asimos had no property
available for distribution from the estate, and was discharged from all further duties as
trustee, on May 19, 2014.

5 Quoting Tobin v. Casaus (1954) 128 Cal.App.2d 588, 592.
6 Asimos submitted a declaration stating Barsotti advised him that the filing of the

appeal stayed the injunction. Asimos also said he believed he could not authorize a
transfer of assets because of his pending bankruptcy proceedings, and he submitted to the

12In reply, Thompson argued the injunction was not stayed because (1) Asimos
appealed only the judgment, not the permanent injunction, and (2) Asimos had not
perfected a stay of the injunction by depositing the signed authorization with the court as
required by section 917.3. Subsequently, on October 21, 2015, Asimos filed in the trial
court a “Notice of Lodging of Executed Document Pursuant to [Code of Civil Procedure
section 917.3]” (Notice of Lodging). Attached to the Notice of Lodging was a copy of
the authorization, signed by Asimos and dated October 19, 2015.

The trial court later concluded Asimos did not perfect a stay of the injunction. The
mini-minutes of a trial court hearing held on November 2, 2015 state “the Court found
that [Asimos] did not lodge the original signed authorization for disbursement of funds
with the Court.” The court granted the requested OSC and set a further hearing for
November 13, 2015. When Asimos and his counsel failed to appear that day, the court
issued a $50,000 bench warrant for his arrest. The court’s written contempt order filed
that date states its findings that it has maintained jurisdiction over Asimos “in regard to”
the permanent injunction, and that “performance of [Asimos’s] obligations under the
Permanent Injunction were not stayed by virtue of the appeal undertaken by [Asimos].”

Without explaining why it found Asimos’s lodging of a copy of a signed
authorization to have been inadequate, the court adjudged Asimos guilty of contempt for
his failure to comply with the permanent injunction issued over two years earlier. The
court further held, “[dJefendant’s disobedience has been willful and with the intent to
frustrate the processes of this court and to deprive Plaintiffs of the benefits to which they
are entitled under the Permanent Injunction.” Finally, the trial court again ordered
Asimos to execute the necessary documents authorizing release of the Astound funds.

Another hearing was scheduled for November 20. At the November 20 hearing,
the trial court found Asimos had once more failed to sign and deliver a document

authorizing release of the Astound funds. The court then issued an order to Carr

trial court a declaration from his bankruptcy attorney stating that Asimos could not
voluntarily transfer assets, and that Asimos was aware of that restriction.

13McClellan directly instructing them to bypass Asimos’s authorization, and the funds were
paid out to Thompson. In light of these events relating to the judgment of contempt,
Thompson filed a second motion in this court to dismiss Asimos’s appeal based on the
disentitlement doctrine. This court issued an order deferring the motion for consideration
along with the merits of the appeal.

II. DISCUSSION

A. Thompson’s Second Motion to Dismiss

Appellate disentitlement is a “well-established” doctrine that bars a party to an
action from appealing a judgment when that party has engaged in “ ‘willful disobedience
or obstructive tactics’ ” to frustrate the enforcement of the judgment he seeks to appeal.
(Stoltenberg v. Ampton Investments, Inc. (2013) 215 Cal.App.4th 1225, 1230, 1234,
italics omitted (Stoltenberg).) Even where the appellant raises allegations of “serious
misconduct by the original judge,” the disentitlement doctrine applies where a party
“seeks to undercut . . . proceedings against himself or herself without subjecting himself
or herself” to a lower court’s judgment, thus creating a “fundamental enforceability
problem” for courts. (Polanski v. Superior Court (2009) 180 Cal.App.4th 507, 537, 538
(Polanski).)

The doctrine has been described as a “discretionary tool that may be applied when
the balance of the equitable concerns make it a proper sanction... .” (People v. Puluc-
Sique (2010) 182 Cal.App.4th 894, 897.) Its purpose, described variously over the years
as ensuring the enforceability of decisions rendered on or following an appeal, imposing
a penalty on an appellant for “flouting the judicial process,” discouraging fugitives from
justice, and “promoting the efficient operation of the courts” (id. at pp. 897-898), boils
down to this enduring statement more than 75 years ago: “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.”
(MacPherson v. MacPherson (1939) 13 Cal.2d 271, 277 (MacPherson).)

Thompson’s latest motion to dismiss under the disentitlement doctrine has

substantial merit, but ultimately we must deny it. We do not discount or in any way

14condone the evasions Asimos engaged in here. He was adjudged guilty of contempt by
the trial court after he repeatedly failed to comply with the injunction. (See MacPherson,
supra, 13 Cal.2d at p. 276; Stoltenberg, supra, 215 Cal.App.4th at p. 1227.) He failed to
“sign immediately any documents reasonably necessary” to distribute the Astound funds
to Thompson. When he eventually signed the approval form, he signed it “under
protest,” offering the reservation that his signature did not constitute a “transfer of
assets.” And ultimately, because of his equivocations, and apparently those of his
counsel as well, Carr McClellan could not release the funds.

This was part of a clear pattern. The court several times ordered Asimos to sign
the necessary documents, and the record reveals he evaded compliance with the judgment
for more than two years between August 2013, when the permanent injunction was
issued, and November 13, 2015, when he was held in contempt. Even after an order to
show cause re contempt (OSC) issued on November 2, 2015, and at the hearing on the
motion seeking the OSC when the court questioned the adequacy of Asimos’s signed
authorization for release of funds, he and his counsel elected not to appear at the
November 13 hearing on the OSC, resulting in issuance of a bench warrant. In its
contempt judgment, the trial court found that Asimos’s lack of cooperation was “willful”
and was carried out “with the intent to frustrate the processes of this court and to deprive
Plaintiffs of the benefits to which they are entitled.”

Nevertheless, having carefully weighed whether Asimos should suffer the ultimate
appellate sanction—dismissal for misconduct, thereby stripping him of his appellate
rights—we conclude that, while the question is close, the equities do not require it. There
is some reason to doubt whether he was properly found guilty of contempt. While the
contempt proceedings were pending, Asimos, having perfected an appeal, lodged a
signed authorization for release of the Astound funds, thus, it seems, triggering a stay of
the permanent injunction, and arguably depriving the trial court of jurisdiction to proceed

15further with contempt proceedings while the appeal was pending.” Thompson argues that
Asimos’s notice of appeal of the judgment does not encompass the permanent injunction,
but we disagree. A reversal of the judgment on any number of the grounds now urged by
Asimos in this appeal would have required a reversal of the injunction.

The critical issue here is whether Asimos deposited the instrument he was directed
to sign, as executed, with the “clerk of the court where the original judgment or order is
entered” in compliance with section 917.3. For reasons we cannot discern from the
record, the trial court refused to accept the lodged document Asimos filed in an effort to
comply with the statute. His counsel, Barsotti, first attempted to file the document on
October 21, 2015. The wording of the authorization for release of funds she filed on
October 21 was unqualified, although she did state grudgingly in the accompanying
Notice of Lodging, for whatever it was worth—which was nothing, for it was not up to
her to decide—that “this document may not be used to attempt to execute any portion of
the judgment in this matter until such time that the Court of Appeal renders a decision in
favor of [Thompson], if ever.”

According to the minutes of the unreported hearing on Thompson’s motion for
issuance of an OSC on November 2, 2015, the court declined to accept the document
Barsotti filed on October 21 not because of her purported limitation on it, but because it
was only a copy. There is no indication that an original was later presented, but
according to the minutes of the unreported proceedings on the OSC on November 13,
when the status of the signed authorization came up again, in the absence of Barsotti and
Asimos, Thompson’s counsel stated that, on November 9, 2013 he had received the
authorization but that it was “signed but NOT dated.”

7 See section 917.3 (“The perfecting of an appeal shall not stay enforcement of the
judgment or order in the trial court if the judgment or order appealed from directs the
execution of one or more instruments unless the instrument or instruments are executed
and deposited in the office of the clerk of the court where the original judgment or order
is entered to abide the order of the reviewing court.”) (italics added).

16From all of this, we may surmise why the court rejected Asimos’s signed
authorization—perhaps it was dissatisfied because the document was not an original,
perhaps it had a problem with the appearance of equivocation created by Barsotti’s
Notice of Lodging, or perhaps the fatal defect was the fact the document was undated—
but the significance of any of that to the applicability of the proviso in section 917.3 is
not obvious. In the context of contempt proceedings, more clarity in the record was
required. The trial court made a finding that a valid order had issued, but we are unable
to find substantial evidence in the record showing that, as of the date of the contempt
hearing, the order remained enforceable.

Here, unlike most other procedural settings, we cannot imply findings the trial
court did not make. An “appellate court does not presume [a contempt] order to be
correct. Rather, because of the summary nature of civil contempt, all presumptions are
drawn against the validity of the contempt order.” (Jn re D.W. (2004) 123 Cal.App.4th
491, 501; accord, In re M.R. (2013) 220 Cal.App.4th 49, 58.) Although the
disentitlement doctrine does not necessarily require a formal finding of contempt, on this
record the court’s contempt finding is sufficiently central to the requested relief that, in
exercising our discretion, we must err on the side of proceeding to the merits.®

B. The Trial Court’s Statement of Decision and Judgment

1. Standard of Review
In reviewing a judgment based upon a statement of decision following a bench

trial, we review questions of law de novo. (Cuiellette v. City of Los Angeles (2011) 194

8 We do not reach, and we express no view on, the question of whether the
contempt judgment was properly entered. That judgment is final. Asimos did not seek
review of it by writ of prohibition (see Koehler v. Superior Court (2010) 181 Cal.App.4th
1153, 1165), and we are not required to pass on its validity here, nor could we, since
contempt judgments are not appealable. (Jn re Buckley (1973) 10 Cal.3d 237, 258-259.)
All we decide is that there is enough doubt about the trial court’s jurisdiction to proceed
with an adjudication of contempt after October 21, 2015 for us to withhold the equitable
remedy of appellate disentitlement.

17Cal.App.4th 757, 765.) We apply a substantial evidence standard of review to the trial
court’s findings of fact. (Niko v. Foreman (2006) 144 Cal.App.4th 344, 364 (Foreman).)
Under this deferential standard of review, findings of fact are liberally construed to
support the judgment and we consider the evidence in the light most favorable to the
prevailing party, drawing all reasonable inferences in support of the findings. (Citizens
Business Bank v. Gevorgian (2013) 218 Cal.App.4th 602, 613 (Gevorgian).)

A single witness’s testimony may constitute substantial evidence to support a
finding. (Gevorgian, supra, 218 Cal.App.4th at p. 613.) It is not our role as a reviewing
court to reweigh the evidence or to assess witness credibility. (Foreman, supra, 144
Cal.App.4th at p. 365.) “A judgment or order of a lower court is presumed to be correct
on appeal, and all intendments and presumptions are indulged in favor of its correctness.”
(In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133 (Arceneaux).) Specifically,
“{u}nder the doctrine of implied findings, the reviewing court must infer, following a
bench trial, that the trial court impliedly made every factual finding necessary to support
its decision.” (Fladeboe v. American Isuzu Motors, Inc. (2007) 150 Cal.App.4th 42, 48
(Fladeboe).)

When a proper request for a statement of decision has been made, the scope of
appellate review may be affected. (See Wegner et al., Cal. Practice Guide: Civil Trials
and Evidence (The Rutter Group 2016) §{ 16:197 to 16:216.5, pp. 16-45 to 16-48.)
Under section 632, upon a party’s request after trial, the court must issue a statement of
decision “explaining the factual and legal basis for its decision as to each of the principal
controverted issues at trial.” And under section 634, if the statement of decision does not
resolve a controverted issue or is ambiguous, and the omission or ambiguity was brought
to the attention of the trial court, “it shall not be inferred on appeal . . . that the trial court
decided in favor of the prevailing party as to those facts or on that issue.” (See
Culbertson v. Cizek (1964) 225 Cal.App.2d 451, 465-466; see also Arceneaux, supra, 51
Cal.3d at pp. 1133-1134.)

The statutory statement of decision process following “ ‘the trial of a question of

fact by the court’ . . . [{] . . . is for the benefit of the court and the parties. To the court it
18gives an opportunity to place upon [the] record, in definite written form, its view of the
facts and the law of the case, and to make the case easily reviewable on appeal by
exhibiting the exact grounds upon which judgment rests. To the parties, it furnishes the
means, in many instances, of having their cause reviewed without great expense.’ ”
(Whittington v. McKinney (1991) 234 Cal.App.3d 123, 126-127, italics and citations
omitted.) A proper statement of decision is thus essential to effective appellate review.
“Without a statement of decision, the judgment is effectively insulated from review by
the substantial evidence rule,” as we would have no means of ascertaining the trial
court’s reasoning or determining whether its findings on disputed factual issues support
the judgment as a matter of law. (Gordon v. Wolfe (1986) 179 Cal.App.3d 162, 168.)
Together, sections 632 and 634, as implemented by rule 3.1590(d)-(g) of the
California Rules of Court, establish a two-step procedure for requesting a statement of
decision and preserving objections for pursuit on appeal. First, following the court’s
announcement of its tentative decision, section 632 requires a party to specify, in timely
fashion and in proper form, “those controverted issues as to which the party is requesting
a statement of decision. After a party has requested the statement, any party may make
proposals as to the content of the statement of decision.”® This initial step serves the
function of advising the trial court of exactly what issues the parties view as materially
controverted at the close of the evidence, just as the process of settling jury instructions

serves to frame issues for decision by the fact-finder in the jury trial setting.'° Second,

9 In cases tried over the course of more than one day or more than eight hours, this
must be done in writing (unless the parties appearing at trial agree otherwise) within 10
days of the court’s announcement of its tentative decision. In cases tried in a day or less
or in less than eight hours, it may be done orally at any time before submission of the
matter for decision. (§ 632.)

10 California Rules of Court, rule 3.1590(c) provides a number of options to the
trial court in structuring and managing this first step of the statement of decision process,
including placing the onus on one of the parties to prepare a proposed statement of
decision or directing that its tentative decision serve as the proposed statement of
decision. Since the trial court in this case did not avail itself of any of these options, rule
3.1590(c) is not relevant to our analysis here.

19section 634 requires that any omissions or ambiguities in the statement of decision must
be “brought to the attention of the trial court either prior to entry of judgment or in
conjunction with” a new trial motion (§ 657) or a motion to vacate the judgment (§ 663),
thus allowing the court to respond to objections before the taking of an appeal. The
second step is not a substitute for the first. Objections are germane only as to issues
framed as materially controverted under section 632.

For the doctrine of implied findings to be disabled on appeal, both steps of the
two-step procedure under section 632 and 634 must be followed. (Fladeboe, supra, 150
Cal.App.4th at pp. 58-59.) Where a party fails to “specify . . . controverted issues” or
otherwise “make proposals as to the content” of a statement of decision under section 632
(forcing the trial court to guess at what issues remain live during preparation of the
statement of decision), or where a party complies with section 632 but fails to object
under section 634 (depriving the trial court of the opportunity to clarify or supplement its
statement of decision before losing jurisdiction), objections to the adequacy of a
statement of decision may be deemed waived on appeal. (Jd. at p. 59.) Because either
procedural defect impedes the trial court’s ability to fulfill its duty under section 632 and
potentially undermines the effectiveness of any statement of decision it prepares as a tool
of appellate review, strict adherence to both steps of the process is necessary before we
will reverse the presumption of correctness generally accorded trial court judgments on
appeal.

Even where proper procedure under sections 632 and 634 has been followed
punctiliously, “[tJhe trial court is not required to respond point by point to the issues
posed in a request for statement of decision. The court’s statement of decision is
sufficient if it fairly discloses the court’s determination as to the ultimate facts and
material issues in the case.” (Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20
Cal.App.4th 1372, 1379-1380; accord, Ermoian v. Desert Hospital (2007) 152
Cal.App.4th 475, 500.) “When this rule is applied, the term ‘ultimate fact’ generally
refers to a core fact, such as an essential element of a claim.” (Central Valley General
Hospital v. Smith (2008) 162 Cal.App.4th 501, 513.) “Ultimate facts are distinguished

20from evidentiary facts and from legal conclusions.” (Jbid.) Thus, a court is not expected
to make findings with regard to “detailed evidentiary facts or to make minute findings as
to individual items of evidence.” (Nunes Turfgrass, Inc. v. Vaughan-Jacklin Seed Co.
(1988) 200 Cal.App.3d 1518, 1525 (Nunes Turfgrass).) In addition, “[e]ven though a
court fails to make a finding on a particular matter, if the judgment is otherwise
supported, the omission is harmless error unless the evidence is sufficient to sustain a
finding in favor of the complaining party which would have the effect of countervailing
or destroying other findings.” (Ibid.; accord, Kazensky v. City of Merced (1998) 65
Cal.App.4th 44, 67-68.)
2. Asimos’s Cross-Complaint

The portion of the trial court’s Statement of Decision resolving Asimos’s cross-
complaint against him reads, in its entirety, as follows: “Asimos asserts five theories of
relief in his cross-complaint .... (1) Breach of contract. Asimos complains that -
Thompson secretly carried out transactions in which Asimos should have been included.
The court has been presented with no credible evidence of such secret transactions.
(2) Breach of covenant of good faith and fair dealing. Absent pleading and proof of a
special relationship between the parties, this theory of relief duplicates the breach of
contract theory of relief. No such special relationship exists in the present case. (3), (4),
and (5). Accounting, Fraud and Concealment, and Constructive Trust. To have viability,
these theories of relief, like the first two, require some credible evidence of concealment,
and the court finds no such credible evidence.”

Asimos argues that, in rejecting the claims asserted in his cross-complaint, the trial
court “utterly failed in its fact finding duties.” In support of this argument, he takes the
position that Thompson admitted breaching the ICAs in at least 10 different ways, none

of which the court expressly addressed.!! For each of these “admitted” breaches, Asimos

'l According to Asimos, Thompson breached the ICAs by (1) failing to provide all
documents that may have a material effect on the parties’ performance; (2) refusing to
“run all business of WREG through Asimos”; (3) “paying commissions to the broker in

21claims he asked for a specific finding of fact when he filed a list of 41 objections on June
13, 2013 in response to the court’s Statement of Decision, and he says he raised the same
objections in a motion for a new trial. The trial court denied his new trial motion on
procedural grounds (untimely notice, late filing of his brief), and never responded to his
objections or clarified or supplemented the Statement of Decision.

Anticipating that he may have problems with this argument because of the
presumption in favor of the judgment on appeal, Asimos contends he “performed all of
the required steps to avoid [an] inference in favor of the judgment, including bringing
deficiencies in the statement of decision before the trial court by way of objections and
[post-trial] motions ....” We disagree. Asimos filed a laundry list of objections under
section 634, but that was not enough to avoid the doctrine of implied findings. Because
he filed nothing under section 632 specifying as “controverted” or otherwise proposing as
“content” any of the manifold breaches of contract he now claims were never
addressed,!? we imply findings against him on each alleged breach, and we find

substantial evidence in the record for those findings.

violation of” the ICAs as well as “established law”; (4) “failing to pay all of th