California Court of Appeals, Fourth District, Third Division
JAMES R. LINDSEY, as Trustee, etc., et al., Plaintiffs and Respondents,
ALIEU B. M. CONTEH et al., Defendants and Appellants.
FOR PARTIAL PUBLICATION [*]
from an order of the Superior Court of Orange County No.
30-2014-00739428, Jacqueline A. Connor, Temporary Judge.
(Pursuant to Cal. Const., art. VI, § 21.) Affirmed.
Smith, Margaret M. Grignon, Anne M. Grignon, Michael Gerst,
Ilana R. Herscovitz, James L. Sanders and Stuart A. Shanus;
Genga & Associates, John M. Genga and Khurram A. Nizami
for Defendants and Appellants.
& Associates, Anton N. Handal, Gabriel G. Hedrick and
Lauren G. Kane; Newmeyer & Dillion and Thomas F. Newmeyer
for Plaintiffs and Respondents.
ACTING P. J.
by the trial court as litigation in which “[m]oney does
not appear to be an object to the parties and counsel[,
]” this case calls on us to consider the propriety of a
discovery referee's order imposing $100, 000 in discovery
sanctions against defendants Alieu B. M. Conteh (Conteh),
Odessa Capital Inc., Dominique Financial, Ltd., OOA ONE, LLC,
and OOA TWO, LLC (collectively, defendants), for failure to
comply with a prior discovery order. Defendants contend the
referee, stipulated to by the parties to rule on all
discovery related matters, erred in imposing monetary
sanctions due to both procedural and substantive defects.
Among other things, they assert that defendants'
“substantial compliance” with the prior discovery
order, combined with Conteh's expressed willingness to
sit for an additional deposition and produce additional
documents, precluded the levying of any sanctions. They also
claim the amount of sanctions is unjustified.
published portion of this opinion, we conclude that the
referee's order, filed with the trial court, is
appealable. The language of the reference, expressly made
under Code of Civil Procedure section 638, subdivision (a),
and the actions of the parties, the referee and the court,
indicate that the reference was a general reference, making
the referee's order appealable once filed with the court.
unpublished portion, we address the merits of Defendants'
appeal and reject their challenges to the imposition and
amount of monetary sanctions. Defendants conceded below that
they failed to comply with the prior discovery order, and the
referee did not abuse her discretion under the circumstances
either in determining monetary sanctions were appropriate
despite Conteh's promises about his future actions, or in
calculating the amount of appropriate sanctions.
AND PROCEDURAL BACKGROUND
Wireless, Inc. (African Wireless) is a Delaware corporation
owned by a handful of shareholders. Conteh and his closely
held business entity, Dominique Financial, Ltd., own
approximately 70 percent of African Wireless shares. In
addition to being a shareholder, Conteh is African
Wireless' CEO and Chairman of its Board of Directors. He
has the power to nominate three of the five members of the
African Wireless Board. Plaintiffs James R. Lindsey, as
trustee of the Lindsey Family Trust, William Buck Johns,
Wymont Services, Ltd. and Marc van Antro (collectively, the
minority shareholders) each hold between a one and 15 percent
interest in African Wireless, and all but one acts as, or has
a representative who acts as, a director of African Wireless.
Wireless' principal place of business is designated as
the City of Irvine, but the corporation has no operations, no
sales and no employees. Its purpose is to act as a holding
company, with its principal asset being a 60 percent interest
in Congolese Wireless Network SPRL (Congolese Wireless).
Congolese Wireless is a business entity organized under the
laws of the Democratic Republic of Congo (the DRC). Its
principal place of business is in Kinshasa, DRC, and all of
its operations take place in the DRC. Beginning in 1990,
Conteh served as manager of Congolese Wireless. With
assistance from Conteh and a few politically connected and
powerful citizens in the DRC, Congolese Wireless embarked on
a joint venture with another company, Vodacom International
Ltd. They created a new entity known as Vodacom Congo for the
purpose of owning and operating a wireless telephone network
in the DRC.
2012, a Congolese criminal tribunal allegedly convicted
Conteh of forgery, sentencing him to one year in jail. A
warrant was supposedly issued for his immediate arrest
following the rejection of all appeals in the case. Conteh
chose to flee the country to avoid incarceration. Less than
two years later, a Congolese commercial tribunal allegedly
ruled against Conteh in a business lawsuit due to
Conteh's criminal forgery conviction. That alleged ruling
prohibited Conteh from: (1) performing any acts in the name
of, and on behalf of, Congolese Wireless, and (2)
representing Congolese Wireless within any of the management
and administrative bodies of Vodacom Congo.
August 2014, the minority shareholders filed this shareholder
derivative action on behalf of African Wireless and against
Conteh, as an individual, and various of his alleged
investment entities that purportedly have ties to Congolese
Wireless and African Wireless. The operative complaint
alleges that over the course of nearly a decade, Conteh took
various actions and engaged in transactions that were
detrimental to African Wireless' interests and that
usurped opportunities belonging to it. The causes of action
include breach of fiduciary duty, unjust enrichment,
accounting and conversion, and among the relief sought is
monetary damages, prejudgment interest, injunctive relief,
declaratory relief and a constructive trust.
minority shareholders sought a temporary restraining order
(TRO) and a preliminary injunction to remove Conteh from his
African Wireless director position and prohibit him from
voting his shares in the corporation. The trial court denied
the TRO request, but scheduled a preliminary injunction
hearing. In preparation for the hearing, the parties
initiated expedited discovery by way of interrogatories,
deposition notices, and requests for admissions and
production of documents. At this point, whatever was not
already sour between the parties quickly turned such. The
minority shareholders accused Conteh, as an individual and as
the representative of the business entity defendants, of
failing to produce a single document, refusing to confirm a
deposition date and appear for a deposition, and unreasonably
objecting to all discovery. In turn, defendants accused all
or some of the minority shareholders of refusing to produce
for deposition a party-affiliated witness, Jonathan Sandler
(Sandler), producing a “shell” person most
knowledgeable (PMK) for deposition, and failing to respond to
interrogatories and document production requests.
variety of back and forth between the parties' counsel,
the parties remained unable to agree on deposition schedules
and locations, and each believed the other was continuing to
fail to provide meaningful discovery responses. At the
preliminary injunction hearing, the trial court briefly
addressed discovery matters raised in the parties'
preliminary injunction papers, expressing
“disappointment in the utter inability of counsel to
effectively meet and confer.” Believing a discovery
referee to be necessary, the court directed counsel to meet
and confer to select one, but left the parties to work out
the parties agreed upon a discovery referee and related
details. They stipulated that the referee would have broad
powers, including “the authority to set the date, time,
and place for any hearings determined by the discovery
referee to be necessary, to preside over hearings, to take
evidence if the referee so determines, rule on discovery
objections, discovery motions, and other requests made during
the course of the hearing.” The reference order drafted
by the parties, and issued by the trial court, indicated it
was made pursuant to section 638, subdivision (a), and
ordered that the parties' then pending discovery motions
were to be heard and decided by the referee.
January 2015, following a telephonic hearing and a review of
the more than 1, 000 pages submitted in conjunction with the
then pending motions to compel, the discovery referee issued
a 38-page detailed ruling and order. The referee ordered
Conteh to attend a three-day deposition in South Africa on
specified dates, and Sandler to attend a deposition in the
same location on the two days prior to the start of
Conteh's deposition. The parties stipulated that Conteh
was the PMK for each of the business entity defendants, so
his appearance would be both in his individual capacity and
as PMK. As for documents, defendants were ordered to produce
the documents listed in the deposition notices for Conteh and
the business entity defendants on or before February 23, 2015
- a date 10 days prior to Conteh's scheduled deposition -
“at a time, place and manner agreed upon by
counsel.” Defendants were also ordered to provide
certain verifications and privilege logs.
served their first document production and related responses
on the agreed upon date. Two days later, defendants'
counsel produced an additional batch of documents without a
proof of service.
Sandler's and Conteh's depositions took place in
South Africa as ordered by the discovery referee, with
Conteh's lasting the full three days for which it was
scheduled. During the first day of Conteh's deposition,
Conteh admitted that he did not produce certain requested
documents even though he acknowledged their existence, and
that he had not done a diligent search for all responsive
documents “in [his] possession and control.” He
stated that additional documents were likely in his office in
South Africa or in the DRC, and that the latter could be sent
by his staff in the DRC.
days after Conteh's deposition concluded, the minority
shareholders sent a motion to the discovery referee
requesting that discovery sanctions be levied against Conteh
and each of the business entity defendants for their alleged
failure to comply with the portion of the referee's
January 2015 order concerning document production. They
requested terminating, evidentiary, contempt and monetary
sanctions. Defendants opposed the sanctions motion.
a hearing, and taking into consideration all of the
parties' arguments and evidence, the referee issued a
detailed ruling, finding that Conteh had violated the January
2015 order in multiple ways. Based on her factual findings,
the referee concluded that monetary sanctions were warranted,
but other sanctions were not. She found the more than $130,
000 requested by the minority shareholders to be excessive,
and instead imposed $100, 000 in sanctions.
referee's sanctions order was filed with the trial court
on May 20, 2015. Defendants timely appealed, limiting their
appeal to the monetary sanctions aspect of the order.
Determining the Nature of the Reference
appeal of an order to pay monetary sanctions in an amount
over $5, 000 is an appealable order over which we have
jurisdiction. (§ 904.1, subd. (a)(12);
Rail-Transport Employees Assn. v. Union Pacific Motor
Freight (1996) 46 Cal.App.4th 469, 471
(Rail-Transport).) Our review of the record raised a
concern about whether the discovery referee's ruling from
which defendants appeal is a qualifying “order”
given that the trial court filed the ruling, but took no
further action with respect to it. At our request, the
parties provided additional briefing concerning the nature of
the reference and the resulting implications on
appealability. We conclude, based on the language of