John F. Mardula Esq et al v Richard S. Mendelson,

COURT OF APPEALS OF VIRGINIA
Present: 	Chief Judge Fitzpatrick, Judges Coleman and Annunziata
Argued by teleconference
JOHN F. MARDULA, ESQUIRE,
MARDULA & DAUGHTREY, PC, AND
ROBERTS & ABOKHAIR, LLC (NOW
ROBERTS, ABOKHAIR & MARDULA, LLC)
OPINION BY
v. 	Record No. 0170-00-4 	JUDGE ROSEMARIE ANNUNZIATA
DECEMBER 19, 2000
RICHARD S. MENDELSON, SPECIAL RECEIVER FOR
INTERLASE LIMITED PARTNERSHIP
FROM THE CIRCUIT COURT OF ARLINGTON COUNTY
Benjamin N. A. Kendrick, Judge
William D. Dolan, III (Michael W. Robinson;
Christine M. McAnney; Venable, Baetjer &
Howard, L.L.P., on briefs), for appellants.
John W. Toothman (David H. White; Toothman &
White, P.C., on brief), for appellee.
John F. Mardula, an attorney, appeals from the decision of
the Circuit Court of Arlington County, holding him in civil
contempt for violating that court's orders. 	The civil contempt
charge was brought by Richard S. Mendelson, Special Receiver for
Interlase Limited Partnership. 	The contempt citation against
Mardula was based upon his legal representation of White Star
Holdings, Ltd., an alleged transferee of assets from Interlase
Limited Partnership, which was the subject of the receivership.
On appeal, Mardula contends: 	(1) the Arlington circuit court
lacked jurisdiction over White Star Holdings, Ltd., the company
which Mardula represented, and that neither White Star nor

Mardula was bound by orders issued by the Arlington circuit
court; (2) the court did not identify the express terms of its
orders which Mardula allegedly violated, nor did the court
specify which actions of Mardula violated its orders; (3) the
evidence was insufficient, as a matter of law, to support the
contempt finding; and (4) the court erred in finding that certain
communications were not protected by the attorney-client
privilege. 	We find that neither Mardula nor White Star was bound
by the orders of the Arlington circuit court and reverse the
finding of contempt on that ground.
FACTS
In 1996, Dr. Kenneth R. Fox filed a divorce action against
his wife, Wendy Fox, in the Circuit Court for the County of
Arlington. 	The final decree, entered on April 9, 1997, granted a
divorce to Mrs. Fox, awarded her a lump sum equitable
distribution award of $1,450,000, and awarded child support in
the amount of $7,000 per month. 	In the final divorce decree, the
court found that various entities were "shams" created by Dr. Fox
to conceal his assets. 	The Interlase Limited Partnership, a
Georgia limited partnership, was among the entities specifically
identified as a "sham" and declared to be the alter ego of Dr.
Fox.
The events that caused the court to appoint a Special
Receiver for Interlase arose from Interlase's ownership of
certain patents developed by Dr. Fox and his former partner, Dr.
Arthur Coster. 	Interlase was receiving royalties from the
licensing of these patents to a company called Spectranetics
Corporation. 	On September 8, 1998, Dr. Coster, acting as the
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general partner of the Coster Family Limited Partnership, filed a
petition to have a Special Receiver appointed to take control of
the assets of Interlase. 	Coster alleged that Dr. Fox was
diverting the assets of Interlase outside the United States and
was applying them to his own personal use. 	On September 14,
1998, the court granted Coster's petition and entered an order
appointing Richard Mendelson as Special Receiver for Interlase.
On October 15, 1998, White Star Holdings, Ltd., sued
Spectranetics in federal court in Colorado for breach of a patent
licensing agreement. 	In its complaint, White Star alleged that
on September 11, 1998, before the appointment of the Special
Receiver, Interlase assigned all of its patents and the rights to
Interlase's patent licensing agreement with Spectranetics, to
White Star. 	In its suit against Spectranetics, White Star sought
to collect royalties due under the patent licensing agreement.
On December 18, 1998, the Arlington circuit court heard
argument on a plea in bar contesting the jurisdiction of the
court to appoint a special receiver for Interlase. 	The plea in
bar had been filed by Daniel J. Glanz, an attorney for Lucre
Investments, Ltd., which claimed to be the corporate general
partner of Interlase. 	The court denied Glanz's plea in bar and
issued a written order. 	In that order, the court declared "that
any alleged transfer of assets of Interlase LP on or about
September 11, 1998, is hereby declared void . . . ." 	White Star
was not made a party to those proceedings, was not served with
process, and did not appear at the December 18, 1998 hearing.
Mardula did not begin his representation of White Star in
the Colorado federal proceedings until sometime in February 1999.
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On July 2, 1999, at the request of the Special Receiver, the
Arlington circuit court entered an order declaring White Star to
be the alter ego of Dr. Fox and directing "White Star and its
agents, including John F. Mardula" to show cause why they should
not be held in contempt of court for violating the court's orders
stemming from the receivership proceedings. 	The Special Receiver
alleged that the transfer of the patents from Interlase to White
Star was void and, therefore, White Star, through its agent,
Mardula, was wrongfully withholding Interlase's assets from the
Special Receiver. 	Mardula moved for a bill of particulars, which
the Special Receiver filed. 	On August 11, 1999, the court found
Mardula in contempt. 	Mardula's motion for the court to
reconsider its finding was heard on October 1, 1999 and was
orally denied. 	On December 22, 1999, the court entered a written
order denying Mardula's motion for reconsideration and finding
Mardula in contempt of the court's September 14 and December 18,
1998 orders.1 It is from this order that Mardula appeals.2
1 In the December 22, 1999 order finding Mardula in
contempt, the court also ordered Mardula to pay over to the
Special Receiver any fees he had been paid by White Star,
Interlase, or Dr. Fox, and ordered Mardula to turn over to the
Special Receiver all of his records pertaining to Interlase and
White Star, an issue which is also before us on appeal. 	Because
we reverse the contempt finding, we need not reach the propriety
of the remedy set forth by the court.
2 The orders that comprise the basis for the court's finding
of contempt were entered on September 14, 1998 and December 18,
1998, respectively. 	In the September 14, 1998 order, the court:
(1) appointed Mendelson as Special Receiver for Interlase; (2)
ordered the Special Receiver to: 	(a) notify all interested
parties of his appointment; (b) identify and collect all assets
of Interlase; (c) determine claims to assets of Interlase; and
(d) file a report with the court; (3) ordered George Myers, an
attorney who had represented Interlase in certain patent matters,
to turn over to the Special Receiver all documents pertaining to
Interlase; and (4) "ordered that Kenneth R. Fox and the general
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ANALYSIS
"Where the court's authority to punish for contempt is
exercised by a judgment rendered, its finding is presumed correct
and will not be reversed unless plainly wrong or without evidence
to support it." 	Brown v. Commonwealth, 26 Va. App. 758, 762, 497
S.E.2d 147, 149 (1998). 	However, "[a] judgment, decree or order
entered by a court which lacks jurisdiction of the parties or of
the subject matter . . . is void." 	Robertson v. Commonwealth,
181 Va. 520, 536, 25 S.E.2d 352, 358 (1943). 	"[D]isobedience of,
or resistance to a void order, judgment, or decree is not
contempt. 	This is so because a void order, judgment, or decree
is a nullity and may be attacked collaterally." 	Id. (citations
omitted). 	"A court is without jurisdiction to order its receiver
to seize property not included in the judgment, nor may it
authorize the seizure of property which is claimed by one in
possession who is not a party to the action." 	First Nat'l
Housing Trust, Ltd. v. Superior Court of California, 263 P. 343,
344 (Cal. Ct. App. 1928) (citations omitted). 	See generally, 1
Ralph Ewing Clark, Law of Receivers § 78 (3d ed. 1959).3
partner of Interlase Limited Partnership shall forthwith deliver
to the Special Receiver all assets of Interlase Limited
Partnership within their possession or control."
The December 18, 1998 order: 	(1) denied the plea in bar
filed by Glanz on behalf of Lucre and Interlase; (2) ordered that
the appointment of the Special Receiver was still in effect; (3)
denied the motion to vacate filed by Glanz; (4) ordered that the
alleged transfer of assets from Interlase to White Star was void;
(5) ordered Lucre to turn over to the Special Receiver any
Interlase assets under Lucre's control; and (6) enjoined Lucre
and its agents from claiming to be the corporate general partner
of Interlase and from taking or purporting to take any actions on
behalf of Interlase.
3 [N]o order can be made directly binding
on a person unless he is properly in court,
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The court found Mardula guilty of contempt in his capacity
as an agent of White Star and ostensibly on the ground that White
Star possessed property which the court determined belonged to
Interlase. 	However, White Star was not made a party to the
September 14 and December 18, 1998 receivership proceedings. 	In
the latter proceeding, an order was issued which purported to
void the transfer of assets from Interlase to White Star. 	We
hold the court's order voiding the transfer is void and,
therefore, an improper basis for contempt. 	In short, in the
absence of in personam jurisdiction over White Star, the court
lacked jurisdiction to determine the validity of White Star's
right to the assets. 	See Zenith Corp. v. Hazeltine, 395 U.S.
100, 110 (1969)4; see also Jetco, Inc. v. Bank of Virginia, 209
Va. 482, 486, 165 S.E.2d 276, 279 (1969) ("It is well settled
that a court may not adjudicate the rights of one who is not a
party to the proceeding."); Finkel Outdoor Products, Inc. v.
Bell, 205 Va. 927, 931, 140 S.E.2d 695, 698 (1965) (holding that
where judgment lien creditors were not served or made parties to
neither can his rights or interests in the
property, if any, be foreclosed . . . .
* 	* 	* 	* 	* 	* 	*
[S]uch person having possession, custody or
control of the property should be made a
party to the suit and be given an opportunity
to resist the application for a receivership
and to otherwise protect his rights.
4 In Zenith Corp., Zenith had sued a subsidiary company,
alleging that the parent and the subsidiary had committed certain
Sherman Act violations. 	The parent company was not made a party
to the suit. 	The trial court entered judgment against both the
subsidiary and the parent company, and the parent appealed. 	The
Supreme Court held that the judgment against the parent was
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suit, court did not have jurisdiction over them and did not have
power to extinguish their rights to property). 	The trial court
also erred in finding that it did "not need jurisdiction over the
transferee to void a [fraudulent] transaction." 	See Iron City
Sav. Bank v. Isaacsen, 158 Va. 609, 627, 164 S.E. 520, 526 (1932)
(holding that trial court had no power to enter an in personam
decree as to the ownership of stock where the court had not
acquired jurisdiction over the transferee in an alleged
fraudulent conveyance). 	It follows that White Star and, by
extension, its agent, Mardula, were not bound by the court's
finding that the property in White Star's possession belonged to
Interlase and cannot be held in contempt for failing to abide by
any dictate that the property in question be relinquished to the
Special Receiver. 	See Robertson, 181 Va. at 536, 25 S.E.2d at
358.
For the same reason, we hold that the court's finding in the
show cause order of July 2, 1999 that White Star was the "alter
ego" of Fox is also void and, therefore, insufficient as a basis
for holding Mardula in contempt for failing to transfer Interlase
assets to the Special Receiver. 	See Zenith, 395 U.S. at 111
("Perhaps Zenith could have proved and the trial court might have
found that [the subsidiary and the parent] were alter egos; but
absent jurisdiction over [the parent], that determination would
bind only [the subsidiary]."). 	The court did not find White Star
to be the alter ego of Fox until July 2, 1999, when it issued an
order granting the Special Receiver's motion to show cause
improper because the parent had not been made a party to the
suit.
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against White Star. 	The July 2, 1999 order was issued after the
alleged contemptuous conduct by Mardula and
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clearly cannot be deemed a proper predicate for finding him in
contempt of the September 14 and December 18, 1998 orders.
Finally, even were we to find that Mardula was within the
jurisdiction of the court and was bound by the orders which he is
alleged to have disobeyed, the fact that Mardula had notice of
their issuance is insufficient, as a matter of law, to sustain
the court's finding of contempt. 	The September 14 and December
18, 1998 orders failed to describe any specific conduct that
White Star or Mardula was required to perform or prohibited from
doing. 	Although a party with notice of a court's order may be
held in contempt where a violation of the order is proved,
Calamos v. Commonwealth, 184 Va. 397, 403, 35 S.E.2d 397, 399
(1945), in instances where the order does not explicitly direct,
mandate or prohibit specific conduct, it is insufficient to
sustain a finding of contempt. 	French v. Probst, 203 Va. 704,
710, 127 S.E.2d 137, 141 (1962) ("order which merely declares the
rights of parties without an express command or prohibition may
[not] be the basis of a contempt proceeding"); see Winn v. Winn,
218 Va. 8, 10, 235 S.E.2d 307, 309 (1977) ("As a general rule,
'before a person may be held in contempt for violating a court
order, the order must be in definite terms as to the duties
thereby imposed upon him and the command must be expressed rather
than implied.'" (citation omitted)); Wilson v. Collins, 27 Va.
App. 411, 424, 499 S.E.2d 560, 566 (1998) ("If the actions of the
alleged contemnor do not violate a clearly defined duty imposed
upon him or her by a court's decree, the alleged contemnor's
actions do not constitute contempt.").
Therefore, for the reasons stated in this opinion, the
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finding of contempt is reversed.5
Reversed.
5 Because we reverse the finding of contempt, we need not
address the claim that the court erred in finding certain
communications were beyond the scope of the attorney-client
privilege.
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