Opinion ID: 1904582
Heading Depth: 1
Heading Rank: 2

Heading: The Facts, In Detail

Text: Plaintiff-appellant Synanon Foundation, Inc. [Synanon], was registered in 1958 as a tax-exempt, nonprofit organization under the laws of the State of California, for the avowed purpose of rehabilitating drug and alcohol abusers and engaging in research, public education, and charitable distribution. On April 18, 1978, Edward Siegel, the President of Synanon, approached defendant-appellee Coldwell Banker & Co., a real estate brokerage house, in regard to the possible purchase of a building in the District of Columbia that would be suitable for use both as Synanon's national headquarters and executive offices, and as a residence for Synanon members and residents. A sales agent for Coldwell Banker, appellee James Kabler III, had obtained a sales listing in December of 1977 from appellee Stuart Bernstein for an apartment building known as the Boston House, located at 1711 Massachusetts Avenue, N.W. Kabler recommended the Boston House to Siegel because that part of the building that faces Massachusetts Avenue is in an area zoned Special Purpose [S-P], and at that time nonprofit organizations were permitted to maintain offices in S-P zoned locations as a matter of right. Kabler did not tell Siegel, however, that earlier that month, Coldwell Banker had received an inquiry from another potential purchaser interested in using the Boston House for office space. That individual had requested that Jeffrey Grene, another Coldwell Banker agent, determine the floor-load capacity of the building, since under the D.C. Building Code, a building that is zoned for offices may not be so used unless the floor-load capacity is 100 pounds per square foot on the first floor, and at least 60 pounds per square foot on the higher floors. Grene asked Kabler to determine the floor-load capacity of the Boston House, and Kabler asked Bernstein. When Bernstein could not locate the information, Grene called a D.C. building inspector, who looked at the original plans for the building and informed Grene that the floorload capacity of the building as designed was only 40 pounds per square foot for the upper floors and 70 pounds per square foot for the lobby, and therefore, based on the original plans, the building was unsuitable for office use. Grene told Kabler that the potential purchaser was not interested in the building because the floor-load capacity was insufficient for his needs. Kabler, however, did not raise this potential problem with the Synanon representative, who made his inquiry one week later. On April 21, Siegel, Kabler and Bernstein met to discuss Synanon's interest in the Boston House. Siegel characterized Synanon as a peaceful, charitable organization, but stated that it had recently received unfavorable publicity from the news media. Siegel did not reveal the details of this publicity: a December 1977 article in Time magazine, and a television report by KGO-TV in January 1978, both alleging that Synanon had strayed from its founding principles, and had been transformed by its founder, Charles Dederich, into a violent cult. Bernstein did not ask for any additional information, and said that he sympathized with Siegel because he knew that the press could often be unfair in its coverage. He also refused Siegel's offer of references, requesting only a financial statement. Bernstein told Siegel that the zoning regulations permitted the use of the Boston House as offices by a nonprofit organization, and Kabler did not qualify that statement. Three days later, Siegel met with Kabler, Bernstein, and Bernstein's attorney to discuss the terms of a purchase of the Boston House. Siegel once again mentioned media criticism of Synanon and difficulties it had had with zoning authorities in California. Bernstein's attorney called the D.C. zoning office during this meeting to confirm that part of the Boston House was zoned SP, and then stated to Siegel that at least part of the building could be used for offices. Kabler once again did not qualify this statement. Bernstein instructed his attorney to draw up an Agreement of Sale, which the parties executed on April 28. The Agreement provided that Synanon would purchase the Boston House for $5,600,000. Closing was deferred until January 1979 in order to provide a tax advantage for Bernstein. Synanon gave Bernstein a down payment of $250,000, and was given permission to occupy the top two floors of the building pending settlement. By section 6(a) of the Agreement, Bernstein was given the right to retain the deposit in the event of Synanon's default. On the question of Synanon's intended use, section 5 of the Agreement provided: Seller and Purchaser recognize that it is the Purchaser's intention to acquire the Building for the purpose of converting it into Purchaser's headquarters.... Section 3(f) of the Agreement states that part of the building was zoned to permit office use by nonprofit organizations. The Agreement did not explicitly recognize that a certificate of occupancy must be obtained prior to any non-residential use of building space in the District. See 11 DCMR § 3203.1 (1984). In order to obtain such a certificate, an applicant would be required to demonstrate that the floor-load capacity of the Boston House met the minimum requirements for office use under the Building Code. See 12 DCMR § 702.5 (1985). Although the Agreement did not specifically assign responsibility for obtaining the required certificate of occupancy for office use, Synanon contended in the trial court that this responsibility was Bernstein's under section 5(h) of the Agreement, which provided that any claims asserted by ... governmental authority other than those based on the actions of Purchaser shall be the responsibility of Seller. Synanon residents began to move into the apartment house during the last week in May. The Boston House Tenants' Association opposed the sale to Synanon, and together with an Advisory Neighborhood Council, it lobbied the D.C. Zoning Commission to change the zoning law in order to prohibit conversion of existing apartment units to offices without obtaining prior approval from the Board of Zoning Adjustment. On June 8, the Zoning Commission issued an emergency order, eliminating the zoning regulation that permitted the conversion of apartments to offices in SP zones as a matter of right, and providing that due to a housing shortage in the District, as an emergency measure all such conversions would require the review and approval of the Board of Zoning Adjustment. See 11 DCMR § 508.1 (1984). From June 12 through June 15, an evening TV news show ran a four-part series on the cult aspects of Synanon and its proclivity for violence. On June 15, Charles Dederich, Synanon's founder, became involved in an altercation with a Washington Post photographer outside the Boston House, and was subsequently charged, along with a second Synanon officer, with assault. During this period, according to Bernstein, he received complaints from Boston House tenants that Synanon had taken control of the front desk, that the organization was holding meetings in the lobby and early morning rallies in the courtyard, and that there had been unauthorized entries into some apartments. On June 16, the Chief of Zoning Inspection notified Bernstein and Dederich that office use of the building would require a special exception under the June 8 emergency order. Also on June 16, Bernstein, Kabler and Siegel met to discuss an upcoming meeting with the tenants' association. Kabler informed Siegel that one of the objections that the association was likely to raise at the meeting was the floor-load capacity of the building. Kabler informed Siegel, for the first time, that the floor-load capacity as listed in the plans for the building was insufficient for office use. At the meeting, the tenants did in fact raise this objection. Later in the day, Bernstein notified Synanon that he considered the tenants' allegations of harassment listed above to be a breach of the Agreement of Sale. On June 17 or 18, Synanon made the decision to move out. On June 20, Bernstein sent notice to Synanon demanding that it cease its office use of the building until it obtained a certificate of occupancy. On June 21, Synanon hired a structural engineer to review the building plans, and also served a demand upon Bernstein that he obtain a certificate of occupancy and a special exception from the Board of Zoning Adjustment for office use of the building. On June 26, the structural engineer hired by Synanon reported that based on the building plans the Boston House could not be used for offices under the Building Code. On July 6, Bernstein purported to declare Synanon in default under the Agreement. On July 7, Synanon purported to rescind the contract based on Bernstein's failure to cure the various zoning problems in order to permit the building to be used for offices as contemplated by the Agreement of Sale. Synanon subsequently filed the instant action in the Superior Court against the owners of the building, Bernstein and Samuel Kushner, and against the agent, Coldwell Banker, and its employee, Kabler. The complaint alleged fraud, breach of contract and breach of warranty, and requested the court to order rescission of the Agreement, return of the $250,000 deposit, restitution for various expenses, and punitive damages. The owners and the agent each filed an answer, alleging that Synanon was forced to move out of the building not because the Boston House did not comply with the zoning requirements, but because of unfavorable publicity and because Charles Dederich wanted to escape prosecution for assault. Bernstein also filed a counterclaim. It initially alleged that Synanon was in default under various provisions of the Agreement that called for apartment and parking space rent payments, and in addition for lump sum payments of $5000 in lieu of rent for each of 35 apartments that had been vacated prior to settlement. Bernstein also requested damages for restoration costs, for legal fees, loss of future rents, and for interference with Bernstein's prospective economic advantage by causing him to lose tenants. On December 12, 1978  following additional publicity about Synanon's harassment of former members who left the organization, and about its policy of violence and its threats against members of the media who published unfavorable reports about its activitiesBernstein filed an amended counterclaim, in which he alleged for the first time that Synanon had procured the Agreement of Sale by fraud, in that it had not disclosed to him that it was an organization committed to violence. The defendants served their first discovery request, consisting of 54 interrogatories, on February 6, 1979. Nineteen of these interrogatories were directed to the issue of whether or not Synanon was a violent organization. (Interrogatories 32-50.) Four interrogatories requested tapes that had been broadcast over an in-house Synanon communication network, the wire, transcripts of those tapes, and indices. Major sources of programming for the wire were the taped and live pronouncements of Charles Dederich, Synanon's founder and leader. Dederich would hold morning meetings called Think Tables, in which he would often spell out new directions for the organization. Think Table discussions were taped, and written summaries were created of the topics discussed. Synanon maintained an archive of 10,000 tapes, some of which were transcribed. It also employed an archivist, Steve Simon, who supervised the creation of a computerized subject matter index to existing transcripts of tapes, referencing the tape number for easy listening access. The index also included some untranscribed tapes. The subject matter index was not an index of wire broadcasts; the only way to identify the material broadcast over the Synanon wire was to examine daily broadcasting logs kept by the organization. As yet unaware of the existence of a subject matter index for all transcripts and some tapes at the time that the first set of interrogatories was filed, the defendants requested Synanon to identify all indices of tapes of Charles Dederich or Edward Siegel that were broadcast over the wire, or indices of transcripts of tapes of Dederich or Siegel broadcast over the wire, for the period January 1, 1977, through July 30, 1978. (Interrogatory 53.) In responding to this interrogatory, the defendants said that no index of wire broadcasts existed. The three other interrogatories requesting tapes and transcripts were as follows: In interrogatory 28, the defendants requested Synanon to identify all tapes or transcripts of wire broadcasts that referred to the period in May and June of 1978 when Synanon was in residence at the Boston House. In interrogatory 32, Synanon was asked to identify all documents, tapes, and transcripts of tapes referring to Bill and Sylvia Crawford, former Synanon residents who allegedly were harassed by Synanon after they left the organization. In interrogatory 34, the defendants asked Synanon to identify all tapes and transcripts of wire broadcasts including any discussion of Charles Dederich's policy on vasectomies for male Synanon residents. Synanon responded to some of the interrogatories. It refused to answer the questions directed to the issue of violence or the question on the vasectomy policy, on the ground that those interrogatories were not likely to lead to the discovery of admissible evidence. In addition, it stated that it would be unduly burdensome for it to identify material contained in tapes in the Synanon archives. The defendants filed a motion to compel answers, and on January 18, 1980, Judge William S. Thompson began a hearing on the motion. At the hearing, Dan L. Garrett, Jr., then general counsel for Synanon, sought to be admitted pro hac vice in order to argue against the motion to compel. Judge Thompson declined to grant this request on the ground that Garrett was potentially a witness in the case. Nevertheless, Garrett sat at counsel table, and through counsel represented that no index, summary or referencing of tapes in the Synanon archives had ever been accomplished. Garrett's position was that it would be unduly burdensome to require Synanon to respond to the interrogatories requesting it to identify tapes on certain subjects, because someone would have to listen to all the tapes in the archives in order to comply. The defendants produced an affidavit that had been filed in another case, in which Garrett's son had stated that Synanon employed Steve Simon specifically to index and reference the tapes. Garrett's counsel represented to the court that Garrett would be willing to state under oath or as an officer of the court or in any capacity that such indices do not exist. When counsel for defendants asked to put Garrett on the stand in order to cross-examine him about the existence of an index, Synanon's counsel objected, telling the court that cross-examination would be gratuitous. Judge Thompson agreed, and relying partly on Garrett's representations as an officer of the court, he limited the scope of defendants' interrogatories to delete any requirement that Synanon identify particular tapes covering any substantial period of time. He limited interrogatory 28, compelling Synanon to provide only tapes of wire broadcasts made during June or July 1978. He eliminated the request for tapes of Dederich's statements on vasectomies, ordering the identification only of existing tape transcripts and indices referring to the subject. He similarly narrowed interrogatory 53 to eliminate the requirement that tapes be identified, ordering Synanon to identify only indices of tapes or transcripts of tapes of wire broadcasts by Charles Dederich or Ed Siegel from January 1, 1977 through July 30, 1978. Finally, Judge Thompson required Synanon to respond to interrogatories 47 through 50 to the extent of identifying any indices and paper documents referring to former Synanon residents threatened or beaten by the organization. Judge Thompson's January 23, 1980, order compelling answers to interrogatories is the only existing order compelling discovery ever entered in this litigation. [1] In February 1980, Dan Garrett left Synanon, and was replaced as general counsel by Phillip Bourdette. Bourdette was subsequently admitted pro hac vice and was among counsel of record for Synanon in the trial court. On February 29, 1980, Synanon filed supplemental answers to the interrogatories in response to Judge Thompson's order. In regard to interrogatories 47 through 50  requesting documents referring to former Synanon residents who were harassed by the organization  Synanon's supplemental response was minimal. In regard to interrogatory 28 (which required Synanon to provide all wire broadcast tapes for June and July, 1978 that referred to Synanon's departure from the Boston House), and to interrogatory 53 (which required Synanon to identify all indices of tapes or tape transcripts of broadcasts by Dederich or Siegel from 1977-78), Synanon referred the defendants to the programming log for wire broadcasts, and stated that no index or abstract showing the content of any broadcasts existed. In a subsequent request for production of documents, filed April 16, 1980, the defendants identified and requested 103 potentially relevant tapes from the wire log that were broadcast in June and July 1978. Synanon ultimately produced four of these. The defendants also requested approximately 400 other tapes in which violence or money-making activities of Synanon were discussed. A small number of these tapes was produced. Defendants requested tapes or transcripts of tapes of telephone conversations to the Boston House from June 15 through June 19, 1978, and Synanon provided a limited response. Defendants also requested a tape of a phone conversation on June 17 between Dan Garrett and Synanon's attorney, and a tape of a wire broadcast on June 23, 1978, both of which defendants said they could not locate. On June 19, 1980, the defendants filed a motion for sanctions based on Synanon's incomplete response to the document production requests. On May 7, 1981, following a hearing, Judge John D. Fauntleroy ordered Synanon to produce all of these documents and tapes within 90 days. Synanon moved for reconsideration of this order, and requested an evidentiary hearing on the question of whether any of the identified tapes existed. On October 3, 1981, Synanon's general counsel, and counsel of record in the case, Phillip Bourdette, filed an affidavit with Judge Fauntleroy stating that he had personally supervised a search of the Synanon archives and could find no additional material responsive to the document production request. At hearings in November 1981 and April 1982, Steven Simon, the Synanon archivist, stated that Synanon tapes were routinely recycled, and that although none of the requested tapes now existed, they had not been deliberately destroyed. Based on this testimony, on April 26, 1982, Judge Fauntleroy vacated his order of May 7, 1981 compelling production of documents. Defendants subsequently filed a second motion for sanctions, which was denied by Judge Carlisle E. Pratt on June 25, 1982. On February 8, 1983, the case was assigned to Judge Leonard Braman. In July 1983, defendants obtained information that Synanon, with the active participation of its in-house legal staffincluding Dan Garrett and Phillip Bourdettehad engaged in a massive scheme, in anticipation of and in response to discovery requests in this case and in several others, to delete incriminating information from tapes in the Synanon archives and to burn or hide other tapes that could not successfully be doctored. Defendants also discovered the existence of the subject-matter index, and were informed that Steve Simon, Synanon's archivist, had supervised a project at the direction of the Synanon legal department to eliminate incriminating topic headings so as to make access to the remaining tapes more difficult. Defendants obtained this information from affidavits by two former Synanon residents who had witnessed and participated in the destruction, Bette Fleishman and George Farnsworth. [2] Based on these affidavits, the defendants filed a motion to dismiss Synanon's complaint. Defendants alleged that dismissal of the complaint was warranted as a sanction for Synanon's willful abuse of discovery under Super.Ct.Civ.R. 37. Defendants also argued that the participation by Synanon's legal counsel, Garrett and Bourdette, in the destruction of tapes and documents, and their attempts to mislead Judges Thompson and Fauntleroy, had worked a fraud upon the court that independently warranted dismissal of the action. Judge Leonard Braman held an eleven-day evidentiary hearing on the motion to dismiss. Farnsworth testified, and defendants presented a videotape of Fleishman. According to their testimony, in October of 1978, Dan Garrett and Steve Simon and another Synanon resident spent two weeks in a trailer listening to tapes. Simon told Fleishman that incriminating tapes were destroyed during that period. In November 1978, tapes were flown out of the Synanon archives to a different location where they were burned at Steven Simon's direction. In December, more tapes were destroyed. Also in that month, Phillip Bourdette ordered all tape recordings and tape summaries distributed throughout Synanon to be turned over to the legal department. In response to this order, Farnsworth testified, he collected tapes and his wife gave them to Bourdette. In March of 1979  immediately following the filing of defendants' first set of interrogatoriesSteve Simon approached Farnsworth, who was in charge of the archive computer system. That system contained the transcript subject matter index (organized by key word) and a tape inventory that could identify all tapes by title or date. Simon told Farnsworth that the indices were dangerous and needed to be purged. Simon also told him that he had the approval of the legal department for this project. Farnsworth provided Simon with a complete printout of indices by title, date and subject matter. Simon marked those entries on the printout for which he wanted Farnsworth to delete the corresponding data file. Farnsworth deleted key words from the subject lists and tape numbers from the tape inventory. He burned all evidence of deletion. Farnsworth revealed that the computer tape inventory, that was presented to Judge Fauntleroy in connection with Simon's testimony that led to a vacation of that court's previous order compelling production of documents ( see p. 1261 supra ) was an intentionally changed inventory from which entire tapes had been deleted at Simon's direction. In April of 1979, Farnsworth approached Bourdette in order to attempt to confirm that his deletion at Simon's order of parts of the transcript index and tape inventory was legal. Bourdette said that he knew what Simon was doing and that Simon was not acting on his own. Bourdette explained that the goal of the deletion project was to make it difficult for people with whom Synanon was involved in litigation to zero in on relevant transcripts, and maintained that Farnsworth's actions were legal as long as the particular items deleted had not yet been requested in litigation. On September 5, 1979, Farnsworth was present at a dinner meeting between Steve Simon and Dan Garrett where the progress of the erasure project was discussed. During September, Farnsworth deleted more references, and in January of 1980, he deleted an additional batch of topics. He estimated that he had deleted a total of 180 topic references. Despite the fact that, on January 18, 1980, Dan Garrett had represented to Judge Thompson that the only way to identify tapes relating to specific topics was to listen to each tape in the archive, Bette Fleishman testified (in the evidentiary hearing before Judge Braman) that in February of 1980 she was recruited to work in the archives deleting and erasing tapes on Simon's instructions. She stated that Simon received information from Bourdette concerning materials sought in various lawsuits in which Synanon was involved. Simon in turn gave Fleishman a sensitive subject list, and she prepared logs of matters appearing on the list and delivered them to Simon. Simon, together with Bourdette's wife and another Synanon attorney, then determined which material to destroy. Once the material was identified, Fleishman would burn the tape label and the topic log and erase the tapes. Other tapes were relabeled in order to avoid subpoenas and document requests in a number of different cases. Simon told Fleishman that he and Bourdette had agreed that Simon would have to lie in various proceedings. By the Summer of 1980, the indices were adjusted and the tape references corresponding to the topic index were erased. Fleishman estimated that more than 100 tapes were erased. During this period, Simon told Fleishman that he had perjured himself when he stated at his deposition that tapes were routinely recycled and that no tapes had been destroyed. In this regard Farnsworth testified before Judge Braman that to his knowledge no tapes were ever reused. Very little direct contradiction of the testimony of Farnsworth and Fleishman was presented by Synanon in the hearing before Judge Braman, since on key points Phillip Bourdette invoked his Fifth Amendment privilege, and other witnesses presented by Synanon had no direct knowledge of the erasure project. Judge Braman found Farnsworth and Fleishman credible. Based on their testimony, Judge Braman held that Synanon's destruction of materials requested by the defendants through the discovery process warranted dismissal of the complaint. He found that the materials destroyed, among others, related to violence, money, purchase of guns, legal terror tactics, Holy War, changing partners or love match. This material, Judge Braman held, was relevant to the complaint because it bore on Synanon's nonprofit status. The trial court in addition held that Synanon's in-house attorneys had perpetrated a fraud on the court of sufficient magnitude to warrant dismissal of the complaint. This appeal followed.