THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, August 13, 1996 TAG: 9608130270
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MARC DAVIS, STAFF WRITER
DATELINE: NORFOLK LENGTH: 62 lines
Businessman R. Alan Fuentes has dodged a legal bullet in the bankruptcy of Computer Dynamics Inc., but his lawyer may be less lucky.
A judge ruled that Fuentes cannot be held in contempt of court for faxing a confidential and defamatory document to potential witnesses.
But the judge also ruled that Fuentes' attorney, Stephen Merrill of Norfolk, may be held in criminal contempt of court for giving Fuentes the seven-page document.
Bankruptcy Judge David H. Adams ordered Merrill to show why he should not be cited. He set a hearing for Sept. 18.
``The court is frankly shocked by what took place and fully intends to . . Thursday.
Judges rarely cite a lawyer for contempt of court. Punishment may include a fine or jail time.
On Monday, Merrill said he does not think he did anything wrong.
``What was given to Mr. Fuentes was a copy of the interrogatory answers which are a formal part of the court record. They contain no confidential information,'' Merrill said. ``It was the very same information that came to the court through live witnesses.''
In a related matter, Adams has ruled that two of Computer Dynamics' creditors - First Hospital Corp. and The Whitlock Group - should not be sanctioned for filing a frivolous action in the case.
Adams ruled that the two companies had followed Merrill's lead and knew very little about the action. He ruled that Merrill, however, may be held responsible.
A motion to sanction Merrill and another creditor, Phoenix Capital Corp., for filing that action is pending. It, too, will be heard Sept. 18.
Computer Dynamics is a Virginia Beach company that Fuentes founded in 1979. It was taken over by businessman Robert L. Starer in 1992 and went broke in 1995. Fuentes and Starer have been bitter enemies since the takeover.
The latest dispute centers on a document detailing charges against Starer of alleged misdeeds and criminal acts. A judge eventually ruled that the charges were not proved in court. Merrill wrote the document as part of the pre-trial exchange of evidence called ``discovery.'' Adams had ordered Merrill not to give any confidential information from discovery to Fuentes.
Merrill, however, did not consider the document confidential, so he gave it to Fuentes, saying it was a public court record. He told Fuentes it would be OK to share the document with others. On Feb. 9, Fuentes faxed the document to two companies controlled by Starer, without identifying who sent it.
It was intercepted at both companies and not distributed. Later, Starer and Computer Dynamics asked Adams to cite Fuentes for contempt of court for sending it.
Adams ruled that Fuentes had ``improper motives'' for faxing the document to potential witnesses. ``It was certainly calculated to discredit Starer and disrupt his business operations. . . ,'' Adams wrote.
But Adams said he could not cite Fuentes because he could not prove that Fuentes knew he was violating a court order. Instead, Adams will pursue Merrill.
``As Fuentes maintained at the hearing, the wrong man was the subject of the show-cause order,'' Adams wrote. ILLUSTRATION: Color photo
Fuentes by CNB