Adams v. New York State Education Department

959 F. Supp. 2d 517, 2013 WL 4054875, 2013 U.S. Dist. LEXIS 110626
CourtDistrict Court, S.D. New York
DecidedAugust 1, 2013
DocketNo. 08 Civ. 5996(VM)
StatusPublished
Cited by2 cases

This text of 959 F. Supp. 2d 517 (Adams v. New York State Education Department) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Adams v. New York State Education Department, 959 F. Supp. 2d 517, 2013 WL 4054875, 2013 U.S. Dist. LEXIS 110626 (S.D.N.Y. 2013).

Opinion

DECISION AND ORDER

VICTOR MARRERO, District Judge.

On April 26, 2013, the Court held a hearing in this matter regarding the failure of Nicholas Penkovsky (“Penkovsky”), attorney for certain plaintiffs in this action, to pay sanctions imposed on him by Order dated April 10, 2012 in the amount of $5,000 pursuant to Federal Rule of Civil Procedure 11 (“Rule 11”). At the hearing, the Court ordered Penkovsky to pay, either in full or in installments, the sanctions against him within sixty days or be held in contempt of court. Penkovsky failed to pay the sanctions within the sixty days and instead, on June 25, 2013, requested that the Court modify the payment schedule. The Court declines to grant this request.

I. BACKGROUND

By Order dated December 8, 2010, Magistrate Judge Andrew Peck, to whom this matter had been referred for supervision of pretrial proceedings, issued a Report and Recommendation (the “Report”) recommending that a sanction in the amount of $7,000 be imposed on Penkovsky. The Court withheld ruling on the Report pending Penkovsky’s appeal to the United States Court of Appeals for the Second Circuit of the Court’s decisions relating to the underlying dispute, which involved the conduct by Penkovsky that prompted Magistrate Judge Peck’s recommendation of sanctions. The Second Circuit affirmed those rulings. See Adams v. New York State Education Department, 460 Fed.Appx. 67 (2d Cir.2012). By Order dated April 10, 2012, the (“April 10 Order”) this Court adopted the Report’s recommendation but reduced the amount of the sanction to $5,000 (the “Sanction”). The Court directed1 Penkovsky to pay within thirty days of the date of the April 10 Order. When Penkovsky failed to comply the Court referred the matter to Magistrate Judge Peck for further proceedings.

Magistrate Judge Peck issued an order directing Penkovsky to pay the Sanction or show cause why further sanctions should not be imposed, and conducted a hearing on June 15, 2012 for that purpose. Following an unsuccessful attempt to obtain a stay from the Second Circuit, Penkovsky appeared at the June 15, 2012 hearing and objected to the sanctions orders. By Report and Recommendation dated June 18, 2012, Magistrate Judge Peck recom[519]*519mended that Penkovsky be held in civil contempt for his willful failure to pay the Sanction. Magistrate Judge Peck noted that while Penkovsky contended that he was unable to pay the Sanction, he failed to provide any financial records to support that claim or to offer a reasonable payment schedule. Penkovsky then sought a writ of prohibition from the Second Circuit to halt further proceeding on this matter, which the Circuit Court denied by Order dated July 23, 2012. By Order dated October 24, 2012, this Court directed Penkovsky to pay the Sanction within five calendar days of the date of the Order and to appear at a hearing before the Court to show cause why he should not be held in civil contempt and sanctioned further. Penkovsky did not comply with the Court’s order and was instructed to appear before the Court for a contempt hearing, which was held on November 9, 2012.

At the contempt hearing, Penkovsky indicated to the Court that he was unable to pay the Sanction. The Court then ordered Penkovsky to file documents under seal, including prior federal and state tax returns, for the Court to evaluate his ability to pay the Sanction. On November 21, 2012, Penkovsky submitted under seal authorizations for the Internal Revenue Service (“IRS”) to release to the Court certain financial records. In response, the Court received some IRS records, but they were not entirely helpful because they were not complete, as Penkovsky did not provide a full authorization permitting Court review of both his personal and law practice tax returns.

On April 26, 2013, the Court held another contempt hearing regarding whether Penkovsky had made sufficient good faith efforts to comply with the Court’s April 10 Order. At that hearing, the Court instructed Penkovsky to pay the Sanction, either in full or in installments, within sixty days or face a contempt finding and possible imprisonment. Having made no attempt to pay any part of the Sanction or otherwise communicate with the Court within the sixty day period, Penkovsky filed a ten-page letter dated June 25, 2013 — the very last day of the deadline— which failed to address his alleged inability to pay the Sanction other than a cursory statement in a single paragraph in which he offered to pay a mere fifty dollars per month for the next six months — a total of $300. The letter primarily reiterated Penkovsky’s previously litigated arguments attacking the legitimacy not only of the Sanction but of the Circuit Court’s decisions affirming this Court’s rulings in the underlying dispute. The letter digressed extensively into irrelevant philosophical polemics and highlights of Penkovsky’s career and life trajectory.

II. LEGAL STANDARD

“A court of the United States shall have power to punish by fine or imprisonment, or both, at its discretion, such contempt of its authority, and none other, as ... [disobedience or resistance to its lawful writ, process, order, rule, decree, or command.” 18 U.S.C. § 401. “[I]n order to hold the alleged contemnor in contempt, the court need only (1) have entered a clear and unambiguous order, (2) find it established by clear and convincing evidence that that order was not complied with, and (3) find that the alleged contemnor has not clearly established his inability to comply with the terms of the order.” Huber v. Marine Midland Bank, 51 F.3d 5, 10 (2d Cir.1995).

III. DISCUSSION

These sanctions proceedings have led the Court down a long and winding road. Penkovsky has left the proceedings at a standstill for a long time — nearly three years since the December 8, 2010 Report. [520]*520During that time, Penkovsky has repeatedly flouted the Court’s numerous warnings and clear and unambiguous orders for sanctions, warranting a finding of contempt to preserve the authority of the Court and to compel Penkovsky to comply. See A.V. By Versace, Inc. v. Gianni Versace, S.p.A., 279 F.Supp.2d 341, 354-55 (S.D.N.Y.2003); see also Verone v. Taconic Tel. Corp., 826 F.Supp. 632, 635 (N.D.N.Y.1993) (finding contempt where no diligent attempt at compliance with sanctions was made). Penkovsky has been given several opportunities and extensions to pay the Sanction, to come forward with a reasonable payment plan, or to make a compelling showing of his inability to pay. Had he adopted such a constructive, good faith course more than one year ago by offering a reasonable installment plan, by now he might have been in full compliance. Instead, he has chosen to withhold any payment towards the Sanction and has used the Court’s orders to show cause to lodge arguments as to the inappropriateness of the Sanction on a variety of baseless grounds already rejected by the Second Circuit. In the April 26, 2013 proceeding, Penkovsky acknowledged that he had paid rent on his home and business addresses and his phone bills, and had purchased other goods, without making any good faith attempt to pay any portion of the Sanction. See Order to Show Cause Tr., Apr. 26, 2013, 6:16-7:14.

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Bluebook (online)
959 F. Supp. 2d 517, 2013 WL 4054875, 2013 U.S. Dist. LEXIS 110626, Counsel Stack Legal Research, https://law.counselstack.com/opinion/adams-v-new-york-state-education-department-nysd-2013.