Booth v. Wilson

964 F. Supp. 757, 1997 WL 241050, 1997 U.S. Dist. LEXIS 6062
CourtDistrict Court, S.D. New York
DecidedMay 1, 1997
DocketNo. 96 Civ. 920(RO)
StatusPublished
Cited by1 cases

This text of 964 F. Supp. 757 (Booth v. Wilson) 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
Booth v. Wilson, 964 F. Supp. 757, 1997 WL 241050, 1997 U.S. Dist. LEXIS 6062 (S.D.N.Y. 1997).

Opinion

AMENDED SUPPLEMENTAL OPINION AND ORDER

OWEN, District Judge.

While the transcript of the hearing of last Monday, April 28 contains most of the observations, findings and conclusions compelling the finding that Thomas C. Wilson is in deliberate and willful contempt of the court’s order of April 7, 1997 to produce documents, and mandating that he be forthwith placéd in the Metropolitan Correctional Center as a civil contemnor to purge himself by speedy compliance with the order, a few further observations and findings of fact are appropriate under the circumstances.

This case has been before me for the better part of a year based on a claim of fraud on the part of Wilson in getting investors to come in with him as limited partners in real estate ventures where he diverted their substantial investments for his personal purposes in other businesses.1 Plaintiff-investors here, after becoming disillusioned, but before commencing suit, worked out a settlement with Wilson providing for a return to them of their entire investments plus attorney’s fees.2 This settlement was reduced to writing and duly executed. Wilson, however, failed to honor the settlement agreement, and this lawsuit was commenced not only for damages for the breach of the settlement agreement, but also alleging the underlying fraud.

Plaintiffs first threatened to move for summary judgment on the settlement agreement and eventually had to file the motion. Wilson’s attorneys, Kirkland & Ellis, opposed the motion through hearsay affidavits and claims to the court that the parties were close to settlement. After hearing oral argument, I offered my good offices for settlement efforts. Plaintiff understandably had insisted over some period of time that any new agreement be backed up by a bond and confessions of judgment. However, after considerable nit-picking by Wilson over insignificant details which clearly appeared to be motivated solely by the “buying of time”,3 [760]*760plaintiffs finally asked the court to rule on the motion. The hearsay opposition was rejected and summary judgment was granted to plaintiffs in December 1996. Wilson and other various entities thereby became judgment-debtors to the plaintiffs to the extent of over $3 million dollars. Here, too, the judgment was dishonored.

Plaintiffs’ counsel, Stuart Perlmutter, then went about the country trying to chase assets flowing from all kinds of transactions, with but limited success. As part of those efforts, Perlmutter, in order to endeavor to collect his clients’ judgment, sought Wilson’s deposition as to assets and sought discovery of the customary documents that would be logical leads to assets. Wilson failed to appear at his first duly-noted deposition and while he showed up the second time, the deposition never took place. Wilson’s lawyer from the Boston firm of Gargill, Sassoon & Rudolph claimed that Wilson was too emotionally distraught to go through with it. Perlmutter accepted this and postponed but Wilson’s lawyers have never rescheduled the deposition. Furthermore, as observed, while Wilson and his lawyer had come to the deposition, neither had brought documents as they were supposed to do.

Perlmutter also sought to inventory Wilson’s safe deposit box in Boston. Wilson’s then and now active counsel, Gargill, Sassoon & Rudolph,4 through partner Sassoon, told Perlmutter that Wilson would not consent to any inventory of any safe deposit box and that Perlmutter could look at Sassoon’s “rear end.”5 Sassoon also told Perlmutter that his purpose in being difficult was to drive Perl-mutter “crazy” and fight him so that it would be extremely expensive for Perlmutter’s clients and then he, Sassoon, would have Wilson file bankruptcy. Sassoon did not deny any of this when it was specifically put before him by Perlmutter in a letter to which Sassoon specifically responded. Thereafter, Sassoon consented to the safe deposit box being inventoried and unsurprisingly, by the time that was done, there was nothing in it.

Next, Patrick Waters, Sassoon’s partner, being importuned by letters from Perlmutter to comply with the document production order, never bothered to answer Perlmutter’s letters. I pressed Waters at the hearing last Monday as to the “why” of all this. His answer was, on any objective reading, manifestly unsatisfying. I therefore find by clear and convincing evidence that between Wilson and his lawyers in the firm of Gargill, Sassoon & Rudolph there has not been and will not be meaningful compliance with the court’s April 7,1997 order for the production of documents. While unspecific promises were made in the courtroom for future compliance, they will doubtless prove to be as hollow as those many in the past.

I address further the issue of whether Wilson’s pre-bankruptcy civil contempt of this court’s April 7 order is stayed by his later filing for bankruptcy on April 24. The court in Int’l Distribution Centers v. Walsh Trucking Co., Inc., 62 B.R. 723 (S.D.N.Y.1986) dealt with this very problem and in an extensive opinion held that “certain civil contempt proceedings may continue even in the face of a bankruptcy petition.” Id. at 727. As here, the court in Int’l Distribution was concerned with compelling future compliance after a bankruptcy filing with a pre-filing District Court order. The court determined that the contempt there was civil in nature stating that “the civil nature of the contempt is not turned criminal by the court’s efforts at vindicating its authority, an [761]*761interest which may be implicated in either civil or criminal proceedings.” Id. at 728. (emphasis added and citations omitted). The court also found that its inherent power in that civil contempt case “to punish the debtor for contumacious conduct against the dignity of either the state or the federal court” was not curtailed by the automatic stay provision of the bankruptcy code, 11 U.S.C. § 362(a). Id. at 729. The threshold issue is whether the motion for contempt is made to satisfy a judgment or if it is directed at an asserted defiance of a court order — a question of fact left to the court’s discretion. Id. Here as there, none of the relief requested involves payment of money to plaintiffs, Id., but rather is intended to uphold an order of this court to compel the production of documents integral to plaintiffs’ case. Accordingly, as I stated last Monday, I find that this contempt order enforcing my pre-bankruptcy order to compel discovery is not stayed by § 362(a) as it is “vindicating] the integrity of the court.”

In addition to my concern for upholding respect for the court, I was also moved to act by the urgency of the situation. The need for speed here is obvious, which is why I felt impelled to forthwith put in place the compulsion of incarceration of Wilson as a civil contemnor to endeavor to get compliance. The plaintiffs in this case, it is now clear, have been stone-walled for almost a year as to any disclosure. During that stone-walling, while Wilson was haggling over easily-avoidable minor issues6, he was obviously endeavoring to avoid having to consent to judgment (now put in jeopardy) by his declaring bankruptcy last week.7 He also during recent months has increased his life insurance from $4,750,000 to $9,750,000.

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Cite This Page — Counsel Stack

Bluebook (online)
964 F. Supp. 757, 1997 WL 241050, 1997 U.S. Dist. LEXIS 6062, Counsel Stack Legal Research, https://law.counselstack.com/opinion/booth-v-wilson-nysd-1997.