In re Daher

546 B.R. 386, 2015 Bankr. LEXIS 4455, 2015 WL 10059062
CourtUnited States Bankruptcy Court, N.D. Ohio
DecidedDecember 1, 2015
DocketCase No. 10-17252
StatusPublished

This text of 546 B.R. 386 (In re Daher) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Daher, 546 B.R. 386, 2015 Bankr. LEXIS 4455, 2015 WL 10059062 (Ohio 2015).

Opinion

AMENDED MEMORANDUM [388]*388 OF OPINION 1

Pat E. Morgenstern-Clarren, Chief Bankruptcy Judge

An agreed order required attorney John Gold to place disputed funds in his client trust account pending further court order. After the court found the funds to be property of the chapter 7 estate, the court ordered him three times to turn the money over to the chapter 7 trustee. Attorney Gold ignored these orders. Following months of obfuscation, the reason became clear: Mr. Gold had taken all of the funds from his trust account and used them for his own purposes.

The United States trustee now moves to hold John Gold in civil contempt for violating the four orders, and Mr. Gold opposes the motion claiming he had the right to take the funds. This court finds that Mr. Gold did not have the right to take any funds without a court order, he knew he did not have that right, and he knowingly violated the court orders. The court finds further that Mr. Gold did not establish any defense to the motion, and accordingly finds him in civil contempt and sanctions him as set out below.

JURISDICTION

Jurisdiction exists under 28 U.S.C. § 1334 and General Order No.2012-7 entered by the United States District Court for the Northern District of Ohio on April 4, 2012. This matter is a core proceeding under 28 U.S.C. § 157(b)(2) and it is within the court’s constitutional authority as analyzed by the United States Supreme Court in Stern v. Marshall, 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011) and its progeny.

CIVIL CONTEMPT OF COURT

This court set out the applicable law in an earlier memorandum of opinion in this case:2

When a court seeks to enforce its order or supervise its judgment, one weapon in its arsenal is contempt of court.” Elec. Workers Pension Trust Fund of Local Union # 58 v. Gary’s Electric Serv. Co., 340 F.3d 373, 378 (6th Cir.2003). This court has civil contempt powers. In re Walker, 257 B.R. 493, (Bankr.N.D.Ohio 2001). “Contempt proceedings enforce the message that court orders and judgments are to be complied with in a prompt manner.” 340 F.3d at 378-79. Civil contempt is used to coerce a party to do what the court has previously ordered him to do. Turner v. Rogers, [564 U.S. 431] 131 S.Ct. 2507, 2516 [180 L.Ed.2d 452] (2011). A finding of contempt is warranted when it is shown by “clear and convincing evidence” that a party has “ ‘violated a definite and specific order of the court requiring him to perform or refrain from performing a particular act or acts with knowledge of the court’s order.’ ” 340 F.3d at 379 (quoting NLRB v. Cincinnati Bronze, Inc., 829 F.2d 585, 591 (6th Cir.1987)). Once a movant establishes a prima facie case for contempt, the burden shifts to the alleged contemnor “who may defend by coming forward with evidence that he is presently unable to comply with the court’s order.” Id. at 379 (citing United States v. Rylander, 460 U.S. 752, 757 [103 S.Ct. 1548, 75 L.Ed.2d 521] (1983)). To meet this burden it must be shown “ ‘categorically and in detail why he ... is unable to comply with the court’s order.’” Id. [389]*389(quoting Rolex Watch U.S.A., Inc. v. Crowley, 74 F.3d 716, 720 (6th Cir.1996)). The Sixth Circuit has stated that a finding of civil contempt is appropriate where the alleged contemnor is unable to show that his present inability to comply is not his own fault or self-induced. Id. at 383.
Sanctions for civil contempt may be employed for “either or both of two purposes:” (1) to coerce compliance with the court’s order; and (2) to compensate for damages caused by the non-compliance. 340 F.3d at 379 (citing United States v. United Mine Workers of Am., 330 U.S. 258, 303-4 [67 S.Ct. 677, 91 L.Ed. 884] (1947)). In general, courts impose two types of civil fines to coerce compliance. The first type is a monetary fine that compensates for the damages caused by the noncompliance, which must be based on evidence of the complainant’s actual loss. United States v. Bayshore Assocs., Inc., 934 F.2d 1391, 1400 (6th Cir.1991). The second type is a fine payable to the court that can be avoided by complying with the court’s order. Id. In addition, incarceration is an appropriate sanction for civil contempt if the commitment can be avoided by complying with the court’s order. Id. (collecting cases).

THE POSITIONS OF THE PARTIES

The United States trustee contends that Mr. Gold violated four court orders, the first directing him to hold money in his Interest on Lawyer’s Trust Account (commonly referred to as an IOLTA account) pending further court order, and the next three directing him to turn the funds over to the chapter 7 trustee. As sanctions, the UST asks that Mr. Gold be ordered to account for the funds, to be fined $50.00 a day until he does so, to pay the attorney fees incurred by the chapter 7 trustee, to have his electronic filing privileges revoked, to be denied any attorney fees, and to be enjoined from attempting to seek any attorney fees.

Mr. Gold did not file anything in opposition, although he had ample opportunity to do so. The court nevertheless permitted him to present his arguments at the hearing. He contended that he is not in contempt because (1) he does not agree with this court’s earlier rulings; (2) he had a right to take the money under a charging lien theory; and (3) the orders had conflicting information.3

FACTS AND DISCUSSION 4

The First Order: September 9, 20135

This agreed order stated in relevant part:

The funds at issue are $51,032.37 held by the State of Ohio, Division of Unclaimed Funds. The funds shall be released to debtor’s counsel, John Gold, and Mr. Gold agrees to hold said funds in his IOLTA account until the Bankruptcy Court makes a determination as to whether and how much of the funds are property of the bankruptcy estate. To the extent this Court determines what, if any, portion of the funds are [390]*390property of the estate, John Gold shall deliver said funds to the Trustee----

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Related

United States v. United Mine Workers of America
330 U.S. 258 (Supreme Court, 1947)
United States v. Rylander
460 U.S. 752 (Supreme Court, 1983)
Stern v. Marshall
131 S. Ct. 2594 (Supreme Court, 2011)
In Re Walker
257 B.R. 493 (N.D. Ohio, 2001)
Rolex Watch U.S.A., Inc. v. Crowley
74 F.3d 716 (Sixth Circuit, 1996)
Turner v. Rogers
180 L. Ed. 2d 452 (Supreme Court, 2011)

Cite This Page — Counsel Stack

Bluebook (online)
546 B.R. 386, 2015 Bankr. LEXIS 4455, 2015 WL 10059062, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-daher-ohnb-2015.