Victor Stanley, Inc. v. SCH Enterprises, LLC

District Court, D. Maryland·Decided August 10, 2021·No. 8:06-cv-02662·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

VICTOR STANLEY, INC., *

Plaintiff, *

v. * Civil Action No. RDB-06-2662

SCH ENTERPRISES, LLC, , *

Defendants. *

* * * * * * * * * * * * * MEMORANDUM ORDER Plaintiff Victor Stanley, Inc. (“VSI”) has been seeking to collect on its judgment and on sanctions that have been awarded against Defendants SCH Enterprises LLC and Mark T. Pappas (“Defendants”) since November 2010. Of relevance here, over the past five years, Plaintiff has sought to collect on sanctions awarded on April 20, 2016 for Defendants’ failures to comply with the Court’s Orders. (ECF Nos. 721, 722.) On August 14, 2019, Plaintiff was awarded $143,087.62 in attorneys’ fees and costs relating to those failures from April 21, 2016 to November 20, 2018. (ECF Nos. 890, 891.) Presently pending before the Court is Plaintiff’s Supplemental Motion for Attorneys’ Fees, seeking $62,226.00 in attorneys’ fees for the period from November 20, 2018 to the present. (ECF No. 943.) A hearing was held on August 2, 2021. See Loc. R. 105.6 (D. Md. 2021). For the reasons stated on the record at the hearing and for the following reasons, Plaintiff’s Supplemental Motion for Attorneys’ Fees (ECF No. 943) shall be GRANTED IN PART and Defendants shall pay $56,193.00 in attorneys’ fees to Plaintiff within 90 days of this Memorandum Order, i.e. no later than November 8, 2021. BACKGROUND Inasmuch as the parties are fully familiar with the pertinent background, it suffices to state that currently, the status of this litigation is that Plaintiff, Victor Stanley, Inc. (“VSI”) is

seeking to collect on its judgment and on sanctions that have been awarded.1 In April 2016, Plaintiff was awarded $1,281,315.91 in sanctions. (ECF No. 722.) On August 14, 2019, Plaintiff was awarded $143,087.62 in attorneys’ fees and costs relating to those failures from April 21, 2016 to November 20, 2018. (ECF Nos. 890, 891.) In January 2020, the case was referred to Magistrate Judge Sullivan for post-judgment proceedings in accordance with Maryland Rule of Procedure 2-633, governing discovery requests in aid of enforcement of a

money judgment. (ECF No. 899.) On January 15, 2020, Plaintiff VSI requested a hearing on the failure of Defendants “to make any voluntarily payments towards the [2016] Sanctions Award (ECF No. 722).” (ECF No. 900.) Magistrate Judge Sullivan held a hearing on February 27, 2020, where, in addition to witness testimony by Defendant Mr. Pappas and Plaintiff VSI’s Vice President, Gerald Skalka (“Mr. Skalka”), exhibits were admitted into evidence by both sides. (ECF No. 911.)

On August 14, 2020, Judge Sullivan issued a Certification of Civil Contempt, recommending, inter alia, that Defendants shall pay $100,000 to Plaintiff VSI by a date certain, such as within 30 days of the Court’s Order adjudicating the recommendations within the Certification of Civil Contempt, and should Defendants fail to fully comply, this Court shall take appropriate action that may include an arrest warrant for Mr. Pappas. (ECF No. 918 at

1 This case was initially assigned to the Honorable Marvin J. Garbis, who has since retired, and the case was reassigned to the undersigned on September 27, 2018. 25-26.) In addition, Judge Sullivan recommended that this Court direct that the Defendants appear before this Court to show cause why they should not be found in contempt of Court for failing to comply with this Court’s order of April 20, 2016. Defendants timely filed

Objections on August 28, 2020. (ECF No. 920.) VSI filed a response (ECF No. 921) to Defendants’ objections, Defendants filed a Reply thereto (ECF No. 923). In addition, since August of 2020, Plaintiff VSI has filed monthly status reports indicating that there have been no payments by the Defendants towards the Sanctions Award. (See ECF Nos. 919, 922, 924, 925, 926, 927, 928, 929, 930, 931, 932.) On June 29, 2021, this Court entered a Memorandum and Order to Appear, scheduling

a contempt hearing for July 20, 2021, and ordering Mark Pappas and SCH Enterprises LLC to appear before this Court to show cause why they should not be found in contempt of Court for failing to comply with this Court’s order of April 20, 2016. (ECF No. 933.) On July 1, 2021, Defendants filed a Request for Confirmation of Sanctions Award and Termination of Contempt Proceedings upon Payment. (ECF NO. 934.) This request sought confirmation that once Plaintiff received $395,691.67, the amount that Judge Sullivan found to be the

remaining balance owed on the Sanctions Award, then the contempt hearing could be terminated, and the sanctions award had been satisfied. On July 1, 2021, the Court rescheduled the show cause hearing to August 2, 2021 at 2 pm. (ECF No. 935.) On July 2, 2021, the Court entered a marginal order approving Defendants’ request for confirmation of sanctions award. (ECF No. 936.) On July 7, 2021, Plaintiffs filed a letter opposing the sanctions award amount of

$395,691.67 and requesting that the Court issue a separate order relating to interest and attorneys’ fees for the sanctions award. (ECF No. 937.) On July 9, 2021, the Defendants filed a response, providing confirmation of its payment to Plaintiffs of $395,691.67 and arguing that the Court’s Order of July 2, 2021 precluded the need for any contempt hearing. (ECF

No. 938.) On July 13, 2021, counsel was advised that the hearing scheduled for August 2, 2021 would proceed as ordered and that all parties, including Mr. Pappas, were to be in attendance. The parties were also directed to file status reports in advance of the hearing, outlining the parties’ respective positions on any remaining balances still at issue, including attorneys’ fees. On August 2, 2021, this Court held a show cause hearing. (ECF No. 941.) At the

hearing, the parties agreed that $22,877.00 was the appropriate interest amount on the recently paid sanctions award of $395,691.67. The parties also agreed that Defendant still owed the balance of the August 14, 2019 attorneys’ fee award of $143,087.62 for Plaintiff’s efforts in collecting on the 2016 Sanctions Award from April 21, 2016 to November 20, 2018. (ECF Nos. 890, 891.) Consequently, this Court awarded Plaintiff $22,877.00 in sanctions and directed Plaintiff’s attorney to submit a supplemental request for attorneys’ fees from

November 20, 2018 to the present. (ECF No. 942.) On August 3, 2021, Plaintiff filed the pending Supplemental Motion for Attorneys’ Fees, seeking $62,226.00 in attorneys’ fees. (ECF No. 943.) ANALYSIS “[F]ederal courts have inherent authority to sanction.” Six v. Generations Federal Credit Union, 891 F.3d 508, 519 (4th Cir. 2018). Such authority derives from “‘inherent powers,’ not

conferred by rule or statute, ‘to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.’” Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178, 1186 (2017) (quoting Link v. Wabash R.R. Co., 370 U.S. 626, 630-31 (1962)). Courts are empowered “to fashion an appropriate sanction for conduct which abuses the judicial process,” such as

“an order . . . instructing a party that has acted in bad faith to reimburse legal fees and costs incurred by the other side.” Six, 891 F.3d at 519 (citing Goodyear Tire, 137 S. Ct. at 1186) (internal citations omitted)). This Court has previously determined that Defendants failed to comply with this Court’s Sanctions Award (ECF Nos. 722, 747, 890). Indeed, Defendants failed to pay the remaining balance on the 2016 Sanctions Award for over five years until threatened by this Court with civil contempt, including possible incarceration. (See Show

Cause Order, ECF No.

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