Vision Bank v. The Rookery, LLC et al
ORDER denying 166 Motion for Order to Show Cause; denying 174 Motion to Strike. Signed by District Judge William H. Steele on 4/13/2018. (tgw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SE PROPERTY HOLDINGS, LLC,
THE ROOKERY, LLC, et al.,
) CIVIL ACTION 11-0014-WS-C
The plaintiff has filed a motion for show cause order against defendant
Richard Vail. (Doc. 166). Vail has filed a response and the plaintiff a reply.
(Doc. 171, 173). The plaintiff asks the Court to hold Vail in contempt for
violating a charging order entered in January 2013 that imposed a lien on Vail
Construction, LLC (“Construction”) and required Construction “to distribute to the
plaintiff any amounts that become due or distributable to Vail by reason of any
interest he owns in” Construction. (Doc. 69). The plaintiff asserts that Vail is the
sole member of Construction, (Doc. 166 at 1), such that any violation of the
charging order is Vail’s violation, for which he may be held in contempt of court.
The plaintiff asserts that Vail has:
(a) Withdrawn funds from Construction’s bank accounts for personal
(b) Used Construction funds to make payments on a loan taken out by
Vail and his ex-wife in their personal capacities and secured by
their real property on Kennedy Road;
(c) Used Construction funds to make payments on a loan taken out by
Vail to purchase a boat;
(d) Used Construction funds to make payments on a personal loan
secured by a mortgage on Vail’s residence (the “Pinewood Drive
(e) Used Construction funds to make court-ordered payments to his exwife in connection with his divorce;
(f) Used Construction funds to purchase real property (the “Whitt
property”) used by Vail’s son and grandchildren as a residence;
(g) Used Construction funds to purchase other real property (the
(h) Used Construction funds to make payments to an LLC (“RMV”) in
which he has a large interest;
(i) Written checks on the Construction bank account for personal
(j) Deposited into his personal account checks paying for construction
services or materials.
(Doc. 166 at 2-6). The plaintiff relies on almost 300 pages of exhibits, (Doc. 1666 to -24), which clearly support the proposition that transfers from Construction to
Vail and to third parties occurred but which do not clearly establish that any of the
transactions constitute “distributions” to Vail in violation of the charging order.
In opposition to the motion, Vail has filed a brief and his affidavit. (Doc.
171). Because the brief essentially parrots the affidavit, the Court focuses on the
latter. Vail responds essentially as follows:
(a) The withdrawn funds were used to cover the cost of goods sold,
material expenses, equipment fuel, crew lunches, vehicles and
(b) The proceeds of the loan were used to purchase a piece of
equipment for Construction;
(c) The proceeds of the loan were used to purchase a pontoon boat
used by Construction to construct piers;
(d) The loan proceeds were used to purchase the Pinewood Drive
property, with the land and all but one room and one bathroom in
the building used exclusively by Construction;
(e) The payments to Vail’s ex-wife were for her share of the
Pinewood Drive property;
(f) The Whitt property is not being used by family members as a
residence but by Construction for storage;
(g) The Russell property belongs to Vail’s ex-wife pursuant to the
divorce decree, but Vail remains on the vendor’s lien deed; when
she stopped making payments, Russell agreed for Construction to
assume the mortgage and pick up the payments;
(h) The payments to RMV (from which Vail withdrew in early 2016)
were on ownership of a piece of potential development property;
(i) The checks on the Construction bank account were for expenses
of the business; and
(j) No response.
(Doc 171 at 7-9).
In its reply, the plaintiff principally objects that Vail relies on his sworn
testimony without presenting any supporting documentation to corroborate his
version of the facts. (Doc. 173). The plaintiff, however, offers no authority for
the facially doubtful proposition that Vail “must rebut with evidence of business
records to support this defense, not self-serving affidavit testimony with zero
documentation in support.” (Doc. 173 at 1).1 The same flaw infects the plaintiff’s
motion to strike Vail’s affidavit based on an unexplained invocation of “best
evidence” and “hearsay.” (Doc. 174). The Court has no obligation to conduct the
research necessary to support a party’s conclusory position, and it declines to do
Nor has the plaintiff explained its facially dubious assumption that controverting
the allegations of its motion constitutes a “defense.”
Vail’s responses to (a), (b), (c), (d) and (i) directly contradict, with
explanation, the plaintiff’s assertion that the transfers constituted distributions in
violation of the charging order. His other responses are more equivocal, but the
Court does not find them to clearly establish a violation of the charging order:
(e) For all that the record shows, the Pinewood Drive property was
purchased exclusively as a residence but was converted by
Vail to almost totally business property after his 2011
divorce, which might justify Construction making the
payments to Vail’s ex-wife for her share of the property;
(f) The plaintiff focuses on Vail’s admission that his son and
grandchildren occupied the Whitt property in June 2016.
(Doc. 152 at 2). The plaintiff has no evidence, however, that
they lived there at any other point in time; nor does the
plaintiff have evidence that the situation on the Whitt
property was any different from that on the Pinewood Drive
property – used almost exclusively by Construction for
business purposes, which might justify the LLC making
payments on the vendor’s lien deed;
(g) The plaintiff stresses that Vail does not identify any business
purpose of the Russell property, which is correct but which
does not establish that there is no such purpose;
(h) Vail’s response is so obscure that the Court cannot determine
whether Construction had a business or investment interest in
the potential development property and therefore cannot
conclude there was no such interest; and
(j) Vail’s failure to respond leaves open plausible explanations for
the deposits (such as repayment of advances) as well as the
possibility the funds were later transferred to Construction,
none of which scenarios are addressed by the plaintiff.
In addition, the Court notes that the plaintiff concedes it must present clear
and convincing evidence of a violation before any burden shifts to Vail to present
anything at all. (Doc. 166 at 6).2 Because, as noted above, the plaintiff’s evidence
does not meet that demanding standard, Vail has no burden to explain his conduct
and cannot be faulted for any failure to do so.
It appears to the Court that the plaintiff filed the instant motion
prematurely. Default judgment was entered against Vail in September 2011, (Doc.
49), and the plaintiff has had over six years to invoke the process of post-judgment
discovery to identify assets and uncover evidence that Vail is improperly avoiding
payment on the judgment. A brief review of the docket sheet reveals that the
plaintiff has repeatedly invoked these procedures. (Docs. 88, 92, 93, 104, 108,
123, 128, 130, 157-61, 165). The plaintiff has not explained why it cannot now
invoke those same procedures to obtain additional written discovery, Vail’s
deposition testimony, and/or any other evidence needed to elevate its suspicion of
wrongdoing into clear and convincing evidence of same.
For the reasons set forth above, the plaintiff’s motion to strike and motion
for show cause order are denied.
DONE and ORDERED this 13th day of April, 2018.
s/ WILLIAM H. STEELE
UNITED STATES DISTRICT JUDGE
E.g., Commodity Futures Trading Commission v. Wellington Precious Metals,
Inc., 950 F.2d 1525, 1529 (11th Cir. 1992).
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