Wichansky v. Zowine et al

Filing 567

ORDER granting in part and denying in part 566 . See order for additional details. Signed by Judge David G Campbell on 6/30/2016.(DGC, nvo)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Marc A. Wichansky,
Plaintiff,

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ORDER

v.

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No. CV-13-01208-PHX-DGC

David T. Zowine, et al.,

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Defendants.

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Defendants have filed an emergency motion for clarification and reconsideration

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of the Court’s order dated June 24, 2016 (Doc. 559). Doc. 566. The motion asks for

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immediate resolution and raises the specter of Defendant Zowine filing for bankruptcy.

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Assuming Plaintiff would want to be heard on this important possibility, the Court

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afforded him a short time to respond. Doc. 563.

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Plaintiff has responded (Doc. 564), and the Court is again amazed at the parties’

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unending ability to fight over everything – absolutely everything. The Court assumed

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that Plaintiff had a very real interest in avoiding Zowine’s bankruptcy and its likely

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adverse effect on his ability to collect on the judgment, and could provide constructive

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suggestions with respect to Defendants’ professed emergency. Instead, Plaintiff resorted

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to his instinct to fight on anything he could find in the emergency motion: it is not a

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proper motion for reconsideration, it violates the Court’s local rules, it is late and

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dilatory, it shows that Zoe has been mismanaged, a receiver should be appointed, Zowine

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admits insolvency, Zowine is about to default on his bank loans, Zowine should not be

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allowed to post security for other Defendants. The Court finds little helpful in this filing.

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The Court will not appoint a receiver. The parties have been down that road

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before. It only embroiled the parties and the state court in accusations and counter-

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accusations, harassment of the receiver, petitions to the court to control the parties and

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their relationship with the receiver, etc. The Court is confident – indeed, positive – that

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appointment of a receiver would produce the same results here. It would simply provide

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more opportunities for the parties to litigate. Plaintiff’s filing today reinforces that view.

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The Court must decide what to do with Defendant Zowine’s assertion that he

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cannot post $25,000,000 in security and may be forced to declare bankruptcy if the Court

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requires it. The Court remains perplexed by this assertion when Zowine has recently

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provided the Court with a new valuation of his interest in Zoe at $179,040,000, after

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subtracting Zoe’s comparatively modest $6,656,895 in debt. The same valuation shows

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that Zoe, which Zowine apparently owns entirely on his own, had $13,929,872 in net

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income last year and $9,511,110 in net income in 2014. Despite defense counsel’s

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explanation of cash flows, the Court cannot understand how a business so valuable and so

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profitable, and an individual with Mr. Zowine’s apparently substantial resources, cannot

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produce $25,000,000 in security. Evidence at trial showed that Zowine earned millions

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in the years before his break-up with Mr. Wichansky. He has owned Zoe ever since, and

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apparently has continued to garner millions in net income annually. Zowine has provided

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a declaration in connection with these issues (Doc. 562-1), and his counsel have filed

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many pages of documents, but none of these say anything about Mr. Zowine’s personal

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assets or wealth.

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These facts, and the fact that Zowine’s security proposal of June 22, 2016 was

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inconsistent with the Court’s order and utterly inadequate, leave the Court where it was

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on June 24, 2016. Doc. 559. Defendant has not provided sufficient detail for the Court

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to conclude that he is unable to provide required security, his proposals have been

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insufficient to protect Plaintiff’s interest, and he has had ample time to satisfy Rule 62.

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The Court also concludes, however, that Plaintiff can be adequately protected in

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his judgments against the other Defendants by their posting security, even if it is provided

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by Mr. Zowine. The Court therefore modifies its June 24, 2016 order as follows:

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1.

Judgment has been entered against Defendant Charles Johnson in the

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amount of $550,000.00 in compensatory damages and $1,500,000.00 in punitive

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damages. Doc. 535. Because the Court continues to believe that punitive damages will

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be reduced somewhat as a result of post-trial motions, Mr. Johnson may obtain a stay

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under Rule 62(b) by posting a supersedeas bond in the amount of $1,000,000.00.

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2.

Judgment has been entered against Defendant Martha Leon in the amount

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of $110,000.00 in compensatory damages and $500.00 in punitive damages. Id. Ms.

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Leon may obtain a stay under Rule 62(b) by posting a supersedeas bond in the amount of

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$110,500.00.

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3.

Judgment has been entered against Defendants Pat Shanahan and Sarah

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Shanahan in the amount of $27,500.00 in compensatory damages and $750,000.00 in

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punitive damages. Id. Because the Court continues to believe that punitive damages will

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be reduced somewhat as a result of post-trial motions, the Shanahans may obtain a stay

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under Rule 62(b) by posting a supersedeas bond in the amount of $100,000.00.

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4.

Judgment has been entered against Defendants Michael Ilardo and Alisa

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Ilardo in the amount of $1,100.00 in compensatory damages. Id. The Ilardos may obtain

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a stay under Rule 62(b) by posting a supersedeas bond in the amount of $1,100.00.

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5.

Judgment has been entered against Defendants David Zowine and Karina

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Zowine in the amount of $10,311,400.00 in compensatory damages and $14,375,000.00

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in punitive damages. Id. Because the Court continues to believe that punitive damages

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will be reduced somewhat as a result of post-trial motions, the Zowines may obtain a stay

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under Rule 62(b) by posting a supersedeas bond in the amount of $20,000,000.00.

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To afford time for Defendants to meet these requirements, and in light of the

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impending July 4 holiday, the stay of enforcement previously imposed by the Court will

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be continued to 5:00 p.m. Arizona time on July 8, 2016. Supersedeas bonds should be

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posted by then. The parties shall file no further motions on this issue.

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IT IS ORDERED:

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1.

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Defendants’ emergency motion (Doc. 566) is granted in part and denied

in part as set forth above.
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The stay on execution previously imposed by the Court (Docs. 551, 559)

shall remain in effect until July 8, 2016 at 5:00 p.m. Arizona time.
3.

The injunction previously imposed on Defendants by the Court (Doc. 551)

shall remain in effect until the Court orders otherwise.
Dated this 30th day of June, 2016.

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