UNITED STATES OF AMERICA v. TWO GENERAL ELECTRIC AIRCRAFT ENGINES

Filing 53

MEMORANDUM OPINION and ORDER holding Claimant Evans Meridian in civil contempt of its Repatriation Order, and imposing a sanction of $15,000 per day (to the Registry of the Court), from the date of this Order, until Evans complies with the Repatriation Order. Signed by Judge Gladys Kessler on 11/2/16. (CL)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,
Plaintiff,

v.
TWO GENERAL ELECTRIC AIRCRAFT
ENGINES, WITH ENGINE SERIAL
NUMBERS 695244 AND 705112,
AND ALL RECORDS PERTAINING
THERETO

Civil Action No. 14-2213 {GK)

Defendant.

Memorandum Opinion and Order
Background

I .

This case began on December 30, 2014, when the United States
filed

a

General

Verified

Complaint

Electric

aircraft

for

Forfeiture

engines

with

engine

695244 and 705112 (the "Defendant Engines").
to

Repatriate

[Dkt. No. 32]
of

the

the

Defendant

Properties

in· Rem against
serial

Antalya, Turkey.
Subsequently,

Complaint,

these

numbers

See Unopposed Order

("Repatriation

(describing the history of this case).

Government's

two

engines

were

Order")

At the time
located

in

Id.
Evans Meridians,

Ltd.

("Evans,"

filed a verified claim to the Defendant Engines..

Id.

"Claimant") ,
After filing

this claim, and unbeknownst to the Court or the Government, Evans
1

transported the Defendant Engines from Turkey to Shanghai, China,
on or about July 27, 2015.

Id.

In response, and pursuant to the Government's Motion for Order
to Repatriate,

[Dkt.

No.

31],

on January 27,

2016,

the

Court

ordered Evans to either repatriate the Defendant Engines to the
United States or post a bond of $6,000,000 by March 31,
Repatriation Order.

2016.

To date, Evans has done neither. 1

Accordingly, the Government filed a Motion for Order to Show
Cause why Evans should not be held in contempt for violating the
Repatriation Order.

Mot. for Order to Show Cause [Dkt. No. 41].

The Court granted the Government's Motion,
hearing,

and

representative

ordered
with

corporation attend.

that

authority

Evans'
to

scheduled a contempt

director

direct

the

Order ("Show Cause Order")

or

affairs

another
of

the

[Dkt. No. 47].

On October 24, 2016, the contempt hearing was held.

Pursuant

to the Court's Show Cause Order, Eugeny Bespalov, an attorney from
Russia

with

a

power

of

attorney

to

bind

Evans,

attended and

testified.

Evans' counsel candidly admits that Evans has not complied with
the Court's Repatriation Order.
Response to Mot. for Order to
Show Cause ("Response") at p. 3-4 [Dkt. No. 44]; Unofficial
Transcript of Show Cause Hearing ("Unofficial Transcript") at p.
17 ~~ 9-10.
An unofficial transcript of the Show Cause Hearing
was prepared by the Court Reporter and will be filed on ECF.
1

2

'>

II.

Legal Standard

"The Court has both an inherent and a statutory power to
enforce compliance with its orders and may exercise that authority
through a civil contempt proceeding."
Corp.,

881 F.

Shillitani v.
States v.
(1947);

18

violates a

Supp.

673,

678

United States,

SEC v. Bankers Alliance,

(D.D.C.

1995)

384 U.S.

364,

United Mine Workers of America,

u.s.c.

§

401).

(citing inter alia
370

(1966);

330 U.S.

United

258,

330-32

"A party commits contempt when it

definite and specific court order requiring him to

perform or refrain from performing a particular act or acts with
knowledge of that order."

Id.

(internal citations and quotations

omitted).
"[T]he moving party has the burden of showing by clear and
convincing evidence that (1) a court order was in effect,

(2) the

order required certain conduct by the

( 3)

respondent,

and

respondent failed to comply with the court's order."

Id.

the
The

respondent "may assert a present inability to comply with the order
in question" as an affirmative defense, but in doing so, has the
burden of production.
Tinsely

v.

Mitchell,

U.S. v. Rylander, 460 U.S. 752, 757 (1983);
804

F.2d

1254,

1256

(D.C.

Cir.

1986)

("impossibility of performance constitutes a defense to a charge
of

contempt").

To

meet

this

burden,

the

respondent

"must

demonstrate his inability to comply categorically and in detail."

3

Bankers Alliance,
Supp.

881 F. Supp. At 678; SEC v. Showalter,

2d 110, 120

(D.D.C.

2002)

227 F.

(defendant cannot merely assert

inability, but must "establish that she has made . . . all reasonable
efforts" to comply (emphasis added)).
Even if the respondent cannot demonstrate that she is unable
to comply with the court's order, the court is required to consider
her "good-faith efforts to comply with [the]
of any penalty" the court might impose.
"To

show

good

faith,

the

order in mitigation

Tinsely, 804 F. 2d at 1256.

[respondent's]

duty

includes

the

obligation to be reasonably diligent and energetic in attempting
to comply with [the] court's order, and to pay what he can toward
the judgment."

Showalter, 227 F. Supp. 2d at 120.

A respondent

attempting to demonstrate that she has acted in good faith to
comply must provide "adequate detailed proof."
Civil

contempt

is

a

remedial device,

compliance with a court's order.

Id.

Id.

utilized to achieve

Therefore,

the sanction

imposed is designed to secure compliance, not to punish.

Bankers

Alliance, 881 F. Supp. at 678; United Mine Workers of America, 330
U.S. at 304

(the sanction imposed may be employed "to coerce the

defendant into compliance with the court's order").

4

III. Analysis
A. Evans Is in Contempt of the Repatriation Order

Here,

there is no question that Evans has failed to comply

with the Court's Repatriation Order,
that it has not.

Response at p.

Show Cause Hearing

as Evans readily conceded

3-4; Unofficial Transcript of

("Unofficial Transcript")

at p.

~~

17

9-10.

Instead, Evans raises two arguments as to why the Court should not
hold it in contempt.
First,

Evans argues

either prong of
forthrightly

the

that

Court's

admitted

that

it is
Order.
it

impossible to comply with
Response

has

at

produced

5-6.

no

Evans

evidence,

whatsoever, demonstrating that it is unable to either repatriate
the engines or post a $6,000,000 bond.
at p. 18

~~

3-10.

Id.; Unofficial Transcript

Consequently, as Evans has not produced even

one shred of evidence in support of its argument that it is unable
to comply with the Court's Repatriation Order, it is obvious that
Evans cannot meet its burden to demonstrate impossibility. 2
Second, Evans argues that it is making good faith efforts to
comply with the Repatriation Order.

2

Response at 7.

In support of

The only evidence presented at the Show Cause Hearing was the
testimony of Mr. Bespalov.
When asked what assets Evans has,
information that would be necessary for the Court to determine
whether Evans has the ability to comply with the Repatriation
Order, Mr. Bespalov stated that he did not have any information
regarding Evans' assets. Unofficial Transcript at p. 44 ~ 4.
5

this argument, Evans asserts that it has an ownership interest in
an entirely different set of engines that are located in Miami
(the "Miami Engines") and that it is currently attempting use its
stake in those engines to meet the terms of the Repatriation Order.
Id.

The Government responds that the Miami Engines have nothing

to do with this case and argues

that Evans'

conduct regarding

those engines does not constitute a good faith effort to comply
with the Repatriation Order.

Reply to Mot. for Order to Show Cause

("Reply") at 3-4.
The Court agrees with the Government.
Evans'

Taken at face value,

offer is not a concrete step towards compliance with the

Court's Repatriation Order, but a mere proposal with an uncertain
chance of

success.

Evans asserts

that

it can sell the Miami

Engines, and use the funds to pay some indeterminate portion of
the

$6,000,000

bond,

or alternatively,

post

the Miami

Engines

themselves as substitute collateral for the $6,000,000 bond.

Yet,

by Evans' owns admission, it lacks physical possession of the Miami
Engines, and the third party that does have possession of them has
some sort of monetary claim against Evans which clouds Evans' title
to them.
Thus,

Evans presently lacks the ability to either sell the

Miami Engines or post them as substitute collateral,

and it is

wholly uncertain whether Evans will ever have the ability to do

6

so.

All Evans has is a questionable plan for future action.

That

plan does not constitute an effort at compliance, but is at best,
a

proposal

to make

future

efforts

that,

if

successful,

might

produce assets that would then enable Evans to make a good faith
effort at compliance.
Indeed, when Evans' conduct is viewed in its entirety, it is
'

abundantly clear that it has not met its burden to demonstrate
that it made "all reasonable efforts to comply" with the Court's
Repatriation Order.

Showalter at 120.

A showing of good-faith

efforts by a contemnor requires her to bring forward evidence of
her ability to comply, so that the court may evaluate the efforts
she has actually made against those she had the capability to make.
Here,

Evans'

refusal

to

put

forward

such

evidence

argument that it is making good faith efforts,

dooms

its

just as surely as

it doomed its argument of impossibility.
Because Evans has failed to present any evidence of how much
it would cost to repatriate the Defendant Engines or what assets
Evans

holds,

reasonable

the

Court

efforts

to

cannot

conclude

repatriate

the

that

Evans

Defendant

made

all

Engines.

Similarly, the absence of any evidence of Evans' financial state
makes it impossible for the Court to conclude that Evans has done
all it reasonably can to post the $6,000,000 bond.
faith,

To show good

Evans must demonstrate that it is "paying what

7

[it]

can."

)

Showalter at 120.

Yet, the Court has no way of knowing what Evans

"can" pay.
The sole piece of evidence before the Court is the testimony
of Mr. Bespalov.

However, he failed to identify any steps that

Evans has taken to repatriate the Defendant Engines to the United
States
!
,-

beyond

a

single

inquiry

allegedly possesses them,
Transcript at p.

46

~~

to

the

Chinese

asking for their return.

the Court does not consider Evans'

have

Defendant

Engines

that

Unofficial

Given the absence of meaningful

17-20.

evidence,
the

company

returned

a

single request to

reasonable

effort

at

compliance.
In sum, Evans has failed to present any evidence showing that
it was "reasonably diligent and energetic in attempting to comply
with this [C]ourt's order."
Evans

has

not

made

Repatriation Order.

a

good

Id.

Therefore, the Court holds that

faith

effort

to

comply

with

the

As Evans admits that it has failed to comply

with the Repatriation Order and has failed to offer any evidence
suggesting that it is unable to comply or has made a good faith
effort to do so, the Court finds Evans in civil contempt.
B. The Goverrunent's Proposed Sanction is Appropriate

The Court now turns to the question of what sanction would be
sufficient to coerce Evans to comply with the Repatriation Order.
United Mine Workers of America, 330 U.S. at 304.
8

At the Show Cause

Hearing, the Government sought a sanction of $15,000 per day until
Evans complies with the Repatriation Order.
In

determining

what

constitutes

sanction,

the court "consider[s]

the

threatened by

harm

effectiveness

of

result desired.

/1

an

effectively

coercive

the character and magnitude of

continued

contumacy,

and

the

probable

any suggested sanction in bringing about
Id.

In doing so,

the court "consider [s]

the
the

amount of [the contemnor 1 s] financial resources and the consequent
seriousness of the burden to that particular [contemnor] .
Where,

as here,

/1

Id.

"the contemnor is the only one who possess the

relevant financial information, and chooses not to disclose it,
the

Court's

inability

to

consider

the

contemnor 1 s

resources is not a bar to imposing sanctions.
v.

Timber Falling Consultants,

1992)

11

financial

See Richmark Corp.

959 F.2d 1468, 1481-82

(9th Cir.

(internal quotation marks and citations omitted).
In this case, the harm created by Evans 1 continuing failure

to

repatriate

the

Defendant

Engines

Government's Complaint alleges
destined

for

Revolutionary

Iran,
Guard

and

substantial.

The

that the Defendant Engines were

more

Corps-Qods

Terrorist Organization.

is

specifically,
Force,

See Complaint.

a

the

designated

Islamic
Foreign

If correct, each day that

the Defendant Engines remain outside the United States increases

9

the risk that they will arrive at their intended destination, and
thereby benefit a hostile organization.
In addition,

the Government's proposed sanction of $15, 000

per day appears reasonably calculated to coerce compliance with
the Repatriation Order.

If Evans were to refuse to comply for one

year, the sanction would total roughly $5.5 million dollars.
amount

is

less

than

the

$6,000,000

bond

contained

in

This
the

Repatriation Order and falls between the disputed estimated values
of the Defendant Engines.
Evans

values

the

See Response at 2, 4 n.3

engines

at

roughly

$4,000,000,

Government likely values them at roughly $6,000,000).
to the extent that Evans has any assets,

(noting that
while

the

Therefore,

which remains an open

question, the proposed sanction presents Evans with the choice of
repatriating Defendant Engines within a year or risk forfeiting
assets roughly equivalent to the value of Defendant Engines.
Thus,
calculated

the
to

Government's
coerce

Evans'

proposed
compliance

sanction
with

is

the

reasonably
Repatriation

Order. 3

A sanction of roughly equivalent size was held reasonable under
similar circumstances. See Richmark, 959 F. 2d 1468 (upholding
sanction of $10, 000 per day against a foreign defendant who refused
to provide information about its assets)

3

10

.:-.

IV.

Conclusion

For the foregoing reasons,

the Court holds Claimant Evans

Meridian in civil contempt of its Repatriation Order, and imposes
a

sanction of

$15, 000

Repatriation Order.

per

day until

Evans

complies

with

the

It is hereby

ORDERED, that Evans Meridians, Ltd. , shall be held in contempt

of Court for violating the Repatriation Order; and it is further
ORDERED, that the Court shall sanction Evans Meridians, Ltd.,

by requiring that it pay a fine of $15,000 per day,

from the day

this Order issues until it complies with the Repatriation Order,
to the Registry of the Court.

GladySK:Sler
November 2, 2016

United States District Judge

Copies via ECF to all counsel of record

11