Chen v. Cayman Arts, Inc et al

Filing 298

ORDER granting in part and denying in part 266 Motion for Reconsideration re 238 Order on Motion for Contempt and 249 Order on Motion for Contempt; denying without prejudice 257 Motion for Criminal Contempt; denying without prejudice 259 Motion for Criminal Contempt; denying without prejudice 271 Motion for Civil Contempt. Signed by Judge James I. Cohn on 8/20/2012. (awe)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 10-80236-CIV-COHN/SELTZER
CAREY CHEN,
Plaintiff,
v.
CAYMAN ARTS, INC., a Florida corporation,
and SCOTT R. STEELE, an individual
Defendant.
_____________________________________/
ORDER
THIS CAUSE is before the Court on the following motions: Plaintiff Carey Chen’s
First Motion for Criminal Contempt [DE 257]; Plaintiff’s Second Motion for Criminal
Contempt [DE 259]; Defendants Cayman Arts, Inc. and Scott R. Steele’s Amended
Motion for Reconsideration of the Civil Contempt Orders [DE 266] (“Rule 60(b) Motion”);
and Plaintiff’s Second Motion for Civil Contempt Relating to Mr. Chen’s Websites and
Digital Files [DE 271] (“Second Motion for Civil Contempt”). The Court has considered
all of the motions, responses, and replies, as well as the evidence presented at the
August 17, 2012 evidentiary hearing, the record in this case, and is otherwise fully
advised in the premises.
I. BACKGROUND
Plaintiff Carey Chen, a marine artist, filed this action on February 12, 2010. See
Complaint [DE 1]. He brought a variety of claims relating to his employment with
Defendant Cayman Arts, Inc. (“Cayman Arts”) and Cayman Arts’ President and Chief

Executive Officer, Defendant Scott R. Steele. See Amended Complaint [DE 22]. On
September 15, 2011, the day that trial was set to begin, the parties announced in open
Court that they had settled this litigation. See Status Report Order [DE 205].
Thereafter, on September 28, 2011, the Court approved the settlement and closed the
case. See Amended Order of Dismissal with Prejudice [DE 210].
Among other terms, the Settlement Agreement required Defendants to transfer
two websites to Plaintiff and to turn over to Plaintiff all digital files in Defendants’
possession containing any licensed products, trade marks, and works. See Settlement
Agreement [DE 220-1] ¶¶ 1, 3. Both tasks were to be completed within 30 days of the
effective date of the agreement. See id. ¶¶ 1, 3, id. at 6.
When Defendants failed to transfer the websites and turn over the digital files,
Plaintiff filed motions to enforce these provisions of the settlement agreement
[DE’s 212, 220] on November 8, 2011 and December 2, 2011. The Court granted the
motions to enforce on November 21, 2011 and December 12, 2011. See Order
Granting Plaintiff’s Motion to Enforce Settlement Agreement [DE 216] (“Order Granting
First Motion to Enforce”); Order Granting Motion to Enforce Settlement Agreement
Relating to the Digital Copies and Files of Plaintiff’s Works [DE 230] (“Order Granting
Second Motion to Enforce”).
When Defendants still failed to comply, Plaintiff filed his motions for civil
contempt [DE’s 222, 243]. Without receiving any evidence to controvert Plaintiff’s
arguments, representations, and evidence, the Court granted both motions for civil
contempt. See Order Granting Motion for Civil Contempt [DE 238] (“First Civil
Contempt Order”); Order Granting Motion for Civil Contempt [DE 249] (“Second Civil
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Contempt Order”).
In the First Civil Contempt Order, entered on January 11, 2012, the Court
directed Defendants to pay Plaintiff a sum of $31,000 consisting of $1,000 per day for
each day that Defendants remained in violation of the Order Granting First Motion to
Enforce.1 See First Civil Contempt Order at 5. In the Second Civil Contempt Order,
entered on March 20, 2012, the Court ordered Defendants to pay $1,000 per day for
each day that they remained in violation of the Order Granting Second Motion to
Enforce, from December 13, 2011 and until the date they finally complied. See Second
Civil Contempt Order at 6. To date, Defendants have not complied with either Civil
Contempt Order.
II. DISCUSSION
Plaintiff filed his First Motion for Criminal Contempt [DE 257] relating to the
website on May 23, 2012. He filed his Second Motion for Criminal Contempt [DE 259]
relating to the digital files on June 7, 2012. Thereafter, Defendants filed their Amended
Motion for Relief from Orders Granting Motions for Civil Contempt [DE 266] (“Rule 60(b)
Motion”) on June 26, 2012. Finally, Plaintiff filed his Second Motion for Civil Contempt
Relating to Mr. Chen’s Websites and Digital Files [DE 271] “Second Motion for Civil
Contempt” on July 30, 2012. The Court set the August 17, 2012 evidentiary hearing to
address all pending motions.

1

By the time the Court granted the motion for civil contempt relating to the
websites, Mr. Steele had finally transferred the websites to Plaintiff, but the transfer did
not occur until 31 days after the Order enforcing that provision of the Settlement
Agreement. See First Civil Contempt Order.
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A. Rule 60(b) Motion
In their Rule 60(b) Motion, Defendants seek relief from the First Civil Contempt
Order and the Second Civil Contempt Order. Specifically, as to the First Civil Contempt
Order, Defendants ask the Court to vacate the Order to the extent that it awarded
Plaintiff $31,000, and reassess this value based on evidence presented at the
evidentiary hearing. As to the Second Civil Contempt Order, Defendants ask the Court
to vacate the Order in its entirety. As an alternative regarding the Second Civil
Contempt Order, Defendants suggest that the Court consider requiring Defendants to
pay Plaintiff a reasonable amount for the value of his digital works.
1. Legal Standard
Federal Rule of Civil Procedure 60(b) provides the following list of reasons
justifying reconsideration:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not
have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation,
or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on
an earlier judgment that has been reversed or vacated; or applying it
prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Fed. R. Civ. P. 60(b).
“Motions under Rule 60(b) are directed to the discretion of the trial court. The

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rule is equitable in origin, and the court may take action appropriate to accomplish
justice.” Jackson v. People's Republic of China, 794 F.2d 1490, 1494 (11th Cir. 1986)
(citing Klapprott v. United States, 335 U.S. 601, 614-15 (1949)). Nonetheless, “[t]he
provisions of the rule must be carefully interpreted to preserve the delicate balance
between the sanctity of final judgments and the ‘incessant command of the court's
conscience that justice be done in light of all the facts.’” Griffin v. Swim-Tech Corp.,
722 F.2d 677, 680 (11th Cir. 1984) (quoting Bankers Mortg. Co. v. United States, 423
F.2d 73 (5th Cir.) (1970), cert. denied, 399 U.S. 927 (1970)) (emphasis in original)).
Moreover, “[a] motion for reconsideration cannot be used 'to relitigate old matters, raise
argument or present evidence that could have been raised prior to the entry of
judgment.’” Richardson v. Johnson, 598 F.3d 734, 740 (11th Cir. 2010) (quoting
Michael Linet, Inc. v. Vill. of Wellington, 408 F.3d 757, 763 (11th Cir. 2005)); see also
Mack v. City of High Springs, No. 12-10728, 2012 WL 3124565 (11th Cir. Aug. 1, 2012)
(finding district court did not abuse its discretion in denying a motion for reconsideration
where the movant raised the same arguments he made before the entry of judgment).
2. Analysis
Defendants seek relief under Rule 60(b)(1) for Mr. Steele’s “excusable neglect”
due to his pro se status throughout post-settlement proceedings and his failure to retain
counsel earlier, under Rule 60(b)(3) for Plaintiff’s alleged misrepresentations and fraud,
or under Rule 60(b)(6) for any other reason that justifies relief. The Court is not
persuaded that Defendants are entitled to relief for any of these reasons.

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a. Rule 60(b)(1)
First, Rule 60(b)(1) permits relief for mistake or excusable neglect, but the Court
finds no mistake or excusable neglect based on Mr. Steele’s previous pro se status or
his failure to retain counsel in a timely fashion. Mr. Steele had every opportunity to
retain counsel to represent him throughout this litigation both before settlement and
after settlement.2 Mr. Steele’s own decision to proceed pro se does not entitle him to
ignore the Court’s Orders or his own promises under the Settlement Agreement.
Indeed, in their Rule 60(b) Motion, Defendants state that they “take responsibility for
their actions in this matter and recognize that they are in part the author of their own
misfortune,” Rule 60(b) Motion at 12, and “understand that they find themselves in this
current predicament because of their failure to retain new counsel in a timely fashion,”
id. “Although pro se pleadings are to be construed liberally, 'procedural rules in
ordinary civil litigation' should not be interpreted 'so as to excuse mistakes by those who
proceed without counsel.’” Kelly v. Old Dominion Freight Line, Inc., 376 F. App’x 909,
913 (11th Cir. 2010) (quoting McNeil v. United States, 508 U.S. 106, 113 (1993)), cert.
denied, 131 S. Ct. 200 (U.S. 2010). Mr. Steele’s pro se status does not excuse his
failure to submit proper declarations, affidavits, or other evidence in response to
Plaintiff’s Motions to Enforce or Motions for Civil Contempt. Therefore, as there has
been no mistake or excusable neglect, the Court declines to grant relief under Rule
60(b)(1).
2

As Plaintiff highlights, once Plaintiff filed his First Motion for Criminal
Contempt, Mr. Steele retained competent counsel in no less than twelve days. See
Defendants’ Response to Motions for Criminal Contempt [DE 265] (stating counsel was
retained on June 4, 2012); see First Motion for Criminal Contempt (filed May 23, 2012).
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b. Rule 60(b)(3)
Second, Rule 60(b)(3) permits relief for fraud, misrepresentation, or misconduct
by an opposing party. To obtain relief from an order pursuant to Rule 60(b)(3), “the
movant must ‘prove[ ] by clear and convincing evidence that an adverse party has
obtained the verdict through fraud, misrepresentation, or other misconduct.’” Cox
Nuclear Pharm., Inc. v. CTI, Inc., 478 F.3d 1303, 1314 (11th Cir. 2007) (citing Frederick
v. Kirby Tankships, Inc., 205 F.3d 1277, 1287 (11th Cir. 2000)). Additionally, “the
moving party must [ ] show that the conduct prevented the losing party from fully and
fairly presenting his case or defense.” Id. (quoting Frederick, 205 F.3d at 1287); see
also Waddell v. Hendry Cnty. Sheriff's Office, 329 F.3d 1300, 1310 (11th Cir. 2003)
(finding district court properly exercised its discretion in denying Rule 60(b) motion
where “[i]t was Plaintiffs' tactical decisions, not fraud by Defendants, that prevented
Plaintiffs from fully presenting their case.”). Based on the affidavits and declarations on
file, as well as Plaintiff’s testimony at the evidentiary hearing, the Court finds no fraud,
misrepresentation, or misconduct justifying relief under Rule 60(b)(3). Plaintiff provided
the Court with the information that he believed to be true and accurate to the best of his
knowledge at the time he filed both Motions for Civil Contempt as well as his
accompanying declaration. Although there appears to have been a misunderstanding
as to the specific location of the digital files on or about the time when Ms. Zelones
handed the files to Glenn Steele, Plaintiff clarified the misunderstanding through his
testimony and through Ms. Zelones’s testimony at the evidentiary hearing. There is no
evidence that Plaintiff defrauded the Court or intentionally presented any misleading
evidence. Moreover, nothing that Plaintiff presented to the Court during the pendency
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of the Motions to Enforce or the Motions for Civil Contempt prevented Defendants from
fully and fairly presenting their version of the facts. As such, Defendants have not
demonstrated any basis for relief under Rule 60(b)(3).
c. Rule 60(b)(6)
Third, Rule 60(b)(6) permits relief for any other reason that justifies relief, but the
Court finds no such reason here. “Rule 60(b)(6) . . . grants federal courts broad
authority to relieve a party from a final judgment 'upon such terms as are just,' provided
that the motion is made within a reasonable time and is not premised on one of the
grounds for relief enumerated in clauses (b)(1) through (b)(5).” Liljeberg v. Health
Servs. Acquisition Corp., 486 U.S. 847, 863-64 (1988). The Supreme Court cautions
that Rule 60(b)(6) “should only be applied in 'extraordinary circumstances.’” Id. (quoting
Ackermann v. United States, 340 U.S. 193 (1950)). Defendants have not demonstrated
any such “extraordinary circumstances” here.
As to the First Civil Contempt Order regarding the websites, Defendants concede
that they delayed in transferring the websites to Plaintiff, and they agree that Plaintiff
suffered damages as a result, see Rule 60(b) Motion at 7, but they contend that the
$1,000 per day loss calculation was excessive and not based on sufficient evidence. In
their Rule 60(b) Motion and at the evidentiary hearing, Defendants presented evidence
purporting to show the dollar value of the website and suggesting that Plaintiff’s loss
could have amounted to no more than one month of his salary, but none of Defendants’
evidence or arguments are newly discovered or were otherwise unavailable while the
Motions to Enforce and Motions for Civil Contempt were pending. In short, the time for
presenting evidence as to Plaintiff’s losses has long passed. The Court entered the
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First Civil Contempt Order based on the uncontroverted evidence and information
before the Court at the time of the ruling. Rule 60(b) is not meant for a party like Mr.
Steele to neglect to submit evidence during the pendency of a motion only to return to
the Court later, at his own convenience, to present evidence that he could have
submitted months ago. See Richardson, 598 F.3d at 740. Therefore, the Court will
deny relief under Rule 60(b)(6) with respect to the First Civil Contempt Order.
As to the Second Civil Contempt Order regarding the digital files, again the Court
will not reconsider its ruling based on arguments or evidence that could have been
presented prior to the entry of the Order. See Richardson, 598 F.3d at 740.
Defendants urge the Court to vacate the Second Civil Contempt Order regardless of
their failure to submit evidence in opposition to Plaintiff’s motion months ago because,
they claim, Defendants “never had any of the alleged digital files and therefore should
not be penalized for failing to return what they do not have.” Rule 60(b) Motion at 13.
At the evidentiary hearing, Mr. Steele testified that he does not have the digital files, he
has not had the digital files, and he was unaware of the existence of the digital files.
His brother, Glenn Steele, also testified that he does not have the files and he knows
nothing about the digital files. However, Cayman Arts’ former Operations Manager,
Michelle Zelones, testified in direct contradiction to the Steeles. Ms. Zelones stated
that she had conversations with Mr. Steele about the digital files and that Mr. Steele
was undoubtedly aware of the digital files and their location in a cd folder at the
Cayman Arts gallery. Ms. Zelones further testified that when Cayman Arts closed its
business, Mr. Steele directed her to give the digital files to his brother, Glenn Steele,
and Glenn would bring the files to Mr. Steele. Ms. Zelones stated that she personally
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handed the files to Glenn Steele, and when doing so, she informed Glenn Steele of the
importance of the files and of the importance of getting them to Mr. Steele. At the
hearing, the Court found Ms. Zelones to be the more credible witness. Ms. Zelones has
no bias in this matter, and her testimony was honest and truthful. As such, the Court
finds that the digital files exist, that Mr. Steele was aware of the files’ existence, and
that Ms. Zelones handed the files to Glenn Steele on or about June 30, 2010.
Therefore, the Court will deny Defendants’ request to vacate the Second Civil Contempt
Order pursuant to Rule 60(b)(6).
d. Defendants’ Alternative Request
In their Rule 60(b) Motion, Defendants suggest, "In the alternative, and in
fairness to Mr. Chen, this Court should consider requiring Cayman Arts to pay Mr. Chen
a reasonable amount for the value of his lost digital works.” Rule 60(b) Motion at 10. In
making this request, Defendants state that they “take responsibility for the mistakes
they made in promising to return digital files without checking to see if they had them or
if they even existed.” Id.
In light of the evidence received at the hearing, and the fact that, despite the
Court’s Orders, Defendants have yet to comply with their obligation to turn over the
digital files to Plaintiff, the Court finds it equitable to grant Defendants’ alternative
request and direct them to compensate Plaintiff a reasonable amount for the value of
the lost digital files. At the hearing, Plaintiff’s unrebutted testimony was that the digital
files contained approximately 1000 images, and that each image was worth $1,000 to
$1,500. Thus, the total value of the missing digital files is $1,000,000 to $1,500,000.
Accordingly, the Court will direct Defendants to pay Plaintiff a sum of $1,000,000 to
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compensate Plaintiff for the reasonable value of the digital files.
Additionally, in lieu of allowing the $1,000 per day fine to continue accruing, the
Court, in its discretion, will terminate the fine from accruing as of the date of the
evidentiary hearing, August 17, 2012. Instead, the Court will direct Defendants to pay
Plaintiff a sum of $248,000, consisting of $1,000 per day for each day that Defendants
remained in violation of the December 12, 2011 Order Granting Plaintiff’s Motion to
Enforce Settlement Agreement [DE 230], from December 13, 2011 through August 17,
2012.
B. Motions for Additional Contempt Sanctions
In his Motions for Criminal Contempt, Plaintiff asks the Court “to issue an Order
directing Defendants . . . to show cause as to why they should not be held in criminal
contempt as a consequence of their willful failure and refusal to comply” with the First
Civil Contempt Order and Second Civil Contempt Order. See First Motion for Criminal
Contempt at 1; Second Motion for Criminal Contempt at 1. In his Second Motion for
Civil Contempt, Plaintiff invites the Court, should it deny the relief sought in the Motions
for Criminal Contempt, to impose additional civil contempt sanctions including additional
monetary fines and, if necessary, incarceration. See Second Motion for Civil Contempt
at 5.
“[A] contempt sanction is considered civil if it is remedial, and for the benefit of
the complainant. But if it is for criminal contempt the sentence is punitive, to vindicate
the authority of the court.” Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S.
821, 827-28 (1994). “Imprisonment may be had for a civil contempt where the
defendant has refused to do an affirmative act required by the provisions of a
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mandatory order, but if the imprisonment is for an act already accomplished, it would be
punitive in its nature and a criminal contempt.” Walling v. Crane, 158 F.2d 80, 83 (5th
Cir. 1946).
At this time, the Court will not impose criminal sanctions or additional civil
sanctions, but rather give the Defendants an opportunity to satisfy the financial
obligations imposed herein. However, should Defendants fail to comply with this Order,
the Court will not hesitate to reconsider the imposition of additional contempt sanctions,
including additional monetary fines and, if necessary, incarceration. Accordingly, the
Court will deny without prejudice Plaintiff’s Motions for Criminal Contempt and Second
Motion for Civil Contempt.
III. CONCLUSION
Based on the foregoing, it is hereby
ORDERED AND ADJUDGED as follows:
1.

Defendants’ Amended Motion for Reconsideration of the Civil Contempt
Orders [DE 266] is GRANTED in part and DENIED in part as follows:
a.

The Motion [DE 266] is DENIED as to the First Order Granting
Motion for Civil Contempt [DE 238].

b.

The Motion [DE 266] is GRANTED in part as to the Second Order
Granting Motion for Civil Contempt [DE 249]. The Second Order
Granting Motion for Civil Contempt [DE 249] is MODIFIED as
follows:

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i.

Defendants shall pay Plaintiff a sum of $248,000, consisting
of $1,000 per day for each day that Defendants remained in
violation of the December 12, 2011 Order Granting Plaintiff’s
Motion to Enforce Settlement Agreement [DE 230], from
December 13, 2011 through August 17, 2012. The $1,000
fine shall no longer accrue as of August 17, 2012.

ii.

Additionally, Defendants shall pay Plaintiff a sum of
$1,000,000 for the value of the digital files.3

2.

Plaintiff’s First Motion for Criminal Contempt [DE 257] is DENIED without
prejudice;

3.

Plaintiff’s Second Motion for Criminal Contempt [DE 259] is DENIED
without prejudice;

4.

Plaintiff’s Second Motion for Civil Contempt Relating to Mr. Chen’s
Websites and Digital Files [DE 271] is DENIED without prejudice.4

DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,
Florida, on this 20th day of August, 2012.

Copies provided to:
Counsel of record via CM/ECF
3

If Defendants produce all digital files within thirty (30) days of this Order,
the Court will reconsider the $1,000,000 award for the value of the digital files.
4

Plaintiff is granted leave to commence discovery in aid of enforcement of

this Order.
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