Voso v. Ewton et al

Filing 155

MEMORANDUM Opinion and Order Signed by the Honorable Amy J. St. Eve on 6/20/2017:Mailed notice(kef, )

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DOMINICK R. VOSO,

)
)
Plaintiff,
)
)
v.
)
)
SHARON TERESA EWTON, KENNETH FRANK, and )
FREDERIC W. FRANK, III,
)
)
Defendants.
)
__________________________________________
)
)
SHARON TERESA EWTON, KENNETH FRANK,
)
FREDERIC W. FRANK, III, and MATTHEW G. SMITH, )
)
Counter-Plaintiffs,
)
v.
)
)
DOMINICK R. VOSO and PURSUIT BEVERAGE
)
COMPANY, LLC,
)
)
Counter-Defendants.
)

No. 16-cv-00190
Judge Amy J. St. Eve

MEMORANDUM OPINION AND ORDER
In May 2016 Counter-Defendants Dominick Voso and Pursuit Beverage Company
(“PBC”), collectively, “Counter-Defendants,” and Counter-Plaintiffs Sharon Ewton, Kenneth
Frank, Frederic Frank, and Matthew Smith (“Counter-Plaintiffs”) reached a settlement
agreement. After Counter-Defendants failed to meet their obligations under the settlement
agreement, Counter-Plaintiffs filed a Motion to Enforce the Settlement Agreement [116], which
the Court granted on January 25, 2017 [127, 128]. The Court ordered Counter-Defendants to
make a final payment under the settlement agreement within 30 days (“the Court’s Order”).
Counter-Defendants have failed to make that final payment and now, Counter-Plaintiffs have

brought the present Motion for a Finding of Contempt [129]. Counter-Plaintiffs also filed a
supplemental brief with additional financial information in further support of contempt. For the
reasons below, the Court grants this motion.
LEGAL STANDARD
To prevail on a request for a civil contempt finding, the movant must establish by clear
and convincing evidence that: (1) a court order sets forth an unambiguous command; (2) the
alleged contemnor violated that command; (3) the violation was significant, meaning the alleged
contemnor did not substantially comply with the order; and (4) the alleged contemnor failed to
make a reasonable and diligent effort to comply. Ohr ex rel. Nat’l Labor Relations Bd. v. Latino
Exp., Inc., 776 F.3d 469, 474 (7th Cir. 2015). A finding of willfulness is not required to hold a
party in civil contempt; all that must be shown is that a party has not been reasonably diligent in
attempting to accomplish what was ordered. SEC v. McNamee, 481 F.3d 451, 456 (7th Cir.
2007). “A civil contempt order can . . . be intended to compensate a party who has suffered
unnecessary injuries or costs because of contemptuous conduct.” Ohr, 776 F.3d at 479.
The Court has discretion in its choice of remedies for civil contempt. The power to hold
a party in contempt is governed by the requirements of full remedial relief, so the Court can take
whatever action is necessary to remedy the contempt. McComb v. Jacksonville Paper Co., 336
U.S. 187 (1949); see 11 Wright & Miller § 2960 at 586. Three remedies are commonly imposed
by courts. First, the Court may jail a disobedient party. Incarceration can only be used to coerce
the party to comply with a court order—once the party complies, she must be released. Gompers
v. Buck’s Stove & Range Co., 221 U.S. 418, 442 (1911) (noting that civil contemnor “holds the
keys of his prison in his own pocket”) (quotations omitted). Second, the Court may impose fines
on a party. These fines can be used either to coerce compliance with a court order or to

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compensate an injured party for the damages caused by the contumacious party’s failure to
comply. F.T.C. v. Trudeau, 579 F.3d 754, 769 (7th Cir. 2009). Third, the Court may award
attorneys’ fees, court costs, and discovery costs to an injured party that has pursued a contempt
judgment. Shakman v. Democratic Org. of Cook Cnty., 533 F.2d 344, 351 (7th Cir. 1976) (“An
award of costs and attorneys’ fees is clearly proper and wholly independent of an award of
compensatory damages.”).
ANALYSIS
Counter-Defendants do not dispute that they have failed comply with the Court’s Order
and have failed to make even a partial payment to Counter-Plaintiffs. Instead of arguing that
Counter-Plaintiffs have not satisfied the elements required for a contempt findings, CounterDefendants argue that the Court should deny this Motion for three primary reasons: (1) Voso and
PBC are attempting to comply with the Court’s Order, but they are unable to make final payment
due to PBC’s financial predicament; (2) Seventh Circuit precedent dictates that a party cannot
enforce a settlement agreement through a contempt proceeding; and (3) a finding of contempt
would violate Counter-Defendants’ Seventh Amendment right to trial by jury. The Court
addresses each of these arguments in turn.
I.

Counter-Defendants Have Failed to Demonstrate an Inability to Pay Defense
Counter-Defendants first argue that they have been attempting to comply with the Court’s

Order, but they “simply are unable to make the final payment at this time.” In support of this
argument, Counter-Defendants note that they have provided K-1 forms and PBC’s bank records
to Counter-Plaintiffs. Counter-Defendants explain that they are working with a consultant to
develop a plan to raise the funds necessary to make their final payment to Counter-Plaintiffs.
Thus far, they have not been able to raise the necessary funds primarily because according to

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Counter-Defendants, PBC’s key investor, Clint Lohman, directed that PBC’s available capital be
used for operational expenses, licensing fees, to repay high-interest debt, and only after those
obligations were met, to make settlement payments. Currently, Lohman is no longer providing
capital, and Counter-Defendants argue that PBC cannot make the final payment without
becoming insolvent. Counter-Defendants note that they also offered to sell PBC to CounterPlaintiffs in lieu of making a final settlement payment, but Counter-Plaintiffs rejected this offer.
The Seventh Circuit has held that “[i]nability to pay is a valid defense in a contempt
proceeding, but the party raising the defense has the burden of proving its inability to pay.” In re
Res. Tech. Corp., 624 F.3d 376, 387 (7th Cir. 2010) (citing United States v. Rylander, 460 U.S.
752, 757 (1983)). “[A] mere assertion of inability to pay . . . [does not] preclude[] a finding of
contempt.” Cent. States, Se. & Sw. Areas Health & Welfare Fund v. Lewis, 745 F.3d 283, 287
(7th Cir. 2014) (citations omitted). To succeed on an inability to pay defense, “[t]here must be
an adequate factual basis to support the defense, and “where, as here, there has been no effort at
even partial compliance with the court’s order, the inability-to-pay defense requires a showing of
a ‘complete inability’ to pay.” Res. Tech. Corp., 624 F.3d at 387 (citations omitted). Put
differently, “under the circumstances here, [Counter-Defendants] ha[ve] the burden of
establishing ‘clearly, plainly, and unmistakably’ that compliance is impossible.” Id. (emphasis in
original) (citing Huber v. Marine Midland Bank, 51 F.3d 5, 10–11 (2d Cir. 1995).
In light of the high standards imposed on parties that have made no effort at even partial
compliance, courts regularly reject inability to pay defenses where the party cannot show that
payment is plainly impossible. In Resource Technology Corp., 624 F.3d at 387, for example, the
Seventh Circuit upheld the district court’s rejection of a debtor’s inability to pay defense because
the debtor had made prior representations about its assets indicating that it would be able to make

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a complete payment as ordered by the court. The debtor submitted financial documents to the
court and argued that the money and assets in its accounts were unavailable to make a payment,
but the court rejected these arguments and held that the debtor “failed to demonstrate that it had
been reasonably diligent and energetic in attempting to accomplish what was ordered . . . and so
did not carry its burden of producing sufficient evidence to establish its inability to pay.” Id. at
388 (citations omitted); see also Lightspeed Media Corp. v. Smith, 761 F.3d 699, 712 (7th Cir.
2014) (upholding finding of contempt where party failed to point to any steps it was taking to
make final payment owed to opposing party and submitted incomplete financial documents in
support of inability to pay argument); Heyne v. Nick’s Am. Pancake & Café, Inc., No. 3:11-CV305 JD, 2016 WL 270110, at *5 (N.D. Ind. Jan. 22, 2016) (rejecting inability to pay defense due
to lack of specific financial evidence); Krumwiede v. Brighton Assocs., L.L.C., 2006 WL
2714609, at *4 (N.D. Ill. 2006) (finding plaintiff’s bare assertions insufficient to demonstrate an
inability to pay).
Here, Counter-Defendants have not made any “effort at even partial compliance with the
court’s order,” and thus, they must show that payment is plainly impossible. Res. Tech. Corp.,
624 F.3d at 387. Counter-Defendants included in their response brief excerpts from financial
spreadsheets showing PBC’s expenditures, capital investments, and debt and equity. As in
Resource Technology Corp., however, these financial documents are insufficient to show that
Counter-Defendants have “been reasonably diligent and energetic in attempting to accomplish
what was ordered,” that is, to make its final settlement payment. Id. These financial disclosures
fall short for several reasons.
First and most importantly, Counter-Defendants did not provide any financial
information relating to Voso as an individual. Voso is personally liable in this matter and as

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such, he could use his personal assets and cash on hand to comply with the Court’s Order and
make a final payment. Voso, however, has not provided his personal credit card or bank account
information, much less any information about other personal assets that could be leveraged to
make a payment to Counter-Plaintiffs.
Second, the Court finds it troubling that Voso took a compensation draw of $134,000
instead of using some or all of that money to pay Counter-Plaintiffs. While Counter-Defendants
argue that this payout was not salary and was instead a “reduction of his member capital
account,” this argument is unpersuasive—Counter-Defendants easily could have re-allocated this
money towards making a final payment in line with the Court’s Order. (R. 139, Resp. to Mot.
for Contempt 6.) Counter-Plaintiffs supplemental brief provides further evidence that Voso may
be personally mismanaging PBC’s corporate funds and using PBC corporate funds to pay
himself and his family members. (R. 151, Supplemental Brief.) Bank records indicate, for
example, that between April 12, 2016 and March 31, 2017, Voso wrote checks to himself from
PBC’s operating account in the total amount of $152,653, and in that same time period, Clint
Lohman transferred $200,000 into Voso’s personal checking account.1 (Id. 3-5.) Additionally,
bank records also show credit card payments from PBC’s account to Voso’s personal credit card,
payments to Voso’s family from PBC accounts, and unexplained ATM withdrawal transactions
involving PBC funds. (Id. 5-7.) Counter-Defendants argue that these transactions were related
to necessary business expenses and payments that Lohman approved, and while that may be true,
the transactions also provide evidence of significant capital that Counter-Defendants could have
used, at least in part, to make a settlement payment. (R. 152, Opp’n to Supplemental Brief.)

1
While Voso argues that Lohman transferred this money as payment for his shares in PBC, this argument
belies the fact that Voso is personally liable as a Counter-Defendant and could have used that money to
make payments pursuant to the Settlement Agreement.

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Finally, Counter-Defendants’ financial excerpts and assertions in their response and
supplemental briefs indicate that they have simply prioritized other debt obligations as well as
operations costs—first at the direction of Lohman and now at their own direction—over the
money owed to Counter-Plaintiffs as part of the settlement agreement. This prioritization with
some of the funds may have been sensible from the business perspective of PBC, but CounterDefendants previously assured the Court that they would use that incoming capital to make
settlement payments,2 and their failure to prioritize these payments provides a clear indication
that Counter-Defendants have not been diligent and energetic in their efforts to make final
payment as ordered by the Court. In Counter-Defendants’ Supplemental Opposition brief, for
example, they explain that Voso has recently used his personal funds to make a $13,000
delinquent tax payment and pay $88,000 in legal fees related to this case. (R. 152, Opp’n to
Supplemental Brief 6-7.) These payments are once again examples of Counter-Defendants, and
Voso individually, prioritizing certain debts over his obligation to pay Counter-Plaintiffs under
the Settlement Agreement and under this Court’s Order.
Accordingly, Counter-Defendants have failed to meet their burden of proving their
inability to pay.
II.

The Court May Find a Party in Contempt for Failure to Comply With Its Order
Contrary to Counter-Defendants’ argument, Counter-Plaintiffs are not seeking a finding

of contempt to enforce a settlement—the Court has already entered an Order, on January 25,
2017, enforcing the parties’ settlement and ordering Counter-Defendants to make their final
payment owed under the settlement agreement. Instead, Counter-Plaintiffs are seeking contempt

2
Counter-Defendants previously asserted that Clint Lohman provided assurances that he would raise the
funds for Counter-Defendants to make a final settlement payment. (R. 146, Tr. of March 27, 2017
Hearing, 3: 12-24.)

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for Counter-Defendants’ violation of that January 25, 2017 Order because Counter-Defendants
have not made a final payment, or any payment for that matter since the Court’s January 25
Order. Courts regularly hold parties in contempt, where, as here, a party has failed to comply
with a court order to make a payment to the opposing party, even if the payment is part of a
settlement agreement. Towne v. Gee Const., LLC, No. CIV.A. 11-1884, 2014 WL 4981442, at
*2 (E.D. La. Oct. 6, 2014) (finding party in civil contempt in order “to coerce compliance with
this Court’s order enforcing the specific terms of the settlement agreement and to compensate the
plaintiff for the defendants’ continued noncompliance”); In re Res. Tech. Corp., No. 08 C 4040,
2008 WL 5411771, at *2 (N.D. Ill. Dec. 23, 2008) (explaining that Court found party in civil
contempt, directed party to pay trustee $500,000 immediately, and imposed a civil fine of $5,000
for every calendar day party failed to comply); Buffalo Wings Factory, Inc. v. Mohd, 574 F.
Supp. 2d 574, 581 (E.D. Va. 2008) (holding party in contempt for failure to comply with consent
order enforcing settlement and ordering party to pay damages and attorneys’ fees); Lovell v.
Evergreen Res., Inc., No. C-88-3467 DLJ, 1995 WL 761269, at *6 (N.D. Cal. Dec. 15, 1995)
(holding party in civil contempt for failure to comply with court order requiring him to make
settlement payment and ordering party to make final payment and pay attorneys’ fees).
Counter-Defendants also cite to Seventh Circuit case law they purport prevents this Court
from using its contempt power to enforce a settlement agreement. This case law, however, is
inapposite. In two of the cited cases, the movants attempted to rely solely on the terms of the
settlement agreement to institute contempt proceedings, and the Seventh Circuit held that a
contempt finding was not permissible because the specific terms of the agreement were not set
forth in a court order. See D. Patrick, Inc. v. Ford Motor Co., 8 F.3d 455 (7th Cir. 1993); H.K.
Porter Co., Inc. v. Nat’l Friction Prods. Corp., 568 F.2d 24 (7th Cir. 1977). Those cases do not

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apply here where Counter-Plaintiffs obtained an explicit Order to enforce the settlement
agreement and make a final payment and are now seeking a finding of contempt for CounterDefendants’ violation of that order. Finally, as noted by Counter-Plaintiffs, the other case upon
which Counter-Defendants rely, Tranzact Technologies, Inc. v. 1Source Worldsite, 406 F.3d 851,
855 (7th Cir. 2005), supports the proposition that the Court may hold Counter-Defendants in
contempt, stating:
It is true that a settlement agreement may not be enforceable through a contempt
proceeding when its terms are not expressly set forth in a court order . . . but this is not
such a case. The language at issue here is not simply incorporated by reference into the
court’s order, but specifically set forth in the order itself. It is clear, unambiguous, and
perfectly amenable to being enforced through a contempt proceeding.
Here, as in Tranzact, the Court did not simply refer to the settlement agreement, but instead
explicitly and unambiguously directed Counter-Defendants to make a final payment within 30
days. Accordingly, as in the cases cited above, the Court may hold Counter-Defendants in
contempt.
III.

The Seventh Amendment Does Not Prevent the Court from Finding CounterDefendants in Contempt
Finally, Counter-Defendants argue that the Court may not make a civil contempt finding

because it would violate their Seventh Amendment right to a jury trial and because CounterPlaintiffs have not alleged the elements of a breach of contract. As to the first argument, it is
well-established that “civil contempt is an equitable action . . . and litigants have never been
entitled to a jury trial for suits in equity.” Trudeau, 579 F.3d at 775 (citations omitted); see also
Shillitani v. United States, 384 U.S. 364, 365 (1966) (“We hold that the conditional nature of
these sentences renders each of the actions a civil contempt proceeding, for which indictment
and jury trial are not constitutionally required.”). Counter-Defendants’ argument that CounterPlaintiff must allege the elements of a breach of contract for the Court to make a contempt
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finding also fails. Simply put, a Court may make a finding of contempt when a party violates its
unambiguous order, and the Court need not address the elements of breach of contract or any
other underlying cause of action. See Ohr 776 F.3d at 474 (describing elements required for
contempt finding).
CONCLUSION
For the foregoing reasons, the Court grants Counter-Plaintiffs’ motion for a finding of
contempt and orders Counter-Defendants to take the following remedial actions on or before July
21, 2017: (1) make a good faith payment of $10,000 to Counter-Plaintiffs; (2) submit to the
Court a written plan for repayment; (3) provide the Court and Counter-Plaintiffs with bank
records for all of Voso’s personal accounts; and (4) provide the Court with documentation
relating to any of Voso’s personal assets with a value of $20,000 or more. The Court also orders
Counter-Defendants to provide to the Court weekly written status reports, starting 14 days
hereof, updating the steps they have taken to make a final payment to Counter-Plaintiffs.3

Dated: June 20, 2017
______________________________
AMY J. ST. EVE
United States District Court Judge

3
Given Counter-Defendants’ financial difficulties, the Court refrains from awarding attorneys’ fees and
costs.

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