Cedar Rapids Lodge & Suites, LLC et al v. JFS Development, Inc. et al

Filing 164

ORDER Adopting 146 Report and Recommendations re 135 Motion for Contempt filed by Michael Coborn, Raymond Mulford, Cedar Rapids Lodge & Suites, LLC, Jerred Ruble, Scott Shisler, Ronald Sailer, Jacob Sailer, Theresa A Mulford, Pamela J. Cobb Revocable Trust, James T Rymes, Julie Shisler, Rhonda L Coborn. Judgment is entered in the amount of $77,928.68 in favor of Plaintiffs. Signed by Chief Judge Linda R Reade on 10/3/2011. (NEF/copy to Vosburg) (pac)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
CEDAR RAPIDS DIVISION

CEDAR RAPIDS LODGE & SUITES,
LLC, et al.,
Plaintiffs,

No. 09-CV-175-LRR

vs.

ORDER

JFS DEVELOPMENT, INC., f/k/a JCS
DEVELOPMENT, INC., et al.,
Defendants.
____________________
TABLE OF CONTENTS
I.

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II.

RELEVANT FACTS AND PROCEDURAL BACKGROUND . . . . . . . . . . . 2

III.

STANDARDS OF REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

IV.

LEGAL STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A.
Contempt of Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
B.
Attorney Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

V.

OBJECTIONS TO THE REPORT AND RECOMMENDATION . . . . . . . . 7
A.
Contempt of Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
B.
Attorney Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

VI.

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
I. INTRODUCTION
The matters before the court are Plaintiffs’ “Motion for Contempt of Court Against

Defendant John F. Seibert” (“Motion for Contempt”) (docket no. 135) and John F.
Seibert’s pro se Objections (docket no. 148) to United States Magistrate Judge Jon S.
Scoles’s Report and Recommendation (docket no. 146). Judge Scoles recommends that
the undersigned grant Plaintiffs’ Motion for Contempt and hold Seibert in contempt for

failing to comply with Judge Scoles’s “Order Granting Motion to Compel Production”
(“Order to Compel”) (docket no. 103). Judge Scoles recommends that the court enter
judgment in favor of Plaintiffs and against Seibert in the amount of $77,928.68 for the cost
of the forensic examination and reasonable attorney fees and costs associated with
obtaining the documents related to the Order to Compel.
II. RELEVANT FACTS AND PROCEDURAL BACKGROUND
On December 3, 2009, Plaintiffs filed an eighty-seven-page, eighteen-count
Complaint (docket no. 1). The Complaint arises from the development of an AmericInn
hotel (“Hotel”) in Cedar Rapids, Iowa. Plaintiffs allege that Defendants fraudulently
induced them to invest in the Hotel and proceeded to mishandle the financing, construction
and/or management of the Hotel. Plaintiffs seek monetary damages and declaratory relief.
Since the Complaint was filed, Defendants Marc Gabrielson and Ted Vosburg have
filed for bankruptcy, see docket nos. 130 & 132, and the Clerk of Court entered a default
against JFS Development, Inc. (“JFS”) (docket no. 101). A jury trial is scheduled to
commence before the undersigned in January of 2012. On October 29, 2010, Brady &
O’Shea, P.C. filed a “Motion of Attorneys Representing John Seibert and JFS
Development, Inc. to Withdraw as Counsel” (“Motion to Withdraw”) (docket no. 86) due
to unpaid attorney fees. On December 6, 2010, Judge Scoles granted the Motion to
Withdraw (docket no. 95).
On January 13, 2011, Plaintiffs filed a “Motion to Compel Production of
Defendants [Seibert’s] and [JFS’s] Computer Systems and Hardware for Inspection and
Copying” (“Motion to Compel”) (docket no. 96). On January 27, 2011, Judge Scoles held
a hearing on the Motion to Compel. See docket no. 102. Robert H. Miller (“Miller”) and
Kevin J. Visser (“Visser”) represented Plaintiffs at the hearing, and Seibert did not appear
and was not represented. See id. On February 1, 2011, Judge Scoles entered the Order
to Compel, granting the Motion to Compel and ordering Seibert and JFS to produce their

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computer systems and hardware for inspection and copying at their expense. Seibert
eventually complied with the Order to Compel after some logistical disputes. The bill for
the forensic computer examination totaled $43,694.93. See docket no. 135-9 (describing
the services performed and the total charges). Plaintiffs submitted the bill to Seibert for
payment, but Plaintiffs subsequently paid the full balance after Seibert failed to pay.
On July 28, 2011, Plaintiffs filed the “Motion for Contempt of Court Against
Defendant John F. Seibert Pursuant to the Court’s February 1, 2011 Order and Fed. R.
Civ. P. 37(b)(2)(A)(viii)” (“Motion for Contempt”) (docket no. 135). On August 23,
2011, Judge Scoles held a hearing on the Motion for Contempt. See docket no. 144. At
the hearing, attorneys Miller, Visser and Brian Thomas represented Plaintiffs, Defendant
Seibert appeared personally and represented himself and attorney Kevin Caster appeared
on behalf of Defendant Lightowler Johnson Associates, Inc. See id. On September 1,
2011, Judge Scoles filed the Report and Recommendation. On September 14, 2011,
Seibert filed his Objections. On September 22, 2011, Plaintiffs filed a Reply (docket no.
152) to the Objections.
In the Motion for Contempt, Plaintiffs claim that Seibert is in contempt of court
because he did not pay the forensic computer examination bill as required by the Order to
Compel. Plaintiffs ask the court to order Seibert to pay both the $43,694.93 bill for the
for the computer examination and the $34,233.75 that Plaintiffs incurred in costs and
attorney fees while obtaining the relevant documents. See docket nos. 135-10 & 135-11
(describing the attorneys’ services and charges). Plaintiffs request in their Brief in Support
of the Motion for Contempt (docket no. 135-22) that the court order Seibert to pay
Plaintiffs a total of $77,928.68 within 15 days or be subject to a bench warrant for
Seibert’s immediate arrest and incarceration until the payment is made. At the time of the
hearing, Plaintiffs alternatively requested that the court enter judgment against Seibert for
$77,928.68. In his Objections, Seibert claims that his failure to pay the bill is not willful,

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he has no money to pay the bill and he should not have to pay for either the forensic
analysis or the Plaintiffs’ attorney fees. The matter is now fully submitted and ready for
decision.
III. STANDARDS OF REVIEW
When a party files a timely objection to a magistrate judge’s report and
recommendation, “[a] judge of the court shall make a de novo determination of those
portions of the report or specified proposed findings or recommendations to which
objection is made.” 28 U.S.C. § 636(b)(1); see also United States v. Lothridge, 324 F.3d
599, 600 (8th Cir. 2003); Fed. R. Civ. P. 72(b)(3) (“The district judge must determine de
novo any part of the magistrate judge’s disposition that has been properly objected to.”).
“A judge of the court may accept, reject, or modify, in whole or in part, the findings or
recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1); see also Fed.
R. Civ. P. 72(b)(3). It is reversible error for the district court to fail to engage in a de
novo review of a magistrate judge’s report when such review is required. See Lothridge,
324 F.3d at 600; Hosna v. Groose, 80 F.3d 298, 306 (8th Cir. 1996); Grinder v.
Gammon, 73 F.3d 793, 795 (8th Cir. 1996). However, the court reviews portions of the
report and recommendation for which there are no objections for plain error only. See
Griffini v. Mitchell, 31 F.3d 690, 692 (8th Cir. 1994).
IV. LEGAL STANDARDS
A. Contempt of Court
The Plaintiffs in this case are asking the court to hold Seibert in civil contempt.
“[C]ourts have inherent power to enforce compliance with their lawful orders through civil
contempt.” Shillitani v. United States, 384 U.S. 364, 370 (1966) (citing United States v.
United Mine Workers of Am., 330 U.S. 258, 330-32 (1947)). One of the purposes of the
contempt power is “to ensure that litigants do not anoint themselves with the power to
adjudge the validity of orders to which they are subject.” Chi. Truck Drivers v. Bhd.

4

Labor Leasing, 207 F.3d 500, 504 (8th Cir. 2000).
“The contempt power is a most potent weapon, and therefore it must be carefully
and precisely employed.” Indep. Fed’n of Flight Attendants v. Cooper, 134 F.3d 917, 920
(8th Cir. 1998) (quoting Mahers v. Hedgepeth, 32 F.3d 1273, 1275 (8th Cir. 1994)).
Therefore, “[j]udicial sanctions in civil contempt proceedings may, in a proper case, be
employed for either or both of two purposes; to coerce the defendant into compliance with
the court’s order, and to compensate the complainant for losses sustained.” United Mine
Workers, 330 U.S. at 303-04; see also Bernard v. Am. Cyanamid Co. (In re Tetracycline
Cases), 927 F.2d 411, 413 (8th Cir. 1991) (stating the same two purposes for civil
contempt).

These purposes differ from criminal contempt, which courts use as a

punishment for disobedience. United States v. Waggoner, 103 F.3d 724, 727 (8th Cir.
1997). If a compensatory sanction is appropriate, the purpose would be to “restor[e] [the
injured] party to the position it would have held had the court’s order been obeyed.”
Hartman v. Lyng, 884 F.2d 1103, 1106 (8th Cir. 1989) (quoting In re Grand Jury
Suubpoena of June 12, 1986, 690 F. Supp. 1451, 1453 (D. Md. 1988)) (internal quotation
marks omitted).
A party bringing a contempt action must prove, “by clear and convincing evidence,
that the alleged contemnors violated a court order.” Chi. Truck Drivers, 207 F.3d at 505.
Unlike a criminal contempt showing, it is not necessary for the moving party to show that
the violation of the court order was willful because civil contempt is remedial. McComb
v. Jacksonville Paper Co., 336 U.S. 187, 191 (1949). Therefore, the violating party’s
intent is irrelevant. Id.
If the party seeking contempt meets the clear and convincing evidentiary standard,
the burden shifts to the alleged contemnor to assert any defenses, including inability to
comply. See Chi. Truck Drivers, 207 F.3d at 505. In claiming an inability to comply,
parties challenging a motion for contempt must establish: “(1) that they were unable to

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comply, explaining why categorically and in detail; (2) that their inability to comply was
not self-induced; and (3) that they made in good faith all reasonable efforts to comply.”
Id. at 506 (internal quotation marks omitted) (citations omitted).
In exercising its contempt power, a court may exercise discretion in determining the
proper remedy for a contempt violation. Hartman, 884 F.2d at 1107. This discretion
includes determining what “‘relief . . . is necessary to effect compliance with its decree.
The measure of the court’s power in civil contempt proceedings is determined by the
requirements of full remedial relief.’” Id. (quoting McComb, 336 U.S. at 193).
A contempt action is not the appropriate proceeding during which to attack the
validity of the order that was disobeyed. According to the Supreme Court,
“[i]t would be a disservice to the law if we were to depart
from the long-standing rule that a contempt proceeding does
not open to reconsideration the legal or factual basis of the
order alleged to have been disobeyed and thus become a retrial
of the original controversy. The procedure to enforce a court’s
order commanding or forbidding an act should not be so
inconclusive as to foster experimentation with disobedience.”
United States v. Rylander, 460 U.S. 752, 756-57 (1983) (quoting Maggio v. Zeitz, 333
U.S. 56, 69 (1948)). “If the order is not obeyed, the party in violation may be held in
contempt, even if he or she later succeeds in getting the order overturned on appeal.”
Brown v. Ramsay (In re Ragar), 3 F.3d 1174, 1180 (8th Cir. 1993). Regardless of the
validity of the order, a party has “no right to take the law into his own hands and disobey
the order.” Id. at 1181.
B. Attorney Fees
The Plaintiffs also request that Seibert pay the reasonable attorney fees and costs
that they incurred while obtaining the information outlined in the Motion to Compel. “If
a party fails to make a disclosure required by Rule 26(a), any other party may move to
compel disclosure and for appropriate sanctions.” Fed. R. Civ. P. 37(a)(3)(A). If the
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court grants a motion to compel, “the court must, after giving an opportunity to be heard,
require the party . . . whose conduct necessitated the motion . . . to pay the movant’s
reasonable expenses incurred in making the motion, including attorney’s fees.” Id. at
37(a)(5)(A). District courts have “broad authority to impose sanctions for failure to
respond to discovery requests or to disclose information required by Fed R. Civ. P.
26(a).” Collins v. Burg, 169 F.3d 563, 565 (8th Cir. 1999).
A party cannot excuse failing to respond to discovery requests by claiming that his
or her attorneys were responsible for the noncompliance. “‘It is a well-established
principle that a party is responsible for the actions and conduct of his [or her] counsel and
that, under appropriate circumstances, dismissal or default may be entered against a party
as a result of counsel’s actions.’” Comiskey v. JFTJ Corp., 989 F.2d 1007, 1010 (8th Cir.
1993) (alteration in original) (quoting Boogaerts v. Bank of Bradley, 961 F.2d 765, 768
(8th Cir. 1992)) (internal quotation marks omitted).

In a case where counsel was

responsible for discovery violations, it was “of no consequence that the discovery abuse
perpetrated was by counsel rather than the plaintiff-client.” Boogaerts, 961 F.2d at 768.
Furthermore, a party that appears pro se cannot claim that he or she did not know
the law or could not comply with court procedures. “[P]ro se litigants are not excused
from failing to comply with substantive and procedural law.” Burgs v. Sissel, 745 F.2d
526, 528 (8th Cir. 1984).
V. OBJECTIONS TO THE REPORT AND RECOMMENDATION
In his Objections, Seibert asks the court to: (1) reject Judge Scoles’s
recommendation that he be held in contempt and (2) reject Judge Scoles’s recommendation
that Seibert pay Plaintiffs’ attorney fees.
A. Contempt of Court
Seibert makes several claims in his Objections to support his argument that he
should not be held in contempt of court.

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First, Seibert makes multiple arguments

regarding the validity of the Motion to Compel, asserting that he was unaware of the
hearing on the Motion to Compel, the Motion to Compel would not have been granted if
he had timely objected, the costs Plaintiffs charged for the forensic analysis were
unreasonable, Seibert did not have the ability to properly examine Plaintiffs’ expert witness
and Seibert was not aware of his rights regarding the Motion to Compel because he is
unrepresented. None of these claims are relevant to the issue of contempt, however.
Instead, they address the validity of the Order to Compel. Because the court cannot
consider arguments challenging the validity of the original order in evaluating the Motion
for Contempt, Seibert’s arguments regarding the Order to Compel are irrelevant. See
Rylander, 460 U.S. at 756-57.
Second, Seibert claims that he did not willfully disobey the Order to Compel. This
argument is relevant to the pending “Motion for Sanctions Against Defendant John F.
Seibert for Spoliation of Evidence” (“Motion for Sanctions”) (docket no. 136) and not the
Motion for Contempt. Furthermore, the court agrees with Judge Scoles’s determination
that willfulness is not an element of civil contempt due to the remedial, not punitive, nature
of the remedy. See McComb, 336 U.S. at 191.
Third, Seibert claims that he does not have the financial means to hire an attorney,
let alone pay the amount Judge Scoles recommends. This argument, however, is without
merit because Seibert has not produced any evidence that shows categorically and in detail
that he is financially unable to comply with the Motion to Compel, that his failure to pay
is not self-induced or that he made good faith efforts to comply. See Chi. Truck Drivers,
207 F.3d at 506.

Therefore, Seibert has not met his burden to show an inability to

comply with the Motion to Compel.
For the reasons discussed above, the court agrees with Judge Scoles’s finding that
Seibert disobeyed the Order to Compel by failing to pay the cost of the forensic analysis
as required. Furthermore, Seibert has failed to show an inability to comply with the Order

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to Compel. The court therefore finds Defendant John F. Seibert in contempt of court and
shall adopt Judge Scoles’s recommendation on the issue. The court also agrees with Judge
Scoles’s recommendation that the court should enter judgment against Seibert for the
amount Plaintiffs requested instead of making Seibert subject to a bench warrant. Thus,
the court shall enter judgment in favor of Plaintiffs and against Seibert for the amount of
the forensic analysis, $43,694.93.
B. Attorney Fees
Seibert also makes several claims to support his argument that he should not have
to pay Plaintiffs’ attorney fees. First, he claims that he provided all relevant documents
to his former attorneys and the attorneys failed to provide Plaintiffs with the documents.
This argument is without merit, however. It was Seibert’s responsibility to ensure that the
Plaintiffs received all requested documents, and whether his attorneys failed to pass the
requested documents on to Plaintiffs is irrelevant to his duty to comply with discovery
requests. See Comiskey, 989 F.2d at 1010. Seibert also has not produced any evidence
to suggest that his former attorneys were responsible for the failure to produce documents.
Second, Seibert claims that, after his attorneys withdrew, his failure to respond to
Plaintiffs’ discovery requests was the result of Plaintiffs’ “east coast tactics” and their
“inability to work amicably with the Defendants.” Objections at 2. This argument is
relevant to the Motion for Sanctions and not the Motion for Contempt. Furthermore, the
Order to Compel required Seibert to comply with Plaintiffs’ request, regardless of whether
the relationship between the parties was amicable. Therefore, the demeanor of the parties
is not relevant in determining whether Seibert should reimburse Plaintiffs for the costs they
incurred while attempting to obtain information from him.
Finally, Seibert again argues that he is at a disadvantage because he appears pro se
and that he failed to object to the reasonableness of the attorney fees at the hearing because
he did not understand his rights. Judge Scoles, however, made it clear to Seibert that he

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would be held to the same standard as counsel, and, in this situation, Seibert is not excused
from complying with the court’s orders and the Federal Rules of Civil Procedure because
he appears pro se. See Ruling on Pretrial Motions, docket no. 95, at 6 n.1; see also
Burgs, 745 F.2d at 528. Furthermore, the court agrees with Judge Scoles’s determination
that the attorney fees are reasonable. Plaintiffs incurred the attorney fees and costs in an
effort to obtain documents and evidence that the court ordered Seibert to provide.
Based on the foregoing, the court adopts Judge Scoles’s recommendation that
Seibert reimburse Plaintiffs for their reasonable attorney fees. Therefore, the court shall
enter judgment in favor of Plaintiffs and order Seibert to pay $34,233.75 for attorney fees.
With the cost of the forensic analysis and the attorney fees combined, the court shall order
Seibert to pay a total of $77,928.68 to Plaintiffs.
VI. CONCLUSION
It is HEREBY ORDERED THAT:
(1)

Defendant Seibert’s Objections (docket no. 148) are OVERRULED;

(2)

The Report and Recommendation (docket no. 146) is ADOPTED;

(3)

The Motion for Contempt (docket no. 135) is GRANTED; and

(4)

JUDGMENT IS ENTERED in the amount of $77,928.68 in favor of
Plaintiffs.

DATED this 3rd day of October, 2011.

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