Consolidated Grain & Barge, Inc. v. Anny et al
Filing
531
ORDER AND REASONS that Randy Anny and Barbara Falgoust pay ARTCO $8,000.00 as reasonable attorney's fees, plus the costs of the judgment debtor examination as set forth herein; FURTHER ORDERED that if the original Judgment and award of sanc tions are not satisfied by 7/15/2018, payments owed by Consolidated Grain & Barge to Randy Anny, Annys Inc., and Aineys, LLC under the Work Agreement shall be paid to ARTCO until the Judgment and award of sanctions are satisfied. Signed by Judge Ivan L.R. Lemelle on 6/14/2018.(Reference: 11-2615, 13-5827)(lag)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CONSOLIDATED GRAIN & BARGE, INC.
CIVIL ACTION
VERSUS
NO. 11-2204
REFERS TO:
11-2615 and
13-5827
RANDY ANNY, ET AL.
SECTION "B"(1)
ORDER AND REASONS
The instant proceeding regarding satisfaction of American
River Transportation Company’s (ARTCO) Judgment (Rec. Doc. 376)
against Randy Anny and Barbara Falgoust is the most recent, and
hopefully the last, chapter in this long-running dispute over the
use of land along the Mississippi River.
For the reasons discussed below,
IT IS ORDERED that Randy Anny and Barbara Falgoust pay ARTCO
eight thousand dollars ($8,000.00) as reasonable attorney’s fees,
plus the costs of the judgment debtor examination, as financial
sanctions for failure to comply with the Court’s Order (Rec. Docs.
413, 409-3) that they produce documents for the judgment debtor
examination.
IT IS FURTHER ORDERED that, if the original Judgment (Rec.
Doc. 376) and award of sanctions are not satisfied by July 15,
2018, payments owed by Consolidated Grain & Barge (CGB) to Randy
Anny, Anny’s Inc., and Ainey’s, LLC under the Work Agreement (see
1
Rec. Doc. 502-1) shall be paid to ARTCO until the Judgment (Rec.
Doc. 376) and award of sanctions are satisfied.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
In November 2017, ARTCO initiated a garnishment proceeding to
satisfy the outstanding portion of the Judgment against Randy Anny
and Barbara Falgoust. See Rec. Docs. 468-471. At that time, Randy
Anny and Barbara Falgoust owed ARTCO $264,926.65 (inclusive of
costs and interest). See Rec. Doc. 468-4. One garnishee, CGB,
responded affirmatively to ARTCO’s garnishment interrogatories,
indicating that it possessed money belonging to Randy Anny. See
Rec. Doc. 502 at 1-4. Specifically, CGB stated that:
[A]s of January 1, 2018, CGB owed (a) “Anny” (a defined
term in the Work Agreement meaning, collectively, “Randy
Anny, Ainey’s LLC, Anny’s Inc., or any entity with which
each has any affiliation”) (i) $100,000.00 pursuant to
the Work Agreement, and (ii) $2,482.00 pursuant to that
part of the Work Agreement requiring CGB to pay “Anny”
$2.00 per barge per day for barges fleeted in specified
“additional fleeting areas,” and (b) Randy Anny $516.00
for his undivided 25% interest in the leased property
described in the Lease referred to in and attached to
CGB’s Original Response (Rec. Doc. 494).
Id. at 4. But CGB’s interrogatory response also stated that Anny’s
Inc. and Ainey’s, LLC claim ownership of the $100,000.00 annual
payment and the $2,482.00 barge fleeting payment. See id. at 3-4;
Rec. Doc. 502-6. ARTCO argues that these competing claims to the
garnished funds are invalid because Anny’s Inc. and Ainey’s, LLC
are alter egos of Randy Anny. See Rec. Doc. 503. Therefore, the
Court ordered CGB to (1) pay to ARTCO the $516.00 owed to Randy
2
Anny individually and (2) deposit the $102,482.00 of contested
funds into the registry of the Court. See Rec. Doc. 506 at 3.
The Court also took steps to resolve the competing claims to
the garnished funds that were deposited into the registry of the
Court. See id. at 3-4. Specifically, the Court ordered Randy Anny
and Barbara Falgoust to “substantiate claims that they are distinct
from Ainey’s, LLC and Anny’s Inc. using sworn documentary evidence,
including evidence (1) of who owns Ainey’s, LLC and Anny’s Inc.
and (2) that Ainey’s, LLC and Anny’s Inc. truly in fact and law
fully and actively observe corporate formalities.” Id. The Court
also allowed Anny’s Inc. and Ainey’s, LLC fourteen days “to duly
file using qualified counsel a motion to intervene with sworn
documentary evidence of their ownership, control, and related
claim over funds at issue.” Id. at 4.
Neither Randy Anny and Barbara Falgoust, nor Anny’s Inc. and
Ainey’s, LLC, fully complied. Randy Anny and Barbara Falgoust filed
a declaration with two exhibits, a far cry from the extensive list
of documents that have been due to ARTCO since September 2016.1
1
Anny and Falgoust were ordered to produce by September 6, 2016,
inter alia, “[a]ny and all documents relating to any and all
businesses . . . jointly or separately owned, operated, or used by
the Judgment Debtors within the past five (5) years[;]” “[a]
complete list of all . . . stocks . . . (whether in closed
corporations or publically owned corporations) owned by Judgment
Debtors within the past five (5) years[;]” “[a] complete list of
all limited liability company(ies) in which the Judgment Debtors
have any membership interest(s) and production of the Operating
Agreements for each such limited liability company(ies)[;]”
3
The declaration states that Anny’s Inc. and Ainey’s, LLC are
validly formed under Louisiana law and observe all corporate
formalities. See Rec. Doc. 508. The exhibits are the articles of
incorporation for Anny’s Inc. (Rec. Doc. 508-1) and a stock
transfer agreement dated March 2015 (Rec. Doc. 508-2) that purports
to transfer all shares in Anny’s Inc. from Randy Anny to his son,
John Anny.
Anny’s Inc. and Ainey’s, LLC filed a motion to intervene to
assert their claims to the garnished funds. See Rec. Doc. 507.
They attached a declaration and various real estate records as
exhibits. See Rec. Docs. 507-1; 507-5; 507-6. The declaration is
from Randy Anny and describes how the annual rent payment from CGB
is allegedly divided between Anny’s Inc. and Ainey’s, LLC. See
Rec. Doc. 507-1. The real estate records are not explained, but
purport to document how Anny’s Inc. and Ainey’s, LLC acquired
control of the land along the Mississippi River that CGB currently
pays rent to access.2 See Rec. Docs. 507-5; 507-6.
“[d]etails concerning any membership interest(s) of the Judgment
Debtors in any limited liability company(ies), including each
Judgment Debtor’s percentage of ownership and an itemized list and
particulars on all distribution(s) the Judgment Debtors have
received from each limited liability company for the years 2011,
2012, 2013, 2014, 2015 and 2016[;]” and “[a]ny and all documents
that reflect or relate to use of proceeds for the sale of any asset
owned by the Judgment Debtors within the last five (5) years that
exceeds $10,000[.]” Rec. Doc. 409-3 at 1-3 (incorporated into Rec.
Doc. 413).
2 One document is a lease between Barbara Falgoust, as lessor, and
Anny’s Inc., as lessee. See Rec. Doc. 507-5 at 1. The lease appears
4
The Court granted the motion to intervene and set a hearing
on the question of whether Anny’s Inc. and Ainey’s, LLC are alter
egos of Randy Anny. See Rec. Doc. 511. The Court also ordered
ARTCO, Randy Anny, Anny’s Inc., and Ainey’s, LLC to file memoranda
discussing (1) the alter ego question and (2) whether Randy Anny,
Barbara
Falgoust,
sanctioned
for
Anny’s
failing
Inc.,
to
and
provide
Ainey’s,
the
LLC
documentary
should
be
evidence
necessary to properly evaluate the alter ego question. See id.
ARTCO’s memorandum argues that sanctions should be imposed
and that Anny’s Inc. and Ainey’s, LLC are alter egos of Randy Anny.
See Rec. Doc. 513. ARTCO argues that the appropriate sanction for
the discovery violations is to “find[] [that] all funds payable by
CGB under the Work Agreement belong to Randy Anny and that Anny’s
Inc. and Ainey’s, LLC are the alter egos of Anny and Falgoust.”
Id. at 6. ARTCO further argues that “there has been a complete
failure to show any legitimate corporate existence for Anny’s Inc.
and Ainey’s, LLC separate and apart from Randy Anny and Barbara
Falgoust.” Id. at 7.
to have expired in August 2017, but prior to that time it entitled
Barbara Falgoust to $2,500 per year. See id. Another document is
a lease between the Sara Simms Estate, as lessor, and Anny’s Inc.,
as lessee. See id. at 2-4. The lease was not signed until December
2015, so it does not address payments made prior to that date. See
id. at 2. The third document is a record of sale between Randy
Anny, as seller, and Ainey’s, LLC, as buyer. See Rec. Doc. 507-6.
It pertains to two pieces of land on the Mississippi River. See
id. at 2.
5
The memorandum filed by Anny’s Inc. and Ainey’s, LLC addresses
the issue of sanctions and the alter ego question. See Rec. Doc.
514. It argues that sanctions should not be imposed against Anny’s
Inc. and Ainey’s, LLC because (1) counsel did not understand what
type of documentary evidence was supposed to be attached to the
motion to intervene and (2) counsel was “unable to obtain sworn
documentary evidence within the relatively brief time established
by the Court[,]” in part because Anny’s Inc. and Ainey’s, LLC “lack
comprehensive document retention policies . . . .” Id. at 2-5.
Anny’s Inc. and Ainey’s, LLC also argue that they are not alter
egos of Randy Anny because “[s]eparate bank accounts and financial
records were maintained for each of the companies and Anny[,]” and
“ARTCO cannot establish co-mingling of funds or a disregard for
statutory formalities for organization, or transacting business.”
Id. at 6-7. No bank, financial, or management records were attached
to the memorandum.
Randy Anny’s memorandum largely relies on his previouslyfiled declaration (Rec. Doc. 508) and adopts the memorandum filed
by Anny’s Inc. and Ainey’s, LLC. See Rec. Doc. 516. None of the
documents previously requested as part of the judgment debtor
examination were attached to the motion, nor does Randy Anny
meaningfully discuss the propriety of imposing sanctions for his
refusal to produce said documents. See id.
6
On May 16, 2018, the Court held a hearing at which all parties
were afforded the opportunity to introduce exhibits substantiating
their various claims to the garnished funds and explain any
deficiencies in the documents produced for the judgment debtor
examination.
See
Rec.
Doc.
519.
The
next
day,
the
parties
(including Anny’s Inc. and Ainey’s, LLC) filed a Joint Status
Report stating their “agree[ment] that the [garnished] funds . . .
held in the registry of the Court should be immediately disbursed
to ARTCO.” Rec. Doc. 521. In light of the parties’ agreement, the
Court ordered that the $102,482.00 of garnished funds be paid to
ARTCO and that the parties attend a settlement conference with the
Magistrate Judge regarding satisfaction of the remaining part of
the Judgment. See Rec. Docs. 522, 525. That settlement conference
was unsuccessful so the parties filed a Joint Memorandum (Rec.
Doc. 529) setting out the remaining unresolved issues related to
satisfaction of the Judgment (Rec. Doc. 376) against Randy Anny
and Barbara Falgoust. The issues raised in that memorandum were
discussed at the most recent hearing on June 13, 2016. See Rec.
Doc. 530.
LAW AND ANALYSIS
Because the parties previously agreed that the $102,482.00 of
garnished funds should be paid to ARTCO, see Rec. Doc. 521, the
only two remaining issues are (1) satisfaction of the balance of
the
Judgment
and
(2)
whether
sanctions
7
are
appropriate
for
noncompliance with the Court’s Order regarding the judgment debtor
examination.
I. Satisfaction of the Judgment
In the recently-filed Joint Memorandum, Randy Anny, Barbara
Falgoust, Anny’s Inc., and Ainey’s LLC represent that they intend
to satisfy the remainder of the Judgment by July 15, 2018.3 See
Rec. Doc. 529 at 3. Randy Anny, Barbara Falgoust, Anny’s Inc., and
Ainey’s
LLC
further
represent
that,
if
the
judgment
is
not
satisfied by July 15, 2018, they welcome “a consent order that any
future funds under [the] Work Agreement with CGB be paid directly
to ARTCO until [the] Judgment is satisfied in full.” Id. This is
precisely what ARTCO seeks in the Joint Memorandum. See id. at 2
(“[T]he Court should order that any sums due under the Work
Agreement with CGB (R.Doc. 502-1) should be deposited with the
Court or paid directly to ARTCO when the indebtedness becomes due
or immediately if any indebtedness is already due.”). Therefore,
the parties appear to agree that future payments under the Work
Agreement should be used to satisfy any portion of the Judgment
not satisfied within the next month.
The parties’ agreement that payments under the Work Agreement
should be used to satisfy the Judgment is consistent with the
3
At the most recent hearing on May 16, 2018, the Court indicated that
settling parties regularly consummate settlement within sixty days of
reaching agreement. July 15, 2018, is sixty days from the May 16th hearing.
8
evidence in the record that further establishes Anny’s Inc. and
Ainey’s, LLC are alter egos of Randy Anny.
To “pierce the corporate veil” or find that a corporation
is an alter ego of an individual, the courts
traditionally look to five factors that, when considered
with the totality of the evidence, indicate that the
individual and the corporation were not actually
separate entities: (1) commingling of corporate and
shareholder funds; (2) failure to follow statutory
formalities required for incorporation and for the
transaction
of
corporate
affairs;
(3)
undercapitalization; (4) failure to provide separate
bank accounts and bookkeeping records; and, (5) failure
to hold regular shareholder or director meetings.
Riddle v. Simmons, 40,000, p. 16 (La. App. 2 Cir. 2/16/06); 922
So. 2d 1267, 1280. “Reverse piercing occurs when, through a legal
action, assets of the corporate entity are reached to satisfy the
obligations of a controlling alter ego[,]” who “may be a corporate
shareholder or officer.” Id. (internal quotation marks omitted).
Where, as here, the shareholder or officer has established the
existence of the corporate entities, the burden shifts to the
creditor
to
“show
the
exceptional
circumstances
which
merit
piercing the corporate veil . . . .” Id. A brief overview of the
two entities would be helpful before walking through the five
factors.
Anny’s Inc. is a corporation organized under Louisiana law.
See Rec. Doc. 503-3 at 3-6. It was incorporated in August 1994.
See id. at 2. Anny’s Inc. is authorized to issue 100 shares of
common stock. See id. at 3. In March 2015, Randy Anny transferred
9
100 shares in Anny’s Inc. to his son, John Anny. See Rec. Doc.
508-2. The financial terms of the transaction are not known. Randy
Anny is presently the President and a Director of Anny’s Inc. See
Rec. Doc. 503-3 at 7. Barbara Falgoust is the Secretary/Treasurer
and a Director of Anny’s Inc. See id. There are no other officers
or
directors.
($30,000.00)
See
of
the
id.
Anny’s
annual
Inc.
payment
claims
from
ownership
CGB
under
of
the
30%
Work
Agreement. See Rec. Doc. 512 ¶¶ 7, 9.
Ainey’s, LLC is a limited liability company under Louisiana
law. See Rec. Doc. 503-2. It was formed in March 2012. See id. at
3. When Ainey’s, LLC was formed, Randy Anny and Barbara Falgoust
were the only two members. See id. at 5. But according to its 2017
Annual Report, Ainey’s, LLC now has three members: Randy Anny,
Barbara Falgoust, and Anny’s Inc. See id. at 6. This Annual Report
contradicts
a
recently-filed
declaration
from
Randy
Anny
and
Barbara Falgoust, which states that “Anny’s Inc. is the sole member
of Ainey’s, LLC.” Rec. Doc. 508 ¶ 12. There is no information in
the record about the transfer of interest in Ainey’s, LLC from
Randy Anny and/or Barbara Falgoust to Anny’s Inc. A recently-filed
letter from the accountant for Anny’s Inc. and Ainey’s, LLC also
indicates that “Anny’s Inc. is the majority member and interest
holder in Ainey’s, LLC[,]” which implies that Randy Anny and
Barbara Falgoust retain interests in Ainey’s, LLC. See Rec. Doc.
513-2. Ainey’s, LLC claims ownership of 54% ($54,000.00) of the
10
annual payment from CGB under the Work Agreement. See Rec. Doc.
512 ¶¶ 7, 10.
Having sketched out the structure of Anny’s Inc. and Ainey’s,
LLC, the relationship between the two entities, and their various
connections to Randy Anny, it is time to address the factors of
the alter ego test.
a. Commingling of corporate and shareholder funds
There is undisputed evidence that the funds of Randy Anny,
Anny’s Inc., and Ainey’s, LLC, have been commingled. The Work
Agreement (Rec. Doc. 502-1) states that the annual and monthly
payments are due to Randy Anny, Ainey’s, LLC, and Anny’s Inc., but
the Work Agreement does not state how each payment should be
divided between those three entities. See Rec. Doc. 502-1 at 4.
Randy Anny provided a W-9 to CGB for the payments. See Rec. Doc.
502-2 at 2. The form states that it is for “Randy Anny,” indicates
that “Randy Anny” is both an “Individual” and a “Limited liability
company,”
and
incudes
the
taxpayer
identification
number
for
Ainey’s, LLC. See Rec. Docs. 502-2 at 2; 508 ¶ 9. As a result, CGB
has made each annual payment in a single check. See Rec. Doc. 5022 at 3-20.
From 2013 through 2016, each check was made payable to Randy
Anny. See Rec. Doc. 502-2 at 3-20. Randy Anny endorsed each check
that was deposited. See id. One check is also endorsed by “Anny’s
Inc.[,]” which is notable because the taxpayer identification
11
number on the W-9 is for Ainey’s, LLC. See id. at 20. Based on the
W-9 that Randy Anny submitted, CGB also issued Form 1099s from
2013 through 2016; each Form 1099 is for Randy Anny, but lists the
taxpayer identification number for Ainey’s, LLC. See id. at 2124. Then, in January 2017, Barbara Falgoust sent CGB a new W-9.
See Rec. Doc. 502-3. The new form directs CGB to make payments to
“Anny’s
Inc.[,]”
a
“C
Corporation”
with
its
own
taxpayer
identification number. See id. Since the new W-9 was submitted,
payments have been made to Anny’s Inc. instead of Randy Anny. See
Rec. Doc. 502-4 at 1-3.
During the judgment debtor examination held on April 24, 2017,
Randy Anny also indicated that he, his son, and Anny’s Inc. planned
to use company assets to satisfy the personal judgment against
Randy Anny and Barbara Falgoust. See Rec. Doc. 503-4 at 4. Their
own plan for the companies to pay the judgment against Randy Anny
and Barbara Falgoust further establishes that there is no material
separation between the personal and corporate assets.
Finally, Randy Anny and Barbara Falgoust filed a declaration
that suggests that Anny’s Inc. and Ainey’s, LLC pay for some
personal expenses. See Rec. Doc. 508. Paragraph three of the
declaration states, “The bank accounts belonging to Anny’s Inc.
are not used to pay the personal bills of Randy Anny and/or Barbara
Falgoust expect when such expenses are paid as part of the salary
or compensation of Randy Anny and/or Barbara Falgoust and are
12
accounted for as such.” Id. ¶ 3 (emphasis added). Paragraph eleven
of the declaration states, “The bank account(s) belonging to
Ainey’s, LLC are not used to pay the personal bills of Randy Anny
and/or Barbara Falgoust except when such expenses are paid as part
of the salary or compensation of Randy Anny and/or Barbara Falgoust
and are accounted for as such.” Id. ¶ 11 (emphasis added). These
statements are notable because they show additional evidence of
commingling; neither Randy Anny nor Barbara Falgoust explain what
business purpose supports Anny’s Inc. or Ainey’s, LLC paying
personal expenses directly (while classifying the payments as
salary or compensation), instead of allowing Randy Anny and Barbara
Falgoust to pay their own personal expenses from any income they
receive.
b. Failure to follow statutory formalities
According to the Louisiana Secretary of State website, Anny’s
Inc. and Ainey’s, LLC are both in good standing. There is no
information in the record about how Anny’s Inc. and Ainey’s, LLC
conduct their corporate affairs. The recently-filed memoranda
indicate that some tax returns have been produced to ARTCO, though
it is not clear that these records support the argument that Anny’s
Inc. and Ainey’s, LLC comply with corporate formalities. ARTCO
states, without attaching the underlying returns, that “various
federal tax returns for Anny’s Inc. . . . show that Anny’s Inc.
reported no taxable income for the years 2001-2012.” Rec. Doc.
13
513. A copy of a letter from the accountant for Anny’s Inc. and
Ainey’s, LLC states that, as of April 2018, “the tax returns for
Ainey’s, LLC . . . and Anny’s Inc. . . . [we]re in the process of
being completed for the years 2013 to 2016.” Rec. Doc. 513-2.
Incredibly,
that
these
“illness
of
defendant
returns
the
relies
were
not
accountant
in
upon
an
originally
accountant
completed
who
states
because
of
charge of above named accounts.”
Id.
c. Undercapitalization
There is no material information in the record about the
capitalization of Anny’s Inc. or Ainey’s, LLC. At some point Anny’s
Inc. issued 100 shares of stock to Randy Anny. See Rec. Docs.
508-1; 508-2. Those shares were later transferred to Randy Anny’s
son, John Anny. See Rec. Doc. 508-2. There is no record of how
much Randy Anny paid for the shares when they were originally
issued or how much John Anny paid for the shares in 2015. No
evidence has been offered about the assets of Anny’s Inc. or
Ainey’s, LLC, other than the terms of the Work Agreement.
d. Failure to provide separate bank accounts and records
No bank or accounting records have been provided. In a pair
of declarations, Randy Andy states that Anny’s Inc. and Ainey’s,
LLC have their own bank accounts. See Rec. Docs. 507-1 ¶¶ 3, 6, 7;
508 ¶¶ 3, 11. But the checks from CGB under the Work Agreement
have always been deposited in a single bank account. See Rec. Doc.
502-2 at 3-20. There is no evidence currently in the record about
14
how funds were moved between the various entities’ and individuals’
bank accounts. Therefore, the fact that Anny’s Inc. and Ainey’s,
LLC technically have their own bank accounts does not indicate
that these entities are distinct from Randy Anny.
e. Failure to hold regular shareholder or director meetings
There is no evidence that Anny’s Inc. or Ainey’s, LLC hold
regular shareholder or director meetings.
f. Weighing the factors
The alter ego question is resolved via a totality of the
circumstances analysis, so no single factor is dispositive. See
Riggins v. Dixie Shoring Co., 590 So. 2d 1164, 1169 (La. 1991).
Application of the alter ego doctrine is usually reserved for
situations where there has been “fraud, malfeasance, or criminal
wrongdoing.” Id. at 1168. A primary justification of the alter ego
doctrine is “to prevent the use of the corporate form in the
defrauding of creditors.” Id. at 1169. Based on the evidence that
has been presented so far, no reasonable person or juror could
find that Anny’s Inc. and Ainey’s, LLC are truly independent legal
entities.
Admittedly, Anny’s Inc. and Ainey’s, LLC appear to be validly
formed under the laws of Louisiana. But there is no evidence that,
in practice, they (1) keep funds separate (between the two entities
and between the entities and Randy Anny) or (2) observe corporate
formalities in conducting business (such as filing timely tax
15
returns or keeping financial records). While it is true that Anny’s
Inc. and Ainey’s, LLC are small, closely held, entities that may
conduct
business
less
formally
that
large
corporations,
see
McDonough Marine Serv. v. Doucet, 95-2087, p. 9 (La. App. 1 Cir.
6/28/96);
694
So.
2d
305,
310-11,
that
does
not
excuse
the
apparently total disregard demonstrated here. Ultimately, Anny’s
Inc. and Ainey’s, LLC agreed to satisfy the Judgment against Randy
Anny and Barbara Falgoust, either by diverting payments under the
Work Agreement or using other assets. See Rec. Doc. 529. While
consent by Anny’s Inc. and Ainey’s, LLC to use their assets to
satisfy the judgment makes it unnecessary to entirely rely on the
alter ego doctrine here, their willingness to make such payments
is further evidence that Anny’s Inc. and Ainey’s, LLC are not in
fact distinct from Randy Anny and Barbara Falgoust.
II. Sanctions
The parties disagree, in part,
about whether ARTCO is
entitled to contempt sanctions against Randy Anny and Barbara
Falgoust for their failure to comply with the Court’s orders
related to the judgment debtor exam. See id. at 2, 4. Anny and
Falgoust recognize that “some type of [reasonable] additional fee”
is appropriate, but maintain that they “never . . . intend[ed] to
delay proceedings or disobey the court’s order.” Id. at 3-4.
“Federal courts have the inherent power to punish for contempt[,]”
a “power [that] promotes the due and orderly administration of
16
justice and safeguards the court's authority.” Hornbeck Offshore
Servs., LLC v. Salazar, 713 F.3d 787, 792 (5th Cir. 2013) (internal
quotation marks omitted).
“A party commits contempt when he violates a definite and
specific order of the court requiring him to perform or refrain
from performing a particular act or acts with knowledge of the
court’s order.” Id. “Good faith is not a defense to civil contempt;
the question is whether the alleged contemnor complied with the
court’s order.” Chao v. Transocean Offshore, Inc., 276 F.3d 725,
728 (5th Cir. 2002). Anny and Falgoust have still not provided the
documents that were ordered produced in 2016 for their judgment
debtor examination. See Rec. Doc. 506 at 4 n.2 (listing the various
documents that were ordered produced). The order at issue is
“definite and specific” because it lists in detail the documents
that were to be produced, see Rec. Doc. 409-3, by a certain
deadline, see Rec. Doc. 413.
Anny and Falgoust maintain that they did not know they had to
provide information about Anny’s Inc. and Ainey’s, LLC during the
judgment debtor examination, but that claim is contradicted by the
text of the Court’s order. The order instructed Anny and Falgoust
to produce, inter alia, “[a]ny and all documents relating to any
and all businesses . . . jointly or separately owned, operated, or
used by the Judgment Debtors within the past five (5) years[;]”
“[a] complete list of all . . . stocks . . . (whether in closed
17
corporations or publically owned corporations) owned by Judgment
Debtors within the past five (5) years[;]” “[a] complete list of
all limited liability company(ies) in which the Judgment Debtors
have any membership interest(s) and production of the Operating
Agreements
for
each
such
limited
liability
company(ies)[;]”
“[d]etails concerning any membership interest(s) of the Judgment
Debtors in any limited liability company(ies), including each
Judgment Debtor’s percentage of ownership and an itemized list and
particulars
on
all
distribution(s)
the
Judgment
Debtors
have
received from each limited liability company for the years 2011,
2012, 2013, 2014, 2015 and 2016[;]” and “[a]ny and all documents
that reflect or relate to use of proceeds for the sale of any asset
owned by the Judgment Debtors within the last five (5) years that
exceeds $10,000[.]” Rec. Doc. 409-3 at 1-3 (incorporated into Rec.
Doc. 413) (emphasis added). Anny and Falgoust participated in the
judgment debtor examination, indicating that they had notice of
the relevant order (Rec. Doc. 413). See, e.g., Rec. Doc. 450.
Therefore,
the
irrefutable
factual
record
contains
clear
and
convincing evidence that Anny and Falgoust are in contempt of the
order
that
they
produce
documents
for
their
judgment
debtor
examination.
Civil contempt sanctions “can be used to compensate a party
who
has
suffered
unnecessary
injuries
or
costs
because
of
contemptuous conduct.” Travelhost, Inc. v. Blandford, 68 F.3d 958,
18
962 (5th Cir. 1995); see also In re Bradley, 588 F.3d 254, 263-64
(5th Cir. 2009). Here, the failure to produce documents for the
judgment
debtor
examination
has
prolonged
ARTCO’s
efforts
to
enforce the Judgment against Anny and Falgoust, forcing ARTCO to
incur additional costs and attorney’s fees. Anny and Falgoust do
not debate that their inaction has negatively impacted ARTCO. See
Rec. Doc. 529 at 3.
At the hearing held on June 13, 2018, counsel for Anny’s Inc.
and Ainey’s, LLC indicated that he believed ARTCO reasonably
incurred twenty additional hours of legal fees because of Anny’s
and Falgoust’s contempt. No other party objected to that estimate
and it is reasonable given the multiple rounds of briefing and two
additional hearings that have been required because of the failure
by Anny and Falgoust to timely produce required documents. As
indicated at the hearing, a fee of $400 per hour is reasonable for
the
type
of
legal
work
involved
in
this
case,
given
this
Court’s experience in fee disputes in this jurisdiction. See,
e.g., Nagle v. Gusman, No. 12-1910, 2014 WL 12719433, at *3
(E.D.
La.
sanction
is
Dec.
17,
$8,000.00
2014).
in
Therefore,
attorney’s
19
fees,
the
appropriate
plus
the
costs
of the judgment debtor examination. See Rec. Doc. 413 (ordering
that
Judgment
Debtors
will
be
liable
for
costs
of
judgment
debtor examination).
New Orleans, Louisiana, this 14th day of June, 2018.
___________________________________
SENIOR UNITED STATES DISTRICT JUDGE
20
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