Victor Stanley, Inc. v. Creative Pipe, Inc. et al
Filing
721
MEMORANDUM OPINION. Signed by Magistrate Judge Timothy J. Sullivan on 4/20/2016. (bmhs, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
VICTOR STANLEY, INC.,
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Plaintiff,
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v.
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CREATIVE PIPE, INC., et al.
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Defendants.
Case No. MJG-06-2662
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MEMORANDUM OPINION
On September 18, 2015, the Court issued an Order that granted in part and denied in part
Plaintiff-Judgment Creditor Victor Stanley, Inc.’s (“VSI”) “Motion for Sanctions and Finding of
Contempt for Failure to Comply with the Court’s Orders of February 8, 2012 and November 20,
2014” (“Motion”) (ECF No. 687).1 (ECF No. 714.) This Order directed VSI “to file with the
Court a memorandum outlining (a) the monetary damages it has sustained as a result of the
contempt of [the Defendant-Judgment Debtors Creative Pipe, Inc. (“CPI”) and Mark Pappas
(“Pappas”) (collectively, “Defendants”)] and (b) the attorney’s fees and costs it has incurred in
connection with its Motion.” (Id. ¶ 5.) Now pending before the Court is VSI’s memorandum
concerning its damages (ECF No. 715), Defendants’ response (ECF No. 718), and VSI’s reply
(ECF No. 719). Although the Court held a hearing on VSI’s Motion on the issue of sanctions and
civil contempt, having reviewed the submissions of the parties in connection with VSI’s
damages, I find that a hearing on the issue of damages is unnecessary. See Loc. R. 105.6. For the
1
On March 22, 2013, this case was referred to me for ordering and conducting
supplementary proceedings in accordance with Md. R. Proc. 2-633. (ECF No. 612.)
reasons set forth below, and as laid out in a separate Order, VSI’s request for monetary damages
and attorney’s fees will be granted in part and denied in part.
I.
INTRODUCTION
A.
The Relevant Judgments
The labyrinthine procedural history of this case need not be set forth in this opinion. It is
sufficient to state that on November 4, 2011, the Court entered an Amended and Final Judgment
Order that, in pertinent part, entered judgment against Defendants and in favor of VSI in the
amount of $2,454,931.10. (ECF No. 488; see also ECF No. 715 at 9 n.3.) A Supplemental
Judgment Order was entered on December 30, 2013 that awarded VSI “legal fees and expenses
in the amount of $748,334.72, to be paid by Defendants.” (ECF No. 666; see also ECF No. 715
at 9 n.3.) The Court will refer to the Amended and Final Judgment Order (ECF No. 488) and the
Supplemental Judgment Order (ECF No. 666) collectively as the “judgment.” VSI states that
only $16,507.60 has been paid toward the judgment, leaving a balance owed on the judgment in
excess of three million dollars. (ECF No. 715 at 9.)
B.
History of Discovery in Aid of Enforcement
VSI has attempted to collect the judgment by propounding discovery on Defendants
pursuant to Rule 69(b) of the Federal Rules of Civil Procedure. On two occasions relevant to this
opinion, the Court ordered Defendants to produce discovery responses to VSI’s requests. (ECF
Nos. 538 & 686.)
First, on February 8, 2012 the Court ordered Defendants to “produce all responsive
documents in their possession, custody, or control” in connection with VSI’s First Request for
Production of Documents to CPI (ECF No. 515-4). (ECF No. 538.) The Court stated that
Defendants would not be required to produce those responsive documents that had been
2
previously produced, but would be required to identify the previously produced document, the
time of its production, and the discovery request to which it was responsive. (Id. at 2.)
Defendants’ discovery responses were due by February 22, 2012. (Id.) In its Motion and in its
memorandum regarding damages, VSI contends that CPI’s response to document production
request 272 (see ECF No. 515-4 at 10) did not comply with the Court’s Order.
Second, on November 20, 2014 the Court ordered Defendants to produce “full and
complete answers to all of the interrogatories propounded in [VSI’s] Third Set of
Interrogatories” to Defendants and “all of the documents sought in [VSI’s] Third Request for
Production of Documents” to Defendants. (ECF No. 686 ¶¶ 2-3.) This Order specifically
cautioned Defendants that “any violation” of the Order might “subject the Defendants to the
sanctions set forth in Fed. R. Civ. P. 37(b)(2)(A)(i)-(vii), including the issuance of an order for
the Defendants to appear before this Court to show cause as to why they should not be held in
contempt of Court.” (Id. ¶ 5.) VSI contends that Defendants’ responses to a number of discovery
requests violated this Order.3
On August 14, 2015, the Court issued an Order directing Defendants to appear before the
Court to show cause why they “should not be held in civil contempt and subject to possible fine
and/or incarceration for failure to fully comply with the Court’s Orders of February 8, 2012
(ECF No. 538) and November 20, 2014 (ECF No. 686).” (ECF No. 701.) A hearing was held on
September 18, 2015. (ECF No. 717.) At the conclusion of the hearing, the Court entered an
2
This request sought “[a]ll documents since January 1, 2009 to the present that refer or
relate to any transfer of funds to or from Salton Sea Builders, Inc. (or any partner of Salton Sea
Builders, Inc.).” (ECF No. 515-4 at 10.)
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The full text of the relevant discovery requests and the Defendants’ responses are
included later in this opinion.
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Order granting in part and denying in part VSI’s Motion. (ECF No. 714.) The Order stated, in
pertinent part:
2. CPI is held in contempt of the Court’s Order dated November 20, 2014 for its
failure to fully and completely respond to Interrogatory No. 7 and Document
Production Request Nos. 4 and 6.
3. Pappas is held in contempt of the Court’s Order dated November 20, 2014 for
his failure to fully and completely respond to Interrogatory Nos. 11 and 12, and
Document Production Request Nos. 10 and 12.
4. CPI is held in contempt of the Court’s Order dated February 8, 2012 for its
failure to produce a full and complete response to Document Request No. 27.
(Id.)
Among other things, the Court must now determine the appropriate sanction for
Defendants’ violation of the Court’s orders compelling the production of discovery.
II.
LEGAL STANDARD
Rule 69(b) permits a judgment creditor to obtain discovery in aid of the judgment or
execution “as provided in [the Federal Rules] or by the procedure of the state where the court is
located.” The two discovery devices employed by VSI, interrogatories and document production
requests, are permitted by Rules 33 and 34 and were appropriately used in this case. When a
party propounds discovery requests that go unanswered, or when incomplete, evasive, or
untruthful responses are produced, Rule 37 allows a court to compel a party to properly respond
to discovery requests. Rule 37 also permits a court to issue sanctions against a party for its failure
to comply with an order compelling a discovery response. See Victor Stanley v. Creative Pipe,
Inc., 269 F.R.D. 497, 537 (D. Md. 2010).
In general, Rule 37 states that a court may “issue further just orders” when a party “fails
to provide or permit discovery” as directed by a court’s order. Fed. R. Civ. P. 37(b)(2)(A). The
rule specifically lists seven types of sanctions that a court may impose against a party that
disobeys a discovery order:
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(i) directing that the matters embraced in the order or other designated facts be
taken as established for purposes of the action, as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting or opposing designated
claims or defenses, or from introducing designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party; or
(vii) treating as contempt of court the failure to obey any order except an order to
submit to a physical or mental examination.
Id.
Because judgment has already been entered in this case, the sanctions set forth in Rule
37(b)(2)(A)(i)-(vi) are not relevant and would not be effective here. These sanctions are all
geared toward the ultimate determination of liability in a case, and not the issue of how any
judgment might be collected. The sanction of treating a party’s disobedience as contempt,
however, remains an effective sanction even after judgment has been entered. This is because a
court’s contempt power can coerce a party into compliance through imprisonment and the
imposition of financial sanctions.
“Civil contempt is an appropriate sanction if we can point to an order of this Court which
‘set[s] forth in specific detail an unequivocal command’ which a party has violated.” In re Gen.
Motors Corp., 61 F.3d 256, 258 (4th Cir. 1995) (quoting Ferrell v. Pierce, 785 F.2d 1372, 1378
(7th Cir. 1986)). Notably, “[w]illfulness is not an element of civil contempt.” Id.; see also S.E.C.
v. SBM Inv. Certificates, Inc., No. DKC-06-0866, 2012 WL 706999, at *10 (D. Md. Mar. 2,
2012) (summarizing the Fourth Circuit’s rejection of “the absence of willfulness” and “good
faith alone” as defenses to civil contempt). Where civil contempt has been established, courts
“may impose sanctions . . . ‘to coerce obedience to a court order or to compensate the
complainant for losses sustained as a result of the contumacy.’” In re Gen. Motors Corp., 61
F.3d at 258 (quoting Connolly v. J.T. Ventures, 851 F.2d 930, 932 (7th Cir. 1988)).
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In August 2015, the undersigned was of the opinion that treating the Defendants’
disobedience to the Court’s orders as civil contempt, as had been done in this case in 2010,
would be the most efficient and effective mechanism to address Defendants’ misconduct. For
this reason, the Court issued the Order dated September 14, 2015 that found Defendants to be in
civil contempt. Upon further review of relevant legal authority, however, the undersigned has
determined that paragraphs 2-4 of the Order dated September 14, 2015 (ECF No. 714) must be
vacated nunc pro tunc. The undersigned believes that he lacks the authority under 28 U.S.C. §
636(e) to hold Defendants in civil contempt given the procedural posture of this case.
Section 636(e) of Title 28 of the United States Code sets forth the civil contempt
authority that a United States magistrate judge may exercise. In civil cases in which a magistrate
judge presides with the consent of the parties pursuant to 28 U.S.C. § 636(c), the magistrate
judge “may exercise the civil contempt authority of the district court.” Id. § 636(e)(4). In civil
cases in which a magistrate judge presides other than by the consent of the parties, pursuant to 28
U.S.C. § 636(a), (b), or “any other statute,” magistrate judges are not authorized to exercise the
civil contempt authority of the district court. Id. § 636(e)(6)(B). Instead, magistrate judges must
certify the facts believed to constitute civil contempt to a district judge, so that the district judge
may make a determination as to whether civil contempt occurred and how it ought to be
“punish[ed].” Id.
Here, the parties are not proceeding before a magistrate judge by their consent. As a
result, Section 636(e)(6)(B) prevents the undersigned from making any finding of civil contempt
and imposing any “punishment” in connection with such contempt. In short, I possess no
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authority to hold Defendants in civil contempt. For this reason, paragraphs 2-4 of the Court’s
Order dated September 14, 2015 (ECF No. 714) will be vacated nunc pro tunc.4
Fortunately, “Rule 37 is flexible,” and courts are permitted to “use as many and as varied
sanctions as are necessary to hold the scales of justice even.” 8B Charles Alan Wright & Arthur
R. Miller, Federal Practice and Procedure § 2284 (3d ed. 2015). Here, the interests of justice
plainly require the imposition of a sanction that will (1) deter Defendants from continuing to
evade their obligation to properly respond to discovery requests, (2) deter Defendants from
violating future orders of the Court, and (3) compensate VSI for the lost judgment collection
opportunities and expenses incurred as a result of the Defendants’ defiance of the Court’s orders.
As it happens, these interests are the same interests that civil contempt sanctions are meant to
advance. See In re Gen. Motors Corp., 61 F.3d at 258.
In determining the extent of sanctions to be imposed, the Court will be guided by the
standard of civil contempt, even though this standard is more rigorous than the general standard
for the imposition of sanctions under Rule 37. Considering Defendants’ misconduct under the
civil contempt standard provides the parties and the district judge additional assurance that the
sanctions imposed are sufficient to meet the interests of justice under the circumstances of this
case, yet not greater than necessary to satisfy those interests. Moreover, the civil contempt
standard provides useful guidance in determining the extent to which sanctions are appropriate,
especially considering the unique circumstances at issue. In addition, in the event that
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As discussed more fully below, the sanctions that will be imposed against the
Defendants pursuant to Rule 37 are the same sanctions that the Court would have imposed had it
possessed civil contempt authority in this case. Nonetheless, if VSI believes that the undersigned
is nonetheless compelled to certify the facts constituting the Defendants’ civil contempt to the
district judge, VSI should make such a request within fourteen (14) days of the date of the
accompanying Order. Given the resources that the parties and the Court have already expended
on this matter, and in consideration of the sanctions to be imposed, it is not clear that
certification of civil contempt to the district judge is necessary.
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Defendants fail to comply with the sanctions imposed, the analysis contained herein will assist
the district judge in determining whether the Order implementing this opinion is a “valid
decree,” which will be a finding required in any future civil contempt analysis. See Ashcraft v.
Conoco, Inc., 218 F.3d at 301.
The Fourth Circuit has stated that four elements “must be shown by clear and convincing
evidence” to establish civil contempt:
(1) the existence of a valid decree of which the alleged contemnor had actual or
constructive knowledge; (2) that the decree was in the movant’s “favor”; (3) that
the alleged contemnor by its conduct violated the terms of the decree, and had
knowledge (at least constructive knowledge) of such violations; and (4) that [the]
movant suffered harm as a result.
Ashcraft v. Conoco, Inc., 218 F.3d 288, 301 (4th Cir. 2000) (internal ellipses omitted).
Like sanctions under Rule 37, courts have broad discretion to fashion remedies for civil
contempt. In re Gen. Motors Corp., 61 F.3d at 259. While such remedies are necessarily coercive
and compensatory, they must not be punitive.5 Id. (stating that a “compensatory sanction may not
exceed the actual loss to the complainant caused by the actions of respondent, lest the contempt
fine become punitive in nature”) (internal quotation marks omitted).
The Court must now determine the monetary damages and attorney’s fees and costs that
are appropriate in light of Defendants’ noncompliance with the Court’s orders. As stated above,
the sanctions that will be imposed for Defendants’ disobedience to the Court’s orders are
imposed pursuant to Rule 37(b).
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Here, there is little risk that any sanctions imposed will be punitive, at least with respect
to the amount of damages. VSI “agrees that any monetary damages awarded [in connection with
its Motion] are subject to being credited against the [judgment].” (ECF No. 715 at 9.) Thus, any
monetary damages assessed against Defendants will not “exceed the actual loss to the
complainant caused by the actions of the respondent” as they will not exceed the amount of the
judgment.
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III.
DEFENDANTS’ DISCOVERY RESPONSES
The Court’s reasoning for imposing sanctions for Defendants’ disobedience to the
Court’s orders is set forth below in connection with each relevant discovery request, but two
findings apply to all of the requests. First, the Court’s orders of February 8, 2012 (ECF No. 538)
and November 20, 2014 (ECF No. 686) are “valid decrees” of which Defendants had actual
knowledge. See generally Ashcraft v. Conoco, Inc., 218 F.3d 288, 302 (4th Cir. 2000). Second,
the Court’s orders of February 8, 2012 and November 20, 2014 were both in VSI’s favor in that
they required Defendants to provide the discovery responses that VSI was seeking. Having made
these findings,6 the only remaining elements in the Court’s sanctions inquiry are (1) whether
Defendants were aware of their violation of the orders; and (2) whether VSI was harmed by
Defendants’ violation of the orders. The Court will address these elements separately as to each
category of discovery responses.
In its memorandum regarding damages, VSI organized Defendants’ inadequate discovery
responses into four categories according to subject matter. The Court adopts this approach in its
discussion below.7 The first category relates to the production of information about CPI’s
accounts receivable, and concerns CPI Interrogatory No. 7 and Document Request No. 6. The
second category relates to a “loan” that CPI made to “Salton Sea Builders” and its owner,
Michael Brabo, and concerns Pappas Interrogatory No. 11 and CPI Document Request No. 27.
The third category relates to information about transfers of money by CPI in excess of $1,000,
and concerns CPI Document Request No. 4 and Pappas Interrogatory No. 12. The fourth
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Defendants do not dispute the validity of the Court’s orders or that the orders were in
VSI’s favor.
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With the exception of Document Request No. 27 to CPI, all of the discovery requests at
issue are dated July 18, 2014. Document Request No. 27 was propounded on November 18,
2011.
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category relates to information about Pappas’s acquisition and ownership of real estate in Belize,
and concerns Pappas Document Request Nos. 10 and 12.
A.
Accounts Receivable
The first category of discovery requests at issue concerns information about CPI’s
accounts receivable. Interrogatory No. 7 to CPI states:
As of the date of your response to this Interrogatory, as to each customer that has
accounts receivable to you totaling over $3,000: (a) identify the customer; (b)
state the amounts owed by that customer to you; and (c) identify and fully
describe the order(s) or contract(s) that relate to that receivable.
(ECF No. 687-14 at 8.)
Initially, CPI answered this request by stating that it possessed no information besides
what it produced on a disc containing its QuickBooks data. (ECF No. 687-3 at 3.) In response to
VSI’s deficiency letter (ECF No. 687-2), on February 27, 2015, CPI amended its answer as
follows:
The accounts receivable data for Creative Pipe, Inc. was not moved out of
QuickBooks and was on the QuickBooks disc produced. There are two ways one
can access the accounts receivable file as follows: 1. On the QuickBooks “Home”
page there is a window in the upper right-hand corner called “Account Balances”
containing several inks including a link for “Accounts Receivable” that can be
clicked on to open the accounts receivable file; 2. One can also access this file by
clicking on the “Reports” link on the top tool bar, then the “Customers &
Receivables” link and finally the “A/R Aging Summary” link to open the
accounts receivable file. The balance at the time of the QuickBooks production
was $63,933.66.
(ECF No. 688-6 at 3-4.)
Document Request No. 6 to CPI requests:
All documents related to your open order files and your accounts receivables,
including, but not limited to aged listings, for you and for any other business
entity in which you have had an ownership interest at any times since January 1,
2013, to the date of your response to this Request. This should include, but not be
limited to, the documents and files referenced at ¶1(b) of Attachment A. This
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shall also include the open order files referenced by Christi DeRouen in her June
2, 2014 Affidavit at ¶8.
(ECF No. 687-7 at 7.)
Initially, CPI responded to this document request: “We no longer keep the open order
report as described in Christi DeRouen’s affidavit previously produced. See QuickBooks
included herein for accounts receivable.” (ECF No. 687-13 at 4.) Subsequently, CPI amended its
response and stated:
The accounts receivable information can be found in QuickBooks produced by
disc as explained in supplemental answer 7 to the Third Set of Interrogatories
propounded by the Plaintiff-Judgment Creditor Victor Stanley. CPI possesses no
open order documents. The “open order” document was created by a former
employee on her own for her own personal reference. It was abandoned when she
left since CPI knew by the purchase orders and invoices what orders were open at
any given time and found the open order document superfluous. Neither Concept
Development nor Robert Greer performs any billing services for CPI. Concept
Development pays some of CPI’s bills as directed.
(ECF No. 689 at 3-4.)
The essence of CPI’s initial and supplemental responses to these discovery requests is
that all of CPI’s accounts receivable are contained in the QuickBooks data produced and are
identified as “Accounts Receivable.” If this were true, while VSI might have a legitimate quibble
with the form of CPI’s responses, the content of the responses might not support the imposition
of sanctions under Rule 37(b). After all, a representative from VSI, Gerald P. Skalka, testified
that VSI had previously made use of CPI’s QuickBooks data to attempt to attach its accounts
receivable. (See also ECF No. 715-3.) If accessing CPI’s accounts receivables was as
straightforward as its discovery responses indicated, it would be difficult for VSI to show that it
suffered any harm. See SBM Inv. Certificates, Inc., 2012 WL 706999, at *10 (generally
discussing the defense of “substantial compliance” to civil contempt).
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At the September 18, 2015 hearing, however, an exchange occurred8 between the Court
and counsel for Defendants that highlights the problem with CPI’s responses:
THE COURT: What if I find out that SCH has been processing orders for
Creative Pipe and was holding accounts receivables for Creative Pipe, despite
your representations today that that’s not happening?
DEFENSE COUNSEL: I would agree, your honor, it’s a big issue and I wouldn’t
make that representation on my own accord, and I think my client would be in
very deep trouble with the Court. . . .
(See ECF No. 717.)
In fact, the Court’s question was prescient because CPI has used a company called SCH
Enterprises (“SCH”) to process orders and collect payments from customers, all without
reporting the payments it expected to receive from SCH as accounts receivable. Mr. Pappas was
deposed on September 18, 2015 and provided information about CPI’s scheme to use SCH as a
way to hide CPI’s accounts receivable.
Mr. Pappas stated that his wife, Jeaneatte Pappas, created SCH sometime around the
beginning of 2015.9 (ECF No. 715-1 at 9.) Mr. Pappas stated that CPI presently “merely consists
of [himself] and Jeanette.” (Id. at 10.) CPI “provide[s] leads to SCH,” but SCH makes the actual
sale to the customer and handles all of the “logistics, the ordering of product, the shipping of
product, and the delivery of product to the customer as well as the collection of monies and the
payment of monies to the vendors,” which are all functions that used to be performed by CPI.
(Id. at 10-11.) The relationship between SCH and CPI is close: SCH “lease[s] the same office
8
The Court does not have access to a transcript of this hearing, but the proceedings were
electronically recorded. The unofficial “transcript” of the hearing included herein is based on the
electronic recording.
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The SCH entity created by Mr. Pappas’s wife is distinct from the SCH entity created
and run by the late Stephen C. Hair and his wife. It appears that the SCH entity owned by Mr.
Hair and his wife performed services for CPI while Mr. Hair was living, but ceased to operate
after his death.
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space” that is used by CPI; SCH and CPI share a telephone number; and, SCH’s employees are
former employees of CPI. (Id. at 11-14.) SCH does not perform “any activity that wasn’t
[previously] performed by Creative Pipe.” (Id. at 15.) In essence, CPI restructured its business so
that SCH would take over “everything that goes along with the sale of a product from beginning
to end.” (Id. at 20.) Unlike CPI, Jeaneatte Pappas is the sole shareholder of SCH. (Id. at 15.)
Nonetheless, Mr. Pappas works as a consultant to SCH and has full access to SCH’s business
data. (Id. at 21.)
In summary, SCH was created to handle the business functions that had previously been
handled by CPI. SCH made sales that generated accounts receivable for SCH. CPI issued
invoices to SCH for services rendered in connection with the sales that SCH made, which have
been referred to by Mr. Pappas as “commissions.” These invoices for “commissions” amount to
accounts receivable for CPI. These accounts receivable were not included in CPI’s QuickBooks
data as accounts receivable in the manner stated in CPI’s discovery responses. Defendants did
not produce documents to VSI that included invoices generated by CPI and sent to SCH until
September 18, 2015. These invoices, which date from the period of October 15, 2014 to
September 1, 2015 seek payment for “commissions” in the amount of $509,493.97. Defendants’
failure to disclose these “commissions” as accounts receivable (or any kind of asset for that
matter) to Defendants is a violation of the Court’s November 20, 2014 Order. Given the
relationship of CPI and Mr. Pappas to SCH, the Court finds that Defendants knew that their
responses were in violation of the Court’s Order.
Defendants argue that VSI misstates the relationship between CPI and SCH, and that the
“commissions” due to CPI from SCH were not “net sales receipts,” but were only commissions
based on a percentage of SCH’s sales. (ECF No. 718 at 4-6.) This argument entirely misses the
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point, however, because these “commissions” were accounts receivable within the ordinary
meaning of the term. Furthermore, whether SCH was created for a legitimate business purpose
(as Defendants argue) or to confuse and obstruct VSI’s judgment execution efforts (as VSI
claims) is not relevant to the Court’s inquiry. CPI stood to be paid by SCH for the sales leads and
services it rendered, but it failed to disclose this to VSI. CPI’s alteration (and convolution) of its
business practices to outsource all of its logistics to SCH is a circumstantial indication that
Defendants’ conduct was designed to mislead VSI. While the Court agrees that Defendants are
“not obligated to voluntarily pay the judgment,” they are obligated to comply with this Court’s
orders.10 As defense counsel said at the September 18, 2015 hearing in response to the Court’s
hypothetical question, Defendants are now in “very deep trouble.”
Having found that Defendants failed to disclose the payments to CPI that were expected
from SCH as accounts receivables, it is now necessary to determine the extent to which VSI has
been harmed. In his declaration dated October 1, 2015, Mr. Skalka states that he reviewed the
invoices from CPI to SCH from October 15, 2014 to September 1, 2015, and found that the
invoices totaled $509,493.97 in “commissions.” (ECF No. 715-3 ¶ 3.) Notably absent from these
invoices are any invoices between July 18, 2014, the time that the discovery request was served,
and October 15, 2014. (Id. ¶ 5.) I find that VSI has been harmed by Defendants’ violation of the
Court’s Order. I further find that if Defendants had properly disclosed its $509,493.97 in
accounts receivable, VSI could have acted to attach this amount in execution of its judgment.
Accordingly, although it is likely an under-estimate of VSI’s actual damages, I find that VSI’s
damages in connection with Defendants’ inadequate responses as to these discovery requests is
$509,493.97. (See ECF No. 715-3 ¶¶ 5-6.)
10
This is especially true given the history of this case and the sanctions that have been
imposed on Defendants for their previous violations.
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B.
Salton Sea Builders Loan
The second category of discovery requests concerns information about a “loan” that CPI
made to Salton Sea Builders, a business entity owned by Mr. Pappas’s accountant, Michael
Brabo. (See ECF No. 715 at 13-15.) In November 2011, VSI requested the production of
documents related to this purported loan. (See ECF No. 515-4.) VSI’s Document Request No. 27
to CPI sought
[a]ll documents since January 1, 2009 to the present that refer or relate to any
transfer of funds to or from Salton Sea Builders, Inc. (or any partner of Salton Sea
Builders, Inc.).
(ECF No. 515-4 at 10.) This document request was included among the requests for which the
Court compelled discovery responses in the Order dated February 8, 2012 (ECF No. 538).
In addition, VSI’s Interrogatory No. 11 in VSI’s Third Set of Interrogatories to Mr.
Pappas, which was propounded on July 18, 2014, stated:
As to any payments to you by Michael Brabo (or his spouse) or Salton Sea
Builders, Inc. since January 1, 2010, identify the dates and amounts of payments,
state where those funds were deposited, and then state how those funds were used
by you.
(ECF No. 687-15 at 9.)
Mr. Pappas initially responded to Interrogatory No. 11 as follows:
Information relating to payments made by Michael Brabo (or his spouse) or
Salton Sea Builders has been provided in previous Answers to Interrogatories and
deposition testimony. Payments made on behalf of Brabo/Salton Sea Builders
have been explained in Mark Pappas’ Second Supplemental Response to the First
Set of Interrogatories propounded by Plaintiff Judgment Creditor, Further
Supplemental Answer No. 2.
(ECF No. 687-10 at 5.) Mr. Pappas later supplemented this response to state that he had “no
further information to provide in response to this interrogatory, other than the information and
documents referenced in Mr. Rothschild’s letters to Mr. Ogg, dated March 24, 2014 and April 3,
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2014, which describe the Salton Sea Loan transaction and reference the documents relating to it.”
(ECF No. 688-7 at 4.)
VSI contends that Defendants failed to fully disclose information related to the payment
of this loan. At a deposition in August 2012, Mr. Pappas implied that the loan had been “paid in
full when it had not been paid at all.” (ECF No. 715 at 14.) Thereafter, VSI argues, Defendants
failed to produce responsive documents to Document Request No. 27 “relating to the actual
status of the loan” that was in the process of repayment. (Id.) Defendants “concocted a scheme to
have the $193,000 that was still owed to CPI by Brabo channeled” to Mr. Pappas. (Id.)
Defendants’ former counsel explained how the loan was repaid in a letter dated March
14, 2014 (ECF No. 687-12). The Court is unable to fully understand the contents of the letter,
and no one—including Mr. Greer (who testified as a witness for Defendants at the September 18,
2015 hearing) and counsel for the parties—has been able to adequately explain the letter. The
Court makes no finding as to whether the contents of the letter are true, but does find that the
letter’s explanation of the repayment of the loan is sufficiently perplexing to be non-responsive
to the discovery requests.11 Accordingly, I find that Defendants’ response to these discovery
11
Defendants now offer a somewhat more lucid explanation for how the loan was repaid.
Michael Brabo issued two checks to Mr. Pappas totaling $75,000. (ECF No. 718 at 9.) An
additional $100,000 of the loan was repaid by a series of eight checks from Concept
Development and/or Robert Greer to Mr. Pappas. It is unclear why Concept Development and/or
Robert Greer repaid the loan on behalf of Salton Sea Builders and Michael Brabo. While the
Court appreciates the efforts of Defendants’ current counsel to explain the repayment of this
loan, this explanation comes far too late. Since judgment was entered in this case against them,
Defendants have engaged in a course of conduct designed to obstruct VSI’s efforts to collect its
judgment. Defendants are free to engage in lawful business activities as they see fit, but they
should be aware that when they intentionally complicate their business transactions, the
explanation that will be required to explain such transactions must be clear. Put another way,
while Defendants’ intentional complication of their financial dealings does not necessarily
violate this Court’s orders, their failure to explain how and where they have hidden their assets
will be a violation. One of the risks that Defendants run in engaging in these purposefully
complicated transactions (presumably designed to protect their assets from the reach of VSI) is
16
requests violated the Court’s orders. Given the Defendants’ obstructive history in this case, taken
together with Mr. Pappas’s misstatement during his 2012 deposition that the loan had been
repaid in full and the complicated scheme set forth in the March 14, 2014 letter regarding the
repayment of the loan, I find that Defendants were, at a minimum, constructively aware that their
responses violated the Court’s orders.
I also find that VSI has been harmed by Defendants’ non-responses. Specifically, at least
$118,000 of the loan was due to be repaid at the August 2012 deposition of Mr. Pappas.
Defendants’ non-compliance with the Court’s orders, by their failure to explain exactly how the
loan was re-structured and how it was repaid (with specific and timely reference to the checks
used for repayment instead of general reference to things like QuickBooks data, cancelled checks
and bank statements), was the proximate cause of VSI’s failure to attach the balance of the loan.
The Court is unable to determine whether VSI might have been able to collect the initial
payments totaling $75,000 on the loan, and will give Defendants the benefit of the doubt on this
point. I find that VSI’s damages as the result of Defendants’ inadequate response as to these
discovery requests is $118,000, which is the remainder of the loan after subtracting $75,000.
C.
$1,000 Transfers by CPI
The third category of discovery requests concerns transfers by CPI of amounts in excess
of $1,000. Document Request No. 4 to CPI seeks:
All instruments, documents or records evidencing the sale, transfer or other
disposition of any asset (in excess of $1,000 in value) in which you had an
interest, legal or equitable, from January 1, 2009, through the date of your
response.
(ECF No. 687-7 at 7.)
that this Court will find that they have not adequately explained the transactions. Defendants
created this risk, and they now bear its consequences.
17
In response, CPI directed VSI to the QuickBooks data produced in connection with its
responses. (ECF No. 687-13 at 3.) CPI did not supplement this response.
Interrogatory No. 12 to Mr. Pappas states:
Identify all funds held at any time since January 1, 2010, held by either Robert
Greer, Promontory Partners, LLC, Concept Development, LLC, or Concept
Development II, LLC, or any other entity/business managed or controlled by
Robert Greer, on behalf of you, CPI, any CPI profit-sharing or pension plans, or
any person or entity related to you. For each such fund, state:
a.
b.
c.
d.
e.
how money was held;
the reason that the money was held;
the entity/person that held the money;
the title-holders of the funds; and
the disposition of those funds.
(ECF No. 687-15 at 9-10.)
Mr. Pappas initially responded to this interrogatory as follows:
None other than the following:
On behalf of CPI. periodic transfers have been made from CPI business checking
accounts to Concept Development for the purpose of paying creditors and vendors
and obligations of CPI as directed by CPI. Any monies transferred to Concept
Development would remain in that account only until the check representing
payment was presented to the Concept Development bank account for payment.
Other than this bill payment service, that has been used for years, no monies have
been or are presently being held for my benefit or the benefit of CPI. As of the
date of these Answers to Interrogatories, I believe there is less than $1000.00 in
the Concept Development account for use in payment to CPI vendors/creditors.
Copies of any and all transfers to Concept Development and the recordation of
Concept Development payment of CPI vendors/creditors will be reflected on the
CPI QuickBooks produced herein.
On behalf of Mark Pappas and CPI, on January 21, 2014, the sum of $72,650.00
was transferred to Concept Development from the CPI Profit and Pension Plans.
On January 21, 2014. Concept Development wired the sum of $72,623.67 to
Victor Stanley in full payment of a sanctions order issued by the Court.
On behalf of CPI, Inc. Profit Sharing Plan and Pension Plan: on May 20, 2014,
Check from Profit Sharing Plan in the amount of $17,200.00 and Check from
Pension Plan in the amount of $7,125.00 both deposited in Robert W. Greer
Attorney at Law account. On June 30, 2014, Robert W. Greer issued check 533 in
18
the amount of $24,047.00 to Christi DeRouen as an allowable loan/advance on
her vested Profit and Pension Plan accrued balance.
(ECF No. 687-10 at 5-6.) Mr. Pappas later supplemented this response:
a. On behalf of CPI, periodic transfers have be [sic] made from CPI business
checking accounts to Concept Development’s checking account.
b. The money was transferred for the purpose of paying creditors and vendors and
obligations of CPI as directed by CPI.
c. The money was held by Concept Development in its checking account and
would remain in the account only until the check representing payment was
presented to the Concept Development Bank account for payment.
d. Concept Development.
e. Other than this bill payment service, that has been used for years, no monies
have been or are presently being held for my benefit or the benefit of CPI. As of
the date of these Answers to Interrogatories, I believe there is less than $1,000.00
in the Concept Development account for use in payment to CPI vendors/creditors.
Copies of any and all transfers to Concept Development and the recordation of
Concept Development payment of CPI vendors/creditors will be reflected on the
CPI QuickBooks produced herein.
(ECF No. 688-7 at 5-6.)
The responses produced by Defendants in response to these requests were evasive and
non-responsive. The production of the QuickBooks data without reference to specific
transactions was as good as no answer at all. As VSI explains, beginning sometime in 2014, CPI
began wiring large sums of money to Concept Development, LLC, the company owned by CPI’s
“trusted friend,” Robert Greer. (ECF No. 715.) Concept Development would use the money to
pay CPI’s bills. Mr. Pappas stated that he outsourced CPI’s payment of its bills (and nearly
$800,000 in CPI’s money) to Concept Development because he “had a lot on [his] plate.” (ECF
No. 715-1 at 23.) The Court rejects Mr. Pappas’s explanation as implausible, but this is of no
consequence to the present inquiry. Even if CPI had not engineered this scheme to hide its
money with Concept Development, Defendants still had the obligation to explain, with
specificity and clarity, their arrangement with Concept Development to VSI in response to the
discovery requests. CPI instructed VSI to find the information itself in the QuickBooks data
19
produced. Instead, Defendants provided untimely, misleading and incomplete information. I find
that they did so with at least the constructive knowledge that such responses violated the Court’s
orders.
Quantifying the harm suffered by VSI into damages on this issue is a more difficult
determination. Defendants’ responses to the discovery requests are plainly in violation of the
Court’s orders. VSI has suffered harm as a result, as there is approximately $770,000 of money
that cannot be attached because it has already been distributed by Concept Development. The
Court recognizes that even if Defendants had provided timely and complete responses to these
discovery requests it is not certain that VSI would have been able to attach the money. This is
because Concept Development apparently took the money that it received from VSI and
promptly used it to pay the bills of Defendants; the money may have already been transferred by
the time that VSI obtained the information in discovery.12
It would be unjust, however, to find that VSI suffered harm as a result of Defendants’
improper responses, but that there is no available remedy. Courts are given broad discretion in
fashioning appropriate sanctions under Rule 37(b). An appropriate sanction is especially
important here because the discovery at issue because it relates to the real-time financial
condition of the Defendants and is constantly changing. In addition to compensating VSI for the
harm it has suffered, the Court’s remedy must also deter Defendants from obstructing VSI’s
discovery efforts in the future.13 Here, I find that a sanction that compensates VSI for its
probable lost collection opportunities is appropriate.
12
Whether the invoices paid by Concept Development were legitimate business expenses
of CPI or not is irrelevant to the Court’s inquiry on this point.
13
For example, if such a remedy were not made available to VSI, Defendants might also
avoid sanctions in the future by a combination of obfuscation and delay. Defendants could put
off disclosure of their financial information until the Court issued an order compelling such
20
In examining the probability of VSI’s ability to collect on its judgment, the Court finds
that VSI was unlikely to attach the funds that predated its discovery requests of July 18, 2014.
Specifically, reference is made to CPI Checks 1003-1006, which were all issued before July 18,
2014. These checks, which total $164,500, were all issued before VSI propounded the instant
discovery requests on July 18, 2014. I find that it is improbable that VSI would have been able to
attach the funds represented in these checks from Concept Development and Robert Greer even
if Defendants had properly responded to the discovery requests.
With respect to the remainder of the funds transferred from CPI to Concept Development
and Mr. Greer, I find that Defendants’ improper responses substantially obstructed VSI’s ability
to attach these funds. I find that the harm caused by Defendants to VSI in connection with these
discovery requests is $605,500, which is the difference between the total amount transferred
($770,000) and the amount I have found VSI was unlikely to attach ($164,500). Accordingly, the
sanction that will be imposed against Defendants pursuant to Rule 37(b) in connection with these
discovery requests is $605,500.
D.
Belizean Real Estate
The fourth category of discovery requests relates to information about Mr. Pappas’s real
estate holdings in Belize. (ECF No. 715.) VSI’s Document Requests Nos. 10 and 12 seek the
following:
[Request 10:] All documents, including but not limited to deeds, mortgages or
liens, loan applications, settlement sheets, appraisals, tax assessment notices,
property tax bills, market analyses, and leases, related to any real property owned
in whole or in part during any period from January 1, 2009, to the present, not
otherwise produced herein, by you and by any other business entity in which you
have or had an ownership or equitable interest.
disclosure. Then, Defendants could comply with the Court’s order by producing information that
had by that point grown stale. VSI would thereby be deprived of any way to obtain timely
information about the source of funds that it might be able to attach in execution of its judgment.
21
[Request 12:] All communications with any of the following regarding any
investment, account or property:
a.
Bank of Belize;
b.
British Caribbean Bank International, Ltd.;
c.
Grand Belizean Co.;
d.
Sugar Caye Development, Ltd.
e.
Christopher Coye;
f.
Belize Bank International;
g.
John Turley; and
h.
Caribbean Mortgage Investment Corporation.
(ECF No. 687-6 at 8.)
With respect to Document Request No. 10, Mr. Pappas initially responded that he had no
responsive documents. (See ECF No. 689-1 (sealed) at 6.) Thereafter, Mr. Pappas supplemented
his response to state that he
[p]ossesses no documents responsive to this request other than the documents
already produced, which included (a) a receipt from British Caribbean Bank
Source of Funds for the purchase dated December 5, 2011, (b) a Grand Belizean
Estates Property Summary, (c) Transfer and Expenditure of Funds Summary, (d)
Individual Land Certificates for 22 GBE parcels, (e) Remax/Island Real Estate
Purchase Agreement dated December 19, 2011, (f) Agreement for Sale GBE
properties dated December 4, 2011, (g) Agreement for Sale GBE properties dated
December 19, 2011, (h) Earnest Money Deposit & Agreement for Sale GOA
properties and Loan Agreement, (i) CMIC Loan Facility Agreement, 2.8 million,
dated January 30, 2012, and (j) Grand Oasis Properties Summary.
(Id.)
With respect to Document Request No. 12, Mr. Pappas initially produced an email from
Christopher Coye. (ECF No. 689-1 (sealed) at 7.) Mr. Pappas later confirmed that he was not in
possession of any documents responsive to this request besides the email that had been produced.
(Id.)
Unfortunately, as VSI learned during the September 18, 2015 show cause hearing and the
deposition of Mr. Pappas that followed, the probable reason that Mr. Pappas did not produce any
22
documents responsive to these requests (except for one email) is that he never looked for the
documents in the first place. (See ECF No. 719 at 18-20.) At the deposition that occurred after
the hearing, Mr. Pappas stated that he did not search any of his or CPI’s email accounts for
communications related to his real estate holdings in Belize. (See ECF No. 715-1 at 27-30.) Mr.
Pappas stated that he viewed VSI’s document requests as “overly general and burdensome,” and
decided not to conduct a thorough search of his email accounts because such a search could yield
“volumes of stuff . . . [or it] could be nothing.” (Id. at 28-29.) Notably, Mr. Pappas made no
effort to determine how burdensome such a search would be. Mr. Pappas chose not to look for
relevant documents regarding his real estate holdings in Belize. VSI persuasively suggests that
responsive documents would likely be in his email accounts (unless he or another employee of
CPI deleted them). By making the choice not to look for the documents, Mr. Pappas violated the
Court’s orders of which he was well aware and deprived VSI of access to the documents. As a
result, VSI has been unable to attach the payments that Mr. Pappas has sent to Belize, or to
repatriate the real estate that he owns there.
The calculation of the harm caused by Mr. Pappas’s incomplete and purposely evasive
response is more complicated. VSI proposes that the Court assume that it suffered harm in the
amount of $140,000 in connection with these discovery requests. VSI calculates this figure as the
product of 10 monthly payments of $14,000, which represents the money that Mr. Pappas
purportedly sent to Belize since the time of the Court’s September 18, 2014 Order. Presumably,
if VSI had more information about Mr. Pappas’s properties in Belize, it might have been able to
somehow intercept these payments. VSI recognizes that the calculation of its damages in this
regard is not straightforward. While I find that VSI has been harmed, I am unable to find that this
harm is quantifiable as the monetary damages proposed by VSI. Accordingly, I will deny VSI’s
23
request for monetary damages as to the Belizean properties, but will do so without prejudice to
its right to renew its request for damages in the future if it uncovers additional evidence.
E.
Summary of Damages and Attorney’s Fees and Costs
1.
Calculation of Total Monetary Damages
For the reasons set forth above, I find that VSI is entitled to monetary damages for
Defendants’ misconduct as follows: $509,493.97 with respect to the accounts receivable
discovery requests; $118,000 with respect to the Salton Sea Builders loan discovery requests;
and $605,500 with respect to the discovery requests related to transfers in excess of $1,000. In
total, the monetary damages assessed against Defendants for their conduct amounts to
$1,232,993.97. I find that the assessment of damages in this amount will serve three purposes.
First, it will deter Defendants from improperly thwarting VSI’s future discovery efforts. Second,
it will compensate VSI for its lost opportunities to collect its judgment that occurred because of
Defendants’ noncompliance with the Court’s orders. Third, it will deter Defendants from
violating this Court’s discovery orders in the future.
2.
Attorney’s Fees and Costs
VSI also requests that the Court order Defendants to reimburse it for the attorney’s fees
and legal costs associated with its Motion. (ECF No. 715 at 22-23.) Rule 37(b)(2)(C) provides
that “instead of or in addition to [other sanctions], the court must order the disobedient party . . .
to pay the reasonable expenses, including attorney’s fees, caused by the failure.” In support of its
request, VSI has attached a declaration of its counsel, Randell C. Ogg. (ECF No. 715-4.) Mr.
Ogg’s declaration includes an itemization of his bills “copied directly from the bills rendered to
[VSI] in this matter.” (Id. ¶ 2.) Mr. Ogg states that these bills were generated “based on the
contemporaneous records kept” by Mr. Ogg’s law practice. (Id.) Mr. Ogg states that the only
24
items included in the bills attached to his declaration are for those services directly related to the
issues underlying Defendants’ improper responses to the discovery requests, Defendants’
violation of the Court’s orders regarding discovery, and the calculation of VSI’s resulting
damages. (Id.) The legal services to VSI were billed at the rate of $50.00 per hour for a paralegal,
and $350.00 per hour for Mr. Ogg, who has been licensed to practice law for more than 35 years.
(Id. ¶¶ 4-5.) In total, VSI requests that the Court award attorney’s fees in the amount of
$46,885.0014 and costs in the amount of $1,436.94. (Id. ¶¶ 3, 8; ECF No. 719 at 24.)
Defendants challenge VSI’s claim that it is entitled to all of its attorney’s fees and costs.
(ECF No. 718 at 15-16.) Defendants do not contest the calculation of Mr. Ogg’s hours (or those
of his paralegal), but instead argue that many of the items claimed do not have “a reasonable
nexus to any basis for contempt.” (Id. at 16.) Specifically, Defendants list four items for which
VSI should not be reimbursed its attorney’s fees and costs: (1) VSI’s response to Defendants’
motion for a protective order (ECF No. 676); (2) VSI’s opposition to Mr. Greer’s request for
admission pro hac vice (ECF No. 708); (3) VSI’s preparation for the post judgment examination
of Mr. Pappas on September 18, 2015; and (4) the expenses for Mr. Pappas’s post-judgment
examinations. (Id.)
In its reply, VSI addresses each of these challenges. With respect to its opposition to
Defendants’ motion for a protective order, VSI states that it is entitled to its fee for having
successfully opposed the motion, pursuant to Fed. R. Civ. P. 37(a)(5)(B), because the motion
14
In its damages memorandum (ECF No. 715), VSI it initially claimed attorney’s fees in
the amount of $42,300. Because this memorandum was submitted before VSI prepared and filed
its reply, VSI requests supplemental attorney’s fees in the amount of $4,585.00 in connection
with the preparation of its reply. (ECF No. 719.) Thus, the total amount of the attorney’s fees
requested by VSI is $46,885.00.
25
was not substantially justified. (ECF No. 719 at 22-23.) The Court agrees that VSI is entitled to
attorney’s fees in connection with Defendants’ motion for a protective order.
With respect to VSI’s opposition to Mr. Greer’s application for admission pro hac vice,
VSI argues that such response was necessary to defeat “an improper attempt by the Defendants
to have a key witness become their counsel at the contempt hearing to the prejudice of VSI.” (Id.
at 23.) The Court agrees that VSI is entitled to attorney’s fees in connection with its opposition to
Mr. Greer’s pro hac vice application.
With respect to Defendants’ opposition to attorney’s fees in connection with VSI’s
preparation for Mr. Pappas’s post-judgment examination, VSI states that “all such time was
excluded from the application.” Because VSI does not claim attorney’s fees in connection with
this area, Defendants’ argument does not provide a basis to reduce VSI’s claim.
Finally, with respect to the “expenses for the post-judgment examination of Mr. Pappas
of at least $848.85,” VSI states that it is not clear how Defendants arrived at this amount. The
transcript for Mr. Pappas’s deposition cost $679.35 and was used by all of the parties in
connection with the Court’s contempt and damages inquiries. The Court finds that VSI is entitled
to the reimbursement of the costs that it claimed, including for the transcript of Mr. Pappas’s
deposition in 2015.
In calculating an award of attorney’s fees, the Court must determine the lodestar amount,
defined as a “reasonable hourly rate multiplied by hours reasonably expended.” Grissom v. The
Mills Corp., 549 F.3d 313, 320-21 (4th Cir. 2008). The Fourth Circuit has stated that a court’s
discretion should be guided by the following twelve factors: (1) the time and labor
expended; (2) the novelty and difficulty of the questions raised; (3) the skill
required to properly perform the legal services rendered; (4) the attorney’s
opportunity costs in pressing the instant litigation; (5) the customary fee for like
work; (6) the attorney’s expectations at the outset of the litigation; (7) the time
limitations imposed by the client or circumstances; (8) the amount in controversy
26
and the results obtained; (9) the experience, reputation and ability of the attorney;
(10) the undesirability of the case within the legal community in which the suit
arose; (11) the nature and length of the professional relationship between attorney
and client; and (12) attorneys’ fees awards in similar cases.
Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir. 2009). In addition, Appendix
B to this Court’s Local Rules (“Rules and Guidelines for Determining Attorneys’ Fees in Certain
Cases”) provides that lawyers admitted to the bar for twenty years or more may reasonably bill
$300-475 per hour, and that paralegals and law clerks may reasonably bill $95-150 per hour.
These hourly rates serve as guidelines in determining the reasonableness of hourly rates.
I find that the hourly rates charged to VSI by Mr. Ogg and his paralegal, both of which
are within the rates recommended by the Local Rules, are reasonable. I also find that the time
that Mr. Ogg and his paralegal spent working on this matter in connection with Defendants’
disobedience to the Court’s orders is reasonable. Finally, I do not find that Defendants’ failure to
comply with the Court’s orders was substantially justified, or that any other circumstances would
make an award of expenses unjust. See Fed. R. Civ. P. 37(b)(2)(C). Accordingly, I award
attorney’s fees and costs to VSI in the amount of $48,321.94.
IV.
CONCLUSION
For the reasons set forth above, the Court finds that monetary sanctions in the amount of
$1,232,993.97 are appropriate. Sanctions in this amount will partially compensate VSI for the
losses it has sustained as a result of Defendants’ disobedience to the Court’s orders and should
also deter Defendants from continuing to violate the Court’s orders in the future. The payment of
these sanctions will be credited against the judgment in this case. In addition, the Court finds that
an award of attorney’s fees of costs in the amount of $48,321.94 is warranted. The payment of
these attorney’s fees and costs will not be credited against the judgment in this case. Defendants
27
are ordered to pay a total of $1,281,315.9115 to VSI by May 23, 2016. Such payment is to be
made through counsel for VSI. The parties are jointly ordered to file a status report by May 31,
2016 confirming that Defendants have made the required payment. If the parties report that
Defendants have failed to make the required payment in full, the Court will certify this fact to the
district judge in this case for a civil contempt inquiry pursuant to 28 U.S.C. § 636(e)(6)(B)(iii).
An Order implementing this decision will follow.
April 20, 2016
Date
/s/
Timothy J. Sullivan
United States Magistrate Judge
15
This amount is the sum of the sanctions imposed against Defendants and the award of
attorney’s fees and costs.
28
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