Abell v. Wilson

Filing 17

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 7/3/14. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
IN RE: VINCENT L. ABELL
:
_________________________________
:
VINCENT L. ABELL
Appellant

:

v.

:

Civil Action No. DKC 14-1037

:
MARIA WILSON, et al.
Appellees

:
MEMORANDUM OPINION

Pending before the court is an appeal by Appellant Vincent
Abell from orders entered by United States Bankruptcy Judge Paul
Mannes on February 18, 2014 and February 24, 2014.
18

order

granted

Schlossberg,

the

Trustee

motion

for

for

Appellant.

sanctions
The

The February

filed

by

Roger

February

24

order

granted a similar motion for sanctions filed by Appellee Maria
Wilson.

Because the facts and legal arguments are adequately

presented in the briefs and record, oral argument is deemed
unnecessary.

See Fed.R.Bankr.P. 8012; Local Rule 105.6.

For

the reasons that follow, the rulings of the bankruptcy court
will be affirmed.
I.

Background
On March 5, 2013, Debtor Vincent L. Abell filed a petition

for relief under Chapter 11 of the bankruptcy code in the United
States Bankruptcy Court for the District of Maryland.

On March

27,

2013,

Abell

filed

amended

schedules

claiming

as

exempt

“Modern Management Company Employee Benefit Trust” (“MM-EBT”)
and a Roth IRA.
filed

objections

In May 2013, creditors - including Wilson to

this

and

other

claimed

exemptions,

contending that the MM-EBT and Roth IRA were not established,
maintained, treated, or operated in compliance with applicable
law

and

thus

cannot

be

claimed

as

exempt

retirement

funds.

Judge Mannes issued a scheduling order setting the close of
discovery at September 4, 2013 and trial on November 7, 2013.
On July 10, 2013, Wilson served her first request for production
of documents and interrogatories upon Abell requesting, in part,
documents concerning the MM-EBT and Roth IRA.

On September 28,

2013, Mr. Schlossberg was appointed trustee upon motion by the
United States Trustee and Wilson.
filed

a

motion

to

compel,

On October 8, 2013, Wilson

arguing

production and answers were incomplete.

that

Abell’s

document

On October 23, 2013,

Judge Mannes granted Schlossberg’s motion to intervene in the
contested matter and extended the discovery deadline by eight
months.

On November 8, 2013, Schlossberg joined Wilson’s motion

to compel and served his first set of interrogatories on Abell
on November 14, 2013.
November 21, 2013.

A hearing was held before Judge Mannes on

On December 11, 2013, Judge Mannes ordered

Abell to produce to Wilson all requested records in his custody
2

concerning the MM-EBT and Roth IRA.

On January 21, 2014, Wilson

and Schlossberg each filed motions for sanctions pursuant to
Fed.R.Civ.P. 37(d) against Abell.

Wilson argued that Abell had

refused to comply with Judge Mannes’ December 11 order, and
Schlossberg represented that after he agreed to Abell’s request
for additional time to respond to his interrogatories, Abell had
still not provided any response.

Both Wilson and Schlossberg

requested that the bankruptcy court deny and dismiss Abell’s
exemption claims relating to funds in the MM-EBT and Roth IRA.
A hearing was scheduled for February 12, 2014.
night

before

the

hearing,

Schlossberg’s requests.
February 12, 2014.

Abell

filed

Late on the

his

responses

to

A hearing on the matter was held on

Mr. Abell was not at the hearing as he was

being held in the D.C. jail since November 18, 2013 for civil
contempt

in

a

separate

case.

Abell’s

counsel

argued

that

because all of the relevant records were in electronic form and
Mr. Abell was not allowed access to a computer, he had been
unable

to

provide

critical

assistance

to

his

counsel.

The

relevant records were being held by Mr. Abell’s estranged wife,
Ms. Bertola.

At the conclusion of the hearing, Judge Mannes

took the matters under advisement.
On February 18, 2014, Judge Mannes granted Schlossberg’s
motion

for

sanctions

and

ordered
3

that

the

facts

related

to

Abell’s

MM-EBT

and

Roth

IRA

are

established

in

favor

of

Schlossberg and Wilson for purposes of the contested matter and,
further, that (1) the Roth IRA was not established in compliance
with applicable state or federal law and therefore never did and
does not now constitute a “Roth IRA” capable of exemption; and
(2) the MM-EBT was not established in compliance with applicable
state or federal law and therefore does not now constitute a
retirement

or

pension

fund

capable

of

exemption.

On

February 24, 2014, Judge Mannes entered a similar order as to
Wilson’s motion.

In a later decision denying Abell’s motion to

stay

pending

proceedings

an

appeal

of

the

sanctions,

Judge

Mannes acknowledged that the sanctions were “extreme,” but found
that the Abell “failure to make disclosures and cooperate were
not

in

good

noncompliance

faith
that

incarceration.”

as
he

reflected
sought

to

in

the

excuse

(ECF No. 12-1).

on

dreary
his

record
more

of

recent

Judge Mannes wrote that a

supersedeas bond is normally a less harsh sanction in situations
similar to the present, but found it useless given that Abell
testified

that

his

failure

to

comply

was

due

to

the

unwillingness of his estranged spouse to cooperate, as she is
the party who holds the documents at issue.
On April 7, 2014, Abell filed an appeal of these two orders
and filed his brief on May 6, 2014.
4

(ECF No. 9).

Wilson and

Schlossberg each filed opposition briefs on June 10, 2014 (ECF
Nos. 12 and 13).
II.

Abell replied on June 25, 2014.

(ECF No. 16).

Standard of Review
When

reviewing

a

bankruptcy

court’s

final

district court acts as an appellate court.
conclusions

are

reviewed

reviewed for clear error.

de

novo

and

order,

the

Accordingly, legal

findings

of

fact

are

In re Official Comm. of Unsecured for

Dornier Aviation (N. Am.), Inc., 453 F.3d 225, 231 (4th Cir.
2006).

An abuse of discretion standard applies to a bankruptcy

court’s

orders

denying

or

imposing

discovery

sanctions.

Jacksonville Airport, Inc. v. Michkeldel, Inc., 434 F.3d 729,
732

(4th

Cir.

2006).

“At

its

immovable

core,

the

abuse

of

discretion standard requires a reviewing court to show enough
deference to a primary decisionmaker’s judgment that the court
does

not

reverse

merely

because

it

would

different result in the first instance.”

have

come

to

a

Evans v. Eaton Corp.

Long Term Disability Plan, 514 F.3d 315, 322 (4th Cir. 2008)
(citation omitted).
III. Analysis
Abell challenges Judge Mannes’ sanctions as an abuse of
discretion.

Fed.R.Civ.P. 37(d), applicable to the bankruptcy

court pursuant to Fed.R.Bankr.P. 7037, governs sanctions for a
party’s failure to respond to discovery requests.
5

The sanctions

available under Rule 37(d) include, inter alia, “directing that
the matters embraced in the order or other designated facts be
taken as established for purposes of the action,” and “rendering
a default judgment against the disobedient party.”
37(b)(2)(A)(i) and (vi).

Fed.R.Civ.P.

The following four factors must be

considered when entering default judgment as a sanction: (1)
whether

the

amount

of

noncompliant
prejudice

party

the

acted

party’s

in

bad

faith;

the

caused

noncompliance

(2)

the

opposing party, which necessarily includes an inquiry into the
materiality of the evidence he failed to produce; (3) the need
for deterrence of the particular sort of noncompliance; and (4)
the effectiveness of less drastic sanctions.

Mut. Fed. Sav. &

Loan v. Richards & Assocs., Inc., 872 F.2d 88, 92 (4th Cir.
1989).
The bankruptcy court was within its discretion to enter
judgment
absence

against
of

Abell

effective,

based
less

on

Abell’s

drastic

bad

sanctions.

faith

and

the

Although

the

bankruptcy court’s order did not make specific findings with
respect to each of these factors, the record of the adversary
proceeding supports the sanction.
respond

to

Wilson

and

Abell repeatedly failed to

Schlossberg’s

requests,

and

the

last-

minute, incomplete documents Abell eventually provided supported
a finding of bad faith.

In seeking sanctions, Schlossberg and
6

Wilson clearly explained that Abell’s behavior prejudiced them
by failing to have the information necessary to support their
objections to Abell’s claimed exemptions for the MM-EBT and the
Roth IRA.
abuse

of

(ECF Nos. 1-75 and 1-78).
discretion

to

conclude

It would not have been an

either

(1)

that

repeatedly

failing to respond to discovery requests is conduct that should
be

deterred;

or

(2)

that

a

less

severe

sanction

would

not

function as an effective deterrent given Abell’s incarceration.
In his appeal, Abell makes multiple arguments.

First, he

argues that he was denied his right to meaningful participation
in this matter.

While he acknowledges that he was represented

by counsel, he argues that severity of the sanction required
that Abell be given the ability “to respond, either directly, or
through directed representation by his counsel.”
24).

(ECF No. 9, at

Second, Abell argues that there was no hearing before

sanctions

were

filed,

contending

that

the

outcome

of

the

February 12 hearing was merely an extension of the discovery
deadline.

Finally, Abell argues that he was not given adequate

warning that a sanction as harsh as deeming the MM-EBT and Roth
IRA non-exempt could possibly be in the offing.1

1

Abell also argues that the ultimate sanction was an abuse
of discretion.
For the reasons discussed above, this argument
will be rejected.
7

Each of these arguments can be easily dismissed.

Both

Schlossberg and Wilson’s motions for sanctions made clear that
they were seeking the strong sanction of declaring the MM-EBT
and Roth IRA as non-exempt.

Abell and his counsel certainly

were on notice of the potential punishment and had adequate
opportunity to plan a defense.

At the hearing, Abell’s counsel

was given much time to explain his client’s predicament and the
reasons

for

his

non-compliance.

Abell

contends

that

Judge

Mannes let Schlossberg and Wilson decide Abell’s sanctions, but
that is simply a misinterpretation of the hearing.

Judge Mannes

acknowledged that Schlossberg’s counsel wanted an extension of
the discovery deadline and then asked counsel if she wanted
anything else.

Schlossberg’s counsel responded that if Judge

Mannes “is not willing to consider out motion for sanctions,
we’ll take the extension.”

(ECF No. 5, at 6, Trans. 6:16-20).

Similarly, Wilson’s counsel stated that her primary desire was
for the court to sanction Abell by declaring the MM-EBT and Roth
IRA as non-exempt.

(Id. at 9, Trans. 9:20-25).

Judge Mannes

extended the discovery deadline to May 1, and took the matter of
sanctions under advisement.

(Id. at 30, Trans. 30:8-9).

In

sum, Judge Mannes had broad discretion to declare that MM-EBT
and

Roth

IRA

were

non-exempt

against

8

Abell

as

a

discovery

sanction, and there is no basis for concluding that he abused
it.
IV.

Conclusion
For the foregoing reasons, the bankruptcy court’s orders

against

Appellant

will

be

affirmed.

A

separate

order

follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

9

will