Davis et al v. Detroit Downtown Development Authority et al

Filing 138

OPINION & ORDER Denying Plaintiffs' Counsel's Motion for an Order to Show Cause Why Defense Counsel Should not be Held in Civil Contempt (Dkt. 133 ). Signed by District Judge Mark A. Goldsmith. (Sandusky, K)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ROBERT DAVIS, et al.,
Plaintiffs,

Case No. 17-cv-11742
Hon. Mark A. Goldsmith

vs.
DETROIT DOWNTOWN
DEVELOPMENT AUTHORITY, et al.,
Defendants.
__________________________________/
OPINION & ORDER
DENYING PLAINTIFFS’ COUNSEL’S MOTION FOR AN ORDER TO
SHOW CAUSE WHY DEFENSE COUNSEL SHOULD NOT BE HELD IN CIVIL
CONTEMPT (Dkt. 133)
This matter is before the Court on Plaintiffs’ attorney Andrew Paterson’s motion for an
order to show cause why defense counsel should not be held in civil contempt (Dkt. 133). Defense
counsel have responded to the motion (Dkts. 134, 137), but Paterson has not filed a reply. Because
oral argument will not assist in the decisional process, the motion will be decided based on the
parties’ briefing. See E.D. Mich. LR 7.1(f)(2); Fed. R. Civ. P. 78(b). For the reasons that follow,
the Court denies Paterson’s motion.
I. BACKGROUND
On November 6, 2018, this Court entered an opinion and order imposing sanctions against
Paterson, ordering him to pay $13,506.00 in attorneys’ fees and costs to Defendants by November
27, 2018. 11/6/18 Op. & Order (Dkt. 107). Paterson did not pay the sanctions by this deadline,
nor did he attempt to seek relief from the Court’s order. After Defendants filed a motion for a
show cause order, which the Court granted, see 12/14/18 Order (Dkt. 112), Paterson responded to
the order by claiming, for the first time, that he did not have the funds to pay the sanctions ordered,

see Resp. to Order to Show Cause (Dkt. 113). Following a contempt hearing, the Court issued an
order permitting Defendants to take discovery regarding Paterson’s ability to pay the sanctions.
See 4/12/19 Order (Dkt. 116). On May 6, 2019, one week after Defendants served him with
discovery requests, Paterson made a lump-sum payment of $13,506.00 to Defendants. See
Satisfaction of Judgment (Dkt. 117).
Defendants thereafter filed a motion seeking sanctions against Paterson and requesting
discovery regarding Paterson’s ability to pay the sanctions during his six-month period of
noncompliance. Defs. Mot. for Sanctions (Dkt. 125). On March 3, 2020, the Court granted
Defendants’ request to conduct discovery and denied the motion without prejudice with respect to
whether sanctions should be imposed (the “March 3 Order”). 3/3/20 Order at 1 (Dkt. 131).
Specifically, the Court authorized discovery as follows:
Defendants . . . . may issue document requests, to which Mr. Paterson must respond
and produce documents within ten days of being served. They may also serve thirdparty subpoenas and require that Mr. Paterson undergo a creditor’s examination.
Defendants’ discovery may seek any and all information and records pertaining to
Mr. Paterson’s financial condition as to assets, liabilities, income and expenses,
going back three years, including without limitation, tax returns, related tax
documents, financial journals and ledgers, credit card and bank statements, and real
property records. The requests may encompass both his personal records and the
records of any trust of which he is a beneficiary and any business entity in which
he is a principal, partner or shareholder.
Id. at 3-4.
Paterson has now filed a motion seeking an order to show cause why defense counsel
should not be held in civil contempt for exceeding the scope of permitted discovery. Mot. at 4, 7.
In response, defense counsel explain the basis for their discovery requests and contend that the
discovery is well within the scope of the Court’s order. Resp. at 6-7.

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II. STANDARD OF REVIEW
“The contempt power ensures that the judiciary’s mandates are authoritative rather than
advisory.” Gascho v. Global Fitness Holdings, LLC, 875 F.3d 795, 798 (6th Cir. 2017). A party
seeking civil contempt sanctions “must demonstrate by clear and convincing evidence that the
opposing party knowingly ‘violated a definite and specific order of the court.’” Id. at 800 (quoting
NLRB v. Cincinnati Bronze, Inc., 829 F.2d 585, 591 (6th Cir. 1987)). Requiring that an order be
definite and specific ensures that contempt cannot be premised on a vague decree. Id. Rather,
contempt is to be reserved for parties “who ‘fully understand[ ]’ the meaning of a court order and
yet ‘choose[ ] to ignore its mandate.’” Id. (quoting Int’l Longshoremen’s Ass’n, Local 1291 v.
Phila. Marine Trade Ass’n, 389 U.S. 64, 76 (1967)). Accordingly, any ambiguity in an order must
be construed in favor of the party charged with contempt. Id.
III. DISCUSSION
Paterson contends that the discovery sought by defense counsel exceeds the scope of
discovery authorized in the Court’s March 3 Order in three respects: (i) by seeking production of
documents going back more than three years, (ii) by seeking production of documents regarding
Paterson’s future interests, and (iii) by issuing a subpoena to MUFG Union Bank seeking
documents regarding Paterson’s wife. Mot. at 4-5, 7. Defense counsel, in turn, respond that
contempt sanctions are not warranted, as they had a reasonable basis for these discovery requests.
Resp. at 6-7; Supp. Br. at 2-3 (Dkt. 137). Defense counsel have the better part of the argument.
First, on March 19, 2020, defense counsel served on Paterson requests for production
seeking various documents dating back over four years, “from November 27, 2015 to the present.”
See generally Requests for Production, Ex. 1 to Resp. (Dkt. 134-1). As stated above, the March 3
Order authorized discovery regarding “Paterson’s financial condition as to assets, liabilities,
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income and expenses, going back three years . . . .” 3/3/20 Order at 3 (emphasis added). Thus,
Paterson contends that defense counsel seek documents outside this three-year timeframe. Mot.
at 4.
But as argued by defense counsel, the March 3 Order did not specify the date from which
discovery would “go[] back three years.” Resp. at 7. As a result, defense counsel interpreted the
March 3 Order as authorizing discovery “going back three years” from November 27, 2018, the
date on which Paterson failed to comply with the Court’s deadline to pay the sanctions. See id.
Defense counsel’s interpretation was correct. The three-year period was designed to give a full
view of Paterson’s financial wherewithal at the time he failed to pay sanctions; running that period
from the date of the March 3 Order would not serve that purpose. Under the facts of the case,
defense counsel’s interpretation of the March 3 Order was both correct and reasonable. Therefore,
they did not disregard the order, and a finding of contempt is not justified.
Second, defense counsel’s requests for production sought documents relating to any future
interest Paterson might have in property or the payment of money. See Requests for Production
at 12. Paterson contends that this request was improper because it sought information outside the
three-year timeframe authorized in the March 3 Order. Pl. Mot. at 5.
Defense counsel respond that the request is relevant to Paterson’s present financial status
because “a future interest in real property or the payment of money is an asset that can be sold,
pledged or used as collateral to obtain cash.” Supp. Br. at 2 (citing United States v. Holland, 953
F.3d 397, 399 (6th Cir. 2020) (noting that the defendant executed a transaction converting his
interest in future royalty payments into a present lump-sum of cash)). The Court agrees that an
inquiry into Paterson’s future interests is relevant to his present financial condition and is proper
under the March 3 Order, which broadly authorized discovery regarding Paterson’s financial
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condition as to assets, liabilities, income, and expenses. Courts have traditionally assigned a
“broad scope” to orders, such as the March 3 Order, that authorize a creditor’s examination. See
Comerica Bank v. Esshaki, 314 F. Supp. 3d 832, 833 (E.D. Mich. 2018). Accordingly, defense
counsel’s discovery request does not merit a finding of civil contempt.
Finally, with respect to the subpoena issued to MUFG Union Bank (“MUFG”), defense
counsel requested documents relating to “any wire transfers, checks, bank drafts and/or transfers”
from MUFG to Paterson’s wife, within the last three years. See Notice of Subpoena (Dkt. 132).
Paterson contends that documents relating to transfers to his wife’s account are plainly beyond the
scope of the March 3 Order permitting discovery into his own financial condition. Mot. at 7-8.
According to defense counsel, Paterson’s bank records showed that he made large, monthly
wire transfers to his wife’s account. Resp. at 4, 8. Additionally, a large transfer was made from
an MUFG bank account to Paterson’s account in April 2019, just prior to Paterson’s payment of
$13,506.00 in sanctions to Defendants. Id. In light of this information, defense counsel seek
information regarding transfers from MUFG to Paterson’s wife in order to discern whether she is
receiving transfers from the same sources as Paterson. Id. at 8. Specifically, Defendants seek to
discover whether Paterson is hiding assets by requiring his debtors to remit payments to his wife.
Id.
Defense counsel’s explanation regarding the relevance of the information requested in the
MUFG subpoena is reasonable. Indeed, Paterson offers no argument in rebuttal. Consequently,
defense counsel have not requested discovery outside the permissible scope set forth in the March
3 Order. A finding of contempt is, therefore, not warranted on this basis.
Even if defense counsel’s discovery requests and subpoena had exceeded the scope of the
March 3 Order, Paterson’s invocation of contempt proceedings was litigation overkill. The proper
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and less drastic avenue for challenging overly broad discovery requests would have been to seek
a protective order. See Fed. R. Civ. P. 26(c). A disagreement about the scope of a court order
could have easily been addressed by asking the court itself to clarify the issue. Escalating the
disagreement into a contempt proceeding only draws into question Paterson’s own good faith and
judgment.
Paterson’s motion is denied.
SO ORDERED.
Dated: June 11, 2020
Detroit, Michigan

s/Mark A. Goldsmith
MARK A. GOLDSMITH
United States District Judge

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