Ferrell et al v. Turner et al

Filing 268

ORDER denying 252 Motion to Strike 251 MOTION for Contempt and setting 251 Motion for Contempt for Hearing on March 19, 2019 at 9:30 a.m. Response to Motion for Contempt is due by 8:00 a.m. on March 19, 2019. Signed by District Judge Henry T. Wingate on 3/13/2019 (CGC)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
WAYNE E. FERRELL, JR.;
JAMES W. NOBELS, JR.; and
ANGELO DORIZAS
vs.

PLAINTIFFS

CIVIL ACTION No.: 3:15-CV-657-HTW-LRA

TAB TURNER; and TURNER &
ASSOCIATES, P.A.

DEFENDANTS
ORDER

BEFORE THIS COURT is a Motion to Strike filed by Wayne E. Ferrell, Jr.. [Docket no.
252]. The target of this Motion to Strike is the Motion for Contempt filed by Tab Turner [Docket
no. 251]. This motion for civil contempt directed at Wayne E. Ferrell, Jr. (hereinafter referred to
as “Ferrell”), and his attorney, Chuck McRae (hereinafter referred to as “McRae”) accuses Ferrell
and McRae of removing funds from McRae’s trust account, in direct contravention of a court order
forbidding removal of those funds without a court order and without notifying “all necessary
parties” of such intention. See [Docket no. 251-2]. Neither of these pre-conditions was performed
by Ferrell and McRae.
Ferrell and McRae have responded with their Motion to Strike which relies upon Federal
Rule of Evidence 408. This rule forbids at trial evidence of compromise offered and negotiations.
As argued by Ferrell and McRae, since the revelation of the trust fund disbursement was revealed
at a court-ordered, mandatory settlement conference, the trust fund disbursement revelation is
inadmissible and cannot be the subject of a Motion for Contempt.
This court, at present, does not agree. Rule 408’s reach does not appear to be broad enough
to embrace the Ferrell-McRae legal theory. Ferrell and McRae who filed the instant Motion to
Strike, instead of a response to the Motion for Contempt (asking for thirty days to file a response
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if the court denies their motion to strike), shall file their response to the Motion for Contempt by
March 19, 2019, by 8:00 o’clock a.m.. They have had ample time to gauge their defense, and their
response to the motion for contempt. Moreover, they have presented a defense in their Motion to
Strike and back at the Settlement Conference of August 4, 2018. Nevertheless, this court will hear
all matters received in opposition to the Motion for Contempt.
I.

BACKGROUND
This case was originally filed in Hinds County, Mississippi Circuit Court on April 22, 2015.

That action was removed to this Court by the Turner Parties when they filed their Notice of
Removal on September 8, 2015, and the case was assigned Civil Action No. 3:15cv657-HTWLRA (sometimes referred to as the “Mississippi Case”). Shortly after the Notice of Removal in
this case was filed, a second suit, styled Turner & Associates, P.A. v. Wayne E. Ferrell, Jr., which
was filed in the Circuit Court of Pulaski County, Arkansas, was also removed and eventually
assigned Civil Action No. 3:15cv903-TSL-RHW (the “Arkansas Case”). The Arkansas Case was
transferred to this Court and the two cases were eventually consolidated on June 2, 2016.
After the action was commenced in Hinds County Circuit Court, but before the case was
removed to this Court, Ferrell had sought to transfer certain funds being held in the trust account
of his former counsel, Hunter Lundy (“Lundy”), to the trust account of his current counsel, McRae.
Those funds, as well as other funds, were being held in Lundy’s trust account pursuant to the Order
Directing Payment entered on June 8, 2011 by the Jasper County, Mississippi Chancery Court in
previous litigation between the parties hereto.
The Order Directing Payment ordered in part: “15. Payment to Lundy, Lundy, Soileau &
South, LLP trust account the sum of $x,xxx,xxx.” See Ex. A. On September 1, 2015, the Hinds

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County Circuit Court ordered that the amount of $540,000.00 be transferred from Lundy’s trust
account to McRae’s trust account (the “Hinds County Order”).
The Hinds County Order ordered that “upon deposit of said monies, the funds will not be
withdrawn until further Order of the Court advising and notifying all necessary parties”. The funds
were actually transferred to McRae’s trust account on September 3, 2015, as evidenced by a check
from Lundy’s trust account to McRae’s trust account.
On July 23, 2018, this Court entered an Order [Docket no. 249] compelling all parties and
counsel in the case to attend a mandatory settlement conference on August 4, 2018 (the “Settlement
Conference”). At the Settlement Conference, it was revealed by Ferrell and McRae that Ferrell
and McRae had removed all of the $540,000.00 held in McRae’s trust account without an order
from this Court, or any other Court allowing them to do so and without advising and notifying the
Court or the Turner Parties that they were doing so. It was also revealed that Ferrell allegedly had
returned a portion of the funds (i.e. the funds received by him) to McRae’s trust account. It was
also revealed that McRae had not returned the funds received by him to his trust account. The
excuse for taking the funds from McRae’s trust account, according to Ferrell and McRae, was that
when this Court dismissed the Turner Parties’ claims in the Arkansas Case, they believed that all
of the Turner Parties’ claims in both cases were dismissed. That was not true, but notwithstanding
the same, neither Ferrell nor McRae sought an order from this Court or any other Court releasing
the funds with notice to the Turner Parties as required by the Hinds County Order, which is a valid
and enforceable order.
Based on these statements made by Ferrell and McRae at the Settlement Conference, the
Turner Parties assert that Ferrell and McRae should be held in civil contempt for violating the
Hinds County Order.

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II.

STATUS OF THE TRUST FUND
As stated above, the Hinds County Order ordered that “upon deposit of said monies, the

funds will not be withdrawn until further Order of the Court advising and notifying all necessary
parties.” Though this case was removed from the Hinds County Circuit Court on September 8,
2015, the Hinds County Order remains a valid and enforceable order binding on the parties in
this case.
Pursuant to Title 28 U.S.C. §1450, “[a]ll injunctions, orders, and other proceedings had in
[an] action prior to its removal shall remain in full force and effect until dissolved or modified by
the district court.” This statute has been interpreted and affirmed by the United States Supreme
Court in Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers Local No.
70 of Alameda County, etc., 415 U.S. 423 (1974). In Granny Goose, the United States Supreme
Court stated that: “Judicial economy is promoted by providing that proceedings had in state court
shall have force and effect in federal court, so that pleadings filed in state court, for example, need
not be duplicated in federal court.” Granny Goose, 415 U.S. at 435-36 (emphasis added). “After
removal, the federal court ‘takes the case up where the State court left it off.’” Id. at 436 (quoting
Duncan v. Gegan, 101 U.S. 810, 812, 25 L.Ed. 875 (1880)). “Thus attachments, sequestrations,
bonds, undertakings, securities, injunctions, and other orders obtained in state court all remain
effective after the case is removed to federal court.” Id. (emphasis added). Though Granny Goose
specifically dealt with the effect of removal on a preliminary injunction issued in the case while it
was pending in state court, the Supreme Court affirmed that the Congress clearly intended to
“preserve the effectiveness of state court orders after removal . . .” with the adoption of 28 U.S.C.
§1450. Id. Therefore, in accordance with federal law, the Hinds County Order remains valid and
enforceable in these proceedings, unless this Court dissolves or modifies the same, which has not

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been done. See Resolution Trust Corp. v. Northpark Joint Venture, 958 F.2d 1313, 1316 (5th Cir.
1992) (Citing Nissho-Iwai American Corp. v. Kline, 845 F.2d 1300, 1303 (5th Cir. 1988)).
III.

CIVIL CONTEMPT
“Civil contempt is a remedial action designed and intended to obtain compliance with a

Court Order or to compensate for damages sustained as a result of noncompliance.” Piambino v.
Bestline Products, Inc., 645 F.Supp. 1210, 1212 (S.D. Fla. 1986) (citing McComb v. Jacksonville
Paper Co., 336 U.S. 187, 191, 69 S.Ct. 497, 499, 93 L.Ed. 599 (1948)). “The failure to comply
need not be with the intent to disobey a Court Order as intent to disobey is not a prerequisite to a
finding of civil contempt.” Id.
Civil contempt proceedings involve (1) the issuance of an Order; (2) following the
disobedience of that Order, the issuance of a conditional Order finding the
recalcitrant party in contempt and threatening to impose a specified penalty unless
the recalcitrant party purges itself of contempt by complying with the prescribed
purgation conditions; and (3) exaction of the threatened penalty if the purgation
conditions are not fulfilled.
Id. at 1213. “A party petitioning for a civil contempt finding must prove by clear and convincing
evidence that the respondent violated a Court Order.” Id. “However, once the prosecuting litigant
makes out a prima facie case, the burden of production shifts to the alleged contemnor, who may
defend his failure on the grounds that he was unable to comply.” Id. “To succeed on this defense,
however, the respondent must go beyond a bald assertion of inability and satisfy his burden by
introducing evidence in support of his claim.” Id. (citing United States v. Hayes, 722 F. 2d 723,
725 (11th Cir. 1984); Combs v. Ryan’s Coal Co., Inc., 785 F. 2d 970, 984 (11th Cir. 1986)).
IV.

HOLDING
At the Settlement Conference, this court inquired of the amount in McRae’s trust account.

McRae answered that a significant amount had been disbursed. In sum, he argued that the juridical
conditions for the trust fund had evaporated and no need for continuing the trust fund then existed.
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The court, at present, disagrees. Outstanding litigation may yet involve the monies pledged
to the trust fund.
Even so, Ferrell and McRae were under a specific order not to disburse the funds without
a court order and not before notifying counsel opposite of such intention. They did not notify the
court, nor, according to Attorney Tab Turner, the other parties.
Ferrell and McRae apparently ignore this court’s power and authority to inquire at any time
whether the court’s forbearance order is being obeyed. At any time, this court could determine
whether its non-distribution order is being obeyed, what financial institution has the money, what
interest rate, if any, is being applied and the financial safety of the holding institution. The court
could require regular reports of the above. Afterall, the money is being held in a non-disbursable
trust by a court order.
Ferrell and McRae turn to Rule 408(a) of the Federal Rules of Evidence for protection.
Aimed at fostering open conversation on possible compromise and settlement, Rule 408,
in various circumstances, bars participants from offering the pre-trial negotiations, offers and
discussions at trial. Ramada Dev. Co. v. Rauch, 644 F.2d 1097, 1106 (5th Cir.1981) (Rule 408 “is
designed to encourage settlements by fostering free and full discussion of the issues”). “[T]he
question under the rule is whether the statements or conduct were intended to be part of the
negotiations toward compromise.” Id. See also Buckhanan v. Shinseki, 665 Fed. Appx. 343 (5th
Cir. 2016) (to determine whether a matter is inadmissible under Rule 408, the court must determine
whether the statements or conduct were intended to be part of the negotiations toward
compromise.” (citing MCI Communications Service, Inc. v. Hagan, 641 F.3d 112, 116-17 (5th Cir.
2011).

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At this stage, this court is not persuaded that McRae’s revelation of the status of the trust
funds is a revelation sheltered by Rule 408 and its exceptions.
The court, however, will not render a final decision on this matter now but, instead, will
do so at the end of the forthcoming hearing, which is scheduled for March 19, 2019 at 9:30 a.m.
IT IS, THEREFORE, ORDERED that Wayne E. Ferrell, Jr.’s Motion to Strike [Docket
no. 252] is hereby DENIED. This court will hold a hearing on March 19, 2019 at 9:30 a.m. on
Defendant’s Motion for Contempt [Docket no. 251].
SO ORDERED this the 13th day of March, 2019.
s/ HENRY T. WINGATE
UNITED STATES DISTRICT COURT JUDGE

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