WONG et al v. LUBETKIN et al
Filing
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OPINION. Signed by Chief Judge Jose L. Linares on 4/6/18. (cm, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
IN RE: 40 LAKEVIEW DRIVE, LLC,
Debtor.
Bankruptcy No.: 15-14692 (VFP)
GRACE WONG,
Appellant,
Civil Action No.: 17-5643 (JLL)
V.
OPINION
JAY L. LUBETKIN, et at.,
Appellee.
LINARES, Chief District Judge.
This matter comes before the Court by way of pro se Appellant Grace Wong’s Amended
Notice of Appeal of the Bankruptcy Court’s July 25, 2017 Order Holding Appellant in Civil
Contempt (“Contempt Order”) and August 9, 2017 Order Detailing the Scope of Assistance to be
Provided by the U.S. Marshal to Enforce the Contempt Order (“Enforcement Order”). (ECf No.
2). The Court has considered the submissions made by Appellant and Appellee Jay L. Lubetkin,
and decides this matter without oral argument pursuant to Rule 7$ of the Federal Rules of Civil
Procedure. For the reasons set forth below, the Court affirms the Bankruptcy Court’s Contempt
and Enforcement Orders and denies Appellant’s Bankruptcy Appeal.
I.
BACKGROUND’
This is the latest of several appeals filed by Appellant in this Court. See, e.g., In re 40
Lctkeview Drive, LLC, D.N.J. No. 17-3959, ECF No. 1 (June 2,2017). Appellant is the managing
member of 40 Lakeview Drive LLC (“Debtor”), which is the
entity
that filed for bankruptcy in the
underlying bankruptcy proceedings. (ECf No. 6, Ex. A (“Hr’g Tr.”) at 3:2—4, 40:13—14). On June
7, 2017, the Bankruptcy Court held a hearing and granted Appellee’s motion to require Appellant
to turn over keys and access codes to the property at 16 Avenue A, Mahwah, New Jersey (“the
Property”). (Hr’g Tr. at 30:18—2 1). On June 29, 2017, the Bankruptcy Court formally issued an
order that Appellant deliver to Appellee “all keys, alarm codes and anything else reasonably
necessary to gain access” to the Property within three days of receipt of said order (“Turnover
Order”). In re 40 Lakeview Drive, LLC, Bankr. D.N.J. No. 15-14692 (Bankntptcy Action”), ECF
No. 212 at 2 (June 29, 2017). That same day, Appellee served Appellant with a copy of the
Turnover Order. (Bankruptcy Action, ECf No. 213).
Appellant did not comply with the Turnover Order within the required three days. (Hr’g
Tr. at 5:25). On July 3, 2017, Appellant forwarded Appellee an email she had received from
Debtor’s counsel, which advised Appellant that she was not obligated to abide by the Turnover
Order. (Hr’g Tr. at 5:13—19). On July 6, 2017, Appellee moved to hold Appellant in contempt.
(Bankruptcy Action, ECF No. 217). On July 19, 2017, the Bankrnptcy Court heard oral argument
on Appellee’s motion to hold Appellant in contempt of court for failing to comply with the
Turnover Order. (See generally Hr’g Tr.). Appellant argued at the hearing that she did not have
the keys nor the alarm or access codes to the Property. (Hr’g Tr. at 29:20—22).
This background is derived from the Bankruptcy Record submitted by Appellant. (ECf No. 3). However, because
this record is incomplete, the Court will also rely on documents filed by the parties and in the bankruptcy action.
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At the hearing, the Bankruptcy Court found that Appellant was in civil contempt of court
by failing to comply with the Turnover Order. (Hr’g Tr. at 36:15—17). In so ruling, the Bankruptcy
Court cited to FTC v. Lane Labs-USA, Inc.. 624 F.3d 575, 582 (3d Cir. 2010), for the proposition
that civil contempt requires a movant to show that a valid court order existed, that defendant had
knowledge of the order, and that defendant disobeyed the order. (Hr’g Tr. at 34:14—21). First, the
Bankruptcy Court noted that the Turnover Order was a valid and existing court order that was
entered nearly a month before the July 19, 2017 Hearing. (Hr’g Tr. at 36:17—19). Second, the
Bankruptcy Court found that Appellant clearly had knowledge of the Turnover Order because she
was present when the order was isscted from the bench at the June 7, 2017 Hearing and Appellee
later served her with a copy of the order. (Hr’g Tr. at 37:15—2 1). Finally, the Bankruptcy Court
concluded that Appellant disobeyed the Turnover Order because the keys were under her control,
even though they were physically in the possession of her friend and Debtor’s counsel. (Hr’g Tr.
at 38:14—24). The Bankruptcy Court noted that any inability to comply alleged by Appellant was
“exclusively self-imposed.” (Hr’g Tr. at 38:9—10).
As a result of these findings, the Bankruptcy Court issued the Contempt Order on July 25,
2017. (Bankruptcy Action, ECF No. 224). The Contempt Order stated that Appellant was in civil
contempt for her failure to comply with the Turnover Order, that she would be fined $100.00 per
day for each day after the issuance of the Contempt Order that she, or any party in possession of
the keys and/or access or alarm codes, failed to comply with the Turnover Order, and that
Appellant was responsible for Appellee’s counsel fees in the amount of $2,500.00. (ECF No. 2 at
7—8). The Contempt Order further stated that, in the event that Appellant did not comply with the
Turnover and Contempt Orders within five days, Appellee was authorized to change the locks and
any alarm or access codes to the Property and could seek the assistance of the U.S. Marshal
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Service, if necessary. (ECf No. 2 at 8). Appellee served Appellant with a copy of the Contempt
Order on July 26, 2017. (Bankruptcy Action, ECF No. 225).
Appellant still did not deliver the keys and/or alarn-i or access codes to Appellee, and, on
August 3, 2017, Appellee moved for an order detailing the scope of assistance to be provided by
the U.S. Marshal Service to enforce the Contempt Order.
(Bankruptcy Action, ECF No. 236).
The Bankruptcy Court held a hearing on August 9, 2017, which Appellant did not attend. (ECF
No. 8-1 at AaO 10). That same day, the Bankruptcy Court issued the Enforcement Order, which
stated that. in the event that the locksmith selected by Appellee is unable to provide access to the
Property, the U.S. Marshal Service could assist Appellee in obtaining access to the Property by
force, if reasonably necessary and if the U.S. Marshal Service took all reasonable efforts to limit
any damage to the Property. (ECf No. 2 at 10). The Enforcement Order also stated that the U.S.
Marshal Service may arrest any person who interferes with Appellee’s efforts to gain access to the
Property, but only afier warning such person that any interference may result in his or her arrest.
(Id. at 11). finally, the Enforcement Order explained that any attempt by Debtor, or a person
acting on its behalf, to change the locks and/or alarm or access codes afier they were changed by
Appellee will constitute further contempt of court. (Id.). Pursuant to the Enforcement Order,
Appellee gained access to the Property by hiring a locksmith to change the locks. (ECF No. 9 at
2).
On August 17, 2017, the Bankruptcy Court issued a memorandum opinion memorializing
and supplementing its decision for, among other things, the Enforcement Order. (ECF No. 8-1 at
Aa009—23). In its memorandum opinion, the Bankruptcy Court explained that Appellant was
already entitled to the assistance of the U.S. Marshal Service under the Contempt Order. (Id. at
Aa023). The Bankruptcy Court also explained that the Enforcement Order merely clarified the
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U.S. Marshal Service’s role and enabled the U.S. Marshal Service to act, which included the use
of force, if necessary. (Id.). The Bankruptcy Court found the Enforcement Order reasonable in
light of Appellant’s multiple failures to abide by the Turnover Order. (ECF No. 8-I at Aa022).
Thereafter, Appellant filed this amended notice of appeal as to both the Contempt and
Enforcement Orders on August 16, 2017. (ECF No. 2). Appellant filed her brief after being
granted an extension and Appellee filed his response thereto. (ECF Nos. 8, 9). In her brief,
Appellant primarily attacks the merits of the Turnover Order. For example, Appellant argues that
she could not be ordered to turn over the keys and alarm or access codes to Appellee because she
is merely the managing member of Debtor and does not have or control the keys and alarm or
access codes. (ECF No. 8 at 9). According to Appellant, she could not be ordered to turn over the
keys and alarm or access codes when the Bankruptcy Court had not determined who owned the
Property. (Id. at 11). Similarly, Appellant argues that she could not be held in contempt for failing
to turn over the keys and alann or access codes to Appellee because she did not have control over
the Property or the people that are in possession of the keys and alarm or access codes. (Id. at 10—
11). Appellant does not advance any arguments pertaining to the Enforcement Order.
(See
general/v ECF No. 8).
II.
LEGAL STANDARD
This Court has jurisdiction to hear appeals from the Bankruptcy Court pursuant to 28
U.S.C.
§ 158. A district court reviews a bankruptcy court’s “legal determinations de novo, its
factual findings for clear error, and its exercises of discretion for abuse thereof.” In re Goody ‘s
family Clothing Inc., et a!., 610 F.3d $12, $16 (3d Cir. 2010) (citing In re Tower Air, Inc., 397
F.3d 191, 195 (3d Cir. 2005)). A bankruptcy court’s decision on a motion for contempt is reviewed
under an abuse of discretion standard. See Harris v. City of Phi/a., 47 F.3d 1311, 1321 (3d Cir.
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1995) (“The imposition of contempt is reviewed tinder an abuse of discretion standard”); see also
In re AGR Premier Consulting, Inc., 550 F. App’x 115, 120 n.6 (3d Cir. 2014) (applying an abuse
of discretion standard to the review of a bankruptcy court’s civil contempt order). “An abuse of
discretion occurs when the court bases its
opinion
on a clearly erroneous finding of fact, an
erroneous legal conclusion, or an improper application of law to fact.” LaSatle Nat ‘tRunk v. first
Conn. Holding Gip., LLC, 287 F.3d 279, 288 (3d Cir. 2002) (citing In
re
Prudential Ins. Co. Am.
Sales Practice Litig. Agent Actions, 278 F.3d 175, 180 (3d Cir. 2002)).
III.
ANALYSIS
As a preliminary matter, while Appellant brought this appeal for both the Contempt and
Enforcement Orders, she has failed to advance any arguments regarding the Enforcement Order.
(See generally ECF No. 8). Accordingly, the Court deems the appeal of the Enforcement Ordet
abandoned. See Nag/c
i’.
A/spach, 8 f.3d 141, 143 (3d Cir.1993) (“When an issue is either not set
forth in the statement of issues presented or not pursued in the
argument section of
the brief, the
appellant has abandoned and waived that issue on appeal”) (citations omitted); see a/so Koot,
Mann, Coifee & Co. v. Coffey, 300 F.3d 340, 354 (3d Cir. 2002) (applying the standard articulated
in Nag/c to a case reviewing a bankruptcy court’s order).
The Court finds that the Bankruptcy Court did not abuse its discretion in holding Appellant
in contempt of court. A bankruptcy court may hold a party in civil contempt of court pursuant to
11 U.S.C.
§ 105(a). In
re Joitbert. 411 f.3d 452, 455 (3d Cir. 2005). To hold a party in civil
contempt, a court must find that (i) a valid court order existed, (ii) that the party charged with
contempt had knowledge of the court order, and (iii) that the party charged with contempt
disobeyed the court order. John T cx rd. Paul T v. Del. Civ. Intermediate Unit, 318 F.3d 545,
552 (3d Cir. 2003) (citing Harris, 47 F.3d at 1326). These elements “must be proven by ‘clear
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and convincing’ evidence, and ambiguities must be resolved in favor of the party charged with
contempt.” Id. (citing Robin Woods, Inc. v. Woods, 28 F.3d 396, 399 (3d Cir. 1994); Harris, 47
F.3d at 1326).
Here, the Bankruptcy Court found that the Turnover Order was a valid court order issued
nearly a month before Appellant was held in contempt of court, (Hr’g Tr. at 36:17—19). As
discussed above, Appellant argues that she could not be ordered to turn over the keys and alarm
or access codes because the Bankruptcy Court had not determined who owned the Property. (ECF
No. 8 at 11). However, the Bankruptcy Court was not required to address this argument because
“a party who is alleged to be in contempt of a court order may not challenge the substantive merits
of that order within contempt proceedings.” Marshak v. Treadwetl, 595 F.3d 478, 486 (3d Cir.
2009) (citing Roe v. Operation Resctte. 919 F.2d 857, 871 (3d Cir. 1990); Halderman v. Fennhurst
State Sch. & Hasp., 673 F.2d 628, 637 (3d Cir. 1982)). Because the underlying merits of the
Turnover Order are not relevant to the Turnover Order’s validity or existence, the Bankruptcy
Court did not abuse its discretion in finding that a valid court order existed.
Next, the Bankruptcy Court correctly found that Appellant had knowledge of the Turnover
Order because she was present at the June 7, 2017 Hearing, when the Bankruptcy Court issued the
Turnover Order. (Hr’g Tr. at 37:15—21). Additionally, Appellee served the Turnover Order on
Appellant by email and first class mail on June 29, 2017. (Hr’g Tr. at 37:15—21). Hence, the
Bankruptcy Court’s conclusion that Appellant knew about the Turnover Order was consistent with
other evidence in the record. For example, Debtor’s counsel sent an email to Appellant discussing
her obligation to comply with the Turnover Order. (Hr’g Tr. at 5:13—25, 11:6—8), which is further
indication that Appellant was aware of the Turnover Order’s existence. Therefore, the Bankruptcy
Court properly found that Appellant had knowledge of the Turnover Order.
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Finally, the Bankruptcy Court found that Appellant disobeyed the Turnover Order when
she did not deliver the keys to Appellee within the proscribed time period. (Hr’g Tr. at 40:1—9).
It is undisputed that Appellant never complied with the Turnover Order and that Appellee had to
retain the services of a locksmith in order to gain access to the Property. (ECF No. 9 at 2).
Appellant asserts that she could not be held in contempt because she did not have or control the
keys and alarm or access codes in order to turn them over to Appellee. (ECf No. $ at 11).
According to Appellant, the keys and alarm or access codes are in the exclusive possession of her
friend and Debtor’s counsel. (Id. at 10—11). However, the Court agrees with the Bankruptcy Court
that Appellant, as the managing member of Debtor, retained the ultimate control over the keys and
alarm or access codes, (Hr’g Tr. at 28:22—24, 39:19—25). See N.J.S.A.
§ 42:2C-37(b) (stating that
the management and conduct of a member-managed limited liability company is vested in its
managing members). Appellant could have easily retrieved the keys and alarm or access codes
from her friend or Debtor’s counsel, which Appellant indicated by stating that it would be “[nb
problem” for her friend to turn over a copy of the keys. (Hr’g Tr. at 42:8—14). Therefore, the
Bankruptcy Court’s finding that Appellant disobeyed the Turnover Order was within its discretion.
Accordingly, the Court affirms the Contempt and Enforcement Orders.
IV.
CONCLUSION
For the aforementioned reasons, the Court hereby affirms the Bankruptcy Court’s
Contempt and Enforcement Orders and denies Appellant’s Bankruptcy Appeal. An appropriate
Order follows this Opinion.
Dated: April
6o18
JOSEL AR S
C14,ef Judge, United States District Court
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