La Casa Homes of NC, Inc.

Filing 161

MEMORANDUM OPINION, ORDER, AND RECOMMENTATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE L. PATRICK AULD on 5/16/2013, ORDERING that Plaintiffs' Motion to Show Cause and for Contempt (Docket Entry 118 ) is GRANTED and R honda Byrd, Charles Washington and QuintonEli Development, Inc. shall show cause why the Court should not hold them in civil contempt for violating the Orders granting a preliminary injunction and appointing a receiver in this matter. The Court will enter a further Order or Notice regarding the time, place, and manner by which such cause shall be shown. RECOMMENDING that Defendants Rhonda Byrd, Joseph Byrd, John S. Washington, Charles Washington's and all related Company's Motion for Relief from Orders for Receivership & Injunction (Docket Entry 122 ) be DENIED. (Lloyd, Donna)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

BOBBY G. SLATE, et al.,

)
)
)
)
)
)
)
)
)

Plaintiffs,
v.
RHONDA L. BYRD, et al.,
Defendants.

1:09CV852

MEMORANDUM OPINION, ORDER AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
This

action

comes

before

the

undersigned

United

States

Magistrate Judge for disposition of Plaintiffs’ Motion to Show
Cause and for Contempt (Docket Entry 118) and for a recommended
ruling on Defendants Rhonda Byrd, Joseph Byrd, John S. Washington,
Charles Washington’s and all Related Company’s Motion for Relief
from Orders for Receivership and Injunction (Docket Entry 122).
(See Docket Entry dated Mar. 18, 2013.)1

For the reasons that

follow, the undersigned will grant Plaintiffs’ Motion to Show Cause
and will recommend that the Court deny Defendants’ Motion for
Relief.

1

Because an order to show cause merely affords “an
opportunity for [a litigant] to explain his [or her] behavior,”
Yates v. Arkin, 242 F. App’x 478, 482 & n.2 (10th Cir. 2007), it
constitutes a non-dispositive pretrial matter as to which a
Magistrate Judge may enter an order, id. (referencing 28 U.S.C.
§ 636); however, a final determination about the continued
propriety of injunctive relief constitutes a matter reserved for a
United States District Judge, such that a Magistrate Judge may only
enter a recommendation, see Peters v. Brants Grocery, 990 F. Supp.
1337, 1340 & n.1 (M.D. Ala. 1998); see also 28 U.S.C.
§ 636(b)(1)(A) & (B).

BACKGROUND
Plaintiffs move the Court “for an order directing [D]efendants
Rhonda Byrd [(‘Rhonda’)], Charles Washington [(‘Charles’)], and
QuintonEli Development, Inc. (‘QuintonEli’) to show cause why they
should not be held in civil contempt for violating the orders
granting a preliminary injunction and appointing a receiver in this
case, by their conduct in entering into business contracts, opening
new bank accounts, and being paid more than $200,000 without
reporting any of these events to the [R]eceiver.”
118 at 2.)2

(Docket Entry

In support, Plaintiffs recount that “[t]his action was

filed in state court on October 17, 2008 [and] [o]n October 15,
2009,

the

state

court

granted

[P]laintiffs’

motion

for

an

injunction and appointment of receiver against [Rhonda], [Charles],
QuintonEli, [Joseph] Byrd, and the other corporate [D]efendants
owned by [Rhonda] and [Charles] . . . [which was] commemorated in
two orders [] issued the same day [(the ‘Orders’)].”
(internal footnote omitted).)3

(Id., ¶ 1

Plaintiffs further note that the

Orders “gave [the Receiver] the authority to ‘oversee, manage,
audit

and

otherwise

handle

the

business,

personal

and

joint

accounts and assets of [Rhonda, Charles, and QuintonEli].’”

(Id.,

¶ 2 (quoting “Report of Receiver, Ex. A”).)
As Plaintiffs observe,
2

Pin citations refer to the pagination in the CM/ECF footer.

3

Plaintiffs’ Motion for a Preliminary Injunction and
Appointment of a Receiver appears as Docket Entry 1-11 at 35-42.
The Orders of the North Carolina state court granting that motion
appear at Docket Entry 1-14 at 5-17 and attached to Plaintiffs’
instant Motion to Show Cause at Docket Entry 119-1 at 8-17.
-2-

[i]n this regard,[the Receiver] was granted: “the
power to: (1) manage the principal financial holdings of
these [D]efendants; (2) access and manage any and all
corporate and individual accounts of any kind; (3) manage
any and all properties in which these [D]efendants have
an interest; (4) sign and approve all outgoing business
and personal expenses; (5) take whatever action may be
necessary to undo or rescind any previous conveyance of
real or personal property that the [R]eceiver deems to be
fraudulent or for the purpose of devaluing any future
judgment obtained by [P]laintiffs; and (6) hire or retain
any third-party company necessary to assist the
[R]eceiver in performing his duties.”
(Id. (quoting Docket Entry 119-1 at 10, 15).) Moreover, Plaintiffs
highlight that “[t]he orders also provided, ‘If any profits are
obtained

from

additional

any

income

of
or

the

[D]efendant

profit

is

businesses,

generated

by

the

or

if

any

individual

[D]efendants, the [R]eceiver shall distribute, maintain, or manage
these

funds

in

his

sole

discretion.’”

underlining provided by Plaintiffs).)

(Id.

(italics

and

Plaintiffs contend that,

“[c]ontrary to [those] commands . . ., [Rhonda, Charles, and
QuintonEli] have conducted business in South Carolina and failed to
report

such

business

to

the

[R]eceiver.

As

shown

in

the

accompanying [R]eport of [R]eceiver, the proceeds of these business
activities exceed $200,000. [Rhonda, Charles, and QuintonEli] have
willfully hidden these proceeds from the [R]eceiver by setting up
secret bank accounts to avoid the [R]eceiver’s oversight.”
¶ 4 (internal citations omitted).)

-3-

(Id.,

In response, Defendants filed a Motion for Relief from Orders
for Receivership and Injunction (Docket Entry 122).4

Through that

Motion, Defendants contend:
•

“[t]he [R]eceiver has had approximately thirty-eight
months

(38)

to

fraudulently

marshal

obtained

and
asset

sequester
[sic]

the

to

allegedly

protect

the

[P]laintiffs [sic] recovery” (id., ¶ 8);
•

“[t]he [R]eceiver did not file a report with any court
until January 18, 2013, and even then he did not report
on the whereabouts, status or disposition of any of the
‘fraudulently’

obtained

assets

or

about

the

shell

companies that [P]laintiff was [sic] so very concerned
about in its motion [for injunction]” (id., ¶ 9);
•

“[t]he [R]eceiver has not been involved or concerned with
the [Defendants’] professional and personal activities in
the last twenty four (24) months” (id., ¶ 10);

•

“[t]he portion of the order on receivership that relates
to property that is not the subject of the action is void
as the scope of the receivership to monitor [Defendants’]
employment,

compensation

and

activities

exceeds

the

statutory boundaries of N.C. [Gen. Stat.] § 1-502(1) over
[P]laintiffs’ ‘apparent right to property which is the
4

Although Plaintiffs directed their instant Motion to Show
Cause only at Rhonda, Charles, and QuintonEli (see Docket Entry 118
at 2 n.1), all Defendants subject to the Orders seek relief from
the Orders by way of their instant Motion for Relief (see Docket
Entry 122 at 1). Moreover, Defendants’ brief in support of their
Motion for Relief is also styled as a brief in opposition to
Plaintiffs’ Motion to Show Cause. (See Docket Entry 123 at 1.)
-4-

subject of the action and in the possession of an adverse
party.’

In re Penny, 10 F. Supp. 638, 640-41 (M.D.N.C.

1935)” (id., ¶ 11);
•

“Plaintiffs have an adequate remedy at law in that the
case is set for trial on April 1, 2013, and [P]laintiffs
will (or will not) have a judgment against [Defendants]
upon

which

they

may

execute

through

the

all

[sic]

statutory means afforded [P]laitniffs [sic]” (id., ¶ 13);
and
•

“[t]he

receivership’s

extension

to

encompass

future

compensation of [Defendants] is beyond the remedy at law
afforded judgment creditors in North Carolina” (id.,
¶ 14).
“Defendants pray the [C]ourt for an order 1) setting aside the
receivership, or 2) in the alternative, suspend [sic] the authority
of the [R]eceiver over all income and compensation earned by
[Defendants]

subsequent

to

his

appointment.”

(Id.

at

4.)

Plaintiffs responded to Defendants’ instant Motion (Docket Entry
142) and Defendants replied (Docket Entry 150).
DISCUSSION
Defendants’ Motion for Relief
“All injunctions, orders and other proceedings had in [an
action removed from a State court to a district court of the United
States] prior to its removal shall remain in full force and effect
until dissolved or modified by the district court.”
§ 1450.

28 U.S.C.

“Upon removal, the orders entered by the state court are

-5-

treated as though they had been entered by the federal court.”
Nasso v. Seagal, 263 F. Supp. 2d 596, 608 (E.D.N.Y. 2003); see also
In re McCraney, 439 B.R. 188, 201 (Bankr. D.N.M. 2010) (noting
that, after removal, “the federal court can perform any act that it
could have as if the case originated in federal court” and citing
cases).
The Parties’ briefing on this matter addresses solely relief
under Federal Rule of Civil Procedure 60(b), specifically under
subsections (b)(4), (b)(5) and (b)(6).
123, 142, 150.)

(See Docket Entries 122,

However, because Rule 60(b) only applies to final

orders, see Fed. R. Civ. P. 60(b), and because the Orders at issue
are interlocutory, see In re Topper, 23 F. App’x 127, 128 (4th Cir.
2001) (“A final order is one that disposes of all the issues in
dispute as to all parties, and ‘ends the litigation on the merits
and leaves nothing for the court to do but execute the judgment.’”
(quoting Catlin v. United States, 324 U.S. 229 (1945)), only Rule
60(b)(5) appears potentially applicable, and then only to the
extent Defendants seek prospective relief from the preliminary
injunction, see Centennial Broadcasting, LLC v. Burns, 433 F. Supp.
2d 730, 733 (W.D. Va. 2006) (“Although a preliminary injunction is
not a ‘final’ order or judgment for purposes of Rule 60(b), courts
nonetheless apply the general equitable principles set forth in
Rule 60(b)(5), which provides for relief from a final judgment ‘if
it is no longer equitable that the judgment should have prospective
application.’”).

Rather, Defendants’ instant Motion for Relief is

more appropriately addressed under Rule 54(b) of the Federal Rules

-6-

of

Civil

Procedure,

which

provides

that

“any

order

or other

decision, however designated, that adjudicates fewer than all the
claims or the rights and liabilities of fewer than all of the
parties . . . may be revised at any time before the entry of a
judgment adjudicating all the claims and all the parties’ rights
and liabilities.”

Fed. R. Civ. P. 54(b).

Accordingly, Rule 54(b)

allows the Court to “revisit interlocutory orders at any time prior
to final judgment . . . when justice requires it, but [such
reconsideration] is discretionary . . . .”

United States v. Duke

Energy Corp., 218 F.R.D. 468, 473-74 (M.D.N.C. 2003) (Eliason,
M.J.).
In

that

reconsideration

regard,
of

final

although

“the

judgments

standards

under

Fed[eral]

governing
R[ule

of]

Civ[il] P[rocedure] 59(e) do not limit a court’s authority to
reconsider an interlocutory decision, courts in the Fourth Circuit
have routinely looked to those factors as a starting point in
guiding

their

discretion

P[rocedure] 54(b).”

under

Fed[eral]

R[ule

of]

Civ[il]

Volumetrics Med. Imaging, LLC v. Toshiba Am.

Med. Sys. Inc., No. 1:05CV955, 2011 WL 6934696, at *2 (M.D.N.C.
Dec. 30, 2011) (unpublished) (internal citations omitted).

Those

factors permit reconsideration: “(1) to accommodate an intervening
change in controlling law; (2) to account for new evidence not
available [earlier]; or (3) to correct a clear error of law or
prevent manifest injustice.”

Pacific Ins. Co. v. American Nat’l

Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998).
the

context

of

reconsideration

of

-7-

Additionally, in

interlocutory

orders

under

Federal Rule of Civil Procedure 54(b), this Court “previously has
declared that ‘[a] motion to reconsider is appropriate when the
court has obviously misapprehended a party’s position or the facts
or applicable law, or when the party produces new evidence that
could

not

have

diligence.’”

been

obtained

through

the

exercise

of

due

Volumetrics Med. Imaging, 2011 WL 6934696, at *2

(quoting Duke Energy, 218 F.R.D. at 474).
“Conversely, ‘a motion to reconsider [under Federal Rule of
Civil Procedure 54(b)] is not proper where it only asks the Court
to rethink its prior decision, or presents a better or more
compelling argument that the party could have presented in the
original briefs on the matter.’” Id. (quoting Hinton v. Henderson,
No. 3:10cv505, 2011 WL 2142799, at *1 (W.D.N.C. May 31, 2011)
(unpublished) (internal citations and quotation marks omitted)). In
other words, “[e]ven under th[e] expanded standard [applicable to
interlocutory

orders],

it

is

improper

to

file

a

motion

for

reconsideration simply to ask the Court to rethink what the Court
had already thought through—rightly or wrongly.” North Carolina ex
rel. Cooper v. Tennessee Valley Auth., No. 1:06CV20, 2008 WL
2115159, at *2 (W.D.N.C. May 16, 2008) (unpublished) (internal
quotation marks omitted). This approach makes sense not only
because “[t]he limited use of a motion to reconsider serves to
ensure that parties are thorough and accurate in their original
pleadings and arguments presented to the Court [but also because]
. . . allow[ing] motions to reconsider offhandedly or routinely
would result in an unending motions practice.”

-8-

Wiseman v. First

Citizens Bank & Trust Co., 215 F.R.D. 507, 509 (W.D.N.C. 2003);
accord,

e.g.,

Coryn

Grp.

II,

LLC

v.

OC

Seacrets,

Inc.,

No.

WDQ–08–2764, 2011 WL 4701749, at *2 n.4 (D. Md. Sept. 30, 2011)
(unpublished) (“Routine reconsideration of interlocutory orders
would undermine judicial economy and respect for the finality of
decisions.”).
Under this standard, Defendants have failed to establish any
basis for the Court to reconsider the Orders. They have identified
neither

“an

intervening

change

in

controlling

law

[nor]

new

evidence not available [earlier],” Pacific Ins., 148 F.3d at 403.
To the extent Defendants’ discussions of N.C. Gen. Stat. § 1-502
and In re Penny represent arguments that the Orders are “a clear
error of law,” Pacific Ins., 148 F.3d at 403, they, too, fail.

As

an initial matter, the court’s “power to appoint a receiver is not
limited to that given by statute; a court has inherent power to
appoint a receiver.”

Doe v. Duke Univ., 118 N.C. App. 406, 409,

455 S.E.2d 470, 471 (1995); see also First United Bank & Trust v.
Square at Falling Run, LLC, No. 1:11CV31, 2011 WL 1563108, at *8
(N.D.W. Va. Mar. 31, 2011) (unpublished) (“A district court’s
authority to appoint a receiver derives from its inherent equitable
powers under the common law.” (citing Liberte Capital Grp., LLC v.
Capwill, 462 F.3d 543, 551 (6th Cir. 2006))); Sinclair v. Moore
Cent. R. Co., 228 N.C. 389, 395, 45 S.E. 2d 555, 560 (1947) (“The
power of the court to appoint a receiver in proper cases and upon
a proper showing is not limited by prevailing statutory provisions.

-9-

It

is

one

of

the inherent

powers

of

a

court

of

equity.”).5

Moreover, the facts in In re Penny are inapposite and said decision
thus does not support the contention that N.C. Gen. Stat. § 1-502
warrants granting the relief requested.
In this regard, Defendants cite the following language:
“When a court undertakes to reach out and appoint a
receiver over property which was not the subject matter
of the controversy, it has no colorable jurisdiction to
do so, and an order so made has been declared to be
utterly void and null. Such void or null orders can be
[attacked] collaterally because if the property is not
involved in the litigation or properly brought into the
litigation the court has no jurisdiction of the property.
1 Clark on Receivers, § 75; Hoiles v. Watkins, 117 Ohio
St. 165, 157 N.E. 557, 61 A.L.R. 1203, 1207 [(Ohio
1927);] Maxwell v. McDaniels[, 184 F. 311 (C.A.4 1910).]”
(Docket Entry 123 at 6 (quoting In re Penny, 10 F. Supp. at 641).)
They, in turn, argue that any profits earned, because they resulted
from contracts that came into existence only after the events
underlying

this

action,

cannot

fall

within

the

scope

of

the

Receiver’s lawful powers, such that those portions of the Orders
are void.

However, in In re Penny, the plaintiffs had made no

claim whatsoever to the assets subject to the receivership. See In
re Penny, 10 F. Supp. at 640.

Here, on the other hand, Plaintiffs

established an apparent right to the assets of Rhonda, Charles and
QuintonEli in that Plaintiffs moved the state court to appoint a

5

The Parties’ briefing focuses entirely on North Carolina
law. However, given that, “[u]pon removal, the orders entered by
the state court are treated as though they had been entered by the
federal court,” Nasso, 263 F. Supp. 2d at 608, it is not clear that
North Carolina law governs. Regardless, as Defendants have failed
to provide any pertinent authority under either North Carolina or
federal law supporting their position, the same outcome results and
the Court need not consider this matter further.
-10-

receiver, in relevant part, on contentions that Rhonda and Charles
defrauded Plaintiff Bobby Slate and Slate’s companies of certain
funds and subsequently established several entities, including
QuintonEli, “for the purpose of concealing and investing funds
embezzled from [P]laintiffs.”
Thus, In

re

(Docket Entry 1-11 at 38, ¶ 7.)

Penny does not support

Defendants’

position

and

Defendants have not presented any probative authority, whether
under state or federal law, rendering the Orders clearly erroneous.
Accordingly, Defendants have not met the standard of Rule 59(e)
(or, by proxy, Rule 54(b)).
Nor

is

prospective

relief

principles of Rule 60(b)(5).

warranted

under

the

equitable

Said Rule provides for prospective

relief if an order “has been satisfied, released or discharged; it
is based on an earlier judgment that has been reversed or vacated;
or applying it prospectively is no longer equitable.” Fed. R. Civ.
P. 60(b)(5).

Moreover, “courts have identified a non-exhaustive

list of factors to consider in determining whether to dissolve an
injunction, which include the following: circumstances leading to
the injunction and nature of conduct to be prevented; length of
time since issuance; whether compliance has occurred; likelihood
that the conduct sought to be prevented will recur absent the
injunction; and whether the objective of the injunction has been
achieved.”

North Carolina Alliance for Transp. Reform, Inc. v.

United States Dep’t of Transp., 713 F. Supp. 2d 491, 512 (M.D.N.C.
2010) (Schroeder, J.).

“The party seeking relief from an order on

the grounds that the order is no longer equitable bears the burden

-11-

of

establishing

that

changed

circumstances

warrant

relief.”

Telesis Cmty. Credit Union v. Mantiff 1215 Statesville Hospitality
LLC, No. 5:09cv118, 2010 WL 892116, at *1 (W.D.N.C. Mar. 5, 2010)
(unpublished) (citing Horne v. Flores, 557 U.S. 433, 447 (2009)).
Defendants fail to develop any argument under this standard.
(See Docket Entry 123.)

The only portion of Defendants’ briefing

that arguably supports such a contention appears as follows:
With trial and judgment less than six weeks away, it
is inequitable for the [D]efendants to be further
subjected to [P]laintiffs’ harassment under the auspices
of the [R]eceiver. [Charles] and [Rhonda] should be
allowed to obtain project and development work free from
the prying eyes of the [R]eceiver.
The [P]laintiffs [sic] remedy at law is to obtain a
judgment and use the statutory provision of execution.
The remedy is not contempt.
The receivership orders
should vacated [sic], amended or [D]efendants relieved
from their operation.
(Id. at 7 (emphasis in original).)

However, such conclusory

statements do not explain why Rhonda and Charles, who Plaintiffs
alleged embezzled a substantial amount of money, “should be allowed
to obtain project and development work free from the prying eyes of
the [R]eceiver.”

(Id.)

Nothing before the Court addresses the

underlying issue - i.e., that Plaintiffs established an apparent
right to the funds of Rhonda and Charles, including those used to
capitalize QuintonEli, and the ensuing concern that, without a
receiver, said funds may be lost before judgment or any execution
of that judgment can occur.

Defendants present no challenges to

Plaintiffs’ prior establishment of the apparent right to the assets
of

Charles,

Rhonda,

and/or

QuintonEli;

nor

have

Defendants

submitted any information to allay concerns regarding potential

-12-

harm to Plaintiffs absent oversight by the Receiver.6

In fact,

given that the instant Motion for Relief comes before the Court
only

after

Defendants

took

actions

which

Plaintiffs

contend

involved further concealment of funds, the record does not dispel
concerns

that

led

to

the

Receiver’s

appointment.

In

sum,

Defendants have failed to establish any grounds for prospective
relief from the Orders under the equitable principles of Rule
60(b)(5).
Plaintiffs’ Motion to Show Cause and for Contempt
Given the absence of grounds for reconsideration of the Orders
under Rule 54(b) or prospective relief from the Orders under the
equitable principles of Rule 60(b)(5), resolution of the merits of
Plaintiffs’ Motion to Show Cause and for Contempt (Docket Entry
118) remains necessary.

“The party moving for a finding of civil

contempt has the initial burden of showing by clear and convincing
evidence: (1) the existence of a valid order of which the alleged
contemnor had actual or constructive knowledge; (2) that the order
was in the moving party’s favor; (3) that the alleged contemnor has
violated the terms of the order by his conduct and has at least
constructive knowledge of this violation; and (4) that the moving
party has been harmed by the contempt.”

6

C.F.T.C. v. Capitalstreet

Moreover, Defendants’ argument that “[P]laintiffs [sic]
remedy at law is to obtain a judgment and use the statutory
provision of execution . . . [and] not contempt” (Docket Entry 123
at 7 (emphasis in original)) appears to confuse the present issue.
Defendants’ ultimate success at trial does not affect whether
Defendants violated an order of the Court. Nor would entry of any
judgment affect concerns regarding the ability of Plaintiffs to
collect on said judgment.
-13-

Fin., LLC, No. 3:09cv387-RJC-DCK, 2010 WL 2131852, at *2 (W.D.N.C.
May 25, 2010) (unpublished) (citing Ashcroft v. Conoco, Inc., 218
F.3d 288, 301 (4th Cir. 2000)).

Plaintiffs must carry this burden

“with competent, credible and admissible evidence.”

Major v.

Orthopedic Equip. Co., Inc., 496 F. Supp. 604, 611 (E.D. Va. 1980);
see also Ri Ra Holdings LLC v. Ri Ra, Madra Mor, Inc., No. 1:99-CV0374, 2002 WL 1009730, at *6 (M.D.N.C. May 16, 2002) (Beaty, J.)
(unpublished) (citing same).

“[U]nless Plaintiff[s] make[] the

necessary showing, . . . there is no need to require Defendants to
show cause why they should not be held in contempt.”

Ri Ra

Holdings, 2002 WL 1009730, at *6.
Plaintiffs have carried their burden here.

In this regard,

Plaintiffs argue that, “[c]ontrary to the commands of the [O]rders
. . ., [Rhonda, Charles, and QuintonEli] have conducted business in
South

Carolina

and

failed

to

report

such

business

to

the

[R]eceiver. . . . [T]he proceeds of these business activities
exceed $200,000. [Rhonda, Charles, and QuintonEli] have willfully
hidden these proceeds from the [R]eceiver by setting up secret bank
accounts to avoid the [R]eceiver’s oversight.”
¶ 4 (internal citations omitted).)

(Docket Entry 118,

In support, Plaintiffs have

provided the Receiver’s Report in which the Receiver expresses his
opinions that:
•

Rhonda, Charles and QuintonEli “have violated the preliminary
injunction and appointment of receiver in that they have been
engaged
Carolina

in

business

which

has

transactions
generated

-14-

in

profit

the
that

State
has

of

South

not

been

maintained, managed or because it was not reported to Receiver
as ordered by him pursuant to his authority under the Court’s
Order” (Docket Entry 119-1 at 5);
•

“upon

prior

inquiry

QuintonEli’s]

regarding

business

[Rhonda,

activities

in

Charles,

South

and

Carolina,

Defendants told Receiver that negotiations had fallen through”
(id.);
•

Rhonda, Charles and QuintonEli “willfully circumvented [the]
receivership by opening alternative bank accounts with TD Bank
to avoid Receiver’s access and management of the corporate and
individual accounts” (id.); and

•

subsequently, Rhonda, Charles and QuintonEli “have refused to
comply

with

information

Receiver’s
relating

to

demand”
business

that

they

“produce

transactions

and

all

income

and/or profit produced between October 1, 2010 and January 10,
2013” (id.).
Plaintiffs have also filed the affidavit of Ralph Braden, who
avers that, in connection with certain business transactions with
Charles, Rhonda and QuintonEli in South Carolina, he paid them “in
excess of $200,000.00 between November 27, 2010 and June 11, 2012.”
(Id. at 35.)

Mr. Braden attached a true and accurate copy of a

schedule of payments made to Defendants to that affidavit (see id.
at

44),

along

with

copies

of

cancelled

checks

and

wiring

confirmations indicating the transmission of said payments to bank
accounts at TD Bank (see id. at 46-54).
these actions damaged them in that:

-15-

Plaintiffs contend that

[t]he purpose of the [O]rders was to protect [P]laintiffs
from dissipation and concealment of [D]efendants’ assets
prior to the entry of the judgment in this case.
In
subverting the receivership order, [Rhonda, Charles, and
QuintonEli] have attempted to thwart this purpose and to
render themselves judgment-proof. In addition, [their]
actions have caused the [R]eceiver to expend time and
effort uncovering [Rhonda, Charles, and QuintonEli’s]
misbehavior, which time and effort is paid for by
[P]laintiffs pursuant to the [O]rders. [Rhonda, Charles,
and QuintonEli] have also caused [P]laintiffs’ [sic] to
expend time, money, and attorneys’ fees in pursuing the
instant motion to enforce the [O]rders, which should have
been self-executing.
(Docket Entry 118, ¶ 5.)
In response, Defendants appear to rely on contentions that
(1) the Orders did not impose any clear obligation to report
profits to the Receiver; (2) Rhonda, Charles, and QuintonEli lacked
knowledge of such obligations; and/or (3) the Receiver’s “silence,
disinterest, neglect, or tacit approval was rightfully interpreted
by

[Charles]

and

[Rhonda]

that

there

was

no

requirement

or

obligation for them to report their activities or their future
contractual compensation” (Docket Entry 123 at 8).
8.)7

(See id. at 5-

Those arguments do not address the relevant issue.

The

Orders reserved to the Receiver the right, as to “any profits” of
QuintonEli and “any additional income or profit [] generated by”
Rhonda and/or Charles, to “distribute, maintain, or manage these
funds in his sole discretion.”
(emphasis added).)

(Docket Entry 119-1 at 10, 15

The Orders thus clearly declared that only the

7

As evidenced by a letter from the Receiver addressed to
counsel in this matter (and attached to Plaintiffs’ Response), the
Receiver takes issue with Defendants’ characterization of his
activities. (See Docket Entry 142-1.) Resolution of that dispute
is not necessary at this juncture.
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Receiver could maintain or manage any additional income or profits
received by Rhonda, Charles, and/or QuintonEli.

Any conduct by

Rhonda, Charles, and/or QuintonEli maintaining or managing any such
funds (e.g., by causing the deposit of such funds into bank
accounts to which the Receiver lacked access) would appear to
violate this proscription.

Furthermore, any dispute regarding the

Receiver’s approval of Rhonda, Charles and QuintonEli’s actions
with respect to profits is more appropriately resolved at a hearing
rather than on the instant Motion.
Moreover, in what only casts doubt on Defendants’ contentions
that

they

lacked

awareness

of

their

obligations

regarding

additional income and/or profits, Defendants offer no explanation
for Charles purportedly informing the Receiver that the deal from
which these profits stem had “fallen through” (and that he was
“managing” to survive through friends and family (Docket Entry 1421 at 2)).

(See Docket Entries 123, 150.)

Nor have Rhonda,

Charles, or QuintonEli offered an explanation for the need for a
new bank account, separate from those disclosed to the Receiver,
and which

Defendants

established

at

a

bank

without

physical location (see Docket Entry 142-1 at 2 n.1).

a nearby

Under these

circumstances, Rhonda, Charles, and QuintonEli must show cause why
the Court should not hold them in contempt.
CONCLUSION
Defendants have offered no basis for the Court to reconsider
the Orders under Federal Rule of Civil Procedure 54(b) or to grant
prospective relief under the equitable principles of Rule 60(b)(5).

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Moreover, Plaintiffs have made a showing sufficient for the Court
to require Rhonda, Charles, and QuintonEli to appear and to show
cause why the Court should not hold them in contempt for violating
the Orders.
IT IS THEREFORE ORDERED that Plaintiffs’ Motion to Show Cause
and for Contempt (Docket Entry 118) is GRANTED and Rhonda Byrd,
Charles Washington and QuintonEli Development, Inc. shall show
cause why the Court should not hold them in civil contempt for
violating

the

Orders

granting

a

preliminary

appointing a receiver in this matter.

injunction

and

The Court will enter a

further Order or Notice regarding the time, place, and manner by
which such cause shall be shown.
IT IS RECOMMENDED that Defendants Rhonda Byrd, Joseph Byrd,
John S. Washington, Charles Washington’s and all related Company’s
Motion for Relief from Orders for Receivership & Injunction (Docket
Entry 122) be DENIED.

/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
May 16, 2013

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