Filing 1

ORDER AND JUDGMENT entered in Civil Case 3:17-cv-470. This matter is referred to the United States Attorney's Office for the Western District of North Carolina for the determination of criminal contempt and other proceedings as to Darryl Miller. Signed by District Judge Robert J. Conrad, Jr on 10/23/2019. (brl)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:17-cv-00470-RJC-DSC

CASCADE CAPITAL, LLC and
CASCADE CAPITAL, LLC –
SERIES A,
Plaintiffs,
vs.
DRS PROCESSING LLC d/b/a
MILLER STARK KLEIN &
ASSOCIATES,
Defendant.

ORDER AND JUDGMENT

THIS MATTER is before the Court on the plaintiffs Cascade Capital,
LLC’s and Cascade Capital, LLC – Series A’s (“Plaintiffs”), Motion for
Enforcement of Contempt Order and Request for Additional Sanctions (Doc. No.
41) and Motion for Determination and Award of Damages and Attorneys’ Fees
(Doc. No. 43), as well as the defendant DRS Processing LLC’s (“Defendant”)
Motion for Purging of Contempt (Doc No. 57).

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I.

BACKGROUND
The underlying facts in this matter are set forth in this Court’s prior orders

(Doc. Nos. 16 and 24) and are incorporated by reference.
On January 5, 2018, this Court granted Plaintiffs’ Motion for Default
Judgment, finding that Plaintiffs’ well-pleaded complaint sufficiently alleged
defendant’s liability for tortious interference of contract, unjust enrichment and
money had and received, and acts constituting unfair and deceptive trade practices.
(Doc. No. 16) (the “Default Judgment Order”). Relevant to these proceedings, the
Court determined that in order to ascertain the extent of Plaintiffs’ damages,
additional information was necessary and a further evidentiary hearing would be
held. Accordingly, the Court ordered Defendant to produce certain documents
within thirty days. (Doc. No. 16). The Court additionally permanently enjoined
Defendant from further communications with any consumer regarding accounts
within the Santander Portfolio and from collecting or attempting to collect on
accounts from the Santander Portfolio. (Doc. No. 16).
After Defendant failed to comply with the Court’s Default Judgment Order,
contempt proceedings were commenced and Defendant and its principal, Darryl
Miller (“Miller”), were ordered to appear and show cause why they should not be
held in contempt. Ultimately, Defendant and Miller were held in civil contempt for
their failure to comply with the Default Judgment Order (Doc. No. 30). Defendant
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and Miller were provided an opportunity to purge their contempt by, among other
things, fully complying with and obeying the Default Judgment Order (Doc. No.
16) and disgorging any monies collected on the Santander Accounts or received
from selling Santander Accounts from January 5, 2018 forward (the “Contempt
Order”). (Doc. No. 30). The sanctions imposed by the Contempt Order were
suspended while Defendant and Miller were given time to purge their contempt.
Based upon the representations of Defendant and Miller that their collection
records regarding the Santander Accounts during the relevant time period were
stored in a cloud based software, “Simplicity Collection Software,” the Court
additionally ordered Simplicity Payment Solutions LLC, a third party software
provider, to produce access and activity logs during the relevant time period,
including any deletions or modifications of the Santander Accounts or the
Santander Portfolio. (Doc. No. 32). On November 5, 2018, the deadline for
Defendant and Miller to purge their contempt was extended through November 15,
2018 (Doc. No. 38).
On December 14, 2018, Plaintiffs filed their Motion for Enforcement of
Contempt Order and Request for Additional Sanctions (Doc. No. 41) and their
Motion for Determination and Award of Damages and Attorneys’ Fees (Doc. No.
43). On December 28, 2018, Defendant filed its Motion for Purging of Contempt
(Doc. No. 57).
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On September 22, 2019, the parties filed a Joint Stipulation of Damages.
(Doc. No. 73). On September 23, 2019, an evidentiary hearing was held with
regard to the pending motions. (Doc Nos. 41, 43, and 57).
II.

TESTIMONY AND EVIDENCE
The parties presented their evidence through affidavits, declarations and

exhibits which were submitted with their respective motions and through live
testimony at the September 23, 2019 hearing. Based upon the evidence presented,
the Court makes the following:
III.

FINDINGS OF FACT

1. On January 5, 2018, this Court entered an order establishing the liability of
Defendant but reserving the issue of damages. The Default Judgment Order
additionally permanently enjoined Defendant from communicating with any
consumer regarding accounts within the Santander Portfolio and from collecting
or attempt to collect on accounts from the Santander Portfolio. (Doc. 16).
2. Additionally, the Court ordered Defendant to produce the following
documentation within thirty (30) days to allow the Court and Plaintiffs
sufficient information to ascertain the scope and appropriate amount of
damages:
(a) Specific Santander Accounts. Defendants must produce reports
identifying all Santander accounts Defendant has acquired or
collected on in the past 24 months. These reports should identify
each consumer with the following: (1) their last name; (2) the last
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four digits of their social security number; and (3) their
corresponding Santander account number;
(b) Related Documents. Defendants must produce all documents
related to their purchase of the Santander Accounts within the past
24 months. These documents include, but are not limited to,
correspondence, bills of sale, and purchase documents;
(c) Collection Documents. Defendants must produce all records of
their collection activities in respect to Santander Portfolio
accounts. These records include, but are not limited to, notes,
correspondence, and recordings of any calls with consumers;
(d) Third Party Referrals. Defendants must produce the identity of
any third party, if any, who referred Santander accounts to
Defendant for collection;
(e) Santander Account Sellers. Defendants must produce the identity
of any person or entity that sold Santander accounts to Defendant
by way of name, address, email, telephone, and website;
(f) Copies of Santander Account Agreements. Defendants must
produce copies of each and every purchase or forwarding
agreements for all Santander accounts identified; and
(g) Accounting. Defendant must make an accounting of all monies
collected from any of the Santander accounts. This accounting
must include monies collected by Defendant or their employees,
contractors, affiliates, members, designees, owners, clients, or any
other third party entity acting in concert with Defendant.

3. Defendant and Miller had actual notice of the Default Judgment Order, but they
did not produce any documentation until just prior to the hearing on show
cause.
4. On September 19, 2018, the Court held a show cause hearing, and on October
1, 2018, this Court entered a Contempt Order finding Defendant and Miller in
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civil contempt of the Default Judgment Order. The Court additionally found
that the information on the record established by clear and convincing evidence
that: (a) Defendant and Miller had knowledge of the Default Judgment Order
and continued to willfully violate the Court’s Order; (b) that the information
provided by Defendant through Miller on September 11, 2018 was false; and (c)
that Miller had demonstrated a lack of candor at the September 19, 2018
hearing.
5. Defendant and Miller retained counsel on September 27, 2018. (Doc. No. 29).
6. By subsequent orders of this Court, Defendant and Miller were provided an
opportunity to purge their contempt by, among other things, disgorging to
Plaintiffs any monies collected on Santander accounts or received from selling
Santander accounts from January 5, 2018 forward and by complying with the
Default Judgment Order.
7. Based upon representations of Defendant and Miller that their collection
records regarding the Santander Accounts during the relevant time period were
stored in a cloud based software, “Simplicity Collection Software,” this Court
ordered Simplicity Payment Solutions LLC, a third party, to produce certain
audit records regarding Defendant’s use of the Simplicity Collection Software
during the relevant period, including any deletions or modifications of the
Santander Accounts or the Santander Portfolio. (Doc. No. 32).
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8. On or about October 10, 2018, Simplicity provided a report detailing all
accounts deleted by DRS Processing in the Simplicity software since October
19, 2015.
9. In direct contravention of the Default Judgment Order (Doc. No. 16), between
January 18, 2018 and March 23, 2018, Defendant deleted the Simplicity
Accounts from the Simplicity Collection Software.
10. On October 29, 2018, Miller was deposed as the 30(b)(6) designee of
Defendant and pleaded the Fifth Amendment when asked, among other things,
about Defendant’s retention of documentation responsive to the Court’s Default
Judgment Order, when asked about deletion of records responsive to the
Default Judgment Order, including the accounts stored in Simplicity, and when
asked about collection of monies on Santander Accounts after the Default
Judgment Order.
11. Defendant and Miller did not preserve documents subject to the Default
Judgment Order. Instead, the Court finds that Defendant and Miller deleted
documents and data, allowed data and documents to be deleted or destroyed,
and failed to save from destruction electronic storage devices which contained
records and documents which were responsive to the Default Judgment Order.
12. As a result of this spoliation by Defendant and Miller, Plaintiffs were left to
calculate their damages in piecemeal fashion.
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While Plaintiffs have likely

underestimated their damages, their methodology of gathering information and
calculating monies collected is trustworthy and Defendant and Miller have
failed to present competent evidence to rebut the evidence presented by
Plaintiffs.
13. Despite being permanently enjoined from doing so, Defendant and Miller
continued to collect on the Santander Accounts after January 5, 2018. During
that time period, Defendant and Miller collected at least $101,851.56 and the
Court acknowledges that such amount likely underestimates the amounts
actually collected.
14. Plaintiff presented evidence, by way of an August 28, 2019 recorded call from
an individual stating that his company had recently purchased 300 Santander
Accounts from Miller for $60,000. Despite notice of the call prior to the
hearing, Defendant and Miller did not present any rebuttal evidence as to the
call.
15. To date, Defendant has not disgorged any of the monies it collected on
Santander Accounts since January 5, 2018.
16. Throughout these proceedings, Miller has displayed a lack of candor and has
not been truthful with the Court, particularly as to when documents were
deleted. Miller additionally has willfully disobeyed court orders, including the
Court’s Default Judgment Order and the Court’s Contempt Orders.
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17. Both Miller and Defendant have previously been held in civil contempt of the
Default Judgment Order, including among other things, for failing to provide
the information required and continuing to collect on the Santander Accounts
when ordered not to do so.
18. The Court finds that Miller, as the principal of Defendant and its sole
representative in this matter, is primarily responsible for the violations of the
Court’s orders and therefore, additional sanctions are necessary and appropriate
and shall be imposed upon him personally.
19. Civil contempt is not capable of assuring Miller’s further compliance with the
Court’s prior orders.
20. The parties have filed a Joint Stipulation as to Plaintiffs’ entitlement to
damages for the substantive claims in the complaint and to Plaintiffs’
entitlement to attorneys’ fees through September 19, 2019. (Doc. No. 73).
21. Plaintiffs’ have incurred additional attorneys’ fees and expenses from
September 20, 2019 through October 7, 2019 in the amount of $13,685.98.
Based on these Findings of Fact, the Court makes the following:
IV. CONCLUSIONS OF LAW
1. The Joint Stipulation of Damages filed with the Court (Doc. No. 73) is
supported by the evidence of record.

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2. The Plaintiffs’ claim for attorneys’ fees, including the additional attorneys’ fees
submitted by the Plaintiffs by Affidavit for the time period beginning
September 20, 2019 and ending October 7, 2019, are compensable, fair and
reasonable.
3. In the Contempt Order filed on October 1, 2018 (Doc. No. 30), the Court
retained jurisdiction upon Defendant’s and Miller’s failure to purge themselves
fully of civil contempt to levy a compliance fine against them and to grant such
other and further relief as the Court would find appropriate.
4. The Court has authority to award Plaintiffs further sanctions against Miller
personally for his acts and to award attorneys’ fees and disgorgement of the
monies collected by Miller after January 5, 2018.
5. Defendant and Miller destroyed and failed to preserve documents specifically
ordered by this Court to be produced in its Default Judgment Order and
Plaintiffs are therefore entitled to all negative inferences which can be drawn
from such spoliation under this Court’s inherent power to control the judicial
process and litigation.
6. Moreover, Plaintiffs are entitled to all adverse inferences which may be drawn
by Defendant and Miller’s invocation of the Fifth Amendment at the deposition.
The Fifth Amendment “does not forbid adverse inferences against parties to
civil actions when they refuse to testify in response to probative evidence
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offered against them[.]” Baxter v. Palmigiano, 425 U.S. 308, 318, 47 L.Ed.2d
810, 821 (1976) (emphasis added).
7. Defendant and Miller have failed to provide sufficient evidence that they

purged themselves of contempt.
8. Defendant’s disregard for the Court’s orders and failure to purge itself
of contempt is attributed primarily to its principal, Miller, and the additional
sanctions levied personally against Miller are appropriate and necessary.
9. Plaintiffs are entitled to recover as additional sanctions from Defendant and
Miller a disgorgement of $101,851.56, said amount representing the monies
collected after January 5, 2018.
10. Plaintiffs are additionally entitled to recover their attorneys’ fees as additional
sanctions against Miller.
11. When a defendant is unable or unwilling to purge his contempt, the punitive
sanction of incarceration for criminal contempt may be more appropriate.
Taylor v. Blackmon, No. 3:14-cv-00507-RJC, 2016 U.S. Dist. LEXIS 89543 at
5 (W.D.N.C. July 11, 2016).
12. Miller has willfully disobeyed the Default Judgment Order with respect to the
deletion of records and with respect to his false representations to the Court as
to the timing of the deletions.

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13. Defendant and Miller had notice that Plaintiffs owned the Santander accounts.
(Doc. No.16; Doc. No. 24). Nevertheless, Defendant, through Miller, continued
to collect on the accounts through the course of this action and sell the accounts
knowing that Defendant did not own the accounts even after this Court’s
Default Judgment Order. Said acts were willful and malicious and caused
significant damage to Plaintiffs as set forth herein. As such, the Courts’ award
against Miller individually and in favor of Plaintiffs is not dischargeable under
11 U.S.C. §523 of the United States Bankruptcy Code.
Based on the foregoing Findings of Fact and Conclusions of Law
IT IS, THEREFORE, ORDERED that:
1. Plaintiffs Cascade Capital, LLC and Cascade Capital, LLC-Series A have
and recover Judgment against Defendant DRS Processing LLC d/b/a Miller
Stark Klein & Associates in the amount of $2,500,000.00, that the damages
be trebled pursuant to N.C. Gen. Stat. §75-16, and that Plaintiffs be awarded
their attorneys’ fees in the amount of $189,466.42 (“Plaintiffs’ Attorneys’
Fees”), and interest at the legal rate from the date of this judgment;
2. Plaintiffs Cascade Capital, LLC and Cascade Capital, LLC-Series A have
and recover Judgment for sanctions against Darryl Miller individually in the
amount of $291,317.98. Any payment received by Plaintiffs from Miller

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shall be treated as a setoff against the Judgment entered in favor of Plaintiffs
against Defendant;
3. The Defendant and Miller shall disgorge to Plaintiffs the sum of
$101,851.66, said amount representing the post January 5, 2018 payments
received by Miller and Defendant;
4. This matter is referred to the United States Attorney’s Office for the Western
District of North Carolina for the determination of criminal contempt and
other proceedings as to Darryl Miller personally and specifically with
respect to the following: (a) Miller’s willful disobedience of the Court’s
Default Judgment Order and the deletion of records responsive to that order;
(b) Miller’s false statements to the Court with respect to the timing of the
deletion of such records; and (c) the August 28, 2019 phone call received by
Plaintiffs dealing with collection activity and/or selling of accounts in
violation of the Court’s orders with respect to default and contempt; and,
5. The Court maintains jurisdiction to consider the award of additional
attorneys’ fees incurred by Plaintiffs since the filing of their Affidavit of
Attorneys’ Fees on October 7, 2019.
Signed: October 23, 2019

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