YAWORSKY v. NEW LEAF SOLUTIONS, LLC et al

Filing 16

MEMORANDUM OPINION AND ORDER granting 14 Motion for Sanctions and holding New Leaf in civil contempt of court, as explained therein. Signed by Judge Terrence F. McVerry on 10/22/14. (mh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA

NICHOLAS YAWORSKY,
Plaintiff,
v

NEW LEAF SOLUTIONS, LLC and DOES 1-10
INCLUSIVE,
Defendants.

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MEMORANDUM OPINION AND ORDER OF COURT
Now pending before the Court is PLAINTIFF’S NOTICE OF MOTION FOR
SANCTIONS AGAINST DEFENDANT FOR CONTEMPT OF A COURT ORDER AND
REQUEST FOR JUDGMENT BY DEFAULT (ECF No. 14). Defendant New Leaf Solutions,
LLC (“New Leaf”) was ordered to file a response to the motion on or before October 14, 2014.
To date, New Leaf has not filed a response. Accordingly, the motion will be resolved without
the benefit of a response from Defendant New Leaf.

Procedural History
Plaintiff Nicholas Yaworsky filed his Complaint in this case under the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692, in April 2013. Defendant New Leaf was duly served
and attorney Nicholas Krawec entered an appearance on behalf of Defendants. The parties
jointly submitted a Stipulated Confidentiality Agreement and Protective Order, which Director of
Human Resources Katelin M. Roussos executed on behalf of New Leaf. On September 18,
2013, the Court was notified that the parties had settled the case. The settlement agreement was

signed by Director of Administration Jesse Wofford on behalf of New Leaf. The Court ordered
the case to be marked closed and retained jurisdiction to enforce the settlement. ECF No. 10.
On April 29, 2014, after New Leaf failed to pay the amount it owed, Plaintiff filed a
motion to enforce the settlement. Defendant failed to file any response. The Court granted
Plaintiff’s motion on June 11, 2014 and ordered New Leaf to “immediately remit payment of the
settlement funds to Plaintiff in care of his counsel.” ECF No. 13. Five days later, the Court
granted Attorney Krawec’s motion to withdraw as counsel for New Leaf. Several months later,
the instant motion followed.

Discussion
Plaintiff pleads that New Leaf has continued to refuse to pay the settlement proceeds in
“flagrant defiance” of the Court’s Order. Plaintiff avers that the Court’s June 11, 2014 Order
was promptly served on New Leaf’s attorney of record via certified mail and facsimile. Plaintiff
contends that New Leaf has chosen to simply ignore the Court’s Order. As a sanction, Plaintiff
seeks entry of a default judgment for the balance of the settlement funds of $4,750.00 and an
award of attorneys’ fees associated with filing the motion.
Defendant New Leaf was ordered by the Court to file a response to the instant motion on
or before October 14, 2014. The Court’s Order was sent to New Leaf via First Class Mail to its
business address. Plaintiff’s counsel avers that New Leaf is an active business. Nevertheless,
New Leaf has again failed to file a response. The Court finds that New Leaf has had full notice
and the opportunity to be heard prior to the imposition of contempt sanctions.
It is well settled that “[a] district court has inherent authority to enforce agreements
settling litigation before it.” McClure v. Township of Exeter, 2006 WL 2794173 at *1 (E.D. Pa.

Sept.27, 2006) (quoting New Castle County v. U.S. Fire Ins. Co., 728 F. Supp. 318, 319 (D. Del.
1989)). A litigant’s failure to comply with a Court Order to enforce a settlement agreement can
be punished by civil contempt. See Institute for Motivational Living, Inc. v. Doulos Institute for
Strategic Consulting, 110 Fed. Appx. 283, 287 (3d Cir. 2004) (unpublished) (court’s civil
contempt jurisdiction does not lapse if it retains jurisdiction to enforce settlement).1 The Court in
Southern Elec. Health Fund v. Bedrock Services, 2005 WL 3108461 (M.D. Tenn. 2005), aptly
summarized the principles of law applicable to a finding of civil contempt and issuance of
sanctions:
While the contempt power should not be used lightly, the power is a
necessary and integral part of the independence of the judiciary, and is absolutely
essential to the performance of the duties imposed by law. Contempt proceedings
are used to enforce the message that court orders and judgments are to be
complied with in a prompt manner. In civil contempt proceedings, judicial
sanctions may be imposed for either or both of two purposes: to coerce the
defendant into compliance with the Court's order and to compensate the movant
for the losses sustained.
To hold a litigant in contempt, the movant must produce clear and
convincing evidence to show a violation of a definite and specific order of the
court requiring him to perform or refrain from performing a particular act or acts
with knowledge of the court's order. Once the movant establishes his prima facie
case, the burden shifts to the contemnor who may defend by coming forward with
evidence showing that he is presently unable to comply with the court's order.
Id. at * 7 (citations omitted).
To prove civil contempt, a plaintiff must demonstrate: (1) that a valid order of court
existed; (2) that the defendants had knowledge of the order; and (3) that the defendants
disobeyed the order. Roe v. Operation Rescue, 54 F.3d 133, 137 (3d Cir. 1995). Willfulness is
not a necessary element of civil contempt and good faith is not necessarily a defense. Harley

1

Under the circumstances of this case, the Court will not enter the “judgment by default” requested by Plaintiff.
This case has already been settled and terminated, and the Court has also previously granted a motion to enforce the
settlement. ECF Nos. 10, 13.

Davidson, Inc. v. Morris, 19 F.3d 142, 148-49 (3d Cir. 1994). However, evidence regarding the
defendant’s state of mind is pertinent to the sanction to be imposed. Id.
The Court finds, by clear and convincing evidence, that Defendant New Leaf is in civil
contempt of Court. The prima facie case is met: (1) a valid Order of Court exists – to wit, the
Order of June 11, 2014 which granted the motion to enforce the settlement and ordered New
Leaf to “immediately remit payment of the settlement funds to Plaintiff in care of his counsel”;
(2) New Leaf has had knowledge of the order via its counsel of record at the time, and via
subsequent communications from counsel for Plaintiff and the Court; and (3) New Leaf has
clearly disobeyed the Order and has failed to remit the settlement payment to Plaintiff.
Defendant New Leaf has failed to rebut the instant motion, despite notice and the opportunity
(indeed, a Court Order) to do so. The Court finds that a contempt sanction is warranted and
necessary to coerce New Leaf into compliance with the Court's orders and to compensate
Plaintiff for the costs he has incurred to enforce the settlement agreement.

Conclusion
In accordance with the foregoing, PLAINTIFF’S NOTICE OF MOTION FOR
SANCTIONS AGAINST DEFENDANT FOR CONTEMPT OF A COURT ORDER AND
REQUEST FOR JUDGMENT BY DEFAULT (ECF No. 14) will be GRANTED. New Leaf is
in civil contempt of Court.
To purge itself of contempt, New Leaf shall immediately remit payment of $4,750.00 to
Plaintiff, in care of his counsel. Any failure, neglect or refusal to timely and fully comply with
the terms, conditions and requirements of this Order of Court by Defendant New Leaf will result
in the imposition of additional sanctions including, but not limited to, a fine in an amount of not

less than $200.00 per day of non-compliance, commencing on November 1, 2014 or the date
New Leaf is given notice of this Order, whichever is earlier.
Plaintiff is also entitled to recover his reasonable attorneys fees and costs. Plaintiff shall
file a petition to itemize and support his claimed reasonable counsel fees and costs in connection
with enforcement of the settlement on or before November 14, 2014. New Leaf shall file a
response – limited to the reasonableness of the claimed attorneys fees and costs -- on or before
November 28, 2014.
An appropriate Order follows.
McVerry, J.

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA

NICHOLAS YAWORSKY,
Plaintiff,
v

NEW LEAF SOLUTIONS, LLC and DOES 1-10
INCLUSIVE,
Defendants.

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) 1:13-cv- 100
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ORDER OF COURT
AND NOW, this 22nd day of October, 2014, it is hereby ORDERED, ADJUDGED and
DECREED that PLAINTIFF’S NOTICE OF MOTION FOR SANCTIONS AGAINST
DEFENDANT FOR CONTEMPT OF A COURT ORDER AND REQUEST FOR JUDGMENT
BY DEFAULT (ECF No. 14) is GRANTED.
New Leaf shall immediately remit payment of $4,750.00 to Plaintiff, in care of
his counsel. Any failure, neglect or refusal to timely and fully comply with the terms,
conditions and requirements of this Order of Court by Defendant New Leaf will result in the
imposition of additional sanctions including, but not limited to, a fine in an amount of not less
than $200.00 per day of non-compliance, commencing on November 1, 2014 or the date on
which New Leaf receives notice of this Order, whichever is earlier.
In addition, Plaintiff is entitled to recover his reasonable attorneys fees and costs in
connection with enforcement of the settlement. Plaintiff shall file a petition to itemize and
support his claimed reasonable counsel fees and costs in connection with enforcement of the
settlement on or before November 14, 2014. Defendant New Leaf shall file a response thereto
on or before November 28, 2014.

IT IS FURTHER ORDERED that the Court expressly retains jurisdiction of this matter to
consider any issue arising during the period when payment is being finalized, including but not
limited to enforcing the settlement and awarding of attorneys fees and costs.
This Memorandum Opinion and Order is being sent to Defendant New Leaf by the Court
via certified US Mail. Plaintiff’s counsel shall attempt to provide expedited notice of this
Memorandum Opinion and Order to Defendant New Leaf via email, telephone and/or facsimile,
and shall notify the Court of the date on which such notice has been successfully accomplished.

BY THE COURT:
s/Terrence F. McVerry
United States District Judge
cc:

Jody B. Burton, Esquire
Email: [e-mail]
New Leaf Solutions, LLC
1912 EVERETT AVENUE,
EVERETT, WA 98201-3607
Via Certified US Mail.