Celtig v. Patey et al

Filing 219

ORDER ADOPTING REPORT AND RECOMMENDATIONS re 214 Report and Recommendations granting in part 181 Plaintiff's Motion for Order to Show Cause. The court hereby reinforces the July 8, 2019 Order 175 that Defendants must pay Plaintiff $1,595.15 in attorney's fees. The court hereby holds the Defendants in civil contempt and imposes a sanction on Defendants of $100 per day for every day that Defendants fail to fully comply with the July 8, 2019 Order 175 . The Defendants have until Monday, March 9, 2020, to pay the attorneys' fees and purge the civil contempt citation before fines begin to be imposed. Signed by Judge Jill N. Parrish on 3/6/2020. (jds)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
CELTIG, LLC, a Tennessee limited liability
company;
Plaintiff,

ORDER ADOPTING REPORT AND
RECOMMENDATION AND FINDING
DEFENDANTS IN CIVIL CONTEMPT

v.
AARON A. PATEY, an individual;
EVERGREEN STRATEGIES, LLC, a
Nevada limited liability company; PSD
INTERNATIONAL, LLC, a Utah limited
liability
company;
and
RELAY
ADVANCED MATERIALS, INC., a
Delaware Corporation;

Case No. 2:17-cv-01086
District Judge Jill N. Parrish
Magistrate Judge Evelyn J. Furse

Defendants.

Plaintiff Celtig, LLC (“Plaintiff”) brought this lawsuit against Defendants Aaron Patey,
Evergreen Strategies, LLC, PSD International, LLC, and Relay Advanced Materials, Inc.
(collectively, “Defendants”) seeking damages and declaratory relief for alleged breach of contract.
ECF No. 17. Defendants filed counterclaims against Plaintiff and third-party claims against two
sets of Third-Party Defendants. ECF No. 22. The court referred this matter to Magistrate Judge
Evelyn J. Furse pursuant to 28 U.S.C. § 636(b)(1)(A). ECF No. 9.
On July 8, 2019, the court ordered Defendants to pay Plaintiff $1,595.15 for the attorney’s
fees that Plaintiff incurred because of Defendants’ failure to appear at properly noticed depositions.
ECF No. 175. The court ordered Defendants to pay Plaintiff by July 15, 2019. Id. Plaintiff alleges
that Defendants failed to comply with the order to pay attorney’s fees and committed further
discovery violations. ECF No. 181. Plaintiff moved for an order to compel Defendants to show
cause “why sanctions—up to and including dismissal of their claims against Celtig—should not
be imposed against them.” Id. at 2.

After reviewing the parties’ briefing, Judge Furse issued a Report and Recommendation
advising the court to grant in part and deny in part Plaintiffs’ motion and to hold Defendants in
civil contempt. ECF No. 214. First, Judge Furse conducted fact finding and recommended that
Defendants should not be held in civil contempt for their continued discovery violations. Id. at 3.
Judge Furse reasoned that the court has already imposed sanctions on Defendants for discovery
violations, see ECF No. 192, and the new alleged misconduct did not justify imposing greater
sanctions such as default judgment, see ECF No. 214 at 3.
Second, Judge Furse conducted fact finding and recommended that Defendants should be
held in civil contempt for failing to comply with the court’s July 8, 2019 Order compelling
Defendants to pay Plaintiff $1,595.15 in attorney’s fees by July 15, 2019. Id. Judge Furse found
that Plaintiff has proven by clear and convincing evidence that “a valid court order existed, that
the defendant had knowledge of the order, and that the defendant disobeyed the order.” Id. at 5
(quoting Reliance Ins. Co. v. Mast Constr. Co., 159 F.3d 1311, 1315 (10th Cir. 1998)). Upon this
showing, the burden shifted to Defendants to show they “could not comply with [the order].”
United States v. Ford, 514 F.3d 1047, 1051 (10th Cir. 2008). Instead of providing evidence to meet
this burden, Defendants argued that Plaintiff’s Motion was moot because Plaintiff had also
previously moved for default judgment based on other discovery violations. ECF No. 214 at 6. But
as Judge Furse recognized, Defendants’ mootness “argument fails with respect to fees” because
the court’s decision concerning Plaintiff’s Motion for Default Judgement “does not absolve the []
Defendants’ obligation to pay the court ordered fees.” Id. Accordingly, Judge Furse recommended
that the court (1) reinforce the July 8, 2019 Order for Defendants to pay Plaintiff $1,595.15 in fees;
and (2) hold the Defendants in civil contempt for failing to comply with the July 8, 2019 Order

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and impose a fine against Defendants of $100 per day to be paid to Plaintiff for every day the
Defendants fails to pay the awarded attorney’s fees.
The Report and Recommendation also specified that, pursuant to FED. R. CIV. P. 72(b)(2),
the parties were to file any objections with the court within fourteen (14) days of service. The time
to object expired on January 14, 2020, and the court has received no objections to the Report and
Recommendation. The parties’ failure to object waived any argument that the Report and
Recommendation was in error. See United States v. One Parcel of Real Prop., 73 F.3d 1057, 1060
(10th Cir. 1996). But the court notes that it need not apply this waiver rule as a procedural bar if
“the interests of justice so dictate.” Id. (quoting Moore v. United States, 950 F.2d 656, 659 (10th
Cir. 1991)).
In addition, when a magistrate judge finds a party committed an act that “constitutes a civil
contempt,” the district court must issue “an order required such person to appear before a district
judge upon a day certain to show cause why that person should not be adjudged in contempt by
reason of the facts so certified” by the magistrate judge. 28 U.S.C. § 636(e)(6)(B)(iii). The district
judge must “hear the evidence as to the act or conduct complained of and, if it is such as to warrant
punishment, punish such person in the same manner and to the same extent as for a contempt
committed before a district judge.” Id. The court held the civil contempt hearing on March 6, 2020.
See ECF No. 218. Despite properly effectuated notice of the civil contempt hearing, see ECF No.
217, counsel for Defendants failed to appear for the hearing, see ECF No. 218. Court personnel
called counsel for Defendants, but counsel did not answer. Id. Accordingly, Defendants’ failure to
appear resulted in its failure to contest the factual findings and legal basis upon which Judge
Furse’s Report and Recommendation relied. In addition, Plaintiff’s counsel represented that as of

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March 6, 2020, Defendants had still not complied with the July 8, 2019 Order to pay Plaintiff
$1,595.15 in attorney’s fees.
Based on the March 6, 2020 civil contempt hearing and having reviewed the Report and
Recommendation that the Plaintiff’s Motion should be granted in part, the court concludes that the
Report and Recommendation is not clearly erroneous. Therefore, the court ORDERS as follows:
1. The court adopts in full the Report and Recommendation (ECF No. 214) regarding
Plaintiff’s Motion (ECF No. 181).
2. The court hereby reinforces the July 8, 2019 Order (ECF No. 175) that Defendants
must pay Plaintiff $1,595.15 in attorney’s fees.
3. The court hereby holds the Defendants in civil contempt and imposes a sanction on
Defendants of $100 per day for every day that Defendants fail to fully comply with the
July 8, 2019 Order (ECF No. 175). The Defendants have until Monday, March 9, 2020,
to pay the attorneys’ fees and purge the civil contempt citation before fines begin to be
imposed.

SO ORDERED March 6, 2020
BY THE COURT:

______________________________
Jill N. Parrish
United States District Court Judge

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