Axiom Resource Management, Inc. v. Alfotech Solutions, LLC et al

Filing 129

ORDER ADOPTING REPORT AND RECOMMENDATIONS: The findings of fact and conclusions of law in the magistrate judge's Report and Recommendation [Dkt. No. 116] are adopted by this Court as its own, Plaintiff's Motion for Contempt [Dkt. No. 72] and Motion for Sanctions [Dkt. No. 98] are GRANTED, and it is hereby ORDERED that defendants Alfotech Solutions, LLC and Garnel Alford be and are found to be in civil contempt of court; and it is further ORDERED that a default judgment be and is entered against defendants Alfotech and Alford, jointly and severally, on Count II of plaintiff's Complaint (breach of contract), in the amount of $502,812.05, with post-judgment interest accruing at the Court's standard ra te; and it is further ORDERED that defendants Alfotech and Alford disgorge any and all funds withdrawn, diverted, or disbursed in violation of the Temporary Restraining Order and Preliminary Injunction issued by this Court,and it is further ORDE RED that the terms of the Temporary Restraining Order and Preliminary Injunction be and are converted into a Permanent Injunction, enjoining Alfotech, Alford, Alfotech's subsidiaries, related companies, officers, agents, servants, employees, attorneys, and those persons in active concert or participation with Alfotech who receive actual notice of the injunction from withdrawing or otherwise disposing of any funds from any bank account held in the name of Alfotech. (PLEASE SEE ORDER FOR COMPLETE AND FULL DETAILS) Signed by District Judge Leonie M. Brinkema on 6/27/11. copies mailed: yes(tfitz, ) Modified to edit text on 6/29/2011 (tfitz, ).

IN THE UNITED STATES DISTRICT COURT FOR T
EASTERN DISTRICT OF VIRGINIA

Alexandria Division

AXIOM RESOURCE MANAGEMENT,

INC.

Plaintiff,

l:10cvl011 (LMB/JFA)

v.

ALFOTECH SOLUTIONS,

LLC,

et al.

Defendants.
ORDER

In a Report and Recommendation issued on June 3, 2011 [Dkt. No.

116], the Honorable John F. Anderson, United States Magistrate
Judge, recommended that the plaintiff's Motion for Contempt [Dkt.

No. 72] and Motion for Sanctions [Dkt. No. 98] be granted and that
defendants Alfotech Solutions, LLC ("Alfotech") and Garnel Alford

("Alford") be found in civil contempt of court for failing to comply
with the terms of a Temporary Restraining Order and Preliminary
Injunction entered by this Court [Dkt. Nos. 8 and 24].

As sanctions

for defendants' violations of this Court's injunction, along with
defendants' complete failure to comply with several other Orders of

this Court requiring defendants to produce outstanding documents
during discovery [Dkt. Nos. 89 and 109], Judge Anderson recommended
that:

1. A default judgment be entered against defendants
Alfotech and Alford on Count II of plaintiff's
Complaint, finding that Alfotech and Alford committed
breach of contract, in the amount of $502,812.05, with

interest from December 2009 until paid;

2. That plaintiff be awarded all expenses, including
reasonable attorneys' fees, incurred in filing the
Motion for Contempt and in appearing before the Court

on April 21, May 13, and May 27, 2011 relating to the
Motion for Contempt; and

3.

That defendants Alfotech and Alford be ordered to"

disgorge any and all funds withdrawn, diverted, or

disbursed in violation of the Temporary Restraining
Order and Preliminary Injunction.
The Report and Recommendation also recommended that the terms of

the Temporary Restraining Order entered on September 17, 2010 [Dkt.

No. 8], which was converted into a Preliminary Injunction on
October 1, 2010 [Dkt. No. 24], be converted into a Permanent

Injunction, and that upon the entry of default judgment, the bond
posted by plaintiff be released.

The Report and Recommendation explicitly advised the parties

that any objections had to be filed within fourteen (14) days, in
accordance with 28 U.S.C. § 626(b)(1)(C), and that a failure to

file timely objections would waive appellate review of any judgment
entered on the basis of the recommendations.

As of June 27, 2011,

no objections to the Report and Recommendation have been filed.

Having carefully reviewed the magistrate judge's Report, the
Court finds that it is factually accurate, and that, with minor

exceptions noted herein, its recommendations are just and

appropriate, in light of the defendants' blatant, repeated, and
egregious violations of multiple Orders of this Court.

Accordingly, the findings of fact and conclusions of law in the

magistrate judge's Report and Recommendation [Dkt. No. 116] are

adopted by this Court as its own, plaintiff's Motion for Contempt
[Dkt. No. 72] and Motion for Sanctions [Dkt. No. 98] are GRANTED,

and it is hereby
ORDERED that defendants Alfotech Solutions,

LLC and Garnel

Alford be and are found to be in civil contempt of court; and it is
further

ORDERED that a default judgment be and is entered against

defendants Alfotech and Alford, jointly and severally, on Count II
of plaintiff's Complaint (breach of contract), in the amount of

$502,812.05, with post-judgment interest accruing at the Court's
standard rate;1 and it is further

ORDERED that defendants Alfotech and Alford disgorge any and
all funds withdrawn, diverted, or disbursed in violation of the

Temporary Restraining Order and Preliminary Injunction issued by
this Court; and it is further

ORDERED that the terms of the Temporary Restraining Order and
Preliminary Injunction be and are converted into a Permanent

Injunction, enjoining Alfotech, Alford, Alfotech's subsidiaries,
related companies, officers, agents, servants, employees,
attorneys, and those persons in active concert or participation

with Alfotech who receive actual notice of the injunction from

withdrawing or otherwise disposing of any funds from any bank

i

The Report and Recommendation recommended that interest

accrue from December 2009 until paid, but the Court finds that

only post-judgment, interest is appropriate, given that the
parties' Subcontract Agreement does not specifically provide for
interest payments, see PL's Compl. at Ex. B, nor has the
plaintiff cited any legal authority which would entitle it to
pre-judgment interest.

account held in the name of Alfotech;2 and it is further

ORDERED that the bond posted by plaintiff in connection with
the Temporary Restraining Order and Preliminary Injunction be and
is released; and it is further

ORDERED that plaintiff will be awarded all reasonable

litigation expenses, including reasonable attorneys' fees, incurred
in filing its Motions for Contempt and Sanctions and in appearing
before the Court on April 21, May 13, and May 27, 2011 relating to
those motions.3

This civil action is, at its core, essentially a claim for
breach of contract, for which plaintiff has now been awarded the

full amount of the compensatory damages it sought.

Plaintiff,

however, has indicated its intention to proceed on the remaining
claims in its Complaint for, inter alia, fraud, conversion, and

violations of the Racketeer Influenced and Corrupt Organizations
Act, 18 U.S.C. § 1961, et sea.

In addition to pursuing those

claims against defendants Alfotech and Alford, plaintiff has also

indicated its intention to pursue all applicable claims against the
two other remaining individual defendants, Gail Alford and Carrie

Cotten.

One of those remaining defendants, Carrie Cotten, has

2 This permanent injunction is to remain in effect during
the pendency of any appeal of the judgment entered by this Court,
until the judgment is satisfied.

3 The reasonableness of any claimed fees is to be
determined by the magistrate judge in the first instance, with

any objections to that judge's recommendations to be heard by
this Court.

filed a Motion to Dismiss, pro se [Dkt. No. 128], to which
plaintiff has not yet responded.

The Court is highly concerned

that plaintiff may be over-reaching in pursuing its remaining
claims,

rather than simply pursuing collection actions against

defendants Alford and Alfotech.

Accordingly,

it is hereby

ORDERED that the jury trial of this civil action, currently
scheduled to begin on July 5, 2011, be and is REMOVED from the
Court's docket at this time; and it is further

ORDERED that by close of business on Friday, July 1, 2011,

plaintiff file a memorandum with the Court, under pain of Fed. R.
Civ. P. Rule 11 sanctions for advancing frivolous claims or
arguments, specifically identifying the remaining defendants and
the remaining claims in its Complaint on which it intends to

proceed, and showing good cause as to why this Court should not
dismiss the remainder of the defendants and the remainder of the

Complaint.

The Clerk is directed to forward copies of this Order to
counsel of record and to all pro se defendants.

Entered this c37

day of June, 2011.

Alexandria, Virginia
Leonie M. Brinkema

United States District Judge