Citronelle-Mobile Gathering, Inc. v. Watkins

• Decision Date: 04 October 1991
• Docket Number: 91-7244,CITRONELLE-MOBILE,Nos. 90-7731,s. 90-7731
• Citation: 943 F.2d 1297
• Parties: GATHERING, INC., Citmoco Services, Inc., Plaintiffs-Counterclaim-Defendants, Bart B. Chamberlain, Jr., Plaintiff-Counterclaim-Defendant-Appellant, v. James D. WATKINS, etc., et al., Defendants-Appellees, United States of America, Defendant-Counterclaim-Plaintiff-Appellee, Douglas Oil Purchasing Company, Inc., Counterclaim-Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1297

943 F.2d 1297

21 Fed.R.Serv.3d 1435

CITRONELLE-MOBILE GATHERING, INC., Citmoco Services, Inc.Plaintiffs-Counterclaim-DefendantsBart B. Chamberlain, Jr., Plaintiff-Counterclaim-Defendant-Appellant, v.James D. WATKINS, etc., et al., Defendants-AppelleesUnited States of America, Defendant-Counterclaim-Plaintiff-AppelleeDouglas Oil Purchasing Company, Inc., Counterclaim-Defendant.

Nos. 90-7731, 91-7244.

United States Court of Appeals, Eleventh Circuit.

Oct. 4, 1991.

Victor T. Hudson, William Watts, III, Reams, Vollmer, Philips, Killion, Brooks & Schell, P.C., Jeffrey Harris, Rubin, Winston, Kiercks & Harris, Washington, D.C., for Chamberlain.

Gilbert T. Renaut, Office of Chief Counsel for Enforcement, Economic Regulatory Admin., Dept. of Energy, Washington, D.C., for Dept. of Energy.

Ruth A. Harvey, U.S. Dept. of Justice, Washington, D.C., for U.S.

Charles P. Adams, Jr., Brunini, Grantham, Grower & Hewes, Jackson, Miss., for Knostman.

Appeals from the United States District Court for the Southern District of Alabama.

Before TJOFLAT, Chief Judge, HATCHETT, Circuit Judge, and HENDERSON, Senior Circuit Judge.

HATCHETT, Circuit Judge:

This is an appeal brought by the principal shareholder of several corporations seeking to overturn the district court's orders holding him in contempt of court and imposing strict sanctions.We affirm.

FACTS

During the Arab oil embargo, between December 20, 1973, and May 26, 1974, Bart B. Chamberlain, Jr., Citronelle-Mobile Gathering, Inc.(Citronelle), and Citmoco Services, Inc.(Citmoco)(collectively, judgment debtors) exported four crude oil shipments for refining to the Grand Bahamas Petroleum Co., Ltd.(Petco), a Bahamian corporation and the New England Petroleum Corporation's wholly owned subsidiary (Nepco).¹After refining, the judgment debtors sold the oil to Nepco for resale to United States customers.The first three shipments were sold for $14 per barrel and the final shipment for $13 per barrel, which were higher prices than the judgment debtors could have charged had the sales been made directly to United States purchasers.Subsequently, the Department of Energy(DOE) found that the crude oil sales were subject to price controls under section 209 of the Economic Stabilization Act of 1970, 12 U.S.C. § 1904 note (1976 ed.), as incorporated by section 5(a)(1) of the Emergency Petroleum Allocation Act of 1973, 15 U.S.C. § 754(a)(1)(1976 ed.).

In 1977, the judgment debtors brought a declaratory and injunctive relief action against the DOE and the Department of Commerce(DOC) alleging that they exported crude oil to the Bahamas pursuant to validly issued export licenses, which exempted the oil from DOE price and allocation controls.The DOE and DOC (government) counterclaimed seeking restitution for alleged overcharges resulting from the crude oil transfers.Thereafter, both parties sought summary judgment.

The district court ruled that (1) the judgment debtors violated the 1970 Economic Stabilization Act, Emergency Petroleum Allocation Act, and various other statutes which regulated ceiling prices for crude oil sales; (2) the federal agencies reviewed and approved the export licenses; (3) Chamberlain acted as a central figure and was personally liable to the extent he profited; (4) the judgment debtors dealt with the federal agencies in good faith; (5) the judgment debtors should restore funds to the United States Treasury; and (6) no penalties should be assessed.Citronelle-Mobile Gathering, Inc. v. O'Leary, 499 F.Supp. 871(S.D.Ala.1980).Thus, the district court granted the government partial summary judgment, and the judgment debtors sought an interlocutory appeal.

On appeal, the Temporary Emergency Court of Appeals affirmed, but held that payment to the United States Treasury did not satisfy the statutory obligation to make restitution.Accordingly, the Temporary Emergency Court instructed the district court to determine the proper restitution amount and distribution method.SeeCitronelle-Mobile Gathering, Inc. v. Edwards, 669 F.2d 717(Temp.Emer.Ct.App.), cert. denied, 459 U.S. 877, 103 S.Ct. 172, 74 L.Ed.2d 141(1982).

On remand, the district court found Chamberlain personally liable for $138,958.88, the amount of profit reported on his 1974 state and federal tax returns.The district court subsequently reduced that amount to $53,461.88 after finding that Chamberlain had personally paid $85,497 in state and federal income taxes on sale generated profits.Neither party agreed with this ruling; consequently, both appealed.

The Temporary Emergency Court found that Chamberlain's central figure status made him personally liable for full restitution, amounting to $6,769,956.76 plus prejudgment interest.SeeCitronelle-Gathering, Inc. v. Harrington, 826 F.2d 16, 31(Temp.Emer.Ct.App.1987).On November 30, 1988, the district court entered a final judgment against the judgment debtors for $19,401,720.47 plus interest and costs.Currently, Chamberlain's debt to the United States exceeds $21,000,000.

Subsequently, the government made repeated informal attempts to collect the funds on the overcharged customers' behalf.When these efforts failed, it initiated discovery by serving Chamberlain with interrogatories and requests for production of documents.Chamberlain did not answer the interrogatories or produce documents.

In August or September, 1989, Chamberlain absconded to Switzerland and began removing his assets from the court's territorial jurisdiction by using Douglas Trading Bahamas, Ltd.(Douglas Trading), a foreign corporation which Chamberlain and his wife jointly owned, and by transferring Citronelle and Citmoco's assets into his solely owned corporation, Douglas Oil Purchasing Company, Inc.(Douglas Oil).The transferred assets included undeclared "dividends" to Chamberlain (such as an airplane belonging to Douglas Oil which he sold and deposited the proceeds in his personal foreign bank account), "suspense funds," and "temporary cash investments."Chamberlain also continued to control a vessel named "Miss Boots" located in the Bahamas, claiming that he was enforcing a lien.

PROCEDURAL HISTORY

On September 27, 1989, the government sought an ex parte temporary restraining order (TRO) preventing the judgment debtors, Douglas Trading, and Douglas Oil from transferring assets.On September 28, 1989, the district court granted the TRO and enjoined Chamberlain from

encumbering, selling, transferring, damaging, destroying, or taking any action which impairs or tends to impair the value of any real and/or personal property including but not limited to cash and any other tangible or intangible assets, in the ownership, custody or control of Douglas Oil, except as necessary for the purchase, sale, or transportation of oil as conducted in the normal course of business.

On October 30, 1989, the government requested the appointment of a Receiver and an order compelling Chamberlain to return transferred assets to the court's jurisdiction.On February 14, 1990, the district court granted the government's motion and appointed a Receiver to possess and control Chamberlain's and the other judgment debtors' assets, including Douglas Oil and Douglas Trading.The order specifically allowed the Receiver "to assume all the rights Chamberlain enjoyed incident to his 100% stock ownership in Douglas Oil," which included the ability to obtain and return assets outside the country.Even after the entry of this order, Chamberlain continued to frustrate the government's discovery and the Receiver's authority.Consequently, the Receiver moved for an order to show cause and a civil contempt judgment for Chamberlain's failure to comply with the court's September 28, 1989, and February 14, 1990, orders.

On June 29, 1990, the district court ordered Chamberlain to respond to the government's interrogatories and requests for the production of documents, to deliver Douglas Oil's stock certificates, and to attend a debtor's examination on July 19, 1990.In response to a government motion, on August 21, 1990, the district court issued an order directing that Chamberlain and his counsel appear on September 14, 1990, to show cause why Chamberlain should not be held in contempt.

Because Chamberlain failed to comply with its orders, on September 18, 1990, the district court held Chamberlain in civil contempt for failing to (1) respond to interrogatories and requests for the production of documents; (2) produce the stock certificates for Douglas Oil and Douglas Trading; and (3) appear for the debtor's examination as stated in its June 29, 1990, order.Accordingly, the court held that until Chamberlain complied with its orders, he(1) could not participate in court proceedings related to this matter, (2) waived any objections to collection efforts, (3) would pay all reasonable expenses and attorney fees, and (4) should surrender to the United States Marshal.

On October 29, 1990, after finding that Chamberlain continued to interfere with the Receiver and did not intend to obey its orders, the court once again found Chamberlain in contempt and issued an order enumerating his contemptuous acts, which included removing and converting assets.Thus, on February 29, 1991, the court issued sanctions prohibiting (1) Chamberlain from using any assets from the joint debtor companies, including Douglas Oil and Douglas Trading, (2) Chamberlain from using any funds or assets "whether or not exempt from execution," and (3) the clerk of court from accepting any filing or papers on Chamberlain's behalf.The order also ordered banks or financial institutions "wherever located" to freeze the judgment debtors' assets.Chamberlain now appeals the court's contempt finding and imposition of sanctions.

ISSUES

On appeal, Chamberlain raises the following issues: (1) whether the district court properly found him in contempt; and (2) whether the district court erred in imposing sanctions.

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