In re Snider Farms, Inc.

• Decision Date: 08 March 1991
• Docket Number: Bankruptcy No. 87-60512.
• Citation: 125 BR 993
• Parties: IN re SNIDER FARMS, INC., Debtor.
• Court: U.S. Bankruptcy Court — Northern District of Indiana

125 B.R. 993 (1991)

IN re SNIDER FARMS, INC., Debtor.

Bankruptcy No. 87-60512.

United States Bankruptcy Court, N.D. Indiana, Hammond Division, at Gary.

March 8, 1991.

Gordon E. Gouveia, Gouveia & Miller, Merrillville, Ind., for debtor.

David M. Powlen, Barnes & Thornburg, Indianapolis, Ind., for Equitable Life Ins.

Paul R. Chael, Kouts, Ind., trustee.

Kenneth C. Meeker, South Bend, Ind., U.S. Trustee.

MEMORANDUM OPINION AND ORDER

KENT LINDQUIST, Chief Judge.

I Statement of Proceedings¹

This Chapter 12 case came before the Court on March 7, 1991 on Motion by the Chapter 12 trustee filed on February 19, 1991, for David Snider, as chief executive officer (hereinafter: "Respondent") of the Chapter 12 Debtor Snider Farms, Inc. (hereinafter: "Debtor"), to show cause why he should not be held in civil contempt of court for violation of certain orders of this Court.

Trustee Chael appears pro se.

Debtor and Respondent appear by Attorney Gouveia.

Submitted. Evidence and arguments heard.

II Findings of Fact

The Court takes judicial notice of the record in the main case. On August 4, 1990 at a status conference at which the Respondent was personally present, the following docket entry order was made on that same date:

DOCKET ENTRY: Status Conference held on Motion for Equitable to Show Cause by DIP. Debtor appears by counsel. Equitable appears by counsel. The parties stipulate as follows: In lieu of state receiver, Debtor shall harvest subject crops in normal course and deposit proceeds in Atty. Gouveia\'s trust account or in the Clerk\'s Registry instanter. Proceeds to be so held until Court decides who has right to crop proceeds. Debtor to plant no further crops lease property or commit waste without further order of Court. SO ORDERED. Atty. for Equitable to submit separate Order. CC: David Powlen, Gordon Gouveia and David Snider on behalf of Snider Farms and Paul Chael. (Emphasis supplied).

The Respondent was personally advised and instructed by all parties concerned, and by the Court as to precisely what was to be done with the proceeds of the 1990 crop growing upon the Debtor's real estate upon which Equitable Life had a mortgage, and the Respondent orally acknowledged his understanding thereof, and his agreement thereto.

In addition, the Court takes judicial notice that pursuant to the above docket entry the following Order was entered by separate document on August 21, 1990. This Order in its relevant part provided as follows:

And the Court, having heard the preliminary statements and arguments of counsel for the Debtor and counsel for Equitable, and being otherwise duly advised, finds that a genuine dispute exists as to whether or not Equitable has a claim to or other interest in the crops (the "Crops") presently growing on the real estate and accordingly whether or not the crops or proceeds thereof should be turned over or paid to Equitable in partial payment of its claim against the Debtor. After the prehearing conference, the parties, including David E. Snider personally and as President of the Debtor, agreed and stipulated to the following entry. Accordingly, it is

ORDERED, ADJUDGED, AND DECREED that:

* * * * * *

(III) The Debtor shall harvest the Crops and deposit all gross proceeds of any sale or other disposition thereof in a trust account maintained by the Debtor\'s attorney Gordon E. Gouveia or in the registry of the Clerk of the Bankruptcy Court, and such proceeds shall be held subject to further order of the Bankruptcy Court as to the disbursement and payment thereof after a determination has been made regarding Equitable\'s claim to or interest in the Crops.

* * * * * *

August 20, 1990

______________________________ KENT LINDQUIST United States Bankruptcy Judge DIP Snider Farms, Inc 133 West 150th South Valparaiso, In 46383 (Emphasis supplied).

The Respondent testified as follows:

1. That he did in fact harvest the 1990 crop in question, and sold the same to Cargill for approximately $52,000.00; that because Cargill had a valid post petition lien on said crop and the proceeds pursuant to Court Order, Cargill retained approximately $38,000.00 of the proceeds to satisfy its lien, and made a check payable to the Debtor, and Ansler Seeds as co-payees for $12,675.00 as to the surplus.

2. That he obtained the endorsement of the Cargill check from Ansler Seeds and deposited the $12,675.00 in the Debtor\'s checking account on October 24, 1990, over which he exercised dominion and control.

3. That instead of paying said monies into Attorney Gouveia\'s trust account, or into the registry of the Clerk, as expressly ordered by the Court, he used the monies to buy seed corn.

4. That the Respondent admitted he was present at the status conference held August 4, 1990, and was advised as to what he was to do with the proceeds of the 1990 crop in question, but denied he ever received copies of the docket entry order of August 4, 1990, and the order issued on a separate document and entered on August 21, 1990. The Respondent asserts he changed his mailing address some two years ago, but never advised the Clerk of the Court.

III Conclusions of Law and Discussion

No objection was made by counsel to the jurisdiction of this Court as to this matter, the Court finds jurisdiction to be present, and that this contested matter is a core proceeding pursuant to 28 U.S.C. § 157. In re Walters, 868 F.2d 665, 669 (4th Cir. 1989); Budget Service Company v. Better Homes of Virginia, Inc., 804 F.2d 289, 292 (4th Cir.1986).

The Bankruptcy Court, pursuant to 11 U.S.C. § 105, as amended, has the statutory power to enter final civil contempt orders. In re Walters, 868 F.2d 665, 669-70 & n. 3 (4th Cir.1989). Accord, Kellogg v. Chester, 71 B.R. 36, 37-39 (N.D.Tex. 1987); In re Stephen W. Grosse, P.C., 84 B.R. 377, 385-88 (Bankr.E.D.Pa.1988); In re Haddad, 68 B.R. 944, 947-49 (Bankr.D. Minn.1987).

In order to find a creditor in contempt of court for violation of an order of the court, it must be shown that the respondent had either official or actual knowledge of the court order. In re De Jesus Suez, 721 F.2d 848, 853 (1st Cir. 1983); In re Smith Corset Shop, Inc., 696 F.2d 971, 977 N. 7 (1st Cir.1982); Matter of Hailey, 621 F.2d 169, 172 (5th Cir.1980); Haile v. New York State Higher Education Service Corp., 90 B.R. 51, 55 (W.D.N.Y.1988); In re Skinner, 90 B.R. 470, 479-80 (D.Utah 1988); In re Calender, 89 B.R. 280, 282-83 (Bankr.D.Columbia 1988); Matter of Carter, 16 B.R. 481, 483 (W.D. Mo.1981), aff'd. 691 F.2d 390, 391-92; In re Clifton Steel Corp., 35 B.R. 732, 736 (N.D.N.Y.1983); In re Edwards, 5 B.R. 663, 665 (Bankr.M.D.Ala.1980); Matter of Holland, 21 B.R. 681, 689 (Bankr.N.D.Ind.1982); In re Waters, 22 B.R. 387, 388 (Bankr.N.D. Tex.1982).

Upon a finding of contempt of court for violation of an order of court, the court may award damages to compensate for actual loss suffered. In re Computer Communications, 824 F.2d 725, 731 (9th Cir. 1987); In re Littke, 105 B.R. 905, 911 (Bankr.N.D.Ind.1989). This includes costs and attorney's fees. In re Skinner, 90 B.R. 470, 474 (D.Utah), citing, Commodity Futures Trading Commission v. Premex, 655 F.2d 779, 785 (7th Cir.1981). In re Crabtree, 39 B.R. 702, 711 (Bankr.E.D. Tenn.1984); In re Ashby, 36 B.R. 976, 978 (Bankr.D.Utah 1984); Matter of DePoy, 29 B.R. 471, 480 (Bankr.N.D.Ind.1983). The purpose is to restore the parties to their precontempt position. In re 2218 Bluebird Ltd. Partnership, 41 B.R. 540, 545 (Bankr. S.D.Cal.1984).

It should be noted that neither the Bankruptcy Court nor the District Court can properly assess punitive damages for civil contempt of court for the violation of an order of the court.

Civil contempt orders serve either or both of two purposes: (1) to compel or coerce obedience to a court order; (2) to compensate the parties for losses resulting from the contemner's non-compliance with a court order. United States v. United States Mine Workers of America, 330 U.S. 258, 303-04, 67 S.Ct. 677, 701, 91 L.Ed. 884 (1947).

The distinction between criminal and civil contempt is the nature of the relief asked, and the purpose of that relief, and while a penalty for criminal contempt is intended to be punitive only, sanctions for civil contempt are employed either to coerce compliance with the Court's order or to compensate the complainant for losses sustained. Shakman v. Democratic Organization of Cook County, 533 F.2d 344 (7th Cir.), cert. den. 429 U.S. 858, 97 S.Ct. 156, 50 L.Ed.2d 135 (1976).

Sanctions for civil contempt must be wholly remedial; a definite fine which is neither compensatory nor conditioned on future violations of the Court's order is punitive and can only be imposed in a criminal contempt proceeding. United States v. Professional Air Controllers Organization (PATCO), PATCO Local 202, 678 F.2d 1 (1st Cir.1982). See e.g., S.E.C. v. Simpson, 885 F.2d 390, 395 (7th Cir.1989), citing, Hicks v. Feiock, 485 U.S. 624, 108 S.Ct. 1423, 99 L.Ed.2d 721 (1988).

In civil contempt, the moving party must prove his case by clear and convincing evidence, rather than by the usual standard of preponderance of the evidence. Stotler v. Able, 870 F.2d 1158, 1163 (7th Cir.1989); In re Hardy, 39 B.R. 64, 66 (Bankr.E.D.Pa.1984), citing, Quinter v. Volkswagen of America, 676 F.2d 969, 974 (3rd Cir.1982); Fox v. Capital Co., 96 F.2d 684, 686 (3rd Cir.1938). See also, U.S. v. Roberts, 858 F.2d 698 (11th Cir.1988). However, once the petitioner makes a prima facie showing of a violation, the burden shifts to alleged contemnor to produce detailed evidence specifying why he cannot comply. Id.

Since civil contempt serves a remedial purpose by either coercing a respondent into compliance with the Court's Order or compensating the complainant for losses sustained, willfulness of the offending party need not be shown for a finding of contempt; it is sufficient that the Court order violated is specific and definite and that the offending party has...