Jou v. Adalian, CIVIL NO. 09-00226 JMS-BMK
| Decision Date | 05 February 2015 |
| Docket Number | CIVIL NO. 09-00226 JMS-BMK |
| Parties | EMERSON M.F. JOU, M.D., Plaintiff, v. GREGORY M. ADALIAN, Defendant. |
| Court | U.S. District Court — District of Hawaii |
Plaintiff Emerson M.F. Jou, M.D. ("Plaintiff" or "Jou") has filed a Motion for an Order for Arrest and Incarceration of Contemnor-Defendant Gregory M. Adalian ("Defendant" or "Adalian") ("Motion to Arrest"). Doc. No. 146. The Motion to Arrest seeks an order commanding the U.S. Marshal to arrest Adalian and to incarcerate him until he pays both an outstanding December 23, 2010 judgment in this case consisting of $155,000 plus $6,365.36 in attorneys' fees and costs, Doc. No. 89, as well as related fines, fees, and costs awarded insubsequent contempt Orders. Doc. Nos. 141, 145. For the reasons set forth, the Motion to Arrest is DENIED. Further, the court VACATES its May 2, 2014 and June 5, 2014 contempt Orders. Doc. Nos. 141, 145.
In considering Jou's Motion to Arrest, the court began by reviewing in toto the procedural history of this nearly six-year-old case to understand the precise context for the relief sought by Jou (incarceration of Adalian as a sanction for civil contempt until Adalian pays the amounts due to Jou). In so doing, the court gained a fresh perspective into the primary issue the collection of a money judgment -- in this unusual proceeding. And, in short, the court concludes that the matter is ultimately controlled by a larger principle that neither of the parties cited, and of which this court had not previously recognized in the present context -- contempt proceedings are, without more, an improper means of collecting a pure money judgment. The court sets forth the relevant details below.
Jou filed this action on May 19, 2009, primarily seeking payment of certain promissory notes issued to him by Adalian. Doc. No. 1. On June 28, 2010, the parties placed a settlement on the record before Magistrate Judge Kevin S.C. Chang. Doc. No. 63. The case, however, remained open -- a dismissal from theparties was due on September 30, 2010. Id. In a July 6, 2010 written settlement agreement, Adalian agreed to pay Jou $180,000 with an initial payment of $25,000, and a second payment of $155,000 (due no later than September 30, 2010). Doc. No. 69-3 at 2. The settlement does not involve any injunctive or declaratory relief -- it concerned only payment of money. Regarding "jurisdiction and enforcement," the settlement agreement provides Id. at 6. That is, the agreement does not provide for retention of jurisdiction to enforce its terms.
Adalian paid the first installment of $25,000, but did not pay the remaining $155,000 by September 30, 2010 (and he has not made that payment since). Doc. No. 88, Order at 2. On October 6, 2010, Jou filed a Motion to Enforce Settlement Agreement and for Damages, Attorney's Fees, Costs and Judgment ("Motion to Enforce"). Doc. No. 69. On November 19, 2010, Magistrate Judge Chang issued a Findings and Recommendation to Grant in Part and Deny in Part the Motion to Enforce ("November 19, 2010 F&R"). Doc. No. 80. Given a binding settlement, the November 19, 2010 F&R recommended(1) ordering Adalian to pay the $155,000 balance to Jou within one week from when this court takes final action on the November 19, 2010 F&R (2) entry of final judgment of $155,000 in favor of Jou and against Adalian; (3) denial of Jou's requests for civil contempt, damages and sanctions; and (4) an award of fees and costs reasonably incurred in bringing the Motion to Enforce. Id. at 2-3. The November 19, 2010 F&R cautioned Adalian "that his failure to tender the balance of the settlement amount pursuant to a court order may result in a finding of civil contempt as well as other sanctions." Id. at 3. In Supplemental Findings, Magistrate Judge Chang recommended an additional award of $6,365.36 in fees and costs, also to be paid within one week from this court's final action on the November 19, 2010 F&R. Doc. No. 81.
On December 23, 2010, this court adopted the November 19, 2010 F&R. Doc. No. 88. This court overruled objections from both sides, and ordered (consistent with the November 19, 2010 F&R) as follows:
Id. at 8-9. Accordingly, final Judgment was entered on December 23, 2010. The Judgment provides:
IT IS ORDERED AND ADJUDGED that Judgment is entered in favor of the Plaintiff Emerson M. F. Jou, M.D., in the amount of $155,000.00 and against the Defendant Gregory M. Adalian and all claims asserted in the Second Amended Complaint are dismissed with prejudice, pursuant to the "Order Adopting the November 19, 2010 Findings and Recommendation to Grant in Part and Deny in Part Plaintiffs' Motion to Enforce Settlement Agreement and for Damages, and the November 23, 2010 Supplement to the Findings and Recommendation," filed on December 23, 2010. It is further ordered that Plaintiff is awarded $5,796.00 in attorneys' fees, $273.11 in tax, and $296.25 in costs for a total of $6,365.36.
Adalian did not pay the December 23, 2010 Judgment within seven days, and Jou then attempted to enforce the December 23, 2010 Order and to secure payment of the Judgment. Specifically, on January 10, 2011 Jou filed a Motion for Order to Show Cause re: Contempt of Court by Defendant Gregory M. Adalian and for Attorney's Fees and Costs. Doc. No. 90. He also filed an Ex Parte Motion for Examination of Judgment Debtor. Doc. No. 99. Jou sought an order holding Adalian in civil contempt, and fining him until he paid the December 23, 2010 Judgment. Doc. No. 90-1 at 1. Jou also asked the court to command Adalian to produce certain tax returns and real estate records. Id. at 6. A February 14, 2011 hearing was set before Magistrate Judge Chang. On that same date, however, Adalian filed a bankruptcy petition in the U.S. Bankruptcy Court for the Middle District of Pennsylvania ("Bankruptcy Court"), Doc. No. 103, and the case was stayed under 11 U.S.C. § 362(a). Doc. No. 105.
On April 20, 2011, the Bankruptcy Court dismissed the February 14, 2011 bankruptcy petition, apparently for Adalian's failure to file certain documents. Doc. No. 106-1. After that dismissal, on May 23, 2011, Jou filed aSecond Motion for Judgment Debtor Exam. Doc. No. 108. Jou also renewed his motion seeking to hold Adalian in contempt for failure to pay the December 23, 2010 Judgment. Doc. No. 113. A hearing was scheduled before Magistrate Judge Chang for July 15, 2011. Adalian responded on July 14, 2011 by filing another bankruptcy petition in the Middle District of Pennsylvania, Doc. No. 120-2, and the hearing was continued until August 29, 2011. Doc. No. 119.
Adalian did not appear at the August 29, 2011 hearing, and on August 30, 2011 Magistrate Judge Chang issued a Findings and Recommendation to grant in part Jou's motion seeking contempt.1 Doc. No. 122. Meanwhile, however, Adalian had filed a third bankruptcy petition in the Middle District of Pennsylvania on August 26, 2011. Doc. No. 124. After being informed of Adalian's latest bankruptcy filing, the August 30, 2011 Finding and Recommendation was vacated and the contempt motion was denied without prejudice. Doc. Nos. 126, 127.
Nevertheless (despite the bankruptcy stay), on September 23, 2011, Jou filed another motion in this court seeking to hold Adalian in contempt for failure to pay the Judgment. Doc. No. 128. Among other grounds, he argued that the bankruptcy proceedings were filed in bad faith, although he acknowledged thata proceeding remained pending in the Bankruptcy Court. See Doc. No. 128, at 2 ( ). The September 23, 2011 contempt motion sought to imprison Adalian for failure to comply with the court's December 23, 2010 Order and corresponding Judgment. Jou also filed an Ex Parte Motion to Shorten Time to hear this September 23, 2011 contempt motion ("Ex Parte Motion"). Doc. No. 129.
On September 28, 2011, a bankruptcy judge issued a temporary restraining order, restraining Jou and/or his counse...
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