Williamson v. Recovery Ltd. P'ship

• Decision Date: 10 June 2016
• Docket Number: No. 14–4231,14–4231
• Citation: 826 F.3d 297
• Parties: Michael Williamson, et al., Plaintiffs, Dispatch Printing Company, Plaintiff–Appellee, v. Recovery Limited Partnership, et al., Defendants, Richard Thomas Robol, Movant–Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

826 F.3d 297

Michael Williamson, et al., Plaintiffs

Dispatch Printing Company, Plaintiff–Appellee

v.Recovery Limited Partnership, et al., Defendants

Richard Thomas Robol, Movant–Appellant.

No. 14–4231

United States Court of Appeals, Sixth Circuit.

Argued: April 27, 2016

Decided and Filed: June 10, 2016

Rehearing En Banc Denied July 21, 2016

ARGUED: Jason D. Winter, Reminger Co., LPA, Cleveland, Ohio, for Appellant. Steven Walter Tigges, Zeiger, Tigges & Little LLP, Columbus, Ohio, for Appellee. ON BRIEF: Jason D. Winter, Holly Marie Wilson, Reminger Co., LPA, Cleveland, Ohio, Richard T. Robol, Robol Law Office, LLC, Columbus, Ohio, for Appellant. Steven Walter Tigges, Bradley T. Ferrell, Zeiger, Tigges & Little LLP, Columbus, Ohio, for Appellee.

Before: BOGGS and SUHRHEINRICH, Circuit Judges; and MURPHY, District Judge.^*

OPINION

BOGGS

, Circuit Judge.

This appeal involves yet another skirmish in the legal battle over the treasure from the S.S. Central America , the history of which was recounted in an earlier decision by this panel in Williamson v. Recovery Ltd. Partnership (Williamson II) , 731 F.3d 608 (6th Cir. 2013)

. In this case, we review the district court's imposition of sanctions against the defendants' attorney, Richard Robol, for hampering the enforcement of a court order in bad faith. For the reasons discussed below, we affirm.

I. Background

On July 20, 2006, the United States District Court for the Southern District of Ohio adopted a consent order intended to resolve a suit by Dispatch Printing Company (Dispatch) against Recovery Limited Partnership (RLP) and Columbus Exploration, LLC (CX) for an accounting of the gold from the S.S. Central America shipwreck. Paragraph 3 of the consent order provided that: “Within sixty (60) days after entry of this Order, Defendants shall provide Plaintiffs' accountant ... with full access and opportunity to review the documents and materials regarding the period from January 1, 2000 through the date of entry of this Order, identified in the July 11, 2006 list by Accountant, for the purpose of preparing a report ... of the financial affairs and condition of CX and RLP.”

On December 5, 2006, the district court issued a contempt order against the defendants based on a number of grounds, one of which was their failure to turn over “an inventory of the gold recovered and sold.” Without an inventory of the gold that the defendants recovered and sold, it was “inconceivable that any degree of thorough auditing could commence.” The district court went on to remark:

The Court is troubled by the Defendants' position regarding documents relating to the sale of gold. While counsel for the Defendants represented to the Court that the documents could not be located, no testimony was presented in support of such contention. Further, the Court is deeply skeptical of the Defendants' claim that such critically important documents could not be located. Moreover, following the hearing conducted in this case, and prior to the issuance of this Order, the Defendants have filed a Motion asking the Court to review in camera records relating to the sale of the gold. Such documents were required to be turned over by the Defendants to Plaintiffs' accountant within sixty days of the Order issued by this Court on July 20, 2006. The Defendants presented no evidence regarding any efforts made to locate such documents, or explaining how such documents were not in the possession of the Defendants. The recent Motion [filed by the defendants] asks for an in camera inspection of documents originally claimed to be lost, leading this Court to find a total lack of good faith of at least CX and RLP in compliance with the July 20, 2006 Order.

Paragraph 2 of the contempt order, as later amended, provided that the “Defendants shall tender to the Plaintiffs' accountant an inventory of the gold.” The court also stated that the “record in this case shall be kept open regarding this violation,” and that the “Court reserves for a later date sanctions or other remedies with regard to such violations.”

In response to the contempt order, the defendants turned over an inventory of the gold that they sold to the California Gold Marketing Group from February 15 to September 1, 2000. They did not, however, turn over any prior inventories, which would have provided a complete accounting of the treasure recovered from the ship. Unsatisfied with the defendants' efforts to comply with numerous provisions of the consent order, even after the contempt order, Dispatch filed another motion to hold the defendants in contempt on March 9, 2007.

At the contempt hearing on April 24, 2007, Dispatch's attorney, Steven Tigges, and the defendants' attorney, Richard Robol, argued about whether the defendants possessed any inventories that predated the sale to California Gold:

Mr. Tigges: Secondly, Your Honor, your order from July 20 of 2006 was very clear. They are to produce documents regarding the period from January 1, 2000. A document may be [produced] prior to that date regarding [treasure sold during] that period.

The Court: I am familiar with the dispute.

Mr. Tigges: An inventory of assets clearly is that. ... Your Honor will recall prior to the agreement with California Gold, these [defendant] entities had an agreement to sell the gold through Christie's. And it's inconceivable that Christie's would undertake that agreement of an advance of upwards of $30 million to these entities and not have an inventory of what they were buying. So those documents plainly exist, Your Honor.

Mr. Robol: May I clarify one thing? This is not for purposes of argument. This is for purposes of Mr. Tigges's understanding. We have produced the inventories, even if they are pre–2000 inventories. I don't want there to be any ambiguity in his mind about that. We have produced all the inventories.

Thus, Robol clearly represented to the court that the defendants were not in possession of any pre–California–Gold–sale inventories. At the close of the contempt hearing, the district court clarified the scope of its contempt order from December 2006:

[T]he defendants shall tender to the accounting firm anything that could be construed as an inventory of any kind regarding assets recovered from the shipwreck that would have been sold during the relevant time of this audit or review. So, in other words, if there are assets recovered in 1980 that were sold in 2001, and there is an inventory that goes with them [sic] assets, then that is to be turned over.

Although the court did not hold the defendants in contempt at that time, it issued a second contempt order against them in September 2009 for causing “significant delay and expense.” The court concluded: “The accounting was sandbagged by the Defendants through a variety of means. What should have taken several months has taken several years.... The Court finds the Defendants have willfully violated the prior Orders of this Court.” This court affirmed that decision in Williamson v. Recovery Ltd. Partnership (Williamson I) , 467 Fed.Appx. 382 (6th Cir. 2012)

.

Throughout the years of litigation, Robol represented on multiple occasions that the California–Gold–sale inventory was the only inventory in the defendants' possession:

• At a hearing on September 7, 2007, Robol said: “Now let me address the specifics of the inventory. What you have been told is false, false, false. The company has no inventories of the gold sold other than what has been provided.” Robol also stated: “We provided the inventory that the company had. We provided the inventory of that asset, the treasure that was sold to the California Gold Marketing Group.”

• In a trial brief filed on December 3, 2008, Robol stated that the defendants “produced the only inventory in their possession in late 2006, which was the inventory of the gold items sold to the California Gold Marketing Group.”

• At a hearing on December 8, 2008, Robol said: “We produced the one and only inventory that the company had, which was the inventory relating to the sale to the party that we had spoken about, the California Gold Marketing Group.”

• In an appellate brief filed with this court on March 19, 2010, in Williamson I

, Robol stated: “The first inventory—the only inventory that Columbus Exploration had in its possession, custody or control—was provided to KPMG shortly after the December 5, 2006 Order.... [That] inventory listed every item of gold treasure sold to the California Gold Marketing Group.” Robol reiterated that claim in a reply brief filed on June 1, 2010.

In 2013, Dispatch obtained the appointment of a receiver that it had first sought in 2008 in order “to take control of RLP and CX, dissolve them and liquidate their assets, and wind up their affairs.” The receiver recovered thirty-six file cabinets containing RLP and CX records that were stored in the basement of a duplex that Robol owned and partially leased to the defendants. Within those cabinets, the receiver found numerous treasure inventories created prior to the California Gold sale that were never turned over to Dispatch. Among the inventories was a master inventory, printed on hundreds of sheets of printer paper bound in a hard cover labeled “89 & 90 COIN AND BAR MASTER COPY.” That inventory was one of many inventories found in the cabinets, which in total span thousands of pages and comprise most of the seventeen-volume appendix to Dispatch's brief.

On October 16, 2013, Dispatch filed a motion asking the district court to exercise its inherent powers to sanction Robol for engaging in bad-faith conduct during the litigation. The district court conducted a three-day sanctions hearing, with testimony from numerous witnesses, and concluded that Robol engaged in sanctionable bad-faith conduct when he concealed the existence of the pre–California–Gold–sale inventories. In calculating the sanctions, the district court rejected Dispatch's initial request for $1,717,388—the entirety of its litigation expenses—and limited the...