Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-02356/USCOURTS-caed-2_09-cv-02356-20/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1442 Petition for Removal

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UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

HSBC BANK USA, National Association, 

as Indenture Trustee for the benefit of the 

Noteholders and the Certificateholders of 

Business Loan Express Business Loan 

Trust 2005-A, 

Plaintiff, 

v. 

DARA PETROLEUM, INC. dba WATT 

AVENUE EXXON, a California 

corporation; SARBJIT S. KANG, an 

individual; NARGES EGHTESADI, an 

individual; U.S. SMALL BUSINESS 

ADMINISTRATION, a United States 

government agency; and DOES 1 through 

20, inclusive, 

Defendants. 

No. 2:09-cv-2356-WBS-EFB 

ORDER, FINDINGS AND CERTIFICATION 

RE: CIVIL CONTEMPT 

 This matter is before the court on plaintiff’s application for issuance of an order directing 

defendant Sarbhit Kang and non-parties Stars Holding Co. LLC (“Stars”) and Azad Amiri to 

show cause why they should not be held in civil contempt for violating the court’s May 2, 2014 

order.1

 ECF No. 137; see ECF No. 119 (order appointing receiver and entering preliminary 

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 This motion was referred to the undersigned by the assigned district judge. ECF No. 

150. 

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injunction). Also before the court is attorney Jeffrey Kravitz’s motion to withdraw as counsel for 

Dara Petrol Petroleum (“Dara”), Sarbjit S. Kang, and Narges Eghtesadi. ECF No. 143. A 

hearing on the motions was held on October 14, 2015. Attorney Eric Pezold appeared on behalf 

of plaintiff; attorney Jeffrey Kravitz appeared on behalf of defendants. No appearance was made 

by Stars or Azad Amiri, nor did Kang or Eghtesadi personally appear.2 For the reasons provided 

below, the court grants Mr. Kravitz’s motion to withdraw as counsel. Further, this court finds 

that Stars, Amiri, and Kang are in willful violation of the court’s May 2, 2014 order. 

Accordingly, they are ordered to appear before the assigned district judge to show cause why they 

should not be sanctioned for civil contempt. 

I. Background 

Plaintiff brought this action in the Sacramento County Superior Court against Dara 

Petroleum, Inc. (“Dara”), Sarbjit S. Kang, Narges Eghtesadi, and the U.S. Small Business 

Administration for judicial foreclosure and breach of a written guarantee. The action arises out of 

Dara’s default on a commercial loan made by plaintiff’s predecessor and secured by real property 

located at 3499 El Camino Avenue, Sacramento, California (“the property”). ECF No. 1. The 

case was subsequently removed to this court by the United States.3 Id. at 2. 

In January 2011, the parties reached a settlement of the case. ECF Nos. 80, 81. As part of 

that settlement, Dara agreed that it would deliver to plaintiff proof that all real property taxes for 

the subject property that were due and payable to the County of Sacramento had been paid as of 

November 30, 2011. See ECF No. 92 at 3. The agreement further provided that plaintiff would 

hold an executed stipulation for judgment for filing with the court in the event that Dara defaulted 

under the terms of the settlement agreement. Id. Notwithstanding that agreement, Dara failed to 

pay all property taxes, and plaintiff subsequently filed the stipulation for judgment. ECF No. 82. 

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 The United States filed a statement of non-opposition to the application for an order to 

show cause and did not appear at the hearing. 

 

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 The United States Small Business Administration has a junior lien on the property. See

ECF No. 1 at 2. 

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Pursuant to the stipulation, judgment was entered in plaintiff’s favor and against Dara, Eghtesadi, 

and Kang, jointly and severally, in the amount of $985,776.75. ECF No. 83. The judgment also 

included an order that the property could be sold in the manner prescribed by law. Id. at 2-3. 

On January 30, 2013, the court entered an amended judgment against defendants in the 

amount of $985,776.75, plus interest and costs. The judgment included an order that the property 

be sold at a foreclosure sale, and directed that the proceeds of that sale be used to satisfy the 

judgment. ECF No. 109. Plaintiff subsequently moved to appoint Kevin Singer as a postjudgment Receiver and requested a preliminary injunction in aid of the receivership. ECF No. 

110. The motion was prescient as it specifically sought to prohibit the defendants from 

interfering with the Receiver’s ability to sell the property. Id. On May 2, 2014, the court granted 

the motion and appointed Mr. Singer as Receiver to take possession, custody, and control of the 

property for the purpose of maintaining the property pending the foreclosure sale. ECF No. 119 

at 8. The order further provided that “Defendants and all other persons acting in concert with 

them who have actual or constructive knowledge of this Order, shall not . . . interfere in any 

manner with the discharge of the Receiver’s duties under this Order.” Id. at 14. As discussed 

below, the property remains unsold and defendants and others in concert with defendants have 

frustrated the Receiver’s ability to complete that process. 

On March 11, 2015, plaintiff filed the instant application for an order to show cause why 

defendant Kang and non-parties Stars and Amiri should not be held in contempt for violation of 

the court’s May 2, 2014 order. ECF No. 137. Plaintiff contends that Kang, Stars, and Amiri have 

orchestrated or aided three bad faith bankruptcy petitions for the purpose of interfering with the 

receivership. Id. Based on these allegations, plaintiff requested the court to order Kang, Stars, 

and Amiri to reimburse it the reasonable expenses it incurred in litigating the bad faith bankruptcy 

actions. 

II. Application for an Order to Show Cause 

 A. Legal Standard 

Civil contempt “consists of a party’s disobedience to a specific and definite court order by 

failure to take all reasonable steps within the party’s power to comply.” Reno Air Racing Ass’n, 

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Inc. v. McCord, 452 F.3d 1126. 1130 (9th Cir. 2006). “The moving party has the burden of 

showing by clear and convincing evidence that the condemners violated a specific and definite 

order of the court.” FTC v. Affordable Media, 179 F.3d 1228, 1239 (9th Cir. 1999). 

To establish that civil contempt is appropriate, plaintiff must demonstrate “(1) that [Kang, 

Star, and Amiri] violated the court order, (2) beyond substantial compliance, (3) not based on a 

good faith and reasonable interpretation of the order, (4) by clear and convincing evidence.” 

United States v. Bright, 596 F.3d 683, 694 (9th Cir. 2010). Once plaintiff makes this showing, 

the burden shifts to Kang, Star, and Amiri to demonstrate that they “took all reasonable steps 

within [their] power to insure compliance with the” court’s order. Hook v. Arizona Dept. of 

Corrections, 107 F.3d 1397, 1403 (9th Cir. 1997). 

B. Discussion 

 The focus of plaintiff’s motion is Kang, Stars, and Amiri’s alleged violations of the 

court’s May 2, 2014 order. That order specifically directed that “Defendants and all other persons 

acting in concert with them who have actual or constructive knowledge of this Order, shall not 

. . . “[d]irectly or indirectly interfere in any manner with the discharge of the Receiver’s duties . . . 

[or] [d]o any act which will, or would tend to, materially impair, defeat, divert, prevent or 

prejudice the preservation of the assets of the Receivership Estate.” ECF No. 119 at 14-15. The 

evidence submitted by plaintiff indicates that Kang, Stars, and Amiri have acted to interfere with 

the Receiver’s ability to sell the property. 

 One week after Mr. Singer was appointed, Dara filed a voluntary Chapter 7 petition in the 

United States Bankruptcy Court for the Eastern District of California. Pl.’s Req. for Judicial 

Notice Ex. 2 (“RJN”), ECF No. 137-2 at 21-23.4 The petition, filed on May 9, 2014, is signed by 

Sarbjit Kang, and lists Dara’s address as 3449 El Camino Avenue Sacramento, CA. Id. at 23. 

Plaintiff moved to dismiss the case, which was granted on May 20, 2014. Id. at 25 (RJN Ex. 3). 

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 Plaintiff’s request for judicial notice of the various court documents is granted. See 

MGIC Indem. Co. v. Weisman, 803 F.2d 500, 505 (9th Cir. 1986) (judicial notice may be taken of 

matters of public record outside the pleadings). 

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 On June 9, 2014, Dara filed a Chapter 11 petition in the United States Bankruptcy Court 

for the Northern District of California. Id. at 27-52 (RJN Ex. 4). This petition was also signed by 

Kang, who is identified as the president of Dara. Id. at 29, 31, 52. This petition, however, lists 

Dara’s address as 55 Oak Court, Suite 100, Danville, CA, and states that Dara’s county of 

residence is Contra Costa County.5 Id. at 27. Plaintiff moved to transfer the case to the Eastern 

District of California or, in the alternative, dismiss the case and impose sanctions. 

On June 24, 2014, the Northern District Bankruptcy Court transferred the case to the 

Eastern District, see ECF No. 137-2 at 56-58, where the United States Trustee conducted a 

meeting of creditors. Both Kang and Azari testified at the meeting of creditors. ECF No. 137-1 

at 22-56. Mr. Amiri identified himself as the treasurer and accountant for Dara. Id. at 24. He 

also acknowledged that Dara does not engage in any business activities and has no employees. 

Id. at 34. Kang identified himself as the president, and stated that he had a 19 percent equity 

interest in Dara. Id. at 24. 

Plaintiff moved to dismiss the second bankruptcy action on the ground that it was filed in 

bad faith. The bankruptcy court agreed and on August 26, 2014, it granted that motion, explicitly 

finding that the action was filed in bad faith. ECF No. 137-2 at 61-66. The order noted that Dara 

argued in opposition to the motion to dismiss “that the filling of this bankruptcy case ‘is a 

legitimate response to a receivership order that was improperly entered and Movant’s subsequent 

bad faith declaration of default under that certain Stipulation for Entry and Satisfaction of 

Judgment, dated May 6, 2014, by and between Debtor and Movant.’” Id. at 65. Rejecting that 

argument, the bankruptcy court observed that Dara did not appeal the receivership order entered 

by the district judge in this case and that “the filing of the bankruptcy case is clearly an attempt to 

circumvent the Receivership Order and forestall Singer’s efforts to sell the Property to satisfy the 

Judgment, all for the benefit of a non-debtor party, Stars.” Id. 

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 Dara’s address of record with the California Secretary of State is 8994 Greenback Ln., 

Orangevale, California, see ECF No. 137-2 at 54 (RJN Ex. 5), which is in Sacramento County. 

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After dismissal of the second bankruptcy petition, the Receiver resumed his duties and 

made efforts to sell the property. Again he was frustrated. Plaintiff duly filed in this action a 

notice of sale of for the property, giving notice that the Receiver intended to sell the property on 

February 26, 2015. ECF No. 136. However, the day before that scheduled sale Dara filed yet 

another bankruptcy petition in this district. ECF No. 137-2 at 68-74 (RJN Ex. 8) (Petition filed 

February 25, 2015). That petition was also signed by Kang. Id. at 70. The bankruptcy court 

dismissed that petition on March 3, 2015. See In re Dara Petroleum, Inc., No. 15-21439, ECF 

No. 24. In doing so, the bankruptcy court incorporated the prior dismissal ruling issued in Dara’s 

second bankruptcy case. Id., ECF No. 23. 

The evidence before the court plainly demonstrates that Kang has willfully taken actions 

that were deliberately calculated to impede the Receiver’s performance of his duties under the 

order to sell the property. Such gamesmanship was not only in bad faith, Kang has willfully 

violated this court’s receivership order. Kang personally signed all three bankruptcy petitions on 

behalf of Dara and did so for the bad faith purpose of circumventing the judgment and order 

entered in this case. Although counsel specifically argued to the bankruptcy court that the second 

petition was filed as “a legitimate response to a receivership order that was improperly entered” 

ECF No. 137-2 at 65, a notice of appeal of the order and injunction was never filed. If Dara and 

Kang truly believed this court’s receivership order was improperly entered, their recourse was to 

seek review in the U.S. Court of Appeals for the Ninth Circuit, not to violate the order. But Dara 

and Kang chose not to appeal and instead filed three meritless bankruptcy petitions for the very 

purpose of frustrating Mr. Singer’s efforts to foreclose the subject property. The receivership 

order specifically prohibited such acts. That order was specific and definite, and the parties were 

required “to take all reasonable steps within their power to comply.” Reno Air Racing Ass’n, Inc., 

452 F.3d at 1130. Dara (through Kang) and Kang did not comply and, indeed, willfully engaged 

in acts that violated the order. Accordingly, the court finds by clear and convincing evidence that 

Kang is in contempt of this court’s May 2, 2014. 

As for Amiri and Stars, the evidence clearly establishes that these parties acted in concert 

with Kang in filing the bankruptcy petitions. At the July 21, 2014 bankruptcy proceeding, Kang 

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testified that the information provided in the bankruptcy petition was acquired from Dara’s 

accountant, Mr. Amiri. ECF No. 137-1 at 27 (Ex. A). Mr. Amiri testified that he had reviewed 

schedules to the petition and that the information in the petition was accurate. Id. He further 

testified that he prepared and filed an operating report with the bankruptcy court. Id. at 29. Amiri 

also testified that Stars is owned by his ex-wife, and that the subject property had been transferred 

to Stars in January 2012. Id. at 31, 34-35. Significantly, Kang testified that Stars paid the filing 

fee for the second bankruptcy case and hired and paid an attorney to represent Dara in the 

bankruptcy action. Id. at 21, 50-51. 

This evidence establishes that Amiri and Stars acted in concert with Kang in the filing of 

the bankruptcy petitions. Furthermore, as found by the bankruptcy court in the second and third 

bankruptcy actions, this court finds that the petitions were filed for the bad faith purpose of 

circumventing this court’s receivership order and hindering Mr. Singer’s ability to carry out his 

duties. Thus, the record demonstrates that Amiri and Stars were acting willfully and in bad faith 

when they participated in Dara and Kang’s efforts to frustrate the court’s order. Accordingly, 

there is clear and convincing evidence that Amiri and Stars are also in contempt of the court’s 

order. See Reno Air Racing Ass’n, Inc., 452 F.3d at 1130. 

A sanction for civil contempt is intended to coerce the contemnor to comply with the 

court’s order in the future. Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468, 1481 

(9th Cir. 1992). The remedies for civil contempt range from incarceration to the imposition of 

monetary sanctions, with the focus on gaining future compliance with the order being violated.6

 

“The choice among the various sanctions rests within the discretion of the district court,” United 

States v. Sumitomo Marine & Fire Ins. Co., 617 F.2d 1364, 1369 (9th Cir. 1980), and the Ninth 

Circuit “defer[s] considerably to the judgment of the district court in fashioning the appropriate 

sentence because of its proximity to the events out of which contempt springs.” United States v. 

Flores, 628 F.2d 521, 527 (9th Cir. 1980). However, a “district court should apply the least 

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 Thus, a party incarcerated for civil contempt “carries the keys of his prison in his own 

pocket because civil contempt is intended to be remedial by coercing the defendant to do what he 

had refused to do.” Lasar v. Ford Motor Co., 399 F.3d 1101, 1110 (9th Cir. 2005). 

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coercive sanction (e.g., a monetary penalty) reasonably calculated to win compliance with its 

orders.’” Id. 

Here, plaintiff does not seek incarceration. Rather, as a remedial measure plaintiff 

requests that Kang, Amiri, and Stars be ordered to reimburse plaintiff the reasonable expenses 

incurred in litigating the three bankruptcy cases, as well as the instant motion for an order to show 

cause. ECF No. 137 at 15. Such a sanction is reasonably calculated to deter future meritless 

filings (whether in the bankruptcy court or any other court) that would impede the Receiver from 

completing the foreclosure sale of the subject property.7 It is also a less drastic means of gaining 

compliance than incarceration. Further, “[a]n award of attorney’s fees for civil contempt is 

within the discretion of the district court.” Harcourt Brace Jovanovich Legal & Prof. Pub., Inc. 

v. Multistate Legal Studies, Inc., 26 F.3d 948, 953 (9th Cir. 1994); see also Perry v. O’Donnell, 

759 F.2d 702, 704-705 (9th Cir. 1985) (holding that “civil contempt need not be willful to justify 

a discretionary award of fees and expenses as a remedial measure.”). Thus, the court finds that an 

award of fees is appropriate here. 

Attorneys’ fees and cost were necessarily incurred by plaintiff in litigating the three 

bankruptcy matters and the instant motion. Further, those expenses are a direct result of the 

contemnors’ violation of the court’s order. However, the court can only award a reasonable fee 

amount. In determining whether the amount of attorney’s fees is reasonable, the court employs 

the “lodestar” method. Under this method, “a district court must start by determining how many 

hours were reasonably expended on the litigation, and then multiply those hours by the prevailing 

local rate for an attorney of the skill required to perform the litigation.” Moreno v. City of 

Sacramento, 534 F.3d 1106, 1111 (9th Cir. 2008). “In addition to computing a reasonable 

number of hours, the district court must determine a reasonable hourly rate to use for attorneys 

and paralegals in computing the lodestar amount.” Gonzalez v. City of Maywood, 729 F.3d 1196, 

1205 (9th Cir. 2013). “The Supreme Court has consistently held that reasonable fees ‘are to be 

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 The property has still not been sold as ordered. Plaintiff’s counsel represented at oral 

argument that until the problem of these contemnors filing serial bankruptcy petitions to obstruct 

scheduled foreclosure sales is cured, the Receiver cannot complete the task assigned him under 

the May 2, 2014 order. ECF No. 161 at 10. 

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calculated according to the prevailing market rates in the relevant community.’” Van Skike v. 

Dir. Off. Of Workers’ Comp. Programs, 557 F.3d 1041, 1046 (9th Cir. 2009). 

Plaintiff requests that it be reimbursed in the amount of $84,955.56 in attorneys’ fees and 

costs. In support of this request, plaintiff submits the declaration of Eric Pezold. ECF No. 137-1. 

Mr. Pezold states that his regular hourly rate is $495 and that he spent 82.7 hours providing 

litigation services for plaintiff. Id. ¶ 10. He further states that attorney Brett Ramsaur’s regular 

hourly rate is $375, and that he spent 121.8 hours on plaintiff’s case. 

Although Mr. Pezold states that the attorneys and paralegals enter their billable time into a 

program contemporaneously with the work they are doing and that “block billing” is not 

submitted, the declaration does not include the printout of the actual time sheets. Thus, plaintiff 

does not provide documentation identifying what specific tasks were performed by each attorney. 

Without that information, the court is unable to determine whether the amount of time expended 

for those tasks is reasonable. Further, plaintiff does not address whether the hourly rate sought by 

each attorney is consistent with the prevailing rates in this district. Thus, while the court finds 

that an award of attorney’s fees and costs is appropriate, the court cannot determine on the current 

record whether the fees sought are reasonable. Therefore, plaintiff must submit a supplemental 

brief addressing these factors. 

As noted, the request for an Order to Show Cause in re contempt was referred to the 

assigned magistrate judge. Pursuant to 28 U.S.C. § 636(e)(B)(iii), where a party’s conduct 

“constitutes a civil contempt, the magistrate judge shall forthwith certify the facts to a district 

judge and may serve or cause to be served, upon any person whose behavior is brought into 

question under this paragraph, an order requiring such person to appear before a district judge 

upon a day certain to show cause why that person should not be adjudged in contempt by reason 

of the facts so certified.” At the hearing, “[t]he district judge shall thereupon hear the evidence as 

to the act or conduct complained of and, if it is such as to warrant punishment, punish such person 

in the same manner and to the same extent as for a contempt committed before the district judge.” 

Id. For the reasons stated above, the facts as found herein are certified and Stars Holding Co. 

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LLC, Azad Amiri and Sarbjit S. Kang are order to appear before Judge Shubb and show cause 

why they should not be ordered to pay the contempt sanctions as recommended herein. 

III. Motion to Withdraw as Counsel 

 Also pending is attorney Jeffrey S. Kravitz’s motion to withdraw as counsel for 

defendants Dara, Kang, and Narges Echtesadi. ECF No. 143. 

 Local Rule 182(d) provides that “[w]ithdrawal as attorney is governed by the Rules of 

Professional Conduct of the State Bar of California, and the attorney shall conform to the 

requirements of those Rules.” California Rule of Professional Conduct 3-700(C)(6) allows 

counsel to seek to withdraw his representation when he “believes in good faith . . . that the 

tribunal will find the existence of . . . good cause for withdrawal.” However, “[a] member shall 

not withdraw from employment until the member has taken reasonable steps to avoid reasonably 

foreseeable prejudice to the rights of the client, including giving due notice to the client, allowing 

time for employment of other counsel, . . . and complying with applicable laws and rules.” Cal. 

Rules of Prof’l Conduct 3-700(A)(2). 

 Mr. Kravitz’s declaration demonstrates that he served each defendant with sufficient 

notice of his intent to withdraw as counsel. ECF No. 143-1 ¶¶ 4-6. Mr. Kravitz also notified 

defendants of the pending application for issuance of an order to show cause and that defendants 

were required to appear in court. Id. ¶¶ 4-6. He further notified Dara that as a corporation it must 

obtain new counsel to appear in court, and also recommended to Kang and Echtesadi that they 

obtain new counsel. Id. ¶ 7. Accordingly, defendants received proper notice of the motion to 

withdraw and counsel took sufficient steps to avoid any foreseeable prejudice. 

 Furthermore, withdrawal is appropriate in light of the defendants’ misconduct in this case. 

Mr. Kravitz was retained to represent defendants Dara, Kang, and Eghtesadi in this action, which 

he did. A settlement was ultimately reached. While the defendants have violated the order that 

resulted from that settlement, Mr. Kravitz had no role in their doing so. He did not represent Dara 

or Kang in the bankruptcy actions nor did he participate in the bad faith filings that occurred in 

those actions. Id. ¶ 1. Mr. Kravitz declares that he “had no knowledge or involvement in any of 

the actions” resulting in these contempt proceedings. Id. ¶ 2. Rather, the defendants, without Mr. 

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Kravitz’s knowledge, directly violated the court’s order by filing meritless bankruptcy petitions to 

frustrate duly-noticed foreclosure sales. Accordingly, withdrawal is appropriate under both 

California Rule of Processional Conduct 3-700(C)(1)(d) and (B)(1). See Cal. Rules of Prof’l 

Conduct 3-700(C)(1)(d) (withdrawal is permissive when “other conduct renders it unreasonably 

difficult for the member to carry out the employment effectively.”) and 3-700(B)(1) (“The 

member knows or should know that the client is bringing an action, conducting a defense, 

asserting a position in litigation, or taking an appeal, without probable cause and for the purpose 

of harassing or maliciously injuring any person.”). 

 For these reasons, attorney Jeffrey S. Kravitz’s motion to withdraw should be granted. 

However, Mr. Kravitz shall promptly notify defendants of this order and shall file a certification 

with the court that the defendants were so informed. 

IV. Conclusion 

 For the reasons stated above, it is hereby ORDERED that: 

1. Attorney Jeffrey Kravitz’s motion to withdraw as counsel (ECF No. 143) is granted, as 

provided herein. Mr. Kravitz shall promptly notify defendants of this order and shall file a 

certification with the court that the defendants were so informed. 

 2. Stars Holding Co. LLC, Azad Amiri and Sarbjit S. Kang shall appear before Judge 

Shubb, on June 13, 2016, at 1:30 p.m., in Courtroom No. 5, to show cause why the findings 

herein that they are in civil contempt should not be adopted and why they should not be ordered 

to reimburse plaintiff the reasonable attorneys’ fees incurred by their violation of the court’s May 

2, 2014 order appointing a receiver and entering a preliminary injunction. 

 3. An award of attorney’s fees as a remedial measure is appropriate to compensate the 

plaintiff for the costs and expenses incurred from Stars, Amiri and Kang’s deliberate disregard of 

the court’s order. Plaintiff shall file by May 19, 2016, a supplemental brief and/or supporting 

documentation including all necessary evidence to support its request for attorney’s fees and 

costs. 

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 4. The failure of Stars Holding Co. LLC, Azad Amiri and Sarbjit S. Kang to comply with 

this order may result in the imposition of further contempt sanctions. 

DATED: May 16, 2016. 

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