1 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF OHIO 

WESTERN DIVISION 

UNITED STATES OF AMERICA, Case No. 1:18-cv-194 

 Plaintiff, and Barrett, J. 

 Bowman, M.J. 

HOUSING OPPORTUNITIES 

MADE EQUAL INC., 

 

 Plaintiff-Intervenor, 

 

 v. 

JOHN KLOSTERMAN and 

SUSAN KLOSTERMAN, 

 Defendants. 

REPORT AND RECOMMENDATION 

 This matter is before the Court upon the motion of the United States to enforce a 

Consent Decree (“Decree”) entered into by Defendants John and Susan Klosterman, 

which Decree was designed to enjoin and remedy John Klosterman’s pattern or practice 

of sexually harassing tenants at his residential rental properties. The motion has been 

referred to the undersigned for initial consideration and a Report and Recommendation. 

(Doc. 96). For the reasons that follow, the motion should be GRANTED. 

I. Factual and Procedural Background 

 This Fair Housing Act case was the first of several related cases involving 

Defendant John Klosterman, and to a lesser extent, his wife Susan Klosterman. With the 

exception of a bankruptcy petition,1 most cases were filed in state court. The above1In May 2019, Defendants filed a pro se bankruptcy petition and invoked the automatic stay provision in 

this case. However, this Court granted the Motion of the United States in Opposition to Imposition of the 

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captioned case was initiated by the United States on March 21, 2018, and alleged that 

Mr. Klosterman sexually harassed female tenants living in properties in which he and his 

wife had an ownership interest, in violation of the Fair Housing Act, 42 U.S.C. § 3601 et 

seq. (Doc. 1). Specifically, the United States alleged that Mr. Klosterman, since at least 

2013, discriminated on the basis of sex against female tenants by engaging in conduct 

that included: (1) making unwelcome sexual comments and advances, and sending 

unwelcome sexual text messages and photographs; (2) touching female tenants on their 

bodies without their consent; (3) offering to grant housing benefits in exchange for sex; 

(4) taking adverse housing actions - such as refusing to make repairs or threatening 

eviction - against female tenants who refused his sexual advances; (5) expressing a 

preference for renting to single female tenants; and (6) entering the homes of female 

tenants without their consent and monitoring their daily activities through cameras or other 

means. (Id. ¶ 11 at PageID 2–3). On August 2, 2018, Housing Opportunities Made Equal, 

Inc. (HOME) intervened as an aggrieved party. (Doc. 25). 

 Defendants were represented by counsel from the outset of this case through its 

resolution with the entry of a Consent Decree. This Court facilitated that resolution, and 

on August 17, 2020 noted that the case was “settled in principle pending Defendant Susan 

Klosterman’s signature on the consent decree and procurement of final approval by the 

Assistant Attorney General.” (Minute Entry 8/17/2020). By September 30, 2020, all 

parties had signed the Consent Decree and jointly moved the Court to approve it; on 

October 1, 2020, this Court entered the Decree. (Docs. 91, 92). In general, the Decree: 

(1) includes what is presumed to be an accurate statement of Defendants’ rental property 

Automatic Stay, concluding that this Fair Housing Act action was specifically exempt from the stay provision. 

(Doc. 43). 

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holdings and requires Defendants to notify the United States of any change to those 

holdings; (2) prohibits Defendant John Klosterman from continuing to personally interact 

with tenants or otherwise participate in the rental management business; (3) requires 

Defendants to turn over the management of rental properties to an independent property 

manager (“Independent Manager”); (4) requires Defendants and their agents to obtain 

Fair Housing Act training; and (5) requires Defendants pay $177,500 in monetary 

damages and civil penalties. (Doc. 92, at ¶¶10-39, PageID 4980-86). 

 In the pending Motion to Enforce the Decree, the United States argues that 

Defendants have failed to comply with virtually all substantive provisions of the Decree. 

Pursuant to the Decree,2 defense counsel filed a Notice of Withdrawal on April 9, 2021. 

(Doc. 94). Recently on November 3, 2021, the United States filed a Motion to Substitute 

John Klosterman for Defendant Susan Klosterman, based upon the death of Susan 

Klosterman on October 20, 2021. (Doc. 101). Defendant John Klosterman continues to 

proceed pro se in opposition to the pending motion. 

 After this federal lawsuit was filed, separate civil litigation was filed on August 14, 

2019 by the City of Cincinnati in the Hamilton County Court of Common Pleas to collect 

fees, fines, and other costs related to extensive violations of the Cincinnati Municipal 

Code and subsequent code enforcement efforts at rental properties owned by 

2The Consent Decree stated that defense counsel “shall have no further obligations” after receiving 

releases signed by a group of aggrieved individuals. (Doc. 92 at PageID 4986, Consent Decree ¶36 n.5). 

The last signed release was received on March 29, 2021. (Doc. 94). The scope of defense counsel’s 

representation after the Decree was entered but before counsel filed the Notice of Withdrawal is unclear. 

(See e.g., Doc. 95-5 at19, PageID 5097 (email from defense counsel stating that “we are now outside the 

scope of our assignment from the insurer,” and that if the United States seeks “enforcement of the consent 

decree, we will not be acting on behalf of the Klostermans.”); see also id. at 18, PageID 5096 (2/25/21 email 

stating that “our assignment has ended with the exception of the ministerial task of obtaining the last 

release.”); Doc. 95-5 (4/6/21 letter from AUSA to Defendants, acknowledging that defense counsel is “no 

longer representing you.”)). 

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Defendants. See City of Cincinnati v. John Klosterman, et al., Case No. A1905588.3 

Highly relevant to this federal case is the fact that on February 14, 2020, the state court 

placed Defendants’ rental properties under Receivership. Id., Order Appointing Receiver. 

Unbeknownst to the United States at the time, five rental properties owned or controlled 

by Defendants remained outside of the Receivership. 

 After this federal case was “settled in principle” but before this Court filed the 

Decree, the State of Ohio filed the first of two criminal charges of Menacing by Stalking 

against John Klosterman relating to his activities concerning a female who, until April 

2021, resided in one of the properties that he owned outside of the Receivership.4 The 

first charge alleged that Defendant “showed up at [the victim’s] residence unannounced 

and uninvited, likewise he has come to her place of employment unannounced and 

uninvited...[and] followed her in his car.” Ohio v. Klosterman, Case No. 20CRB17905, 

Affidavit, Sept. 17, 2020, and said “odd things to her.” Id. Although the first state criminal 

charge was filed before the Decree was filed in this case, a second Menacing by Stalking 

Charge was filed on November 2, 2020, more than a month after entry of the Decree. 

See Ohio v. Klosterman, Case No. 29CRB21168, Complaint, Nov. 2, 2020. The second 

charge involved the same female tenant, and alleged that Defendant “continued to show 

up at the victim’s employment causing her to be in fear for her safety.” Id.

 The United States has offered evidence that Defendant was found to have violated 

the conditions of his bond regarding the Menacing by Stalking charges on at least four 

occasions occurring on or after the entry of the Consent Decree, between October 2, 

3Due to the volume of related civil and criminal proceedings in state court, Plaintiff has attached only a small 

portion of the relevant state court records as exhibits in support of its motion. To the extent not included in 

Plaintiff’s exhibits, this Court takes judicial notice of all state court records. 

4The same individual now resides in a property under control of the Receivership. 

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2020 and June 24, 2021. (See Doc. 95 at 3-4, PageID 5002-03 (citing state court 

records)). In addition, on November 13, 2020, a Grand Jury indicted Defendant for a 

misdemeanor violation of a protective order. See Ohio v. Klosterman, Case No. 

B2005843, Indictment for Violating a Protection Order. That indictment was based upon 

a finding that the conduct that resulted in the second Menacing by Stalking charge also 

violated the protection order issued in connection with the first Menacing by Stalking 

charge. In August 2021, Defendant was found guilty of all state criminal charges and 

sentenced to serve a total of 360 days. 

Three weeks before Defendant was found guilty of criminal charges, the United 

States filed the instant Motion to Enforce the Consent Decree.5 (Doc. 95). Defendant 

John Klosterman filed an individual pro se “Answer” or response to the motion. (See Doc. 

99). Plaintiff-Intervenor HOME also has filed no response.6 The United States filed a 

reply in support of its motion. (Doc. 100). 

II. Analysis of Motion to Enforce the Decree 

A. The Motion to Substitute John Klosterman 

The United States filed a Motion to Substitute John Klosterman in place of Susan 

Klosterman, based upon the recent death of Susan Klosterman on October 20, 2021, 

which event moots any injunctive relief sought against her. The United States seeks to 

substitute Defendant John Klosterman on the basis that any monetary damages that Mrs. 

Klosterman was obligated to pay to the victims of sexual harassment in this case survive 

5Because the case was administratively closed following entry of the Decree, the motion of the United 

States is construed as a motion to re-open the case to enforce the Decree. 

6The lead attorney for HOME withdrew from representation after entry of the Consent Decree, but her 

Notice of Withdrawal states that “Alphonse A. Gerhardstein of the new law firm of Friedman, Gilbert + 

Gerhardstein, LLC has consented to substitute as Trial Attorney for Plaintiff if the case is re-opened.” (Doc. 

93). Mr. Gerhardstein entered his appearance on July 23, 2018, (Doc. 14). The receipt generated by the 

filing of Doc. 95 indicates that the motion was electronically sent to Mr. Gerhardstein on July 27, 2021. 

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her death. John Klosterman is the presumed beneficiary of his wife’s estate under Ohio 

law. 

 Under 28 U.S.C. § 2404, “a civil action for damages commenced by or on behalf 

of the United States,” survives the death of a defendant and is enforceable against the 

estate as well as any surviving defendants. In addition, Fair Housing Act claims typically 

survive the death of a party. See Revock v. Cowpet Bay Est Condo. Assoc., 853 F.3d 

96, 108-110 (3d Cir. 2017); see also generally Crabbs v. Scott, 880 F.3d 292, 294 (6th 

Cir. 2018) (applying Ohio state law and finding a § 1983 claim survived death). The 

undersigned agrees that substitution of John Klosterman in place of Susan Klosterman is 

appropriate for purposes of any remaining claims of monetary damages against her 

estate. 

B. This Court’s Authority to Interpret and Enforce the Decree 

 The Consent Decree was entered upon the Court's approval, and provides for the 

Court's retained jurisdiction. The Decree grants prospective injunctive relief and provides 

the United States with a mechanism to petition the Court to enforce its terms. (Doc. 92 

at 11, ¶¶ 42, 46). “It falls on the Court, as issuer of the Decree and the injunctive relief 

provided therein, to interpret and apply the terminology to the circumstances at hand.” 

McGoldrick v. Bradstreet, 397 F.Supp.3d 1093, 1101 (S.D. Ohio 2019). In interpreting 

the Decree, the Court is bound by principles of Ohio contract law. See Marie Tribe of 

Chippewa Indians v. Engler, 146 F.3d 367, 372 (6th Cir. 1998). Thus, the Court must 

closely examine the precise language of the Decree to determine whether Defendants 

have violated its provisions. “The Ohio Supreme Court has held that extrinsic evidence 

surrounding a contract may only be considered when the language of the contract is 

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unclear or ambiguous or when the circumstances surrounding the agreement invest the 

language of the contract with a special meaning.” Waste Management of Ohio, Inc. v. City 

of Dayton, 169 Fed. Appx. 976, 989, 2006 WL 620648, at *12 (6th Cir. 2006) (citing Shifrin 

v. Forest City Enters., Inc., 64 Ohio St.3d 635, 597 N.E.2d 499, 501 (1992)). 

C. The Alleged Violations 

1. The False Affirmation in ¶ 10 and Failure to Update Holdings in ¶ 11 

The United States asserts that both Defendants violated a central tenet of the 

Decree that “requires Defendants to accurately represent and update the extent of their 

rental property holdings.” (Doc. 95 at 2, PageID 5001). The undersigned agrees. At the 

time the parties entered into the Decree, the United States believed that all rental 

properties owned or operated by either of the Defendants had been placed under the 

control of a Receiver during the state court civil litigation. Defendants unequivocally 

confirmed the accuracy of that understanding in ¶ 10 of the Decree, which states: 

10. Defendants affirm that they do not own, lease, or control any rental properties 

with the exception of properties under receivership in City of Cincinnati v. John 

Klosterman, et al, Hamilton County C.P. Case No. A190558 (the 

“Receivership”). 

(Doc. 92 at 3, ¶10). 

 The affirmation in ¶ 10 is foundational to the entire Decree. While ¶ 10 is the first 

paragraph in Section IV, appropriately captioned “INJUNCTION CONCERNING 

MANAGEMENT OF RESIDENTIAL RENTAL PROPERTIES,” multiple provisions of the 

Decree are defined by reference to the properties held under Receivership as discussed 

below. Closely related is ¶ 11, which requires Defendants to update the United States if 

they acquire any additional rental holdings outside of the Receivership. 

11. If, at any time during the effective period of this Decree, either or both 

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Defendants acquire a direct or indirect management, ownership, financial, or 

controlling interest in any other residential rental property (or if they maintain 

any such interest in any residential property following the Receivership), such 

property will be subject to the applicable provisions of this Decree. Within 30 

days of acquiring such an interest (or, for any properties currently owned and 

retained following the Receivership, within 30 days following the termination of 

the Receivership), Defendants will notify counsel for the United States of the 

nature of their interest in the dwelling or property; the address of the property; 

the number of individual dwelling units at the property; and any other 

information required under this Decree. Defendants will further provide the 

United States with copies of any documents memorializing the transfer in 

interest of the property. 

(Id. at ¶ 11). 

Consistent with the foundational statement in ¶ 10, an earlier section contains 

terms and conditions that make plain that the Decree is intended to apply to “any 

residential property that is owned or operated” by Defendants. Specifically, ¶ 7 in that 

section states: “Unless otherwise specified herein, the provisions of this Decree apply to 

any residential property that is owned or operated by any of the Defendants, or that is 

owned or operated by any entity of which any Defendant is an officer, agent, employee 

or partner, or in which any Defendant has any ownership, financial, or control interest, 

whether that property is currently owned or acquired during the term of this Consent 

Decree.” (Doc. 92 at ¶ 7, PageID 4979). 

 Soon after entry of the Decree, the United States began to suspect that the 

affirmation in ¶ 10 was false, and that one or both Defendants retained ownership or 

control of five additional rental properties outside of the Receivership. The United States 

sought clarification from defense counsel. (See Doc. 95-7, email from Plaintiff’s counsel 

to defense counsel dated 2/18/21, requesting a response not later than March 5 and 

expressing concern, based upon information “from the receiver that John Klosterman is 

renting properties that are not a part of the receivership”). Defense counsel promptly 

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responded via email dated 2/23/21, stating that counsel “have no knowledge about any 

of the allegations made by the receiver,” expressly affirming that defense counsel “were 

under the belief that all of the Klosterman properties were under receivership,” and 

indicating counsel would follow up with the Klostermans. (Doc. 95-5 at 19, PageID 5097). 

In a March 5, 2021 letter that Defendant John Klosterman sent directly to the 

United States,7 Defendant admits to owning five properties outside the Receivership, 

contrary to the affirmation made in ¶ 10. (Doc. 95-2, stating that “[w]e own and have 

owned 621, 623, 634, 787, and 801 Delhi for over a decade.”). Defendant additionally 

admits that, with respect to 801 Delhi, he expanded any pre-existing ownership interest 

through a buy-out that occurred in October 2020. 8 Therefore, Defendants admit to 

violating both ¶ 10 and ¶ 11 of the Decree. 

Rather than accepting responsibility for the false affirmation, Defendant John 

Klosterman suggests that the United States should have been aware of the inaccuracy 

because the five properties “were all listed in the Bankruptcy documentation that the City 

and [t]he US Government were a part of in the first hearing of the Debtors.” (Doc. 95-2 at 

3). Defendant also places a heavy share of blame on defense counsel. Contrary to 

counsel’s statements, Defendant insists that his attorneys knew “that I retained properties 

that the City failed to attach their judgment to and was also known at the withdrawn 

bankruptcy hearing.” (Id. at 2). Defendant maintains that former counsel also knew that 

7Defense counsel apparently forwarded the United States’ email to Defendant John Klosterman and asked 

him to respond. The United States represents that the Defendant’s letter was received on or about March 

5, 2021. 

8To the extent that Defendants had an ownership interest in 801 Delhi at the time the Decree was entered, 

Defendant implies that interest was shared with a business partner. The March 5, 2021 letter explains that 

“801 Delhi was owned by my old employee and partner of 30 years” but that “we decided that I would buy 

him out and [I] did so in October I believe.” An October 2020 “buy out” date constitutes a change in 

Defendant’s holdings that post-dates the Decree and triggers an obligation to report under ¶ 11.

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Defendant intended to use “the income generated from the units” to satisfy the judgment 

owed under the Consent Decree. (Doc. 95-2 at 1). 

Regarding his own culpability, Defendant suggests that he didn’t have time to read 

through and didn’t recall the terms of the Decree, which he only signed “at the last 

settlement meeting... after much back and forth ... while [counsel] feverishly made 

whatever changes were discussed....” (Id. at 2). He asserts that he believed that the 

settlement “was mostly about money and I recall nothing was said about any other 

important items,” other than that he “would have nothing to do with tenants.” (Doc. 95-2 

at 2). In a follow-up email, Defendant characterizes the false affirmation as a “good faith 

mistake,” (Doc. 95-8, 4/23/21 email from Defendant to AUSA stating that “I will 

answer...any of the concerns that you had, including the good faith mistake in not 

reporting the 5 properties that the City failed to control.”). 

In his response in opposition to the motion to enforce the Decree, Defendant walks 

back some of his prior admissions, suggesting that at the time of the Decree, he “believed 

all rental properties [were] subject to the receivership,” and “did not find out until later that 

five (5) properties were left off of the list of the receivership.” (Doc. 99 at 2). As to any 

obligation to correct the error or update the list of holdings, Defendant asserts that he 

“fully expected [defense counsel] to notify the Court and the U.S. Attorney,” and “did not 

find out until months later that [counsel] had removed himself from the case.” (Id.)9 In 

other words, Defendant’s response to the pending motion focuses on evading personal 

responsibility for the false affirmation and/or failure to correct the record, in the same way 

9Many of Defendant’s vague statements are contradicted by the record. For example, he seems to suggest 

that he was unaware of the withdrawal of defense counsel. Apart from the provision of the Decree that 

spelled out that counsel would have no further obligation after receiving releases signed by a group of 

aggrieved individuals, the Notice of Withdrawal was served on Defendants by certified mail. (Doc. 94). 

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that his March 5, 2021 letter and April 23, 2021 email imply that any errors were made by 

counsel, and/or in “good faith.” 

To the extent that Defendant believes he should escape culpability because he did 

not read the Consent Decree before signing, he is mistaken. Under controlling Ohio law, 

a party cannot evade the terms of a contract that he knowingly signs by later pleading 

ignorance as to its terms. It is a “long-held principle that parties to contracts are presumed 

to have read and understood them and that a signatory is bound by a contract that he or 

she willingly signed.” Preferred Capital, Inc. v. Power Eng. Group, Inc., 112 Ohio St.3d 

429, 2007-Ohio-257, 860 N.E.2d 741, ¶10 (Ohio 2007). “Further, if the parties have 

signed a written agreement, it is presumed that their minds have met and 

a contract made, even if one of the parties failed to read the agreement.” Hughes v. 

Cardinal Fed. Savings & Loan Assoc., 566 F. Supp. 834, 844 (S.D. Ohio 1983) 

(citing Parklawn Manor v. Jennings-Lawrence Co.,197 N.E.2d 390, 26 Ohio Op.2d 341, 

344 (1962)). In any event, nothing in Defendant’s response disputes: (1) that the full 

extent of Defendants’ rental holdings being held under Receivership was fundamental to 

the Decree; (2) that the affirmation set forth by Defendants in ¶ 10 was false when made, 

because Defendants actually owned or controlled five properties outside of the 

Receivership; and (3) that Defendants violated ¶ 11 by failing to notify the United States 

(at a minimum) of the acquisition of a new post-Decree interest in 801 Delhi. Thus, 

undisputed facts reflect that Defendants made a false affirmation in ¶ 10 on the date of 

the Decree, and that they subsequently violated ¶ 11. 

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2. Violations of Paragraphs 12 and 20 of the Decree

The United States next argues that Defendant John Klosterman has violated an 

injunctive provision that permanently enjoins him from personally interacting with tenants 

or otherwise participating, directly or indirectly, in the rental management business. 

Again, the undersigned agrees, based upon the language agreed upon by the parties and 

entered by this Court. 

12. John Klosterman is permanently enjoined from directly or indirectly performing 

any property management responsibilities at any residential rental property. For 

purposes of this Decree, “property management responsibilities” include the 

following: showing or renting housing units; processing rental applications; 

performing or supervising repairs or maintenance; determining tenant eligibility for 

subsidies or waivers of fees and rents; inspecting dwelling units; collecting rent 

and fees; entering occupied rental units; overseeing any aspects of the rental 

process; or engaging in any other property-related activities that involve, or may 

involve, personal contact with tenants or prospective tenants. 

(Doc. 92 at 4, ¶12, PageID 4981). Unlike some provisions, ¶ 12 prohibits all property 

management activities by Defendant John Klosterman for “any residential rental property” 

without regard to whether those properties are held under Receivership. 

Relatedly, ¶ 20 also permanently enjoins both John and Susan Klosterman: 

20. Defendants are permanently enjoined from purposefully or knowingly 

contacting or communicating, either directly or indirectly, with any person identified 

by the United States as an aggrieved person in this action, or with former or 

prospective tenants of Defendants’ former or future rental properties. “Contact or 

communications includes, but is not limited to, physical contact, verbal contact, 

telephone calls, e-mails, faxes, written communications, text or instant messages, 

contacts through social media, or other communications made through third 

parties. 

(Id. at PageID 4982). Thus, ¶ 20 prohibits contact or communication with “former or 

prospective tenants” at “Defendants’ former or future rental properties.” To the extent 

that a reference to “former” tenants is ambiguous, the undersigned interprets the phrase 

to refer to all tenants who held leases prior to October 1, 2020, because the salient date 

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for interpreting the Decree was the date it was entered by this Court. For the same 

reason, the undersigned interprets “former or future rental properties” in ¶ 20 to mean 

properties held or controlled by Defendants either before or after October 1, 2020, with a 

“prospective tenant” to mean any person seeking to rent from Defendants on or after 

October 1, 2021. 

In his March 5, 2021 letter, Defendant admits that he knew at the time he entered 

into the Decree “that I would have nothing to do with tenants,” and that he “agreed 

wholeheartedly” to that requirement. (Doc. 95-2 at 2). Yet, in the same letter, Defendant 

admits to being involved in rental negotiations with at least one prospective tenant. (Doc. 

95-2 at 6). Additionally, he states in his April email that he personally “instructed the 2 

tenants at 801 Delhi to send rents via money order until I have found a new manager.” 

(Doc. 95-3). Thus, John Klosterman admits to violating both ¶ 12 and ¶ 20. Defendant 

also admits to having employed a tenant and later a prospective tenant to perform 

property management responsibilities, which also violated both provisions. And another 

property manager identified by Defendant, Ms. Rammelsburg, informed the United States 

that Defendant was still “communicating with tenants and prospective tenants and 

collecting rents.” (Doc. 95-10 at 2, PageID 5168). Last, Defendant’s recent state criminal 

charges involving multiple communications with a former tenant of 801 Delhi offer further 

evidence of his violations of ¶¶ 12 and 20 after entry of the Decree.10 (See Docs. 100-1, 

100-2, 100-3). 

10Defendant complains that some events occurred earlier, but does not dispute that other events occurred 

after October 1, 2021. He also asserts that the state court convictions are not yet final; state records confirm 

that an appeal filed on August 24, 2021 remains pending. Regardless of whether the convictions are upheld 

in state court, Defendant does not dispute that he violated ¶¶ 12 and 20 of the Decree. 

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In his response in opposition to the pending motion, Defendant admits that ¶ 12 

prohibits him from property management activities, thereby requiring him to employ 

someone else to engage in those activities for “any” rental properties – including those 

properties held outside the Receivership. Rather than disputing any of the clear violations 

of both ¶¶ 12 and 20, Defendant focuses on defending his actions, arguing that he “has 

had issues maintaining managers due to COVD-19 [sic] and the small number of units 

managed.” (Doc. 99 at PageID 5191).11 He excuses his violations on grounds that he 

had contact with tenants “only after his hired manager had quit.” (Doc. 99 at 2). Other 

than – for the first time - seeking “guidance” on “how to proceed...in the event a manager 

quits,” (id. at 7), the response offers no reassurance that Defendant will avoid improper 

communications in the future. 

3. Defendants Have Failed to Retain an Independent Manager and Have 

Violated Paragraphs 13, 14, and 16

As discussed, ¶ 12 of the Decree specifically enjoins John Klosterman “from 

performing any property management responsibilities.” In order to avoid “directly or 

indirectly” performing duties for “any” of his rental properties, Defendant was required to 

hire someone else. Paragraph 13 specifically directs both John and Susan Klosterman 

to employ an “Independent Manager,” and cites to ¶¶ 11 and 12 in defining the duties of 

an Independent Manager that are applicable to “current or future rental properties.” The 

United States argues that because neither of the Defendants have ever employed an 

Independent Manager, they have violated ¶ 13. 

11Defendants have never reached out to the United States for advice or assistance to the extent that 

Defendants are now attempting to assert an “impossibility of performance” defense. 

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Muddying the waters somewhat, the language of ¶ 13 begins with prefatory 

language that ties the timing of hiring an “Independent Manager” to events connected to 

the Receivership, which again, the United States believed encompassed the entirety of 

Defendants’ holdings based upon the affirmation made in ¶ 10. 

13. Prior to obtaining an ownership interest in any future rental properties or

following termination of the Receivership should Defendants retain an ownership 

interest in any of the current rental properties, Defendants will retain an 

Independent Manager, to be approved in writing by the United States, to perform 

all property management duties as described in paragraph 12 at any residential 

rental property Defendants own, lease, or control, including subsequently-acquired 

properties as set forth in Paragraph 11 (“current or future rental properties”). An 

“Independent Manager” is an individual or entity reasonably experienced in 

managing rental properties and who has no current or past employment, financial, 

contractual, personal, or familial relationship with Defendants. 

(Doc. 92 at ¶13, PageID 4891, emphasis added). The italicized language of ¶ 13 seems 

to suggest that hiring an Independent Manager is based upon a contingent future event 

in that it is required only when Defendants acquire “future rental properties” (after October 

1, 2020) or if Defendants retain an ownership interest “following termination of the 

Receivership” – an event that has not yet occurred.12 

According to John Klosterman’s March 5 letter, he owned five additional properties 

outside of the Receivership on October 1, 2020. However, he also admits to acquiring 

an additional interest in 801 Delhi after October 1, by “buy[ing] out” a former business 

partner. If for no other reason, Defendant’s admission that he acquired an additional 

interest in 801 Delhi “in October” brings that property squarely into the “future rental 

12Hamilton County Case No. A 1905588 reflects an Entry Adopting Magistrate’s decision and final decree 

in foreclosure was filed on October 7, 2021. However, it is clear from the record that Receivership 

proceedings continue. See Notice of Hearing on Amended Motion by Receiver to approve sale and sale 

terms, filed 10/27/21. 

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property” category for which an Independent Manager was required under the narrowest 

possible interpretation of ¶ 13. 

Considering the equities involved in both Defendants’ misrepresentation in ¶ 10 

and reading the entirety of the Decree as a whole, however, the undersigned does not 

read the obligation to hire an Independent Manager in ¶ 13 to be as limited as a narrow 

reading of the prefatory language might suggest. The parties and the Court expressed 

the overarching intent of the Decree to apply to “all rental properties” (Decree, at ¶ 7). 

Although the language of a contract must be interpreted according to the language used 

by the parties (and the Court in this instance), Ohio law also provides that extrinsic 

evidence may be considered “when the circumstances surrounding the agreement invest 

the language of the contract with a special meaning.” Waste Management of Ohio, Inc., 

169 Fed. Appx. at 989. The language of ¶ 13 has such “special meaning” insofar as it 

was based upon the foundational affirmation made by Defendants in ¶ 10, and should 

therefore be construed to have the meaning intended. Alternatively, the undersigned 

recommends that the express language of ¶ 13 be reformed as a “mutual mistake.”13 

Thus, to fulfill the intent of the parties, the undersigned construes ¶ 13 as if written as 

follows: “Prior to obtaining an ownership interest in any future rental properties or 

following termination of the Receivership should Defendants retain an ownership interest 

in any of the[ir] current rental properties, Defendants will retain an Independent 

Manager....” 

Independent of the construction of ¶ 13, the United States argues persuasively that 

Defendants also have violated ¶ 16 of the Decree, which does not tie the hiring of an 

13After all, even Mr. Klosterman maintains that the false affirmation was a “mistake.” 

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Independent Manager to any particular event in time, but instead requires Defendants to 

perform eight specific duties through an Independent Manager for all “current or future 

rental properties.” Because Defendants failed to hire an Independent Manager at any 

point, they have not complied with duties required of the Independent Manager for all of 

their properties, including those held outside the Receivership. In pertinent part, ¶ 16 

states as follows: 

16. Defendants shall do the following through the Independent Manager for any 

current or future rental properties: 

a. Implement, subject to the United States’ approval, a written policy against 

sexual harassment, including a formal complaint procedure.... 

b. Ensure that any persons who will be performing any duties with respect to 

future rental properties are familiar with the requirements of the FHA...and this 

Decree. 

c. Post an “Equal Housing Opportunity” sign in any rental office....14

d. Require that all advertising...include either a fair housing logo, the words “equal 

housing opportunity provider,” and/or the following sentence: [specific wording 

that connotes the lessor is an equal housing provider].... 

e. Send to the United States within 30 days after the effective date of this Decree, 

and every six months thereafter..., a list of all tenants at future properties and 

their addresses. 

f. Maintain all rental records... and allow the United States to inspect and copy 

such records.... 

g. Provide any information reasonably related to compliance with this Decree that 

is requested by the United States. 

h. Notify the United States in the event the Independent Manager obtains any 

information indicating that Defendant John Klosterman is in violation of this 

Consent Decree or the Fair Housing Act.... 

14 In his March 5, 2020 letter, Defendant states that Defendants’ manager (who was not a qualified 

“Independent Manager”) would be posting “Posters” in the near future, by March 8, 2021. (Doc. 95-2 at 6). 

The United States concedes that the reference may be to the requirement in ¶ 16(c) that an Independent 

Manager post Equal Housing Opportunity posters. However, Defendants have never provided confirmation 

of the content of the posters or whether they were in fact posted at all properties. 

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(Doc. 92 at 4-5, ¶ 16, PageID 4981-82). 

Defendants also have violated Paragraph 14, which contains a notification 

procedure for any time in which the Defendants seek to change from one Independent 

Manager to the next. 

14. If, after retaining an Independent Manager, Defendants wish to change the 

Independent Manager for any reason, they shall submit the name of the 

prospective manager, in writing, to the United States for written approval at least 

ten (10) days prior to retaining the individual or entity, except in the event of an 

emergency. If there is a need to retain an Independent Manager on an emergency 

basis, Defendants shall submit the name of the manager, in writing, to the United 

States within 48 hours. 

(Doc. 92 at 4, PageID 4981). 

In his March 5, 2021 letter as well as in his response in opposition to the Motion to 

Enforce the Decree, John Klosterman asserts that he has tried to comply with ¶¶ 13-16 

by engaging at least five property managers since August 1, 2020: NCN Property 

Maintenance (“NCN”) (August 1, 2020 to November 2020); Zell Hatfield (in or around 

November 2020 to March 3, 2021); Amy Mcintire (March 6, 2021 through an unknown 

end date); Sharri Rammelsburg (beginning April 2021 through an unknown end date); 

and Judy Tausch (beginning June 24, 2021). (Docs. 95-2 at 3-6, 95-3, 95-4; see also

Doc. 99 at 3, 6). In addition, Defendant states that he “has hired and is submitting for 

approval... Karen Goodman” as his Independent Manager. (Doc. 99 at 6, PageID 5195). 

Other than claiming that he has tried to hire managers, Defendant does not dispute the 

well-supported contentions of the United States that he has never employed an 

Independent Manager and that no one has performed the eight requirements of ¶ 16. 

(See Doc. 99 at 4, arguing that Defendant “has acted in good faith...if not the letter [of 

the Decree] by hiring Independent Managers.”). It is also undisputed that prior to 

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proposing Ms. Goodman in response to the pending motion, Defendants made no attempt 

to gain advance approval for any of the alleged managers, and none were actually 

approved by the United States. 

The United States points out that Defendant has admitted that Ms. Hatfield is a 

current tenant, and that Ms. Mcintire was a prospective tenant. After Defendant 

mentioned Ms. Rammelsburg in his responsive memorandum, the United States 

interviewed her. By Ms. Rammelsburg’s own admission, she is unqualified to serve as 

an Independent Manager because she was performing some (but not all) of the property 

management functions as a personal favor based upon her friendship with John 

Klosterman. (Doc. 95-5 at 4-5; see also Doc. 95-10 at 2, PageID 5168). Judy Tausch 

was not an Independent Manager because Defendant admits she is his sister. (Doc. 95-

4).15 Finally, on October 5, 2021, the United States spoke with Ms. Goodman and learned 

that she also has a personal relationship with Mr. Klosterman through her son, who is an 

inmate incarcerated together with Defendant. (Doc. 95, PageID 5005). That relationship, 

including Defendant’s promise to provide housing to Ms. Goodman’s son once he is 

released from jail, precludes her from serving as an Independent Manager.16 In addition, 

while Ms. Goodman agreed to collect some (but not all) rents on Defendant’s behalf, she 

expressly declined to serve as his property manager. (Doc. 100-4). In sum, Defendants 

have violated ¶¶ 13, 14, and 16 by failing to employ an Independent Manager, by failing 

15The State of Ohio alleges in a motion to revoke bond that Ms. Tausch, at Defendant’s direction interfered 

with the Receivership by posing as an “investor” interested in the properties and speaking with a tenant. 

Ohio v. Klosterman, Case Nos. 20CRB17905, 20CRB18773, 20CRB19488, 20CRB21069A, B, 

20CRB21168, Motion to Revoke Bond, June 25, 2021). 

16According to the United States, Ms. Goodman admitted she is in regular communication with Defendant, 

that he dictates her interactions with tenants and that he retains authority over property management 

responsibilities. The United States has confirmed those communications through its review of recordings 

of jail telephone calls. 

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to notify or seek approval from the United States for any of the alleged managers, by 

changing managers frequently without notice to the United States or advance approval, 

and by failing to have any of the managers perform the eight duties set forth in ¶ 16. 

4. Defendants and Their Agents or Employees Failed to Complete Fair 

Housing Act Training Under Paragraphs 22 and 23 

The United States argues that Defendants also violated their duties under Section 

V of the Consent Decree, captioned “EDUCATION AND TRAINING.” These violations 

are undisputed. Paragraph 22 directs Defendants to obtain Fair Housing Act training, 

while ¶ 23 mandates training for Defendants’ agents and employees. The precise 

language states, in relevant part: 

22. Within 30 days of acquiring an ownership interest in any future rental property 

or following termination of the Receivership should Defendants retain an 

ownership interest in any of the current rental properties, Defendants will attend 

an in-person training delivered face-to-face or via video conferencing with 

synchronous instruction on the Fair Housing Act, including the Act’s provisions 

related to sexual harassment, other forms of sex discrimination, and discriminatory 

statements. The trainer or training entity must be qualified to perform such training, 

must be independent of Defendants, and must be approved in advance by the 

United States. Defendants will bear the cost of any expenses associated with this 

training. ....Defendants will send a copy of these certificates [of attendance] to 

counsel for the United States within 10 business days of the training. 

23. During the effective period of this Decree, all new agents or employees of 

Defendants, including agents or employees of the Independent Manager, who are 

involved in showing, renting, managing or maintaining any residential rental 

properties owned, managed, or operated by Defendants, and all employees or 

agents who supervise such persons, shall, within 30 days of commencing an 

employment or agency relationship with Defendants or the Independent Manager, 

be provided the training described in Paragraph 22, or participate in an online 

training on the Fair Housing Act, including the Act’s provisions related to sexual 

harassment and other forms of sex discrimination. The online training program 

must be approved in advance by the United States. New employees who are 

provided online training will participate in an in-person training as described in 

Paragraph 22, within one year of commencing an employment or agency 

relationship with Defendants. Defendants will send a copy of the certificates of 

training...to counsel for the United States within 10 business day s of said training. 

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(Doc. 92 at 6-7, ¶¶22-23, PageID 4983-84 (emphasis added)). 

The undersigned notes that ¶ 22 includes prefatory language similar to ¶ 13, which 

(if narrowly construed) suggests that the timeframe for Defendants to complete the 

requisite Fair Housing Act training begins to run only after acquisition of a “future rental 

property or following termination of the Receivership.” If so construed, the obligation to 

complete Fair Housing Act training was nevertheless triggered when Defendant acquired 

an additional ownership interest in 801 Delhi after entry of the Decree. However, 

consistent with ¶ 13 and based upon the admitted false affirmation made in ¶ 10, the 

undersigned concludes that ¶ 22 should be construed more broadly. Thus, ¶ 22 should 

either be interpreted or reformed to reflect the parties’ and this Court’s intent, to capture 

all current (as of October 1, 2020) and future rental properties owned or controlled by 

Defendants. As reformed, ¶ 22 would state in relevant part: “Within 30 days of acquiring 

an ownership interest in any future rental property or following termination of the 

Receivership should Defendants retain an ownership interest in any of the[ir] current 

rental properties, Defendants will attend an in-person training delivered face-to-face or 

via video conferencing with synchronous instruction on the Fair Housing Act ....” Under 

this interpretation, Defendants’ obligation to take the Fair Housing Act training began to 

run on the date of the Decree. 

Neither of the Defendants ever sought the United States’ approval for any Fair 

Housing Act training, or completed any such training. John Klosterman admits as much. 

(Doc. 99 at 4; see also Doc. 92-5 at 4 and 6, email in which Defendant states that he 

“signed up for a course Sexual Harassment [sic] class” in January 2021, but never took it 

due to “billing issues.”). In prior correspondence with Mr. Klosterman, the United States 

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explained that the on-line course that he claimed to have signed up for (but never took) 

did not satisfy the terms of the Decree in part because the course description indicated it 

was geared toward workplace harassment, and was not training that was relevant to the 

Fair Housing Act. (Doc. 95-5 at 4). In his response to the pending motion, Defendant 

complains that he has not been able to obtain training since he was taken into custody 

on state court criminal charges. Whether Defendant is presently prohibited from video 

training remains unclear. However, Defendant had more than 10 months to obtain 

training before he was incarcerated, and does not deny that he never sought approval for 

any training. 

Defendants also have violated ¶ 23 because none of the employees, agents, or 

managers hired to perform duties at the five rental properties held outside of the 

Receivership have taken the Fair Housing Act training required. Unlike ¶ 22, there is no 

ambiguity that would suggests that the obligation set forth in ¶ 23 is contingent on some 

future event. Instead, ¶ 23 expressly applies to all “agents or employees of Defendants,” 

and to “any residential rental properties” owned, leased, or controlled by Defendants at 

any time during the term of the Decree. 

5. Defendants Have Failed to Pay Monetary Damages into an Escrow 

Account in Violation of Paragraphs 27-32 of the Decree 

The last set of provisions that Defendants have violated is contained in Section VI 

of the Decree, captioned “MONETARY DAMAGES.” In ¶¶ 25-26, Defendants were 

required to pay a total of $162,500 up front, with payments divided between the United 

States, for the benefit of a list of aggrieved persons, and Plaintiff-Intervenor HOME. (Id. 

at PageID 4984). Defendants also were required to pay a civil penalty of $2,500. (Id. at 

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¶ 39). According to the United States, “Defendants’ insurer made a majority of [the initial] 

payment on behalf of Defendants.” (Doc. 95 at 9, n.3). 

Notwithstanding the completion of those initial payments, Defendants failed to 

comply with additional terms that required them to pay an additional $15,000 in damages 

in three installments of $5,000, to be deposited over the course of one year into an 

interest-bearing escrow account. (See Doc. 92 at ¶ 27). The first installment of $5,000 

was to have been deposited within six months of the Decree, not later than April 1, 2021. 

(Id. at ¶28). Two additional $5,000 deposits were to have been made quarterly, not later 

than July 1 and October 1, 2021. The Decree requires Defendants to provide proof that 

each of the installment payments have been made into the escrow account as specified 

by the Decree. (See, e.g., Doc. 92 at ¶ 28, “Within 5 business days of the establishment 

of the Escrow Account, the Defendants shall submit proof to the United States that the 

account has been established and the funds deposited”; id. at ¶ 30, requiring the 

submission of similar proof after each quarterly deposit). 

 The record reflects that Defendants made some attempt to complete the initial 

payment due on April 1, 2021, when they sent the United States a personal check in the 

amount of $5,000 on March 29, 2021. However, the United States returned Defendants’ 

check and explained in an April 6, 2021 letter that it did not meet the terms of the Decree, 

because the Decree clearly requires Defendants to establish and deposit the money into 

an interest bearing escrow account. (Doc. 95-5 at 8; Doc. 95-10 at 3 and 10). The letter 

explains in detail the requirements of ¶¶ 27-32, including the requirement to “establish an 

interest-bearing escrow account and deposit the money owed there, providing proof of 

these deposits to the United States.” (Id.) 

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In an email response dated April 23, 2021, John Klosterman states that Susan 

Klosterman “tried to set up an escrow account at 5th bank [sic] and was told they only do 

it for mortgages with the bank, so I am going to ask her to setup a separate saving account 

at 5th 3rd today for the collection [of] the $15,000.00.” (Doc. 95-8, PageID 5165). In a 

separate email later that same day, Defendant states “Sue Klosterman opened the 

savings account,” and that “[t]here is $5,000.00 in the account.” (Doc. 95-10 at 7, PageID 

5173). However, via responsive email on May 6, 2021, the United States explained again 

that “[w]hile we appreciate this effort..., this deposit does not comply with the 

requirements of the Consent Decree,” and emphasized that the deposit must be placed 

“into an interest-bearing escrow account” with “proof of this deposit to the United 

States.” (Doc. 95-10 at 3, PageID 5169 (emphasis original)). 

In emails dated June 24, 2021 and again on July 4, 2021, Defendant claimed to 

have resolved the deficiency regarding the “escrow” account. (See Doc. 95-4, stating 

“that 5/3 Bank had made a mistake in not putting the $5000.00 into the escrow account, 

which is corrected”; Doc. 95-6, stating that “we have deposited the 2nd $5,000.00 in the 

5/3 escrow savings account.”) (emphasis added). But in his response in opposition to the 

pending motion, Defendant now admits that there is still no escrow account, attempting 

to excuse the deficiency on grounds that he “could not set up this account because of 

house arrest.” (Doc. 99 at 5). 

Two weeks prior to her death, on October 5, 2021, Susan Klosterman sent the 

United States a copy of a deposit slip, showing that a total of $15,000.00 has been 

deposited into a savings account that is not an escrow account. (Doc. 100-5). The 

United States has repeatedly explained that, while it appreciates Defendants’ attempted 

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payment, Defendants have not complied with the requirement that Defendants establish 

and make payments into an interest-bearing escrow account, and have failed to identify 

any plan to transfer funds to such an escrow account. The “escrow account” distinction 

is a material term of the Decree. A savings account remains under Defendants’ control, 

allowing Defendants to draw on it at any time. By contrast, an escrow account ensures 

that the money deposited cannot be removed except to compensate the identified victims 

of Mr. Klosterman’s sexual harassment, as set forth in the Decree. The unrebutted 

evidence submitted by the United States demonstrates that the deposits made by Susan 

Klosterman prior to her death were made to a savings account and not to an escrow 

account. 

III. Defendant John Klosterman individually, and as Beneficiary of the 

Estate of Susan Klosterman, Should be Held in Contempt and 

Required to Comply with the Imposition of Additional Injunctive and 

Monetary Relief

A court may find and enter civil contempt as “a sanction to enforce compliance with 

an order of the court or to compensate for losses or damages sustained by reason of 

noncompliance.” McComb v. .Jacksonville Paper Co., 336 U.S. 187, 191 (1949); see also 

United States v. Bayshore Assocs., Inc., 934 F.2d 1391, 1400 (6th Cir. 1991) (“[T]he 

purpose of civil contempt is to coerce an individual to perform an act or to compensate 

an injured complainant.”). However, civil contempt may be imposed only if there is “clear 

and convincing evidence” that the opposing party knowingly “violated a definite and 

specific order of the court.” NLRB v. Cincinnati Bronze, Inc., 829 F.2d 585, 591 (6th Cir. 

1987) (quotation and brackets omitted). “[W]hen deciding whether a court order is ‘definite 

and specific,’ courts must construe any ambiguity in favor of the party charged with 

contempt.” Gascho v. Global Fitness Holdings, LLC, 875 F.3d 795, 800 (6th Cir. 2017). 

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Based upon Defendants’ failure to comply with the referenced provisions, the 

United States seeks an Order holding both Defendants in civil contempt. For the reasons 

discussed above, the undersigned finds that the United States has offered clear and 

convincing evidence that Defendant John Klosterman failed to comply with multiple 

“definite and specific” provisions of the Decree.17 Clear and convincing evidence also 

shows that prior to her death, Susan Klosterman also failed to comply with many of the 

same provisions. From the moment that both Defendants signed the Decree, they 

concealed their ownership of rental properties outside of the Receivership, undermining 

foundational provisions of injunctive relief. At every turn, Defendants either ignored key 

provisions or made (at best) half-hearted attempts to comply after being called out on 

their violations by the United States. 

To the extent that John Klosterman presently asserts an “impossibility” defense as 

an excuse for his failure to comply with any portion of the Decree, the undersigned rejects 

that defense because Defendant has failed to carry his burden of proof that he cannot 

comply. Once the movant has demonstrated a violation of the Consent Decree, “the onus 

shifts to the opposing party to demonstrate that it was unable to comply with the court's 

order.” Gascho, 875 F.3d at 800. “But to show impossibility, [the defendant] has the 

burden to demonstrate that (1) [he] was unable to comply with the court's order, (2) [his] 

inability to comply was not self-induced, and (3) [he] took ‘all reasonable steps’ to 

comply.” Id., 875 F.3d at 802 (additional citation omitted). 

17In Gascho, the Sixth Circuit held that an injunctive command that is based upon a contingency or future 

event that has not yet occurred is not sufficiently definite to be enforceable through an order of contempt. 

Id., 875 F.3d at 801. The undersigned distinguishes the interpretation of ¶¶ 13 and 22 from Gascho insofar 

as Defendant’s “buy out” of 801 Delhi in October 2020 rendered the obligations expressly contained in 

those provisions unequivocal, even if a reviewing court were to disagree with the undersigned’s alternate 

interpretation and/or reformation of the terms contained therein. 

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Defendant’s response in opposition to the motion does not seriously contest the 

facts presented by the United States but instead suggests that his multiple failures to 

comply with the Decree should be excused because he made some attempts to comply, 

and did not intend to make the false affirmation in ¶ 10. However, “the test is not whether 

defendants made a good faith effort at compliance but whether ‘the defendants took all 

reasonable steps within their power to comply with the court’s order.’” Glover v. Johnson, 

934 F.2d 703, 708 (6th Cir. 1991) (citing Peppers v. Barry, 873 F.2d 967, 969 (6th Cir. 

1989)). Defendant John Klosterman now claims to be unable to set up the escrow 

account or to take the required training due to his incarceration. But his incarceration is 

a self-induced condition that did not occur until 10 months after the entry of the Decree. 

He has not demonstrated impossibility of performance or that he took “all reasonable 

steps” to comply prior to his incarceration. For example, there is no evidence that Susan 

Klosterman, who made deposits to a savings account prior to her death, could not have 

arranged for transfer of the deposited funds to an escrow account. On the record 

presented, the undersigned concludes that Defendant John Klosterman in particular has 

exhibited a laisse fare attitude toward the Decree that prioritizes personal profit and 

convenience to him. While Defendants made modest attempts to comply with the Decree, 

they continually ignored “the letter” of provisions that were difficult or inconvenient. 

John Klosterman’s suggestion that he didn’t understand all the terms of the Decree 

at the time he signed it is no excuse for non-compliance, just as Susan Klosterman’s 

actions or inactions prior to her untimely death did not excuse her non-compliance.18 If 

18Defendants previously moved for partial summary judgment on all claims against Susan Klosterman, 

arguing that she should not be held vicariously liable for her husband’s conduct and should not be held 

directly liable based upon her own actions. (Doc. 62). The United States vigorously opposed the motion 

both on grounds that Susan Klosterman had an ownership interest “in all but one of the properties at which 

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Defendants did not receive a copy of the Decree at the outset (a highly doubtful claim), 

Defendants easily could have obtained a copy from the United States or from the Court. 

Indeed, the United States provided Defendants with a copy of the Decree during its 

unfruitful attempts to persuade Defendants to comply with its terms prior to finally filing a 

motion. The parties’ correspondence during the months in which the United States 

attempted to bring Defendants into compliance illustrates Defendants’ willingness to 

disregard the clear provisions of the Decree even when the United States took great pains 

to highlight the areas of deficiency. 

A court has the authority to enforce a consent decree it has entered by ordering 

any remedies necessary to cure the violations. See generally, Peacock v. Thomas, 516 

U.S. 349, 356 (1996). Upon a finding of civil contempt, a Court may order a “fine or 

imprisonment, or both, at its discretion.” 18 U.S.C. § 401(3). “The measure of the Court’s 

power in civil contempt proceedings is determined by the requirements of full remedial 

relief.” NLRB v. Aquabrom, 855 F.2d 1174, 1182 (6th Cir. 1958). “When a court imposes 

fines and punishments on a contemnor, it is not only vindicating its legal authority to enter 

the initial court order, but it also is seeking to give effect to the law’s purpose of modifying 

the contemnor’s behavior to conform to the terms required in the order.” Int’l Union United 

Mine Workers of Am. V. Bagwell, 512 U.S. 821, 828 (1994). A finding of civil contempt is 

reviewed only for abuse of discretion. Roles Watch USA, Inc. v. Crowley, 74 F.3d 716, 

721 (6th Cir. 1996). 

Defendant John Klosterman harassed female tenants,” and “directly collected rent from at least one of the 

tenants that John Klosterman sexually harassed,” among other arguments concerning the parties’ agency 

relationship. (Doc. 68). The Consent Decree, signed by Susan Klosterman, rendered the motion moot. 

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In light of the violations presented, the undersigned concludes that additional 

measures are necessary to ensure compliance with the Consent Decree. The United 

States persuasively argues that those measures should include prospective contempt 

fines for each day in which John Klosterman remains out of compliance, as well as 

additional injunctive relief as to that Defendant. With minor modifications to the relief 

proposed by the United States, the undersigned agrees that both fines and additional 

injunctive relief should be included in the Contempt Order. Particularly imperative, in light 

of the Defendants’ false affirmation in ¶ 10, is a requirement for John Klosterman to 

provide the United States with a complete list of all residential properties owned, leased, 

or controlled by either of the Klostermans, either directly or indirectly, beginning on 

October 1, 2020 and continuing to the present day. 

In addition to the additional monetary and injunctive relief, the United States seeks 

an extension of the Decree. The original Decree was to have remained in effect for a 

period of five years. The Decree specifically provides that “[t]he United States may move 

the Court to extend the period in which this Order [the Decree] is in effect if one or more 

Defendants violates one or more terms of the Decree or if the interests of justice so 

require.” (Doc. 92 at 11, ¶ 42, PageID 4988). Both as punishment for the lengthy period 

of time in which Defendants continued to violate the Decree and to dissuade Defendant 

John Klosterman from additional noncompliance, the undersigned recommends that the 

original five-year term of the Decree be extended. 

IV. Conclusion and Recommendations 

 Based upon the above analysis, IT IS RECOMMENDED THAT: 

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1. Plaintiff’s Motion to Substitute John Klosterman for Defendant Susan Klosterman, 

(Doc. 101), should be GRANTED; 

2. Plaintiff’s Motion to Enforce the Consent Decree, as construed as a motion to reopen this case to Enforce the Consent Decree (Doc. 95) should be GRANTED; 

3. The Court should enter a finding of civil contempt against both Defendant John 

Klosterman individually and as substitute for Susan Klosterman, and shall include 

the following provisions in the Contempt Order; 

a. The term of the October 1, 2020 Decree should be extended until July 1, 2026; 

b. The prefatory language in ¶ 13 and ¶ 22 of the October 1, 2020 Decree should 

be interpreted and/or formally reformed in the manner discussed above; 

c. The following prospective monetary sanctions should be added to the terms of 

the original October 1, 2020 Decree: 

i. $100 per day shall be paid to the United States if, within ten days of the 

Court’s Contempt Order, Defendant John Klosterman has not proposed to 

the United States a professional Independent Manager who has experience 

with property management and does not have a personal relationship with 

Defendants, pursuant to paragraph 13 of the Decree. Such daily fine shall 

continue until John Klosterman has made a proposal that complies with the 

requirements of ¶ 13, but should not exceed thirty (30) days absent further 

Order of this Court; 

ii. $100 per day shall be paid to the United States if, within ten (10) days of this 

Court’s Contempt Order, Defendant John Klosterman has not proposed to 

the United States Fair Housing Act training for himself and for any employees 

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and agents pursuant to ¶¶ 22 and 23 of the Decree. Such daily fine shall 

continue until Defendant has made a proposal that complies with the 

requirements of the Decree,19 but should not exceed thirty (30) days absent 

further Order of this Court; 

iii. $100 per day shall be paid to the United States if, within ten (10) days of this 

Court’s Contempt Order, Defendant John Klosterman has not completed 

deposits of $15,000.00 into an escrow account, with proof of the deposit 

demonstrated in the manner specified in paragraph 30 of the Decree. Such 

daily fine shall continue until Defendant has provided the required 

verification, but should not exceed thirty (30) days absent further Order of this 

Court; 

iv. $500 per incident shall be paid to the United States as an additional fine if, 

on any occasion following the Court’s entry of a Contempt Order, Defendant 

John Klosterman engages in property management responsibilities that are 

specifically prohibited by the terms of the Decree. The same fine of $500 per 

incident should be imposed if Defendant communicates with tenants or 

prospective tenants in violation of the Decree following the Court’s entry of a 

Contempt Order. However, the fine(s) specified in this paragraph shall not 

exceed a total of $5,000 absent further Order of this Court, and may be 

excused upon clear and convincing evidence by John Klosterman that 

19The United States shall review John Klosterman’s contention that he cannot comply with the training 

requirement during his incarceration. If no training is possible for John Klosterman at this time, the parties 

shall employ their best efforts to propose a reasonable modification of ¶ 22 for John Klosterman alone, and 

shall so notify the Court. 

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communication was required on an emergency basis, such as a condition 

impacting the ability of a tenant’s home; 

d. Within ten (10) days of the date of the Contempt Order, John Klosterman shall 

be required to provide to the United States a complete list of all rental properties 

that John and/or Susan Klosterman have owned, leased, managed, or 

otherwise controlled (directly or indirectly) beginning on October 1, 2020 

through the present date. Said list shall be verified with a declaration made 

under penalty of perjury pursuant to 28 U.S.C. § 1746 in order to ensure that 

the United States has a complete list of past and current holdings; 

e. Within ten (10) days of the date of the Contempt Order, Defendant John 

Klosterman shall provide to the United States a full accounting of incomes and 

expenses at all properties owned, leased, managed or controlled by 

Defendants outside of the Receivership since October 1, 2020, including bank 

records, rent receipts, and receipts for any expenses for the maintenance of 

the properties which Defendants maintain should be deducted from the 

calculation of profits. Following receipt of this information, the United States 

may, in its discretion, move the Court to require Defendants to pay rental profits 

into a fund for the Independent Manager’s maintenance of the properties, to 

restore the parties to the position that they would have been in but for 

Defendants’ noncompliance with the Decree, and to ensure that sufficient funds 

are available for property management going forward; 

f. Within ten (10) days of the date of the Contempt Order, and every ninety (90) 

days thereafter for the duration of the Decree, Defendant John Klosterman shall 

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file with this Court a certification affirmatively stating that he has complied with 

all Decree requirements including but not limited to the additional requirements 

entered with the Contempt Order; 

g. The requirement for the parties to endeavor in good faith to resolve informally 

any differences regarding interpretation of and compliance with the Decree, as 

set forth in ¶ 46 of the October 1, 2020 Decree, shall continue along with all 

other provisions unless modified by the Contempt Order. Paragraph 46 

includes, but is not limited to, resolution of any future defense of impossibility 

of performance. 

s/ Stephanie K. Bowman 

Stephanie K. Bowman 

United States Magistrate Judge 

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF OHIO 

WESTERN DIVISION 

UNITED STATES OF AMERICA, Case No. 1:18-cv-194 

 Plaintiff, and Barrett, J. 

 Bowman, M.J. 

HOUSING OPPORTUNITIES 

MADE EQUAL INC., 

 

 Plaintiff-Intervenor, 

 

 v. 

JOHN KLOSTERMAN and 

SUSAN KLOSTERMAN, 

 Defendants. 

NOTICE

 Pursuant to Fed. R. Civ. P. 72(b), any party may serve and file specific, written 

objections to this Report & Recommendation (“R&R”) within FOURTEEN (14) DAYS after 

being served with a copy thereof. That period may be extended further by the Court on 

timely motion by either side for an extension of time. All objections shall specify the 

portion(s) of the R&R objected to, and shall be accompanied by a memorandum of law in 

support of the objections. A party shall respond to an opponent’s objections within 

FOURTEEN DAYS after being served with a copy of those objections. Failure to make 

objections in accordance with this procedure may forfeit rights on appeal. See Thomas 

v. Arn, 474 U.S. 140 (1985); United States v. Walters, 638 F.2d 947 (6th Cir. 1981). 

 

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