15-3158-cv Weston Capital Advisors, Inc. v. P.T. Bank Mutiara, Tbk

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRON IC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated Term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the

24 th day of June, two thousand sixteen.

Present: ROSEMARY S. POOLER, ROBERT D. SACK, GERARD E. LYNCH, Circuit Judges

.

_____________________________________________________

WESTON CAPITAL ADVISORS, INC.,

Petitioner-Appellant

,

v. 15-3158-cv

PT BANK MUTIARA, Tbk,

Respondent-Appellee

.

_____________________________________________________

Appearing for Appellant: Charles B. Manuel, Jr., Manuel & Associates LLP, New York,

NY.

Appearing for Appellee: Marc L. Greenw ald (Andrew P. Mark, Daniel R. Koffman, on the brief) , Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY.

Appeal from the United States Di strict Court for the Southern District of New York (Crotty, J. ).

ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the order of said Dist rict Court be and it hereby is AFFIRMED

.2 Weston Capital Advisors, Inc. (“WCAI”) appeals from the September 8, 2015 opinion
and order of the United States District Court fo r the Southern District of New York (Crotty, J. ), expanding the order of contempt previously entere d against WCAI to include related entities, Weston International Capital Management (Luxe mbourg) S.A.; Weston International Capital (Mauritius) Ltd.; Weston International Capital Ltd (“WICL”).; Weston Capital Services Ltd.; First Capital Management Ltd.; First Global F unds Ltd. PCC; Weston International Investments Limited; Arlington Assets Investments Ltd.; We ston International Asset Recovery Co. Ltd.;
Weston International Asset Recove ry Corporation Inc. (together, the “Weston Entities”), and John R. Liegey, and imposing escalating sancti ons of $1,000 a day, to be doubled monthly until the contempt is purged. We assume the parties’ familiarity with the underlying facts, procedural history, and specification of issues for review.

Although neither party contests appellate jurisdic tion in this case, the Court has an independent duty to determine wh ether such jurisdiction exists. See Arnold v. Lucks , 392 F.3d 512, 517 (2d Cir. 2004) (“[E]very federal appellate c ourt has a special obliga tion to satisfy itself . . . of its own jurisdiction . . . .” (internal quotation marks omitted)). Generally, appeals over civil contempt orders issued against parties are not final orders within the meaning of 28 U.S.C. § 1291, and thus must await a final order before an appeal may be taken. OSRecovery, Inc. v. One Groupe Int’l, Inc. , 462 F.3d 87, 89-90 (2d Cir. 2006). Ho wever, “civil contempts against non-parties are immediately appealable because the a ppeal does not interfere with the orderly progress of the main case.” Id. at 92 (quoting Int’l Bus. Machs. Corp. v. United States , 493 F.2d 112, 115 n.1 (2d Cir. 1973)). Because the Weston Entit ies and Liegey are non-parties, this Court has jurisdiction to consider their appeals.

Weston, however, is a party. It is well esta blished that a party to a pending proceeding may not appeal from an order of civil contempt except as part of an appeal from a final judgment. Fox v. Capital Co ., 299 U.S. 105, 107 (1936); see also SEC v. Sloan , 535 F.2d 679, 680 (2d Cir. 1976) (“An order of ci vil contempt against a party to litigation is not an appealable final order.”). The order here is plainly civil: its purpose is to secure compliance with the court’s order, and curing the contempt will bring the sancti on to an end. We therefore lack jurisdiction to consider the appeal of this non-final order by WCAI, and dismiss its appeal for lack of jurisdiction.

Turning to the appeal by the Weston Entities and Liegey, the power to punish parties for contempt is inherent in all courts, and “[a] sa nction imposed to compel obedience to a lawful court order or to provide compensation to a complaining party is civil” in nature . N.Y. State Nat’l Org. for Women v. Terry , 886 F.2d 1339, 1351 (2d Cir. 1989). Orders of contempt are reviewed

for abuse of discretion. OSRecover y, 462 F.3d at 93. However, “because the power of a district court to impose contempt liability is carefully limited, our review of a contempt order for abuse of discretion is more rigorous than would be the case in other situati ons in which abuse-ofdiscretion review is conducted.” Id . (internal quotation marks omitted).

Civil contempt orders are remedial in nature, and may be either coercive or
compensatory. Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc.

, 369 F.3d 645, 657 (2d Cir. 2004). Where a fine serv es a coercive purpose, a “court has broad discretion to design a remedy that will bring about compliance.” Id . (internal quotation marks3 omitted). A court may hold a party in contempt if the court determines that “(1) the order the party failed to comply with is clear and unamb iguous, (2) the proof of noncompliance is clear and convincing, and (3) the party has not diligently attempted to comply in a reasonable

manner.” CBS Broad. Inc. v. FilmOn.com, Inc ., 814 F.3d 91, 98 (2d Cir. 2016).

The district court’s contempt order met all three requirements and thus was not an abuse of discretion. First, the orde r the district court enforced clearly and unambiguously told appellants exactly what they must do: retu rn the $3.6 million they received under the vacated turnover order. Second, the proof of non-complian ce was clear and convincing; appellants do not dispute that the $3.6 million has not been repaid. Third, appellants have not met their burden of establishing their inability to comply “clearly, plainly, and unmistakably,” Huber v. Marine
Midland Bank , 51 F.3d 5, 10 (2d Cir. 1995), and thus faile d to prove that they have “diligently attempted to comply” with the court’s order, CBS Broad. Inc. , 814 F.3d at 98. In evaluating whether “compliance is literally impossible and, as a result, any attempts at coercion are pointless,” Badgley v. Santacroce , 800 F.2d 33, 37 (2d Cir. 1986), “[ t]he court is not required to credit the alleged contemnor’s denials if it finds them to be incredible in context,” Huber , 51 F.3d at 10 (internal quotation marks omitted). 1

We affirm the district court’s decision to ex tend the contempt orde r and sanctions to the Weston Entities and Liegey. “In order for a court to hold a nonparty responde nt in contempt of a court order, the respondent must either abet the [party named in the order], or must be legally
identified with him.” People of New York v. Operation Rescue Nat’l , 80 F.3d 64, 70 (2d Cir. 1996) (alteration in the original) (internal quotation marks omitted); see also Spectacular Venture, L.P. v. World Star Int’l Inc. , 927 F. Supp. 683, 684-85 (S.D.N.Y. 1996) (“A nonparty respondent may be held in contempt of a court order if the respondent ab ets the party named in the order in its noncompliance or if it is legall y identified with that pa rty.”). There is ample evidence in the record to support the district court’s findings that the Weston Entities and Liegey aided and abetted WCAI’s contempt. WCAI does not have its own bank account, so the turnover funds were paid to a related entity, WICL. WICL then immediately paid out the monies to other Weston accounts and to third parties. Even as late as January 2014, two of the Weston entities had at least $415,000 in monies that were used for purposes other than complying with the

district court’s order.

The record also supports the district court’s finding th at the Weston Entities do not operate as separate entities, because (1) the boards of directors for the entities are nearly identical; (2) several entities share a single offi ce (and a single employee); (3) Liegey and the entities guarantee each other’s debts, and (4) WCS acts as Liegey’s personal operating company, paying both his personal expe nses and WCAI’s legal fees and other expenses.

1 If there comes a time when the escalating natu re of the sanctions or changed circumstances render appellants unable to comply with the c ontempt order making the sa nctions punitive rather than coercive, see Armstrong v. Guccione , 470 F.3d 89, 113 (2d Cir. 2006), or if “it becomes obvious that sanctions are not going to compel compliance,” such that the civil contempt

sanctions “lose their remedial ch aracteristics and take on more of the nature of punishment,”
Simkin v. United States , 715 F.2d 34, 36-37 (2d Cir. 1983) (cita tion omitted), appellants may again petition the district court for relief.4 Finally, we affirm the di strict court’s imposition of sanctions of $1,000 a day, doubling each month until the contempt is purged. The record supports the district court’s conclusion that the Weston Entities and Liegey could pay th e wrongly seized funds, but instead made a

deliberate decision to use these monies for other e xpenses. Further, while Liegey testified at the evidentiary hearing that both he and the Weston Entities were il liquid, no financial documents were submitted to support the claims of penury. See Huber , 51 F.3d at 11 (“The court was entitled to consider Huber’s refusal to produce docu ments in assessing the cr edibility of his oral representations.”).

We have considered the remainder of the arguments set forth by the Weston Entities and Liegey and find them to be without merit. A ccordingly, the appeal by WCAI is DISMISSED for lack of jurisdiction and the September 8, 2015 orde r of the district court hereby is AFFIRMED as to the Weston Entities and Liegey.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk