Opinion ID: 182548
Heading Depth: 2
Heading Rank: 1

Heading: The Basis for the District Court’s Order

Text: In adjudicating Berov’s application for bail pending appeal, we first consider the validity of the underlying contempt order to evaluate the merit of his pending appeal. “Ordinarily, we review the district court’s legal determinations de novo and its factual determinations for clear error, but, 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 situations in which abuse-of-discretion review is conducted.” E.E.O.C. v. Local 638, 81 F.3d 1162, 1171 (2d Cir. 1996) (internal quotation marks omitted). “A court may hold a party in civil contempt only if there is a clear and unambiguous order, noncompliance is proved clearly and convincingly, and the defendant has not been reasonably diligent and energetic in attempting to accomplish what was ordered.” Drywall Tapers and Pointers of Greater New York v. Local 530, 889 F.2d 389, 394 (2d Cir. 1989) (internal quotation marks omitted). When a party is found in civil contempt, the sanction ordered must be issued to “coerce[] the defendant into compliance with the court’s order, [or to] ... compensate[] the complainant for losses sustained.” Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 829 (1994) (internal quotation marks omitted). Thus, any purgation requirements set in a civil contempt order must serve one or more of those purposes. See id. Berov’s primary challenge to the district court’s November 2010 contempt order is that the district court erred in finding him in contempt without providing notice or a hearing. See 8 Local 638, 81 F.3d at 1176 (“A party charged with contempt of court (except where the contempt is made in court and is summarily punished) is entitled to notice and an opportunity to be heard.”). Close-Up contends that the November 2010 contempt order continued from the district court’s June 2008 contempt order, that Berov has waived his right to challenge that June 2008 order, and that the June 2008 contempt order was issued with adequate procedures. After reviewing the record below and the parties’ submissions in this case, we are unable precisely to determine either: (1) the nature of the district court’s November 2010 order or (2) the factual basis for the order. We note there are several possible bases for the contempt order. For one, the contempt finding may have been based on the mortgage loans Berov took out in violation of the April 2007 order, in which case he was already found in contempt for those actions in June 2008. If that is the case, it is not apparent why it issued a second contempt order and why the sanctions imposed in November 2010 were required. Alternatively, the contempt finding may have been based on Berov’s failure to comply with the June 2008 order, either because of his failure to disgorge the profits from his contumacious mortgage loans or his failure to comply with plaintiffs’ discovery requests. If so, we ask the district court to clarify whether the most recent order gives effect to the June 2008 order’s provision for the confiscation of Berov’s passport and the imposition of additional sanctions. Yet another possibility is that the contempt order was based on evidence of more recent conduct by Berov that gave the district court the impression that he was a flight risk who was trying to remove his assets from the United States to avoid paying the judgment owed to plaintiffs. Further, the contempt order and the resulting sanctions could have stemmed both from Berov’s earlier contumacious conduct and his failure to comply with the June 2008 order and from more recent conduct. 9 In reviewing these alternatives, we note that on November 29, 2010, Judge Trager offered to conduct an evidentiary hearing with respect to the contempt allegations. Berov, through counsel, declined to participate in the hearing and instead appealed to this Court. An evidentiary hearing is precisely what is needed to clarify the basis for the contempt order. At oral argument both sides indicated they would welcome an evidentiary hearing. Accordingly, we remand the case to the district court to conduct whatever hearing it deems necessary so it may clarify the factual basis for the contempt finding. Such a remand will provide the supplementation of the record needed to address Berov’s application for bail pending appeal. See Jacobson, 15 F.3d at 21-22. We note that in light of Judge Trager’s sad passing on January 5, 2011, this matter will be addressed on remand by a new district court judge. Because of this fact, and without expressing any views on the merits of the November 2010 order, we state explicitly that the district court may, if it sees fit, reconsider that order in the course of supplementing the record to assist this panel. The district court, in reconsidering the matter, must keep in mind the following. While, in certain circumstances, “civil confinement pursuant to a civil contempt order is a valid method of assuring compliance with judgments,” Tauro v. Allegheny Cnty., 371 F. App’x 345, 348 (3d Cir. 2010) (unpublished) (citing Chadwick v. Janecka, 312 F.3d 597, 613 (3d Cir. 2002)), “[o]ur society closed its debtor’s prisons long ago,” United States v. Big Crow, 327 F.3d 685, 689 (8th Cir. 2003). If, on remand, the district court concludes that Berov should remain in confinement for contempt, it should set forth clearly that Berov is in contempt not merely for failing to pay the judgment but for disregarding clear and unambiguous orders of the court with which he is financially able to comply. In this respect, although the basis for the court’s November 23, 2010 10 amended order is unclear, the district court held in that order that Berov could obtain his release from prison by paying the full amount of the judgment, though the district court did, at the subsequent November 29 hearing, express some willingness to modify that condition. If, indeed, the district court on remand orders that Berov cannot purge his contempt without satisfying the entire judgment, it must clearly identify its basis for doing so. Alternatively, the district court may, as it sees fit, modify the sanctions imposed, including the purgation requirements by which Berov can end his detention, to ensure that any sanctions are tailored to the contempt Berov committed and would appropriately “coerce[] the defendant into compliance with the court’s order, [or] . . . compensate[] the complainant for losses sustained.” Bagwell, 512 U.S. at 829. Finally, the district court may also reconsider whether Berov’s conduct justifies the imposition of attorneys’ fees. Cf. Jacobs v. Citibank, N.A., 318 F. App’x 3, 5 n.3 (2d Cir. 2008) (summary order) (noting that the circumstances under which a court may order attorneys’ fees as a sanction for violating a court order appears to remain an open issue in this Circuit).