Opinion ID: 43355
Heading Depth: 2
Heading Rank: 1

Heading: Finding of contempt

Text: The district court’s January 9, 2002 order found Pelullo and Fioravanti in contempt of its March 31, 1997 permanent injunction. The 1997 order enjoined Pelullo “from commencing or prosecuting any action affecting the proceeds of the policy,” which encompasses not only actions seeking the proceeds themselves but also any action concerning the proceeds or undermining the final judgment of the district court. The district court’s January 2002 order found the only reasonable interpretation of the claims asserted by Pelullo is that the recovery sought would “affect [] the proceeds of the [D & O] policy” in violation of this court’s permanent injunction. For 5 example, Pelullo alleges a breach of the Defense Funding Agreement which specifically provided for payment out of policy proceeds. Furthermore, the damages sought by Pelullo include legal fees for the Philadelphia, Newark and Jacksonville Criminal Actions which were the subject of the instant interpleader action. Such relief would directly affect the proceeds of the D & O policy. We agree with the district court. Civil contempt orders should be upheld if the defendant’s contempt is clear and convincing, and demonstrates “(1) the allegedly violated order was valid and lawful; (2) the order was clear, definite and unambiguous; and (3) the alleged violator had the ability to comply with the order.” McGregor v. Chierico, 206 F.3d 1378, 1383 (11th Cir. 2000) (quotation omitted). Pelullo and Fioravanti do not argue the district court’s injunction was invalid or unlawful, or unclear and ambiguous. Nor do they argue they were unable to comply with the permanent injunction. Instead, they contend they did not willfully violate the district court’s injunction, and therefore they should not be held in contempt. But their subjective intent is not relevant: “[T]he focus of the court’s inquiry in civil contempt proceedings is not on the subjective beliefs or intent of the alleged contemnors in complying with the order, but whether in fact their conduct complied with the order at issue.” Howard Johnson Co., Inc. v. Khimani, 892 F.2d 1512, 1516 (11th Cir. 1990). 6 By itself, Count X of the RICO complaint violated the permanent injunction because, if successful, it would affect the proceeds of the D & O policy. Count X alleged National Union breached the DCFA, which concerned the payment of legal fees by National Union to Pelullo under the D & O policy. Under Count X, paragraph 208(a) sought “the damages alleged in paragraph 182.” Paragraph 182 outlined damages suffered by Pelullo, including millions of dollars in legal fees for the Philadelphia and Newark actions. In other words, Pelullo’s RICO complaint sought payment of legal fees, fines, forfeitures, and restitution for the Philadelphia and Newark actions. But the district court’s June 4, 1996 judgment (amended by the March 31, 1997 judgment) denied coverage and legal fees for Pelullo’s defense in the Philadelphia and Newark actions. Thus, the RICO complaint by Pelullo and Fioravanti would affect the proceeds of the D & O policy, which the district court’s permanent injunction expressly prohibited. Similarly, Count II alleged National Union organized and supervised a conspiracy to “ensure that M. Pelullo would remain incarcerated and be convicted in the Jacksonville Criminal Action, which conviction would then require Mr. Pelullo to reimburse National Union for Mr. Pelullo’s legal fees and costs paid by National Union under the D & O policy.” According to Count II, among the method and means employed by National Union included “National Union’s 7 breach of its obligations under the D & O Policy and the Funding Agreement.” If Pelullo succeeded on Count II, the proceeds of the D & O policy might be affected. The district court correctly determined Pelullo’s RICO complaint, if successful, would affect the D & O policy, and therefore violated its permanent injunction. We find no abuse of discretion.