Court Opinion

ID: 4095079
Source: CourtListenerOpinion
Date Created: 2016-11-02 21:01:27.720956+00
Date Added: 2024-06-11T14:37:12.206724
License: Public Domain

UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

                  Plaintiff,

           v.

TWO GENERAL ELECTRIC AIRCRAFT                       Civil Action No. 14-2213 {GK)
ENGINES, WITH ENGINE SERIAL
NUMBERS 695244 AND 705112,
AND ALL RECORDS PERTAINING
THERETO

                  Defendant.

                                   Memorandum Opinion and Order

     I .        Background

           This case began on December 30, 2014, when the United States

filed       a    Verified    Complaint     for      Forfeiture   in· Rem against          two

General          Electric    aircraft     engines      with    engine     serial    numbers

695244 and 705112 (the "Defendant Engines").                      See Unopposed Order

to    Repatriate       the     Defendant    Properties         ("Repatriation       Order")

[Dkt. No. 32]         (describing the history of this case).                   At the time

of    the       Government's       Complaint,       these   engines     were    located    in

Antalya, Turkey.             Id.

           Subsequently,      Evans Meridians,          Ltd.   ("Evans,"       "Claimant") ,

filed a verified claim to the Defendant Engines..                       Id.    After filing

this claim, and unbeknownst to the Court or the Government, Evans

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transported the Defendant Engines from Turkey to Shanghai, China,

on or about July 27, 2015.           Id.

     In response, and pursuant to the Government's Motion for Order

to Repatriate,      [Dkt.    No.    31],   on January 27,            2016,     the   Court

ordered Evans to either repatriate the Defendant Engines to the

United States or post a bond of $6,000,000 by March 31,                               2016.

Repatriation Order.         To date, Evans has done neither. 1

     Accordingly, the Government filed a Motion for Order to Show

Cause why Evans should not be held in contempt for violating the

Repatriation Order.         Mot. for Order to Show Cause [Dkt. No. 41].

The Court granted the Government's Motion,                     scheduled a contempt

hearing,     and     ordered       that        Evans'      director       or     another

representative      with    authority      to     direct       the   affairs     of     the

corporation attend.         Order ("Show Cause Order")               [Dkt. No. 47].

     On October 24, 2016, the contempt hearing was held.                        Pursuant

to the Court's Show Cause Order, Eugeny Bespalov, an attorney from

Russia   with   a   power    of    attorney      to     bind   Evans,    attended and

testified.

1 Evans' counsel candidly admits that Evans has not complied with
the Court's Repatriation Order.    Response to Mot. for Order to
Show Cause ("Response") at p. 3-4 [Dkt. No. 44]; Unofficial
Transcript of Show Cause Hearing ("Unofficial Transcript") at p.
17 ~~ 9-10.   An unofficial transcript of the Show Cause Hearing
was prepared by the Court Reporter and will be filed on ECF.
                                           2
'>

          II.     Legal Standard

                "The Court has both an inherent and a statutory power to

     enforce compliance with its orders and may exercise that authority

     through a civil contempt proceeding."                        SEC v. Bankers Alliance,

     Corp.,       881 F.    Supp.      673,    678    (D.D.C.     1995)    (citing inter alia

     Shillitani v.          United States,           384 U.S. 364,     370   (1966);     United

     States v.          United Mine Workers of America,               330 U.S. 258,     330-32

     (1947);       18    u.s.c.    §   401).         "A party commits contempt when it

     violates a          definite and specific court order requiring him to

     perform or refrain from performing a particular act or acts with

     knowledge of that order."                 Id.    (internal citations and quotations

     omitted).

            "[T]he moving party has the burden of showing by clear and

     convincing evidence that (1) a court order was in effect,                              (2) the

     order required certain conduct by the                        respondent,       and     ( 3)    the

     respondent failed to comply with the court's order."                                 Id.       The

     respondent "may assert a present inability to comply with the order

     in question" as an affirmative defense, but in doing so, has the

     burden of production.             U.S. v. Rylander, 460 U.S. 752, 757 (1983);

     Tinsely       v.    Mitchell,       804 F.2d 1254,     1256    (D.C.    Cir.       1986)

     ("impossibility of performance constitutes a defense to a charge

     of    contempt").            To   meet     this      burden,    the     respondent            "must

     demonstrate his inability to comply categorically and in detail."

                                                      3
Bankers Alliance,        881 F. Supp. At 678; SEC v. Showalter,               227 F.

Supp.    2d 110, 120      (D.D.C.    2002)       (defendant cannot merely assert

inability, but must "establish that she has made . . . all reasonable

efforts" to comply (emphasis added)).

        Even if the respondent cannot demonstrate that she is unable

to comply with the court's order, the court is required to consider

her "good-faith efforts to comply with [the]                   order in mitigation

of any penalty" the court might impose.                  Tinsely, 804 F.2d at 1256.

"To     show    good   faith,    the    [respondent's]         duty     includes   the

obligation to be reasonably diligent and energetic in attempting

to comply with [the] court's order, and to pay what he can toward

the judgment."         Showalter, 227 F. Supp. 2d at 120.               A respondent

attempting to demonstrate that she has acted in good faith to

comply must provide "adequate detailed proof."                    Id.

        Civil   contempt    is   a   remedial device,         utilized to achieve

compliance with a court's order.                   Id.    Therefore,    the sanction

imposed is designed to secure compliance, not to punish.                      Bankers

Alliance, 881 F. Supp. at 678; United Mine Workers of America, 330
U.S. at 304      (the sanction imposed may be employed "to coerce the

defendant into compliance with the court's order").

                                             4
    III. Analysis

        A. Evans Is in Contempt of the Repatriation Order

      Here,     there is no question that Evans has failed to comply

with the Court's Repatriation Order,                 as Evans readily conceded

that it has not.          Response at p.       3-4; Unofficial Transcript of

Show Cause Hearing         ("Unofficial Transcript")         at p.      17     ~~   9-10.

Instead, Evans raises two arguments as to why the Court should not

hold it in contempt.

      First,     Evans argues      that    it is     impossible to comply with

either prong of          the   Court's    Order.      Response    at    5-6.        Evans

forthrightly       admitted      that     it   has     produced        no    evidence,

whatsoever, demonstrating that it is unable to either repatriate

the engines or post a $6,000,000 bond.               Id.; Unofficial Transcript

at p. 18   ~~    3-10.     Consequently, as Evans has not produced even

one shred of evidence in support of its argument that it is unable

to comply with the Court's Repatriation Order, it is obvious that

Evans cannot meet its burden to demonstrate impossibility. 2

      Second, Evans argues that it is making good faith efforts to

comply with the Repatriation Order.                Response at 7.      In support of

2 The only evidence presented at the Show Cause Hearing was the
testimony of Mr. Bespalov.   When asked what assets Evans has,
information that would be necessary for the Court to determine
whether Evans has the ability to comply with the Repatriation
Order, Mr. Bespalov stated that he did not have any information
regarding Evans' assets. Unofficial Transcript at p. 44 ~ 4.
                                           5
this argument, Evans asserts that it has an ownership interest in

an entirely different set of engines that are located in Miami

(the "Miami Engines") and that it is currently attempting use its

stake in those engines to meet the terms of the Repatriation Order.

Id.   The Government responds that the Miami Engines have nothing

to do with this case and argues         that Evans'      conduct regarding

those engines does not constitute a good faith effort to comply

with the Repatriation Order.      Reply to Mot. for Order to Show Cause

("Reply") at 3-4.

      The Court agrees with the Government.          Taken at face value,

Evans'   offer is not a concrete step towards compliance with the

Court's Repatriation Order, but a mere proposal with an uncertain

chance of     success.     Evans asserts   that   it can sell the Miami

Engines, and use the funds to pay some indeterminate portion of

the   $6,000,000   bond,   or alternatively,      post   the Miami   Engines

themselves as substitute collateral for the $6,000,000 bond.            Yet,

by Evans' owns admission, it lacks physical possession of the Miami

Engines, and the third party that does have possession of them has

some sort of monetary claim against Evans which clouds Evans' title

to them.

      Thus,   Evans presently lacks the ability to either sell the

Miami Engines or post them as substitute collateral,             and it is

wholly uncertain whether Evans will ever have the ability to do

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so.     All Evans has is a questionable plan for future action.                     That

plan does not constitute an effort at compliance, but is at best,

a   proposal      to make     future   efforts      that,   if    successful,      might

produce assets that would then enable Evans to make a good faith

effort at compliance.

        Indeed, when Evans' conduct is viewed in its entirety, it is
                                                                                            '   )

abundantly clear that it has not met its burden to demonstrate

that it made "all reasonable efforts to comply" with the Court's

Repatriation Order.           Showalter at 120.         A showing of good-faith

efforts by a contemnor requires her to bring forward evidence of

her ability to comply, so that the court may evaluate the efforts

she has actually made against those she had the capability to make.

Here,    Evans'     refusal    to   put   forward      such      evidence   dooms     its

argument that it is making good faith efforts,                     just as surely as

it doomed its argument of impossibility.

        Because Evans has failed to present any evidence of how much

it would cost to repatriate the Defendant Engines or what assets

Evans    holds,     the   Court     cannot       conclude   that    Evans    made     all

reasonable        efforts      to   repatriate        the     Defendant       Engines.

Similarly, the absence of any evidence of Evans' financial state

makes it impossible for the Court to conclude that Evans has done

all it reasonably can to post the $6,000,000 bond.                      To show good

faith,    Evans must demonstrate that it is "paying what                    [it]    can."

                                             7
      Showalter at 120.         Yet, the Court has no way of knowing what Evans

      "can" pay.

              The sole piece of evidence before the Court is the testimony

      of Mr. Bespalov.          However, he failed to identify any steps that

      Evans has taken to repatriate the Defendant Engines to the United

      States     beyond    a   single     inquiry          to    the     Chinese   company        that
!,-
      allegedly possesses them,            asking for their return.                      Unofficial

      Transcript at p.         46   ~~   17-20.           Given the absence of meaningful

      evidence,      the Court does not consider Evans'                        single request to

      have     the   Defendant      Engines       returned         a     reasonable      effort     at

      compliance.

              In sum, Evans has failed to present any evidence showing that

      it was "reasonably diligent and energetic in attempting to comply

      with this [C]ourt's order."               Id.        Therefore, the Court holds that

      Evans    has   not   made      a   good     faith         effort    to    comply    with     the

      Repatriation Order.           As Evans admits that it has failed to comply

      with the Repatriation Order and has failed to offer any evidence

      suggesting that it is unable to comply or has made a good faith

      effort to do so, the Court finds Evans in civil contempt.

                B. The Goverrunent's Proposed Sanction is Appropriate

              The Court now turns to the question of what sanction would be

      sufficient to coerce Evans to comply with the Repatriation Order.

      United Mine Workers of America, 330 U.S. at 304.                          At the Show Cause

                                                      8
Hearing, the Government sought a sanction of $15,000 per day until

Evans complies with the Repatriation Order.

        In     determining           what    constitutes       an       effectively    coercive

sanction,       the court "consider[s]                the character and magnitude of

the     harm    threatened by            continued      contumacy,         and   the   probable

effectiveness         of      any suggested sanction in bringing about                        the

result desired.         /1
                               Id.      In doing so,      the court "consider [s]             the

amount of [the contemnor 1 s] financial resources and the consequent

seriousness of the burden to that particular [contemnor] .                               /1
                                                                                              Id.

Where,       as here,        "the contemnor is the only one who possess the

relevant financial information, and chooses not to disclose it,                                 11

the     Court's       inability         to   consider     the       contemnor 1 s      financial

resources is not a bar to imposing sanctions.                             See Richmark Corp.

v.    Timber Falling Consultants,                959 F.2d 1468, 1481-82                (9th Cir.

1992)    (internal quotation marks and citations omitted).

        In this case, the harm created by Evans 1 continuing failure

to    repatriate             the     Defendant     Engines      is       substantial.         The

Government's Complaint alleges                     that the Defendant Engines were

destined        for          Iran,     and     more     specifically,            the     Islamic

Revolutionary           Guard         Corps-Qods      Force,        a    designated      Foreign

Terrorist Organization.                 See Complaint.         If correct, each day that

the Defendant Engines remain outside the United States increases

                                                 9
the risk that they will arrive at their intended destination, and

thereby benefit a hostile organization.

        In addition,         the Government's proposed sanction of $15, 000

per day appears reasonably calculated to coerce compliance with

the Repatriation Order.              If Evans were to refuse to comply for one

year, the sanction would total roughly $5.5 million dollars.                             This

amount      is   less        than    the     $6,000,000        bond    contained    in    the

Repatriation Order and falls between the disputed estimated values

of the Defendant Engines.                  See Response at 2, 4 n.3             (noting that

Evans      values      the    engines        at     roughly     $4,000,000,      while    the

Government likely values them at roughly $6,000,000).                            Therefore,

to the extent that Evans has any assets,                         which remains an open

question, the proposed sanction presents Evans with the choice of

repatriating Defendant Engines within a year or risk forfeiting

assets roughly equivalent to the value of Defendant Engines.

        Thus,    the     Government's             proposed     sanction    is     reasonably

calculated       to    coerce       Evans'        compliance    with    the     Repatriation

Order. 3

3 A sanction of roughly equivalent size was held reasonable under
similar circumstances. See Richmark, 959 F.2d 1468 (upholding
sanction of $10, 000 per day against a foreign defendant who refused
to provide information about its assets)
                                                  10
.:-.

           IV.   Conclusion

             For the foregoing reasons,           the Court holds Claimant Evans

       Meridian in civil contempt of its Repatriation Order, and imposes

       a   sanction of    $15, 000   per   day until    Evans   complies   with   the

       Repatriation Order.      It is hereby

             ORDERED, that Evans Meridians, Ltd. , shall be held in contempt

       of Court for violating the Repatriation Order; and it is further

             ORDERED, that the Court shall sanction Evans Meridians, Ltd.,

       by requiring that it pay a fine of $15,000 per day,            from the day

       this Order issues until it complies with the Repatriation Order,

       to the Registry of the Court.

                                           GladySK:Sler
       November 2, 2016                    United States District Judge

       Copies via ECF to all counsel of record

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