Court Opinion

ID: 6318415
Source: CourtListenerOpinion
Date Created: 2022-03-01 17:00:31.933057+00
Date Added: 2024-06-11T09:01:35.903757
License: Public Domain

Appellate Case: 20-4090            Document: 010110650936   Date Filed: 03/01/2022   Page: 1
                                                                                    FILED
                                                                        United States Court of Appeals
                                             PUBLISH                            Tenth Circuit

                           UNITED STATES COURT OF APPEALS                      March 1, 2022

                                                                            Christopher M. Wolpert
                                 FOR THE TENTH CIRCUIT                          Clerk of Court
                             _________________________________

  FEDERAL TRADE COMMISSION;
  UTAH DIVISION OF CONSUMER
  PROTECTION,

         Plaintiffs,

  v.                                                             No. 20-4090

  ZURIXX; CARLSON DEVELOPMENT
  GROUP UTAH; CJ SEMINAR
  HOLDINGS; ZURIXX FINANCIAL
  UTAH; CHRISTOPHER A. CANNON;
  JAMES M. CARLSON; JEFFREY D.
  SPANGLER; BRAND MANAGEMENT
  HOLDINGS; CAC INVESTMENT
  VENTURES; CARLSON
  DEVELOPMENT GROUP PUERTO
  RICO; DORADO MARKETING AND
  MANAGEMENT; JSS INVESTMENT
  VENTURES; JSS TRUST; ZURIXX
  FINANCIAL PUERTO RICO; GERALD
  D. SPANGLER,

         Defendants.

  ------------------------------

  DAVID K. BROADBENT,

         Receiver - Appellee,

  v.

  DAVID EFRON; EFRON DORADO SE,

         Interested Parties - Appellants.
Appellate Case: 20-4090      Document: 010110650936        Date Filed: 03/01/2022       Page: 2

                          _________________________________

                      Appeal from the United States District Court
                                for the District of Utah
                        (D.C. No. 2:19-CV-00713-DAK-DAO)
                        _________________________________

 Submitted on the briefs:*

 David Efron, San Juan, Puerto Rico, for Appellants.

 Doyle S. Byers and Cory A. Talbot, Holland & Hart LLP, Salt Lake City, Utah,
 for Appellee.
                       _________________________________

 Before TYMKOVICH, Chief Judge, BRISCOE and CARSON, Circuit Judges.
                  _________________________________

 CARSON, Circuit Judge.
                     _________________________________

        David Efron and Efron Dorado SE (collectively Efron) appeal a civil contempt

 order entered by the district court for violating its preliminary injunction. Because the

 contempt order was a non-final decision, we dismiss this appeal for lack of jurisdiction.1

                                              I

        This litigation began when the Federal Trade Commission and the Utah Division

 of Consumer Protection filed a complaint in the United States District Court for the

        *
         After examining the briefs and appellate record, this panel has determined
 unanimously that oral argument would not materially assist in the determination of
 this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
 ordered submitted without oral argument.
        1
         Although Efron is not a party to the proceedings below, “a nonparty may
 generally appeal an order holding him in civil contempt,” Concorde Res., Inc. v.
 Woosley (In re Woosley), 855 F.2d 687, 688 (10th Cir. 1988) (internal quotation
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Appellate Case: 20-4090      Document: 010110650936          Date Filed: 03/01/2022      Page: 3

 District of Utah against Zurixx, LLC and related entities. The complaint alleged Zurixx

 marketed and sold deceptive real-estate investment products in violation of the Federal

 Trade Commission Act, 15 U.S.C. §§ 41-58, and the Utah Consumer Sales Practices Act,

 Utah Code §§ 13-11-1 to -23, among other things. The district court entered a stipulated

 preliminary injunction, enjoining Zurixx from continuing its business activities and

 freezing its assets wherever located. The injunction also directed any person or business

 with actual knowledge of the injunction to preserve any of Zurixx’s assets in its

 possession, and it prohibited any such person or business from transferring those assets.

 The order also appointed a receiver to “[t]ake exclusive custody, control, and possession

 of all [a]ssets and [d]ocuments of, or in the possession, custody, or under control of, any

 [Zurixx] Entity, wherever situated.” Aplt. App. at 17; see also 28 U.S.C. § 754 (“A

 receiver appointed in any civil action or proceeding involving property, real, personal or

 mixed, situated in different districts shall . . . be vested with complete jurisdiction and

 control of all such property with the right to take possession thereof.”).

        A week later, the receiver filed a copy of the complaint and injunction in federal

 court in Puerto Rico, where Zurixx leased office space from Efron. The office contained

 Zurixx’s computers, furniture, and other assets. The receiver also notified Efron of the

 receivership and gave him actual notice of the injunction. Although Efron at first

 allowed the receiver access to the office to recover computers and files, he later denied

 marks omitted). We discuss the effect of Efron’s status as a nonparty more
 thoroughly below.
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 access to remove the remaining assets and initiated eviction proceedings against Zurixx

 in a Puerto Rico court.

        Given these events, the receiver moved the district court in Utah for an order

 holding Efron in contempt of court for violating the injunction. In response, Efron

 claimed the assets belonged to him under his lease agreement with Zurixx. About seven

 months later, after a full round of briefing, the district court granted the motion and held

 Efron in contempt of court for violating the injunction. The contempt order directed

 Efron “(1) to allow the Receiver and his representatives access to the office to recover

 and remove Zurixx’s assets or (2) to compensate the Receiver for the value of those

 assets that Efron . . . took or otherwise disposed of in violation of the Injunction.” Aplt.

 App. at 154-55. The order also provided that if Efron failed to comply with the contempt

 order within thirty days, he would be required “to pay the Receiver’s legal fees in

 connection with the [contempt] motion.” Id. at 155.

        Efron asked the district court to reconsider its contempt order, insisting that under

 his lease with Zurixx, the furniture, fixtures, and equipment in the office belonged to him

 and that the receiver’s efforts to recover the assets were an unconstitutional taking. Efron

 filed a notice of appeal from the contempt order before the court ruled on his motion for

 reconsideration. The court later denied reconsideration, but Efron did not amend his

 notice of appeal to include the ruling on reconsideration. Proceedings were ongoing in

 the district court.

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                                               II

        We first consider the scope of this appeal. Efron first suggests he is appealing

 from the district court’s October 20, 2020, denial of reconsideration. See Aplt. Br. at 1

 (“The District Court entered the final decision from which this appeal is filed on

 October 20, 2020[,] denying [his] Motion for Reconsideration. . . .”). But he filed his

 notice of appeal on August 26, 2020, before the court denied reconsideration. See Aplt.

 App. at 243. If Efron wished to appeal the order denying reconsideration, he needed to

 file a new notice of appeal or amend his existing notice of appeal. See Fed. R. App. P.

 4(a)(4)(B)(ii). Because he did neither, the order denying reconsideration is not before us.

 See Pierce v. Shorty Small’s of Branson, Inc., 137 F.3d 1190, 1192-93 (10th Cir. 1998)

 (declining to review the denial of reconsideration entered after appellant filed his notice

 of appeal absent an amended notice of appeal).

        Efron also asserts we have jurisdiction under 28 U.S.C. § 1292(a)(1) to review the

 “preliminary injunction order and [the] later decision and order declining to modify [the]

 injunction.” Aplt. Br. at 1. Efron cannot challenge the injunction, however, because he

 did not designate the injunction in the notice of appeal. See Fed. R. App. 3(c)(1)(B)

 (requiring notice of appeal to “designate the judgment, order, or part thereof being

 appealed”).

        Nor can Efron rely on § 1292(a)(1) to challenge the contempt order, which he calls

 the “order declining to modify [the] injunction,” Aplt. Br. at 1, because the contempt

 order is not an injunctive order as contemplated by § 1292(a)(1). Although the district

 court did not characterize the contempt order as an injunctive order, Efron does,

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 describing it as an “order declining to modify [the] injunction,” Aplt. Br. at 1 (emphasis

 added). His characterization is not determinative, however, because “[i]n resolving their

 appellate jurisdiction, the circuit courts have looked behind the terminology used by the

 parties and the district court,” Pimentel & Sons Guitar Makers, Inc., v. Pimentel,

 477 F.3d 1151, 1153 (10th Cir. 2007). We “consider the substance rather than the form

 of the” order to determine whether it falls within the scope of § 1292. Id. And the

 substance of this order was to hold Efron in contempt for violating the court’s

 preliminary injunction. Simply put, the contempt order did not grant, deny, or modify an

 injunction as required by § 1292. See Comptone Co. v. Rayex Corp., 251 F.2d 487, 488

 (2d Cir. 1958) (recognizing a finding of contempt was not appealable under § 1292

 because it was “not an order granting, continuing, modifying, refusing, or dissolving an

 injunction, or refusing to dissolve or modify an injunction”). It merely enforced a

 previously granted preliminary injunction. Cf. Ditucci v. Bowser, 985 F.3d 804, 808

 (10th Cir. 2021) (“This circuit has defined an injunction broadly as an equitable decree

 compelling obedience under the threat of contempt.” (brackets and internal quotation

 marks omitted)).

        Contrary to Efron’s suggestion, the contempt order did not “declin[e] to modify

 [the] injunction,” Aplt. Br. at 1. Efron had not asked the court to modify the injunction

 by motion or otherwise. The contempt order was, instead, in response to the receiver’s

 motion asking the court to hold Efron in contempt for refusing to comply with the court’s

 previous injunction. The contempt order concluded that Efron actually knew of the

 preliminary injunction provisions and that he violated the injunction by preventing the

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 receiver from taking control of Zurixx’s assets. But the contempt order did not “alter the

 status of the parties” or “change[] the terms and force of the injunction.” Pimentel,

 477 F.3d at 1154 (internal quotation marks omitted). Rather, its “actual, practical effect,”

 id., was to compel Efron’s compliance with the existing terms of the injunction. So Efron

 cannot rely on § 1292(a)(1) to appeal the contempt order.

        Our jurisdiction, then, hinges on whether the contempt order is a final, appealable

 decision under § 1291. Efron offers no argument on this score, but the receiver contends

 the contempt order is not a final decision because it imposed no sanction against Efron.

 We agree.

        Nonparties like Efron need not await entry of final judgment to appeal a civil

 contempt order. See U.S. Catholic Conf. v. Abortion Rights Mobilization, Inc.,

 487 U.S. 72, 76 (1988) (“The order finding a nonparty . . . in contempt is appealable

 notwithstanding the absence of a final judgment in the underlying action.”). “In fact,

 it is that status as a nonparty which entitles him or her to perfect an appeal before a

 final judgment has been entered.” Concorde Res. v. Woosley (In re Woosley),

 855 F.2d 687, 688 (10th Cir. 1988). As the Supreme Court explained more than a

 century ago, a nonparty contemnor may take an immediate appeal because, as a

 nonparty, he has no right to appeal from the entry of final judgment. See Bessette v.

 W.B. Conkey Co., 194 U.S. 324, 329-30 (1904).

        Even so, our jurisdiction under § 1291 is limited to reviewing only “final

 decisions” of the district court. See Amazon, Inc. v. Dirt Camp, Inc., 273 F.3d 1271,

 1275 (10th Cir. 2001) (“Generally, only final decisions of the district court are

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 appealable.”). In the context of a party seeking to appeal a contempt order, we have

 held that “in the postjudgment stage of a case, once the finding of contempt has been

 made and a sanction imposed, the order has acquired all the elements of

 operativeness and consequence necessary to be possessed by any judicial order to

 enable it to have the status of a final decision under 28 U.S.C. § 1291.” O’Connor v.

 Midwest Pipe Fabrications, Inc., 972 F.2d 1204, 1208 (10th Cir. 1992) (italics and

 internal quotation marks omitted). Thus, even at the postjudgment stage, a party

 must establish the finality of a contempt order by showing that the district court

 (1) “made a finding of contempt” and (2) “imposed specific, unavoidable sanctions.”

 Consumers Gas & Oil, Inc. v. Farmland Indus., Inc., 84 F.3d 367, 370 (10th Cir.

 1996).

          Though we have no published authority specifically on this point, other courts

 require nonparties to satisfy the same two criteria—show a finding of contempt and

 the imposition of sanctions—to establish the finality of a contempt order. See

 Petroleos Mexicanos v. Crawford Enters., Inc., 826 F.2d 392, 398 (5th Cir. 1987)

 (holding that the general rule for nonparties is that “a contempt decision’s finality

 and appealability is composed of two parts: (1) a finding of contempt, and (2) an

 appropriate sanction”); see also OSRecovery, Inc. v. One Groupe Int’l, Inc., 462 F.3d

 87, 91-93 (2d Cir. 2006) (concluding that an order holding a nonparty in civil

 contempt, imposing a specific, unavoidable fine, and directing the nonparty’s arrest

 was a final, appealable order); Cacique, Inc. v. Robert Reiser & Co., 169 F.3d 619,

 622 (9th Cir. 1999) (“A contempt order and imposition of sanctions on a non-party

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 for failure to obey a discovery order or subpoena is a final order for purposes of

 28 U.S.C. § 1291.”); 15B Charles Alan Wright et al., Federal Practice & Procedure

 § 3917 (2d ed. Apr. 2021 Update) (“A determination that contempt has occurred is

 not final if the question of sanctions is postponed. . . . Finality . . . requires

 determination of both liability and sanction . . . .”). Once the district court makes a

 finding of contempt and imposes a sanction, a nonparty has an unquestionable right

 to appeal. See U.S. Catholic Conf., 487 U.S. at 75-76 (recognizing nonparty

 contemnor’s right to appeal “adjudication of contempt” even without a final

 judgment where district court rendered finding of contempt and assessed a $50,000

 daily fine for noncompliance).

        Here, though, the contempt order is not a final, appealable decision because

 the sanction contemplated was not actually imposed. The order found Efron in

 contempt, but it provided a window of time to purge the contempt either by allowing

 the receiver to access the office to recover Zurixx’s assets or by compensating the

 receiver for the value of the assets. The contempt order stated that Efron would need

 to pay the receiver’s legal fees in connection with the contempt motion if he failed to

 purge the contempt by complying with the court’s directives within thirty days. And

 the order contained no specifics about the amount of the possible sanction—another

 order would have been required to set the amount of the sanction if Efron did not

 purge the contempt within thirty days. Without imposition of a specific, unavoidable

 sanction, the contempt order was not a final, appealable decision under § 1291, and

 we lack jurisdiction to consider it. See Petroleos Mexicanos, 826 F.2d at 398. We

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Appellate Case: 20-4090    Document: 010110650936          Date Filed: 03/01/2022     Page: 10

  therefore dismiss the appeal for lack of jurisdiction. And given the dismissal, we

  deny the motion for a stay pending appeal as moot.

                                               III

        This appeal is dismissed for lack of jurisdiction. Efron’s motion for a stay is

  denied.

                                                         Entered for the Court

                                                         Joel M. Carson III
                                                         Circuit Judge

                                             10