Mpatanishi Garrett v. Coventry II DDR/Trade ( 2015 )

Case: 14-10525 Document: 00512930283 Page: 1 Date Filed: 02/09/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 14-10525 United States Court of Appeals
Fifth Circuit
FILED
In the Matter of: NINA WHITE-ROBINSON, February 6, 2015
Lyle W. Cayce
Debtor Clerk
------------------------------
MPATANISHI TAYARI GARRETT; TAYARI LAW, P.L.L.C.,
Appellants
v.
COVENTRY II DDR/TRADEMARK MONTGOMERY FARM, L.P.,
Appellee
Appeal from the United States District Court
for the Northern District of Texas
Before JOLLY, WIENER, and CLEMENT, Circuit Judges.
PER CURIAM:
Appellants Mpatanishi Tayari Garrett (“Garrett”) and her law firm,
Tayari Law, P.L.L.C. (“the firm”), appeal the bankruptcy court’s contempt
order (the “Contempt Order”), which held them in civil contempt for failing to
pay sanctions imposed for prior misconduct. The district court affirmed the
Contempt Order. We likewise AFFIRM.
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FACTUAL AND PROCEDURAL BACKGROUND
We have considered this unseemly case once before. It involves Garrett’s
misconduct in her legal representation of debtor Nina White-Robinson (“White-
Robinson”) during bankruptcy proceedings. We previously affirmed the
bankruptcy court’s two sanctions orders (the “Sanctions Orders”). First, the
bankruptcy court sanctioned Garrett and her firm for discovery abuse,
ordering them to pay $5,000 to appellee Coventry II DDR/Trademark
Montgomery Farm, L.P. (“DDR”). Second, after a subsequent show-cause
hearing, the bankruptcy court sanctioned Garrett for bringing a frivolous and
procedurally deficient motion for contempt against DDR, ordering her to pay
$20,000 to DDR. On November 13, 2012, the district court affirmed the
Sanctions Orders. Finally, on January 2, 2014, we likewise affirmed the
bankruptcy court’s Sanctions Orders with a two-paragraph order, and the
Supreme Court denied certiorari on October 6, 2014. In re White-Robinson,
551 F. App’x 121 (5th Cir. 2014), cert. denied, 135 S. Ct. 76 (2014).
In the interim, during the appeal of the Sanctions Orders, Garrett and
her firm did not pay the ordered sanctions, even though they did not post a
supersedeas bond or otherwise obtain a stay pending appeal. On December 18,
2012, DDR filed a motion for contempt. The bankruptcy court held a show-
cause hearing in which Garrett appeared but did not present any evidence. On
February 21, 2013, the bankruptcy court held Garrett and her firm in civil
contempt, finding that they knew about the non-stayed Sanctions Orders but
declined to pay them. The bankruptcy court ordered Garrett and her firm to
pay DDR an additional $6,454.50, the expenses DDR incurred in attempting
to enforce the Sanctions Orders. The Contempt Order also ordered them to
pay DDR $100 for each additional day that they did not pay the sanctions.
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Over six months later, on September 12, 2013, Garrett and her firm 1
filed an emergency motion for a stay with the district court, moving to stay
“essentially all orders,” including the Sanctions Orders and Contempt Order.
On September 20, 2013, the district court denied Garrett’s motion to stay
because she had not demonstrated why she failed to obtain a stay from the
bankruptcy court. There is no indication in the record that Garrett
subsequently filed another motion to stay the Sanctions Orders or the
Contempt Order.
Finally, on March 25, 2014 (after we affirmed the Sanctions Orders), the
district court affirmed the bankruptcy court’s Contempt Order. Garrett has,
predictably, appealed again, this time arguing that we should reverse the
Contempt Order.
STANDARD OF REVIEW
“Like the district court,” we review “a bankruptcy court’s findings of fact
for clear error, and its legal conclusions de novo.” In re Bradley, 588 F.3d 254,
261 (5th Cir. 2009). “A bankruptcy court’s assessment of monetary sanctions
for contempt is reviewed for abuse of discretion.” Id.
DISCUSSION
Garrett raises three main issues on appeal. First, she argues that the
bankruptcy court lacked jurisdiction to issue the Contempt Order because it
was not related to the bankruptcy and was issued while the Sanctions Orders
were before us on appeal. Second, she argues that the Contempt Order violates
the prohibition on imprisonment for a debt. Third, she argues that the
Contempt Order was an abuse of the bankruptcy court’s discretion. We deal
with each issue in turn.
1The remainder of this opinion refers to Garrett and her firm collectively as “Garrett,”
except where otherwise provided.
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I. Jurisdiction
A bankruptcy court may issue civil contempt orders. In re Terrebonne
Fuel & Lube, Inc., 108 F.3d 609, 612–13 (5th Cir. 1997). There is no real
dispute that the contempt order here was civil, and indeed it clearly was—its
purpose was “to coerce compliance with a court order or to compensate another
party for the contemnor’s violation.” Id. at 612. That is, the $6,454.50 award
was meant to reimburse DDR for having to seek enforcement of the Sanctions
Orders, and the $100-per-day award was meant to coerce Garrett into paying
the Sanctions Orders timely.
A bankruptcy court may exercise full judicial power only in core
proceedings. In re Wood, 825 F.2d 90, 91 (5th Cir. 1987); see also 28 U.S.C.
§ 157(b)(1) (giving bankruptcy court full jurisdiction over core matters); id.
§ 157(c)(1) (giving bankruptcy courts only recommendation authority over non-
core matters that are merely “related to” a bankruptcy case). We hold that the
bankruptcy court’s issuance of the Contempt Order took place during such a
core proceeding. A proceeding is core if it either arises under the Bankruptcy
Code or “would have no existence outside of the bankruptcy” proceeding. Wood,
825 F.2d at 96–97. Here, the proceeding was core because holding a party in
civil contempt for refusing to follow a bankruptcy court’s valid and binding
orders “would have no existence outside of the bankruptcy” proceeding. Again,
an order of civil contempt is meant to coerce the contemnor into compliance or
provide a remedy for the party injured by noncompliance. Terrebonne Fuel,
108 F.3d at 612. As such, an order of civil contempt is considered part of the
underlying case. See In re Hipp, Inc., 895 F.2d 1503, 1517 (5th Cir. 1990)
(“[C]ivil contempts generally have been viewed as part of the underlying
case.”). Thus, the civil contempt order was issued as part of the bankruptcy
case itself, making it a core proceeding that “would have no existence outside
of the bankruptcy.”
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Moreover, the Contempt Order here falls within one of the statutorily-
enumerated examples of core proceedings because it was a “matter[ ]
concerning the administration of the estate.” 28 U.S.C. § 157(b)(2). The
Contempt Order concerned the orderly administration of White-Robinson’s
estate—namely, her attorney’s compliance with federal bankruptcy rules and
the orders of the bankruptcy court. See In re Memorial Estates, Inc., 950 F.2d
1364, 1370 (7th Cir. 1991) (holding that sanction for attorney’s misconduct
during bankruptcy case was core proceeding, without considering whether
misconduct occurred during core proceeding, in part because misconduct itself
“concern[ed] the administration of the estate” (internal alteration in original));
Jackson v. Wessel, 118 B.R. 243, 248 (E.D. Pa. 1990) (holding that malpractice
claims against debtor’s counsel alleging “professional conduct not compatible
with obligations imposed by provisions of the bankruptcy law itself—provisions
relating to the conduct of practitioners before the bankruptcy court—”
concerned “the administration of the estate”). We find unpersuasive Garrett’s
claim that the Contempt Order was non-core and unrelated to the bankruptcy
case merely because White-Robinson had been discharged from bankruptcy.
The bankruptcy court issued its Sanctions Orders to help promote the proper
administration of the estate, and therefore the later Contempt Order to enforce
the Sanctions Orders still “concern[ed] the administration of the estate.” 2
In the alternative, Garrett argues that the bankruptcy court could not
issue its Contempt Order while the Sanctions Orders were being appealed to
this court. This argument is clearly foreclosed by our precedent. Unless a
bankruptcy court’s ruling is stayed pending appeal, that court retains
2 Rather than discussing whether the Contempt Order was issued during core
proceedings, Garrett primarily argues that the Contempt Order was not “related to” White-
Robinson’s bankruptcy. We do not reach this argument because, once a proceeding is
determined to be core, we need not consider whether it is also “related to” a bankruptcy case.
Stern v. Marshall, 131 S. Ct. 2594, 2605 (2011).
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jurisdiction to engage in proceedings to enforce its own rulings. United States
v. Revie, 834 F.2d 1198, 1205 (5th Cir. 1987). Here, Garrett did not obtain a
stay of the Sanctions Orders pending appeal. Accordingly, the bankruptcy
court retained jurisdiction to enforce the Sanctions Orders through any
appropriate means, including a civil contempt order. See Resolution Trust
Corp. v. Smith, 53 F.3d 72, 76–77 (5th Cir. 1995) (“Until the judgment has been
properly stayed or superseded, the district court may enforce it through
contempt sanctions.” (internal quotation marks and alteration omitted)).
II. Imprisonment for a Debt
Garrett next argues that the Contempt Order was improper because it
violates 28 U.S.C. § 2007 (“§ 2007”), the federal prohibition on imprisonment
for a debt. That section provides in relevant part that “[a] person shall not be
imprisoned for debt on a writ of execution or other process issued from a court
of the United States in any State wherein imprisonment for debt has been
abolished.” Id. § 2007(a). The Sanctions Orders were issued from a federal
court in Texas, and the Texas Constitution provides that “[n]o person shall ever
be imprisoned for debt.” Tex. Const. art. I, § 18. Thus, because the Contempt
Order allegedly threatens Garrett with imprisonment for her failure to pay the
Sanctions Orders, Garrett argues that the Contempt Order violates § 2007.
The most intuitive response to this argument is that the Contempt Order
did not imprison anyone and did not realistically threaten anyone with the risk
of imprisonment. But Garrett argues that one of our cases could be read to
imply that, in Texas, § 2007 prohibits all civil contempt orders for failure to
pay a debt because imprisonment is a possible remedy for civil contempt. In
Pierce v. Vision Investments, Inc., we applied § 2007 analysis to a civil contempt
order, even though the order did not imprison the contemnor. 779 F.2d 302,
306–10 (5th Cir. 1986). Ultimately, we decided that the civil contempt order
was issued for the violation of an equitable decree rather than failure to pay a
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debt, so § 2007 was not violated. Id. at 309. But we did not explicitly decide
whether § 2007 could ever be violated by a civil contempt order that does not
impose imprisonment. See id. 3
We start by assuming, without deciding, that sanctions of the sort
imposed here are “debts” within the meaning of the term as used in § 2007 and
the Texas Constitution. 4 Having made this assumption, we start and end our
analysis of Garrett’s argument with the plain text of § 2007. That section
prohibits only imprisonment for a debt—not fining for a debt, not sanctioning
for a debt, and not holding in contempt for a debt. We hold that, given the
plain statutory language and the lack of any binding precedent, only
imprisonment for a debt could possibly violate § 2007. Thus, a civil contempt
order that does not impose imprisonment cannot violate § 2007, regardless of
whether it is imposed for nonpayment of a debt. Here, Garrett was not
imprisoned, so § 2007 does not apply.
Garrett essentially argues that a civil contempt order always implicitly
threatens imprisonment. But DDR’s motion for contempt requested only
3 Pierce was decided on panel rehearing. Id. The panel’s original, vacated opinion
explicitly decided that a civil contempt order for failure to pay a debt was precluded by § 2007
in Texas, even if the contempt order did not require imprisonment. Pierce v. Vision Invs.,
Inc., 765 F.2d 539, 545 (5th Cir. 1985), vacated on rehearing by 779 F.2d 302 (5th Cir. 1986).
Needless to say, this statement in the original opinion is not good law because the opinion
was vacated. It is troubling that Garrett repeatedly relies upon the vacated Pierce opinion.
4 As we have indicated above, we do not decide whether the Sanctions Orders, imposed
for an attorney’s misconduct during litigation, created mere “debts” within the meaning of
§ 2007 or Texas law. We have been unable to find any Texas or federal cases that directly
consider this question. Cf. Pierce, 779 F.2d at 309 (“Nothing in Texas jurisprudence indicates
that a Texas court would find that the court order in this case was a mere debt.”). Similarly,
we do not decide whether Texas law allows imprisonment of someone who has the financial
resources to pay a debt but refuses to do so, although we note that the Texas Courts of
Appeals are apparently split on this issue. Compare Ex parte Buller, 834 S.W.2d 622, 626
(Tex. App.—Beaumont 1992) (holding that Texas’s “constitutional prohibition” against
imprisonment for debts “simply does not apply unless the contemner demonstrates inability
to pay” (internal quotation marks omitted)), with In re Byrom, 316 S.W.3d 787, 795 n.6 (Tex.
App.—Tyler 2010) (noting Buller holding with disapproval).
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monetary sanctions, not imprisonment. And, during the contempt hearing, the
bankruptcy court and DDR repeatedly disclaimed any intention to imprison
Garrett or anyone else for failure to pay the amounts due under the Sanctions
Orders. We find Garrett’s contention that she was “threatened” with
imprisonment disingenuous. 5
III. Abuse of Discretion
The remainder of Garrett’s arguments can be disposed of easily. She
makes essentially five points, none of which is extensively briefed. First, she
argues that less harsh remedies were available and the fines imposed were
excessive. We review only for abuse of discretion, and we hold that the
bankruptcy court did not abuse its discretion. There was ample, uncontested
evidence that the Sanctions Orders were in effect and that Garrett knew of
them and did not pay them. Fining Garrett for DDR’s rather limited expenses
of $6,454.50 was eminently reasonable and not at all excessive or overly harsh.
Further, given Garrett’s apparent obduracy in refusing to pay the sanctions,
imposing an additional fine of $100 per day of nonpayment was reasonably
calculated to coerce compliance and was not excessive or overly harsh.
Second, Garrett argues that she was denied due process and equal
protection because she did not receive a fair hearing. But she was given the
opportunity to appear, object to documentary evidence, and put on evidence of
her own. 6 When the bankruptcy court told Garrett that “it’s your
5 That said, in the seemingly not-unlikely situation that Garrett violates the Contempt
Order, imprisonment would be appropriate only if it would also be appropriate for
nonpayment of the Sanctions Orders. That is, assuming arguendo that imprisonment for
nonpayment of the Sanctions Orders would be forbidden by § 2007, imprisoning Garrett for
violation of the Contempt Order would be tantamount to imprisoning her for failure to pay a
debt. Otherwise, imprisonment for a debt could always be accomplished by first obtaining a
contempt order and then requesting imprisonment for failure to comply with it.
The firm alone argues in the reply brief that it was not given proper notice of the
6
contempt hearing. Because this argument is cursorily raised for the first time in the reply
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opportunity . . . to put on evidence at this time,” she responded simply, “I have
nothing further to say to this Court.” Indeed, reading the contempt hearing
transcript leaves the distinct impression that Garrett essentially refused to
participate in the proceeding after the bankruptcy court rejected her
jurisdictional and § 2007 objections. Garrett cannot now complain that she
was not given the opportunity to present evidence or to present her case.
Garrett also complains that the bankruptcy court violated her due
process rights by not considering whether she was financially able to pay the
Sanctions Orders. But she never even raised an inability-to-pay defense, let
alone satisfied her burden of production for that defense. See, e.g., United
States v. Rylander, 460 U.S. 757, 757 (1983) (noting that alleged contemnor
who “rais[es] th[e] defense” of present inability to comply with the violated
order bears the burden of production (emphasis added)); Huber v. Marine
Midland Bank, 51 F.3d 5, 10 (2d Cir. 1995) (“[A] party’s complete inability, due
to poverty or insolvency, to comply with an order to pay court-imposed
monetary sanctions is a defense to a charge of civil contempt. The alleged
contemnor bears the burden of producing evidence of his inability to comply.”
(emphasis added) (internal citations omitted)). Again, Garrett was given every
opportunity to present this defense. Indeed, the bankruptcy judge specifically
informed Garrett that “I would be willing to hear anything about your financial
resources. I would be willing to hear whatever reasons you care to offer about
why you didn’t pay the money judgment. So I am asking you one more time:
Do you want to say anything on any of these points?” Garrett responded with
arguments unrelated to financial inability to pay the sanctions. And, again,
brief, we do not consider it. See United States v. Myers, 772 F.3d 213, 218 (5th Cir. 2014)
(“We generally do not consider arguments made for the first time in a reply brief and deem
those arguments waived.”).
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when the bankruptcy court asked her whether she would present any evidence,
she declined to do so.
Garrett suggests that, given the amount of time that has elapsed since
the Contempt Order, she now owes over $100,000, so we should vacate the
Contempt Order and remand for consideration of financial inability to pay.
This we will not do. Garrett did not obtain (or even vigorously pursue) a stay
of the contempt order pending appeal, so she is to blame for any accrued
balance. 7
Third, Garrett argues that the Contempt Order was void for vagueness
because it would “lead the reader to believe the orders at issue were more than
monetary judgments to a creditor.” Given her lack of legal citations, we are
not sure why she believes that the alleged vagueness of a few factual findings
would render an entire order void. Regardless, we hold that the Contempt
Order was not vague and indeed correctly stated that Garrett had not complied
with the Sanctions Orders.
Fourth, Garrett argues that the district court made a number of
unsupported findings. We do not defer to the district court’s findings in this
bankruptcy appeal, so any such error is harmless on appeal. See Terrebonne
Fuel, 108 F.3d at 613 (“Although the bankruptcy appellate process makes this
court the second level of review, we perform the identical function as the
district court.”).
Fifth, Garrett alone argues that the bankruptcy court improperly held
her jointly and severally liable for actions she performed as a member of her
law firm, which is allegedly a limited liability company (“LLC”) organized
under Texas law. But Texas law only protects LLC members from being held
7Of course, if another civil contempt proceeding is brought against Garrett to enforce
the Sanctions Orders and Contempt Order, she will have the opportunity to defend based on
her “present inability to comply with the order[s] in question.” Rylander, 460 U.S. at 757.
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liable for the LLC’s obligations, not their own obligations. See Tex. Bus. Orgs.
Code § 101.114 (“[A] member . . . is not liable for a debt, obligation, or liability
of a limited liability company . . . .” (emphasis added)). Garrett was found in
civil contempt for her failure to pay sanctions that she owed because of her own
misconduct in prior bankruptcy proceedings. Accordingly, she is not protected
by her alleged membership in her LLC. See id.; Sanchez v. Mulvaney, 274
S.W.3d 708, 712 (Tex. App.—San Antonio 2008) (holding that LLC member
could be held individually liable for “his own allegedly tortious or fraudulent
actions”).
CONCLUSION
For the foregoing reasons, we AFFIRM the bankruptcy court’s Contempt
Order.
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