Feltner, Lisa v. Title Search Company ( 2002 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-2132
Lisa Ann Feltner,
Plaintiff,
v.
Title Search Company,
Defendant-Appellant,
and
1st Source Bank,
Garnishee-Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Indiana, South Bend Division.
No. 95-CV-217--Robert L. Miller, Jr., Judge.
Argued January 23, 2002--Decided March 12, 2002
Before Bauer, Coffey and Evans, Circuit
Judges.
Bauer, Circuit Judge. Title Search
Company appeals the district court’s
entry of a contempt and sanctions order
after finding that Title Search violated
an injunction preventing relitigation in
state court of certain issues previously
decided in federal court. Because the
district court was well within its
discretion to hold Title Search in
contempt and sanction it, we affirm the
judgment of the district court.
BACKGROUND
Lisa Ann Feltner sued Title Search
Company for sexual harassment and
discrimination in 1995, under 42 U.S.C.
sec. 2000(e) et seq. A trial was held in
1996, and a jury awarded Feltner damages,
plus attorney’s fees totaling
approximately $93,000. Title Search
appealed, and we affirmed the judgment.
Despite losing the case, Title Search did
not pay, forcing Feltner to seek a
garnishment order. Garnishment
proceedings were commenced in April 1997,
and in the course of those proceedings
Feltner discovered Title Search’s
accounts at 1st Source Bank.
The district court notified Title Search
of the impending garnishment of the 1st
Source Bank accounts and gave Title
Search an opportunity to contest the
garnishment at a hearing. Title Search
could have avoided the garnishment by
demonstrating that funds in the accounts
did not belong to it, but Title Search
did not contest the garnishment. The
district court later set another hearing
and again sent notice to Title Search,
yet again Title Search failed to appear.
Thereafter, in September of 1998, a
garnishment order was entered, and in
compliance with that order 1st Source
Bank disbursed $93,165.65 to Feltner from
Title Search accounts numbers 123-224-8
and 8112232248.
On November 6, 1998, well after it
should have contested the issue, Title
Search filed a motion for reconsideration
of the garnishment order claiming that
the funds in account 123-224-8 were part
of a trust/escrow account containing
funds that did not belong to Title
Search. The motion was denied, and Title
Search did not appeal the ruling.
Then on February 4, 2000, Title Search
filed suit in Indiana state court
alleging breach of contract because 1st
Source Bank improperly paid out funds,
which did not belong to Title Search.
After receiving notice of the state court
suit, 1st Source Bank returned to federal
court and moved to stay the state court
proceedings. After briefing and oral
argument, the district court granted the
injunction prohibiting Title Search from
relitigating in state court the issues
which were already decided in federal
court. The district court found that the
state court action was an attempt by
Title Search to relitigate the propriety
of the garnishment order and challenge
the district court’s determination that
Title Search owned the funds in the
account. The district court found that
the stay was necessary to protect its
previous rulings. See the All-Writs Act,
28 U.S.C. sec. 1651; the Anti-Injunction
Act, 28 U.S.C. sec. 2283. However, the
district court did note that whether or
not 1st Source Bank breached any
contractual duties was a question not
previously litigated and that issue would
not be affected by the stay. Title Search
did not appeal the entry of the
injunction.
Armed with the injunction, 1st Source
Bank filed for summary judgment in the
state court proceedings, and Title Search
responded arguing that the account was an
escrow account. 1st Source Bank
reappeared in federal court requesting
that Title Search be held in contempt for
violating the injunction. The magistrate
judge issued an order to show cause, and
Title Search filed a memorandum in
opposition to the contempt petition. The
magistrate judge recommended that Title
Search be found in contempt and
sanctioned in the amount of $9,121.15.
The district court adopted the magistrate
judge’s recommendations and granted the
petition for contempt on March 29, 2001.
The district court also ordered Title
Search to file a memorandum in state
court withdrawing all of its arguments
which violated the injunction. Title
Search now appeals that ruling.
ANALYSIS
A. Issues on Appeal
On June 16, 2000, the district court
enjoined Title Search from relitigating
issues in Indiana state court which were
previously litigated in federal court.
Title Search did not appeal the entry of
the injunction. Nevertheless, in its
briefs and at oral argument, Title Search
argued that the injunction does not fall
within any of the statutory exceptions
contained in the Anti-Injunction Act.
Title Search also attempts to shoehorn
this issue into the contempt and
sanctions appeal by arguing it did not
violate the injunction because the issue
of ownership of the funds was not
litigated in federal court. We do not
consider any of Title Search’s arguments
which attack the scope of the injunction
because Title Search never appealed the
entry of the injunction on June 16, 2000.
Cf. Szabo v. U.S. Marine Corp., 819 F.2d
714, 718 (7th Cir. 1987) ("Not having
appealed from the grant of the
injunction, U.S. Marine cannot argue that
it is too vague to be enforced . . . .").
The only issue before this court is
whether the district court abused its
discretion in entering the contempt and
sanctions order on March 29, 2001.
B. Contempt & Sanctions Order
It is well established that the decision
by a district court to enter a finding of
civil contempt is discretionary and we
review it only to determine if there was
an abuse of discretion or its entry was
clearly erroneous. Jones v. Lincoln Elec.
Co., 188 F.3d 709, 737 (7th Cir. 1999);
Stoler and Co. v. Able, 870 F.2d 1158,
1163 (7th Cir. 1989); Jewel Tea Co. v.
Kraus, 204 F.2d 549, 551 (7th Cir. 1953).
Contempt proceedings are generally
classified into two categories, coercive
and remedial. Jones, 188 F.3d at 738.
Coercive sanctions are used to induce
compliance with court orders in the
future, while remedial sanctions
compensate an aggrieved party for losses
sustained for past disobedience of a
court’s order. Id. The district court’s
order in this case contains a remedial
monetary sanction for violation of the
injunction, and what could be classified
as both a remedial and coercive sanction
to remove certain arguments from motions
filed in state court. The sanction,
regardless of its nature, "must be
predicated on a violation of an explicit
court order." Id.Title Search contends that it did not
violate the injunction with respect to
relitigation of the issue of ownership
and nature of the accounts. To hold a
party in contempt, "the court must be
able to point to a decree from the court
which ’set[s] forth in specific detail an
unequivocal command’ which the party in
contempt violated." Ferrell v. Pierce,
Jr., 785 F.2d 1372, 1378 (7th Cir. 1986)
(per curiam) (quoting H.K. Porter Co. v.
National Friction Prod., 568 F.2d 24, 27
(7th Cir. 1977)). The district court’s
June 16, 2000 injunction order provides,
in relevant part:
1. Title Search is prohibited from
relitigating in the related state-court
action those allegations and/or issues
contained in Paragraphs 5, 6, 7, 8, and
11 of its state-court complaint . . . .
2. Title Search is prohibited from
litigating in the related state-court
action the issue of whether it was the
sole owner of the funds contained in
Account No. 123-224-8 with 1st Source
Bank. Whether the funds belonged to Title
Search or its customers is a question
that has already been determined as part
of its garnishment proceeding, that took
place between April 4, 1997 and November
10, 1998. The court determined that Title
Search was the sole owner of the funds,
and, therefore, the issue shall not be
tried again.
The district court’s contempt and
sanctions order "pointed" to the
injunction order, and specifically found:
"Title Search has in three separate
instances continued to allege that the
bank account at issue was an ’escrow’
account, in direct violation of this
court’s order."
Throughout its reply to 1st Source
Bank’s motion for summary judgment in the
state action Title Search asserted that
the account in question was an escrow
account and that the funds did not belong
to Title Search. For example, on page
five of that motion, Title Search stated:
"[t]here exists a genuine issue of fact
as to the type of account which Title
Search held with 1st Source." And on page
six of that motion Title Search blatantly
stated: "regardless of the district
court’s adjudication of ownership of the
garnished funds, Title Search has alleged
that it had an escrow deposit agreement
with 1st Source regarding these
accounts." (emphasis in original). In
support, Title Search submitted the
"Verified Statement of M. Terese
Partyka," President of Title Search, who
stated that there was an understanding
between 1st Source and Title Search that
the account was an escrow account./1
The reply brief is rife with other
examples, which the district court quoted
and compared with Title Search’s state
court complaint and the injunction for
more than five pages in its sanctions
order.
In the contempt and sanctions order, the
district court quoted the "unequivocal
commands" in the injunction and compared
those commands with the arguments
asserted in Title Search’s motions.
Notwithstanding Title Search’s assertions
to the contrary, the issue of ownership
was clearly decided by the district court
and Title Search’s attempt to relitigate
it in state court violated the
injunction. The injunction expressly
prohibited relitigation of this issue,
and the district court was well within
its discretion to find Title Search in
contempt of its order and sanction Title
Search. The judgment of the district
court is therefore Affirmed.
FOOTNOTE
/1 And at oral argument, counsel for Title Search
again asserted that there was an escrow agree-
ment, though when pressed counsel could not
direct the panel to any page in the record to
verify this contention. We reviewed the record in
search of this supposed agreement, however, as
Ms. Partyka stated in her verified statement, the
escrow agreement with 1st Source is nowhere to be
found even after a "diligent" search of Title
Search’s records.