Commercial Credit Group Inc. v. AMH Logistics, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 COMMERCIAL CREDIT GROUP INC., No. 1:19-cv-01081-AWI-EPG 12 Plaintiff, FINDINGS AND RECOMMENDATIONS, RECOMMENDING THAT PLAINTIFF’S 13 v. MOTION FOR AN ISSUANCE OF ORDER TO SHOW CAUSE BE GRANTED 14 AMH LOGISTICS, INC., et al., (ECF No. 32) 15 Defendants. FOURTEEN DAY DEADLINE 16 17 Plaintiff Commercial Credit Group Inc. (“CCG”) filed the complaint commencing this 18 action on August 6, 2019. (ECF No. 1). The complaint alleges that Defendants are borrowers or 19 guarantors loans issued by CCG and which are secured by certain vehicles.1 Defendants defaulted 20 on their obligations, and CCG sought to recover the collateral. While it was able to recover some 21 of the collateral, certain vehicles remain missing. Despite the Court order to transfer the missing 22 vehicles and issuing writs of possession with respect to them, (ECF Nos. 22, 24), Defendants 23 have failed to do so. CCG moved for an issuance of an order to show cause why Defendants 24 should not be held in contempt on May 8, 2020. (ECF No. 32). District Judge Ishii referred the 25 motion to the undersigned on July 10, 2020. (ECF No. 34). The Court held a hearing on August 7, 26 27 1 The Complaint alleges that CCG lent money to BKSG Transportation, LLC, which transferred the loans to AMH Logistics Inc.; to AMH Logistics, Inc. separately; and to AM2 Logistic, Inc. Each of those Defendants, along with 28 Defendants AMK Transport Inc., Karnvir Singh and Maninder Kaur Bains, are guarantors. 1 2020. (ECF No. 39). For the foregoing reasons, the Court recommends that CCG’s motion be 2 granted and that the Court issue an order to show cause why the Defendants should not be held in 3 contempt. 4 I. PROCEDURAL HISTORY 5 The complaint was filed on August 6, 2019. Defendants—AMH Logistics, Inc.; AM2 6 Logistic, Inc.; BKSG Transportation, LLC; AMK Transport, Inc.;2 Karnvir Singh; and Maninder 7 Kaur Bains—were served on August 29, 2019, and CCG filed executed summonses on September 8 3, 2019. (ECF Nos. 9-14). However, no Defendant has appeared. 9 On August 12, 2019, CCG filed an application for a writ of possession for those vehicles. 10 (ECF No. 7). On December 18, 2019, the Court granted CCG’s application and ordered 11 Defendants to turn over the missing vehicles (the “Turnover Order”). (ECF No. 22). The 12 Turnover Order noted that “Defendants are cautioned that failure to turn over possession of the 13 property to Plaintiff may subject Defendants to being held in contempt of Court.” (Id. at 5). 14 Defendants or, with respect to the entities, their agents for service of process (other than AMK 15 Transport, Inc., which has been dismissed), were personally served with the Turnover Order on 16 March 24, 2020. (ECF Nos. 27-31). 17 On May 8, 2020, CCG filed a motion for an issuance of an order to show cause why 18 Defendants should not be held in contempt for failing to comply with the Turnover Order. (ECF 19 No. 32). The motion requested that order to show cause require Defendants to show cause “[w]hy 20 [individual Defendants] Singh and Bains should not be coercively incarcerated if the vehicles are 21 not turned over to CCG within 10 days of service of an order holding them in contempt until such 22 time they fully comply with the Turnover Order and an order holding them in contempt[.]” (Id. at 23 3). 24 Defendants did not respond. On June 5, 2020, CCG filed a notice of non-response which 25 requested that the motion to be granted based on Defendants’ nonresponse or, in the alternative, 26 for a telephonic oral argument. (ECF No. 33). District Judge Ishii referred the matter to the 27 undersigned. (ECF No. 34). The Court set a hearing for August 7, 2020. When setting a hearing, 28 2 CCG has since voluntarily dismissed AMK Transport, Inc. (ECF Nos. 36-37). 1 the Court ordered CCG to attempt personal service on Defendants or explain why personal 2 service was impossible no later than two weeks before the hearing. (ECF No. 35). On July 21, 3 2020, CCG submitted a declaration showing its unsuccessful attempts at personal service. (ECF 4 No. 38). Specifically, CCG hired two different firms to attempt personal service on Bains and 5 Singh. The first firm went to their home once a day from June 19-25, 2020 at varying times. (Id. 6 at 5-6). The other attempted service daily on June 19-21, 23-25, and 29, 2020, and conducted a 7 stakeout on July 1, 2020 without success. (Id. at 8-12). 8 The Court held the hearing on August 7, 2020. (ECF No. 39). Plaintiff’s counsel Hal 9 Goldflam telephonically appeared. No Defendant appeared. 10 II. THE TURNOVER ORDER AND DEFENDANTS’ NONCOMPLIANCE 11 The Turnover Order (ECF No. 22), clearly spelled out what Defendants were required to 12 do: “Defendants are further directed to transfer possession of the repossession vehicles as 13 described above to Plaintiff via the United States Marshal[.]” (ECF No. 22 at 4). The vehicles 14 were described by in a table that included a description of the vehicle and its serial number. (Id. at 15 2-4). 16 According to the CCG’s attorney Andrew Alper’s declaration, CCG submitted a package 17 containing the writs of possession to the United States Marshal on January 30, 2020. (ECF No. 32 18 at 16). After being “advised that the United States Marshal was unable to serve the Defendants 19 with the levy,” CCG personally served the writs and corresponding documents on Defendants. 20 (Id.). He further attests that none of the Defendants have “delivered any of the vehicles identified 21 [in the Turnover Order] to the United States Marshal.” (Id. at 17). 22 III. STANDARD FOR CIVIL CONTEMPT 23 A court holds a party in civil contempt to compel that party to comply with a court order 24 or to provide compensation for the contemnor’s injuries. United States v. Bright, 596 F.3d 683, 25 695–96 (9th Cir. 2010) (“Civil contempt is characterized by the court's desire to compel 26 obedience to a court order or to compensate the contemnor's adversary for the injuries which 27 result from the noncompliance.”). “In a civil contempt action, the moving party has the burden of 28 showing by clear and convincing evidence that the contemnors violated a specific and definite 1 order of the court. The burden then shifts to the contemnors to demonstrate why they were unable 2 to comply.” Fed. Trade Comm'n v. Enforma Nat. Prod., Inc., 362 F.3d 1204, 1211 (9th Cir. 2004) 3 Overall, there are four elements that a party seeking a contempt order must show: “(1) that 4 [the disobedient party] violated the court order, (2) beyond substantial compliance, (3) not based 5 on a good faith and reasonable interpretation of the order, (4) by clear and convincing evidence.” 6 Labor/Cmty. Strategy Ctr. v. Los Angeles Cty. Metro. Transp. Auth., 564 F.3d 1115, 1123 (9th 7 Cir. 2009). 8 “Given the remedial purpose of the sanction, a finding of contempt must be accompanied 9 by conditions by which contempt may be purged, spelled out in either the original order or the 10 contempt order. Moreover, although the district court generally must impose the minimum 11 sanction necessary to secure compliance, the district court retains discretion to establish 12 appropriate sanctions.” Bright, 596 F.3d at 696. “District courts have broad equitable power to 13 order appropriate relief in civil contempt proceedings.” S.E.C. v. Hickey, 322 F.3d 1123, 1128 14 (9th Cir.), opinion amended on other grounds on denial of reh'g sub nom. Sec. & Exch. Comm'n 15 v. Hickey, 335 F.3d 834 (9th Cir. 2003). 16 Incarceration is a permissible punishment for civil contempt. 18 U.S.C. § 401 (“A court of 17 the United States shall have power to punish by fine or imprisonment, or both, at its discretion, 18 such contempt of its authority [for] . . . (3) Disobedience or resistance to its lawful writ, process, 19 order, rule, decree, or command.”); Uphaus v. Wyman, 360 U.S. 72, 81 (1959) (in affirming order 20 incarcerating an individual for civil contempt, noting “we are not at all concerned with the power 21 of courts to impose conditional imprisonment for the purpose of compelling a person to obey a 22 valid order. Such coercion, where the defendant carries the keys to freedom in his willingness to 23 comply with the court’s directive, is essentially a civil remedy designed for the benefit of other 24 parties and has quite properly been exercised for centuries to secure compliance with judicial 25 decrees”). 26 Here, CCG has provided “clear and convincing evidence that [Defendants] violated a 27 specific and definite order of the court,” Enforma, 362 F.3d at 1211. The Turnover Order requires 28 Defendants to transfer possession of specific vehicles to CCG via the United States Marshal. 1 According to CCG’s counsel’s affidavit, Defendants have failed to do so. That is clear and 2 convincing evidence of violating a specific and definite court order. The burden, now, rests on 3 Defendants, to show why they have been unable to comply. Defendants, who have not appeared 4 and did not attend the August 7, 2020 hearing, have provided no such explanation. For that 5 reason, an order to show cause why they should not be held in contempt should issue. 6 Although it is premature to determine what sanction should issue, given that Defendants 7 have not been held in contempt, the Court notes that incarceration may be appropriate. CCG has 8 also obtained a money judgment against Defendants. (ECF No. 32 at 85-97). At the hearing, 9 CCG’s counsel advised that the judgment has not yet been satisfied. It seems unlikely, then, that 10 an additional money judgment would sufficiently compel Defendants to comply with the Court’s 11 order. Therefore, the Court cautions Defendants Singh and Bains that continued 12 disobedience to the Turnover Order may result in incarceration. 13 IV. CONCLUSION AND RECOMMENDATION 14 For the foregoing reasons, it is HEREBY RECOMMENDED that: 15 1) CCG’s motion for an issuance of an order to show cause be GRANTED. 16 2) That the Court order Defendants, within fourteen (14) days of being served with the 17 order to show cause, to show cause in writing: 18 a. Why Defendants, and each of them, should not be held in contempt of court for 19 violating the Turnover Order; 20 b. Why Defendants, and each of them, should not forthwith take all steps necessary and 21 appropriate to turn over all of the vehicles identified in the Turnover Order to CCG 22 within 10 days of service of an order holding them in contempt; 23 c. Why Defendants Singh, Bains, or both should not be coercively incarcerated if all of 24 the vehicles listed in Turnover Order are not turned over to CCG within 10 days of 25 service of an order holding them in contempt until such time they fully comply with 26 the Turnover Order; and 27 d. Why such other relief that the Court may deem just and proper should not be 28 imposed against Defendants, including monetary sanctions, to coercively cause woe 4:40 LOLA NS MMC IO VOPR EEN POY VV 1 Defendants’ compliance with the Turnover Order and order of contempt. 2 These findings and recommendations will be submitted to the United States district judge 3 | assigned to the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(). Within fourteen 4 | (4) days after being served with these findings and recommendations, the parties may file 5 | written objections with the Court. The document should be captioned “Objections to Magistrate 6 | Judge’s Findings and Recommendations.” The parties are advised that failure to file objections 7 | within the specified time may result in the waiver of rights on appeal. Wilkerson v. Wheeler, 772 g | F.3d 834, 838-39 (9th Cir. 2014) (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)). 9 IT IS SO ORDERED. 10 11 | Dated: _ August 14, 2020 [see ey □□ UNITED STATES MAGISTRATE JUDGE 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 &K