Opinion
97 Civ. 4759 (SHS).
June 13, 2006
OPINION, FINDINGS OF FACT AND ORDER OF CONTEMPT
Plaintiff and judgment creditor Bank of Credit and Commerce International (Overseas) Limited, through its Court Appointed Fiduciaries ("BCCI"), has applied to this Court for an order finding defendant Roger Tamraz in further civil contempt and directing that he be arrested. This action was brought by BCCI to enforce Tamraz's personal guarantee on a loan made to one of his companies. Tamraz contested BCCI's claims and discovery was taken. Ultimately, the action was settled in early 1999 — more than six years ago — pursuant to a joint stipulation providing for entry of judgment against Tamraz in the amount of $7.5 million, taxable costs of $3,500, and statutory postjudgment interest. (See Stipulation and Order, dated February 19, 1999, Ex. 2 to Declaration of Michael Nussbaum, Esq. dated June 9, 2005 ("Nussbaum Decl.").) The proceeds of the judgment are for the benefit of the plaintiff bank's depositors and creditors who lost substantial funds when the bank became insolvent. That entire judgment remains outstanding in spite of repeated efforts by the plaintiff's Court Appointed Fiduciaries to pursue post-judgment discovery into Tamraz's assets, as expressly authorized by the February 19, 1999 Stipulation and Order. (Stipulation and Order, dated February 19, 1999, at ¶¶ 5(a) — (c); Nussbaum Decl. at ¶ 4).
Following the entry of judgment, Tamraz initially complied with discovery requests; however, in May 2002, Tamraz failed to produce requested documents or appear at his deposition. Since that time, and as chronicled below, Tamraz has continuously refused to comply with Orders of this Court compelling discovery. As a result of these repeated and manifest failures, on May 4, 2006 BCCI requested that this Court (i) make its second finding of civil contempt against Tamraz and (ii) direct that a warrant be issued for Tamraz's arrest. Because Tamraz has persistently evaded orders of this Court, BCCI's request is granted.
I. Findings of Fact
After Tamraz failed to comply with his discovery obligations, the Court issued an Order on September 23, 2004 directing Tamraz to appear for his deposition and to comply with plaintiff's Request for Production of Documents. Tamraz failed to obey the Sept. 23, 2004 Order, and on August 15, 2005, the Court directed Tamraz to appear and show cause why it should not enter an order finding him in civil contempt. BCCI then filed a declaration and affidavits of proof of service demonstrating that the August 15, 2005 Order to Show Cause and its supporting documents had been served on Tamraz as directed by the Court. Tamraz did not file any papers in response to the August 15, 2005 Order; nor did he appear at the October 14, 2005 show cause hearing either pro se or through counsel. Counsel for BCCI did appear and represented that Tamraz had made no contact with him regarding the Order to Show Cause or these post-judgment proceedings.
As a result, the Court issued an Order on October 27, 2005 finding Tamraz in civil contempt for his failure to comply with the September 23, 2004 Order. The Court ordered that Tamraz pay the Clerk of Court a fine of $500 per day for each day that Tamraz remained in violation of the September 23, 2004 Order. The Court also ordered Tamraz to appear for his deposition at 10 a.m. on December 1, 2005 at the offices of Wachtell, Lipton, Rosen Katz in New York, New York and to comply with plaintiff's Request for Production of Documents. Though the Court declined to direct the arrest of Tamraz, it noted that if Tamraz did not appear at the December 1, 2005 deposition and did not produce the required documents by November 28, 2005, "plaintiff may file an appropriate motion requesting a further finding of contempt and seeking an order directing Tamraz's arrest, and . . . such continued violation will be deemed a proper basis for directing Tamraz's arrest." (See October 27, 2005 Order at 13.) Finally, the Court ordered that BCCI serve a copy of the October 27, 2005 Order on Tamraz by facsimile, by e-mail and by Federal Express at his Paris address, and supply to the Court evidence of the signature of the person who accepted the package.
The October 27, 2005 Order was subsequently amended twice. On November 29, 2005 the Order was amended to require — in addition to Fed-Ex, fax, and e-mail service — personal service upon Tamraz; additionally, the deposition date was postponed until January 26, 2006 and the time for Tamraz to respond to document requests was postponed until January 23, 2006. On January 23, 2006, those dates were further postponed: the deposition was re-scheduled for April 10, 2006 and the document request deadline was pushed to April 5, 2006.
On March 16, 2006, plaintiff filed in this Court a declaration and accompanying affidavits describing its mostly successful efforts to serve Tamraz with the October 27, 2005 Order and its subsequent amendments. The Affidavit and Proof of Service on Defendant and Judgment Debtor Roger Tamraz reflects that BCCI's process server found and personally served Tamraz on March 8, 2006 while he was walking on Avenue Montaigne in Paris, France. (Affidavit of Proof of Service dated March 14, 2006 at ¶¶ 5-6.) The process server knew that the individual served was Tamraz because he recognized Tamraz from photographs that he had been given and because Tamraz answered "Yes" when asked if he were Roger Tamraz. (Id.) BCCI also served Tamraz by e-mail at TamOil@aol.com, and represents that a tracking confirmation program indicated that the e-mail was opened approximately two hours after it was sent on March 13, 2006. (Declaration of Michael Nussbaum, Esq. dated Mar. 16, 2006 at ¶ 8). Finally, Tamraz was served by Federal Express; tracking information confirms that the concierge at Tamraz's 53 Avenue Montaigne address personally signed for the delivery on March 15, 2006. (Id. at ¶ 9). Service to Tamraz's facsimile number failed on repeated occasions. (Id. at ¶ 7.)
The Court will entertain plaintiff's current request for a finding of contempt even though facsimile service was technically a requirement of the October 27, 2005 Order. Given plaintiff's repeated good faith efforts to effect such service, and given that Tamraz was personally served, plaintiff's inability to serve by facsimile — an inability presumably brought about by Tamraz himself — in no way prejudices the defendant.
Plaintiff informed the Court — and Tamraz — on May 4, 2006 that Tamraz had not appeared for the April 10, 2006 deposition and had not responded to the Request for Production of Documents by the April 5, 2006 deadline. Plaintiff requested that the Court make a second finding of civil contempt against Tamraz and renewed its request that the Court issue a warrant for Tamraz's arrest. II. Discussion A. The Standards Governing Civil Contempt
Courts possess the "'inherent power to enforce compliance with their lawful orders through civil contempt.'" In re Martin-Trigona, 732 F.2d 170, 173 (2d Cir. 1984) (quotingShillitani v. United States, 384 U.S. 364, 370, 86 S. Ct. 1531, 1535, 16 L. Ed. 2d 622 (1966)). Where a party is found to have failed to obey a court order compelling discovery, Rule 37(b)(2) of the Federal Rules of Civil Procedure authorizes appropriate sanctions of varying degrees of severity, including taking certain facts to be true; refusing to permit the disobedient party to support or oppose claims or defenses or introducing certain evidence; or dismissing an action or imposing judgment by default against the disobedient party. See Fed.R.Civ.P. 37(b)(2)(A) — (C). Rule 37 permits the court to hold the party in contempt of court, see Fed.R.Civ.P. 37(b)(2)(D), and also specifies that contempt orders will be appropriate where a party fails to appear at his own deposition or to respond to requests for inspection, see Fed.R.Civ.P. 37(d).
"A party may be held in civil contempt for failure to comply with a court order if '(1) the order the contemnor failed to comply with is clear and unambiguous, (2) the proof of noncompliance is clear and convincing, and (3) the contemnor has not diligently attempted to comply in a reasonable manner.'"Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Tech., 369 F.3d 645, 655 (2d Cir. 2004) (quoting King v. Allied Vision, Ltd., 65 F.3d 1051, 1058 (2d Cir. 1995)). There is no requirement, however, that the party's contumacious act be willful. Id. An order is clear and unambiguous if it leaves "no uncertainty in the minds of those to whom it is addressed." Hess v. New Jersey Transit Rail Operations, Inc., 846 F.2d 114, 116 (2d Cir. 1988); see also Drywall Tapers, Local 1974 v. Local 530, Operative Plasterers Int'l Ass'n, 889 F.2d 389, 395 (2d Cir. 1989).
If a party is adjudged to be in civil contempt, the court must determine what sanctions are necessary to secure future compliance with its order and to compensate the complaining party for past noncompliance. See Paramedics Electromedicina, 369 F.3d at 657. A district court has considerable discretion in determining whether a coercive sanction is necessary and, if so, the form it will take. Id. When imposing a coercive sanction, a court should consider (1) the character and magnitude of the harm threatened by the continued contumacy, (2) the probable effectiveness of the sanction in bringing about compliance, and (3) the contemnor's financial resources and the consequent seriousness of the sanction's burden. Id. at 657-58 (citingPerfect Fit Indus. v. Acme Quilting Co., 673 F.2d 53, 57 (2d Cir. 1982)). Arrest is an appropriate coercive sanction for civil contempt, so long as its purpose is not punitive but is instead to compel the contemnor to perform the required act. Cf. Hicks v. Feiock, 485 U.S. 624, 631-34, 108 S. Ct. 1423, 99 L. Ed. 2d 721 (1988) (explaining distinction between civil and criminal contempt and noting that imprisonment is appropriate sanction for civil contempt if remedial in nature, i.e. if conditioned upon compliance).
B. Notice
Before Tamraz may be held in contempt, due process requires that he receive notice that he is a defendant in a contempt hearing, and that if he is to face the possibility of incarceration, that he be afforded the right to counsel. Drywall Tapers Pointers, Local 1974 etc. v. Local 530 of Operative Plasterers Cement Masons International Ass'n, 889 F.2d 389, 394 (2d Cir. 1989); Dole Fresh Fruit Co. v. United Banana Co., 821 F.2d 106, 109-10 (2d Cir. 1987) (citing In re Di Bella, 518 F.2d 955, 959 (2d Cir. 1975)).
Tamraz has been repeatedly notified of the contempt proceedings against him. The Court has already found that Tamraz was on notice of the October 14, 2005 contempt hearing, including notice that BCCI had requested that he be arrested and imprisoned; that he was advised of his right to be represented by counsel at that hearing; and that he was advised that if he were not able to afford an attorney, one would be appointed at no cost to him. (See October 27, 2005 Order at 8.) Furthermore, Tamraz was on notice of the fact that, in the October 27, 2005 Order, the Court "h[e]ld the request for an order of arrest in abeyance to afford Tamraz the opportunity to comply with the finding of contempt and sanctions the Court imposes today." The Court has been presented with no reason to doubt the veracity of the process server's representation that he personally handed a package containing the October 27, 2005 Order to Tamraz or the veracity of BCCI's attorney in representing that Tamraz was also served by e-mail and by Federal Express. There can be no question, then, that Tamraz is on notice of the civil contempt proceedings confronting him and has been notified of his right to counsel.
C. The Order Which Tamraz Failed to Comply With Is Clear and Unambiguous
As noted above, plaintiff's application to find Tamraz in further contempt of court results from Tamraz's failure to comply with the terms of the October 27, 2005 Order. In that Order, the Court found that its September 23, 2004 Order directing compliance with certain discovery obligations was clear and unambiguous in what it required of Tamraz. (See October 27, 2005 Order at 8-9.) There can be no question that the October 27, 2005 Order — which effectively renewed the dictates of the September 23, 2004 Order — was similarly clear and unambiguous. Specifically, the Order, as amended, directed Tamraz to appear for his deposition in New York on April 10, 2006 at 10:00 a.m. local time, and ordered him to comply with plaintiff's Request for Production of Documents by April 5, 2006. Furthermore, the Court specified that though it was not ordering his arrest as a sanction, his "continued violation w[ould] be deemed a proper basis for directing Tamraz's arrest." (Id. at 13.) The October 27, 2005 Order was clear and unambiguous, and left no room for "uncertainty in the minds of those to whom it is addressed." Hess v. New Jersey Transit Rail Operations, Inc., 846 F.2d 114, 116 (2d Cir. 1988).
D. The Proof of Tamraz's Noncompliance Is Clear and Convincing
As the Court noted in its October 27, 2005 Order, Tamraz had not to that point complied with plaintiff's request for production of documents; nor had he produced documents in compliance with the September 23, 2004 order or appeared for his deposition at the time and place specified in that Order.
Similarly, it is clear that Tamraz has failed to comply with the October 27, 2005 Order, which gave him yet another opportunity to satisfy his discovery obligations. As evidenced by plaintiff, Tamraz neither answered the document requests by the April 5, 2006 deadline nor appeared at the scheduled April 10 deposition. (See Transcript of the scheduled Deposition inBank of Credit and Commerce Int'l (Overseas) Ltd. v. Tamraz, No. 97-Civ.-4759 at 3-4 (S.D.N.Y. Apr. 10, 2006) (attached as Exh. A to Letter from Michael Nussbam, Esq. to Hon. Sidney H. Stein dated May 4, 2006). The proof of Tamraz's noncompliance is clear and convincing; similarly, it is clear that Tamraz has not made a diligent attempt to comply — indeed, he has made no attempt to comply whatsoever — with the October 27, 2005 Order. See Paramedics Electromedicina, 369 F.3d at 655 (court must find noncompliance and no diligent attempt at compliance).
Therefore, upon review of the uncontested evidence submitted by plaintiff, the Court finds that Tamraz is in further contempt of court for his failure to comply with the clear and unambiguous October 25, 2005 Order.
E. Appropriate Sanctions
In determining what coercive sanction is appropriate, the Court must consider the harm caused by Tamraz's continued failure to comply with the Court's Orders — here, the plaintiff's continuing inability to collect on an uncontested judgment imposed more than six years ago pursuant to a Stipulation and Order agreed to by Tamraz — as well as the probable effectiveness of the sanction in bringing about compliance. See Paramedics Electromedicina, 369 F.3d at 657-58.
Based on Tamraz's continued failure to comply with the Court's orders to that point, the Court in its October 27, 2005 Order coercively sanctioned Tamraz in the amount of $500 per day for each day that he remained remiss in his obligations to comply with the September 23, 2004 Order. The Court noted that "[t]he only remaining sanction is to issue an order of arrest," but "h[e]ld the request for an order of arrest in abeyance to afford Tamraz the opportunity to comply with the finding of contempt and sanctions the Court imposes today." (October 27, 2005 Order at 11.) It was pellucid that at some point in time Tamraz's continued efforts to evade the Court's orders would result in an order for his arrest.
That point in time has now arrived. Financial sanctions have proven insufficient to coerce Tamraz's compliance with Court-ordered discovery obligations: the Court's first finding of contempt and concomitant $500 per day coercive sanction has not tempered Tamraz's continued contumaciousness. Furthermore, the non-exhaustive list of sanctions referenced in Fed.R.Civ.P. 37(b)(2) — viz., for the Court to direct that certain things be admitted or to preclude Tamraz from introducing certain evidence — are unhelpful where plaintiff has already obtained a judgment against the defendant. It appears that, as foreshadowed in the October 27, 2005 Order, the only remaining effective avenue of securing compliance is to order that Tamraz be arrested. Therefore, the Court, mindful of the seriousness of this sanction, orders that Tamraz be arrested and imprisoned only insofar as is necessary to coerce his compliance with the discovery obligations imposed in the September 23, 2004 and October 27, 2005 Orders.
III. CONCLUSION
WHEREAS, plaintiff has shown by clear and convincing evidence that Tamraz has failed to comply with this Court's clear and unambiguous October 27, 2005 Order directing that he appear for his deposition on April 10, 2006 and that he comply with plaintiff's Request for Production of Documents, IT IS HEREBY ORDERED that:
1. Pursuant to Fed.R.Civ.P. 37(b) and 37(d), the Court finds Tamraz in further civil contempt of Court for having failed to comply with this Court's October 27, 2005 Order in all respects.
2. As a sanction for Tamraz's contempt of this Court's October 27, 2005 Order, and in order to compel his future compliance with the post-judgment discovery obligations, the Court orders that Tamraz be arrested and that upon his arrest he be incarcerated for such a period of time as is necessary to secure his appearance at a deposition to be conducted by plaintiff and his compliance with plaintiff's Request for Production of Documents.
3. Pursuant to Fed.R.Civ.P. 4.1(b), the U.S. Marshal for the Southern District of New York shall take all necessary measures to effect service and enforcement of this Order upon defendant Tamraz within either (i) the state of New York; or (ii) 100 miles from the United States Courthouse for the Southern District of New York at 500 Pearl Street, New York, NY 10007.
4. It is further ordered that the U.S. Marshals Service, if called upon to execute the terms of the attached Order, will be permitted to use the minimum degree of nondeadly force necessary to arrest and detain Roger Tamraz and shall be permitted to enter forcibly into the premises of defendant Tamraz if he is reasonably believed to be inside and if requested access to such premises is withheld.
5. Pursuant to Federal Rule of Civil Procedure 4(f)(3), plaintiff shall serve a copy of this Order on Tamraz by personal service; by Federal Express addressed to him at 53 Avenue Montaigne, Paris, 75008, France with plaintiff to furnish evidence regarding the signature of the person who accepted the package; and also by e-mail at TamOil@aol.com. Plaintiff shall file proof of service promptly after all those methods of service are complete.
SO ORDERED