Opinion
20-P-717
06-21-2021
MASSACHUSETTS HOUSING FINANCE AGENCY v. JAMES E. SPALT & others.[1]
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass.App.Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The defendant, James E. Spalt (Jamie), appeals from a separate and final judgment entered against him on February 4, 2019, in favor of the Massachusetts Housing Finance Agency (MHFA), for Jamie's violation of a modified preliminary injunction dated June 24, 2014. On appeal, Jamie argues: (1) the injunction was ambiguous, such that it was not a clear and unequivocal order, and (2) the judge's findings that he had actual notice of the injunction, and that he also knowingly aided his father, James G. Spalt (James G.), in violating the injunction, were incorrect. We affirm.
Jamie's father, James G. Spalt (James G.), and his mother, Kristen Spalt, were defendants in a collection action, where MHFA sought to recover a $7 million judgment against James G. James G. was the subject of two prior injunctions, each of which was modified and enlarged to enjoin additional Spalt family controlled entities. On June 24, 2014, the injunction was once again modified, restraining additional Spalt family entities, including Cape Coastal Marine, LLC (Cape Coastal). MHFA has filed numerous complaints for contempt against James G., Jamie, Cape Coastal, and other Spalt family entities. The present appeal stems from MHFA's third complaint for contempt for Jamie's violation of the June 24, 2014 injunction.
Discussion.
"[A] civil contempt finding [must] be supported by clear and convincing evidence of disobedience of a clear and unequivocal command" (citation omitted). Commercial Wharf E. Condominium Ass'n v. Boston Boat Basin, LLC, 93 Mass.App.Ct. 523, 532 (2018) (Commercial Wharf). "We review the judge's ultimate finding of contempt for an abuse of discretion." Martinez v. Lynn Hous. Auth., 94 Mass.App.Ct. 702, 705 (2019), citing Massachusetts Comm'n Against Discrimination v. Wattendorf, 353 Mass. 315, 317 (1967).
Jamie claims that the June 24, 2014 injunction is ambiguous because it neither explicitly prohibits the transfer of the assets of the entity Cape Coastal Marine, LLC (Cape Coastal), itself, nor does it even mention Jamie by name at all. As such, he argues that the injunction was an ambiguous order, such that the judge's ultimate finding of contempt constituted an abuse of discretion. We disagree.
The injunction dated June 24, 2014, was not ambiguous. The order explicitly enjoined "James [G.] Spalt individually or in any other capacity, including, without limitation, as the registered agent and manager of Cape Coastal Marine, LLC," as well as "all those officers, agents, servants, employees, attorneys, and those persons in active concert or participation with the above named persons" (emphasis added). The mere fact that Jamie, a person who was not yet a party to the litigation, was not explicitly mentioned by name in the injunction does not render the order ambiguous. See Bird v. Capital Site Mgt. Co., 423 Mass. 172, 178 (1996) (nonparty who counsels or aids party in disobeying decree still subject to contempt). See also Mass. R. Civ. P. 65 (d), 365 Mass. 832 (1974) (injunction effective against party's "officers, agents, servants, [and] employees"). The judge found (and the record established) that Jamie "served alongside his [f]ather as the operating manager, chief executive officer, or manager" of Cape Coastal while the injunction was in effect. As such, he is covered by the express language of the June 24, 2014 order, and no ambiguity exists.
However, despite Jamie being covered as an officer, agent, and employee of Cape Coastal, he argues that the injunction order is not clear and unambiguous in its restriction of the transfer of the assets of the entity Cape Coastal itself. Jamie claims that the order was ambiguous in whether it allowed for exceptions for business expenses for entities such as Cape Coastal. We disagree.
The earlier injunctions against James G., Jamie's father, sought not only to enjoin James G. from transferring his personal assets, but also from spending or moving money held in the bank accounts of the many Spalt family entities. One of the prior injunctions, dated January 2, 2014, enjoined James G. individually, and as registered agent, manager, or member of New Ranger, LLC. James G. and other members of the Spalt family including Jamie, repeatedly sought to convince the court to grant exceptions to the order for business expenses, similar to the claim made by Jamie on appeal. Such attempts to create business expense exceptions and other carve-outs were entirely unsuccessful. These prior attempts in pursuit of exceptions for business expenses demonstrate both actual knowledge and notice, on the part of Jamie and his father, that the language of the prior injunction was clear and unequivocal in restraining "any and all payments of money out of bank accounts without exception, including for business and living expenses."
At bottom, "[c]ivil contempt 'can be used as an enforcement mechanism only if the underlying order is sufficiently clear, so that the party to be bound is provided with adequate notice of the required or prohibited activity.'" Lynch v. Police Comm'r of Boston, 51 Mass.App.Ct. 772, 776-777 (2001), quoting Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. 501, 565-566 (1997). Here, the record undoubtedly demonstrates that Jamie had such adequate notice of the prohibited activity. The express language of the June 24, 2014 injunction, coupled with Jamie's knowledge and involvement in the case prior to his being named a defendant, renders the injunction a clear and unequivocal order, sufficient to support a contempt proceeding, given that the scope of the order was not subject to discretionary judgment. See Lynch, supra at 777. As such, we find no abuse of discretion.
The judge found that Jamie had extensive knowledge of the proceedings against his father, prior to being included as a defendant, as evidenced by his efforts to restructure the Spalt family entities, and to seek carve-outs for such entities from the injunctions.
Jamie also claims that he did not have actual notice of the June 24, 2014 injunction until he was added as a defendant in 2018, and as such, he did not knowingly aid his father in the violation of the order. We disagree.
We review the judge's findings of fact for clear error. See Commercial Wharf, 93 Mass.App.Ct. at 532-533. In his brief, Jamie does not argue that the trial judge's findings of fact were clearly erroneous. He merely denies that he had actual notice of the order, and denies he knowingly aided his father in the violation of the order. Mere disagreement with the judge's findings of fact, without any argument as to why the judge erred, constitutes insufficient appellate argument. See Kellogg v. Board of Registration in Med., 461 Mass. 1001, 1003 (2011) ("bald assertions of error" that lack legal argument and authority provide insufficient basis to consider appellant's claims). In fact, without an evidentiary basis in the record, Jamie's arguments in his brief are insufficient to demonstrate any error by the judge. See White v. Hartigan, 464 Mass. 400, 414 (2013) (finding of fact is not clearly erroneous "unless the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed" [citation omitted]).
Nevertheless, even if we assume that Jamie properly argued in his brief that the trial judge's findings of fact were clearly erroneous, we find no clear error in such findings. An injunction is binding upon "the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order." Mass. R. Civ. P. 65 (d). To hold a nonparty in contempt for violation of an injunction, the court must not only find actual notice of the order, but also that the nonparty knowingly aided the violation of the injunction. See Bird, 423 Mass. at 178-179.
Here, the judge found that the record "clearly establish[ed] that [Jamie] had actual knowledge of the TRO [temporary restraining order] and [m]odified [p]reliminary [i]njunction." At all relevant times, Jamie has served as the operating manager, chief executive officer, or manager of many of the Spalt family entities, including Cape Coastal. He was served with a copy of the TRO and the earlier preliminary injunction dated January 2, 2014, making him aware of "their effect on his family's ability to spend money." Furthermore, in 2014, after the June 24, 2014 injunction was in place, Jamie consulted with attorneys and accountants to restructure the ownership interests in Cape Coastal, as well as other Spalt family businesses, in an effort to dilute his mother's interest in the business. Such facts demonstrate both knowledge and actual notice of the June 24, 2014 injunction. See Commonwealth v. Munafo, 45 Mass.App.Ct. 597, 602 (1998), quoting Commonwealth v. Delaney, 425 Mass. 587, 592 (1997) ("[A] party may not shut his eyes to the means of knowledge which he knows are at hand, and thereby escape the consequences which would flow from the notice if it had actually been received" [quotation omitted]).
Like the judge's finding of fact regarding actual notice, the record also demonstrates that Jamie knowingly aided his father in the violation of the June 24, 2014 order. Jamie personally made numerous transfers out of Cape Coastal's accounts. While he claims that these funds were merely withdrawn for ordinary operating business expenses for Cape Coastal, the record demonstrates that a substantial amount of money was used for Jamie's personal and household expenses, including direct payments to himself.
Furthermore, while Jamie insists that he was just a salesperson for Cape Coastal, he was the manager of the entity, and took on an active management role. The judge found that as manager of Cape Coastal, Jamie provided his father with a signature stamp that was used to "blatant[ly] siphon off considerable funds" available to satisfy the underlying judgment. In his brief, without any citation to the record, Jamie claims that he did not sign any of the checks personally, nor was he present when his father used the signature stamp. Such conclusory claims, without any substantial evidentiary support in the record, are insufficient to render the judge's findings of fact clearly erroneous, particularly where the judge gave such minimal credibility to the testimony of both Jamie and his father. See White, 464 Mass. at 414 ("On appeal, we are bound by a judge's findings of fact that are supported by the evidence, including all inferences that may reasonably be drawn from the evidence" [citation omitted]). See also Noelle N. v. Frasier F., 97 Mass.App.Ct. 660, 664 (2020) (reviewing court gives utmost deference to credibility determinations of judge who heard testimony of parties and observed their demeanor).
In her findings of fact, the judge made numerous explicit credibility determinations. Regarding Jamie's father, the judge stated, "In twenty-seven years on the bench, [she could not] recall encountering a witness who admitted so unabashedly to committing perjury in previous sworn testimony as [James G.] did." The judge credited little of what James G. said, describing him as a "self-professed perjurer." The judge then described Jamie's credibility as "the apple doesn't fall far from the tree," as Jamie also, on numerous occasions, "strained credulity to the breaking point." Where such little credibility was awarded to his testimony, Jamie's own personal assertions of fact, standing alone, are insufficient to render the judge's findings of fact clearly erroneous.
Conclusion.
The separate and final judgment entered against James E. Spalt on February 4, 2019, is affirmed.
So ordered.
By the Court
The panelists are listed in order of seniority.