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holding party should not be held in contempt for technical violation of the "letter" of an order that did not violate the "spirit" of the order because the violation advantaged the party enforcing the order
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01 Civ. 2709 (HB)
March 4, 2004
OPINION AND ORDER
Defendants, and Third — Party Plaintiffs Lennox Lewis, Lennox Lewis Enterprises, Inc., and New Jersey Sports Productions, Inc., d/b/a, Main Events (collectively "Lewis"), move for an order pursuant to 18 U.S.C.A. § 401 and Federal Rule of Criminal Procedure (" Fed.R.Crim.P.") 42(1) holding plaintiffs and third — party defendants Panix Promotions, Ltd., Panix of the U S., Inc, and Panos Eliades(colletively "Panix Parties ") in civil contempt of this Court February 15, 2002 Order ("February 15 Order" or "Order"), (2) incarcerating Panos Eliades until such time as Panix Parties comply with then — Court ordered obligations, and (3) appointing an Assistant United States Attorney or other prosecutor to initiate criminal contempt proceedings against the Panix Parties. For the foregoing reasons, Lewis' motion for civil contempt is granted — in — part and denied — in — part, and his request for criminal proceedings is denied.
Panos Eliades is the sole shareholder and president of Panix Promotions Ltd. and Panix of the U.S., Inc. Eliades Aff. at ¶ 1.
I. BACKGROUND
The final judgment that serves as the basis for this motion was the culmination of a lawsuit initiated by the Panix Parties against Lewis, for breach of contract. Lewis counterclaimed for breach of contract, fraud, breach of fiduciary duty, and violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962. On February 14, 2002, following a jury trial, a verdict in favor of Lewis was rendered, awarding Lewis $6,821,159 for breach of fiduciary duty, $396,082 for RICO violations, and $56,400 for fraud, and awarding $681,469 to Main Events for the fight promotion. On the following day, this Court issued the February 15 Order, restricting Panix Parties from engaging in certain transactions that could dilute its liquidity, thereby jeopardizing Lewis' recovery.
On July 15, 2003, I issued an order on treble damages with regard to Panix Parties' RICO violations, pre-judgment interest, and bifurcated damages. Two judgments were entered nunc pro tune against Panix, one for $792,164 and one for $7,273,641, with interest to be calculated from May l, 1999 to the date of the verdict (February 14, 2002), based to the sum of $6,877,599, corresponding to the damages awarded for the state law claims. Two weeks later, on July 31, 2003, the motion to bifurcate damages was withdrawn and the Clerk of the Court entered one judgment against Panix for $8,065,805, with the same interest calculation as stated above. On August 14, Eliades appealed the July 31 Order, preventing enforcement of the judgment.
The February 15 Order (1) restrained and enjoined Panix Parties from transferring or encumbering any assets other than in the ordinary course of business, (2) forbade the Panix Parties from engaging in any transaction with a value in excess of £3,500, or engaging in multiple transactions with a value in excess of £5,000 in any one day, without the Courts written approval, (3) ordered Panix Parties to produce to Lewis copies of all of their books and records, (4) ordered Panix Parties to execute written authorizations so that Lewis could acquire Panix Parties' financial information directly from banks, tenants, lenders, and credit card companies, and (5) ordered Eliades to be deposed about his financial affairs.
Lewis makes the following contempt allegations: (1) Panix Parties promoted a fight card on May 10, 2002, (2) Eliades paid a $7,000 hotel bill, (3) Eliades made an £11,000 wire transfer for an overdraft, (4) Eliades transferred title to a Mercedes-Benz, (5) Eliades allowed a charge to be registered against his property at 24 Parliament Hill ("Parliament Hill Property"), (6) Eliades transferred his interest in Treptos Investments to Rita Moustaka to avoid Lewis discovery of this asset, (7) Panix Parties paid off approximately £46,000 of unsecured debt to Barclay's Bank, (8) Panix Parties violated discovery obligations concerning financial disclosure, (9) Eliades perjured himself in his testimony about Aris Kaissides, and (10) Eliades failed to follow both the per diem and transactional spending limits of the Order.
II. DISCUSSION
A. Standard of Review for Contempt
"A party may not be held in contempt unless the order violated by the contemnor is clear and unambiguous, the proof of non — compliance is clear and convincing, and the contemnor was not reasonably diligent in attempting to comply." Equal Employment Opportunity Comm'n, et al. v. Local 638, 81 F.3d 1162, 1171 (2d Cir. 1996) (internal quotations and citations omitted); Peterson v. Vallenzano, 858 F. Supp. 40, 41 (S.D.N.Y. 1994). A "clear and unambiguous order" is one "specific and definite enough to apprise those within its scope of the conduct that is being proscribed." New York State Nat'l Org. for Women v. Terry, 886 F.2d 1339, 1352 (2d Cir. 1989), quoting In re Baldwin — United Corp., 770 F.2d 328, 339 (2d Cir. 1985). Any sanction imposed by this Court for non — compliance must be calculated either "to coerce future compliance with the Court's order, or to compensate the complainant for losses stemming from the contemnor's past noncompliance." A. V. By Versace, Inc. v. Gianni Versace, S.p.A., 279 F. Supp.2d 341, 354 (S.D.N.Y. 2003), citing United States v. United Mine Workers, 330 U.S. 258, 303-04 (1947); Perfect Fit Indus, v. Acme Quilting Co., 673 F.2d 53, 56-57 (2d Cir. 1982).
In the case of civil sanctions, the contemnor's actions need not be willful. See Yurman Design Inc. v. Chaindom Enters., Inc., 99 Civ. 9307, 2003 WL 22047843, at *2 (S.D.N.Y. Aug 29, 2003) (quotation omitted). The burden of proof is on the party (here Lewis) seeking to hold the other in civil contempt, and is satisfied by the production of "clear and convincing" evidence. See Levin v. Tiber Holding Corp., 277 F.3d 243, 250 (2d Cir. 2002). "[T]he clear and convincing standard requires a quantum of proof adequate to demonstrate a `reasonable certainty' that a violation has occurred." Id., citing Callanan Indus., Inc. v. White, 510 N.Y.S, 2d 230, 231 (3d Dep't 1986). A party may overcome a finding of civil contempt is required or proving that (1) the Order is vague and indefinite as to whether a particular action is required or prohibited, (2) the party lacked knowledge of the terms of the Order, or (3) the proof of the violation is not clear and convincing. See Sacco v. Burke, 764 F. Supp. 918, 921 (S.D.N.Y. 1991).
Criminal contempt, pursuant to 18 U.S.C. § 401, provides a vehicle through which the Court may rectify contempt of its authority by fine or imprisonment Taking such necessary action is "regarded as — essential to ensuring that the Judiciary has a means to vindicate its own authority without complete dependence on the other Branches." ACLI Gov't Sec. Inc., v. Rhoades, 989 F. Supp. 462, 468 (S.D.N.Y. 1997), quoting Young v. United States, 481 U.S. 787, 795 (1987). To hold a party in criminal contempt, "the government must prove beyond a reasonable doubt that: (1) the court entered a reasonably specific order; (2) the defendants knew of that order; (3) the defendants violated that order; and (4) their violation was willful." U.S. v. Lynch, 162 F.3d 732, 734 (2d Cir. 1998), quoting United States v. Cutler, 58 F.3d 825, 834 (2d Cir. 1995). Therefore, the burden on a party seeking to hold another in criminal contempt is greater than the burden on a party seeking only civil redress — as criminal contempt requires willful disobedience and demands proof beyond a reasonable doubt. Because "criminal contempt is a crime in the ordinary sense" ( Int'l Union et al. v. Bagwell, 512 U.S. 821, 826 (1994), quoting Bloom v. Illinois, 391 U.S. 194, 201 (1968)), "criminal penalties may not be imposed on someone who has not been afforded the protections that the Constitution requires of such criminal proceedings." Int'l Union, 512 U.S. at 826, quoting Hicks v. Feiock, 485 U.S. 624, 632 (1988).
Therefore, as to alleged violations where I find the basis for civil contempt to be lacking, I will not address the appropriateness of criminal contempt — it may be assumed that the more rigorous requirements of criminal contempt have not been met.
The distinction between civil and criminal contempt is determined by the substance of the proceeding, and "character and purpose" of the sanction involved. Gompers v. Bucks Stove Range Co., 221 U.S. 418, 441 (1911). When the Court holds a party in civil contempt, "the punishment is remedial, and for the benefit of the complainant." Id. On the other hand, for criminal contempt, "the sentence is punitive, to vindicate the authority of the court." See also Int'l Union, 512 U.S. at 828.
B. Alleged Violations of the February 15 Order
1. 24 Parliament Hill Property
Lewis asserts that Eliades violated the February 15 Order by allowing a lien to be registered against his Parliament Hill Property on February 21, 2002. Eliades claims that since — July 1988, Barclays Bank had a "legal charge" over the property at Parliament House security for a loan to Panix Promotions Limited and Eliades. Eliades 1st Aff. ¶ 3. Eliades further claims that in November 2001 he decided to transfer the security held by Barclays Bank to Managa Properties, in exchange for Managa's settling a debt of £750,000, owed by Eliades to Barclays. Eliades 1st Aff. Exh. 2. Lewis asserts that the documents for this Property are fraudulent, as demonstrated by the fact that there are two mortgage documents — one dated January 25, 2002, and the second, indicating the same transaction, dated February 8, 2002. Burstein Aff. ¶ 2.
The Order forbade any transfer after February 15th.
While these mortgage documents reflect dates before the February 15 Order, the charge for the property was entered after the February 15 Order. While Eliades does not dispute the date of entry, he asserts that he initiated the transaction as early as October 31, 2001, well before the date of the Order, and only the formal entering of the charge postdated the Order. Eliades 1st Aff. Exh. 2. Further, because it is the responsibility of the mortgagee to register the transaction (Eliades 2d. Aff. ¶¶ 13-18), the timing of the register was not within Eliades' control, and therefore, it would be unfair to hold Eliades in contempt as a result of this chronology. This Court agrees. While Lewis is correct in asserting that the value of the property, $2,000,000, is significant, this does not alter the fact that Eliades had entered into this transaction long prior to the February 15 Order. This Court credits Eliades' defense that the February 15 Order "is vague and indefinite as to whether a particular action [here, conduct that pre-dates the Order but whose finalization post — dates the Order] is required or prohibited." Sacco, 764 F. Supp. at 921; see also City of New York v. Local 28, Sheet Metal Workers' Int'l Ass'n, 170 F.3d 279, 282 (2d Cir. 1999) (a "party may be held in [civil] contempt only if it is proven by clear and convincing evidence that the party violated a clear and unambiguous order of the court."). Further, this Court is adverse to find contempt stemming from the actions of a non-party, unless it can be shown that the non — party received actual notice of the injunction and was acting in active concert or participation with the parties named in the injunction. See Marshall v. Blasters, Drillrunners, and Miners Union, Local 29, 78 Civ. 4619, 1980 WL 2150 at *2 (S.D.N.Y. Apr 14, 1980), citing Vuitton et Fils S.A. v. Carousel Handbags, 592 F.2d 129-130 (2d Cir. 1979).
Although perhaps moot, the Court now clarifies that the February 15 Order applies to transactions initiated prior to February 15, 2003, whose finalization post — dates the Order. If any such transactions still exist, Panix Parties should inform Lewis of those transactions and seek Lewis' approval for their eventual finalization. If Lewis refuses to approve these transactions, the Panix Parties, if they wish to finalize the transactions within the duration of the Order, must apply to the Court for permission, including a brief description of (a) the transaction, (b) the reason for the delay in finalization, and (c) what impact, if any, the transaction will have on its financial liquidity. Lewis may submit an opposition, as desired.
Here, Managa's equitable lien on 24 Parliament Hill came into effect before the February 15 Order was issued and it is unclear whether Managa had actual notice of the injunction on the date that the lien was registered. Finally, the support that Lewis provides for his claim of fraudulent documentation — which amounts only to the presentation of two agreements, with different dates — falls far short of that necessary to prove "by a reasonable certainty" that the overdraft agreement, signed by Mr. S. Kalli of Barclays Bank (Eliades 1st Aff. Exh. 1), is "entirely suspect" (Burstein Aff. ¶ 6); Levin, 277 F.3d at 250. As a result, this alleged violation does not warrant a finding of civil contempt.
2. Repayment of Loan to Barclays Bank
Lewis also claims that Eliades' repayment of a loan of £43,850 to Barclays Bank violated the February 15 Order. In defense, Eliades first argues that the payment was not a payment from Eliades to Barclays Bank — which would be prohibited by the Order — but rather, was a payment from one account at Barclays Bank to several accounts at the Bank — a payment "from Barclays Bank to Barclays Bank." Burstein Aff. ¶ 19. Later, Eliades alters his story, and alleges that the payment merely transferred the debt from Barclays Bank to Managa, in conjunction with the transfer of the charge against the Parliament Hill Property. Eliades 1st Aff. ¶¶ 39-41. In rebuttal, while Lewis brings to light that Eliades' new explanation "does not comport with his prior deposition testimony" (Burstein Aff. ¶ 19), he fails to provide evidence that either of Eliades' explanations is untrue. Therefore, while this Court cautions Eliades about the repercussions of untruthful deposition testimony ( see 18 U.S.C. § 1623(a) (1982)), as Lewis has not provided clear and convincing evidence to refute Eliades' explanations, Lewis has failed to meet his burden with regard to this transfer, and therefore, civil contempt is improper.
3. $7.000 Hotel Bill
Lewis claims that Eliades also violated the February 15 Order through his payment on February 16, 2002 of the $7,000 hotel bill for his stay in New York during the trial in this action (which lasted from February 1st through 14th. In defense, Eliades asserts that he had not yet learned of the Order when he paid his hotel bill. Eliades 1st Aff. ¶ 8. Eliades' defense is corroborated by his attorney, Jay Goldberg's statement that the "Order was not sent to Mr. Eliades' hotel" [when it was received Friday afternoon, February 15, 2002] and the that time. Eliades was therefore "unaware that the order had been signed." Steven Isser Affirm. ¶ 46, Exh. 19. It is well — settled that a person cannot be held in civil contempt of an order if he does not have knowledge of the order. See Perfect Fit Industries, Inc. v. Acme Quilting Co., Inc., 646 F.2d 800, 808 (2d. Cir. 1981), citing Vuitton et Fils S.A., 592 F.2d at 126; Fidelity Mortgage Investors v. Cornelia Builders, Inc., 550 F.2d 47, 51 (2d Cir. 1976), cert. denied, 429 U.S. 1093 (1977). Because Lewis has provided no credible evidence to rebut this defense, Lewis has failed to prove by clear and convincing evidence that Eliades violated the Order, after having been apprised of its contents. Therefore, Eliades' payment of the February 16th hotel bill does not warrant a finding of civil contempt.
Because reasonable ignorance of the Order is a complete defense, it is unnecessary to reach the determination of whether payment of the hotel bill with fall knowledge of the contents of the. February 15 Order would have been actionable.
4. May 10 Fight Promotion
Lewis contends that Eliades' promotion of the May 10, 2002 fight violated the February 15 Order because Eliades exceeded the spending limits allotted by the Order without the Court's approval. While it is undisputed that Eliades promoted the May 10 fight without the consent of Lewis' attorney, Judd Burstein, Main Events' attorney, Patrick English, or the consent of this Court, and that Eliades expended far above £3,500 or even £5,000 to promote this fight, it is less clear that the May 10 promotion clearly and unambiguously violated the spirit of the February 15 Order. After all, in Eliades' May 7, 2002 letter to Burstein, he expressly demonstrated that while he anticipated spending £49,000 to promote the match, he planned to bring in £53,000, netting £4,000. Therefore, while this Court in no way condones Eliades' behavior, and even credits Lewis' classification of Eliades' action as a violation of the letter of the Order, it does not serve the purpose of the Order to hold Eliades in civil contempt for an action, which in hindsight, increased his net worth. Eliades 1st Aff. ¶¶ 11-24. See Titra California, Inc. v. Titra Film, 98 Civ. 0234, 2001 WL 1382587, at *5 (S.D.N.Y. Nov 6, 2001) ("It is the spirit of the order, not the letter, that must be obeyed"), citing John B. Stetson Co. v. Stephen L Stetson Co., 128 F.2d 981, 983 (2d Cir. 1942); Nat'l Res. Bur. v. Kucker, 481 F. Supp. 612, 615 (S.D.N.Y. 1979). Furthermore, the remedial function of civil contempt would not be met. See ACLI Government Securities Inc., v. Rhoades, 989 F. Supp. 462, 465-466 (S.D.N.Y. 1997). Therefore, Eliades' technical violation of the Order, through his May 10 fight promotion, does not result in a finding of contempt.
The Order forbids the expenditure of more than £3,500 on any one transaction or more than £5,000 on multiple transactions in any one day.
While the Court finds credible Eliades' assumption that Burstein would act consistently with his prior response to Eliades' request for approval of the March 16, 2002 fight — by approving the fight and sending someone to audit Eliades' records (Eliades 1st Aff. ¶ 5) — Burstein's prior acquiescence did not bind him to consent to the May 10 fight Once Eliades knew that Burstein did not give his blessing, Eliades had the duty either to seek the Court's
However, this Court strongly cautions Eliades that further violations, even if they fortuitously have profit — enhancing results, will be sanctioned.
5. Mercedes Transfer to Ever Loukaides
Further, Lewis asserts that Eliades violated the February 15 Order when he transferred title to his Mercedes Benz to Ever Loukaides. Eliades claims that the transfer was effected on January 31, 2002 (Eliades 1st Aff. ¶¶ 32-38), while Lewis contends that the transfer occurred at a later date. Schalk Aff. ¶¶ 14-16. Similar to his defense with respect to the Parliament Hill Property, Eliades claims that while he officially transferred title to the automobile after the February 15 Order, he signed the paperwork for the transfer prior to the Order, on January 31, 2002 (Eliades 1st Aff. ¶ 10), after Loukaides paid Eliades £36,909.83 for the car. Id. ¶ 10. Eliades asserts that he finalized the transfer as soon as the English Courts vacated the World Wide Freeze Order that had been in effect. Eliades 1st Aff. ¶¶ 32-38. As explained earlier, because the February 15 Order is not entirely clear as to the effect of transactions entered into prior to the Order, that take effect after the Order, rather than hold Eliades in civil contempt with regard to an ambiguous provision, this Court has clarified the Order. See supra, footnote 5.
6. Transfer of Interest in Treptos Investments
Lewis also asserts that Eliades violated the February 15 Order through his transfer of his interest in Treptos Investments ("Treptos") as security for a loan. Schalk Aff. ¶ 12. The only "evidence" that Lewis provides in support of his position is the mere supposition that because Lewis was in New York for the trial on February 6th, he would not have been able to effectuate the transfer. Schalk Aff. ¶ 18. In rebuttal, Eliades contends that the shares were transferred prior to the Order, on February 6, 2002, and therefore the transfer in no way violated the Order. Eliades 1st Aff. ¶¶ 11-12. In support, Eliades produced documentation, in the form of minutes from a Board of Directors Meeting held on February 6, 2002, in which Eliades participated by phone, which noted the transfer, and a Share Certificate executed on February 6th, which finalized the transfer. Eliades 1st Aff. Exh. 24. In reply, Lewis failed to provide any evidence to rebut Eliades presentation, and therefore, failed to prove by clear and convincing evidence that, despite evidence to the contrary, Eliades' transfer actually pre — dated the. February 15 Order. As a result, the Treptos transfer does not serve as a basis to hold Eliades in civil contempt.
7. £11,000 Wire Transfer
Lewis also claims that an £11,000 wire transfer by Eliades to Switch Communications ("Switch"), on or after February 21, 2002, violated the February 15 Order. In defense, Eliades assets that he had previously issued a check to Switch, in the amount of £11,000, on February 14, 2002, but due to a bank error, the check was not paid until after the date of the Order, when after discussions with Eliades' bookkeeper, the bank acknowledged its mistake, and agreed to wire the payment directly to Switch. Eliades 1st Aff. ¶¶ 27-31, Exh. 20. Lewis provides no evidence to the contrary to rebut Eliades' defense. Once again, this situation, akin to both the Parliament Hill Property and the Repayment of the Loan to Barclays Bank, involves the post — Order finalization of an event initiated pre — Order. As explained earlier, while Eliades should have informed his bookkeeper about the strictures of the Order, and should have notified Lewis or the Court about the chronology, Eliades' failure to do either is not a clear violation of the Order. This Court finds it inappropriate to hold Eliades in civil contempt for what appears to be a mistake on the part of the bank that caused a transaction not to reach fruition until after the date of the Order.
8. Production of Documents
Lewis asserts that Eliades failed in several regards to honor the February 25, 2002 deadline, set out in the February 15 Order for the production of "all books and records, including, but not limited to, all banking records and third party contracts." In particular, Lewis asserts that Eliades failed to disclose any documentation with regard to (a) a loan of £ l.9 million from Eliades' brother Christos, (b) a £ 500,000 flat which Eliades purchased for his son, (c) the recent valuation of Panos Eliades Franklin Co. at £ 300,000, (d) an investment of £ 450,000 and an additional £ 163,000 extension of credit to a company called Secondsout, (e) contact information for his brother Christos, and (e) contact information for Mr. Kaissides. Burstein Aff. ¶¶ 19-22.
In response, Eliades asserts that he provided all of the documentation in his possession for all of these transactions or inquiries or otherwise knew that Lewis already possessed the information sought Eliades 1st Aff. ¶ 50. Although Lewis may read the Order otherwise, this Court does not interpret the February 15 Order to require Eliades to produce documents, other than those in his possession. After all, the Order required Eliades to sign financial disclosures to allow Lewis access to materials that were not in Eliades' possession, but that were relevant to Lewis' inquiries. Further, Lewis' attempt at rebuttal is unsuccessful as (a) he fails to provide any evidence to support his claim that Eliades' deposition evidence is insufficient, and (b) his assertion that "it strains credulity" that Eliades would not have in his possession further documentation concerning these transactions does not suffice as clear and convincing evidence to the contrary. Burstein 1st Aff. ¶¶ 21-25. Therefore, these alleged discovery violations do not warrant a finding of civil contempt.
With regard to the loan of £ 1.9 million, Eliades asserts and provides documentation to prove that he provided Schalk with "a schedule of monies loaned by Managa Properties Limited . . . which was produced on the second day of the UK deposition," and further asserts that he "was not in possession of" any other documents, which "could be obtained direct from the company." Eliades 1st Aff. ¶ 50(a). With regard to the £ 500,000 flat that Eliades purchased for his son, Eliades asserts and provides documentation to support that he produced documents relevant to this purchase on the second day of the UK deposition and that while no further documentation was requested, "Forbes Anderson were given during the UK world freeze trial a copy of the Land Certificate in respect of the flat." Id. 50(b). Third Eliade asserts not only that the recent valuation of £ 300,000 for Panos Eliades Franklin Co. represents unbilled work in progress that has not yet been documented, but also that he had already apprised Burstein of this fact Id. ¶ 50(c). Additionally, with regard to investments in Secondsout.com, Eliades asserts and provides documentation to support that he produced relevant documents on the second day of his UK deposition. Id. ¶ 50(d). Eliades also asserts and provides supportive documentation to show that he provided Burstein with the contact information for his brother Christos, on the second day of his UK depositions. Id. ¶ 50(e). Finally, Eliades asserts, albeit inferentially, that as evidenced by a letter from Boodle Hatfield, Kaissides' solicitors, to Lewis' UK attorneys, Forbes Anderson, Lewis should have known how to contact Kaissides, through his attorneys. While this last argument is certainly Eliades' weakest, as the fact that Lewis had an alternative means of obtaining Kaissides' contact information does not release Eliades from his obligation to produce the information, Eliades' argument makes clear that Lewis likely should not have requested information already in his possession, and makes civil contempt grounded on this withholding less supportable
9. Ownership of 39 Beech Hill Property
Lewis asserts, quite convincingly, that Eliades' perjury in his deposition testimony, with regard to conversations allegedly had with Aris Kaissides, or more accurately, Eliades' failure to volunteer to Lewis that Aris Kaissides had died on April 11, 2000, warrants a finding of contempt. There is no question that Kaissides was a relevant figure to this dispute as there was some confusion as to whether Eliades or Kaissides owned the parcel of property at 39 Beech Hill ("Beech Hill Property"). And, it is also apparent that during his deposition, Eliades relayed conversations that he professed to have had with Kaissides, on dates subsequent to Kaissides passing. However, the motivation behind what Lewis construes as Eliades' "lie," is hotly disputed. Lewis argues that Eliades wished to conceal his ownership of the Beech Hill Property, in order to shield this property from reach of the judgment. Burstein Aff. ¶¶ 7, 9. On the other hand, Eliades asserts that his failure to be forthcoming stemmed from his desire to shield, not the property, but rather the Kaissides family, during their time of grief, and further, to protect the Kaissides children from the investigators that Eliades contends had been following him. Eliades 2d. Aff. ¶¶ 115-118.
Further, Eliades asserts that all conversations that he claimed to have had with Aris Kaissides did in fact occur at the times and places mentioned; however, the conversations were with other members of the Kaissides family — not with Aris. Burstein Aff. ¶ 4.
The civil contempt power is an extreme remedy and indeed a "potent weapon" ( Stein Indus., Inc., v. Jarco Indus., Inc., 33 F. Supp.2d 163, 170 (E.D.N.Y. 1999), citing Int'l Longshoremen's Assn. v. Philadelphia Marine Trade Assn., 389 U.S. 64, 76 (1967)), and therefore should not be utilized "where there is a fair ground of doubt as to the wrongfulness of the defendant's conduct." Stein, 33 F. Supp.2d at 170, citing California Artificial Stone Paving Co. v. Molitor, 113 U.S. 609, 618 (1885). Because Lewis has not provided clear and convincing evidence to support by a "reasonable certainty" that Eliades had an improper motive, there is still considerable doubt as to the wrongfulness of Eliades' conduct. Consequently, this Court finds it improper to hold Eliades in civil contempt for what may be described as his lack of candor with regard to Kaissides.
10. Violations of the Per Diem and Transactional Spending Limits
Lewis alleges that Eliades' £40,000 payment to his lawyers violated the £3,500 transactional limit imposed by the Order. In defense, Eliades contends that the term "transaction," refers to individual purchases or checks drawn against an account. For example, Eliades argues that if £3,500 is withdrawn daily to finance an aggregate payment, there would be no violation of the £3,500 transaction limit. Eliades specifically made this argument with regard to his £40,000 payment to his UK lawyers, which he made in installment payments not exceeding £3,500. Eliades 3d. Aff. ¶¶ 2-3. Lewis asserts that this system violates the transactional limit because the total payment constitutes one transaction even though payments are made over a period of time. Notably, Eliades also made this argument in reference to the May 10 promotion. While the fact that an order is vague and indefinite as to whether a particular action is required or prohibited serves as a defense to contempt ( see Sacco, 764 F. Supp. at 921), the Order is crystal clear on this point. The idea of a transactional limit is aimed to prevent exactly what Eliades did — spreading out one transaction over a period of time. The Court does not credit Eliades' theory as it is obviously contrary to both the spirit and the letter of the Order As there is a £ 3,500 transactional spending limit in place, this payment of £ 40,000 amounts to a £36,500 violation of the Order.
Further Eliades concedes on several occasions to having violated the spending limits imposed by the February 15 Order, though he claims that these violations were "not willful" and were instead due to "administrative or clerical errors." Eliades 2d. Aff. ¶ 5. Unfortunately for Eliades, the contemptee need not be willful in his violations in order to be found in civil contempt. See Canterbury Belts Ltd v. Lane Maker Rudkin, Ltd., 869 F.2d 34, 39 (2d Cir. 1989). Therefore, Eliades may be held in civil contempt for his alleged unintentional violations of the transactional limitations of the February 15 Order as listed below:
a) February 22, 2002 excess expenditure of £1045.13 (Eliades 2d. Aff. ¶¶ 41-43);,
b) March 20, 2002 excess expenditure of £1000 (Eliades 2d. Aff. ¶¶ 50-51);
c) March 22, 2002 excess expenditure of £1 17.84 (Eliades 2d. Aff. ¶¶ 52-54);
d) March 29, 2002 excess expenditure of £780.16 (Eliades 2d. Aff. ¶ 59); and
e) April 29, 2002 excess expenditure of £389.22 (Eliades 2d. Aff. ¶ 74).
The purpose of the Order was to make funds available to satisfy the judgment against the Panix Parties. Further, the purpose of "civil contempt proceedings is remedial and compensatory . . ." Upjohn Co. v. Medtron Labs., Inc., 894 F. Supp. 126, 135 (S.D.N.Y. 1995), citing Sunbeam Corp. v. Golden Rule Appliance Co., 252 F.2d 467, 469 (2d Cir. 1958); Huber v. Marine Midland Bank, 51 F.3d 5, 10 (2d Cir. 1995) (stating that a civil contempt order is coercive rather than punitive in nature). Civil contempt is also utilized to ensure future compliance with an order. See U.S. v. Paccione, 975 F. Supp. 537, 544 (S.D.N.Y. 1997); United Mine Workers, 330 U.S. at 303-04. As explained supra, "[a] party may not be held in contempt unless the order violated by the contemnor is clear and unambiguous, the proof of non — compliance is clear and convincing, and the contemnor was not reasonably diligent in attempting to comply." Local 638, 81 F.3d at 1171. With' regard to these expenditures, Eliades concedes that he violated the Order, and his excuse that these payments were "administrative oversights" does not suffice as the sheer number of such oversights negates a finding of any sort of reasonable diligence. Therefore, the requirements for a coercive sanction have been met. "When imposing coercive sanctions, 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." New York Nat'I Org. for Women, 886 F.2d at 1353. These considerations serve only to confirm the appropriateness of a sanction for these overt violations.
Eliades', explanations for the per diem violations were as follows: (a) for the February 22, 2002 violation, "it would appear that there had been a slight violation of £1045.13 for this day," (b) March 20 and March 22, 2002, "this was an administrative oversight," and (c) March 29 and April 29, 2002 were claimed to be administrative oversights by his bookkeeper.
I am therefore imposing a fine of £40,832.35 — the total amount in excess of the per diem and transactional spending limits — in order both to remedy the violations and ensure Panix Parties' compliance with the Order in the future. Eliades is to place this sum in escrow, within thirty days of the date this Order and Opinion is entered, earmarked for the satisfaction of the Judgment against Eliades, should the Judgment be affirmed on appeal.
This court arrived at this sum by adding the amounts of the per diem spending limit violations (£4,332.35) to the £36,500 transactional violation.
As a result of my decision to impose civil sanctions, I deny the request to appoint an Assistant United States Attorney, or other private attorney, to initiate and prosecute criminal contempt proceedings against the Panix Parties. No finding warrants such serious action. See Paccione, 975 F. Supp. at 545, quoting Spallone v. U.S., 493 U.S. 265, 276 (1990) ("the Supreme Court has made clear that `in selecting contempt sanctions, a court is obliged to use the least possible power adequate to the end proposed.'").
III. CONCLUSION
For the above stated reasons, the motion to hold Panix Parties in civil contempt is granted as to his violations of the Order's per diem and transactional spending limits, as discussed supra, Section II.B.10, and is denied with regard to all other alleged violations. Panix Parties collectively are ordered to place the sum of £40,832.35 in escrow, with the Clerk of this Court, no more than thirty days from the date hereof. The motion for criminal sanctions and to appoint a prosecutor are denied. The Clerk is requested to close this motion and any open motions and remove this case from my docket.