Gowdy v. Mitchell (In re Ocean Warrior, Inc.)
- Summarized by Paul Avron , Berger Singerman LLP
- 8 years 4 months ago
- Citation:
- No. 15-11891 (11th Cir. Aug. 26, 2016)
- Tag(s):
-
- Ruling:
- The Bankruptcy Court (i) did not abuse its discretion in failing to conduct evidentiary hearing on civil contempt matter because contemnor had notice of the hearing and was given the opportunity to testify and submit evidence; (ii) did not violate the contemnor's due process rights by conducting a show-cause hearing without appointing counsel because there was no threat of incarceration at that time; (iii) had the authority to issue a civil contempt citation after the contemnor's failure to purge contempt, and the sanctions imposed were not punitive; (iv) had the authority to issue a final order because the contempt matter concerned administration of the estate and turnover of funds such that the matter was a "core" bankruptcy proceeding; (v) erred in the award of fees to the Bankruptcy Trustee because the fees were not limited to efforts relating to the contempt proceeding.
- Procedural context:
- The matter before the Eleventh Circuit was an appeal of an order of the Bankruptcy Court imposing civil contempt sanctions, which had been affirmed on intermediate appeal by the U.S. District Court for the Southern District of Florida.
- Facts:
- Plaintiff sued two entities, one Ocean Warrior, in U.S. District Court in Washington State for maritime-related claims, and an in rem action against a vessel, naming its owner Ocean Warrior. The District Court had the vessel arrested; a sale occurred that day; however, the sale was voided by the Bankruptcy Court where in which Ocean Warrior filed its Chapter 11 case that day due to substantial equity in the vessel. The Bankruptcy Court ordered the Debtor's President to maintain the vessel in U.S. waters off Washington State, and maintain insurance pending adjudication of the Plaintiff's claims. The Plaintiff then obtained a judgment which prompted the Bankruptcy Court to order the Debtor to deposit funds as security for the judgment; however no money was deposited, insurance was not maintained and the vessel (along with the Debtor's President) disappeared. The Debtor's Chapter 11 case was converted to a Chapter 7 case and ultimately closed. Almost 20 years later the Debtor's President was located and arrested and brought before the District Court which deferred the matter in favor of the contempt proceedings before the Bankruptcy Court. That Court entered an order to show cause why the Debtor's President should not be held in contempt; incarceration had not been threatened by the Bankruptcy Judge, but the President refused to answer questions including the location of the vessel after which he was found in contempt and ordered to produce the vessel or pay the judgment in favor of the Plaintiff to purge the contempt. In response the President filed an Affidavit claiming he was without assets, but did not disclose an interest in a pending maritime personal injury suit for which he received almost $450,000. The Bankruptcy Trustee, who had commenced an adversary proceeding seeking recovery for conversion of the vessel, turnover and injunctive relief regarding the funds the President received in his other action. The Bankruptcy Court awarded fees and costs to the Trustee and stayed disbursement of funds to the Plaintiff pending conclusion of the Trustee's adversary proceeding. Subsequently, the Bankruptcy Court directed disbursement of funds to the Plaintiff, entered final judgment in favor of the Trustee.
- Judge(s):
- Eleventh Circuit Judges Stanley Marcus and Joel Dubina, and Visiting Eighth Circuit Judge Michael Melloy
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