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Asset Management Holdings, LLC v. Alelia Hernandez (In re Hernandez)

Summarizing by Lars Fuller

United States v. Thomas Thompson

Case Type:
Business
Case Status:
Affirmed
Citation:
No. 17-4264; File Name: 19a01107p.06 (6th Circuit, May 29,2019) Published
Tag(s):
Ruling:
Sixth Circuit affirmed the District Court's denial of a motion to terminate a defendant's civil-contempt sanctions in accordance with U.S.C. Section 1826. The Sixth Circuit found that because the defendant was found in contempt for failure to attend a debtor's examination AND otherwise perform the requirements of his plea bargain, the limitation in Section 1826 of 18 months incarceration for failing to testify did not apply. The defendant was required by the plea agreement to assist parties in recovering gold coins from a shipwreck and that is non-testimonial conduct.
Procedural context:
Defendant hired employees to help him find a shipwreck and recover its cargo of gold coins. The employees sued defendant to recover profits from the discovery and a TRO prohibited the defendant from disposing of the gold coins which were found - instead, he transferred them to a trust in violation of the TRO. Defendant failed to provide the information and the District Court entered a show cause order. Defendant absconded and was arrested. Defendant was criminally charged with failing to follow the orders of the District Court. Defendant entered into a plea agreement which required him to testify at a debtor's examination and assist the civil parties (including a receiver) in recovering the gold coins. Defendant refused to testify at the examination claiming the 5th Amendment privilege. Defendant refused to testify a second time. The District Court sentenced him to two years for criminal contempt but stayed the sentence while he was sentencing for civil contempt. He was found guilty of civil-contempt and incarcerated indefinitely and fined $1,000 per day. The appeal challenging the ability to hold him for more than 18 months followed.
Facts:
The Sixth Circuit reviewed the few cases decided which interpret Section 1826. The Court found that if the civil-contempt was determined solely for failure to testify at the debtor's examination, the provisions of Section 1826 (the "recalcitrant witness" statute) would apply and he should have been release after serving his 18 months in prison. However, it was clear in the plea agreement that he agreed to "assist" the civil parties. By using the term "assist", the Court found that this was non-testimonial conduct which was outside the strictures of Section 1826's prohibition of incarcerating someone for more than 18 months. The record in the District Court was somewhat less than clear as to why the civil-contempt was occurring - and whether it was solely related to the failure to testify - but the Court found that the overall interpretation of the plea agreement was clear that he was to assist in ding the gold coins.
Judge(s):
Moore, Clay and Donald, Circuit Judges

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