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Jou v. Adalian

United States District Court, District of Hawaii

February 5, 2015

EMERSON M.F. JOU, M.D., Plaintiff,
v.
GREGORY M. ADALIAN, Defendant.

ORDER (1) DENYING PLAINTIFF’S MOTION FOR AN ORDER FOR ARREST AND INCARCERATION OF CONTEMNOR-DEFENDANT GREGORY M. ADALIAN AND FOR ATTORNEYS’ FEES AND COSTS, DOC. NO. 146; AND (2) VACATING ORDERS OF MAY 2, 2014, DOC. NO. 141, AND JUNE 5, 2014, DOC. NO. 145

J. MICHAEL SEABRIGHT, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Plaintiff Emerson M.F. Jou, M.D. (“Plaintiff” or “Jou”) has filed a Motion for an Order for Arrest and Incarceration of Contemnor-Defendant Gregory M. Adalian (“Defendant” or “Adalian”) (“Motion to Arrest”). Doc. No. 146. The Motion to Arrest seeks an order commanding the U.S. Marshal to arrest Adalian and to incarcerate him until he pays both an outstanding December 23, 2010 judgment in this case consisting of $155, 000 plus $6, 365.36 in attorneys’ fees and costs, Doc. No. 89, as well as related fines, fees, and costs awarded in subsequent contempt Orders. Doc. Nos. 141, 145. For the reasons set forth, the Motion to Arrest is DENIED. Further, the court VACATES its May 2, 2014 and June 5, 2014 contempt Orders. Doc. Nos. 141, 145.

II. BACKGROUND

In considering Jou’s Motion to Arrest, the court began by reviewing in toto the procedural history of this nearly six-year-old case to understand the precise context for the relief sought by Jou (incarceration of Adalian as a sanction for civil contempt until Adalian pays the amounts due to Jou). In so doing, the court gained a fresh perspective into the primary issue -- the collection of a money judgment -- in this unusual proceeding. And, in short, the court concludes that the matter is ultimately controlled by a larger principle that neither of the parties cited, and of which this court had not previously recognized in the present context --contempt proceedings are, without more, an improper means of collecting a pure money judgment. The court sets forth the relevant details below.

A. Proceedings Leading to a December 23, 2010 Order and Judgment

Jou filed this action on May 19, 2009, primarily seeking payment of certain promissory notes issued to him by Adalian. Doc. No. 1. On June 28, 2010, the parties placed a settlement on the record before Magistrate Judge Kevin S.C. Chang. Doc. No. 63. The case, however, remained open -- a dismissal from the parties was due on September 30, 2010. Id. In a July 6, 2010 written settlement agreement, Adalian agreed to pay Jou $180, 000 with an initial payment of $25, 000, and a second payment of $155, 000 (due no later than September 30, 2010). Doc. No. 69-3 at 2. The settlement does not involve any injunctive or declaratory relief -- it concerned only payment of money. Regarding “jurisdiction and enforcement, ” the settlement agreement provides “[t]his Agreement shall be governed by the laws of the State of Hawaii. In the event that enforcement of any term of this Agreement is necessary, the prevailing party is entitled to recover all costs, interest, and legal fees incurred in such enforcement procedure.” Id. at 6. That is, the agreement does not provide for retention of jurisdiction to enforce its terms.

Adalian paid the first installment of $25, 000, but did not pay the remaining $155, 000 by September 30, 2010 (and he has not made that payment since). Doc. No. 88, Order at 2. On October 6, 2010, Jou filed a Motion to Enforce Settlement Agreement and for Damages, Attorney’s Fees, Costs and Judgment (“Motion to Enforce”). Doc. No. 69. On November 19, 2010, Magistrate Judge Chang issued a Findings and Recommendation to Grant in Part and Deny in Part the Motion to Enforce (“November 19, 2010 F&R”). Doc. No. 80. Given a binding settlement, the November 19, 2010 F&R recommended (1) ordering Adalian to pay the $155, 000 balance to Jou within one week from when this court takes final action on the November 19, 2010 F&R; (2) entry of final judgment of $155, 000 in favor of Jou and against Adalian; (3) denial of Jou’s requests for civil contempt, damages and sanctions; and (4) an award of fees and costs reasonably incurred in bringing the Motion to Enforce. Id. at 2-3. The November 19, 2010 F&R cautioned Adalian “that his failure to tender the balance of the settlement amount pursuant to a court order may result in a finding of civil contempt as well as other sanctions.” Id. at 3. In Supplemental Findings, Magistrate Judge Chang recommended an additional award of $6, 365.36 in fees and costs, also to be paid within one week from this court’s final action on the November 19, 2010 F&R. Doc. No. 81.

On December 23, 2010, this court adopted the November 19, 2010 F&R. Doc. No. 88. This court overruled objections from both sides, and ordered (consistent with the November 19, 2010 F&R) as follows:

1. Defendant is ordered to pay $155, 000 to Plaintiff within one week from the date of this Order -- that is, by December 30, 2010. Failure to pay this amount within one week may result in Defendant being found in contempt of this Order.
2. The court further awards Plaintiff $5, 796.00 in attorneys’ fees, $273.11 in tax, and $296.25 in costs, for a total of $6, 365.36. Defendant must remit this payment to Plaintiff no later than one week from the date of this Order, by December 30, 2010. Failure to pay this amount within one week may result in Defendant being found in contempt of this Order.
3. Plaintiff’s request[s] for civil contempt, damages, and sanctions are DENIED.
4. The court directs the Clerk of Court to enter Judgment in the amount of $155, 000 in favor of Plaintiff and against Defendant. The Second Amended Complaint, filed September 24, 2010, and all claims asserted therein, are dismissed with prejudice. The court retains jurisdiction to enforce the terms of the July 6, 2010 Settlement Agreement and Release between the parties.

Id. at 8-9. Accordingly, final Judgment was entered on December 23, 2010. The Judgment provides:

IT IS ORDERED AND ADJUDGED that Judgment is entered in favor of the Plaintiff Emerson M. F. Jou, M.D., in the amount of $155, 000.00 and against the Defendant Gregory M. Adalian and all claims asserted in the Second Amended Complaint are dismissed with prejudice, pursuant to the “Order Adopting the November 19, 2010 Findings and Recommendation to Grant in Part and Deny in Part Plaintiffs’ Motion to Enforce Settlement Agreement and for Damages, and the November 23, 2010 Supplement to the Findings and Recommendation, ” filed on December 23, 2010. It ...

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