Bk. Case No. 1:11-BK-10426-VK
The opinion of the court was delivered by: The Honorable A. Howard Matz, U.S. District Judge
Present: The Honorable A. HOWARD MATZ, U.S. DISTRICT JUDGE
Stephen Montes Not Reported Deputy Clerk Court Reporter / Recorder Tape No. Attorneys NOT Present for Plaintiffs: Attorneys NOT Present for Defendants: Proceedings: IN CHAMBERS (No Proceedings Held)
Appellant-Debtor Georges Marciano appeals from orders of the bankruptcy court holding him in contempt and issuing a bench warrant for his arrest.*fn1 Because Marciano has not shown that the bankruptcy court committed clear error or an abuse of discretion, the orders are AFFIRMED.
On November 14, 2011, the bankruptcy court issued an order to show cause ("the OSC") why Marciano should not be held in contempt. E.R. 177. The order noted that, nearly a year after the bankruptcy court had entered an Order of Relief subjecting him to bankruptcy court jurisdiction, Marciano had failed to fulfill his legal obligations as a debtor including, inter alia, filing the required schedules of assets and liabilities and failing to turn over property of the estate to Chapter 11 Trustee David K. Gottlieb ("Trustee").
On November 23, 2011, Marciano filed schedules ("the November Schedules") that listed among his assets certain valuable watches and numerous automobiles.*fn2 E.R. 271. In a responsive filing, the Trustee argued that the November Schedules, which listed just over $2.3 million in assets with many assets designated as "unknown" value, were incomplete and inadequate. E.R. 410. The Trustee attached a 2008 ledger that showed that the Georges Marciano Trust had a "book value" of over $360 million, as well as a declaration filed in state court by Marciano's accountant disclosing a net worth of at least $170 million. E.R. 412, 433, 454.
For his part, Marciano blamed the schedules' defects on the Trustee,
for actions he had taken in Canada. Marciano has resided in Montreal,
Canada, since the outset of bankruptcy proceedings. On September 15,
2011, the Trustee's representatives obtained a warrant from the
Superior Court of Quebec to seize Marciano's assets in Montreal. Among
the assets seized were a collection of expensive watches, a large
gemstone known as the Chloe Diamond, and stock certificates and other
legal documents showing ownership of various entities. Marciano
claimed that this seizure made it impossible for him to accurately
inventory his assets. The Quebec court subsequently quashed the
warrants and the property was returned to Marciano.*fn3
The parties have not made clear when, precisely, Marciano's
property was returned. According to the Trustee, Marciano had access
to most of the seized documents by mid-October 2011. Appellee Br.
(Dkt. 25) at 9. Marciano acknowledges that all of his property was
returned by the end of December, 2011. Appellant Br. (Dkt. 24) at 15.
On December 5, 2011, the bankruptcy court issued an order finding Marciano in civil contempt ("the Contempt Order"). E.R. 656. In that order, the bankruptcy court ruled that the November Schedules were deficient and did not substantially comply with the Bankruptcy Code. The court ruled that Marciano could purge his contempt by, inter , refiling complete and accurate schedules and turning over estate assets to the Trustee and allowing inspection of assets claimed as exempt.
On December 31, 2011, Marciano filed new schedules of assets and liabilities ("the December Schedules"). E.R. 884. In the December Schedules, Marciano claimed that many of the valuable assets listed as property of the estate in the November Schedules, including the watch collection, were not, in fact, his property.
After a hearing at which Marciano's attorney was present, the bankruptcy court issued a bench warrant for Marciano's arrest on January 13, 2012. E.R. 1187. The bankruptcy court concluded that Marciano had failed to comply with the court's orders by failing to turn over the following assets: (1) the watch collection listed in the November Schedules; (2) the stock certificates and other evidence of ownership of the assets listed in the November Schedules; (3) the vehicles listed in the November Schedules; and (4) the Chloe Diamond. The order also faulted Marciano for failing to allow inspection of assets that he had claimed as exempt on the November and December Schedules. The court further ruled that Marciano could purge his contempt by turning over the four identified assets and allowing inspection of the assets claimed as exempt. It is that order which is the subject of this appeal.
An order of the bankruptcy court imposing sanctions for civil contempt is a final appealable order. In re Stasz, 387 B.R. 271, 274 (9th Cir. BAP 2008); see also SEC v. , 322 F.3d 1123, 1127 (9th Cir. 2003) ("A civil contempt order is ordinarily not appealable until the district court has adjudicated the contempt motion and applied sanctions."). A lower court's award of sanctions is reviewed for abuse of discretion, and its factual findings made in conjunction with that order are reviewed for clear error. Affordable Media, 179 F.3d at 1239. A court's finding that compliance was not impossible is a factual finding that is reviewed for clear error. Affordable Media, 179 F.3d at 1239.
Civil contempt is "a party's disobedience to a specific and definite court order by failure to take all reasonable steps within the party's power to comply." Reno Air Racing Ass'n, Inc. v. McCord, 453 F.3d 1126, 1130 (9th Cir. 2006). Whereas criminal contempt is imposed as punishment for a "completed act of disobedience," civil contempt sanctions are imposed as a means of forcing compliance with a court order. Int'l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 828 (1994) (quotation omitted). Because of the coercive, rather than punitive, nature of civil contempt, a civil contemnor has the ability to ...