DEFENDANT-APPELLANT DAVID B. FENKELL'S NOTICE OF APPEAL

WILLIAM M. CONLEY, District Judge.

Defendant-Appellant David B. Fenkell hereby notices his appeal to the United States Court of Appeals for the Seventh Circuit from (1) this Court's August 28, 2015, Opinions and Orders [Dkts. 1085, 1086, and 1087 (at Dkt. 1087, which Judge William M. Conley signed on the 27th day of August, 2015, and entered in this action on the 28th day of August, 2015, Judge Conley granted in part the "Motion of Judgment Creditors Alliance Holding[s, Inc.] ESOP [(Employee Stock Ownership Plan and Trust)] to Enforce the Judgment, for a Constructive Trust, Temporary Restraining Order and Injunction Freezing Fenkell Assets, and for Attorneys' Fees," and, among other things, ordered Mr. Fenkell to restore to the Alliance ESOP $2,044,014.42 within seven (7) days of this Court's Order or show cause why he should not be held in civil contempt of court; (2) this Court's November 18, 2015, Opinion and Order [Dkt. 1121], denying Mr. Fenkell's Motion for Reconsideration of this Court's August 28, 2015, Opinions and Orders; (3) this Court's December 9, 2015, Agreed Consent Order [Dkt. 1132](e.g., including without limitation, to the extent that this Court's December 9, 2015, Agreed Consent Order renders this Court's November 18, 2015, Opinion and Order a non-final order, and/or with respect to the denial of Mr. Fenkell's Motion to Stay, Mr. Fenkell being held in civil contempt, the requirement of Mr. Fenkell to post a supersedeas bond and to have pledged collateral that he did not own and was otherwise exempt from attachment in order to secure the supersedeas bond and cure this Court's holding of Mr. Fenkell in civil contempt, and this Court's imposition of fines and imprisonment consistent with this Court's November 18, 2015, Opinion and Order); and (4) this Court's February 3, 2015, Opinion and Order [Dkt. 1031]. The Docketing Statement required pursuant to Circuit Rule 3(c)(1) of the United States Court of Appeals for the Seventh Circuit is filed as an attachment to this Notice of Appeal.

SEVENTH CIRCUIT RULE 3(c) DOCKETING STATEMENT OF DEFENDANT-APPELLANT TO DAVID R. FENKELL

Defendant-Appellant David B. Fenkell, by his undersigned counsel, respectfully submits this Docketing Statement pursuant to Circuit Rule 3(c)(1) of the United States Court of Appeals for the Seventh Circuit.

I. DISTRICT COURT JURISDICTION. The United States District Court for the Western District of Wisconsin (the "District Court") has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1331 (federal question) because it arises under the laws of the United States and pursuant to 29 U.S.C. § 1132(e)(1) which provides for jurisdiction of actions brought under Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

II. APPELLATE COURT JURISDICTION. This appeal is taken from (1) this Court's August 28, 2015 Opinions and Orders [Dkts. 1085, 1086, and 1087 (at Dkt. 1087, which Judge William M. Conley signed on the 27th day of August, 2015, and entered in this action on the 28th day of August, 2015, Judge Conley granted in part the "Motion of Judgment Creditors Alliance Holdings[, Inc.] ESOP [(Employee Stock Ownership Plan and Trust)] and Alliance Holdings, Inc. to Enforce the Judgment, for a Constructive Trust, Temporary Restraining Order and Injunction Freezing Fenkell Assets, and for Attorneys' Fees", and among other things, ordered Mr. Fenkell to restore to the Alliance ESOP $2,044,014.42 within seven (7) days of this Court's Order or show cause why he should not be held in civil contempt of court)], (2) this Court's November 18, 2015, Opinion and Order [Dkt. 1121], denying Mr. Fenkell's Motion for Reconsideration of this Court's August 28, 2015, Opinions and Orders; and (3) this Court's December 9, 2015 Agreed Consent Order [Dkt. 1132](e.g., including without limitation, to the extent that this Court's December 9, 2015, Agreed Consent Order renders this Court's November 18, 2015, Opinion and Order a non-final order, and/or with respect to the denial of Mr. Fenkell's Motion to Stay, Mr. Fenkell being held in civil contempt, the requirement of Mr. Fenkell to post a supersedeas bond and to have pledged collateral that he did not own and was otherwise exempt from attachment in order to secure the supersedeas bond and cure this Court's holding of Mr. Fenkell in civil contempt, and this Court's imposition of fines and imprisonment consistent with this Court's November 18, 2015, Opinion and Order); and (4) this Court's February 3, 2015, Opinion and Order [Dkt. 1031]. The United States Court of Appeals for the Seventh Circuit has jurisdiction to decide this case pursuant to 28 U.S.C. § 1291 and 28 U.S.C. § 1294.

David B. Fenkell timely filed the required Notice of Appeal (including this Docketing Statement required pursuant to Circuit Rule 3(c)(1) of the United States Court of Appeals for the Seventh Circuit filed as an attachment to the Notice of Appeal along with a separate Certificate of Service for the Docketing Statement) with the District Court on December 9, 2015 (which is within thirty (30) days of this Court's November 18, 2015, which purports to address and dispose of all of the issues raised in the motions that sparked the post-judgment proceedings in this matter).1

III. THIS IS AN APPEAL OF AN IMMEDIATELY APPEALABLE FINAL ORDER OF NOVEMBER 18, 2015 [Dkt. 1121] AND/OR DECEMBER 9, 2015 [Dkt. 1132] TO THE EXTENT THAT THE DECEMBER 9, 2015, ORDER RENDERS THE NOVEMBER 18, 2015, ORDER NON-FINAL. As noted above, the District Court entered a final appealable order on November 18, 2015 and on December 9, 2015. This is a civil appeal as a matter of right pursuant to Federal Rule of Appellate Procedure 3(a) and Circuit Rule 3(a).

IV. PRIOR OR RELATED APPELLATE PROCEEDINGS. An appeal is pending in United States Court of Appeals for the Seventh Circuit, Case No. 14-3181.

V. ADDITIONAL REQUIREMENTS OF CIRCUIT RULE 3(c)(1). None of the parties to this litigation appear in an official capacity. This is a civil case that does not involve any criminal convictions. 28 U.S.C. § 1915(g) is inapplicable. This case does not involve a collateral attack on a criminal conviction.

Before the court are two motions to compel — one by plaintiffs and the other by defendant Alliance Holdings Inc. and nominal defendant Alliance Holdings, Inc. ESOP — both seeking post-judgment discovery from defendant David B. Fenkell. (Dkt. ##1023, 1025.) For the reasons that follow, the court will grant both motions, ordering Fenkell to respond to discovery requests and sit for a deposition, and will further award reasonable attorneys' fees and costs in bringing both motions.

BACKGROUND

This court previously entered judgment against defendant David Fenkell. As a result of various settlements and assignment of claims with other co-defendants, the Alliance ESOP is owed over $2 million and Alliance is owed $3.25 million as the holder of the trustee defendants' right to indemnification making both judgment creditors of Fenkell. (Judgment (dkt. #986); Am. Judgment (dkt. #999); Joint Mot. to Permit Registration (dkt. #1006) 5-6.) While plaintiffs also assigned some of portions of the judgment against Fenkell to Alliance, plaintiffs retained the judgment awarding them attorneys' fees in the amount of $1,854,008.50. (Id.) All of these debts are exclusive of post-judgment interest that continues to run.

Recently, the court granted an unopposed join motion by Alliance and plaintiffs to register the judgment for enforcement against Fenkell's property in other districts pursuant to 28 U.S.C. § 1963. (11/17/14 Order (dkt. #1017).) Defendant Fenkell has yet to seek a stay of execution of the judgment in this court or in the Seventh Circuit Court of Appeals, where several appeals are pending.

OPINION

In response to the motions to compel, Fenkell represents that he has agreed to: (1) produce discovery responses to plaintiffs; and (2) sit for a deposition (presumably, also for plaintiffs' benefit only). As for the Alliance defendants' requests, however, Fenkell would cast them both as "non-parties," for whom no discovery is owed. (Fenkell's Opp'n (dkt. #1028) 3.) Unfortunately, Federal Rule of Civil Procedure 69, which governs execution of judgments, is not limited to parties: "In aid of the judgment or execution, the judgment creditor or a successor in interest whose interest appears of record may obtain discovery from any person — including the judgment debtor — as provided in these rules and in the procedure of the state where the court is located." Fed. R. Civ. P. 69(a)(2). Wisconsin Statute § 806.18 also permits the assignment of judgments, while Chapter 816 sets forth certain discovery mechanisms for executing on judgments similar to Rule 69.

In an apparent attempt to avoid Rule 69 and § 806.418, Fenkell challenges the legitimacy of plaintiffs' assignment of their claim to Alliance. But the court need not find that the assignment is permissible to decide the present motion, because part of the court's judgment orders Fenkell to restore to nominal defendant Alliance ESOP over $2 million, and as mentioned above, has joined defendant Alliance Holdings, Inc. in bringing the motion to compel. Moreover, Alliance Holdings, Inc., as the administrator of the Plan, also has a sound basis for seeking post-judgment discovery. As such, the court rejects any objection to Alliance Holdings, Inc. and Alliance ESOP's request for discovery.

Fenkell also takes issue with some of the discovery requests as irrelevant and beyond the scope of permissible discovery, and specifically challenges any requests for discovery of his wife Karen Fenkell's assets or assets held jointly. Again, the language of Rule 69(a)(2), which allows discovery from "any person," largely answers this challenge as well. Moreover, courts have recognized that discovery into a third-party's assets is allowed where the "relationship between the judgment debtor and the [third-party] is sufficient to raise a reasonably doubt about the bona fides of the transfer of assets between them." Magnaleasing, Inc. v. Staten Island Mall, 76 F.R.D. 559, 561-62 (S.D.N.Y. 1977). Not only are such situations common in the spousal context (see Alliance's Reply (dkt. #1029) 5 (citing numerous cases finding discovery of spouse's assets appropriate)), but are particularly so here, given Mr. Fenkell's previous transfer of funds to his wife in an attempt to move assets beyond the reach of plaintiffs. (11/17/14 Order (dkt. #1017) 3.)

Finally, Fenkell contends that Alliance is simply trying to get discovery here that has been denied in a pending, related case in the Eastern District of Pennsylvania. Fenkell's characterization of discovery efforts in the other case appears to be at odds with recent developments, as Alliance notes in its reply that the Eastern District of Pennsylvania recently allowed subpoenas to be served on the Fenkells' banks. (Alliance's Reply (dkt. #1029) 3 n.2.) Regardless, the discovery status in that ongoing case is of little or no relevance to the post-judgment status of this lawsuit. Alliance and plaintiffs have a right as judgment creditors to determine the location and extent of Fenkell's assets. Whether or not this touches on matters at issue in the Eastern District of Pennsylvania action does not change their independent right to post-judgment discovery here.

Accordingly, the court will order Fenkell to: (1) provide full and complete responses to interrogatories and document requests on or before February 17, 2015, and (2) sit for a deposition concerning his assets and transfer of assets on or before March 17, 2015.

In addition to seeking an order compelling Fenkell to respond to discovery requests and sit for a deposition, Alliance and plaintiffs also seek attorneys' fees and costs for having to bring this motion pursuant to Federal Rule of Civil Procedure 37(a)(5)(A). That provision provides in pertinent part that:

Fed. R. Civ. P. 37(a)(5)(A)(ii).

In response to the movant's request, Fenkell simply reiterates his argument that his position is substantially justified because "[p]laintiffs have no economic interest in the alleged judgment [and] the Alliance Defendants are not entitled to post-judgment discovery." (Fenkell's Opp'n (dkt. #1028) 9.) For reasons outlined above, however, Fenkell's objections have no reasonable basis. See Pierce v. Underwood, 487 U.S. 552, 565 (1988). The Alliance defendants are judgment creditors in light of the court's judgment ordering Fenkell to restore over $2 million to the Alliance ESOP, regardless of the status of any assignment. Also, regardless of any assignment plaintiffs made to Alliance as part of their settlement, plaintiffs retain an interest in the judgment awarding them attorneys' fees of over $1.8 million. Accordingly, the court will award reasonable attorneys' fees and costs incurred by plaintiffs and defendants Alliance Holdings, Inc. and Alliance Holdings, Inc. ESOP in bringing the present motions, to be paid by David Fenkell.

ORDER

IT IS ORDERED that:

In a previous order concerning post-judgment discovery, the court granted motions to compel discovery from David and Karen Fenkell by plaintiffs and Alliance Holdings, Inc. and Alliance Holdings, Inc. Employee Stock Option Plan (referred to collectively as "Alliance"). (2/3/15 Op. & Order (dkt. #1031).) In that same order, the court also granted Alliance and plaintiffs' requests for attorneys' fees and costs in having to bring these motions, finding that David Fenkell had no reasonable basis for objecting to the discovery requests. (Id. at 5-6 (discussing standard under Fed. R. Civ. P. 37(a)(5)(A)(ii).) Having reviewed plaintiffs' and Alliance's respective requests for fees and Fenkell's opposition, the court will award plaintiffs $17,599.81 in attorneys' fees and will award Alliance $31,740.54.1

OPINION

Plaintiffs seek $20,730.00 in attorneys' fees, which plaintiffs' counsel represents reflects the lodestar value of their legal services in preparing the motion to compel, reply in support of the motion and a fee petition. In support, plaintiffs submit detailed time records, reflecting 48.4 hours of work at an hourly rate of $400.00 for one attorney and $635.00 for the other attorney. (Pls.' Submission, Ex. A (dkt. #1033-1).)

Alliance seeks $42,938.42 in attorneys' fees, which Alliance represents reflects the lodestar value of their legal services in preparing the motion to compel and the fee petition. In support of this request, Alliance also submits detailed time records and the hourly rates for each attorney and paralegal who worked on the motion and fee petition. (Alliance's Submission, Exs. A, B (dkt. ##1034-1, 1034-2).) Those records reflect 103.30 hours of legal services. Further, Alliance Holdings, Inc., was invoiced for the fees associated with the motion to compel and rely brief in support of that motion. (Id., Ex. K (dkt. #1034-11).) Alliance also submitted declarations in support of the reasonableness of the hourly rates, explaining that the rates requested were actually reduced and are competitive with attorneys of comparable experience at other large law firms in the Chicago market. (See, e.g., Declaration of Charles C. Jackson (dkt. #1034-3) ¶ 9.) The hourly rates requested range from $165.00 for a paralegal, $375.00 for an associate, and up to $600.00 for a senior partner.

In response to these submissions, Fenkell raises two core objections. First, Fenkell challenges the court's finding that Fenkell's objections have no reasonable basis, effectively seeking reconsideration of that decision. (Fenkell's Resp. (dkt. #1037 3-6.) Fenkell already asserted these arguments in his opposition to the motions to compel (Fenkell's Opp'n (dkt. #1028) 8-9), and the court finds no reason to address those arguments further, nor to explain further the court's reasons for rejecting them, nor to defend the court's ultimate conclusion that Fenkell's objections had no reasonable basis.

Second, Fenkell challenges whether the fees requested are reasonable, raising issues with respect to: (a) the amount of time Alliance and plaintiffs' spent on the motions to compel; (b) plaintiffs' counsel's lack of substantiation for their rates; and (c) the inclusion of time spent preparing the fee petition. The court will address each challenge in turn. Fenkell's primary argument is that the amount of pages produced for both the motions to compel and the reply briefs in support of the motions do not justify the time spent on those filings. The court rejects this overarching, general challenge, but agrees with Fenkell that any fees associated with the parties' coordination on these motions (see, e.g., dkt. #1034-1 at p.2 (12/4/14 Jackson entry describing "Conference with Joe Barton regarding Fenkell court filing, motion to compel discovery, strategy")) should not be awarded in light of the fact that the parties chose to file separate, overlapping motions and to incur fees associated with activities that could have been avoided. Similarly, the court will exclude from the fee petition those activities that would have been incurred anyway for reasons independent of the motion to compel (see, e.g., dkt. #1033-1 (12/9/14 Erlandson entry describing "Review Spear discovery order from Pennsylvania action")). Accordingly, the court has deducted fees associated with a number of time entries or portions of entries from each parties' requested fees as duplicative.

Fenkell also challenges the parties' inclusion of time and fees incurred in preparing their fee petitions. In support, Fenkell cites to a single district court case. Lorillard Tobacco Co. v. Elston Self Serv. Wholesale Groceries, Inc., 259 F.R.D. 323, 329 (N.D. Ill. 2009).2 In Lorillard, the court did not consider whether fees associated with preparing a fee petition are allowed under Rule 37(a)(5(A). Id. Instead, the court considered whether the parties' preparation of an "Agreed Order" fell within the scope of the "effort expended in bringing the motion itself." Instead, as Alliance points out, "attorney's fees incurred in litigating and establishing an attorney's entitlement to fees are generally compensable." Holmstrom v. Metro. Life Ins., Co., No. 07-CV-6044, 2011 WL 2149353, at *8 (N.D. Ill. May 31, 2011) (citing Bond v. Stanton, 630 F.2d 1231, 1235 (7th Cir. 1980)). While the court will award the parties' fees associated with preparing the fee petition, the court finds the time Alliance spent on preparing the fee petition — 33 hours — to be excessive. Accordingly, the court will significantly reduce the amount associated with those efforts by 75%.

Finally, Fenkell notes that plaintiffs' counsel fails to provide any support for the reasonableness of their hourly rates. (Fenkell's Resp. (dkt. #1037) 10.) Such a showing was not necessary in light of plaintiffs' counsel's prior submissions and the court's finding that plaintiffs' counsel's "hourly rates are on par with the market rates charged by other plaintiffs' firms handling ERISA breach of fiduciary duty cases, recognizing ERISA cases involve a national rate standard." (9/5/14 Op. & Order (dkt. #985) 13 (citing Pls.' Br. (dkt. #928) 36-27).) This argument might have gained more traction had Fenkell's counsel disclosed its time and fees in opposing the motion to compel. Instead, the decision not to do so is telling.

ORDER

IT IS ORDERED that:

In yet another post-judgment discovery dispute, plaintiffs Alliance Holdings, Inc. and the Alliance Holdings, Inc. Employee Stock Option — all judgment creditors of defendant David B. Fenkell — move to compel David Fenkell's deposition, specifically requiring him to fully answer questions concerning communications with his wife, Karen Fenkell, about the transferring and titling of assets. (Dkt. #1050.) While the court has to date ordered Fenkell to respond to discovery requests and sit for a deposition, as well as denied his efforts to quash the judgment creditors' discovery requests, this motion goes too far by seeking information before Fenkell has put it in issue. Accordingly, the court will deny this motion, though the court will require Fenkell to disclose the time and place of the communications at issue (to the extent that he recalls) and state whether any other individuals were involved in the discussions.

As required by this court, David Fenkell sat for a deposition during which he refused at times, on privilege grounds at the instruction of his counsel, to answer questions about communications he had with his wife concerning the couple's assets. The judgment creditors ask the court to overrule these objections, offering three core bases for doing so, all of which the court rejects.

First, the judgment creditors contend that "[t]he marital privilege does not extend to a judgment debtors' efforts to frustrate judgment creditors." (Judgment Creditors' Br. (dkt. #1051) 13.) While the court agrees with defendants that discovery into the Fenkells' marital assets and Karen Fenkell's own assets is permissible — and has supported their efforts to date to secure that discovery — the request here goes beyond reasonable limitations. As evidenced by the judgment creditors' submission, Fenkell has disclosed significant information about the location of his and his wife's assets, both held jointly and separately, and has provided a reason for the decision to place a significant portion of the marital assets in his wife's name. The judgment creditors have also discovered powers of attorney documents granting David Fenkell significant control over those assets titled in his wife's name. While the judgment creditors focus on what they do not know — the specific details of Fenkell's communications with his wife about transferring of assets — the record reflects that Fenkell has invoked the privilege in a limited and appropriate (at least for now) manner.

Second, the judgment creditors contend that Fenkell has waived the privilege by failing to provide information sufficient to permit the judgment creditors to assess his privilege claim. Federal Rule of Civil Procedure 26(b)(5)(A) requires the party invoking privilege to

Here, Fenkell acknowledged having communications with his wife about his decision to title marital assets in her name only, but then asserted that the communications were privileged. It is difficult to understand what else the judgment creditors would need to assess the claim. Nonetheless, the court will order Fenkell to provide the time and place of those discussions, to the extent that he can recall, and disclose whether any other individuals were involved in or made aware of those discussions.

Third, the judgment creditors contend that Fenkell has also waived the privilege by making affirmative claims concerning his reasons for titling assets in his wife's name. At some point, this argument may have merit, but it remains premature. David Fenkell has simply invoked the privilege to protect communications he had with his wife about the titling and transfer of his assets. If the judgment creditors seek to execute assets titled in Karen Fenkell's name to satisfy the judgment on the basis that those assets consist of marital property and David Fenkell controls those assets, and Fenkell then invokes a defense that rests at least in part on privileged communications with his wife, then the appropriate court may wish to reconsider the validity of Fenkell's privilege claim.

Accordingly, IT IS ORDERED that plaintiffs, Alliance Holdings, Inc. and the Alliance Holdings, Inc. Employee Stock Option's motion to compel (dkt. #1050) is DENIED, except that David Fenkell is required on or before September 10, 2015 to disclose the time and place of the communications at issue (to the extent that he recalls) and state whether any other individuals were involved in or may be aware of any of those discussions.

In an unusual motion in a case that continues to have unusual twists and turns, defendant Alliance Holdings, Inc., and nominal defendant Alliance Holdings, Inc. Employee Stock Option Plan ("Alliance ESOP" and collectively "Alliance defendants") now purport to have a right to a post-judgment, temporary restraining order against defendant David Fenkell. More specifically, the Alliance defendants now request: (1) an order requiring Fenkell to restore $2.044 million to Alliance ESOP within seven days or hold him in civil contempt; (2) an order freezing Fenkell's assets and establishing a constructive trust to cover the $3.25 million indemnity requirement in the judgment, pending disposition of the Seventh Circuit appeal from this court's final judgment; and (3) an order requiring Fenkell to pay all of their attorneys' fees and costs attendant to obtaining enforcement of the judgment. (Alliance Br. (dkt. #1066:41.)

BACKGROUND

On September 8, 2014, the court issued a final judgment providing, in pertinent part, that:

(9/8/14 Judgment (dkt. #986); 10/17/14 Am. Judgment (dkt. #999) (amending attorney's fees part of judgment; not pertinent to present motion).)1 On November 17, 2014, the court granted the Alliance defendants and plaintiffs' unopposed motion to permit registration in other districts of the judgment for enforcement against Fenkell pursuant to 28 U.S.C. § 1963. (Dkt. #1017.) Significant, post-judgment discovery has occurred since that date.

On August 14, 2015, the Alliance defendants brought the present motion for an ex parte temporary restraining order. (Dkt. #1066.) In the motion and in supporting materials, the Alliance defendants present evidence that generally demonstrates: (1) since at least 2007 (and perhaps much earlier), David Fenkell has transferred significant amounts of money from accounts held in his name or held jointly with his wife to accounts held solely in his wife's name; (2) his wife, Karen Fenkell, relies on David Fenkell to manage the money in the accounts held solely in her name, is generally unaware of the amount of money in those accounts, and the placement of those assets; and (3) power of attorney documents give David Fenkell broad control over assets in her accounts and he exercises that control regularly.

The court effectively denied ex parte relief by affording Fenkell an opportunity to be heard on the motion. On August 24, 2015, Fenkell submitted an opposition brief and a declaration. (Dkt. ##1081, 1082.) In his response, Fenkell pokes holes in some of the Alliance defendant's proposed facts (or inferences to be drawn from those facts) — e.g., the amount of control he can exercise over Mrs. Fenkell's Barclays account, or whether the arrangement he and his wife have is unusual — but for the most part the record appears undisputed.

OPINION

Before addressing the merits of the motion, the court must first address Fenkell's numerous challenges to the Alliance defendants' standing and other jurisdictional concerns. First, Fenkell argues that Alliance Holdings lacks standing because it was dismissed with prejudice as a result of its settlement agreement with plaintiffs. While all claims against Alliance Holdings were dismissed, this motion in effect seeks execution of a judgment entered by the court, and the court retains jurisdiction over that request. See India Breweries, Inc. v. Miller Brewing Co., 612 F.3d 651, 657 (7th Cir. 2010) ("An order is final for purposes of § 1291 if it ends the litigation on the merits and leaves nothing for the [district] court to do but execute the judgment." (internal quotation marks and citation omitted)). Second, Fenkell contends that the court lacks jurisdiction over Alliance ESOP because it was never a party. To the contrary, the Alliance ESOP was a nominal defendant, and, as importantly, the court ordered Fenkell to restore money to the Alliance ESOP as part of its remedies order as set forth in the final judgment. Third, Fenkell challenges this court's jurisdiction over Karen Fenkell, but the court need not revisit this issue since the court is not being asked to exercise jurisdiction over Mrs. Fenkell, at least for now. Indeed, Karen Fenkell was not found liable and the judgment is not directed against her. Accordingly, the court is satisfied that the Alliance defendants' motion — at least as framed by the court — is properly before it.2

What is substantially less clear, and oddly ignored by both sides, is whether the Alliance defendants have invoked the proper vehicle for the relief sought. Ignoring the titling of their motion, the Alliance defendants are effectively seeking to execute on a judgment by means of (1) an order requiring Fenkell to pay $2.044 million or be held in civil contempt; and (2) the temporary freezing of assets and establishment of a constructive trust sufficient to cover the order requiring Fenkell to indemnify the Trachte trustee defendants up to $3.25 million. Despite the nature of the relief sought, the Alliance defendants do not invoke Federal Rule of Civil Procedure 69. In fact, they don't even cite to that provision. At least as a starting point, the court will.

Rule 69 provides in part that "[a] money judgment is enforced by execution, unless the court directs otherwise." Fed. R. Civ. P. 69(a)(1). Rule 69 further provides that "[t]he procedure on execution — and in proceedings supplementary to and in aid of judgment or execution — must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies." Id.; see also Dexia Crédit Local v. Rogan, 629 F.3d 612, 626-28 (7th Cir. 2010) (requiring district courts to apply procedures of state in which they sit even if assets are located in another state). Moreover, while this case concerns ERISA, the court is still directed to look to state law, for this court, Wisconsin, for procedures on how to execute on a judgment. See Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 834-35 (1988) (holding that state methods for collecting money judgments against employee welfare benefit plans govern since ERISA provides no mechanism for that purpose).3

Despite having received permission to register the judgment in other jurisdictions, however, the Alliance defendants still have not sought a writ of execution in this court or, as far as the court can tell, any other court. Interestingly, once the judgment has been registered in a district court in another state, then the law of the state where the judgment was registered applies. See Pac. Reinsurance Mgmt. Corp. v. Fabe, 929 F.2d 1215, 1219 (7th Cir. 1991) (looking to Illinois law to enforce Central District of California judgment registered in Northern District of Illinois court).

As for the Alliance defendants' request for a contempt order, there is some precedent for enforcing an order compelling delivery of assets through a contempt order. In Laborers' Pension Fund v. Dirty Work Unlimited, Inc., 919 F.2d 1215 (7th Cir. 1990), the Seventh Circuit rejected the debtor's argument that "the court should not have used contempt to enforce its order. Id. at 1219. At the same time, however, the Seventh Circuit held "that, according to Rule 69(a) of the Federal Rules of Civil Procedure, a writ of execution would have been the proper means of enforcement." Id. In so holding, as required by Rule 69(a), the court also looked to Illinois law for support of using contempt as a means of enforcement of a court order compelling the delivery of assets. Here, the Alliance defendants do not direct the court to any provisions of Wisconsin law that authorizes the use of a contempt order to enforce its judgment. Moreover, Wisconsin Statute § 815.02 states that:

Still, plaintiffs' claims against Fenkell and the other defendants are equitable claims under 29 U.S.C. §§ 404, 406, and the remedies afforded the plaintiffs similarly are equitable in nature. (See 7/24/12 Op. & Order (dkt. #733 (finding Fenkell violated 29 U.S.C. §§ 404(a), 406(b)); 6/4/13 Op. & Order (dkt. #790 (granting equitable relief to plaintiffs against Fenkell under 29 U.S.C. § 1109(a)).) Accordingly, the court's order that Fenkell "is liable to restore to the Alliance ESOP $2,044,014.12" and that he "shall indemnify" the trustee defendants arguably require Fenkell to perform specific "acts." As such, Wisconsin law may provide a mechanism for the court to enforce the judgment by means of a contempt order.4

In the alternative, Federal Rule of Civil Procedure separately provides that if a judgment "requires a party . . . to perform any other specific act and the party fails to comply within the time specified, the court may order the act to be done" and hold the "disobedient party in contempt" for failing to do so.

Much of Fenkell's opposition concerns whether the Alliance defendants have a right to satisfy the judgment from assets held solely in Mrs. Fenkell's name, including an extensive overview of Pennsylvania marital asset law. Without diving into the specifics of this argument, Fenkell's position appears to be that all marital assets are "entireties property" under Pennsylvania law, and entireties property cannot be used to execute on a judgment against only one of the spouses. (Fenkell's Opp'n (dkt. #1081) 42-43.) If this description of the law is accurate, the court is hard-pressed to see how a judgment creditor could collect on any monetary judgment against any married individual in Pennsylvania. Regardless, the court need not delve into this dispute since the Alliance defendants represent that Fenkell has sufficient assets in his own name to satisfy the judgment order requiring him to restore over $2 million to the Alliance ESOP. (Alliance Defs.' Br. (dkt. #1066) 31.) Moreover, Fenkell has had more than ample time to restore the $2.044 million to the Alliance ESOP as ordered in this court's final judgment. Nevertheless, the court will give Fenkell one more week to comply with its judgment. Barring that the court will hold a hearing on September 10, 2015, at 10:00 a.m., at which time Mr. Fenkell shall appear in person and show cause why he should not be held in civil contempt.

As for the second request — that the court freeze Fenkell and his wife's assets and establish a constructive trust for the purposes of satisfying the judgment order requiring Fenkell to indemnify the Trachte trustees — the Alliance defendants' motion falls short of demonstrating that they have standing to pursue this request at this time. Indeed, in their own motion, the Alliance defendants state that the duty to indemnify a portion of the judgment is "now possessed by plaintiffs," and will pass to Alliance "in the event the Seventh Circuit affirms this Court's approval of the settlement agreement in this case." (Alliance Defs.' Br. (dkt. #1066) 8, n.1.) While the Alliance defendants direct the court to authority for such an order, see Resolution Trust Corp. v. Ruggerio, 994 F.2d 1221, (7th Cir. 1993) (affirming district court's order granting judgment creditors' petition to impose trust on assets held nominally in the debtor's wife's name), given the conditional character of this portion of the judgment (by the Alliance defendants' own characterization), the court doubts that it has the authority to issue the order sought, at least at this time. Absent either authority more clearly on point with the circumstances at stake here or clarity as to the status of this portion of the judgment, the court will deny this portion of the motion at this time. Given the amount at stake here, and pending the submission of legal authority on this point or clarity as to the status of the Alliance defendants' current right to indemnity, the court will deny further relief as to this portion of the motion.

ORDER

IT IS ORDERED that in response to Alliance Holdings, Inc., and Alliance Holdings, Inc., Employee Stock Option Plan's motion for a temporary restraining order that on or before September 4, 2015, defendant Fenkell is ordered to RESTORE to the Alliance ESOP $2,044,014.42. Barring that, the court will hold a hearing on September 10, 2015, at 10:00 a.m., at which David Fenkell is ordered to appear in person to show cause why he should not be held in civil contempt of this court's final judgment. In all other respects, the motion is DENIED without prejudice.

On September 10, 2015, the court held a hearing to determine whether it should hold defendant David Fenkell in contempt for his failure to comply with an order requiring him to restore the sum of $2,044,014.42 to the Alliance ESOP, an amount representing the remaining shortfall to certain of its beneficiaries as the result of fiduciary breaches principally orchestrated and perpetuated by defendant David Fenkell. Fenkell appeared in person and by his counsel. For the reasons described during the hearing and set forth below, the court will hold Fenkell in civil contempt. If Fenkell fails to restore the required funds or post an appropriate bond on or before December 9, 2015, or fails to post bond to assure its payment pending appeal, he shall pay a fine to the clerk of court for the Western District of Wisconsin of $500 per day and doubling every seven days thereafter until he is in full compliance. Should the aggregate of those fines exceed $1 million, the court will further order Fenkell to appear to show cause why he should not be held in custody until in full compliance with this order.

BACKGROUND

On September 8, 2014, the court issued a final, amended judgment providing, in pertinent part that: "David Fenkell is liable to restore to the Alliance ESOP $2,044,014.42. (9/8/14 Judgment (dkt. #986); 10/17/14 Am. Judgment (dkt. #999); 9/5/14 Op. & Order (dkt. #985) 21-23 (reducing amount required of defendant Fenkell to restore money wrongfully taken from the ESOP after payment of $7,744,000 made by other defendants found to be jointly and severally liable and amending attorney's fees award).) After almost a full year had passed with no apparent effort by Fenkell to comply, the court ordered Fenkell on August 28, 2015, to restore these funds on or before September 4, 2015, or appear in person to show cause why he should not be held in civil contempt of this court's judgment. (Dkt. #1087 at 9-10.) Still refusing to restore these funds, counsel for Fenkell instead filed a motion for reconsideration and a response to the court's August 28 order, making several arguments in opposition to the court's order and in anticipation of the contempt hearing. (Dkt. #1090.) In response to the Alliance defendants' opposition to Fenkell's motion for reconsideration (dkt. #1097), Fenkell requested leave to file a reply at the September 10 hearing, which the court granted. Fenkell subsequently filed a reply (dkt. #1107), which the court has also considered.

OPINION

The court will address defendant Fenkell's various arguments as follows: (1) jurisdictional issues; (2) the court's contempt power; (3) the relevance of claimed state exemptions from execution of certain assets; and (4) Fenkell's ability to pay.

I. Jurisdictional Challenge

Fenkell's most novel argument is that by setting a final date for Fenkell to comply with the court's equitable judgment (or risk contempt), this court effectively amended its final judgment, something beyond its jurisdiction to do while an appeal is pending in the Seventh Circuit. In setting a date for compliance with certain provisions of the judgment, however, the court is not amending the judgment. The original judgment was entered more than a year ago; the amended judgment, which contains largely immaterial changes to the issues presented here, was entered shortly thereafter, on October 31, 2014, now more than a year ago as well. As a result, Fenkell has had over a year to comply with the requirement that he restore losses to Alliance ESOP and has wholly failed to do so. Absent a stay, "all orders and judgments of courts must be complied with promptly." Maness v. Meyers, 419 U.S. 449, 458 (1975). By setting a deadline for compliance, in response to specific requests of the Alliance defendants and now plaintiffs, the court is simply acting to enforce its judgment, not amending it.

While Fenkell also appears to argue more generally that this is a "closed case," and therefore this court lacks jurisdiction to enforce its judgment, the law is to the contrary. See, e.g., HSBC Bank USA, N.A. v. Townsend, 793 F.3d 771, 787 (7th Cir. 2015) ("A court in a civil case routinely retains jurisdiction to enforce its judgment[.]"); see also Analytical Eng'g, Inc. v. Baldwin Filters, Inc., 425 F.3d 443, 451 (7th Cir. 2005) ("Under Rule 70, therefore, a district court may direct a party to complete a specific act where the district court previously directed the same party to perform the same act in its final judgment and that party has failed to comply."). If this were not so, there would be no point to seeking a stay of enforcement pending appeal or seeking a bond be posted in lieu of enforcement as contemplated by Federal Rule of Civil Procedure 62, both steps defendant Fenkell has assiduously avoided in favor of a strategy of asset preservation techniques to keep his and his wife's judgment creditors at bay.

II. Court's Contempt Power

Fenkell also argues that the court lacks authority to hold Fenkell in contempt, reasoning that the only enforcement tool available to his judgement creditors is to execute on his non-exempt assets, something he explains are now non-existent by virtue of legitimate asset transfers consistent with property and bankruptcy laws. In support of this argument, Fenkell relies on the fact that the relevant provision of the judgment only requires that he "restore" money to the Alliance ESOP, which he likens to a judgment under Wisconsin law that "requires the payment of money," as opposed to a judgment that "requires the performance of any other act." (Fenkell's Opp'n (dkt. #1095) 33 (quoting Wis. Stat. § 815.02).)

The court already addressed this statutory language once in its August 28 opinion and order, concluding that the relevant remedy of restoration afforded to plaintiffs in the judgment was equitable in nature, rather than merely a money judgment. (8/28/15 Op. & Order (dkt. #1087) 7.) The United States Supreme Court's decision in CIGNA Corporation v. Amara, 563 U.S. 421, 131 S.Ct. 1866 (2011), provides additional support for this conclusion. In CIGNA, the Court held that certain remedies properly fell under the "other appropriate equitable relief" contemplated by ERISA § 502(a)(3), including an injunction "requir[ing] the plan administrator to pay to already retired beneficiaries money owed them under the plan as reformed." Id. at 1880. In other words, the mere fact that a judgment required payment of money does not mean that the relief provided is a legal, as opposed to an equitable remedy.

Here, rather than order the payment of money damages, the court deliberately ordered defendant Fenkell to "restore" certain money wrongfully taken from the Alliance ESOP, equitable relief intended to make the fund whole, without regard to Fenkell's possible monetary liability to other defendants who had stepped forward to restore other sums under their joint and several liability with Fenkell. As the court explained in its August 28 opinion, Federal Rule of Civil Procedure 70 sets forth provisions for enforcing a judgment, and in particular supports this court's authority to find Fenkell in contempt for his failure to restore the funds to the Alliance ESOP. See Fed. R. Civ. P. 70(e) ("The court may also hold the disobedient party in contempt."); Stotler & Co. v. Able, 870 F.2d 1158, 1164 (7th Cir. 1989) ("Rule 70 permits a court to find a party in contempt if he fails to honor a court's order.").1

Indeed, there is significant support for use of the court's contempt power to enforce an equitable remedy that requires the payment of money, including in ERISA cases. See Cent. States, Se. & Sw. Areas Pension Fund v. Wintz Properties, Inc., 155 F.3d 868, 876 (7th Cir. 1998) (affirming contempt order against president of company in an ERISA action based on company's failure to comply with preliminary order requiring payment to multiemployer pension fund); Donovan v. Mazzola, 716 F.2d 1226, 1239 & n.9 (9th Cir. 1983), cert. denied, 464 U.S. 1040 (1984) (contempt appropriate in enforcing order to post a bond under ERISA; "Even if the bond requirement was deemed to be an order to pay money just as an equitable decree of restitution ordering the payment of money may be enforced through a contempt action so may an order requiring a party to post a bond." (internal citations omitted)); Usery v. Fisher, 565 F.2d 137, 139 (10th Cir. 1977) (approving district court's use of contempt to enforce order requiring payment of unpaid wages in an FLSA suit, in part, because the consent order was "not a money judgment" and was equitable in nature); Hodgson v. Hotard, 436 F.2d 1110, 1113-14 (5th Cir. 1971) (reversing district court's refusal to find defendant in contempt in FLSA action to enforce order requiring payment of wages, finding that district court's decision rested on an erroneous belief that the judgment entered was a money judgment); Securities & Exchange Comm'n v. Solow, 682 F.Supp.2d 1312, 1325-26 (S.D. Fla. 2010) (using equitable powers to hold defendant in contempt for failing to pay money as required by a disgorgement order).

III. Inability to Comply

Before finding Fenkell in contempt, the Plan must also establish by clear and convincing evidence that (1) the judgment "set forth an unambiguous command"; (2) Fenkell "violated that command"; (3) "the violation was significant, meaning that [Fenkell] did not substantially comply with the order"; and (4) Fenkell "failed to make a reasonable and diligent effort to comply." Ohr ex rel. Nat'l Labor Relations Bd. v. Latino Exp., Inc., 776 F.3d 469, 475 (7th Cir. 2015). For reasons already discussed, the first three elements are unquestionably satisfied. The only element in dispute, therefore, is whether Fenkell cannot comply with the court's order due to an inability to pay the amount due. See Lightspeed Media Corp. v. Smith, 761 F.3d 699, 712 (7th Cir. 2014) ("Inability to pay is indeed a valid defense in contempt proceedings[.]") (citing In re Resource Tech. Corp., 624 F.3d 376, 387 (7th Cir. 2010)). Indeed, it is on this element that Fenkell mainly makes his stand. (Fenkell's Resp. (dkt. #1095) 13-14.)

As to this element, Fenkell bears the burden of proof. See In re Resource Tech., 624 F.3d at 387. Moreover, "[w]here there has been no effort at even partial compliance with the court's order," as it true here, "the inability-to-pay defense requires a showing of a complete inability to pay." Lightspeed Media Corp., 761 F.3d at 712 (citing In re Resource Tech., 624 F.3d at 387) (quotation marks omitted) (emphasis added).

Given that the evidence shows Fenkell was actually taking affirmative steps to put his assets (at least technically) outside the reach of the Plan and other creditors, it is hardly surprising that Fenkell largely ignores his obligation to show "reasonable and diligent efforts" to restore funds to the Plan. Instead, Fenkell argues that "[t]here has been no showing — and there will not be any showing — that Mr. Fenkell's failure to pay is willful, contemptuous, and not as a result of his inability to pay pursuant to the August 28th Order with non-exempt assets." (Id. at 14 (emphasis added); see also 9/10/15 Hr'g Tr. (dkt. #1104) 33.)

Fenkell asserts several arguments in support of his claim that all of his assets (save vehicles which are already subject to a writ of execution by plaintiffs) are exempt or otherwise outside of the reach of this court or the judgment creditors. After hearing Fenkell's testimony, the court has no basis to doubt that Fenkell's belief that assets titled in his name are non-exempt and assets titled in his wife's name or assets held in tenancy in the entireties are not subject to this court's order, even though it is also clear from his testimony that he could use his own assets, and indeed virtually all of the assets now titled solely in his wife's name remain in his control.2

Fenkell nevertheless believes that having structured his finances in such a way to avoid execution on those assets, he has no obligation to take affirmative steps to restore funds he wrongfully appropriated from the Plan that would have otherwise benefitted Alliance retirees and others due to retire. The sincerity of his belief does not, however, save a meritless legal position. See McComb v. Jacksonville Paper Co., 336 U.S. 187, 190 (1949) ("Civil as distinguished from criminal contempt is a sanction to enforce compliance with an order of the court or to compensate for losses or damages sustained by reason of noncompliance. Since the purpose is remedial, it matters not with what intent the defendant did the prohibited act. An act does not cease to be a violation of a law and of a decree merely because it may have been done innocently.").

All of this is to say that Fenkell's repeated position that he cannot comply with the court's order because he lacks non-exempt assets or assets not held in tenancy in the entireties under Pennsylvania law with his wife rests on a non sequiter. The court is not being asked to execute on exempt assets, nor for that matter, on any assets at all. Rather, the court is being asked to hold Fenkell in contempt for not acting where he has the ability to do so. Noticeably absent from the legal authority cited by Fenkell's counsel is any case holding that a court's equitable powers to require a party to perform an act (albeit one involving payment of funds) are limited to executing on non-exempt assets for purposes of execution on a monetary judgment. See, e.g., Usery, 565 F.2d at 139 (discussing options available in executing on a money judgment as compared to enforcing an equitable remedy).

Regardless, the court is not ordering Fenkell to liquidate a specific asset to comply with its order that he restore funds to the Alliance ESOP. Even if certain assets are exempt or otherwise unavailable were the Plan seeking to execute on a judgment, these arguments are of no consequence. As such, the court need not consider: whether the retirement account funds held in Fenkell's name are exempt under either Wisconsin and/or Pennsylvania law; whether ERISA's anti-alienation provision is in play; whether the court has jurisdiction over Karen Fenkell or assets titled solely in her name; or whether any assets held in tenancy by the entireties are also exempt from execution. The court need only determine that Fenkell has the ability to comply. Fenkell has wholly failed to meet his burden to show an inability to comply. Indeed, he has not even undertaken to make such a showing, given his position that he need not do so.

Relying on evidence established at trial, as well as the Alliance defendants' brief in support of a motion for temporary restraining order and in supporting materials, and based on Fenkell's own testimony both at trial and post-trial proceedings, the court finds by clear and convincing evidence that: (1) David Fenkell has been the sole source of income (except for a relatively small inheritance from Karen Fenkell's father) for his family since 1988 (Alliance Defs.' Mot. for TRO (dkt. #1066) 14); (2) from 2001 through 2011, Fenkell was paid over $27 million from Alliance Holdings and also made more than $4 million from DBF Consulting, LLC (id. at 14); (3) together the Fenkells have approximately $13 million in various accounts, though the vast majority of that money is now held in accounts titled solely in Karen Fenkell's name (id. at 14-15, 18-20); (3) David Fenkell exercises significant control over Karen Fenkell's accounts, including regularly authorizing wire transfers from these accounts (id. at 26-27);3 and (4) David Fenkell has retirement accounts titled in his own name (id. at 15).

At the hearing, Fenkell's testimony and certain financial evidence further support the court's finding that Fenkell has sufficient assets under his control to either restore $2,044,014.42 to the Alliance ESOP or to post a bond in that amount.4 Specifically, the evidence demonstrates that: (1) there are approximately $10 million in funds held in Barclays accounts in his wife's name or held in tenancy in the entireties with his wife (Exs. 2-4, 6 (dkt. ##1103-2, 1103-3, 1103-4, 1103-6)); (2) David Fenkell has checkwriting authority over those funds (dkt. ##1073-1 at p.2, 1073-10); and (3) Fenkell has retirement account funds in his own name exceeding $1,700,000 (Exs. 5, 7, 8 (valuing Spencer Phantom Stock at $600,000) (dkt. ##1103-5, 1103-7, 1103-8)). From all of this evidence, the court concludes that there are many sources of funds and avenues of compliance available to Fenkell. In no particular order, he may:

How he wishes to comply is a decision that remains in David Fenkell's hands. As such, he holds the proverbial keys to an ultimate jail cell. See In re Grand Jury Proceedings, 280 F.3d 1103, 1107 (7th Cir. 2002) ("If the contemnor retains the ability to purge the contempt and obtain his release by committing an affirmative act—and thereby `carries the keys of his prison in his own pocket,' Gompers v. Buck's Stove & Range Co., 221 U.S. 418, 442 (1911) — the order is coercive, and therefore civil.").

ORDER

IT IS ORDERED that:

AGREED CONSENT ORDER REGARDING DAVID B. FENKELL'S EMERGENCY MOTION TO STAY AND TO RECONSIDER AMOUNT OF SUPERSEDEAS BOND

Upon consideration of defendant David B. Fenkell's ("Mr. Fenkell's") Emergency Motion to Stay and Reconsider Amount of Supersedeas Bond and Reply In Support (Dkt. Nos. 1122, 1123 & 1126), the judgment creditors' joint Opposition and Sur-reply (Dkt. Nos. 1125 & 1129-1), the discussion of the parties with the Court during the status conference held on December 4, 2015, on December 7, 2015, and again on December 8, 2015, and the parties' agreement to the entry of an Agreed Consent Order containing the terms and agreements recited below, the Court hereby orders as follows:

1. On September 8, 2014, the Court entered final judgment "in favor of plaintiffs against defendant David Fenkell on the unsettled claims as follows: a. David Fenkell is liable to restore to the Alliance ESOP $2,044,014.42; b. David Fenkell shall indemnify defendants Mastrangelo, Seefeldt and Klute for any compensatory relief they are required to pay; c. David Fenkell shall be barred from continuing as trustee of the Alliance ESOP; and d. David Fenkell is liable to plaintiffs for attorney's fees and costs in the total amount of $1,854,008.50." Dkt. No. 986. On October 16, 2014, the Court issued its Amended Final Judgment, clarifying that Mr. Fenkell is "liable to plaintiffs for attorney's fees on all claims not part of the settlement agreement in the amount of $1,854,008.50." Dkt. No. 999, at 2. All other orders in the September 8, 2014, Judgment (Dkt. No. 986) remained the same and were not changed by the Court's Amended Final Judgment (Dkt. No. 999).

2. While Mr. Fenkell has appealed the Amended Final Judgment and other orders (e.g., Dkt. No. 988 & 1005), to date he has not posted a supersedeas bond pending appeal. See Fed. R. Civ. P. 62(d). On November 18, 2015, the Court held Mr. Fenkell in contempt for failure to pay the Amended Final Judgment ordering Mr. Fenkell "to restore $2,044,014.42 to the Alliance ESOP or provide a bond assuring the payment of this sum pending appeal" or to post a supersedeas bond assuring the ordered restoration. Dkt. No. 1121. The Court ordered penalties that would apply in the event of Mr. Fenkell's failure to comply with the November 18, 2015, opinion and order by December 9, 2015. Id. The Court also stated that if Mr. Fenkell pledged his unencumbered interest in his Alliance ESOP account in a way that is "legally binding," Mr. Fenkell could reduce the amount of the bond by the value of his Alliance ESOP account. Id.

3. Mr. FenkeWs Emergency Motion (Dkt. No. 1123 at p. 21) recites that he desires to pledge his interest in his Alliance ESOP account so as to reduce the amount of a supersedeas bond that he would otherwise be required to post to comply with the Court's November 18, 2015, Opinion and Order. Mr. Fenkell represents that these assets are unencumbered. Mr. Fenkell agrees to execute the attached "Collateral Pledge of Assets" which is incorporated into this Order. Mr. Fenkell represents that he will never pursue or authorize any claim that this Collateral Pledge of Assets has deprived him of the rights provided to a participant under the Alliance Holdings, Inc. Employee Stock Ownership Plan and Trust, or is not permitted under the Alliance Holdings, Inc. Employee Stock Ownership Plan and Trust or any state or federal law. Mr. Fenkell intends to waive all claims related to this Collateral Pledge of Assets, and agrees that the judgment creditors have no responsibility or liability for Mr. Fenkell's pledge. The Court orders that Mr. Fenkell's Alliance ESOP account pledge is effective notwithstanding any provision in the Alliance Holdings, Inc. Employee Stock Ownership Plan and Trust or state or federal law to the contrary.

4. The Court further accepts the judgment creditors' offer to allow Mr. Fenkell to reduce the amount of the supersedeas bond by pledging all of his rights to receive phantom stock payments under The Spencer Turbine Company Phantom Stock Agreement and The Spencer Turbine Company Phantom Stock Plan ("Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights") to Alliance. Mr. Fenk.ell represents that Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights are unencumbered. Mr. Fenkell also agrees to execute the attached Collateral Pledge of Assets (including Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights), which is incorporated into this Order. Mr. Fenkell represents that he will never pursue or authorize any claim that this Collateral Pledge of Assets has deprived him of the rights provided to a participant under the Spencer Turbine Company Phantom Stock Agreement signed by Mr. Fenkell and/or The Spencer Turbine Company Phantom Stock Plan, or is not permitted under the Spencer Turbine Company Phantom Stock Agreement signed by Mr. Fenkell and/or The Spencer Turbine Company Phantom Stock Plan or any state or federal law. Mr. Fenkell intends to waive all claims related to this Collateral Pledge of Assets, and agrees that the judgment creditors, The Spencer Turbine Company and The Spencer Turbine Company Phantom Stock Plan have no responsibility or liability for Mr. Fenkell's pledge. The Court orders that Mr. Fenkell's pledge of Mr. Fenkell's Spencer Turbine Phantom Stock Rights is effective notwithstanding any provision in The Spencer Turbine Company Phantom Stock Agreement signed by Mr. Fenk.ell or The Spencer Turbine Company Phantom Stock Plan or state or federal law to the contrary.

5. The terms of the Collateral Pledge of Assets, which are incorporated into this Order, shall apply following the outcome of Mr. Fenkell's appeal to the U.S. Court of Appeals for the Seventh Circuit.

6. Should the U.S. Court of Appeals for the Seventh Circuit issue an opinion affirming this Court's judgment requiring Mr. Fenk.ell to restore $2,044,014.42 to the Alliance ESOP, or a lesser amount, Mr. Fenk.ell agrees, and this Court orders, that the supersedeas bond shall be immediately payable to the Alliance ESOP, Mr. Fenk.ell's Alliance ESOP Account shall be forfeited to the Alliance ESOP, and Mr. Fenk.ell will forfeit all rights to Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights and Alliance will pay $600,000 to the Alliance ESOP; provided, however, that for seven (7) calendar days after the issuance of the Seventh Circuit's opinion, Mr. Fenk.ell shall have the option of paying the differential between the supersedeas bond and the $2,044,014.42 restoration ordered by the Court in cash rather than with his pledged Alliance ESOP account assets and Mr. Fenk.ell's Spencer Turbine Company Phantom Stock Rights.

7. The Court also orders that Mr. Fenkell will be responsible for all tax consequences or liabilities related to Mr. Fenk.ell's Alliance ESOP account pledge and the pledge of Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights, and that he will be held immediately responsible for any shortfall that results. The Court also orders that neither Alliance, the Alliance ESOP, nor The Spencer Turbine Company and The Spencer Turbine Company Phantom Stock Plan shall be charged or assessed any responsibility for any tax consequences or liabilities that Mr. Fenk.ell might incur.

8. In consideration of the foregoing, the amount of the supersedeas bond to be posted shall be $995,345.78 ($2,044,014.42 less $448,668.64 less $600,000).

9. This Court retains jurisdiction to resolve any dispute related to this order except as otherwise ordered by the U.S. Court of Appeals for the Seventh Circuit.

10. Accordingly, to enforce the Court's judgment and amendedjudgments (Dkt. Nos. 986 & 999), it is hereby ORDERED AND ADJUDGED AS FOLLOWS:

Attachment to Agreed Order

COLLATERAL PLEDGE OF ASSETS

COLLATERAL PLEDGE OF ASSETS, dated as of December 9, 2015 (the "Collateral Pledge") by David B. Fenkell ("Mr. Fenkell", or the "Pledgor") in favor of Alliance Holdings, Inc. ("Alliance") and the Alliance Holdings, Inc. Employee Stock Ownership Plan and Trust ("Alliance ESOP"), pursuant to the Order entered by The Honorable Judge William M. Conley, United States District Court for the Western District of Wisconsin (the "Court") on December 9, 2015 regarding obligations of Pledgor to Alliance ESOP (the "Court Order").

WHEREAS, on September 8, 2014, the Court entered a final judgment ordering Mr. Fenkell, among other things, to restore $2,044,014.42 to the Alliance ESOP, and on October 16, 2014, entered an Amended Final Judgment ordering, among other things, Mr. Fenkell to restore $2,044,014.42 to the Alliance ESOP (the "Obligation");

WHEREAS, on November 18, 2015, the Court held Mr. Fenkell in contempt for failure to pay the Amended Final Judgment and ordered him to restore $2,044,014.42 to the Alliance ESOP or to post a supersedeas bond assuring the ordered restoration and payment of this sum pending appeal to the Alliance ESOP. Dkt. No. 1121. The Court ordered penalties that would apply in the event of Mr. Fenkell's failure to comply by December 9, 2015. Id. The Court also stated that if Mr. Fenkell pledged his unencumbered interest in his Alliance ESOP account in a way that is "legally binding," Mr. Fenkell could reduce the amount of the bond by the value of his Alliance ESOP account, id.;

WHEREAS, Mr. Fenkell's Emergency Motion (Dkt. No. 1123 at p. 21) recites that he desires to pledge his interest in his Alliance ESOP account so as to reduce the amount of a supersedeas bond that he would otherwise be required to post to comply with the Court's November 18, 2015, Opinion and Order to restore $2,044,014.42 to the Alliance ESOP or provide a supersedeas bond assuring the payment of this sum pending appeal (the "Obligation"). The Court ordered that the Mr. Fenkell's ESOP Account pledge is effective notwithstanding any provision in the Alliance ESOP and Trust to the contrary;

WHEREAS, the Court also accepted the judgment creditors' offer to allow Mr. Fenkell to reduce the amount of the supersedeas bond by pledging all of his rights to receive phantom stock payments under The Spencer Turbine Company Phantom Stock Agreement and The Spencer Turbine Company Phantom Stock Plan to the Alliance ESOP ("Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights") on the condition that these proceeds will be transferred to the Alliance ESOP. The Court ordered that Mr. Fenkell's pledge of Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights is effective notwithstanding any provision in The Spencer Turbine Company Phantom Stock Agreement or The Spencer Turbine Company Phantom Stock Plan to the contrary;

WHEREAS, Mr. Fenkell agrees that he will be solely responsible for all tax consequences or liabilities, if any, related to the Mr. Fenkell's ESOP Account pledge or transfer and the pledge or transfer of Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights, and that he will be solely responsible for any shortfall that results; and

WHEREAS, as collateral security for the Court's November 18, 2015, Opinion and Order, and the Obligation, Pledgor has agreed to pledge to Pledgees (as defined below), and grant Pledgees a continuing lien on and security interest in, all of Pledgor's rights, benefits and privileges in the Collateral (as defined below) under this Collateral Pledge.

NOW, THEREFORE, the parties hereby agree as follows:

1. Pledge, and Grant of Security Interest. As collateral security for the Court's November 18, 2015, Opinion and Order, and the Obligation, Pledgor hereby collaterally assigns and pledges to the Alliance ESOP, and grants to the Alliance ESOP a continuing lien on and perfected security interest in, all of Pledgor's right, title, benefit and interest in Pledgor's Alliance ESOP account (the "Mr. Fenkell's ESOP Pledge"). As additional collateral security for the Court's November 18, 2015, Opinion and Order, and the Obligation, Pledgor hereby collaterally assigns and pledges to Alliance, and grants to Alliance a continuing lien on and perfected security interest in, all of Pledgor's right, title, benefit and interest in The Spencer Turbine Company Phantom Stock Agreement and the Spencer Turbine Company Phantom Stock Plan (the "Spencer Turbine Pledge.").

2. Pledgor's Representations, Warranties and Covenants.

(a) Pledgor warrants that (i) he is the absolute owner of his Alliance ESOP account and of Pledgor's rights under The Spencer Turbine Company Phantom Stock Agreement and The Spencer Turbine Company Phantom Stock Plan (previously defined as Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights and, together with Mr. Fenkell's Alliance ESOP account, the "Collateral") and the Collateral is not subject to any lien, charge or encumbrance, other than the lien thereon in favor of Alliance and the Alliance ESOP (collectively, "Pledgees") created hereby; and (ii) he has full capacity, and has taken all necessary action, to pledge and transfer unto Pledgees the Collateral.

(b) Pledgor represents, warrants and covenants that (i) he will not alter, amend or modify the Collateral without the prior written consent of Pledgees; and (ii) he will not terminate, modify, cancel or surrender the Collateral, assign or sublease the Collateral, without the prior written consent of Pledgees. Any moneys received by the Pledgor under the Collateral, whether as payments thereunder or otherwise, shall be proceeds of such Collateral subject to a lien in favor of Pledgees which lien Pledgor hereby grants and shall be remitted by Pledgor to Pledgee within one (1) business day of an Event of Default for application to the Obligation as a payment thereon. An Event of Default shall mean the failure of Pledgee to satisfy in full the Obligation by payment of the $2,044,014.42 Obligation in full to the Alliance ESOP within seven (7) calendar days after the issuance of the Seventh Circuit's opinion providing that the Seventh Circuit affirms the Court's judgment requiring Pledgor to restore $2,044,014.42 or a lesser amount to the Alliance ESOP (a "Seventh Circuit Affirmative Decision"). Pledgor may pay the $2,044,014.42 Obligation by applying (i) the supersedeas bond in the amount of $995,345.78 ($2,044,014.42 minus $448,668.64 attributed to Mr. Fenkell's ESOP Pledge and minus $600,000 attributed to Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights) plus $1,048,668.64 in cash; or by applying (ii) the supersedeas bond in the amount of $995,345.78 plus release of Mr. Fenkell's ESOP Pledge ($448,668.64) and/or release of all of Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights ($600,000) and/or substitution of cash to cover any differential attributable to Mr. Fenkell's retention of the pledged assets so long as the $2,044,014.42 Obligation is satisfied within such seven (7) day period.

3. Events of Default and Remedies. Upon the occurrence and during the continuance of any Event of Default, title to Mr. Fenkell's Alliance ESOP account shall pass to the Alliance ESOP and title to the Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights shall pass to Alliance and all of Pledgor's rights to the Collateral shall cease and be forfeited without any further action. The Court has ordered that Mr. Fenkell may provide a supersedeas bond in a reduced amount of $995,345.78, together with his pledges of Mr. Fenkell's Alliance ESOP account and his Spencer Turbine Company Phantom Stock Rights to satisfy the Court's November 18, 2015, Opinion and Order, and the Obligation. In the event of a forfeiture hereunder, Mr. Fenkell will satisfy the Obligation by means of the supersedeas bond which immediately becomes payable and the forfeiture and transfer of Mr. Fenkell's Alliance ESOP account to the Alliance ESOP and the forfeiture and transfer of Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights to Alliance. In no event shall Pledgees be entitled to receive payment hereunder and as a result of the supersedeas bond in excess of the Obligation. Pledgees may, in addition to any rights or remedies available to it hereunder or under the Court's November 18, 2015, Opinion and Order, and to the extent permitted by applicable law, take such action personally or through its agents or attorneys, with or without entry, and without notice, demand, presentment or protest (each and all of which are hereby waived by Pledgor), as either Pledgee deems necessary or advisable to protect and enforce its rights and remedies hereunder against Pledgor and in and to the Collateral (including without limitation to protect and enforce any rights of Pledgor to receive payments under the Collateral), at such time and in such order as such Pledgee may determine, in its sole discretion; provided, however, that no such actions by either Pledgee shall prevent Mr. Fenkell from exercising his right hereunder to make a cash payment of $448,668.64 to the Alliance ESOP in lieu of releasing Fenkell's Alliance ESOP Account and/or $600,000 to the Alliance ESOP in lieu ofreleasing Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights to the Alliance ESOP and Alliance Holdings, Inc., respectively, within the seven (7) day period referred to in Section 2(b). of this Collateral Pledge.

4. Power of Attorney. Upon the occurrence and during the continuance of an Event of Default, each Pledgee shall have the right, and is hereby irrevocably appointed the true and lawful attorney in fact of Pledgor, coupled with an interest, in its name and stead, subject to the terms and conditions of the Collateral, to assign, convey, transfer or otherwise deal in or with, Pledgor's interest in the Collateral and any remaining right, interest or license of Pledgor with respect thereto, and Pledgor agrees to execute, acknowledge and deliver to such Pledgee, or to any pledgee or transferee of the Collateral of such rights, interests and licenses, upon request by such Pledgee, such instrument as may be advisable in Pledgee's judgment to ratify, confirm or evidence such assignment or other transaction.

5. PLEDGOR HEREBY ACKNOWLEDGES AND AGREES THAT PLEDGOR'S REASONABLE EXPECTATION WITH RESPECT TO THE AUTHORIZATION GRANTED PURSUANT TO ANY POWER OF ATTORNEY SET FORTH IN SECTION 4. HEREUNDER IS THAT THE PLEDGEES OR ITS ATTORNEY MAY SEEK TO FORECLOSE ON THE COLLATERAL AND TAKE ANY OTHER ACTIONS WITH RESPECT TO THE EXERCISE OF THE PLEDGEES' RIGHTS AND REMEDIES HEREUNDER. PLEDGOR HEREBY WAIVES ALL OTHER DUTIES OF THE PLEDGEES THAT MAY ARISE UNDER 20 PA. C.S.A. §5601.3(b). WITH RESPECT TO THE EXECUTION OF THIS COLLATERAL PLEDGE, PLEDGOR HEREBY REMISES, RELEASES, AND FOREVER DISCHARGES, AND WAIVES ALL CLAIMS, CAUSES OF ACTION AND ANY OTHER RIGHTS AGAINST PLEDGEES AND ANY PREDECESSORS, LEGAL REPRESENTATIVES, PAST AND PRESENT PARENT COMPANIES, SUBSIDIARIES, AGENTS, EMPLOYEES, SERVANTS, INSURERS, ATTORNEYS, OFFICERS, DIRECTORS, STOCKHOLDERS, AFFILIATES, AFFILIATE COUNTERPARTIES, SUCCESSORS IN INTEREST, AND ASSIGNS OF AND FROM ANY AND ALL CLAIMS, DEMANDS, DAMAGES, FEES, AND COSTS, SUMS OF MONEY, RIGHTS, CAUSES OF ACTIONS, OBLIGATIONS AND LIABILITIES OF ANY KIND OR NATURE WHATSOEVER INCLUDING ATTORNEYS' FEES, ARISING UNDER OR RELATING TO ANY DUTIES OF AN AGENT UNDER 20 PA. C.S.A. §5601.3 OR OTHERWISE.

6. Filings. Pledgor hereby authorizes Pledgees to file against Pledgor, one or more financing, continuation or amendment statements pursuant to the Uniform Commercial Code in form and substance satisfactory to Pledgor to perfect Pledgees' security interest in the Collateral.

7. Covenants. No delegation to, or assumption by, Pledgees of any of Pledgor's liabilities, duties or obligations under the Collateral is intended by this Collateral Pledge nor shall any such delegation or assumption be deemed to have been made or incurred. No rights are intended to be granted hereunder in favor of any third party donee, creditor or incidental beneficiary.

8. General Provisions. This Collateral Pledge cannot be modified, changed or discharged except by an agreement in writing, signed by the party against whom enforcement of such modification, change or discharge is sought. This Collateral Pledge and all matters relating hereto and arising herefrom (whether arising in tort, contract law, or otherwise) shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. This Collateral Pledge shall bind Pledgor, its successors and assigns, and shall inure to the benefit of Pledgees, and any successor of Pledgees under the Collateral. The Spencer Turbine Company has signed below to indicate its acknowledgement of and consent to the foregoing collateral pledge by Pledgor of Mr. Fenkell's Spencer Turbine Company Phantom Stock Rights.

9. No Assumption of Tax or Other Obligations by Pledgees. Pledgees shall not be deemed to have assumed any of the tax obligations or other duties, undertakings, obligations or liabilities of Pledgor (and/or any of its permitted successors and assigns) under the Collateral by reason of this Collateral Pledge or any enforcement by Pledgees of their rights thereunder. Pledgor shall be solely responsible for all tax consequences or liabilities related to the pledge, assignment, transfer or forfeiture of the Collateral. Mr. Fenkell acknowledges that Pledgees have not made any representations to him regarding tax matters and that he is not relying on Pledgees with respect to the tax consequences of his actions hereunder.

10. Termination. In the event that the U.S. Court of Appeals for the Seventh Circuit issues an opinion which does not affirm the Court's judgment requiring Pledgor to restore $2,044,014.42 or a lesser amount to the Alliance ESOP, this Agreement shall terminate. In the event that the U.S. Court of Appeals for the Seventh Circuit issues an Opinion which affirms the Court's Amended Final Judgment but requires Pledgor to restore an amount less than $2,044.014.42, then Pledgor shall have the right to pay such lesser amount in cash and may use the supersedeas bond to pay up to $995,345.78 of such lesser amount, in which event Collateral pledged hereunder shall be released by Pledgees.

IN WITNESS WHEREOF, this Collateral Pledge has been duly executed by Pledgor as of the date and year first above written.