JOHN E. HOFFMAN, Jr., Bankruptcy Judge.
George Bavelis, the Chapter 11 debtor in possession and the plaintiff in this adversary proceeding, contends that one of the defendants, Ted Doukas, knowingly violated an order of the Court that prohibited him from transferring certain assets and that required him to provide Bavelis unfettered access to certain documents. In direct contravention of the requirements imposed by this order, Doukas obstructed Bavelis's access to the documents. Among other things, when Bavelis asked Doukas for copies of the documents during discovery, Doukas lied and said he had no responsive documents. He then doubled down on his contempt, transferring assets
The Court has jurisdiction to hear and determine this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the general order of reference entered in this district. This is a core proceeding. See 28 U.S.C. § 157(b)(2)(A) and (O).
The Court also has the constitutional authority to hear and determine the matter. See In re Brown, 511 B.R. 843, 848 (Bankr.S.D.Tex.2014) (holding that bankruptcy courts retain the constitutional authority to impose sanctions for contempt of a court order after Stem v. Marshall, ___ U.S. ___, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011)); In re Green, No. 12-13410, 2014 WL 1089843, at *1 (Bankr.N.D.Ohio Mar. 19, 2014) (same); Schermerhorn v. CenturyTel, Inc. (In re SkyPort Global Commc'ns), No. 08-36737-H4-11, 2013 WL 4046397, at *41 (Bankr.S.D.Tex. Aug. 7, 2013) ("Stern does not limit this Court's constitutional authority to enter an order enforcing the Court's own prior orders....").
On July 20, 2010 ("Petition Date"), Bavelis filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. On October 20, 2010, Bavelis commenced this adversary proceeding and filed a motion for a preliminary injunction (Adv.Doc. 2). Bavelis served Plaintiffs First Set of Requests for Production of Documents to Each Defendant ("First Document Request") (Bavelis Ex. 4) the next day. After holding a telephonic status conference, the Court entered an agreed scheduling order ("Scheduling Order") (Adv.Doc. 42) providing that Doukas and the other defendants "shall produce their responses and objections to [the First Document Request], including all documents produced in response thereto, so that they are received in the offices of [Bavelis's] counsel by 10:00 a.m. on Friday, December 3, 2010." Scheduling Order ¶ 2.
The Court conducted a hearing on the motion for a preliminary injunction on December 14, 2010. After the hearing recessed and the parties conferred, they presented a draft agreed order regarding the motion for a preliminary injunction, and the Court entered an order granting preliminary injunctive relief on December 15, 2010 ("Injunction") (Adv.Doc. 78).
This matter is before the Court on Bavelis's two motions requesting that the Court enter an order directing Doukas to appear and show cause why he should not be held in civil contempt for violating the Scheduling Order and the Injunction. Those motions are located at Adv. Doc. 234 ("First Show Cause Motion") and Adv. Doc. 277 ("Second Show Cause Motion" and, together with the First Show Cause Motion, "Show Cause Motions"). Doukas filed a response to the First Show Cause Motion (Adv.Doc. 239) ("First Doukas Response"), and Bavelis filed a reply memorandum in support of that motion ("First Bavelis Reply") (Adv.Doc. 241). Likewise, Doukas filed a response to the Second Show Cause Motion (Adv.Doc. 279) ("Second Doukas Response"), and Bavelis filed a reply memorandum in support of that motion ("Second Bavelis Reply") (Adv.Doc. 281).
After the Show Cause Motions were filed, the Court entered an order ("Show Cause Order") (Adv.Doc. 424) directing Doukas to appear and show cause why he should not be held in contempt and sanctioned
During the Show Cause Hearing, Bavelis's Exhibits 2 through 19, 21 through 23, and 47 were admitted into evidence.
Several years before the Petition Date, Bavelis and one of his business partners, Mahammad A. Qureshi, formed four limited liability companies, including GMAQ, LLC ("GMAQ") and FLOVEST, LLC ("FLOVEST"), for the purpose of investing in gas stations, office buildings and mixed-use real estate developments. Bavelis and Qureshi each owned one-half of GMAQ. In addition, Bavelis was the manager and indirect part owner of yet another company (FLOHIO, LLC) that owned one-half of FLOVEST; the other one-half owner of FLOVEST was one of Qureshi's companies, MAQ Management, Inc. In time, business disputes between Bavelis and Qureshi developed. See Bavelis v. Doukas (In re Bavelis), 490 B.R. 258 (Bankr.S.D.Ohio 2013) ("Bavelis I".)
Doukas then entered the picture. As Bavelis I sets forth in much greater detail, after Bavelis and Doukas became friends in early 2009, Doukas offered to help resolve the Bavelis-Qureshi disputes favorably to Bavelis. For the ostensible purpose of facilitating such a resolution, in December 2009, Doukas convinced Bavelis to sign documents purporting to transfer Bavelis's one-half interest in GMAQ and FLOHIO's one-half interest in FLOVEST to a Doukas-affiliated company, Nemesis of L.I. Corp. ("Nemesis").
This factual background is not recited to support the Court's conclusion that Doukas later engaged in contemptuous conduct, and the Court does not consider it in reaching the determination that he did so. The Court simply provides the background in order to explain one of the reasons Bavelis commenced the adversary proceeding and sought the Injunction—to attempt to unwind the transfers to Nemesis and to maintain the status quo while he was seeking that result.
Based on the evidence adduced at the Show Cause Hearing, including the documentary evidence and the testimony presented, and having considered the demeanor and credibility of the sole witness— Doukas—the Court makes the findings of fact set forth below.
Doukas used Nemesis to place assets under his sole control after the December 2009 transfers. In June 2010, Doukas, acting in his capacity as the president of Nemesis—which purportedly was acting as the managing member of FLOVEST— signed two Quit Claim Deeds identifying FLOVEST as the grantor of parcels of real property in Orange County, Florida and Leftheris Properties Corporation ("Leftheris"), a company whose sole shareholder, director and officer is Doukas, as the grantee. Tr. at 26, 61. The Quit Claim Deeds were recorded in Orange County in September 2010. Bavelis's Exs. 12 and 13.
The following month, Doukas signed an Assignment of Mortgage in his capacity as the president of Nemesis, which this time purportedly was acting as the managing member of GMAQ. Bavelis Ex. 11. The Assignment of Mortgage identified GMAQ as the assignor and Leftheris as the assignee of a mortgage ("Mortgage") "by Noel Stephen O'Brien ... in favor of GMAQ, LLC on lands in the County of Palm Beach, State of Florida [(`O'Brien Property')]." The Assignment of Mortgage was recorded in Palm Beach County on July 9, 2010. Bavelis Ex. 11. Bavelis then commenced his bankruptcy case and this adversary proceeding.
Doukas withheld the Quit Claim Deeds and the Assignment of Mortgage from Bavelis
First Doc. Req. at 10.
As used in the First Document Request, the term "Companies" was defined to include FLOVEST and GMAQ. First Doc. Req. at 9. Thus, the First Document Request required Doukas to produce all documents identifying assets that FLOVEST and GMAQ transferred since December 1, 2009. The Quit Claim Deeds and the Assignment of Mortgage fit the bill. And the First Document Request also required Doukas to produce any agreements relating to transfers of assets by FLOVEST and GMAQ since December 1, 2009—again requiring the production of the Quit Claim Deeds and the Assignment of Mortgage. There is no evidence that Doukas produced those documents in response to the First Document Request. Tr. at 34-39.
Doukas had another opportunity to disclose the existence of the documents before the hearing on the motion for a preliminary injunction, but again failed to do so. Bavelis's counsel, Marion Little, deposed Doukas, asking him questions that, if answered honestly, would have disclosed the existence of the Quit Claim Deeds and the Assignment of Mortgage. Doukas, though, failed to respond trathfully to the questions:
As to FLOVEST, Little posed questions that required Doukas to disclose the existence of the Quit Claim Deeds, but Doukas lied and failed to do so:
Dep. Tr. at 45.
Similarly, Little asked questions that required Doukas to disclose the existence of the Assignment of Mortgage, but again Doukas lied:
Dep. Tr. at 46, 47. See also Dep. Tr. at 64 (Doukas responding `Yes" when Little asked whether "whatever you have as it relates to [GMAQ and FLOVEST], you've collected and made available to us, correct?" and responding "No, no" when Little asked `You didn't withhold anything, did you?").
In sum, during his deposition, Doukas disclaimed knowledge of transactions consummated by FLOVEST and GMAQ since December 2009 even though in June 2010 he had signed the Quit Claim Deeds, purporting to transfer parcels of real property in Orange County from FLOVEST to Leftheris, and even though in July 2010 he had signed the Assignment of Mortgage, purporting to transfer the Mortgage from GMAQ to Leftheris. During the Show Cause Hearing, Doukas testified that he could not remember why he failed to disclose the existence of the Quit Claim Deeds or the Assignment of Mortgage during his deposition. Tr. at 43-44.
While unacceptable, Doukas's failure to disclose the existence of the Quit Claim Deeds and the Assignment of Mortgage during his deposition did not violate the Injunction for the simple reason that the Injunction had not yet been issued. Doukas's pre-Injunction conduct is relevant here nonetheless. As discussed in more detail below, among his other excuses for his contemptuous conduct, Doukas testified that he gave all the documents he had to his attorney at the time, who failed to produce them. No one but Doukas and the attorney (and those they have chosen to tell) know whether it is true that Doukas gave him the documents, as Doukas apparently has declined to produce the files. But even if Doukas's testimony in this regard were true, Doukas cannot blame the attorney for his own lies during his deposition.
Doukas's pre-Injunction conduct is relevant for another reason. Doukas contends that, because the Injunction failed to specifically mention the O'Brien Property but referenced two other assets, the Injunction was not sufficiently specific and definite enough to prohibit Doukas's post-Injunction transfer of GMAQ's interests in the O'Brien Property. As will be seen, the reason the Injunction mentioned two specific properties is that Bavelis was aware that interests in them had already been transferred while, as a result of Doukas's non-disclosures, Bavelis was unaware that Doukas had already signed the Assignment of Mortgage as to the O'Brien Property. In any event, the language of the Injunction was sufficiently specific and definite enough to prohibit Doukas from making further transfers of GMAQ's assets.
Bavelis filed the motion for a preliminary injunction in order to, as the Injunction states, preserve what he believed to be "the status quo pending a decision on the merits" of the adversary proceeding. Inj. ¶ 1. Thus, among other things, the Injunction prohibited the defendants, including Doukas, from "transferring, conveying, further encumbering, or otherwise disposing of any property, interest, and/or assets of ... GMAQ ... [FLOVEST, and two other limited liability companies] (the `Companies')...." Inj. ¶ 1(a). That is, the Injunction contained a clear and specific order prohibiting Doukas from transferring "any property, interest, and/or assets of GMAQ.
The Injunction also referenced the "Evergreen Elder Care Mortgage," which had been transferred to BNK Real Estate, LLC ("BNK"), an entity affiliated with Qureshi. The Injunction provided that "BNK agrees that the asset it received by transfer from GMAQ, hereinafter referred to as the Evergreen Elder Care Mortgage, shall not be disposed of, transferred, or otherwise altered or encumbered without the mutual written agreement of [Bavelis] and the Qureshi Defendants." Inj. ¶ 2. Similarly, the Injunction provided that "Financial Lending Services [an entity affiliated with defendant Rab Masroor] agrees that the property that it received from [FLOVEST] by Quit Claim Deed, hereinafter referred to as the Ocean Drive Motel, shall not be transferred, encumbered, pledged, sold or otherwise disposed of without the mutual written agreement of the Parties." Inj. ¶ 3. As previously noted, the parties were able to include those provisions in the Injunction because, unlike the Assignment of Mortgage from GMAQ to Leftheris, Bavelis knew about the transfers to BNK and Financial Lending Services.
The Injunction also provided that "[t]he Parties agree to provide complete banking, loan and financial records of the Companies to each other within twenty (20) days so that the Parties can prepare their own accounting reports regarding the Companies" and that "[t]he Parties shall be permitted unfettered access to the books and records of the Companies and be entitled to copies of all documents and reports, including, without limitation, income statements, check registers, and financial statements, for the Companies[,]" including GMAQ and FLOVEST. Inj. ¶ 4. "Books and records" and "all documents" of GMAQ and FLOVEST certainly would include documents by which they purported to transfer their assets. The Injunction required that the Parties "be permitted" unfettered—i.e., unrestricted—access to
The Injunction was agreed to by Attorney Newburgh on behalf of Doukas as well as on behalf of Nemesis and other entities affiliated with Doukas. Doukas conceded that he had knowledge of the Injunction, including paragraphs one and four. Tr. at 46-8.
Doukas possessed copies of the Quit Claim Deeds and the Assignment of Mortgage when the Injunction was issued. Tr. at 55. Yet Doukas did not provide the Quit Claim Deeds or the Assignment of Mortgage to Bavelis at any time until he filed the First Doukas Response on June 26, 2012, when he finally disclosed the existence of the Assignment of Mortgage in an effort to absolve himself of contempt—an effort that, as explained below, is unavailing. That is, Doukas failed to permit Bavelis "unfettered access" to the documents. In September 2011—after the Injunction was issued—Bavelis served Doukas with his second set of requests for production of documents on Doukas ("Second Document Request"). Bavelis Ex. 8. With the exception of documents that had already been produced—and Doukas had not produced the Quit Claim Deeds or the Assignment of Mortgage, nor is there any evidence suggesting that Bavelis was aware of them at the time the Second Document Request was served—Bavelis requested that Doukas produce, among other documents:
Second Doc. Req. at 16-17.
In short, document requests number 38 and 39 required Doukas to produce all documents that would identify assets transferred since December 1, 2009 by FLOVEST and GMAQ, the date on which the transfers were made and the recipient of the transfers. The Quit Claim Deeds and the Assignment of Mortgage contained that information. Document request number 40 required Doukas to produce any agreements relating to a transfer of assets by FLOVEST and GMAQ since December 1, 2009-again requiring the production of the Quit Claim Deeds and the Assignment of Mortgage. Thus, anyone reading the Second Document Request clearly would have seen that the Quit Claim Deeds and
Despite the Injunction's requirement that Doukas grant Bavelis unfettered access to the books and records of FLOVEST and GMAQ, Doukas failed to do so. Furthermore, in light of Doukas's testimony that Gary Goldstein—the attorney who responded to the Second Document Request on Doukas's behalf—never took any action that Doukas had not authorized, Doukas cannot blame Goldstein for the failure to turn over documents in response to document requests. Tr. at 57-58.
On March 5, 2012, Goldstein sent Bavelis's counsel a letter requesting—as Goldstein had done "numerous times" before— the original promissory note secured by the Mortgage on the O'Brien Property.
On April 13, 2012, the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida ("State Court") entered a final judgment of foreclosure ("Foreclosure Judgment") in favor of GMAQ in an amount in excess of $2.3 million ("Judgment Amount"). The Foreclosure Judgment gave GMAQ a lien on the O'Brien Property for the Judgment
Because it was entered in favor of GMAQ and provided a hen to GMAQ on the O'Brien Property, the Foreclosure Judgment was an asset of GMAQ. As such, the Injunction prohibited Doukas from transferring it. Despite this, on June 18, 2012, Doukas signed a document in his purported capacity as the manager of GMAQ entitled "Assignment of Judgment and Right to Bid at Sale." The Assignment of Judgment and Right to Bid at Sale, which was recorded in the real estate records of Palm Beach County, Florida on June 18, 2012, purported to transfer GMAQ's interest in the Foreclosure Judgment, as well as GMAQ's right to bid at the sale of the O'Brien Property, to Leftheris. Bavelis Ex. 16.
GMAQ was the winning bidder at a sale occurring on February 1, 2013. Three days later, Doukas filed a document with the State Court entitled "Assignment of Bid[,]" again purporting to assign GMAQ's successful bid to Leftheris and requesting that the title for the O'Brien Property be in the name of Leftheris. Bavelis Ex. 21. On February 14, 2013, Qureshi signed a verified objection on behalf of GMAQ stating that the Assignment of Bid was a "fraud upon the [State] [C]ourt" and that the title to the O'Brien Property should only be in GMAQ's name. Bavelis Ex. 22.
During the Show Cause Hearing, Doukas gave testimony that raised serious questions as to his credibility. He testified that he could not recall whether Leftheris gave GMAQ any consideration for the Quit Claim Deeds or the Assignment of Mortgage in 2010, see Tr. at 53, or whether Leftheris gave GMAQ any consideration for the post-Injunction transfers he caused it to make to Leftheris in 2012 and 2013. Tr. at 72. The Court finds that a business person—except one lacking any long-term memory whatsoever—would recall whether one of his companies gave consideration for an asset with a value of approximately $2 million during the past several years. As was the case in his previous appearances as a witness before the Court, during the Show Cause Hearing Doukas exhibited the capacity to remember events occurring over the last several years when he believed it would cause him no harm, but suffered convenient memory lapses when he thought a lack of recall might benefit him.
"[I]t is firmly established that [t]he power to punish for contempts is inherent in all courts." Chambers v. NASCO, Inc., 501 U.S. 32, 44, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (internal quotation marks omitted); SkyPort Global Commc'ns, 2013 WL 4046397, at *1 ("The
Like other courts, bankruptcy courts have the authority to award damages compensating injured parties for the civil contempt of another. See, e.g., Liberis v. Craig, No. 87-5321, 1988 WL 37450, at *8 (6th Cir. Apr. 25, 1988) ("Courts have, and must have, the inherent authority to enforce their judicial orders and decrees in cases of civil contempt.... [T]here is no question that the bankruptcy court had the authority to award attorneys' fees against the plaintiffs to compensate the trustee for bringing plaintiffs' contempt to the court's attention."); see also McMahan & Co. v. Po Folks, Inc., 206 F.3d 627, 634 (6th Cir.2000) ("We have previously recognized that an award of attorney's fees is appropriate for civil contempt in situations where court orders have been violated.").
"A contempt fine ... is considered civil and remedial if it either coerce[s] the defendant into compliance with the court's order, [or] ... compensate[s] the complainant for losses sustained." Int'l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 829, 114 S.Ct. 2552, 129 L.Ed.2d 642 (1994) (internal quotation marks omitted); see also In re Hake, No. 06-8014, 2006 WL 2846277, at *2 (6th Cir. BAP Oct. 3, 2006) ("A contempt fine is civil if it either coerces one into compliance with a court order or compensates for a loss sustained."). Any damages the Court awards would be designed to compensate Bavelis's estate for losses it sustained (including for attorneys' fees and expenses incurred) as a result of Doukas's contemptuous conduct. Thus, any fine imposed against Doukas would be civil in nature.
"[B]efore a finding of contempt may be entered, a party must have willfully violated a specific provision of a court order." Williamson v. Recovery Ltd. P'ship, 467 Fed.Appx. 382, 388 (6th Cir. 2012). Disobedience of a court order warrants a finding of civil contempt only if the order is "clear and unambiguous[,]" with "[a]mbiguities ... resolved in favor of the party charged with contempt." Liberte Capital Grp., LLC v. Capwill, 462 F.3d 543, 550-51 (6th Cir.2006) (citations and internal quotation marks omitted). In order to obtain an order of civil contempt, Bavelis must carry the "burden of proving by clear and convincing evidence" that Doukas "violated a definite and specific order of the court requiring him to perform or refrain from performing a particular act or acts with knowledge of the court's order." Id. As explained below, the evidence is clear and convincing that Doukas had knowledge of the Injunction and that the Injunction unambiguously prohibited his subsequent misconduct.
Doukas conceded that he had knowledge of the Injunction. Furthermore, through counsel, he agreed to its provisions. His acquiescence, though, turned out to be illusory, for he disregarded the Injunction when he found it expedient to do so. But he had no right to resist the Injunction on those occasions. The only proper way for Doukas to protest the Injunction would have been to object to its issuance, and, if the Court had entered it over his objection, to seek his "remedy ... on appeal."
First came Doukas's violations of the Injunction's fourth paragraph, which required that Bavelis be "permitted unfettered access to the books and records of [GMAQ and FLOVEST] and ... to copies of all documents and reports, including, without limitation, income statements, check registers, and financial statements, for [GMAQ and FLOVEST]." Inj. ¶ 4. A company's books and records and its documents include the written records of its business transactions, such as documents by which it purports to transfer its interests in property. GMAQ's books and records therefore included copies of the Quit Claim Deeds and the Assignment of Mortgage. Bavelis accordingly was to be permitted unfettered access to those documents and was entitled to copies of them. Yet when Bavelis—after the issuance of the Injunction—propounded a request for production of documents that required Doukas to produce the Quit Claim Deeds and the Assignment of Mortgage (or at the very least a response stating that the documents were publicly available) Doukas declined to produce the documents and said that no relevant documents existed. That is, Doukas obstructed Bavelis's access to the Quit Claim Deeds and the Assignment of Mortgage rather than granting him unfettered access to them.
Moreover, Goldstein sent Bavelis's counsel a letter that requested the original promissory note secured by the Mortgage on the O'Brien Property but failed to inform Bavelis's counsel that Doukas had already signed and filed the Assignment of Mortgage from GMAQ to Leftheris. Goldstein also stated that the refusal to turn over the original promissory note would cause harm to GMAQ. The only fair reading of that letter is that GMAQ still had a financial interest in the Mortgage. Therefore, that letter—which by Doukas's own admission he authorized, because, as he testified, Goldstein never took any action that Doukas did not authorize—also served to obstruct Bavelis's access to the Assignment of Mortgage.
Next came Doukas's dual violations of the Injunction's prohibition against "transferring, conveying, further encumbering, or otherwise disposing of any property, interest, and/or assets of GMAQ. Inj. ¶ 1(a). After the Injunction was issued, Doukas signed the Assignment of Judgment and Right to Bid at Sale, a document purporting to transfer a judgment in an amount in excess of $2.3 million and a lien on the O'Brien Property, as well as the right to bid at the sale of the O'Brien Property, from GMAQ to Leftheris. Then, after GMAQ was the winning bidder at the foreclosure sale, Doukas filed a document with the State Court purporting to assign GMAQ's successful bid to Leftheris and requesting that the title to the O'Brien Property be issued only in the name of Leftheris. In other words, after the Injunction was issued, Doukas twice attempted to transfer GMAQ's assets to Leftheris.
Doukas attempts to justify his actions by making six arguments, none remotely persuasive. His first argument is that assigning the Mortgage to Leftheris before the Injunction was in place made the Mortgage an asset of Leftheris, not an asset of GMAQ subject to the Injunction, and that it therefore was impossible for him to have
Doukas's second argument is that the Injunction does not prohibit the transfer of GMAQ's interests in the O'Brien Property. To the contrary, the Injunction was sufficiently specific enough to prohibit Doukas from transferring the Foreclosure Judgment and right to bid at foreclosure from GMAQ to Leftheris. After all, the Injunction prohibited Doukas from "transferring, conveying, further encumbering, or otherwise disposing of any property, interest, and/or assets of [GMAQ]." Inj. ¶ 1(a). While the Sixth Circuit has stated that "milieu limits the reach of general words" such as the words "all" or "any," Russell v. Citigroup, Inc., 748 F.3d 677, 681 (6th Cir.2014), there is absolutely nothing in the Injunction remotely suggesting that the phrase any property interest, and/or assets should be limited in the way Doukas suggests. He notes that the Injunction failed to mention the O'Brien Property while referencing two other properties, including the property subject to the Evergreen Elder Care Mortgage, the mortgage that was transferred to BNK, and finds in this difference evidence that the Injunction did not cover the Mortgage on the O'Brien Property. Tr. at 14-16.
Under Doukas's odd interpretation of the Injunction, the only GMAQ asset that any of the parties are prohibited from transferring is the one that had already been transferred to BNK, an affiliate of Qureshi. In other words, according to Doukas, even though the Injunction says that it prohibits the transfer of any property, interest and/or assets of GMAQ, what it actually means is that there are no assets of GMAQ that Doukas is prohibited from transferring. That is an absurd reading of the Injunction. And it becomes all the more absurd (if that is possible) when one considers that the reason the Injunction specifically mentioned the Evergreen Elder Care Mortgage was because Bavelis was aware of the transfer of that mortgage to BNK. By contrast, because Doukas lied in a deposition and failed to produce (in response to the First Document Request) the Quit Claim Deeds and the Assignment of Mortgage, Bavelis did not know about the purported transfer of the Mortgage on the O'Brien Property to Leftheris at the time the parties agreed to the Injunction.
Doukas's fourth argument is that he did not violate the Injunction as to the Quit Claim Deeds and the Assignment of Mortgage because he filed those documents in the public record. Tr. at 135-37, 141. True, Doukas filed the documents in the real estate records, but he failed to permit Bavelis the unfettered access to them the Injunction required. The argument that Bavelis's access was unfettered because he would have found them if he had searched the public records does not absolve Doukas of liability for obstructing Bavelis's access to the documents. Doukas asserts that his filing of the Quit Claim Deeds and the Assignment of the Mortgage in the public record negates any suggestion that he intended to hide the ball. That argument might hold water if Doukas did not attempt to conceal the existence of these documents through his false and misleading responses to the Second Document Request. It is one thing to defend against a claim of wrongful nondisclosure by arguing that your opponent, by making a thorough public records search, could have found the needle in the haystack; it is quite another to lie about the existence of the needle.
Doukas's fifth argument is that the Quit Claim Deeds and the Assignment of Mortgage are not the type of records covered by a reasonable interpretation of paragraph 4 of the Injunction because the Injunction required the provision of "complete banking, loan and financial records of the Companies" so that "the Parties can
Doukas's sixth argument is that the Court does not have jurisdiction to unwind the transfer that Doukas (through Nemesis) made to Leftheris of GMAQ's interest in the O'Brien Property and that the Court therefore should not hold Doukas in contempt for making the transfer to Leftheris. Tr. at 121-25. But as counsel to Doukas acknowledged, Tr. at 123, the Court has related-to jurisdiction to unwind the transfer if doing so would have a conceivable effect on the administration of Bavelis's bankruptcy estate. See Mich, Emp't Sec. Comm'n v. Wolverine Radio Co. (In re Wolverine Radio Co.), 930 F.2d 1132, 1142 (6th Cir.1991) ("The usual articulation of the test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy"); Meritage Homes Corp. v. JPMorgan Chase Bank, N.A., 474 B.R. 526, 557-69 (Bankr.S.D.Ohio 2012) (discussing the conceivable-effect test for determining the existence of related-to jurisdiction).
Among other things, given that a bankruptcy estate is comprised of property, a proceeding could conceivably have an effect on a bankruptcy estate if the outcome of the proceeding could potentially result in an increase in the value of the estate's property. Id. at 559. There is such a conceivable effect here. Bavelis is seeking to recover his membership interest in GMAQ. And under Bavelis's proposed fifth amended plan of reorganization ("Plan") (Doc. 712) funds to which Bavelis becomes entitled as a result of that membership interest could be available for distribution to creditors. See Plan at 8 (defining "Net Distributive Liquidation Proceeds" as "any consideration received by the Debtor following the Effective Date on account of his ownership interest in an entity arising from the sale or refinancing of the principal asset(s) of any such entity, which interest is not otherwise subject to the lien of the holder of an Allowed Secured Claim hereunder, less all costs, expenses and applicable tax obligations incurred by or on behalf of the Debtor in realizing such consideration") and Plan at 22 (providing that certain Net Distributive Liquidation Proceeds may be deposited into an account used to make distributions to unsecured creditors). Thus, like his others, Doukas's sixth and final argument is without merit.
For the foregoing reasons, the Court concludes that Bavelis has carried his burden of proving by clear and convincing evidence that Doukas committed civil contempt when, after the issuance of the Injunction, he: (a) failed to provide Bavelis with unfettered access to the Quit Claim Deeds and the Assignment of Mortgage; and (b) transferred the Foreclosure Judgment entered in favor of GMAQ and its right to bid on the O'Brien Property from GMAQ to Leftheris.
Bavelis requests that the Court award him reasonable attorneys fees and costs associated with prosecuting the Show Cause Motions. Bavelis shall file a statement
