DAVID R. STRAWBRIDGE, Magistrate Judge.
Movant Ryan Paddick, Esq. seeks the entry of a civil contempt order against Sandra Thompson, Esq. for her failure to comply with a valid court order we entered June 18, 2018. By that order, we compelled Ms. Thompson to disburse a portion of a settlement fund to which we determined he was entitled.
This Court held an evidentiary civil contempt hearing on the motions on November 15, 2018. Thompson and Paddick both appeared and presented testimony. For reasons set forth below, we will grant the motion and enter an order finding Thompson in civil contempt for failing to comply with our order compelling her to disburse Paddick's award.
It is elemental that a district court possesses the "inherent power to enforce compliance with [its] lawful orders through civil contempt." Spallone v. United States, 493 U.S. 265, 276 (1990) (quoting Shillitani v. United States, 384 U.S. 364, 370 (1966)). Civil contempt "is remedial, and for the benefit of the complainant." Int'l Union, United Mineworkers of Am. v. Bagwell, 512 U.S. 821, 827 (1994) (quoting Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 441 (1911)). If successful in a civil contempt proceeding, the complainant is entitled to costs of investigating violation of the court order [and] preparing for and conducting the contempt proceeding, and attorneys' fees. See Robin Woods Inc. v. Woods, 28 F.3d 396, 400-01 (3d Cir. 1994). These sanctions are designed to place the complainant in the position he would have been had the contemnor complied with the court order. Id. at 400.
"Civil contempt sanctions . . . fall into two general categories." Harris v. City of Phila., 47 F.3d 1311, 1328 (citing Bagwell, 512 U.S. at 829). One category is designed to compensate complainants "for losses sustained by [the contemnor's] disobedience." Robin Woods Inc., 28 F.3d at 400. The other is calculated "to coerce the defendant into compliance with the court's order." Harris, 47 F.3d at 1328. Coercive contempt sanctions "must be capable of being purged" to be properly characterized as civil, rather than criminal. Id. (citing Bagwell, 512 U.S. at 828). Contempt arising from "discrete, readily ascertainable acts, such as . . . payment of a judgment, properly may be adjudicated through civil proceedings since the need for extensive, impartial factfinding is less pressing." Bagwell, 512 U.S. at 833.
To hold a party in civil contempt, the complainant must establish three elements by clear and convincing evidence: (A) a valid court order existed; (B) the contemnor had knowledge of the order; and (C) the contemnor disobeyed the order. John T. ex rel. Paul T. v. Delaware Cnty. Intermediate Unit, 218 F.3d 545, 552 (3d Cir. 2003) (quoting Harris, 47 F.2d at 1326). "[A]mbiguities must be resolved in favor of the party charged with contempt," see id., and courts "should hesitate to adjudge a defendant in contempt when there is ground to doubt the wrongfulness of the conduct." F.T.C. v. Lane Labs—USA, Inc., 624 F.3d 575, 582 (3d Cir. 2010). A finding of willfulness on the part of the contemnor, however, is unnecessary because "good faith is not a defense to civil contempt." Id. (internal quotation marks and citations omitted). Before a finding of contempt is made, "due process . . . require[s] notice and a hearing . . . so that the parties `have an opportunity to explain the conduct deemed deficient . . . and that a record will be available to facilitate appellate review.'" Harris, 47 F.3d at 1322 (quoting Newton v. A.C. & S. Inc., 918 F.2d 1121, 1227 & n. 5 (3d Cir. 1990)).
On April 27, 2018, this Court entered an order and issued a memorandum opinion concluding that Paddick was due a quantum meruit sum of $54,562.73 for his substantial contribution to the creation of a settlement fund.
Thompson filed a Motion to Stay on June 1, 2018, asking us to stay our May 24, 2018 order compelling payment. (Doc. 370.) We denied that motion by our order and accompanying memorandum opinion of June 18, 2018, concluding that she "ha[d] not demonstrated a likelihood of success on the merits" warranting intervention. (Doc. 380.) We further directed her to "disburse funds in her escrow account in accordance with our May 24, 2018 order by June 25, 2018" (Doc. 381.)
As of June 26, 2018, Thompson had not complied with the Court's June 18, 2018 order to disburse funds. Accordingly, Paddick filed a Motion for Order to Issue a Writ of Execution on the escrow account where Thompson maintained the settlement funds. (Doc. 390.) He followed with his present contempt motion on July 2, 2018 We granted his motion for a writ of execution on July 3, 2018, which the Clerk of Court issued the same day.
Having directed issuance of the writ, we assumed that Paddick would be paid and this matter resolved. To that effect, we issued an August 16, 2018 Order to Show Cause as to why his motion for contempt should not be dismissed as moot. (Doc. 410.) Paddick's August 22, 2018 response informed us that Thompson had still "not paid any part of the funds." (Doc. 411. at 1.) Thompson rebutted that Paddick's claims "were moot as the Writ of Execution was granted addressing Paddick's claims" and asserted that she "did not have the authority to move those amounts awarded to Paddick from her IOLTA account." (Doc. 414 at 2.) Paddick, however, replied that "nothing was preventing her from disbursing to [him] prior to service of the Writ or directing her bank to pay in accordance with the Writ after service."
Paddick ultimately turned to Thompson's bank, Fulton Bank, seeking payment. On September 11, 2018, he filed a praecipe for judgment upon Fulton Bank as garnishee of Thompson's IOLTA account. (Doc. 421.) We granted that praecipe in an October 9, 2018 order with accompanying memorandum opinion compelling Fulton Bank to disburse $57,960.28 to Paddick, which sums encompassed the judgment, nominal costs, and pursuant to Pennsylvania law, $3,250.00 for attorney time incurred in relation to execution upon Fulton Bank. See generally Paddick v. Butt, No. 09-4285, 2018 WL 4899310 (E.D. Pa. Oct. 9, 2018); Doc. 431. What remains to be determined, however, is Paddick's present request for outstanding unpaid costs totaling $17,945.50. (See Costs. Summ. at 2.)
We must determine whether Thompson is in civil contempt for failing to comply with a court order. As discussed above, this requires that we find by clear and convincing evidence that (A) a valid court order existed; (B) the contemnor had knowledge of the order; and (C) the contemnor disobeyed the order. John T. ex rel. Paul T., 318 F.3d at 552 (quoting Harris, 47 F.2d at 1326). Here, as set forth below, Paddick has established by clear and convincing evidence that the three elements necessary to establish contempt are present.
Of the several orders this Court entered compelling Thompson to disburse funds to Paddick, it is the June 18, 2018 order that gives rise to this contempt motion. In that order, we mandated that Thompson "disburse funds in her escrow account in accordance with our May 24, 2018 order by June 25, 2018." (Doc. 381.) Our May 24, 2018 order had unambiguously compelled Thompson to "disburse to Paddick his award . . . by June 1, 2018." (Doc. 369.) Thompson nowhere suggests that either order is in any way unlawful, improper, or invalid.
The impact of the Court's June 18, 2018 order was eminently clear to Thompson. Indeed, after the June 25, 2018 deadline passed, she filed a June 26, 2018 motion for a stay in the Third Circuit. (See Resp. to Costs at 3.) Whatever her opinions on the court's order may have been, it is clear that she knew about it.
Thompson does not dispute the fact that she failed to comply with our order compelling payment by June 25, 2018. It was not until after October 9, 2018—over three months later—that Paddick received payment.
We understand Thompson to assert two defenses: that the writ of execution prevented her from complying with our order, and that her due process right to appeal vitiated our June 18, 2018 order. We consider each in turn.
Thompson contends that the writ of execution placed a "legal hold" on her account that prevented her from disbursing funds to Paddick.
A charge of civil contempt may be defended with an assertion that the contemnor was unable to comply with the order in question. See United States v. Rylander, 460 U.S. 572, 757 (1983) (citations omitted); United States v. Chabot, 681 Fed. Appx. 134, 136 (3d Cir. March 13, 2017). "However, the burden is that of the defendant to introduce evidence beyond a mere assertion of inability, and to show that [she] has made in good faith all reasonable efforts to comply." Harris, 47 F.3d at 1324 (internal quotations and citations omitted).
Thompson has failed to establish an inability to comply with our June 18, 2018 order. She is correct that the writ instructs that the "garnishee is enjoined from paying any debt to or for the account of the defendant and from delivering any property of the defendant or otherwise disposing thereof." (See Doc. 408 at 2.) But Thompson's own statements — which show that the writ was not effectively served until on or after July 26, 2018 — undercut her argument. As she noted in her September 19, 2018 filing, Paddick's first two attempts to serve the writ were ineffective.
In any event, Thompson has failed to meet her burden establishing that she took reasonable efforts to comply with the order. She might have, for example, asked Paddick to rescind the writ or petitioned this Court to suspend it under Rule 70 so that she could write a check. But she has offered no evidence to show that she made any effort to find a solution. The upshot is her bare assertion that her hands were tied because of the writ. The "mere assertion of inability," however, is not enough to meet her burden. See Harris, 47 F.3d at 1324. This defense must fail.
Thompson's next argument boils down to her assertion that she is being "punished for exercising due process rights to an appeal and applying for a stay of execution of judgment pending the appeal." (Opp. Brief at 2.) Her motive for non-payment in this context was clear, as she believed that "once the money [was] distributed it [was] unlikely to be collected again." (Id.)
As discussed above, it is fundamental that pendency of appeal does not excuse obedience with a valid court order. Maness v. Meyers, 419 U.S. 449, 458 (1975) ("We begin with the basic proposition that all orders and judgments of courts must be complied with promptly. If a person to whom a court directs an order believes that order is incorrect the remedy is to appeal, but, absent a stay, [she] must comply promptly with the order pending appeal. Persons who make private determination of the law and refuse to obey an order generally risk criminal contempt even if the order is ultimately ruled incorrect."); see also Island Creek Coal Sales Co. v. City of Gainesville, Fla., 764 F.2d 437, 440-41 (6th Cir. 1985) ("Where, as here, the district court is attempting to supervise its judgment and enforce its order through civil contempt proceedings, pendency of appeal does not deprive it of jurisdiction for these purposes."). Thompson was entitled to exercise her appellate rights, and she has done so. While substantively the matter is pending, the Court of Appeals denied her request for a stay of our Orders of May 24, 2018 and June 18, 2018 by its Order dated July 17, 2018 and docketed August 23, 2018. See Butt v. United Brotherhood, No. 18-2272, BL-18 (3d Cir. Aug. 23, 2018). Accordingly, this defense fails.
Finally, we must determine what remedy appropriately compensates Paddick for the attorney-time he incurred because of Thompson's failure to comply with the court order. In his November 15, 2018 Summary of Costs and Time, Paddick asks for $17,945.50 "for matters seeking payment since June 26, 2018." (Costs Summ. at 2.)
The Third Circuit has made clear that a district court has wide discretion in fashioning a civil contempt remedy. See Delaware Valley Citizens' Council for Clean Air v. Com. of Pa., 678 F.2d 470, 478 (3d Cir. 1982) (citations omitted). The remedy itself is designed to place the complainant in the position he would have been had the contemnor complied with the court order. Robin Woods Inc., 28 F.3d at 400. This includes compensating the complainant for the expense of investigating the violation of the order and preparing for and conducting the contempt proceeding, in addition to attorneys' fees. See id. at 401.
An award of attorneys' fees and costs to the prevailing party in a civil contempt action is determined according to the "lodestar method." Horizon Unlimited, Inc. v. Silva, No. 97-7430, 2002 WL 1896297, at *1-2 (E.D. Pa. August 15, 2002). The lodestar calculation involves determining the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate, Hensley v. Eckerhart, 461 U.S. 424, 433 (1983), and is presumed to yield a "reasonable fee." Further, "under the lodestar method, `[t]he party seeking attorney's fees has the burden to prove that its request . . . is reasonable." Clemens v. New York Central Mut. Fire Ins. Co., No. 17-3150, 2018 LEXIS 25803, at *7 (3d Cir. Sept. 12, 2018) (citation omitted). Once the party seeking fees provides such evidence the burden shifts to its adversary to contest, with sufficient specificity, the reasonableness of the hourly rate or the hours expended. Rode v. Dellareciprete, 892 F.2d 1177, 1183 (3d Cir. 1990). If the party opposing the fee application meets its burden, the Court has wide discretion to adjust the attorneys' fee for inadequate documentation, duplication of effort, unreasonableness of hours expended, or lack of relation to the results obtained. Ursic v. Bethlehem Mines, 719 F.2d 670, 677 (3d Cir. 1983). A district court may also adjust the lodestar amount downward if the amount is not reasonable in light of the results obtained. Rode, 892 F.2d at 1183.
Paddick seeks $17,945.50 to compensate him for some 75.65 hours spent on execution of the judgment and in bringing this contempt motion. Thompson objects, arguing that Paddick is not entitled fees as a pro se litigant, that the fees of Michael Reed, Esq., whom Paddick engaged as counsel, are not compensable because a genuine attorney-client relationship did not exist, that the Court would be "double-paying" Paddick if we grant him recovery of attorney's fees, that his "travel time" is non-compensable, and that any fees, if at all granted, should be limited to the time period between June 26 and July 10, 2018.
We note at the outset that Paddick can recover compensation for the attorney-time he incurred even though he represented himself pro se. It is undeniable that he incurred a loss—the value of the time involved in seeking payment—and that that loss was the direct result of Thompson's disobedience. Because civil contempt sanctions sound in equity, we find it fundamentally fair for Thompson to pay for the value of the services necessitated by her noncompliance. See Leman v. Krentler-Arnold Hinge Last Co., 284 U.S. 448, 457 ("[T]here is no reason why in [a contempt] proceeding equitable principles should not control the measure of relief to be accorded to the injured party."); Delaware Valley, 678 F.2d at 478 (noting that a district court possesses wide equitable discretion in fashioning a civil contempt remedy); see also J. Moore, Moore's Federal Practice, ¶ 54.173[1][a], p. 54-425 (3d ed. 2011) ("Pro se litigants, whether lawyers or not, generally may collect fees under any of the equitable exceptions to the American Rule. This is logical, for the exceptions permits fees where appropriate as a matter of equity, and equitable considerations may be present regardless of whether the fee movant was represented by counsel or not."). Paddick alerted Thompson that he would hold her responsible for fees if she continued to refuse payment. (See, e.g., Doc. 426, Ex. M-2). We conclude that his losses justly fall upon her shoulders.
We have reviewed Paddick's Summary of Costs and Time and the attached time entries designated Exhibit "M-2a," in which he requests compensation for 75.65 hours of attorney-time expended from June 26, 2018 to November 15, 2018. For ease of reference, we consider his fee requests page by page using the time-entry exhibit docketed November 15, 2018. (Doc. 445-1.)
We decline to credit nearly all of the time expended between June 27, 2018 and July 27, 2018 in that we awarded him compensation for the same in our October 9, 2018 memorandum opinion and order.
We credit all of Paddick's time entries between August 22, 2018 and November 9, 2018 finding that they were reasonably expended with the exception of 0.37 hours titled "math is bad" and 1.12 hours spent traveling.
We finally consider what compensation, if any, Paddick is due for the time expended by Michael Reed, Esq., whom Paddick retained as counsel for "matters seeking [Thompson's] compliance . . . with the Court's orders for payment." (Costs Summ. at 1.) Thompson objects, arguing that Paddick "failed to present admissible evidence" regarding Reed's fees. (See Resp. to Costs. at 2.) She contends that Paddick presented only "hearsay testimony about Attorney Reed's activities" and that his documents are "unauthenticated." (See id.)
Reed expended 7.61 hours "draft[ing] contempt papers . . . draft[ing] int[errogatories] for garnishment . . . [a]dvising [Paddick] by email and phone [about the] execution process" and performing similar attorney work. (See Doc. 445-1 at 13-14.) We find that this amount of time was reasonable for the subject matter involved and necessary in that execution was a prerequisite to payment in light of Thompson's noncompliance with the court order. And although Thompson objected to the presentation of this evidence at the hearing, we explicitly overruled her objection as Paddick himself testified as to the document's authenticity. (See Fed. R. Evid. 901(b)(1) (testimony of a witness with personal knowledge satisfies authentication requirement). Accordingly, we credit Reed's 7.61 hours at his rate of $300.00 per hour, which equals $2,283.00.
In sum, we thus credit Paddick for $14,760.50 in attorney time spent attempting to secure Thompson's compliance with this Court's order.
By clear and convincing evidence, we find that Thompson knew of, and failed to comply with, our June 18, 2018 order compelling her to disburse funds to Paddick. Further, she failed to establish any valid defense. As a result of her noncompliance, Paddick took alternative measures to secure payment, and sought reimbursement for those efforts by bringing this contempt motion. For reasons stated above, we conclude that Thompsons must compensate him
After he was terminated, but before the case reached settlement, Paddick put Ms. Thompson on notice of his lien claims as against any future recovery. (See, e.g., Doc. 306-8) (October 2015 email from Paddick to Thompson stating that "hourly [fees] from the time spent on the appeal remains due . . . [and] fees remain due on the work I did on the cases prior to your stepping in"). He was unsuccessful, however, in convincing Thompson to honor his lien, and on November 13, 2017 he filed a Motion for Recognition and Enforcement of Lien (Doc. 305-306), which we resolved with the issuance of our April 27, 2018 order and accompanying memorandum opinion.
