UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
TWO GENERAL ELECTRIC AIRCRAFT Civil Action No. 14-2213 {GK)
ENGINES, WITH ENGINE SERIAL
NUMBERS 695244 AND 705112,
AND ALL RECORDS PERTAINING
THERETO
Defendant.
Memorandum Opinion and Order
I . Background
This case began on December 30, 2014, when the United States
filed a Verified Complaint for Forfeiture in· Rem against two
General Electric aircraft engines with engine serial numbers
695244 and 705112 (the "Defendant Engines"). See Unopposed Order
to Repatriate the Defendant Properties ("Repatriation Order")
[Dkt. No. 32] (describing the history of this case). At the time
of the Government's Complaint, these engines were located in
Antalya, Turkey. Id.
Subsequently, Evans Meridians, Ltd. ("Evans," "Claimant") ,
filed a verified claim to the Defendant Engines.. Id. After filing
this claim, and unbeknownst to the Court or the Government, Evans
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transported the Defendant Engines from Turkey to Shanghai, China,
on or about July 27, 2015. Id.
In response, and pursuant to the Government's Motion for Order
to Repatriate, [Dkt. No. 31], on January 27, 2016, the Court
ordered Evans to either repatriate the Defendant Engines to the
United States or post a bond of $6,000,000 by March 31, 2016.
Repatriation Order. To date, Evans has done neither. 1
Accordingly, the Government filed a Motion for Order to Show
Cause why Evans should not be held in contempt for violating the
Repatriation Order. Mot. for Order to Show Cause [Dkt. No. 41].
The Court granted the Government's Motion, scheduled a contempt
hearing, and ordered that Evans' director or another
representative with authority to direct the affairs of the
corporation attend. Order ("Show Cause Order") [Dkt. No. 47].
On October 24, 2016, the contempt hearing was held. Pursuant
to the Court's Show Cause Order, Eugeny Bespalov, an attorney from
Russia with a power of attorney to bind Evans, attended and
testified.
1 Evans' counsel candidly admits that Evans has not complied with
the Court's Repatriation Order. Response to Mot. for Order to
Show Cause ("Response") at p. 3-4 [Dkt. No. 44]; Unofficial
Transcript of Show Cause Hearing ("Unofficial Transcript") at p.
17 ~~ 9-10. An unofficial transcript of the Show Cause Hearing
was prepared by the Court Reporter and will be filed on ECF.
2
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II. Legal Standard
"The Court has both an inherent and a statutory power to
enforce compliance with its orders and may exercise that authority
through a civil contempt proceeding." SEC v. Bankers Alliance,
Corp., 881 F. Supp. 673, 678 (D.D.C. 1995) (citing inter alia
Shillitani v. United States, 384 U.S. 364, 370 (1966); United
States v. United Mine Workers of America, 330 U.S. 258, 330-32
(1947); 18 u.s.c. § 401). "A party commits contempt when it
violates a definite and specific court order requiring him to
perform or refrain from performing a particular act or acts with
knowledge of that order." Id. (internal citations and quotations
omitted).
"[T]he moving party has the burden of showing by clear and
convincing evidence that (1) a court order was in effect, (2) the
order required certain conduct by the respondent, and ( 3) the
respondent failed to comply with the court's order." Id. The
respondent "may assert a present inability to comply with the order
in question" as an affirmative defense, but in doing so, has the
burden of production. U.S. v. Rylander, 460 U.S. 752, 757 (1983);
Tinsely v. Mitchell, 804 F.2d 1254, 1256 (D.C. Cir. 1986)
("impossibility of performance constitutes a defense to a charge
of contempt"). To meet this burden, the respondent "must
demonstrate his inability to comply categorically and in detail."
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Bankers Alliance, 881 F. Supp. At 678; SEC v. Showalter, 227 F.
Supp. 2d 110, 120 (D.D.C. 2002) (defendant cannot merely assert
inability, but must "establish that she has made . . . all reasonable
efforts" to comply (emphasis added)).
Even if the respondent cannot demonstrate that she is unable
to comply with the court's order, the court is required to consider
her "good-faith efforts to comply with [the] order in mitigation
of any penalty" the court might impose. Tinsely, 804 F. 2d at 1256.
"To show good faith, the [respondent's] duty includes the
obligation to be reasonably diligent and energetic in attempting
to comply with [the] court's order, and to pay what he can toward
the judgment." Showalter, 227 F. Supp. 2d at 120. A respondent
attempting to demonstrate that she has acted in good faith to
comply must provide "adequate detailed proof." Id.
Civil contempt is a remedial device, utilized to achieve
compliance with a court's order. Id. Therefore, the sanction
imposed is designed to secure compliance, not to punish. Bankers
Alliance, 881 F. Supp. at 678; United Mine Workers of America, 330
U.S. at 304 (the sanction imposed may be employed "to coerce the
defendant into compliance with the court's order").
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III. Analysis
A. Evans Is in Contempt of the Repatriation Order
Here, there is no question that Evans has failed to comply
with the Court's Repatriation Order, as Evans readily conceded
that it has not. Response at p. 3-4; Unofficial Transcript of
Show Cause Hearing ("Unofficial Transcript") at p. 17 ~~ 9-10.
Instead, Evans raises two arguments as to why the Court should not
hold it in contempt.
First, Evans argues that it is impossible to comply with
either prong of the Court's Order. Response at 5-6. Evans
forthrightly admitted that it has produced no evidence,
whatsoever, demonstrating that it is unable to either repatriate
the engines or post a $6,000,000 bond. Id.; Unofficial Transcript
at p. 18 ~~ 3-10. Consequently, as Evans has not produced even
one shred of evidence in support of its argument that it is unable
to comply with the Court's Repatriation Order, it is obvious that
Evans cannot meet its burden to demonstrate impossibility. 2
Second, Evans argues that it is making good faith efforts to
comply with the Repatriation Order. Response at 7. In support of
2 The only evidence presented at the Show Cause Hearing was the
testimony of Mr. Bespalov. When asked what assets Evans has,
information that would be necessary for the Court to determine
whether Evans has the ability to comply with the Repatriation
Order, Mr. Bespalov stated that he did not have any information
regarding Evans' assets. Unofficial Transcript at p. 44 ~ 4.
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this argument, Evans asserts that it has an ownership interest in
an entirely different set of engines that are located in Miami
(the "Miami Engines") and that it is currently attempting use its
stake in those engines to meet the terms of the Repatriation Order.
Id. The Government responds that the Miami Engines have nothing
to do with this case and argues that Evans' conduct regarding
those engines does not constitute a good faith effort to comply
with the Repatriation Order. Reply to Mot. for Order to Show Cause
("Reply") at 3-4.
The Court agrees with the Government. Taken at face value,
Evans' offer is not a concrete step towards compliance with the
Court's Repatriation Order, but a mere proposal with an uncertain
chance of success. Evans asserts that it can sell the Miami
Engines, and use the funds to pay some indeterminate portion of
the $6,000,000 bond, or alternatively, post the Miami Engines
themselves as substitute collateral for the $6,000,000 bond. Yet,
by Evans' owns admission, it lacks physical possession of the Miami
Engines, and the third party that does have possession of them has
some sort of monetary claim against Evans which clouds Evans' title
to them.
Thus, Evans presently lacks the ability to either sell the
Miami Engines or post them as substitute collateral, and it is
wholly uncertain whether Evans will ever have the ability to do
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so. All Evans has is a questionable plan for future action. That
plan does not constitute an effort at compliance, but is at best,
a proposal to make future efforts that, if successful, might
produce assets that would then enable Evans to make a good faith
effort at compliance.
Indeed, when Evans' conduct is viewed in its entirety, it is
' )
abundantly clear that it has not met its burden to demonstrate
that it made "all reasonable efforts to comply" with the Court's
Repatriation Order. Showalter at 120. A showing of good-faith
efforts by a contemnor requires her to bring forward evidence of
her ability to comply, so that the court may evaluate the efforts
she has actually made against those she had the capability to make.
Here, Evans' refusal to put forward such evidence dooms its
argument that it is making good faith efforts, just as surely as
it doomed its argument of impossibility.
Because Evans has failed to present any evidence of how much
it would cost to repatriate the Defendant Engines or what assets
Evans holds, the Court cannot conclude that Evans made all
reasonable efforts to repatriate the Defendant Engines.
Similarly, the absence of any evidence of Evans' financial state
makes it impossible for the Court to conclude that Evans has done
all it reasonably can to post the $6,000,000 bond. To show good
faith, Evans must demonstrate that it is "paying what [it] can."
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Showalter at 120. Yet, the Court has no way of knowing what Evans
"can" pay.
The sole piece of evidence before the Court is the testimony
of Mr. Bespalov. However, he failed to identify any steps that
Evans has taken to repatriate the Defendant Engines to the United
States beyond a single inquiry to the Chinese company that
!,-
allegedly possesses them, asking for their return. Unofficial
Transcript at p. 46 ~~ 17-20. Given the absence of meaningful
evidence, the Court does not consider Evans' single request to
have the Defendant Engines returned a reasonable effort at
compliance.
In sum, Evans has failed to present any evidence showing that
it was "reasonably diligent and energetic in attempting to comply
with this [C]ourt's order." Id. Therefore, the Court holds that
Evans has not made a good faith effort to comply with the
Repatriation Order. As Evans admits that it has failed to comply
with the Repatriation Order and has failed to offer any evidence
suggesting that it is unable to comply or has made a good faith
effort to do so, the Court finds Evans in civil contempt.
B. The Goverrunent's Proposed Sanction is Appropriate
The Court now turns to the question of what sanction would be
sufficient to coerce Evans to comply with the Repatriation Order.
United Mine Workers of America, 330 U.S. at 304. At the Show Cause
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Hearing, the Government sought a sanction of $15,000 per day until
Evans complies with the Repatriation Order.
In determining what constitutes an effectively coercive
sanction, the court "consider[s] the character and magnitude of
the harm threatened by continued contumacy, and the probable
effectiveness of any suggested sanction in bringing about the
result desired. /1
Id. In doing so, the court "consider [s] the
amount of [the contemnor 1 s] financial resources and the consequent
seriousness of the burden to that particular [contemnor] . /1
Id.
Where, as here, "the contemnor is the only one who possess the
relevant financial information, and chooses not to disclose it, 11
the Court's inability to consider the contemnor 1 s financial
resources is not a bar to imposing sanctions. See Richmark Corp.
v. Timber Falling Consultants, 959 F.2d 1468, 1481-82 (9th Cir.
1992) (internal quotation marks and citations omitted).
In this case, the harm created by Evans 1 continuing failure
to repatriate the Defendant Engines is substantial. The
Government's Complaint alleges that the Defendant Engines were
destined for Iran, and more specifically, the Islamic
Revolutionary Guard Corps-Qods Force, a designated Foreign
Terrorist Organization. See Complaint. If correct, each day that
the Defendant Engines remain outside the United States increases
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the risk that they will arrive at their intended destination, and
thereby benefit a hostile organization.
In addition, the Government's proposed sanction of $15, 000
per day appears reasonably calculated to coerce compliance with
the Repatriation Order. If Evans were to refuse to comply for one
year, the sanction would total roughly $5.5 million dollars. This
amount is less than the $6,000,000 bond contained in the
Repatriation Order and falls between the disputed estimated values
of the Defendant Engines. See Response at 2, 4 n.3 (noting that
Evans values the engines at roughly $4,000,000, while the
Government likely values them at roughly $6,000,000). Therefore,
to the extent that Evans has any assets, which remains an open
question, the proposed sanction presents Evans with the choice of
repatriating Defendant Engines within a year or risk forfeiting
assets roughly equivalent to the value of Defendant Engines.
Thus, the Government's proposed sanction is reasonably
calculated to coerce Evans' compliance with the Repatriation
Order. 3
3 A sanction of roughly equivalent size was held reasonable under
similar circumstances. See Richmark, 959 F. 2d 1468 (upholding
sanction of $10, 000 per day against a foreign defendant who refused
to provide information about its assets)
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IV. Conclusion
For the foregoing reasons, the Court holds Claimant Evans
Meridian in civil contempt of its Repatriation Order, and imposes
a sanction of $15, 000 per day until Evans complies with the
Repatriation Order. It is hereby
ORDERED, that Evans Meridians, Ltd. , shall be held in contempt
of Court for violating the Repatriation Order; and it is further
ORDERED, that the Court shall sanction Evans Meridians, Ltd.,
by requiring that it pay a fine of $15,000 per day, from the day
this Order issues until it complies with the Repatriation Order,
to the Registry of the Court.
GladySK:Sler
November 2, 2016 United States District Judge
Copies via ECF to all counsel of record
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