decided: March 12, 1985; As Amended March 20, 1985 and May 7, 1985.*fn1.
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 84 C 7303-Bernard M. Decker, Judge.
Cummings, Chief Judge, Wood and Cudahy, Circuit Judges.
WOOD, Jr., Circuit Judge.
Petitioner, Hugh Thom, appeals the denial of his petition for a writ of habeas corpus. Thom challenges his continued confinement for civil contempt for his failure to pay $115,172.68 in satisfaction of a judgment entered against him on November 21, 1983 in favor of Metal Improvement Co. Thom contends that the writ should issue because he is currently unable to pay the judgment and the coercive effect of the incarceration is therefore vitiated.
Metal Improvement Co. is a nation-wide provider of shot-peening services.*fn2 Hugh Thom was employed at Metal Improvement Co. through 1980 where he had access to confidential information on Metal Improvement's shot-peening business such as specifications, drawings, blueprints, pricing lists, etc. Thom took this confidential information with him when he left and used it to perform shot-peening services in competition with Metal Improvement Co. In February, 1981, a federal district court ordered Thom to return to Metal Improvement all confidential information obtained while employed, to file a certificate of compliance, and to stop shot-peening. Thom disobeyed, continuing to shot-peen, failing to turn over all confidential documents, and knowingly filing a false certificate of compliance.
On March 16, 1983, the court found Thom in civil contempt and ordered him to pay Metal Improvement Co. $20,614.37 and to file another certificate attesting to the turnover of all confidential information. A recalcitrant Thom continued to shot-peen, failed to pay the $20,614.37, and failed to file a new certificate of compliance. On November 21, 1983, the district court found Thom in civil and criminal contempt. The court committed Thom to the custody of the United States Marshal until he paid $39,832.41 to Metal Improvement Co. and filed a new certificate of compliance. The court also sentenced Thom to sixty days for criminal contempt after compliance with the civil contempt order. Finally, the court ordered Thom to disgorge to Metal Improvement Co. $115,172.68 he had received from American Motors Company for shot-peening.*fn3
Thom paid the $39,832.41 and filed the certificate of compliance.*fn4 He did not, however, pay the $115,172.68, and on July 2, 1984, Judge Decker held a hearing on Metal Improvement's motion for an order to require Thom to satisfy the judgment. After the hearing, Judge Decker entered an order holding Thom in civil contempt for failure to pay and committed him to the custody of the United States Marshal until he pays Metal Improvement Co. $115,172.68 or until such further order of the court.*fn5 Thom appealed the civil contempt order but later withdrew the appeal pursuant to a settlement effort that ultimately fell through. Thom was incarcerated on August 16, 1984.
On August 23, 1984, Thom filed a petition for a writ of habeas corpus. After conducting a hearing on Thom's ability to pay, Judge Decker denied the petition on August 29. This appeal followed.
It is well-settled that "civil contempt is coercive in nature, and consequently there is no justification for confining on a civil contempt theory a person who lacks the present ability to comply." McNeil v. Director, Patuxent Institution, 407 U.S. 245, 251, 32 L. Ed. 2d 719, 92 S. Ct. 2083 (1972) (citing Maggio v. Zeitz, 333 U.S. 56, 92 L. Ed. 476, 68 S. Ct. 401 (1948)). The district court found, after conducting two hearings, that as of August 29, 1984 Thom had the ability to pay the $115,172.68 judgment.*fn6 We review this factual finding to determine if it is clearly erroneous. See Walaschek & Associates, Inc. v. Crow, 733 F.2d 51, 53 (7th Cir. 1984); Jewel Tea Co. v. Kraus, 204 F.2d 549, 551 (7th Cir. 1953).
The record contains the following evidence which, if believed, supports a finding of present ability to pay:
1) A January 5, 1984 Supervision Report that Thom filed with his probation officer in an unrelated criminal matter. In this Report, Thom represented that he was president of Meromorphic Labs., that he was receiving $15,000 per month in salary and had been receiving this salary since the last Report, that he had $260,000 in savings, that he owned a 1982 Lincoln Continental, and that he had no indebtedness. Metal Improvement Co.'s Appendix.
2) Thom's March 14, 1984 deposition testimony that the January 5 Report was true except for his statement of income which was ...