MEMORANDUM OPINION AND ORDER
MARVIN E. ASPEN, Chief Judge:
Presently before this court are objections to three orders and recommendations of Magistrate Judge Rosemond, a motion for contempt and issuance of writs of sequestration and assistance, and defendant Michelle Chang's "Motion To Strike And Dismiss Guess?'s Amended Complaint Or In The Alternative For Summary Judgment, Or In The Alternative For A More Definite Statement." For the reasons set forth below, we grant in part and deny in part Guess?'s motion for contempt, overrule the defendants' objections to Magistrate Judge Rosemond's orders of August 25 and 28, overrule Guess?'s objections to Magistrate Judge Rosemond's order of August 23, and deny Michelle Chang's motion to strike and dismiss or for summary judgment.
Although the facts of this case have already been laid out in our prior opinion, Guess?, Inc. v. Chang, 163 EF.R.D.F 505, 1995 U.S. Dist. LEXIS 19417 (N.D. Ill. 1995), we nonetheless must briefly reiterate the relevant background in order to resolve the instant matters. The plaintiff alleges that merchandise bearing counterfeit Guess? trademarks was sold and distributed in the Chicago area by defendant Unique Fashions and its Korean-American principals, who apparently have a limited command of the English language. Def.'s Obj. to 8/1/95 Rec., Ex. B. PP 5-6.
On June 15, 1994, Guess? filed the initial complaint against Edwin Chang, Unique Fashions, and Jae Hwan Kim, and the following day obtained an ex parte seizure order for approximately 500 counterfeit Guess? garments held by Unique Fashions. Soon afterwards, Guess? began negotiations with James T. Hyun, counsel for the defendants, in the hope of reaching a settlement. However, neither the defendants nor their attorney appeared before us, and on October 13, 1994 we granted Guess?'s motion for entry of default. We also granted Guess? leave to file an amended complaint in order to name Michelle Chang, Edwin Chang's wife, as a defendant. Instead of personally serving Michelle Chang, the plaintiff gave the amended complaint to Hyun based on its belief that he represented her as well as the other defendants. It was later learned that Hyun did not represent Michelle Chang and did not have authority to receive service on her behalf.
As the chances of a negotiated settlement faded, Guess? moved for default judgment against all the defendants, and on February 17, 1995, we entered default judgment in the amount of $ 476,283 plus attorney's fees. On March 9-10, 1995, Guess? personally served "Citations to Discover Assets" on the defendants in the hopes of finding a means of satisfying the judgment. In addition to informing the defendants of their right to claim certain statutory exemptions at the time of the citation hearing, the Citations also stated:
YOU ARE PROHIBITED from making or allowing any transfer or other disposition of, or interfering with, any property not exempt from execution or garnishment belonging to the judgment debtors or to which the judgment debtors may be entitled or which may be acquired by or become due to the judgment debtors and from paying over or otherwise disposing of any money not so exempt, which is due or becomes due to the judgment debtors, until further order of court or termination of the proceedings.
Def.'s Obj. to 8/1/95 Rec., Ex. 2.
Pursuant to the Citations, Mr. Chang appeared (without counsel) at a status hearing before Magistrate Judge Rosemond on March 23, 1995, and indicated that he was unaware of the judgment entered against him. On April 6, 1985, Edwin Chang again appeared before Magistrate Judge Rosemond, this time accompanied by his wife Michelle Chang, but still without Mr. Hyun. After the status hearing Mr. Chang agreed to give sworn deposition testimony to Guess?'s attorney, at which time it was explained to Mr. Chang that, pursuant to the Citations, neither he nor his company were permitted to transfer or dispose of any assets. Edwin Chang Dep., at 45-46. Both Mr. Chang and Mrs. Chang indicated that although they previously did not understand this restriction in the Citations, they were now cognizant of its import. Id.; Michelle Chang Dep., at 21.
After this meeting Guess? began to doubt the Changs' compliance with the terms of the Citation, and on June 20, 1995, obtained a turnover order from Magistrate Judge Rosemond. Based on information indicating that Mr. Chang possessed $ 5000 in cash, some valuable jewelry, and an "inventory of 'team jackets' valued at approximately $ 20,000.00-30,000.00," the magistrate judge ordered Mr. Chang to turn over all this property to Guess?. 6/20/95 Ord., at 3.
In addition, he ordered Michelle Chang to turnover $ 1000 in cash and certain pieces of jewelry. Soon thereafter, the defendants retained a new attorney, and moved before this court for a stay of the turnover order and a vacation of the default judgment. We denied the motion for a stay on June 27, 1995, and directed the defendants to comply with the magistrate judge's turnover order. On August 17, 1995, we denied Edwin Chang's motion to vacate the default, but granted Michelle Chang's motion to vacate because she had never been properly served with the Amended Complaint. Although vacating the default as to Ms. Chang, we declined to disturb the June 20, 1995 turnover order, observing that the magistrate judge's concerns over the defendants' violation of the Citations had not been alleviated.
Ms. Chang was properly served about a week later, and now, in what can best be described as a scatter-shot approach, she has moved to either strike or dismiss the complaint, order a more definite statement, or obtain summary judgment.
In the meantime, prior to our ruling on the motion to vacate, Guess? sought an order of criminal contempt and the issuance of writs of sequestration and assistance, arguing that the defendants had failed to hand over any of the property identified in the June 20, 1995 turnover order. On July 21, 1995, two days after the motion was filed, the defendants made available to Guess? the jewelry referred to in the order, but did not deliver the $ 6000 in cash (claiming that they had no money) or the "team jackets" (ostensibly because they were held on consignment and were no longer in Edwin Chang's possession). After a hearing on the matter with counsel for both parties present, Magistrate Judge Rosemond issued a report and recommendation on August 1, 1995, recommending that we hold the Changs in contempt for either refusing to turnover the property identified in the June 20, 1995, or, if they no longer had the property, for violating the non-transfer provision of the March 1995 Citations. He recommended the Changs pay (1) $ 500 per day from June 27 (the date we denied the defendants' motion for stay of the turnover order) to July 21 (the date the defendants turned over the jewelry), for a total of $ 12,000; (2) $ 250 per day from July 21 until they complied with the turnover order; and (3) Guess?'s attorney's fees and costs in moving for contempt. In addition, the magistrate judge recommended issuing Writs of Sequestration and Assistance to seize the Changs' Infiniti automobile and other personal possessions in order to compel compliance with the turnover order. Finally, the magistrate judge issued a Rule to Show Cause why the Changs should not be held in criminal contempt, and ordered the defendants to appear on August 16, 1995.
On August 9, 1995, Edwin Chang turned over to Guess? an inventory of jackets, pants, vests, and hats from Unique Fashions. In explaining why he did not turnover these items prior to that date, Mr. Chang claimed that he did not completely understand the turnover order of June 20, 1995.
At the August 16, 1995 hearing, the Changs appeared before Magistrate Judge Rosemond and presented an affidavit outlining their expenses since March 1995, as well as a motion to exempt certain property from the Citations. The magistrate judge confirmed his August 1 finding of contempt, but continued the Rule to Show Cause on criminal contempt pending our resolution of the objections filed by the defendants to his August 1 recommendations. The court also granted the defendants' motion to exempt $ 7,445 in borrowed funds, and $ 2,000 per month in living expenses, from the Citations. Magistrate Judge Rosemond denied the remainder of the defendants' motion for exemption of personal property on August 29, 1995, finding the request untimely.
We first address the recommendation that Edwin and Michelle Chang be held in contempt of court for failing to comply with the Citations and the turnover order. We then move on to consider the objections filed in response to the various orders of the magistrate judge. Lastly, we consider the dispositive motion filed by Michelle Chang in response to the Amended Complaint.
A. Contempt of Court
The recommendation for contempt is based on the failure of Michelle Chang or Edwin Chang to turn over three sets of items specifically referred to in the June 20, 1995 order: (1) $ 6000 in cash held by both Michelle and Edwin Chang, (2) various pieces of jewelry and a life insurance policy, and (3) an inventory of "team jackets" held by Edwin Chang and Unique Fashions. Neither defendant has complied with the requirement that they turn over the cash, arguing that they have expended these funds on necessities. On July 21, 1995, both defendants turned over the materials listed in the second category above, thirty-one days after ordered to do so by Magistrate Judge Rosemond, and twenty-four days after we denied a stay of the turnover order. Finally, on August 9, 1995, Edwin Chang made available to Guess? the inventory of Unique Fashions, which consisted of approximately 1,500 articles of clothing, most of which was not held on consignment but was owned by Unique Fashions.
Although the parties do not directly address the issue, it is necessary to consider whether the recommended finding of contempt is civil or criminal in nature. "A contempt sanction is considered civil if it 'is remedial, and for the benefit of the complainant. But if it is for criminal contempt the sentence is punitive, to vindicate the authority of the court.'" International Union, United Mine Workers of America v. Bagwell, 129 L. Ed. 2d 642, 114 S. Ct. 2552, 2557 (1994) (quoting Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 441, 55 L. Ed. 797, 31 S. Ct. 492 (1911)). Characterization of contempt as civil or criminal comes not from the subjective intent of the court, but "from an examination of the character of the relief itself." Hicks v. Feiock, 485 U.S. 624, 635-36, 99 L. Ed. 2d 721, 108 S. Ct. 1423 (1988). Thus, contempt sanctions of a conditional nature, in which "the contemnor is able to purge the contempt . . . by committing an affirmative act," are deemed civil. Bagwell, 114 S. Ct. at 2558. In contrast, because fixed sanctions that are imposed for prior misconduct or disobedience are of limited coercive value, they are deemed criminal in nature. Id. This distinction between civil and criminal contempt has been explicitly applied to fines, and has led to a bright line rule:
Where a contempt fine is not compensatory, it is civil only if the contemnor is afforded an opportunity to purge. Thus, a 'flat, unconditional fine' totalling even as little as $ 50 announced after a finding of contempt is criminal if the contemnor has no subsequent opportunity to reduce or avoid the fine through compliance.
Id. (citing Penfield Co. of Cal. v. SEC, 330 U.S. 585, 588, 590, 91 L. Ed. 1117, 67 S. Ct. 918 (1947)). This distinction is not simply used to perpetuate a legal taxonomy; rather, the classification of contempt as criminal or civil determines the amount of process the contemnor is due prior to an adjudication of guilt and the imposition of a sanction. Bagwell, 114 S. Ct. at 2556.
Although the magistrate judge did not consider whether any of his recommended contempt sanctions were criminal, we believe some of them fit into this category. The $ 12,000 fine for noncompliance from June 27 to July 21 ($ 500 per day) was not compensatory in nature, and the Changs had no possibility of reducing or avoiding the fine by complying with the remainder of the turnover order. Rather than seeking to assist the plaintiff in obtaining a recovery, the magistrate judge appeared to recommend the sanctions in order to vindicate the authority of the court. Indeed, the magistrate judge concluded that sanctions were appropriate because the defendants "seemed to be thumbing their nose[s] at the law." Tr. of 7/25/95 Hearing, at 7. Thus, we hold this sanction to be criminal in nature, and conclude that it could not have been imposed without the requisite procedural protections required by the Constitution. It does not appear from the record that sufficient protections were provided to the defendants in this case;
however, we need not define the exact contours of the defendants' procedural rights at this time. Instead, we simply decline to adopt this portion of the magistrate judge's recommendation, and remand the issue of the $ 12,000 in fines to the magistrate judge to consider whether to pursue this sanction in a constitutionally adequate proceeding.
We next address the $ 250 per day fine and the writs of sequestration and assistance, recommended by the magistrate judge because the Changs did not turn over the $ 6000 in cash they possessed at the time of the turnover order. The magistrate judge made this recommendation because either the defendants refused to comply with the directive of the turnover order, or they no longer had the money and transferred it in violation of the Citations. 8/1/95 Rec., at 3-4. If the contempt is based on the former proposition, and the defendants actually have the ability to comply with the turnover order, then the sanction is civil because it seeks to coerce their compliance. However, if the contempt is based on the latter scenario, and the defendants actually lack sufficient funds to satisfy the turnover order, then the sanction cannot be designed to coerce their compliance. Rather, its only purpose can be to punish the Changs for violating the non-transfer provisions of the Citations. As discussed above, the hearing before the magistrate judge on July 25, 1995 did not appear to comply with the constitutional requisites for a criminal proceeding. Thus, to the extent the contempt sanctions were criminal in nature, we cannot adopt the recommendation of the magistrate judge unless it is shown that the requisite procedures were provided to the Changs.
However, because the magistrate judge did not specifically find that the Changs do not have sufficient assets to comply with the turnover order, we cannot ascertain whether the fine and writs were designed to compel obedience or to punish. Accordingly, we decline to adopt this portion of the recommendation, and refer the matter back to the magistrate judge for a specific finding on the ability of the defendants to turn over $ 6,000 in cash.
Finally, we consider the $ 250 per day fine from August 1 until August 9, when Edwin Chang eventually provided Guess? with the inventory of Unique Fashions. This sanction was civil in nature: Mr. Chang obviously had the ability to comply with this portion of the turnover order, and could have completely avoided the fine had he made the materials available to Guess? by August 1, 1995.
Mr. Chang argues that his noncompliance was not willful, but occurred because of a misunderstanding as to the items that were specified in the turnover order and his belief that items on consignment could not be legally seized by Guess?. This argument is unconvincing both because willfulness is not required for civil contempt, see In re Establishment Inspection of Microcosm, 951 F.2d 121, 125 (7th Cir. 1991), cert. denied, 113 S. Ct. 55, 121 L. Ed. 2d 24 (1992); Stotler and Co. v. Able, 870 F.2d 1158, 1163 (7th Cir. 1989) (observing that civil contempt may be appropriate if party has not been "'reasonably diligent and energetic in attempting to accomplish what was ordered'"), and because Mr. Chang could not reasonably have claimed to have misunderstood the scope of the turnover order, since the items identified in the order were based on information he provided at his deposition. In sum, after conducting a de novo review of the record, we are in complete agreement with the magistrate judge that a civil fine of $ 250 per day was proper. Accordingly, we order Edwin Chang to pay Guess? $ 2000 for the eight days (August 1, 1995 to August 9, 1995) during which he was in noncompliance.
B. Objections to Orders of August 23, 25, 28
The parties next attack three rulings by the magistrate judge concerning the turnover order and the ability of the defendants to claim statutory exemptions to the Citations. On August 16, 1995, Edwin and Michelle Chang appeared with their attorney before Magistrate Judge Rosemond and presented a motion to claim exemptions from the Citations, as provided by 735 ILCS 5/2-1402(b), 5/12-1001. In this motion the defendants sought to exclude, inter alia, the jewelry already held by Guess? pursuant to the June 20, 1995 turnover order, $ 2,000 in personal property, and clothing expenses. On August 23, 1995, the magistrate judge granted the defendants' motion as to $ 3,445 borrowed by Edwin Chang from his mother and $ 4,000 advanced to the Changs from credit card companies. In addition, he permitted the defendants to continue borrowing funds to pay for necessities, up to a maximum of $ 2,000 per month. However, on August 28, 1995, the magistrate judge denied the remainder of the Changs' motion because their request was untimely. Meanwhile, on August 25, 1995, after we vacated the default judgment against Michelle Chang, the magistrate judge denied Michelle Chang's motion to reconsider the June 20 turnover order, finding that she had not dispelled the risk that she and her husband were disposing of assets and planning to flee the jurisdiction. The defendants now object to the partial denial of their motion to exclude property, and the denial of Michelle Chang's motion to reconsider the turnover order. Guess? objects to the partial grant of the Changs' motion to exclude property.
We first consider whether the motion to exclude was timely.
Although 5/2-1402(b) does not lay out a specific time limit for claiming exemptions, it does require citations to contain the following language:
THE JUDGMENT DEBTOR HAS THE RIGHT TO ASSERT STATUTORY EXEMPTIONS AGAINST CERTAIN INCOME OR ASSETS OF THE JUDGMENT DEBTOR WHICH MAY ACT BE USED TO SATISFY THE JUDGMENT. . . . THE JUDGMENT DEBTOR HAS THE RIGHT AT THE CITATION HEARING TO DECLARE EXEMPT CERTAIN INCOME OR ASSETS OR BOTH.