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Arma Yates, LLC v. Arma Care Center, LLC

United States District Court, N.D. Illinois, Eastern Division

May 14, 2018

Arma Yates, LLC, et al., Plaintiffs,
v.
Arma Care Center, LLC, et al., Defendants.

          MEMORANDUM OPINION & ORDER

          Honorable Thomas M. Durkin United States District Judge.

         For the reasons set forth below, plaintiffs Arma Yates LLC, Florence Heights Associates LLC, Hutchinson Kansas LLC, Minnesota Associates LLC, Ogden Associates LLC, Peabody Associates Two LLC, Sedgwick Properties LLC, and Wellington Subleasehold LLC's (“Judgment Creditors'”) motion for a rule to show cause against defendant Jon Robertson (“Robertson”) [138], as recently supplemented [189], is granted in part and denied in part.

         Background

         On July 14, 2016, this Court entered an agreed order requiring the production of certain records prior to Robertson's deposition in this case. R. 84. The order required Robertson to “produce, on or before July 21, 2016, all business records and correspondence dating at least as far back as the filing of this lawsuit, to the extent such documents are in his possession or under his control, related to: . . . d. Details regarding any transfer of the [Esther Johnson Trust (‘Trust')], or any assets held in or by the Trust, overseas or elsewhere including, if possible, an accounting of Trust funds transferred.” R. 84 ¶ 1. Judgment Creditors believe that Robertson did not produce all Trust-related documents that were in his possession or control. Robertson claims that he produced all relevant documents in his possession or control.

         On December 16, 2016, this Court entered judgment in favor of Judgment Creditors in the amount of over $30 million. R. 107. The judgment remains largely unsatisfied. Judgment Creditors issued citations to discover assets on March 10, 2017. R. 108; R. 112. When Judgment Debtors failed to comply with the citations, Judgment Creditors followed up with motions to compel, and this Court granted those motions. R. 114; R. 116; R. 127. On April 15, 2017, the Court entered a turnover order specifically directing Robertson to comply with the citations. R. 128; R. 130.

         On May 22, 2017, Judgment Creditors moved for a rule to show cause. R. 138. That motion sought, among other things, an order for “Judgment Debtors J. Robertson and [his wife] S. Robertson . . . to appear before the Court to answer questions, under oath, propounded by the Court and counsel for Judgment Creditors.” Id. at 7. At a show cause hearing on May 31, 2017, the Court granted Judgment Creditors' request and ordered an evidentiary hearing to take place. R. 142.

         The evidentiary hearing was subsequently postponed several times, first by Robertson's request for a continuance (R. 157) and then by Robertson and his wife's two successive bankruptcy filings (R. 159; R. 163). The first bankruptcy case was dismissed by the United States Bankruptcy Court for the District of Utah on September 20, 2017. R. 160-1. In the second bankruptcy case, the Bankruptcy Court issued an order on December 4, 2017 “confirm[ing] that the automatic stay has terminated with respect to the Debtors under 11 U.S.C. § 362(c)(3) as to any actions by the Judgment Creditors with respect to the judgment debt owed to them by the Debtors” and expressly authorizing this Court to convene a show cause hearing in this case. R. 164-1 at 2-3.

         After continued scheduling difficulties (see R. 167; R. 168; R. 173), the Court ultimately conducted a two and a half hour evidentiary hearing on March 1, 2018. R. 186. The Robertsons and one of the Judgment Creditors' counsel appeared by video. R. 187 at 1. At the end of the hearing, the Court authorized Judgment Creditors to supplement their motion for rule to show cause. Id. at 87. Judgment Creditors filed a supplement a few weeks later (R. 189), Robertson responded (R. 193), and the Judgment Creditors replied (R. 194).

         Analysis

         As set forth in Judgment Creditors' supplement to their motion for rule to show cause, Judgment Creditors seek three forms of relief against Robertson: (1) “civil contempt (until such time as he provides credible evidence as to the location of the Trust's assets or transfer of same), [2] criminal contempt (incarceration for providing perjurious testimony and material misrepresentations . . .), and/or [3] a referral to an appropriate United States Attorney's Office for prosecution for providing false statements and testimony, and/or bankruptcy fraud.” R. 189 at 2. The Court addresses each form of requested relief in turn.

         Civil Contempt.

         “To hold a party . . . in civil contempt, the district court must be able to point to a decree from the court which set[s] forth in specific detail an unequivocal command which the party . . . in contempt violated.” Jones v. Lincoln Elec. Co., 188 F.3d 709, 738 (7th Cir. 1999). As the Jones court further explained:

civil contempt proceedings may be classified into two categories. Coercive sanctions, which are really the essence of civil contempt, seek to induce future behavior by attempting to coerce a recalcitrant party or witness to comply with an express directive from the court. Remedial sanctions, by contrast, are backward-looking and seek to compensate an aggrieved party for losses sustained as a result of the contemnor's disobedience of a court's order or decree made for the aggrieved party's benefit. However, irrespective of the nature of the civil ...

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