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ISRAEL v. CARPENTER

July 7, 2003

DONALD M. ISRAEL AND MARK R. TAYLOR, PLAINTIFFS,
v.
DANIEL E. CARPENTER, BENEFIT CONCEPTS NEW YORK, INC., AND VOLUNTARY BENEFIT SYSTEMS, INC., DEFENDANTS.



The opinion of the court was delivered by: James Francis, Magistrate Judge

MEMORANDUM AND ORDER

The plaintiffs, who have obtained a judgment against the defendant, Daniel E. Carpenter, now seek to hold the defendant in contempt of court for failing to honestly disclose his assets during the course of his post-judgment deposition. The plaintiffs also seek various forms of equitable relief, including a court-imposed constructive trust over any of Mr. Carpenter's or his wife's assets, and an injunction preventing New England Mutual Life Insurance Company ("New England") or the Robert E. Burns Agency (the "Burns Agency") from making any change in their payments to any Benistar entity. For the reasons that follow, the plaintiffs' motion is denied.

Background

The plaintiffs have obtained a judgment against Mr. Carpenter, and despite continuous efforts to satisfy the judgment, they have been unable to do so. The plaintiffs have conducted extensive post-judgment discovery in order to determine whether Mr. Carpenter has any income or assets. As part of that discovery, the plaintiffs deposed Mr. Carpenter in Connecticut, not as part of the instant action, but rather, in an action commenced in the United States District Court for the District of Connecticut in 2000. Israel v. Carpenter, 00-MC-546 (Conn. 2000). In that action, the plaintiffs registered this Court's judgment in Connecticut.

The plaintiffs contend that documents they received from New England pursuant to a subpoena demonstrate that Mr. Carpenter lied during his post-judgment deposition. (Plaintiffs' Memorandum of Law in Support of Motion to Hold Defendant in Contempt and for Other Relief ("Pl. Memo.") at 1-4; Plaintiffs' Notice of Motion to Hold Defendant in Contempt and for Other Relief dated October 11, 2002 ("Pl. Notice of Motion"), Exhs. B, C). They claim that these documents contradict Mr. Carpenter's repeated assertions that he had no ownership interest in companies known as Benistar Insurance Group ("Benistar Insurance"), Benistar Administrative Services, Benistar Property Exchange Trust Company, Inc., or Benistar Limited. (Deposition of Daniel E. Carpenter dated May 3, 2001 ("Carpenter Dep."), attached as Exh. A to the Pl. Notice of Motion at 36, 43, 91). Specifically, the plaintiffs note that the documents reflect that Mr. Carpenter signed a contract with New England on behalf of Benistar Insurance as its agent and sub-agent in early 1997. (Corporate Agent Contract (the "Contract") dated February 14, 1997, attached as Exh. B to the Pl. Notice of Motion). From this Contract as well as other commission statements, the plaintiffs infer that Mr. Carpenter is an owner of Benistar Insurance Group. (Pl. Memo. at 1-2). Based on the defendant's post-judgment deposition testimony, where he disavowed all ownership interests in any Benistar entity, the plaintiffs request that this Court hold the defendant in contempt. (Carpenter Dep. at 36, 91).

In addition to their contempt claim, the plaintiffs also seek various forms of equitable relief. These include an injunction prohibiting any change in the payee for any payments made by New England or the Burns Agency to any Benistar entity as well as the imposition of a constructive trust on any monies paid by New England or the Burns Agency to any Benistar entity.*fn1

I held hearings on January 29 and February 10, 2003, to explore the contempt issue. After the first hearing, I ordered that the defendant attend the February 10 hearing. Despite my order, Mr. Carpenter failed to appear.

Discussion

A. Contempt

1. The Defendant's Deposition Testimony

"It is a firmly established principle that the power to punish for contempt is an inherent power of the federal courts." People of the State of New York by Abrams v. Terry, 45 F.3d 17, 23 (2d Cir. 1995); see Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 450 (1911) ("the power of courts to punish for contempt is a necessary and integral part of the independence of the judiciary"). Federal courts "are universally acknowledged to be vested, by their very creation, with power to impose silence, respect, and decorum, in their presence, and submission to lawful mandates." Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991). A court's contempt power stems from the "`control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.'" Id. (quoting Link v. Wabash Railroad Co., 370 U.S. 626, 630-31 (1962)).

There are two different types of contempt: civil and criminal. In order to determine whether a contempt is civil or criminal, the court must examine "the substance of the contempt proceeding and the `character and purpose' of the sanction involved." D'Orange v. Feely, 959 F. Supp. 631, 637 (S.D.N.Y. 1997) (citing Gompers v. Bucks Stove & Range Company, 221 U.S. 418, 441 (1911)). "A contempt sanction is considered civil if it is remedial and for the benefit of the complainant, and criminal if it is punitive, to vindicate the authority of the court." D'Orange, 959 F. Supp. at 637. For the following reasons, I conclude that a finding of either civil or criminal contempt is not warranted here.

A court's civil contempt power may only be invoked when "(1) the order the party allegedly failed to comply with is clear and unambiguous, (2) the proof of noncompliance is clear and convincing, and (3) the party has not diligently attempted in a reasonable manner to comply." New York State National Organization for Women v. Terry, 886 F.2d 1339 (2d Cir. 1989) (citing Equal Employment Opportunity Commission v. Local 638, Local 28 of Sheet Metal Workers International Association, 753 F.2d 1172, 1178 (2d Cir. 1985)); see D'Orange v. Feely, 959 F. Supp. 631, 635 (S.D.N.Y. 1997).

Here, the plaintiffs have failed to demonstrate that this Court should invoke its civil contempt power to punish the defendant for his allegedly untruthful deposition testimony. The plaintiffs have not demonstrated the fundamental tenet of a finding of civil contempt, namely, that the defendant has disobeyed a court order. Absent such a showing, this Court is not justified in invoking its contempt power. Thus, the ...


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