United States District Court, S.D. New York
March 4, 2004.
PANIX PROMOTIONS, LTD. and PANIX OF THE U.S. INC., Plaintiffs, -against- LENNOX LEWIS, LENNOX LEWIS ENTERPRISES, INC. and NEW JERSEY SPORTS PRODUCTIONS, INC., d/b/a/ MAIN EVENTS, Defendants LENNOX LEWIS, Third-Party Plaintiff, -against- PANOS ELUDES, MILTON CHWASKY, RICHARD ASHKENS and KYRIACOS ANTONIOU, d/b/a/ LEE CHRISTIAN & CO., Third Party Defendants
The opinion of the court was delivered by: HAROLD BAER, JR., District Judge[fn1] [fn1] Audrey Roofeh, a fall 2003 intern in my Chambers and a second year law student at Benjamin N. Cardozo School of Law, provided substantial assistance in the research and drafting of this opinion.
OPINION AND ORDER
Defendants, and Third Party Plaintiffs Lennox Lewis, Lennox
Lewis Enterprises, Inc., and New Jersey Sports Productions, Inc., d/b/a,
Main Events (collectively "Lewis"), move for an order pursuant to
18 U.S.C.A. § 401 and Federal Rule of Criminal Procedure ("Fed.R. Crim.
P.") 42(1) holding plaintiffs and third party defendants Panix
Promotions, Ltd., Panix of the U S., Inc, and Panos
Eliades*fn2(colletively "Panix Parties ") in civil contempt of this
Court February 15, 2002 Order ("February 15 Order" or "Order"), (2)
incarcerating Panos Eliades until such time as Panix Parties comply with
then Court ordered obligations, and (3) appointing an Assistant
United States Attorney or other prosecutor to initiate criminal contempt
against the Panix Parties. For the foregoing reasons, Lewis' motion
for civil contempt is granted in part and denied
in part, and his request for criminal proceedings is denied.
The final judgment that serves as the basis for this motion was the
culmination of a lawsuit initiated by the Panix Parties against Lewis,
for breach of contract. Lewis counterclaimed for breach of contract,
fraud, breach of fiduciary duty, and violations of the Racketeer
Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962.
On February 14, 2002, following a jury trial, a verdict in favor of Lewis
was rendered, awarding Lewis $6,821,159 for breach of fiduciary duty,
$396,082 for RICO violations, and $56,400 for fraud, and awarding
$681,469 to Main Events for the fight promotion. On the following day,
this Court issued the February 15 Order, restricting Panix Parties from
engaging in certain transactions that could dilute its liquidity, thereby
jeopardizing Lewis' recovery.*fn3
The February 15 Order (1) restrained and enjoined Panix Parties from
transferring or encumbering any assets other than in the ordinary course
of business, (2) forbade the Panix Parties from engaging in any
transaction with a value in excess of £3,500, or engaging in
multiple transactions with a value in excess of £5,000 in any one
day, without the Courts written approval, (3) ordered Panix Parties to
produce to Lewis copies of all of their books and records, (4) ordered
Panix Parties to execute written authorizations so that Lewis could
acquire Panix Parties' financial information directly from banks,
tenants, lenders, and credit card companies, and (5) ordered Eliades to
be deposed about his financial affairs.
Lewis makes the following contempt allegations: (1) Panix Parties
promoted a fight card on May 10, 2002, (2) Eliades paid a $7,000 hotel
bill, (3) Eliades made an £11,000 wire transfer for an overdraft,
(4) Eliades transferred title to a Mercedes-Benz, (5) Eliades allowed a
charge to be registered against his property at 24 Parliament Hill
("Parliament Hill Property"), (6) Eliades transferred his interest in
Treptos Investments to Rita Moustaka to avoid Lewis discovery of this
asset, (7) Panix Parties paid off approximately £46,000 of
unsecured debt to Barclay's Bank, (8) Panix Parties violated discovery
obligations concerning financial disclosure, (9) Eliades perjured
himself in his testimony about Aris Kaissides, and (10) Eliades
failed to follow both the per diem and transactional spending
limits of the Order.
A. Standard of Review for Contempt
"A party may not be held in contempt unless the order violated by the
contemnor is clear and unambiguous, the proof of non compliance
is clear and convincing, and the contemnor was not reasonably diligent in
attempting to comply." Equal Employment Opportunity Comm'n, et al. v.
Local 638, 81 F.3d 1162, 1171 (2d Cir. 1996) (internal quotations
and citations omitted); Peterson v. Vallenzano, 858 F. Supp. 40,
41 (S.D.N.Y. 1994). A "clear and unambiguous order" is one "specific and
definite enough to apprise those within its scope of the conduct that is
being proscribed." New York State Nat'l Org. for Women v. Terry,
886 F.2d 1339, 1352 (2d Cir. 1989), quoting In re Baldwin
United Corp., 770 F.2d 328, 339 (2d Cir. 1985). Any sanction imposed
by this Court for non compliance must be calculated either "to
coerce future compliance with the Court's order, or to compensate the
complainant for losses stemming from the contemnor's past noncompliance."
A. V. By Versace, Inc. v. Gianni Versace, S.p.A., 279 F. Supp.2d 341,
354 (S.D.N.Y. 2003), citing United States v. United Mine
Workers, 330 U.S. 258, 303-04 (1947); Perfect Fit Indus, v. Acme
Quilting Co., 673 F.2d 53, 56-57 (2d Cir. 1982).
In the case of civil sanctions, the contemnor's actions need not be
willful. See Yurman Design Inc. v. Chaindom Enters., Inc., 99
Civ. 9307, 2003 WL 22047843, at *2 (S.D.N.Y. Aug 29, 2003) (quotation
omitted). The burden of proof is on the party (here Lewis) seeking to
hold the other in civil contempt, and is satisfied by the production of
"clear and convincing" evidence. See Levin v. Tiber Holding
Corp., 277 F.3d 243, 250 (2d Cir. 2002). "[T]he clear and convincing
standard requires a quantum of proof adequate to demonstrate a
`reasonable certainty' that a violation has occurred." Id.,
citing Callanan Indus., Inc. v. White, 510 N.Y.S, 2d 230, 231
(3d Dep't 1986). A party may overcome a finding of civil contempt is
required or proving that (1) the Order is vague and indefinite as to
whether a particular action is required or prohibited, (2) the party
lacked knowledge of the terms of the Order, or (3) the proof of the
violation is not clear and convincing. See Sacco v. Burke,
764 F. Supp. 918, 921 (S.D.N.Y. 1991).
Criminal contempt, pursuant to 18 U.S.C. § 401, provides a vehicle
through which the Court may rectify contempt of its authority by fine or
imprisonment Taking such necessary action is "regarded as
essential to ensuring that the Judiciary has a means to vindicate its own
authority without complete dependence on the other Branches."
ACLI Gov't Sec. Inc., v. Rhoades, 989 F. Supp. 462, 468
(S.D.N.Y. 1997), quoting Young v. United States, 481 U.S. 787,
795 (1987). To hold a party in criminal contempt, "the government must
prove beyond a reasonable doubt that: (1) the court entered a reasonably
specific order; (2) the defendants knew of that order; (3) the defendants
violated that order; and (4) their violation was willful." U.S. v.
Lynch, 162 F.3d 732, 734 (2d Cir. 1998), quoting United States
v. Cutler, 58 F.3d 825, 834 (2d Cir. 1995). Therefore, the burden on
a party seeking to hold another in criminal contempt is greater than the
burden on a party seeking only civil redress as criminal contempt
requires willful disobedience and demands proof beyond a
reasonable doubt.*fn4 Because "criminal contempt is a crime in the
ordinary sense" (Int'l Union et al. v. Bagwell,
512 U.S. 821, 826 (1994), quoting Bloom v. Illinois, 391 U.S. 194,
201 (1968)), "criminal penalties may not be imposed on someone who has
not been afforded the protections that the Constitution requires of such
criminal proceedings." Int'l Union, 512 U.S. at 826, quoting
Hicks v. Feiock, 485 U.S. 624, 632 (1988).
The distinction between civil and criminal contempt is determined by
the substance of the proceeding, and "character and purpose" of the
sanction involved. Gompers v. Bucks Stove & Range Co.,
221 U.S. 418, 441 (1911). When the Court holds a party in civil contempt,
"the punishment is remedial, and for the benefit of the complainant."
Id. On the other hand, for criminal contempt, "the sentence is
punitive, to vindicate the authority of the court." See also
Int'l Union, 512 U.S. at 828.
B. Alleged Violations of the February 15 Order
1. 24 Parliament Hill Property
Lewis asserts that Eliades violated the February 15 Order by allowing a
lien to be registered against his Parliament Hill Property on February
21, 2002.*fn5 Eliades claims that since July 1988, Barclays Bank
had a "legal charge" over the property at Parliament House security for a
loan to Panix Promotions Limited and Eliades. Eliades 1st Aff. ¶ 3.
Eliades further claims that in November 2001 he decided to transfer the
security held by Barclays Bank to Managa Properties, in exchange for
Managa's settling a debt of £750,000, owed by Eliades to Barclays.
Eliades 1st Aff. Exh. 2. Lewis asserts that the documents for this
Property are fraudulent, as demonstrated by the fact that there are two
mortgage documents one dated January 25, 2002, and the second,
indicating the same transaction, dated February 8, 2002. Burstein Aff.
While these mortgage documents reflect dates before the February 15
Order, the charge for the property was entered after the February 15
Order. While Eliades does not dispute the date of entry, he asserts that
he initiated the transaction as early as October 31, 2001, well before
the date of the Order, and only the formal entering of the charge
postdated the Order. Eliades 1st Aff. Exh. 2. Further, because it is the
responsibility of the mortgagee to register the transaction (Eliades 2d.
Aff. ¶¶ 13-18), the timing of the register was not within Eliades'
control, and therefore, it would be unfair to hold Eliades in contempt as
a result of this chronology. This Court agrees. While Lewis is correct in
asserting that the value of the property, $2,000,000, is significant,
this does not alter the fact that Eliades had entered into this
transaction long prior to the February 15 Order. This Court credits
Eliades' defense that the February 15 Order "is vague and indefinite as
to whether a particular action [here, conduct that pre-dates the Order
but whose finalization post dates the Order] is required or
prohibited." Sacco, 764 F. Supp. at 921; see also City of
New York v. Local 28, Sheet Metal Workers' Int'l Ass'n,
170 F.3d 279, 282 (2d Cir. 1999) (a "party may be held in [civil] contempt
only if it is proven by clear and convincing evidence that the party
violated a clear and unambiguous order of the court."). Further, this
Court is adverse to find contempt stemming from the actions of a
non-party, unless it can be shown that the non party received
actual notice of the injunction and was acting in active concert or
participation with the parties named in the injunction.*fn6 See
Marshall v. Blasters, Drillrunners, and Miners Union, Local 29, 78
Civ. 4619, 1980 WL 2150 at *2 (S.D.N.Y. Apr 14, 1980), citing Vuitton
et Fils S.A. v. Carousel Handbags, 592 F.2d 129-130 (2d Cir. 1979).
Here, Managa's equitable lien on 24 Parliament Hill came into effect
before the February 15 Order was issued and it is unclear whether Managa
had actual notice of the injunction on the date that the lien was
registered. Finally, the support that Lewis provides for his claim of
fraudulent documentation which amounts only to the presentation
agreements, with different dates falls far short of that
necessary to prove "by a reasonable certainty" that the overdraft
agreement, signed by Mr. S. Kalli of Barclays Bank (Eliades 1st Aff. Exh.
1), is "entirely suspect" (Burstein Aff. ¶ 6); Levin, 277
F.3d at 250. As a result, this alleged violation does not warrant a
finding of civil contempt.
2. Repayment of Loan to Barclays Bank
Lewis also claims that Eliades' repayment of a loan of £43,850 to
Barclays Bank violated the February 15 Order. In defense, Eliades first
argues that the payment was not a payment from Eliades to Barclays Bank
which would be prohibited by the Order but rather, was a
payment from one account at Barclays Bank to several accounts at the Bank
a payment "from Barclays Bank to Barclays Bank." Burstein Aff.
¶ 19. Later, Eliades alters his story, and alleges that the payment
merely transferred the debt from Barclays Bank to Managa, in conjunction
with the transfer of the charge against the Parliament Hill Property.
Eliades 1st Aff. ¶¶ 39-41. In rebuttal, while Lewis brings to light
that Eliades' new explanation "does not comport with his prior deposition
testimony" (Burstein Aff. ¶ 19), he fails to provide evidence that
either of Eliades' explanations is untrue. Therefore, while this Court
cautions Eliades about the repercussions of untruthful deposition
testimony (see 18 U.S.C. § 1623(a) (1982)), as Lewis has not
provided clear and convincing evidence to refute Eliades' explanations,
Lewis has failed to meet his burden with regard to this transfer, and
therefore, civil contempt is improper.
3. $7.000 Hotel Bill
Lewis claims that Eliades also violated the February 15 Order through
his payment on February 16, 2002 of the $7,000 hotel bill for his stay in
New York during the trial in this action (which lasted from February 1st
through 14th. In defense, Eliades asserts that he had not yet learned of
the Order when he paid his hotel bill. Eliades 1st Aff. ¶ 8. Eliades'
defense is corroborated by his attorney, Jay Goldberg's statement that
the "Order was not sent to Mr. Eliades' hotel" [when it was received
Friday afternoon, February 15, 2002] and the that time. Eliades was
therefore "unaware that the order had been signed." Steven Isser Affirm.
¶ 46, Exh. 19. It is well settled that a person cannot be
held in civil contempt of an order if he does not have knowledge of the
order. See Perfect Fit Industries, Inc. v. Acme Quilting Co.,
Inc., 646 F.2d 800, 808 (2d. Cir. 1981), citing Vuitton et Fils
S.A., 592 F.2d at 126; Fidelity Mortgage Investors v. Cornelia
Builders, Inc., 550 F.2d 47, 51 (2d Cir. 1976), cert.
denied, 429 U.S. 1093 (1977). Because Lewis has provided no credible
evidence to rebut this defense, Lewis has failed
to prove by clear and convincing evidence that Eliades violated the
Order, after having been apprised of its contents. Therefore, Eliades'
payment of the February 16th hotel bill does not warrant a finding of
4. May 10 Fight Promotion
Lewis contends that Eliades' promotion of the May 10, 2002 fight
violated the February 15 Order because Eliades exceeded the spending
limits allotted by the Order*fn8 without the Court's approval. While it
is undisputed that Eliades promoted the May 10 fight without the consent
of Lewis' attorney, Judd Burstein,*fn9 Main Events' attorney, Patrick
English, or the consent of this Court, and that Eliades expended far
above £3,500 or even £5,000 to promote this fight, it is less
clear that the May 10 promotion clearly and unambiguously violated the
spirit of the February 15 Order. After all, in Eliades' May 7,
2002 letter to Burstein, he expressly demonstrated that while he
anticipated spending £49,000 to promote the match, he planned to
bring in £53,000, netting £4,000. Therefore, while this Court
in no way condones Eliades' behavior, and even credits Lewis'
classification of Eliades' action as a violation of the letter of the
Order, it does not serve the purpose of the Order to hold Eliades in
civil contempt for an action, which in hindsight, increased his net
worth. Eliades 1st Aff. ¶¶ 11-24. See Titra California, Inc. v.
Titra Film, 98 Civ. 0234, 2001 WL 1382587, at *5 (S.D.N.Y. Nov 6,
2001) ("It is the spirit of the order, not the letter, that must be
obeyed"), citing John B. Stetson Co. v. Stephen L Stetson Co.,
128 F.2d 981, 983 (2d Cir. 1942); Nat'l Res. Bur. v. Kucker,
481 F. Supp. 612, 615 (S.D.N.Y. 1979). Furthermore, the remedial function of
civil contempt would not be met. See ACLI Government Securities Inc.,
v. Rhoades, 989 F. Supp. 462, 465-466 (S.D.N.Y. 1997). Therefore,
Eliades' technical violation of the Order, through his May 10 fight
promotion, does not result in a finding of contempt.*fn10
5. Mercedes Transfer to Ever Loukaides
Further, Lewis asserts that Eliades violated the February 15 Order when
he transferred title to his Mercedes Benz to Ever Loukaides. Eliades
claims that the transfer was effected on January 31, 2002 (Eliades 1st
Aff. ¶¶ 32-38), while Lewis contends that the transfer occurred at a
later date. Schalk Aff. ¶¶ 14-16. Similar to his defense with respect
to the Parliament Hill Property, Eliades claims that while he officially
transferred title to the automobile after the February 15 Order,
he signed the paperwork for the transfer prior to the Order, on
January 31, 2002 (Eliades 1st Aff. ¶ 10), after Loukaides paid
Eliades £36,909.83 for the car. Id. ¶ 10. Eliades
asserts that he finalized the transfer as soon as the English Courts
vacated the World Wide Freeze Order that had been in effect. Eliades 1st
Aff. ¶¶ 32-38. As explained earlier, because the February 15 Order is
not entirely clear as to the effect of transactions entered into prior to
the Order, that take effect after the Order, rather than hold Eliades in
civil contempt with regard to an ambiguous provision, this Court has
clarified the Order. See supra, footnote 5.
6. Transfer of Interest in Treptos Investments
Lewis also asserts that Eliades violated the February 15 Order through
his transfer of his interest in Treptos Investments ("Treptos") as
security for a loan. Schalk Aff. ¶ 12. The only "evidence" that Lewis
provides in support of his position is the mere supposition that because
Lewis was in New York for the trial on February 6th, he would not have
been able to effectuate the transfer. Schalk Aff. ¶ 18. In rebuttal,
Eliades contends that the shares were transferred prior to the Order, on
February 6, 2002, and therefore the transfer in no way violated the
Order. Eliades 1st Aff. ¶¶ 11-12. In support, Eliades produced
documentation, in the form of minutes from a Board of Directors Meeting
held on February 6, 2002, in which Eliades participated by phone, which
noted the transfer, and a Share Certificate executed on February 6th,
which finalized the transfer. Eliades 1st Aff. Exh. 24. In reply, Lewis
failed to provide any evidence to rebut Eliades presentation, and
therefore, failed to prove by clear and convincing evidence that, despite
evidence to the contrary, Eliades' transfer actually pre dated
the. February 15 Order. As a result, the Treptos transfer does not serve
as a basis to hold Eliades in civil contempt.
7. £11,000 Wire Transfer
Lewis also claims that an £11,000 wire transfer by Eliades to
Switch Communications ("Switch"), on or after February 21, 2002, violated
the February 15 Order. In defense, Eliades assets that he had previously
issued a check to Switch, in the amount of £11,000, on February
14, 2002, but due to a bank error, the check was not paid until
after the date of the Order, when after discussions with Eliades'
bookkeeper, the bank acknowledged its mistake, and agreed to wire the
payment directly to Switch. Eliades 1st Aff. ¶¶ 27-31, Exh. 20. Lewis
provides no evidence to the contrary to rebut Eliades' defense. Once
again, this situation, akin to both the Parliament Hill Property and the
Repayment of the Loan to Barclays Bank, involves the post Order
finalization of an event initiated pre Order. As explained
earlier, while Eliades should have informed his bookkeeper about
the strictures of the Order, and should have notified Lewis or the Court
about the chronology, Eliades' failure to do either is not a clear
violation of the Order. This Court finds it inappropriate to hold Eliades
in civil contempt for what appears to be a mistake on the part of the
bank that caused a transaction not to reach fruition until after the date
of the Order.
8. Production of Documents
Lewis asserts that Eliades failed in several regards to honor the
February 25, 2002 deadline, set out in the February 15 Order for the
production of "all books and records, including, but not limited to, all
banking records and third party contracts." In particular, Lewis asserts
that Eliades failed to disclose any documentation with regard to (a) a
loan of £ l.9 million from Eliades' brother Christos, (b) a £
500,000 flat which Eliades purchased for his son, (c) the recent
valuation of Panos Eliades Franklin & Co. at £ 300,000, (d) an
investment of £ 450,000 and an additional £ 163,000 extension
of credit to a company called Secondsout, (e) contact information for his
brother Christos, and (e) contact information for Mr. Kaissides. Burstein
Aff. ¶¶ 19-22.
In response, Eliades asserts that he provided all of the documentation
in his possession for all of these transactions or inquiries or
otherwise knew that Lewis already possessed the information sought
Eliades 1st Aff. ¶ 50.*fn11 Although Lewis may read the Order
Court does not interpret the February 15 Order to require Eliades
to produce documents, other than those in his possession. After all, the
Order required Eliades to sign financial disclosures to allow Lewis
access to materials that were not in Eliades' possession, but that were
relevant to Lewis' inquiries. Further, Lewis' attempt at rebuttal is
unsuccessful as (a) he fails to provide any evidence to support his claim
that Eliades' deposition evidence is insufficient, and (b) his assertion
that "it strains credulity" that Eliades would not have in his possession
further documentation concerning these transactions does not suffice as
clear and convincing evidence to the contrary. Burstein 1st Aff. ¶¶
21-25. Therefore, these alleged discovery violations do not warrant a
finding of civil contempt.
9. Ownership of 39 Beech Hill Property
Lewis asserts, quite convincingly, that Eliades' perjury in his
deposition testimony, with regard to conversations allegedly had with
Aris Kaissides, or more accurately, Eliades' failure to volunteer to
Lewis that Aris Kaissides had died on April 11, 2000, warrants a finding
of contempt. There is no question that Kaissides was a relevant figure to
this dispute as there was some confusion as to whether Eliades or
Kaissides owned the parcel of property at 39 Beech Hill ("Beech Hill
Property"). And, it is also apparent that during his deposition, Eliades
relayed conversations that he professed to have had with Kaissides, on
dates subsequent to Kaissides passing. However, the motivation behind
what Lewis construes as Eliades' "lie," is hotly disputed. Lewis argues
that Eliades wished to conceal his ownership of the Beech Hill Property,
in order to shield this property from reach of the judgment. Burstein
Aff. ¶¶ 7, 9. On the other hand, Eliades asserts that his failure to
be forthcoming stemmed from his desire to shield, not the property, but
rather the Kaissides family, during their time of grief, and further, to
protect the Kaissides children from the investigators that Eliades
contends had been following him. Eliades 2d. Aff. ¶¶ 115-118.*fn12
The civil contempt power is an extreme remedy and indeed a "potent
weapon" (Stein Indus., Inc., v. Jarco Indus., Inc., 33 F. Supp.2d 163,
170 (E.D.N.Y. 1999), citing Int'l Longshoremen's Assn. v.
Philadelphia Marine Trade Assn., 389 U.S. 64, 76 (1967)), and
therefore should not be utilized "where there is a fair ground of doubt
as to the wrongfulness of the defendant's conduct." Stein,
33 F. Supp.2d at 170, citing California Artificial Stone Paving Co. v.
Molitor, 113 U.S. 609, 618 (1885). Because Lewis has not provided
clear and convincing evidence to support by a "reasonable certainty" that
Eliades had an improper motive, there is still considerable doubt as to
the wrongfulness of Eliades' conduct. Consequently, this Court finds it
improper to hold Eliades in civil contempt for what may be described as
his lack of candor with regard to Kaissides.
10. Violations of the Per Diem and
Transactional Spending Limits
Lewis alleges that Eliades' £40,000 payment to his lawyers
violated the £3,500 transactional limit imposed by the Order. In
defense, Eliades contends that the term "transaction," refers to
individual purchases or checks drawn against an account. For example,
Eliades argues that if £3,500 is withdrawn daily to finance an
aggregate payment, there would be no violation of the £3,500
transaction limit. Eliades specifically made this argument with regard to
his £40,000 payment to his UK lawyers, which he made in installment
payments not exceeding £3,500. Eliades 3d. Aff. ¶¶ 2-3. Lewis
asserts that this system violates the transactional limit because the
total payment constitutes one transaction even though payments are made
over a period of time. Notably, Eliades also made this argument in
reference to the May 10 promotion. While the fact that an order is vague
and indefinite as to whether a particular action is required or
prohibited serves as a defense to contempt (see Sacco,
764 F. Supp. at 921), the Order is crystal clear on this point. The idea of a
transactional limit is aimed to prevent exactly what Eliades did
spreading out one transaction over a period of time. The Court does not
credit Eliades' theory as it is obviously contrary to both the spirit and
the letter of the Order As there is a £ 3,500 transactional
spending limit in place, this payment of £ 40,000 amounts to a
£36,500 violation of the Order.
Further Eliades concedes on several occasions to having violated the
spending limits imposed by the February 15 Order, though he claims that
these violations were "not willful" and were instead due to
"administrative or clerical errors." Eliades 2d. Aff. ¶ 5.
Unfortunately for Eliades, the contemptee need not be willful in his
violations in order to be found in civil
contempt. See Canterbury Belts Ltd v. Lane Maker Rudkin,
Ltd., 869 F.2d 34, 39 (2d Cir. 1989). Therefore, Eliades may be held
in civil contempt for his alleged unintentional violations of the
transactional limitations of the February 15 Order as listed below:
a) February 22, 2002 excess expenditure of
£1045.13 (Eliades 2d. Aff. ¶¶ 41-43);,
b) March 20, 2002 excess expenditure of
£1000 (Eliades 2d. Aff. ¶¶ 50-51);
c) March 22, 2002 excess expenditure of £1
17.84 (Eliades 2d. Aff. ¶¶ 52-54);
d) March 29, 2002 excess expenditure of
£780.16 (Eliades 2d. Aff. ¶ 59); and
e) April 29, 2002 excess expenditure of
£389.22 (Eliades 2d. Aff. ¶ 74).
The purpose of the Order was to make funds available to satisfy the
judgment against the Panix Parties. Further, the purpose of "civil
contempt proceedings is remedial and compensatory . . ." Upjohn Co.
v. Medtron Labs., Inc., 894 F. Supp. 126, 135 (S.D.N.Y. 1995),
citing Sunbeam Corp. v. Golden Rule Appliance Co., 252 F.2d 467
469 (2d Cir. 1958); Huber v. Marine Midland Bank, 51 F.3d 5
(2d Cir. 1995) (stating that a civil contempt order is coercive rather
than punitive in nature). Civil contempt is also utilized to ensure
future compliance with an order. See U.S. v. Paccione,
975 F. Supp. 537, 544 (S.D.N.Y. 1997); United Mine Workers, 330 U.S. at
303-04. As explained supra, "[a] party may not be held in
contempt unless the order violated by the contemnor is clear and
unambiguous, the proof of non compliance is clear and convincing,
and the contemnor was not reasonably diligent in attempting to comply."
Local 638, 81 F.3d at 1171. With' regard to these expenditures,
Eliades concedes that he violated the Order, and his excuse that these
payments were "administrative oversights"*fn13
does not suffice as the
sheer number of such oversights negates a finding of any sort of
reasonable diligence. Therefore, the requirements for a coercive sanction
have been met. "When imposing coercive sanctions, a court should consider
(1) the character and magnitude of the harm threatened by the continued
contumacy, (2) the probable effectiveness of the sanction in bringing
about compliance, and (3) the contemnor's financial resources and the
consequent seriousness of the sanction's burden." New York Nat'I Org.
for Women, 886 F.2d at 1353. These considerations serve only to
confirm the appropriateness of a sanction for these overt violations.
I am therefore imposing a fine of £40,832.35 the total
amount in excess of the per diem and transactional spending
limits*fn14 in order both to remedy the violations and ensure
Panix Parties' compliance with the Order in the future. Eliades is to
place this sum in escrow, within thirty days of the date this Order and
Opinion is entered, earmarked for the satisfaction of the Judgment
against Eliades, should the Judgment be affirmed on appeal.
As a result of my decision to impose civil sanctions, I deny the
request to appoint an Assistant United States Attorney, or other private
attorney, to initiate and prosecute criminal contempt proceedings against
the Panix Parties. No finding warrants such serious action. See
Paccione, 975 F. Supp. at 545, quoting Spallone v. U.S.,
493 U.S. 265, 276 (1990) ("the Supreme Court has made clear that `in
selecting contempt sanctions, a court is obliged to use the least
possible power adequate to the end proposed.'").
For the above stated reasons, the motion to hold Panix Parties in civil
contempt is granted as to his violations of the Order's per diem
and transactional spending limits, as discussed supra, Section
II.B.10, and is denied with regard to all other alleged violations. Panix
Parties collectively are ordered to place the sum of £40,832.35 in
escrow, with the Clerk of this Court, no more than thirty days from the
date hereof. The motion for criminal sanctions and to appoint a
prosecutor are denied. The Clerk is requested to close this motion and
any open motions and remove this case from my docket.
IT IS SO ORDERED.
*fn2 Panos Eliades is the sole shareholder and president of Panix
Promotions Ltd. and Panix of the U.S., Inc. Eliades Aff. at ¶
*fn3 On July 15, 2003, I issued an order on treble damages with regard
to Panix Parties' RICO violations, pre-judgment interest, and bifurcated
damages. Two judgments were entered nunc pro tune against Panix, one for
$792,164 and one for $7,273,641, with interest to be calculated from May
l, 1999 to the date of the verdict (February 14, 2002), based to the sum
of $6,877,599, corresponding to the damages awarded for the state law
claims. Two weeks later, on July 31, 2003, the motion to bifurcate
damages was withdrawn and the Clerk of the Court entered one judgment
against Panix for $8,065,805, with the same interest calculation as
stated above. On August 14, Eliades appealed the July 31 Order,
preventing enforcement of the judgment.
*fn4 Therefore, as to alleged violations where I find the basis for
civil contempt to be lacking, I will not address the appropriateness of
criminal contempt it may be assumed that the more rigorous
requirements of criminal contempt have not been met.
*fn5 The Order forbade any transfer after February 15th.
*fn6 Although perhaps moot, the Court now clarifies that the February
15 Order applies to transactions initiated prior to February 15, 2003,
whose finalization post dates the Order. If any such transactions
still exist, Panix Parties should inform Lewis of those transactions and
seek Lewis' approval for their eventual finalization. If Lewis refuses to
approve these transactions, the Panix Parties, if they wish to finalize
the transactions within the duration of the Order, must apply to the
Court for permission, including a brief description of (a) the
transaction, (b) the reason for the delay in finalization, and (c) what
impact, if any, the transaction will have on its financial liquidity.
Lewis may submit an opposition, as desired.
*fn7 Because reasonable ignorance of the Order is a complete defense,
it is unnecessary to reach the determination of whether payment of the
hotel bill with fall knowledge of the contents of the. February 15 Order
would have been actionable.
*fn8 The Order forbids the expenditure of more than £3,500 on
any one transaction or more than £5,000 on multiple transactions in
any one day.
*fn9 While the Court finds credible Eliades' assumption that Burstein
would act consistently with his prior response to Eliades' request for
approval of the March 16, 2002 fight by approving the fight and
sending someone to audit Eliades' records (Eliades 1st Aff. ¶ 5)
Burstein's prior acquiescence did not bind him to consent to the
May 10 fight Once Eliades knew that Burstein did not give his blessing,
Eliades had the duty either to seek the Court's
*fn10 However, this Court strongly cautions Eliades that further
violations, even if they fortuitously have profit enhancing
results, will be sanctioned.
*fn11 With regard to the loan of £ 1.9 million, Eliades asserts
and provides documentation to prove that he provided Schalk with "a
schedule of monies loaned by Managa Properties Limited . . . which was
produced on the second day of the UK deposition," and further asserts
that he "was not in possession of" any other documents, which "could be
obtained direct from the company." Eliades 1st Aff. ¶ 50(a). With
regard to the £ 500,000 flat that Eliades purchased for his son,
Eliades asserts and provides documentation to support that he produced
documents relevant to this purchase on the second day of the UK
deposition and that while no further documentation was requested, "Forbes
Anderson were given during the UK world freeze trial a copy of the Land
Certificate in respect of the flat." Id. 50(b). Third Eliade
asserts not only that the recent valuation of £ 300,000 for Panos
Eliades Franklin & Co. represents unbilled work in progress that has
not yet been documented, but also that he had already apprised Burstein
of this fact Id. ¶ 50(c). Additionally, with regard to
investments in Secondsout.com, Eliades asserts and provides documentation
to support that he produced relevant documents on the second day of his
UK deposition. Id. ¶ 50(d). Eliades also asserts and
provides supportive documentation to show that he provided Burstein with
the contact information for his brother Christos, on the second day of
his UK depositions. Id. ¶ 50(e). Finally, Eliades asserts,
albeit inferentially, that as evidenced by a letter from Boodle Hatfield,
Kaissides' solicitors, to Lewis' UK attorneys, Forbes Anderson, Lewis
should have known how to contact Kaissides, through his attorneys. While
this last argument is certainly Eliades' weakest, as the fact that Lewis
had an alternative means of obtaining Kaissides' contact information does
not release Eliades from his obligation to produce the information,
Eliades' argument makes clear that Lewis likely should not have requested
information already in his possession, and makes civil contempt grounded
on this withholding less supportable
*fn12 Further, Eliades asserts that all conversations that he claimed
to have had with Aris Kaissides did in fact occur at the times and places
mentioned; however, the conversations were with other members of the
Kaissides family not with Aris. Burstein Aff. ¶ 4.
*fn13 Eliades', explanations for the per diem violations were
as follows: (a) for the February 22, 2002 violation, "it would appear
that there had been a slight violation of £1045.13 for this day,"
(b) March 20 and March 22, 2002, "this was an administrative oversight,"
and (c) March 29 and April 29, 2002 were claimed to be administrative
oversights by his bookkeeper.
*fn14 This court arrived at this sum by adding the amounts of the
per diem spending limit violations (£4,332.35) to the
£36,500 transactional violation.
© 1992-2004 VersusLaw Inc.