The opinion of the court was delivered by: Kiyo A. Matsumoto, United States District Judge
Defendant/counterclaim plaintiff U.S. Bank National Association ("USB") moved to hold non-party witness Robert Lovy ("Lovy") in civil contempt of court for his failure to comply with this Court's November 12, 2010 Order that Lovy comply with USB's subpoena seeking documents and testimony issued pursuant to Fed. R. Civ. P. 45 and served on Lovy on September 7, 2010 (the "subpoena" or "Rule 45 subpoena"). (See generally ECF No. 72, Mot. for Order to Show Cause and Mem. of Law in Supp. of USB's Order to Show Cause ("USB Mem.").) The Court held a Show Cause Hearing on March 1, 2011, at which Lovy did not appear. (Minute Entry, dated 3/1/11.)
As determined at the Show Cause Hearing, and for the reasons set forth below, Lovy is in civil contempt of the Court and the Court: (1) imposes a $500 per diem monetary sanction starting on March 26, 2011, in order to procure Lovy's compliance with Court Orders and the Rule 45 subpoena; and (2) awards reasonable attorney's fees and costs to USB in an amount to be determined in order to compensate USB for damages suffered while attempting to procure Lovy's compliance with its subpoena.
As set forth more fully below, the $500 per diem monetary sanction shall begin to accrue on March 26, 2011, unless Lovy fully purges his contempt by producing documents on or before March 18, 2011, and appearing and testifying at a deposition on or before March 25, 2011. Should Lovy fail to purge his contempt by close of business on March 25, 2011, USB shall immediately notify the court, and the $500 per diem monetary sanctions shall commence on March 26, 2011 and shall continue until Lovy fully purges his contempt.
Further, if, by April 4, 2011, Lovy continues in his failure to comply with this Court's Orders, including payment of all monetary sanctions, USB shall advise the Court by April 5, 2011, and, in addition to the continuing $500 per diem monetary sanction, the Court will issue an Order directing the United States Marshal to bring Lovy before the Court for incarceration. The incarceration and per diem monetary sanction shall both continue until such time as Lovy purges his contempt by complying with this Court's Orders and paying all monetary sanctions imposed by the Court.
The instant case involves two loans allegedly made by USB, totaling $39 million, to two entities controlled by plaintiff and counterclaim defendant Abraham Leser ("Leser"). (See ECF No. 1, Compl. against USB ("Compl.") at ¶¶ 5-18; ECF No. 11, Ans. at ¶¶ 5-24; USB Mem. at 1.) USB alleges that Leser's signature appears on most documents executed in connection with the two loans in question, including two personal guaranties for payment provided to USB. (See USB Mem. at 2.) Leser contests the genuineness of these signatures. (See Compl. at ¶¶ 9, 10, 16, 17.) USB alleges that Lovy notarized one of the guarantees at issue, as well as several other documents related to the loans in question. (See USB Mem. at 2.) Accordingly, the parties sought to depose Lovy and have asked him to produce certain documents.
II. Service of the Federal Rule of Civil Procedure 45 Subpoena and Court Orders*fn1
A. Proceedings Before Magistrate Judge Carter*fn2
By letter motion filed on December 4, 2009 to Magistrate Judge Andrew L. Carter, USB sought to compel Lovy to produce documents and to appear for a deposition pursuant to a subpoena served upon him. (See ECF No. 47, Letter to Hon. Andrew L. Carter, Jr. by USB.) The letter motion explained that USB had served Lovy with a subpoena issued pursuant to Federal Rule of Civil Procedure 45 on October 19, 2009, by substitute service, by serving an individual at Lovy's residence of suitable age and discretion, who accepted service on Lovy's behalf. (See ECF No. 46, Certification of Contempt ("Certification") at 2.) The letter motion further explained that the subpoena required that Lovy produce documents by November 16, 2009 and appear for a deposition on November 25, 2009, but that Lovy neither produced the documents nor appeared for the deposition by the requested dates, nor provided an explanation for his failure to do so. (See id.) By Memorandum and Order dated February 18, 2010 and entered February 19, 2010 (the "February 19, 2010 Order"), Magistrate Judge Carter granted USB's motion to compel and ordered Lovy to produce the requested documents within one week of the service of the February 19, 2010 Order, and to appear for a deposition within three weeks of the service of the February 19, 2010 Order or to show cause by March 22, 2010 why he should not be held in contempt for failure to comply. (See ECF No. 29, 2/19/10 Mem. and Order at 9.)
On March 26, 2010, USB filed a letter motion advising Magistrate Judge Carter that Lovy had failed to respond or to show cause in response to the Court's February 19, 2010 Order and requested that the Court enter a Certification of Contempt*fn3
pursuant to 28 U.S.C. § 636(e). (See ECF No. 38, Letter by USB; Certification at 1, 3.) The letter explained that, on February 23, 2010, USB had served Lovy with a copy of the February 19, 2010 Order by "nail and mail" after several attempts were made to personally serve Lovy.*fn4 (See ECF No. 38, Letter by USB; Certification at 3.)
On April 15, 2010, Magistrate Judge Carter issued an Order directing Lovy to appear on April 28, 2010 to show cause why he should not be held in contempt of court for failing to abide by the Court's February 19, 2010 Order and warned Lovy that failure to appear may result in sanctions. (See 4/15/10 Order.) USB served a copy of the April 15, 2010 Order on Lovy by hand delivery and by UPS. (See Certification at 4.) By Order dated April 27, 2010, the show cause hearing was adjourned to May 6, 2010. (4/27/10 Order ("Due to unforeseen scheduling conflict that has arisen, the 4/28/2010 show cause hearing and status conference have both been adjourned to 5/6/10.").) Magistrate Judge Carter again warned Lovy that his failure to appear may result in sanctions. (See id.) Magistrate Judge Carter ordered USB to notify Lovy of the adjournment as soon as possible and, additionally, to serve the April 27, 2010 Order notifying Lovy of the adjournment date of May 6, 2010 via UPS by May 3, 2010. (See id.)
On May 6, 2010, Magistrate Judge Carter held a Show Cause Hearing at which Lovy did not appear. (See id.; ECF No.43, Minute Entry for 5/6/10 Show Cause Hearing.) Magistrate Judge Carter issued a Certification of Contempt on May 14, 2010, certifying to the undersigned the facts which Magistrate Judge Carter found to be sufficient to hold Lovy in civil contempt and recommending that Lovy be directed to appear before the undersigned to show cause why he should not be found in civil contempt for failing to comply with the subpoena served on him and with Court orders. (Certification at 4.)
B. Proceedings Before this Court
Based on the facts contained in the Certification of Contempt, on June 4, 2010, this Court issued an Order to Show Cause and granted the parties leave to move for contempt.*fn5 (ECF No. 49, Order to Show Cause, dated 6/4/10.) However, upon further discussions with the parties, the Court discovered that the original subpoena the parties sought to enforce had been served on Lovy by substitute service without any attempts at personal service. Because the Court was not convinced that substitute service of the subpoena on a person of suitable age and discretion at Lovy's address, without more, complied with the service requirements of Rule 45 - i.e. that it was reasonably designed to ensure Lovy's actual receipt of the subpoena and reasonably calculated under the circumstances to provide Lovy with notice and an opportunity to provide objections, the Court vacated its June 4, 2010 Order to Show Cause and dismissed the motion for contempt without prejudice. (Minute Entry, dated 6/25/10.) The Court then ordered USB to effect proper service of the subpoena on Lovy in a manner prescribed by Rule 45. (Id.)
On August 6, 2010, after numerous attempts,*fn6 USB
was able to serve Lovy personally with the subpoena,*fn7
and requested that this Court enter an order compelling
Lovy's compliance with the subpoena by a date certain and that this
Court issue an Order to Show Cause as to why Lovy should not be held in civil
contempt of court. (See ECF No. 58, USB Letter, dated 8/12/10; ECF No.
58-1, Aff. of Service, dated 8/12/10.) After reviewing USB's papers,
however, the Court noted that USB had served Lovy on August 6, 2010
with a stale subpoena dated October 16, 2009 and containing expired
return dates of November 16, and 25, 2009. (Minute Entry, dated
8/25/10.) The Court alerted the parties to this deficiency in a
telephone conference on August 25, 2010 and granted the parties leave
to move to serve Lovy with an updated subpoena by alternative means.
USB so moved on September 2, 2010. (ECF No. 61, USB Letter, dated 9/2/10). Upon the legal and factual bases contained in USB's letter, including but not limited to USB's showing that it had attempted to personally serve Lovy over 35 times, that Lovy had purposefully evaded service,*fn8 and that additional costs and delays would result by requiring further attempts at personal service, the Court granted USB's motion for alternative service of an updated subpoena on Lovy.*fn9 (9/3/10 Order.) The Court further found that, under the circumstances, service of an updated subpoena by "nail and mail" was reasonably designed to ensure actual receipt by Lovy and reasonably calculated to provide Lovy with notice and an opportunity to provide objections. (Id.)
On September 7, 2010, USB served Lovy by "nail and mail" with a subpoena that required him to produce documents by September 27, 2010 and to appear for a deposition on September 29, 2010. (See ECF No. 66, USB Letter, dated 10/22/10; see also ECF. No. 69, 11/12/10 Order.) Lovy did not comply with the subpoena and, as a result, by letter dated October 22, 2010, USB moved for an order compelling Lovy to produce documents and to provide testimony. (See ECF No. 66, USB Letter, dated 10/22/10.)
By Order dated November 12, 2010, this Court granted USB's motion to compel Lovy's compliance with the subpoena and ordered Lovy to produce documents by December 10, 2010 and to appear for a deposition at 9:30 a.m. on December 16, 2010 at USB's counsel's office. (ECF No. 69, 11/12/10 Order.) The Order explicitly stated that if Lovy did not comply with the mandates in the Order, the Court would issue an Order to Show Cause, requiring Lovy to show cause why he should not be held in civil contempt of Court. (Id.) The Court also warned Lovy that his continued noncompliance with the Court's orders and the Rule 45 subpoena served upon him would subject him to sanctions including but not limited to: (1) monetary sanctions for each day he failed to comply with the Rule 45 Subpoena and the Court's November 12, 2010 Order; and (2) an order directing the United States Marshal to bring him to Court. (Id.) The Clerk of the Court served Lovy with the November 12, 2010 Order via Federal Express and filed a certificate of service on the docket. (See ECF No. 76, Certificate of Service.)
On December 16, 2010, USB apprised the Court that Lovy had failed to produce documents or to appear at his deposition in accordance with the November 12, 2010 Order. (ECF No. 71, USB Letter, dated 12/16/10). Accordingly, on December 23, 2010, this Court granted USB leave to move by Order to Show Cause to hold Lovy in civil contempt. (12/23/10 Order.) The Court further ordered that, by January 14, 2010, USB personally serve Lovy with a copy of USB's contempt motion papers in accordance with Rule 83.9 of the Local Rules of the Easter District of New York ("Local Rules") and section 308 of the New York Civil Procedure and Civil Practice Law and Rules ("C.P.L.R.").*fn10 The Court directed USB to serve copies of the subpoena previously served on Lovy on September 7, 2010, the Court's November 12, 2010 Order, and the Court's December 23, 2010 Order along with its contempt motion. (Id.)
USB electronically filed its contempt motion on January 7, 2011, which included a Memorandum of Law in support of its request for an Order to Show Cause, the Affidavit of Michael DiCanio, Esq. in support thereof, and supporting exhibits, all of which set forth the factual and legal bases as to why Lovy should be held in civil contempt of court. (See generally ECF No. 72, USB Mem.)
Despite USB's attempts to personally serve Lovy nine times during
different times of the day over the course of a week,*fn11
USB was unable to effect personal serve of its contempt motion on Lovy, and, accordingly, moved for leave to serve Lovy by
"nail and mail" on January 18, 2011. (ECF No. 74, USB Letter, dated
1/18/11.) Given the legal and factual bases contained in USB's letter,
including USB's multiple attempts to serve Lovy and Lovy's history of
purposeful evasion of service, on January 19, 2011, this Court found
that personal service could not be made with "due diligence," as set
forth in C.P.L.R. § 308(4). (1/19/11 Order.) The Court accordingly
authorized service on Lovy via "nail and mail" of: (1) its January 19,
2011 Order authorizing "nail and mail" service; (2) a copy of USB's
contempt motion papers; and (3) the other documents required to be
served on Lovy pursuant to the Court's December 23, 2010 Order. (Id.)
These documents were affixed to Lovy's door on January 20, 2011 and
mailed to him via First Class Mail on January 21, 2011. (See ECF No.
79, Aff. of Service, dated 1/26/11.)
On January 27, 2011, this Court issued an Order to Show Cause setting a Show Cause Hearing for March 1, 2010 and requiring that Lovy submit his Show Cause Response by February 21, 2011. (ECF No. 80, 1/27/11 Order to Show Cause at 1, 4.) The Court's Order to Show Cause warned Lovy that his failure to appear at the Show Cause Hearing would subject him to civil contempt and sanctions, including but not limited to: (1) monetary sanctions for each day he failed to comply with the Rule 45 Subpoena and this Court's orders; (2) payment of attorney's fees; (3) payment of other costs; and (4) possible arrest for civil contempt of court. (See id. at 2.) The Order to Show Cause notified Lovy that he was "a defendant in a contempt hearing and face[ed] the possibility of incarceration if [he was] found to be in civil contempt" and that, "[a]ccordingly, he [had] the right to be represented by counsel." (Id.) The Court also stated that if Lovy could demonstrate that he could not "afford an attorney, the Court [would] appoint an attorney for [him] at no cost to [him]." (Id.)
The Court ordered USB to personally serve Lovy with the Order to Show Cause in accordance with Local Rule 83.9 and C.P.L.R. § 308. (Id. at 4-5.) Additionally, the Clerk of the Court served a copy of the Order to Show Cause on Lovy via ...