Free Motion for Order to Show Cause - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Law Office of James Burr Shields 382 East Palm Lane Phoenix, Arizona 85004-1531 (602) 307-0780 (Office) (602) 307-0784 (Facsimile)
James Burr Shields II, State Bar #011711 John A. Conley, State Bar #016429 Blake Simms, State Bar #021595 Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT IN AND FOR THE STATE OF ARIZONA

Cathleen Channel, Theresa Wharry, Stacie Hanson, Monique Nichols,

) ) ) ) ) Plaintiffs, ) ) vs. ) ) Home Mortgage, Inc., an ) Arizona corporation conducting ) business in Arizona, ) Carl Brown; ) Molly Brown; ) ) Defendants. ) ____________________________)

Case No. CIV 2003-0100 PHX ROS MOTION FOR CIVIL ARREST WARRANT AGAINST DEFENDANTS CARL BROWN AND MOLLY BROWN and MOTION FOR ORDER TO SHOW CAUSE WHY DEFENDANTS CARL BROWN AND MOLLY BROWN SHOULD NOT BE HELD IN CONTEMPT OF COURT

Plaintiffs, Cathleen Channel, Theresa Wharry, Stacie Hanson, and Monique Nichols, by and through counsel undersigned, hereby file their Motion for Civil Arrest Warrant Against Defendants Carl Brown and Molly Brown and Motion for Order to Show Cause Why Defendants Carl Brown and Molly Brown Should Not Be Held In Contempt of Court. MEMORANDUM OF POINTS AND AUTHORITIES A. Background Plaintiffs, after obtaining against Home Mortgage, Inc., a judgment representing unpaid wages, brought suit against Defendants Carl Brown and Molly Brown. The suit against Defendants Carl Brown and Molly Brown alleged they were the alter ego of Home Mortgage and that there was sufficient justification to pierce Home Mortgage's corporate veil and hold them liable for the judgment against Home Mortgage. The matter went to a
Document 224 Filed 05/21/2008 Page 1 of 5

Case 2:03-cv-00100-ROS-MEA

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

trial before the Court on September 18, 2007, and September 19, 2007. The Court, on September 20, 2007, issued a ruling Defendants Carl Brown and Molly Brown were the alter egos of Home Mortgage and should be liable to Plaintiffs on the judgment they obtained against Home Mortgage. The Court, in that decision, ordered Defendants Carl Brown and Molly Brown to pay to Plaintiffs within fourteen days of the order $240,912.77, plus post-judgment interest at the rate of .97%. The Court, on January 31, 2008, granted Plaintiff's Motion for Award of Fees and Costs and awarded Plaintiffs attorney's fees in the amount of $79,577.50 and costs in the amount of $2,565.14. The Court ordered Defendants to pay to Plaintiffs these amounts within fourteen days of the Order. The Court, on February 5, 2008, reduced to judgment Plaintiffs' recoveries against Defendants Carl Brown and Molly Brown. The Court, consistent with the prior judgment against Home Mortgage and the awarded $232,241.34 in principal damages, attorneys fees in the amount of $4,390.82 for the fees Plaintiffs incurred in pursuing the judgment against HMI, pre-judgment interest in the amount of $8,386.43, costs of $4,590.89, attorney's fees in the amount of $79,577.50, and post-judgment interest in the amount of .97% per annum. These are Defendants' obligations to Plaintiff. Plaintiffs, on April 15, 2008, pursuant to Ariz. Rev. Stat. § 12-1631(2), caused the Court to issue to Defendants Carl Brown and Molly Brown a subpoena commanding their appearance for a debtor's examination. See Exhibit A, Subpoenas to Defendants Carl Brown and Molly Brown. Defendant Carl Brown's debtor's exam was set for May 6, 2008, at 10:00 a.m., while Defendant Molly Brown's debtor's exam was set for May 6, 2008, at 12:00 p.m. The subpoenas commanding Defendants' appearance also commanded them to bring various documents to help Plaintiffs determine the extent and location of their assets. Plaintiffs caused to be served on Defendants' counsel of record, Dennis Hall, the subpoenas for the debtor's exam. Mr. Hall has informed counsel of Plaintiff he provided to Defendants notice of the debtor's exam, including the date and time. Defendants Carl Brown and Molly Brown, however, failed to appear for the debtor's exam. They also failed
-2Document 224 Filed 05/21/2008 Page 2 of 5

Case 2:03-cv-00100-ROS-MEA

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

to provide any of the documents the subpoena commanded they produce. Defendants have offered no legitimate reason for their failure to obey this Court's subpoena. Defendants, through a different attorney, contended they never received notice of the debtor's exam. Defendants' counsel of record, Mr. Hall, however, stated he informed Defendants of the debtor's exam. It is clear, then, Defendants intentionally disregarded the subpoena. Plaintiffs request the Court, pursuant to Ariz. Rev. Stat. § 12-1631, issue civil arrest warrants against Defendants Carl Brown and Molly Brown commanding the United States Marshals to arrest and incarcerate Defendants until they comply with the subpoena in question. Plaintiffs also request the Court, pursuant to Fed. R. Civ. P. 45(e), issue an order to show cause why Defendants should not be held in contempt. B. Legal Authority 1. Civil Arrest Warrant under Ariz. Rev. Stat. § 12-1631 Rule 69(a) of the Federal Rules of Civil Procedure states: A money judgment is enforced by a writ of execution, unless the court directs otherwise. The procedure on execution-and in proceedings supplementary to and in aid of judgment or execution-must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies. Fed. R. Civ. P. 69(a). This means a judgment creditor may "use any execution method consistent with the practice and procedure of the state in which the district court sits." Cigna Prop. & Cas. Ins. Co. v. Polaris Pictures Corp., 159 F.3d 412, 421 (9th Cir. 1998). One remedy a judgment creditor has under Arizona law is to require the judgment debtor to present for an examination at which the judgment creditor can gain information about the judgment debtor's assets. Ariz. Rev. Stat. 12-1631(A)(1). A judgment creditor, in order to initiate the debtor's examination procedure, must simply "[h]ave a subpoena issued compelling the judgment debtor to appear for deposition upon oral examination and answer concerning his property at a time and place specified in the subpoena." Id. The respective subpoenas Plaintiffs caused to be issued to Defendants did indicate a failure to comply could lead to arrest.
-3Document 224 Filed 05/21/2008 Page 3 of 5

Case 2:03-cv-00100-ROS-MEA

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Under Arizona law, a court may issue against an individual a civil arrest warrant. Ariz. R. Civ. P. 64.1(b). Such a warrant is appropriate where an individual, "[h]aving been served personally with a subpoena to appear in person, at a specific time and location, which contains a warning that failure to appear may result in the issuance of a civil arrest warrant, has failed to appear." Ariz. R. Civ. P. 64.1(b)(2). Rule 64 of the Federal Rules of Civil Procedure states: "At the commencement of and throughout an action , every remedy is available that, under the law of the state where the court is located, provides for seizing a person or property to secure satisfaction of the potential judgment." Fed. R. Civ. P. 64(a). The power to arrest is one of these remedies. Fed. R. Civ. P. 64(b). Further, federal courts have the inherent authority to incarcerate individuals who are in civil contempt of court. Armstrong v. Guccione, 470 F.3d 89 (2d Cir. 2006). See, also, 18 U.S.C. § 401. 2. Defendants Are in Civil Contempt of Court The Federal Rules of Civil Procedure state, "Failure by any person without adequate excuse to obey a subpoena served upon that person may be deemed a contempt of the court from which the subpoena issued." Fed. R. Civ. P. 45(e). District Courts have significant discretion in deciding whether to hold individuals in contempt. Hook v. Arizona Dep't of Corrections, 107 F.3d 1397, 1403 (9th Cir. 1997). A district court may hold an individual in contempt without holding a full-blown evidentiary hearing. United States v. Ayres, 166 F.3d 991, 995 (9th Cir. 1999). Defendants Carl Brown and Molly Brown have, by failing to obey the subpoenas at issue, rebuffed the Court's authority. Defendants have also failed to comply with the Court's order of September 20, 2007, in which the Court ordered Defendants to satisfy the Home Mortgage judgment within fourteen days of the order. Defendants also failed to comply with the Court's order of January 31, 2008, in which the Court ordered Defendants to pay to Plaintiffs within fourteen days the attorney's fees award the Court granted. Defendant Carl Brown has, by repeatedly dissembling and obfuscating during his sworn testimony, demonstrated a complete lack of respect for the Court and its functions. Plaintiffs, therefore, ask the Court to hold Defendants in civil contempt and that the Court
-4Document 224 Filed 05/21/2008 Page 4 of 5

Case 2:03-cv-00100-ROS-MEA

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

issue contempt sanctions severe enough to ensure Defendants' compliance with the subpoenas at issue. C. Conclusion Defendants have refused to comply with a valid subpoena of this Court commanding them to appear and provide oral testimony and produce documentary evidence related to their assets. Defendants have also failed to comply with the Court's respective orders of September 20, 2007, and January 31, 2008. Plaintiffs request the Court issue a civil arrest warrant against Defendants and that the Court hold Defendants in civil contempt. RESPECTFULLY SUBMITTED this 21st day of May, 2008. LAW OFFICE OF JAMES BURR SHIELDS

____s/ W. Blake Simms__________________ James Burr Shields Blake Simms Attorneys for Plaintiffs CERTIFICATE OF SERVICE I hereby certify that on the 21st day of May, 2008, I electronically submitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: James M. McGee, Esq. P.O. Box 460 Cottonwood, Arizona 86326 [email protected] Attorney for Defendants Dennis L. Hall, Esq. d.l.hall attorney, pllc 14555 North Scottsdale Road, Suite 160 Scottsdale, Arizona 85254 [email protected] Co-Counsel for Defendants Carl and Molly Brown and a copy has been mailed this date to the following: Carl and Molly Brown 7798 North Foothills Drive South Paradise Valley, Arizona 85253 ____s/ Gail Ivey___________________
-5Document 224 Filed 05/21/2008 Page 5 of 5

Case 2:03-cv-00100-ROS-MEA