Lawyer Held In Contempt For Refusing To Follow Court Orders

Eisenberg v. Swain, No. 19-cv-189, District of Columbia Court of Appeals began modestly with an effort by the attorney (Eisenberg) to collect fees owed to him from his client. He obtained a judgment and garnished $1499 in wages. After that he learned that the former client had filed a bankruptcy petition. The Superior Court entered certain orders against the attorney as follows:

The Superior Court ordered Mr. Eisenberg to return the garnished wages to Ms. Swain until a decision was reached on whether his judgment against her was included in the bankruptcy discharge. Mr. Eisenberg did not comply. The Superior Court then issued an order that included three rulings: (1) it ruled that Ms. Swain’s debt to Mr. Eisenberg had been discharged, (2) it held Mr. Eisenberg in contempt of court for his failure to return the garnished wages, and (3) it rejected Mr. Eisenberg’s request to add Ms. Swain’s bankruptcy attorney as a defendant in the underlying breach of contract case after Mr. Eisenberg alleged that Ms. Swain’s attorney had conspired with her to defraud Mr. Eisenberg.

Usually when a debtor files a bankruptcy petition, there is an automatic stay of all collection proceedings against the debtor. In this case the trial court understood the bankruptcy stay applied and ordered Eisenberg to return the garnished wages to the debtor until the bankruptcy had been adjudicated. The lawyer then refused to do so and was held in contempt. He then apparently attempted to add the debtor’s bankruptcy attorney to the case. The trial court rejected this request and Eisenberg appealed. The DC Court of Appeals affirmed.

Eisenberg’s appeal of the contempt order was rejected on several grounds. The relevant portion of the Court’s opinion is quoted below:

Mr. Eisenberg challenges Judge Pan’s contempt ruling and associated sanctions. Mr. Eisenberg’s actions in this litigation justified holding him in contempt. We affirm the trial court’s judgment on this ground as well.

Mr. Eisenberg was ordered to return $1,499 to Ms. Swain on November 17, 2016. His motion to stay the return of these funds was denied on February 23, 2017. Despite twice receiving clear instruction from the court to return $1,499 to Ms. Swain, Mr. Eisenberg had not returned the funds when he appeared before the court on December 3, 2018, more than two years after the initial order, and nearly two years after his motion to stay return of the funds was denied. When questioned by the trial court on the reasons for his noncompliance, Mr. Eisenberg said only, “I believe the judgment was actually void given the history that we have gone through,” adding later that he believed “federal law” superseded the Superior Court’s authority and that Judge Pan had relinquished jurisdiction over the issue. When asked why, given these beliefs, he had not filed a motion to reconsider, Mr. Eisenberg responded that he “wasn’t aware that was an option.” At other points during this exchange, however, Mr. Eisenberg represented that he kept the funds in his trust account because “Ms. Swain had been resistant and deceptive, and [he] wanted to make sure [he] preserved [his] property” and that “those monies were [his], and … since they were in dispute … [he] left them in the trust account.” These alternating and seemingly self-serving rationales left Judge Pan with the well-founded impression that after receiving a ruling he did not like, Mr. Eisenberg “just did what [he] wanted to do” and that his actions were “[n]ot in good faith.” Judge Pan issued an order to show cause why Mr. Eisenberg should not be held in contempt and requested briefing from both parties.

At a second hearing, held on February 25, 2019, Judge Pan questioned Mr. Eisenberg and Ms. Swain on their positions regarding contempt. In conjunction with this questioning, Judge Pan asked Ms. Swain to detail the expenses she had incurred as a result of not having the $1,499 returned to her. These included moving expenses after Ms. Swain was unable to pay her rent and had to relocate, as well as time spent litigating the issue in Superior Court. In a written order issued on March 1, 2019, Judge Pan held Mr. Eisenberg in contempt of court and ordered him to pay compensatory damages to Ms. Swain in the amount of $978.22.[5]

Superior Court judges have express authority to “punish for disobedience of an order or for contempt committed in the presence of the court.” D.C. Code § 11-944(a) (2012 Repl.) In addition to its statutorily derived authority, the court retains a well-established power to punish for contempt that is “inherent in the nature and constitution of a court … arising from the need to enforce compliance with the administration of the law.” Brooks v. United States, 686 A.2d 214, 220 (D.C. 1996) (citation and quotation marks omitted). The decision whether to hold a party in civil contempt is confided to the sound discretion of the trial judge, and will be reversed on appeal only upon a clear showing of abuse of discretion. In re T.S., 829 A.2d 937, 940 (D.C. 2003).

In challenging the trial court’s contempt ruling, Mr. Eisenberg advances three arguments: (1) that the Superior Court did not have substantive jurisdiction over the garnished funds, (2) that the underlying order was vague and ambiguous as to when the money had to be returned to Ms. Swain, and (3) that, for a variety of ill-supported reasons, his actions could not be deemed contemptuous. Each argument is meritless.

Mr. Eisenberg claims that the Superior Court lacked substantive jurisdiction over the garnished wages, rendering the underlying order requiring him to return the money to Ms. Swain void. While it is true that “[v]oidness of a court order is an absolute defense to a contempt motion,” an order is void for lack of jurisdiction only when the issuing court is “powerless to enter it.” Kammerman v. Kammerman, 543 A.2d 794, 799 (D.C. 1988) (citation omitted). Mr. Eisenberg asserts that the Superior Court did not have substantive jurisdiction over the disputed funds because they were under the exclusive jurisdiction of the bankruptcy court. As explained in detail above, he is wrong about that. Because Mr. Eisenberg’s debt was unscheduled, the funds at issue were subject to the concurrent jurisdiction of the Superior Court. See, e.g., In re Rollison, 579 B.R. at 72-73.

Mr. Eisenberg also argues that any substantive jurisdiction the Superior Court may have had was nonetheless waived by Judge Pan’s statement in the order that she was “not in a position to evaluate the merits of plaintiff’s motion to dismiss defendant’s bankruptcy.” Mr. Eisenberg relies heavily on this statement, alleging in his brief that the Superior Court “at the time chose to relinquish its jurisdiction over the disputed money as it pertained to the [federal bankruptcy law] issue and send it to [the bankruptcy court].” Mr. Eisenberg advances this interpretation despite the immediately preceding sentence in the order, which reads, “[Mr. Eisenberg] is not entitled to garnishment at this time, and it would be unjust to allow [Mr. Eisenberg] to retain defendant’s money pending the outcome of [Ms. Swain]’s bankruptcy matter,” and the immediately following sentence, which reads, “[t]he Court, therefore, denies plaintiff’s motion to stay the order releasing garnishment.” In the context of the order as a whole, Mr. Eisenberg’s suggestion that Judge Pan expressly relinquished jurisdiction over the garnished funds is patently unreasonable.[6]

We likewise reject Mr. Eisenberg’s assertion that the order was vague because it did not list a date by which the funds had to be returned. Nothing in the record suggests a genuine confusion on Mr. Eisenberg’s part about when the return of funds was required. To the contrary, in Mr. Eisenberg’s motion to stay the return of the garnished funds, he acknowledged that the court had “ordered the moneys be returned to Ms. Swain,” but specifically requested that the order be stayed “pending the exhaustion of his legal remedies.” In her order denying this motion, Judge Pan stated that it would be unjust to allow Mr. Eisenberg to keep the money “pending the outcome of defendant’s bankruptcy matter” and ordered the funds returned. To the extent that there was any ambiguity in the initial order, it is clear from the ensuing litigation that the order contemplated the prompt return of the funds during the pendency of the bankruptcy matter. Under any interpretation of the language of the order, a delay of two years—during which time Mr. Eisenberg actively pursued his claims in both bankruptcy court and the Superior Court—is clearly not contemplated. Finally, “the proper response to a seemingly ambiguous court order is not to read it as one wishes.” Loewinger v. Stokes, 977 A.2d 901, 907 (D.C. 2009). If a party subject to a court order genuinely does not understand its requirements, he may “apply to the court for construction or modification.” Id. To fail to take such steps is “to act at one’s peril as to what the court’s ultimate interpretation of the order will be.” Id. (quoting D.D. v. M.T., 550 A.2d 37, 44 (D.C. 1988)).

The court of appeals also rejected the attempt to add the bankruptcy lawyer as a defendant.

Mr. Eisenberg argues that the trial court erred in denying his motion to join Ms. Swain’s bankruptcy attorney, Mr. Moses, in the underlying breach of contract action. According to Mr. Eisenberg, Mr. Moses should have been joined as a party because he and Ms. Swain “conspired to defraud [Mr. Eisenberg] of moneys they knew were not dischargeable through bankruptcy.” Mr. Eisenberg does not assert that the trial court was required to join Mr. Moses under Super. Ct. Civ. R. 19, but that it erred in not joining him under Super. Ct. Civ. R. 20, governing permissive joinder. Rule 20 allows for the joinder of a defendant where any “right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences” and “any question of law or fact common to all defendants will arise in the action.” Super. Ct. Civ. R. 20(a)(2). Superior Court Civil Rule 20 is largely identical to Rule 20 of the Federal Rules of Civil Procedure. See Super. Ct. Civ. R. 20 cmt.; Fed. R. Civ. P. 20. As with its federal counterpart, we will review rulings on permissive joinder only for an abuse of discretion. See, e.g., Mosley v. Gen. Motors Corp., 497 F.2d 1330, 1332 (8th Cir. 1974) (“[T]he scope of the civil action is made a matter for the discretion of the district court, and a determination on the question of joinder of parties will be reversed on appeal only upon a showing of abuse of that discretion.”).

Mr. Eisenberg has not proffered any factual basis tying Mr. Moses to Mr. Eisenberg and Ms. Swain’s initial representation agreement, to the settlement agreement, or any other set of events relevant to the original contractual dispute in Superior Court. As the trial court noted, the contract dispute was already resolved in Superior Court with a full judgment in Mr. Eisenberg’s favor and the case was reopened for the limited purpose of addressing the discharge of debt. If Mr. Eisenberg believes he has a non-frivolous claim against Mr. Moses arising out of the proceedings in bankruptcy court, the proper course of action is to initiate a separate lawsuit. It is no basis to join Mr. Moses in the breach of contract case against Ms. Swain.

Comment: Deciding to defy a court order is a serious matter that should not be undertaken lightly. In my opinion, a lawyer should not subject himself to contempt proceedings in a dispute over his own legal fees. The decision to defy a court order should be undertaken only when the client’s important rights are at stake, such as preserving the attorney-client privilege or preserving the client’s 5th Amendment rights.

Should you have a question on an ethics issue, do not hesitate to call me.

Ed Clinton, Jr.

https://www.clintonlaw.net/legal-ethics.html

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