RG Abrams Ins. v. The Law Office of C.R. Abrams

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RG ABRAMS INSURANCE, et al., Plaintiffs, v. THE LAW OFFICES OF C.R. ABRAMS, et al., Defendants.

No. 2:21-cv-00194-FLA (MAAx)

United States District Court, C.D. California

November 9, 2021

ORDER ADJUDICATING DEFENDANTS TO BE IN CONTEMPT OF COURT ORDERS, IMPOSING SANCTIONS, AND SETTING STATUS CONFERENCE [DKTS. 229, 237]

FERNANDO L. AENLLE-ROCHA United States District Judge.

RULING

Before the court are two Orders to Show Cause Why Defendants Should Not Be Held in Contempt for Violation of Court Orders (collectively, the “OSCs”). Dkt. 229, 237. The court held a hearing on the OSCs on November 5, 2021 (the “Hearing”). For the reasons stated herein, the court:

• FINDS by clear and convincing evidence and ADJUDGES Defendants Christopher R. Abrams (“Abrams”) Sarah Rinelli (“Rinelli”), Jack R. Mills (“Mills”), Cynthia Wooten (“Wooten”) and Robin Armstrong (“Armstrong”) (collectively, “Defendants”)^[1] to be in contempt of the order in this action dated December 21, 2020 (the “December 21, 2020 Order”) (Dkt. 69);

• FINDS by clear and convincing evidence and ADJUDGES Defendants Rinelli, Mills, and Wooten to be in contempt of the order in this action dated January 8, 2021 (the “January 8, 2021 Order”) (Dkt. 71);

• FINDS by clear and convincing evidence and ADJUDGES Defendants Abrams, Rinelli, Mills, Wooten, and Armstrong to be in contempt of court orders dated July 8, 2021 (Dkt. 134), July 14, 2021 (Dkt. 146), and August 10, 2021 (Dkt. 182) (collectively, the “Three Discovery Orders”);

• ORDERS Defendants Abrams, Rinelli, Mills, Wooten, and Armstrong, jointly and severally, to pay Plaintiffs $2, 730.00 in attorney's fees incurred in bringing the March 3, 2021 Motion for Order to Show Cause Why Defendants Should Not Be Held in Contempt for Violation of Court Orders (the “March 3, 2021 OSC Motion”) (Dkt. 82), by no later than December 6, 2021;

• ORDERS Defendants Abrams, Rinelli, Mills, Wooten, and Armstrong, jointly and severally, to pay Plaintiffs $5, 215.00 in attorney's fees incurred in bringing the September 17, 2021 Motion for Order to Show Cause Why Defendants Should Not Be Held in Contempt for Violation of Court Orders (the “September 17, 2021 OSC Motion”) (Dkt. 213), by no later than December 6, 2021;

• ORDERS Defendants Abrams, Rinelli, Mills, Wooten, and Armstrong, jointly and severally, to pay to the court a per diem fine of $100.00 starting November 6, 2021, for each day up to and including December 3, 2021 that all amounts owed under the December 21, 2020 Order, the January 8, 2021 Order, and the Three Discovery Orders remain unpaid; and

• SETS a status conference for December 3, 2021 at 1:30 p.m. And ORDERS Defendants Abrams, Rinelli, Mills, Wooten, and Armstrong to appear in-person to address their compliance with the December 21, 2020 Order, the January 8, 2021 Order, the Three Discovery Orders, and payment of the per diem fine payable to the court, if applicable.

If the amounts due under the December 21, 2020 Order, the January 8, 2021 Order, the Three Discovery Orders, and the applicable per diem fines ordered by this court have not been paid in full on or before the 1:30 p.m. hearing on December 3, 2021, the court will order Defendants Abrams, Mills, Rinelli, Wooten, and Armstrong to surrender to the U.S. Marshal's Service in court and to remain in custody until all amounts due under the December 21, 2020 Order, the January 8, 2021 Order, the Three Discovery Orders, and the applicable per diem fines ordered by this court have been paid in full. The court will issue an arrest warrant for any Defendant who fails to appear for the status conference on December 3, 2021.

The court will purge the contempt as to Defendants Abrams, Mills, Rinelli, Wooten, and Armstrong only upon a joint filing by Plaintiffs and Defendants, in which Plaintiffs and Defendants' counsel attest under penalty of perjury that Defendants have paid Plaintiffs, and that Plaintiffs have received, all amounts due under the December 21, 2020 Order, the January 8, 2021 Order, and the Three Discovery Orders, and that Defendants have paid all applicable per diem fines to the court.

BACKGROUND^[2]

Plaintiffs filed the Complaint in this action in the United States District Court for the Northern District of California on February 24, 2020. Dkt. (Compl.) 1. Plaintiffs assert a single federal cause of action for violation of the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030 (against all Defendants), id. at 11-12 (Count I) ¶¶ 1-6, and causes of action under state law for fraud and intentional deceit (against Defendants Mills Wooten, and Armstrong), negligent misrepresentation (against the same Defendants), intentional interference with prospective economic advantage (against all Defendants), negligent interference with prospective economic advantage (against Defendants Mills, Wooten, and Armstrong), conversion (against all Defendants), breach of contract (against Defendants Abrams, Rinelli, and Mills), breach of the implied covenant of good faith and fair dealing (against the same Defendants), breach of fiduciary duty and duty of loyalty (against Defendants Wooten and Armstrong), unjust enrichment and promissory estoppel (against all Defendants), and civil conspiracy (against all Defendants). Id. at 11-20, ¶¶ 1-72.^[3]

I. The Northern District of California Orders and Order to Show Cause

On June 17, 2020, Plaintiffs filed a Motion for Service Costs and Attorney's Fees pursuant to Fed.R.Civ.P. 4(d) (“Rule 4 Motion”), in which they requested the court order Defendants Wooten, Mills, Rinelli, and Armstrong to pay the costs of service and associated attorney's fees (including the fees required to bring the Rule 4 Motion). Dkt. 27. In an order dated January 8, 2021, the Honorable Jon S. Tigar granted Plaintiffs' Rule 4 Motion in part and ordered Defendants Mills, Wooten, and Rinelli to pay Plaintiffs $2, 395.10 for the costs of service only as to these Defendants and $5, 250.00 for attorney's fees incurred in bringing the Rule 4 Motion, thus totaling sanctions of $7, 645.10. Dkt. 71 at 7. The court denied the Rule 4 Motion as to Defendant Armstrong because Plaintiffs did not prove they had sent written notice to Armstrong as required under Rule 4(d). Id. at 5.

On December 11, 2020, Plaintiffs filed a Motion for Administrative Relief to Extend Mediation Deadline (“Administrative Motion”), in which they requested (1) the court extend the parties' deadline to complete mediation from December 31, 2020 to March 1, 2021, due to discovery related delays, and (2) the court order Defendants Abrams, Rinelli, Mills, Wooten, and Armstrong to pay Plaintiffs' attorney's fees incurred in bringing the Administrative Motion. Dkt. 60. In an order dated December 20, 2021, Judge Tigar granted Plaintiffs' Administrative Motion in its entirety and ordered Defendants to pay Plaintiffs, within 30 days, $1, 400 for attorney's fees incurred in connection with the Administrative Motion. Dkt. 69.

According to Plaintiffs, Defendants have not paid the attorney's fees ordered with respect to either the Rule 4 Motion or the Administrative Motion. See generally Dkt. 82; Dkt. 82-1 (Slater Decl.) ¶ 2; Dkt. 82-4 (Peden Decl.) ¶ 3. On February 10, 2021, Plaintiffs' counsel, Michael Slater (“Mr. Slater”), emailed Defendants' counsel, Timothy Donahue, regarding Defendants' non-compliance. Dkt. 82 at 6; Dkt. 82-1 (Slater Decl.) ¶ 3; Dkt. 82-2 (Ex. A) at 1. Mr. Slater provided Mr. Donahue with instructions for sending the amounts owed via check or wire transfer and requested the amounts be paid within 24 hours. Dkt. 82-1 (Slater Decl.) ¶ 3; Dkt. 82-2 (Ex. A) at 1. Mr. Slater further attests that Mr. Donahue did not respond to Mr. Slater's February 10, 2021 email, but later acknowledged, during a telephone conference with Mr. Slater on February 12, 2021, that he would address Defendants' non-compliance with his clients. Dkt. 82-1 (Slater Decl.) ¶ 4; Dkt. 82-3 (Ex. B). On February 23, 2021, Plaintiffs' co-counsel, Patricia Peden (“Ms. Peden”), sent an email to Mr. Donahue regarding Defendants' non-compliance and requesting the amounts be paid. Dkt. 82-5 (Ex. C). Ms. Peden attests that Mr. Donahue did not respond to her email. Dkt. 82-4 (Peden Decl.) ¶ 3.

On March 3, 2021, Plaintiffs filed the March 3, 2021 OSC Motion, seeking an order requiring Defendants to show cause: (1) why the court should not issue terminating sanctions as to Defendants' counterclaims against Plaintiffs; (2) why Defendants should not be adjudicated in contempt of the December 21, 2020 Order; (3) why Defendants should not be adjudicated in contempt of the January 8, 2021 Order; (4) why Defendants should not be ordered to pay Plaintiffs' attorneys' fees incurred in connection with the March 3, 2021 OSC Motion; (5) why the court should not impose a fine, payable to the court, for each day beyond this court's ruling on this Motion, that Defendants fail to bring themselves into compliance with the December 21, 2020 Order and January 8, 2021 Order; and (6) why the court should not order other relief the court deems appropriate. Dkts. 82, 83.

Defendants filed an Opposition on April 2, 2021, and Plaintiffs filed a Reply on April 5, 2021. Dkts. 91, 92. On October 15, 2021 the court granted Plaintiffs' Motion and ordered Defendants Abrams, Mills, Rinelli, Wooten, and Armstrong to appear in court on October 29, 2021 to show cause why the court should find them in contempt of the December 21, 2020 Order and the January 8, 2021 Order. Dkt. 237. The court allowed supplemental briefing on why Defendants should not be held in contempt, which Defendants timely filed on October 22, 2021 as an “Opposition to OSC.” Dkt. 242. On October 24, 2021, the court continued the hearing to November 5, 2021, pursuant to Defendants...