Goldman v. Bankton Financial Corp. (In Re Skyport Global Communications, Inc.)
661 F. App'x 835
| 5th Cir. | 2016Background
- SkyPort (later TrustComm) confirmed a Chapter 11 reorganization plan that enjoined derivative claims on behalf of SkyPort/SkyComm but did not enjoin direct claims against third parties.
- The Schermerhorn parties (49 investors) filed a Texas state-court suit seeking $32M; Samuel Goldman represented them. The action was removed to bankruptcy court, which entered a preliminary injunction barring the plaintiffs from pursuing claims and from contacting SkyPort’s former/current vendors, employees, and customers without SkyPort counsel’s consent.
- The preliminary injunction was signed by Goldman (agreeing to form) and was not appealed. It required written request to SkyPort counsel and consent or no response within one business day before contacting former/current employees.
- Despite the injunction, Goldman and non-party Franklin Craig communicated extensively with former SkyPort employee Dawn Cole and facilitated her potential litigation involvement and representation; Craig forwarded communications between Goldman and Cole and arranged financial support and counsel.
- The bankruptcy court held 17 days of hearings, found Goldman and Craig in civil contempt, and awarded SkyPort partial attorneys’ fees and expenses ($137,513 joint and several liability). The district court affirmed; the Fifth Circuit affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contempt proceeding was criminal (jurisdictional) | Goldman/Craig: proceeding was criminal, bankruptcy court lacked jurisdiction | Court/ SkyPort: proceeding was civil remedial (compensatory) | Held civil; bankruptcy court had jurisdiction to impose compensatory sanctions |
| Whether awarded attorneys’ fees were reasonable/necessary | Goldman/Craig: fees unreasonable because no compensatory harm or coercive relief was granted | SkyPort: fees compensate costs incurred enforcing injunction; court reduced requested amount | Held fees were compensatory and reasonably calculated; award not an abuse of discretion |
| Whether dissolution of the preliminary injunction moots the contempt award | Goldman/Craig: injunction dissolved so contempt/coercive relief is mooted | SkyPort: award is compensatory and survives termination of underlying proceeding | Held compensatory contempt is not mooted by dissolution; award stands |
| Whether Goldman/Craig actually violated injunction as reasonably understood | Goldman/Craig: they reasonably believed they did not violate the injunction (ambiguity/Scope) | SkyPort: injunction language was clear; defendants willfully and repeatedly violated it; non-parties in concert are bound | Held terms were specific and clear; both Goldman and Craig knowingly violated the injunction; non-party Craig bound under Rule 65(d) principles |
Key Cases Cited
- In re Bradley, 588 F.3d 254 (5th Cir.) (distinguishing civil/criminal contempt by primary purpose)
- Hornbeck Offshore Servs. v. Salazar, 713 F.3d 787 (5th Cir.) (standard for reviewing preliminary injunction-related findings)
- Travelhost, Inc. v. Blandford, 68 F.3d 958 (5th Cir.) (civil contempt compensatory/coercive distinction; mooting rule)
- Smith v. Sullivan, 611 F.2d 1050 (5th Cir.) (initial duty to classify contempt as civil or criminal)
- In re Hipp, Inc., 895 F.2d 1503 (5th Cir.) (bankruptcy court jurisdiction over civil but not criminal contempt)
- Lamar Financial Corp. v. Adams, 918 F.2d 564 (5th Cir.) (primary purpose test for contempt characterization)
- Lewis v. S.S. Baune, 534 F.2d 1115 (5th Cir.) (court’s characterization of proceedings is a factor in contempt analysis)
- Cook v. Ochsner Found. Hosp., 559 F.2d 270 (5th Cir.) (attorneys’ fees may be awarded as compensatory relief in civil contempt)
- Combs v. City of Huntington, Texas, 829 F.3d 388 (5th Cir.) (lodestar and fee-award methodology)
- Jimenez v. Wood County, 621 F.3d 372 (5th Cir.) (lodestar adjustments and exclusion of excessive time)
- Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542 (U.S. Supreme Court) (lodestar presumption of reasonableness)
- Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.) (twelve Johnson factors for adjusting lodestar)