Gowdy v. Mitchell (In Re Ocean Warrior, Inc.)
835 F.3d 1310
11th Cir.2016Background
- Mitchell sued Ocean Warrior (owner of the F/V Janice) in Washington for maintenance, cure, and unearned wages; the vessel was arrested and sold in 1990 but the sale was voided when Ocean Warrior filed Chapter 11 in Florida.
- Bankruptcy court permitted president James Gowdy to operate the Janice, ordered insurance, and ordered the vessel to remain in U.S. waters; a 1992 Washington judgment for Mitchell led the Florida court to order a $38,000 deposit as security—no deposit or insurance occurred and the vessel disappeared in 1992.
- Gowdy disappeared and was later arrested in 2011; the Florida bankruptcy case was reopened, Gowdy refused to disclose the vessel’s location at a December 2011 show-cause hearing, and the bankruptcy court found him in civil contempt and gave him an opportunity to purge.
- Gowdy later received a Texas personal-injury settlement (~$449,637) that produced $224,818.63 to the bankruptcy Trustee after interpleader; the Trustee sought disbursement for Mitchell and Trustee fees, and the bankruptcy court ordered interim disbursals and ultimately entered sanctions and judgments in favor of Mitchell and the Trustee.
- District court affirmed most bankruptcy rulings; the Eleventh Circuit affirmed in part but reversed and remanded limited to the Trustee fee award amount, holding fees must be limited to those reasonably related to enforcing contempt and noting Gowdy’s conversion claim remained distinct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an evidentiary hearing was required before finding civil contempt | Gowdy: bankruptcy court abused discretion by not holding full evidentiary hearing on disputed facts | Appellees: court held a show-cause hearing giving notice and opportunity to be heard | Held: No error — show-cause hearing satisfied due process (notice and opportunity to be heard) |
| Whether Gowdy was entitled to appointed counsel at the civil contempt hearing | Gowdy: Due process violated because he lacked counsel when threatened with potential incarceration | Appellees: no right to counsel for civil contempt where no immediate risk of incarceration | Held: No right to appointed counsel; court clarified hearing was civil and incarceration was not imminent (Turner v. Rogers) |
| Whether bankruptcy court had authority/jurisdiction to enter final contempt order (core proceeding/Stern issue) | Gowdy: contempt proceeding not core; court should have issued proposed findings, preserving Article III jury/trial rights | Appellees: contempt for violation of orders about estate property is a core proceeding | Held: Proceeding was core (administration of estate/turnover); bankruptcy court could enter final order |
| Whether Trustee fees disbursed from Gowdy’s settlement were proper in amount and timing | Gowdy: fees should come from judgment or be limited; appeal timely | Appellees: fee appeal untimely and bankruptcy has broad equitable discretion | Held: Appeal timely; remanded — bankruptcy court abused discretion by awarding full Trustee fees; fees must be limited to those reasonably related to enforcing contempt, and Trustee’s conversion claim may still require Article III resolution |
Key Cases Cited
- Turner v. Rogers, 564 U.S. 431 (no right to appointed counsel in civil contempt absent risk of incarceration)
- Stern v. Marshall, 564 U.S. 462 (limits on bankruptcy courts’ authority to enter final judgments in non-core matters)
- Abbott Labs. v. Unlimited Beverages, Inc., 218 F.3d 1238 (attorneys’ fees in civil contempt limited to those reasonably and necessarily incurred enforcing compliance)
- Jove Eng’g, Inc. v. I.R.S., 92 F.3d 1539 (civil contempt sanctions compensate complainant for expenses caused by contempt)
- In re Evergreen Sec., Ltd., 570 F.3d 1257 (civil contempt penalties must be coercive or compensatory)
- In re McLean, 794 F.3d 1313 (distinguishing punitive contempt sanctions from compensatory/coercive sanctions)