581 B.R. 728
S.D.N.Y.2017Background
- Blair Ventures LLC filed Chapter 11 in Feb. 2012; sale of its Manhattan property was arranged and a proposed payment schedule (Exhibit A) accompanied an August 29, 2012 dismissal order.
- The Order of Dismissal required Blair to "pay all known creditors...in full in accordance with the proposed schedule" within 30 days and retained jurisdiction to enforce terms.
- Exhibit A bifurcated amounts into two categories: "TO BE ESCROWED" (including Famous Restoration's $56,636.50 mechanics' lien) and "TO BE PAID."
- In 2016 Famous moved to enforce the 2012 order, seeking immediate payment and contempt sanctions; the Bankruptcy Court (2017) held Blair in contempt and ordered payment of the lien amount plus interest and fees.
- Blair appealed; this Court stayed enforcement pending appeal and required funds to remain in escrow. The district court reviewed whether the 2012 order was sufficiently clear to support civil contempt.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Blair could be held in civil contempt for failing to pay Famous $56,636.50 directly under the 2012 Order | Famous: the Order clearly required payment to all creditors within 30 days, including direct payment to Famous of the listed amount | Blair: the Order required payment "in accordance with the proposed schedule," which identified Famous's amount as "TO BE ESCROWED," so Blair only needed to deposit sufficient funds into escrow | The Order was ambiguous as to whether the amount had to be paid directly or merely placed in escrow; ambiguity precludes civil contempt, so the contempt order was vacated and the matter remanded |
| Whether Blair's failure to file an affidavit of compliance justified contempt | Famous: Blair failed to file the required affidavit, supporting contempt | Blair: the contempt ruling was predicated on failure to pay directly, not on the affidavit omission | The court found the contempt sanction was not imposed on the affidavit lapse; regardless, the primary basis (clear command to pay Famous directly) was ambiguous and insufficient for contempt |
Key Cases Cited
- Paramedics Electromedicina Comercial, Ltda. v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645 (2d Cir.) (elements required to hold party in civil contempt)
- Donovan v. Sovereign Sec. Ltd., 726 F.2d 55 (2d Cir.) (willfulness not required for civil contempt)
- Perez v. Danbury Hosp., 347 F.3d 419 (2d Cir.) (vacating contempt where underlying order ambiguous)
- Hess v. N.J. Transit Rail Operations, Inc., 846 F.2d 114 (2d Cir.) (same)
- United States v. O'Quinn, 913 F.2d 221 (5th Cir.) (same)
- In re Lehman Bros. Holdings Inc., 526 B.R. 481 (S.D.N.Y.) (bankruptcy contempt standards and appellate review)