Mountain Pure, LLC v. Clear Water Holdings, LLC
2016 Ark. App. 542
| Ark. Ct. App. | 2016Background
- Simmons First National Bank filed a foreclosure action against Mountain Pure entities; a receiver (Michael McAfee) was appointed to manage assets.
- Appellants (Mountain Pure entities and John Stacks) and Simmons entered a settlement requiring the receiver to provide copies of MAS-90 (SAGE) data within 30 days and to turn over actual hard drives/computer towers after the receivership concluded.
- McAfee delivered the main file server (with MAS-90) to Stacks in January 2015; Stacks claimed data was missing. McAfee delivered a terminal server in May 2015; again, Stacks claimed deletions.
- Appellants obtained evidence that 300GB of data had been copied to a USB and deleted from the main server; IT contractors testified deletions occurred and some server data was removed because of hacking concerns.
- Appellants moved for contempt (arguing McAfee willfully violated the April 13, 2015 court order forbidding deletion and requiring turnover of computer towers/hard drives). The circuit court found McAfee’s conduct troubling but concluded it did not rise to willful contempt and denied the petition. Appellants appealed and the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McAfee willfully violated the April 13, 2015 turnover order by deleting data and failing to disclose deletions | McAfee ordered deletion of almost all data (except MAS-90) from main server, failed to disclose deletions at April hearing, and delivered servers with deletions—constituting willful contempt | McAfee produced MAS-90 data as required, delivered more than required before receivership concluded, and deletions were either prior to the order or undertaken without his willful direction (or to remediate hacks) | Court affirmed: no abuse of discretion; deletions before the order cannot be contempt, and post-order conduct did not show willful disobedience of the clear order |
| Whether the April 13 order was clear and definite as to duties imposed | Order expressly required turn over of remaining towers/hard drives and prohibited deleting or removing data | McAfee contended he complied by delivering MAS-90 data and later the terminal server and USB with the removed data | Court: order was clear, but McAfee complied with its terms (turned over terminal server and provided deleted data on USB), so no contempt |
| Whether omissions at the April hearing (failure to disclose prior deletions) establish contempt | Stacks argued nondisclosure evidenced willful misconduct and contempt | McAfee admitted nondisclosure but said deletions occurred before the April 13 order and he later provided the data | Court: omissions related to pre-order conduct and thus could not form basis for contempt under that order |
| Whether evidence supported finding of at least negligent or reckless conduct warranting contempt sanctions | Appellants urged court dissatisfaction and circumstantial evidence showing bad faith | McAfee argued conduct at most negligent; remedial steps and delivery of data undermined willfulness | Court: found conduct may warrant criticism but did not rise to willful contempt; abuse of discretion not shown |
Key Cases Cited
- Harral v. McGaha, 427 S.W.3d 769 (Ark. App. 2013) (standard of review for contempt: abuse of discretion)
- Jones v. Jones, 898 S.W.2d 23 (Ark. 1995) (order must be clear and definite to support contempt)
- Davenport v. Uselton, 2013 Ark. App. 344 (Ark. App. 2013) (contempt enforces valid court orders; matter between judge and litigant)
- Lone v. Koch, 467 S.W.3d 152 (Ark. App. 2015) (willful disobedience required for contempt)
- McCullough v. Lessenberry, 780 S.W.2d 9 (Ark. 1989) (cannot be held in contempt for failing to do something the court did not order)
- Waldon v. Waldon, 806 S.W.2d 387 (Ark. App. 1991) (same principle on clarity and scope of contempt orders)