Shales v. T. Manning Concrete, Inc.
2012 U.S. Dist. LEXIS 33244
| N.D. Ill. | 2012Background
- Plaintiffs seek civil contempt against Thomas Manning for alleged transfer of T. Manning Concrete, Inc. assets after service of a citation to discover assets.
- An August 17, 2011 citation was served on the company and its agents to prohibit transfers of non-exempt assets pending further order.
- Manning opened a Golden Eagle Community Bank account for the company and directed disbursements from that account after learning of the citation, including payroll funds.
- Funds froze company accounts and sought to recover assets; Manning used personal funds via a client trust to pay payroll and later asserted wage claims in bankruptcy.
- Court held an evidentiary hearing (Feb. 8, 2012) and analyzed whether Manning knowingly violated the citation and whether contempt was warranted.
- Court concluded Manning is personally liable for $40,700.78 transferred in violation and awarded $18,309.50 in attorney fees and costs to the Funds, with restitution ordered to restore funds to the company account.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether service of the citation was proper on the company | Shales contends valid service gave notice to Manning and the company. | Manning argues service was defective or insufficient to bind him personally. | Service proper; notice valid. |
| Whether Manning violated the citation by transferring assets after service | Manning knowingly caused non-exempt funds to be transferred despite the injunction. | Manning claims transfers were allowed or not in violation due to bankruptcy context. | Yes; Manning violated the citation by transferring $40,700.78. |
| Whether the violation supports contempt sanctions against Manning | Civil contempt is warranted to compensate or coerce compliance for known violation. | Contempt should be limited or no sanction imposed due to ambiguities or lack of willful conduct. | The conduct supports civil contempt with monetary remedy. |
| Amount for which Manning is personally liable | Manning should be liable for the $40,700.78 actually transferred from the company assets. | Argues for lesser or no liability given bankruptcy and other channels. | Manning is personally liable for $40,700.78. |
| Award of attorney fees and costs for the contempt proceedings | Fees and costs are recoverable as sanctions for civil contempt under Rule 277 and statutes. | Requests limiting fee recovery pending bankruptcy trustee determinations. | Award of $18,309.50 to Funds for attorney fees and costs. |
Key Cases Cited
- Laborers’ Pension Fund v. A & C Envtl., Inc., 2005 WL 994525 (N.D. Ill. 2005) (illustrates liability of corporate officers for non-exempt payments)
- Bank of Aspen v. Fox Cartage, Inc., 533 N.E.2d 1083 (Ill. 1989) (recognizes restraint on corporate funds after citation)
- City of Chicago v. Air Auto Leasing Co., 697 N.E.2d 791 (Ill. App. 1998) (corporate citation notice and lien mechanics)
- United States v. Dowell, 257 F.3d 694 (7th Cir. 2001) (civil contempt standard and proof burden)