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FDIC as Receiver for Amtrust Bank v. Lewis

United States District Court, D. Nevada

July 6, 2017

FDIC as Receiver for AMTRUST BANK, f/k/a Ohio Savings Bank, a federal savings bank, et al., Plaintiffs,
v.
REX H. LEWIS, et al., Defendants.

          ORDER

         Presently before the court is a motion for contempt filed by plaintiffs Iota Cinnamon, LLC, Iota Coral, LLC, Iota Red, LLC, Iota Royal, LLC, and Iota Violet, LLC (collectively, as “judgment creditors”). (ECF No. 249). Defendant Rex Lewis (“judgment debtor” or “Lewis”) filed a response (ECF No. 252), to which judgment creditors replied (ECF No. 254).

         Also before the court is judgment creditors' motion to modify injunction. (ECF No. 250). Judgment debtor filed a response (ECF No. 253), to which judgment creditors replied (ECF No. 255).

         I. Facts

         The facts of the instant case are familiar to the court and the parties. This dispute arose out of five commercial loan agreements guaranteed by judgment debtor. Each loan was secured by one or more deeds of trust on the relevant properties. After Nevada's real estate market crashed in 2008, the borrowers defaulted on the loans and the banks foreclosed on the properties. Substantial debts remained after the foreclosure sales. (ECF No. 174).

         Judgment creditors filed a deficiency judgment action against judgment debtor as guarantor of the loans. (ECF No. 1). Judgment creditors moved for summary judgment, and judgment debtor did not oppose the motion. The court granted summary judgment and entered judgment against judgment debtor and his various companies, jointly and severally, for $66, 089, 661.52. (ECF Nos. 41, 59).

         On July 3, 2014, the court entered an order enjoining judgment debtor from transferring assets he currently owns which are worth $5, 000.00 or more. (ECF No. 65).

         On August 27, 2015, Lewis filed a notice of appeal. (ECF No. 182). On May 30, 2017, the Ninth Circuit affirmed the court's order enjoining judgment debtor from transferring assets he currently owns which are worth $5, 000.00 or more (ECF No. 65). (ECF Nos. 256, 258).

         In the instant motions, judgment creditors renew their previous motions for contempt and to modify the injunction.[1] (ECF Nos. 249, 250).

         II. Legal Standards

         A. Contempt

         It is well established that “courts have inherent power to enforce compliance with their lawful orders through civil contempt.” Shillitani v. United States, 384 U.S. 364, 370 (1966). Additionally, “[a] court has wide latitude in determining whether there has been contemptuous defiance of its order.” Gifford v. Heckler, 741 F.2d 263, 265 (9th Cir. 1984) (citing Neebars, Inc. v. Long Bar Grinding, Inc., 438 F.2d 47, 48 (9th Cir. 1971)).

         “Civil contempt . . . consists of a party's disobedience to a specific and definite court order by failure to take all reasonable steps within the party's power to comply.” In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993). However, “a person should not be held in contempt if his action[s] appear[] to be based on a good faith and reasonable interpretation of the court's order.” Id. (quoting Vertex Distrib., Inc. v. Falcon Foam Plastics, Inc., 689 F.2d 885, 889 (9th Cir. 1982)). Further, “[s]ubstantial compliance with the court order is a defense to civil contempt, and is not vitiated by a few technical violations where every reasonable effort has been made to comply.” In re Dual-Deck, 10 F.3d at 695. . . .

         B. Modify Injunction

         A district court has “wide discretion” when deciding whether to modify an injunction based on changes in factual or legal circumstances. System Federation No. 91 v. Wright, 364 U.S. 642, 647 (1961); see also A&M Records, Inc. v. Napster, Inc., 284 F.3d 1091, 1098 (9th Cir. 2002). When deciding whether to modify an injunction, the court must strike a balance “between the policies of res judicata ...


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