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Garth O. Green Enterprises, Inc. v. Standard Plumbing Supply, Inc.

United States District Court, D. Utah, Central Division

May 5, 2017

STANDARD PLUMBING SUPPLY, INC., Counterclaim Plaintiff. STANDARD PLUMBING SUPPLY, INC., Crossclaim Plaintiff,
HARWARD IRRIGATION, Crossclaim Defendant.

          Evelyn J. Furse, Magistrate Judge


          David Nuffer, United States District Judge

         Standard Plumbing Supply, Inc. (“Standard”) and Richard Reese[1] request a hearing and move for an expedited order to show cause why attorney Marcus R. Mumford should not be held in contempt and suspended from the practice of law for violation of the court's order requiring immediate payment of the $25, 115.74 sanction award (“Motion for Order to Show Cause”).[2] Attorney Marcus R. Mumford opposes the Motion for Order to Show Cause (“Opposition”).[3]Standard filed a reply in support of the Motion for Order to Show Cause (“Reply”).[4] For the reasons below, the Motion is GRANTED IN PART AND DENIED IN PART.


         On January 18, 2017, an order was entered granting Standard's motion for sanctions against counsel for the Greens, Mr. Mumford (“Rule 11 Order”).[5] The order explained that the Greens' unfair competition claim was devoid of merit and frivolous and that the Greens' counsel was given an opportunity to withdraw the claim, but refused to do so.[6] The order explained that because Mr. Mumford was the Greens' counsel at the time of filing the Amended Complaint containing the frivolous claim and had refused to withdraw it, and that there was “no indication that the Greens made misrepresentations to their attorney or failed to disclose relevant facts, ” Mr. Mumford alone would be sanctioned.[7] The order requested that Standard file a motion for determination of sanctions to determine the appropriate amount of sanctions.[8]

         On February 13, 2017, after full briefing on the determination motion, an order was entered instructing Mr. Mumford to pay $25, 115.74 to Standard Plumbing within 28 days (“Sanctions Award Order”).[9] Standard had requested in its determination motion that the entire amount of $25, 115.74 be paid within 10 days. In opposing the determination motion, Mr. Mumford did not argue that a hardship would be imposed by ordering him to pay within 10 days. Instead, he argued that the amount of the award was too high and opposing counsel had engaged in questionable billing practices. Those arguments were rejected.[10] Nevertheless, Mr. Mumford was allotted 18 additional days by the court to pay the full sanctions amount.

         The payment was due on Monday, March 13, 2017. On March 10, 2017 at 5:27 p.m.- the Friday before the Monday on which the payment was due-Mr. Mumford filed a motion to seal a forthcoming motion that would seek a stay of enforcement of the Sanctions Award Order.[11] For the first time, Mr. Mumford raised hardship arguments and stated he was unable to pay. After full briefing on the motion to seal, the motion was granted and Mr. Mumford was allowed to file his motion to stay enforcement by March 13, 2017 at 4:00 p.m.[12] At 8:34 p.m., Mr. Mumford filed the motion to stay.[13] He did not file the motion to stay under seal. Mr. Mumford argued that personal circumstances and circumstances with his law practice did not allow him to pay the full sanctions amount by the deadline. He requested a stay of enforcement or a payment plan. The only evidence Mr. Mumford provided in support of his inability to pay was a personal declaration stating his financial condition. There were no attached exhibits such as bank statements or financial statements. The declaration was inconclusive. For example, the declaration did not state the fees Mr. Mumford generated in this matter since February 13, 2017, the date of the Sanctions Award Order. The declaration did not state the fees Mr. Mumford generated in other matters since February 13, 2017. The declaration did not give any details of the revenue, receivables or collections his law practice. Nor was an overall picture of his personal financial condition included. The declaration did not describe any attempt to obtain a loan to satisfy payment of the sanctions amount which would provide Mr. Mumford a payment plan as he desired. The declaration did explain that he was unable to encumber any jointly owned assets, but did not explain whether he could encumber personal assets or assets of his law firm, such as accounts receivable. Standard opposed the motion to stay.[14] The motion to stay was denied, and Mr. Mumford was ordered to “immediately pay $25, 115.74 to Standard Plumbing.”[15] That order was entered on Friday, March 17, 2017.

         On Monday, March 20, 2017, Mr. Mumford still had not paid the sanctions amount, so Standard filed the Motion for Order to Show Cause currently under review. On Wednesday, March 22, 2017, the parties were ordered to “contact Magistrate Judge Wells's chambers on or before March 27 to set a settlement and status conference” on the Motion for Order to Show Cause.[16] After confidential briefing before Judge Wells, and a settlement conference held on April 5, 2017, the parties were unable to reach a settlement on the Motion for Order to Show Cause.[17]

The next day, on April 6, 2017, the following order was entered:
DOCKET TEXT ORDER taking under advisement 250 Motion for Order to Show Cause. Briefing of the 250 motion will be conducted in the regular course.
Any response must be filed on or before 4/20/17.[18] Any reply must be filed on or before 14 days from the date any response is filed.
The 250 Motion for Order to Show Cause requests an order (1) holding Mr. Mumford in contempt for failing to pay the sanctions amount and (2) suspending Mr. Mumford from the practice of law until he pays the sanctions amount. The 250 Motion also seeks additional fees associated with enforcement of the sanctions orders. This case, at this time, is not the proper forum to consider barring Mr. Mumford from practice in this court. Therefore, any response and reply shall be limited to discussion of contempt and additional fees. Signed by Judge David Nuffer on 4/6/17. No attached document. (kjw) (Entered: 04/06/2017)[19]

         Thus, pursuant to the April 6, 2017 order, it was determined that the matter would not be expedited, as Standard had requested, but would be “conducted in the regular course[, ]” and Standard's request to bar Mr. Mumford from the practice of law would not be considered in this case at this time.[20] Thus, the request for expedited treatment was denied and the order signaled that this proceeding was not a proper forum to bar Mr. Mumford from the court. The remaining issues raised in the Motion for Order to Show Cause will be addressed in this order.

         After February 13, 2017, when the initial Sanctions Award Order was entered, there has been a substantial amount of litigation for which the parties have incurred additional fees. Specifically, Standard was required to:

(1) prepare a response to Mr. Mumford's motion to stay the Sanctions Award Order;
(2) attempt to collect on the Sanctions Award Order;
(3) expend efforts to enforce the subsequent order affirming the Sanctions Award Order and attempt to have Mr. Mumford comply with the mandate to immediately pay the sanctions amount;
(4) prepare a Motion for Order to Show Cause after Mr. Mumford had not complied with the orders of the court;
(5) prepare for and participate in a settlement conference regarding the Motion for Order to Show Cause; and
(6) prepare a reply in support of the Motion for Order to Show Cause.

         Each of these items required Standard to confer with counsel and determine a course of action. The total amount of additional fees incurred by Standard in attempting to enforce compliance with the Sanctions Award Order is $8, 967.10.[21]

         Standard has refused a payment plan from Mr. Mumford. Mr. Mumford has sent two checks-one for $2, 500 dated March 13, 2017[22] and one for $2, 500 dated April 21, 2017[23]-to Standard. Standard has refused to deposit the checks.

         Mr. Mumford stated in his most recent filing that: “I recently analyzed my financial condition and determined that, from the date that the court ordered that I pay $25, 115 in sanctions, i.e., February 13, 2017, to the present, after satisfying my obligations to make payroll for my staff, alimony and child support payments, and office rent, there was a balance of approximately $15, 000. Of that amount, I paid $5, 000 of it to Standard towards the court's sanctions orders, approximately $2, 00-4, 000 to myself for living expenses in that time period, and approximately $6, 000-7, 000 toward other business expenses, with additional expenses being put on credit cards, as I prioritize payment toward the court's sanctions order over my personal financial security.”[24] No supporting documentation of these statements has been provided by Mr. Mumford.


         Parties' Arguments

         Standard argues that Mr. Mumford should be ordered to show cause why he should not be held in contempt for failing to immediately pay the sanctions amount in full.[25] Standard argues that Mr. Mumford is in “clear violation of the Court's March 17 Order” and that “there is no excuse or justification for Mr. Mumford's conduct, which conduct is in open and flagrant disregard of the Court's mandate to ‘immediately' pay the Sanctions Amount to Standard.”[26]Standard explains that rather than pay the sanctions amount as ordered, “Mr. Mumford contacted seventeen (17) attorneys at Kirton McConkie [the law firm representing Standard] and told them they ‘didn't stop [Standard's Rule 11 motion] when you should have - and I would encourage you to go back and read the letter I senton October 27, 2014, when I first tried to dissuade your firm from taking this action.'”[27] Standard argues that Mr. Mumford should also be ordered to pay Standard's counsel's additional fees associated with enforcement of the sanctions orders.[28]

         Mr. Mumford disagrees with Standard, and argues that he should not be held in contempt.[29] He argues that the reason he has not paid the sanctions amount is because he does not have the ability to make an immediate payment of over $25, 000.[30] He argues that the sanctions amount was ordered in error and he intends to appeal the decision.[31] Mr. Mumford contends that “additional attorney fees and expenses are not appropriate because Standard incurred them unnecessarily.”[32] Mr. Mumford states that he has “tried repeatedly to work out a payment plan with Standard because I simply do not have the full amount, despite my best efforts” but “Standard has continually refused.” Mr. Mumford states that he has sent two checks to Standard totaling $5, 000, but Standard has refused to cash the checks.[33]

         Legal Standard for Contempt

         For Mr. Mumford to be held in contempt, Standard must prove, by clear and convincing evidence, “that a valid court order existed, that [Mr. Mumford] had knowledge of the order, and that [Mr. Mumford] disobeyed the Order.”[34] “A district court may exercise broad discretion in using its contempt power to assure compliance with its orders.”[35] “Abuse of discretion is established if the district court's adjudication of the contempt proceedings is based upon an error of law or a clearly erroneous finding of fact.”[36]

         Mr. Mumford Is in Contempt for His Ongoing Failure to Pay the Sanctions Amount

         First, a valid court order existed. Indeed, several court orders existed. The Rule 11 Order, entered January 18, 2017 held that Mr. Mumford would be sanctioned. The Sanctions Award Order, entered February 13, 2017, determined that the appropriate amount of sanctions to compensate Standard and to serve a deterrent effect was $25, 115.74. The Sanctions Award Order required Mr. Mumford to pay that amount to Standard within 28 days. On March 17, 2017, ...

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