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TFG-Michigan, L.P. v. Grain

United States District Court, D. Utah

September 28, 2017

TFG-MICHIGAN, L.P., a Utah Limited Liability partnership, Plaintiff,
v.
BOERSEN FARMS GRAIN, a Michigan partnership, BOERSEN FARMS PROPERTIES, LLC, a Michigan limited company, BOERSEN FARMS, INC., a Michigan corporation, BOERSEN TRANSPORT, INC., a Michigan corporation, BOERSEN FARMS AG, LLC, a Michigan limited liability company, BOERSEN LAND COMPANY, LLC, a Michigan limited liability company, DENNIS A. BOERSEN, a Michigan citizen, ROSS M. BOERSEN, a Michigan citizen, ARLAN J. BOERSEN, a Michigan citizen, and SANDRA BOERSEN, a Michigan citizen, Defendants.

          MEMORANDUM DECISION AND ORDER FINDING DEFENDANTS IN CONTEMPT OF COURT AND ISSUING SANCTIONS

          TED STEWART UNITED STATES DISTRICT JUDGE

         This matter came before the Court on Plaintiff TFG-Michigan, L.P.'s (“Plaintiff”) Renewed Motion for an Order to Show Cause and for Terminating and Other Sanctions against Defendants Boersen Farms Grain, (“Defendants”). The Court held a show cause hearing on September 26, 2017. For the reasons discussed below, the Court finds Defendants in contempt and will issue terminating sanctions.

         I. BACKGROUND

         Plaintiff is an equipment leasing company and has brought this action against Defendants alleging breach of contract and breach of good faith and fair dealing regarding numerous lease agreements. Among other things, Plaintiff sought a writ of replevin requiring the immediate return of the leased property and a prejudgment writ of attachment, authorizing the seizure of the leased property. On June 12, 2017, this Court, per the Honorable Tena Campbell, entered an Order directing the Boresen Defendants to:

deliver the equipment, identified in the lease schedules attached hereto as Exhibit A (hereinafter “the Equipment”), to a location identified by Plaintiff within seven calendar days of Plaintiff providing written notice to the Boersen Defendants of such location, or, alternatively, at Plaintiff's election and within seven calendar days of Plaintiff's request, to deliver written notice to Plaintiff of the Equipment's location and that the Equipment is available for pick up, and then allow Plaintiff (or its agents) to enter upon the premises where the Equipment is located and take possession of the Equipment. If any Equipment has been transferred, sold or otherwise disposed of, the Boersen Defendants are not to disperse the proceeds of any transfer, sale or other disposition and are ORDERED to deposit any liquid proceeds in a trust account, and/or to provide a specific accounting of any non-liquid assets or proceeds. For liquid proceeds, the Boersen Defendants shall promptly identify the location of the bank holding the trust account (as well as the specific account number) to Plaintiff and the amount of funds held in such account. The Boersen Defendants shall also promptly identify the location of any non-liquid proceeds or assets. The Boersen Defendants are also ORDERED to not transfer, sell, or otherwise dispose of any Equipment or undertake any other acts that will lower the leased equipment's value.[1]

         On June 19, 2017, Defendants filed a Motion for Reconsideration Regarding the June 12, 2017 Order. On June 26, 2017, Plaintiff filed a Motion for Order to Show Cause, alleging Defendant had not complied with the June 12 Order. The Court addressed both motions in its Order issued July 5, 2017. The July 5 Order recognized that Defendants may not be able to fully comply with the June 12 Order in the time period allotted, specifically regarding the delivery of 126 pivot systems and fifteen other fixed items, and therefore directed the parties “to meet and confer to establish a plan for Defendants to comply with the Court's [June 12] Order by July 7, 2017.”[2] If the parties were unable to agree to a plan, the Court directed the parties to file proposed schedules with the Court. In light of this modification of the June 12 Order, the Court denied Plaintiff's Motion for Order to Show Cause, but recognized that sanctions could have been imposed and warned that “further efforts by Defendants to avoid the Court's orders may result in sanctions, up to and including a finding of contempt and terminating sanctions.”[3]

         The parties filed their respective proposed schedules on July 10, 2017, as directed. The Court issued an Order setting the schedule to comply with the June 12 Order on July 17, 2017, wherein it imposed the following deadlines: “Removal of the 126 pivot systems must begin no later than July 25, 2017, and shall be completed by September 22, 2017;” “[r]emoval of the 15 fixtures must begin no later than August 16, 2017, and shall be completed October 16, 2017;” and “[a]ll other equipment should be delivered to Plaintiff immediately, as previously ordered by the Court.”[4] The Court further directed that,

All other provisions of the [June 12 Order] remain in effect, including that portion of the Order directing that the Boersen Defendants are not to transfer, sell, or otherwise dispose of any Equipment or undertake any other acts that will lower the leased equipment's value. Additionally, the Boersen Defendants shall immediately cease and desist using any of the equipment at issue, including the equipment that has not been delivered.[5]

         On July 28, 2017, Plaintiff filed a Renewed Motion for an Order to Show Cause and for Terminating and Other Sanctions against Defendants.[6] In its Renewed Motion, Plaintiff alleged that Defendants again failed to comply with the Court's order. Specifically, Plaintiff alleged that: as of July 21, 2017, Defendants continued to use some of the 126 pivot systems; upon information and belief, Defendants continued to use the 15 larger items; Defendants failed to “immediately” return the remaining equipment as ordered; and Defendants had not established a trust account as required by the June 12 Order. As a result, Plaintiff requested “an order to show cause compelling the Boersen Defendants to personally appear and explain why they should not be held in contempt for their failure to comply with the Court's order.”[7] Plaintiff also requested that the Court issue terminating sanctions against Defendants in regard to all of Plaintiff's claims.

         The Court granted Plaintiff's request to order Defendants to appear and show cause as to why they should not be held in contempt of court and/or issued sanctions on August 30, 2017. The contempt hearing took place on September 26, 2017. Defendant Dennis Boersen appeared at the hearing. Having considered the filings and evidence presented on this matter, the Court determines that Defendants are in contempt of court and will issue both terminating and compensatory sanctions against them.

         II. DISCUSSION

         a. Contempt

         To prevail on a claim of civil contempt, Plaintiff “has the burden of proving, by clear and convincing evidence, that a valid court order existed, that [Defendants] had knowledge of the order, and that [Defendants] disobeyed the order.”[8]

         The evidence presented at the hearing clearly showed each of the above stated elements. First, valid Court orders are in place requiring Defendants to cease use of and return certain farming equipment to Plaintiff by specified dates. Second, Defendants had, and continue to have, knowledge of those orders. And finally, Defendants have not complied, nor do they intend to comply, with the Court's orders. Notably, Defendants did not offer testimony or evidence disputing this evidence, but instead alleged that compliance has not and ...


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