In Re: Alicia Marie Richards

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

IN RE: ALICIA MARIE RICHARDS. Case No. 8:23-cv-00199-SB

Debtor.

ORDER AFFIRMING CIVIL

CONTEMPT ORDER

Bankruptcy No.: 8:21-bk-10635-SC

Following acrimonious divorce proceedings between Debtor Alicia Marie

Richards and her ex-husband, Debtor filed for bankruptcy under Chapter 7. Debtor

claimed a homestead exemption in her bankruptcy petition, which entitled her to a

portion of the proceeds of her home upon its sale, subject to California’s

requirement that homestead exemption proceeds be reinvested in an eligible

dwelling within six months of disbursement. Debtor’s home was sold at an auction

overseen by the bankruptcy court and Debtor received $300,000 as her portion of

the homestead exemption.1 After Debtor failed to reinvest the $300,000 in an

eligible dwelling as required, the bankruptcy court found that the proceeds had

become property of the bankruptcy estate and ordered Debtor to turn over the

proceeds and provide an accounting for any withheld funds. Debtor failed to

comply.2 The bankruptcy court held Debtor in civil contempt and remanded her

into custody until she purges her contempt. Debtor appeals the bankruptcy court’s

1 The remainder of the homestead exemption was disbursed to Debtor’s ex-

husband. The disposition of these funds is at issue in two of Debtor’s other

appeals before this Court. Case Nos. 8:22-cv-01951-SB, 8:22-cv-02183-SB.

2 The bankruptcy court’s turnover order is at issue in Case No. 8:22-cv-02183-SB.

contempt order.3 Dkt. No. 1. Because Debtor has failed to show that the

bankruptcy court abused its discretion, the civil contempt order is affirmed.4

I.

A.

Debtor filed for bankruptcy on March 12, 2021 and disclosed in her

bankruptcy schedules a community property interest in real property in Newport

Beach, California. SER 1933.5 The bankruptcy court granted the Trustee’s

motions to compel turnover and sale of the property. Ex. 6. Debtor filed an ex

parte application to stay the orders, which the bankruptcy court denied. Exs. 8, 10.

Debtor refused to vacate the property and was held in civil contempt. Ex. 15. The

Trustee obtained a writ of assistance from the U.S. Marshals Service to have

Debtor involuntarily removed from the property. Ex. 14. The Marshals removed

Debtor from the property on February 25, 2022, and the sale of the property closed

on March 8. Ex. 17. The bankruptcy court discharged the contempt order after

Debtor involuntarily vacated the property. Ex. 24.

Following the sale of the property, the bankruptcy court authorized the

Trustee to pay Debtor $300,000 (one-half of the $600,000 homestead exemption).

Ex. 10. Debtor received a check for $300,000 that cleared on March 11. SER

1934. Debtor sent a text message to the Trustee on May 5 acknowledging that “the

homestead is only exempt for 6 months.” SER 1688. On the basis of this text

message, the bankruptcy court found that Debtor had actual knowledge that under

California law homestead funds must be reinvested. SER 1935. Despite her

knowledge, Debtor spent some of the homestead funds on personal expenses. SER

3 Debtor filed a motion styled “Motion to Proceed Without the Written and Oral

Record on Appeal.” Dkt. No. 32. It is unclear what documents Debtor was unable

to provide for which she seeks relief or what relief she requests. In any event, the

Court finds the parties’ filings sufficient to resolve her appeal.

4 Debtor objects to the bankruptcy court’s exercise of personal jurisdiction over

her. Debtor’s filing of a voluntary bankruptcy petition confers jurisdiction. In re

Sasson, 424 F.3d 864, 870 (9th Cir. 2005) (“The debtor invoked bankruptcy court

subject matter and in personam jurisdiction by filing a voluntary petition in

bankruptcy.”).

5 The Court relies on the Appendix submitted by the Trustee, Dkt. No. 35, and uses

the pagination at the bottom of each page of the Appendix or exhibit number.

1937. After Debtor failed to reinvest the homestead exemption proceeds in an

eligible dwelling within six months of her receipt of the proceeds, the Trustee

moved for an order requiring Debtor to turn over the proceeds. Ex. 41. Between

the filing of the motion and the motion hearing, Debtor appears to have withdrawn

$196,500 in cash and cashier’s checks from her bank accounts. SER 2025–26.

Debtor appeared at the hearing on the turnover motion. SER 2392.

The bankruptcy court concluded that Debtor’s homestead exemption

proceeds became property of the bankruptcy estate because she failed to reinvest

the homestead exemption proceeds in a qualifying homestead dwelling within six

months of receipt as required. SER 1941–1942. The bankruptcy court ordered

Debtor to turn over $300,000 and provide an accounting for any funds withheld to

the Trustee no later than November 25, 2022. Ex. 53. A status conference on

Debtor’s compliance with the turnover order was set for December 15, 2022. Id.

The bankruptcy court also separately entered judgment in favor of the Trustee in

the amount of $300,000. Ex. 55. Concerned about further dissipation of estate

property, the Trustee moved on shortened time to lift any temporary stay on

judgment enforcement proceedings that might be imposed under Federal Rule of

Bankruptcy Procedure 7062. Exs. 56, 57. The bankruptcy court granted the

Trustee’s motion. Ex. 58. A judgment debtor examination was set for December

15, 2022. SER 1989–92.

Debtor did not appear at the December 15 status conference or examination,

which were both continued to January 12, 2023. SER 1197–98. The bankruptcy

court issued an order to show cause (OSC) why Debtor should not be held in civil

contempt for failing to comply with the turnover order or appear at the December

15 status conference. Ex. 64. The OSC was set for hearing on January 12, 2023.

Debtor failed to file a written response to the OSC. SER 2019.

On January 12, the bankruptcy court first heard from the parties on the status

of Debtor’s compliance with the turnover order. The Trustee stated that “Debtor

has failed to comply with the Court’s homestead order in all respects . . . .” SER

2511:22–24. Before proceeding further, the bankruptcy court inquired whether

Debtor had obtained a stay of the turnover order, and Debtor was unable to identify

any court-ordered stay. SER 2513:9–13. The bankruptcy court then heard from

the parties on the contempt matter. The Trustee noted that a substantial amount of

money had been withdrawn from Debtor’s bank account during the days leading

up to the hearing on the turnover motion, and he discussed efforts to freeze

Debtor’s accounts during the days leading up to the January 12 contempt

proceedings.6 Debtor then testified under oath. She claimed that she did not know

if she had turned over any money to the Trustee. SER 2532:19–2533:15. In

response to the Trustee’s questioning about dissipation of the homestead

exemption proceeds, Debtor continually claimed that she did not know or

remember the answers to his questions. SER 2534:10–2545:10.

The bankruptcy court found that the Trustee showed by clear and convincing

evidence that Debtor “willfully disobeyed the [turnover order] including by

making large withdrawals from her account . . . .” SER 2019. The court held

Debtor in civil contempt for failing to comply with the turnover order, but did not

hold her in contempt for her failure to appear at the December 15 proceedings. Ex.

67. The bankruptcy court found that no lesser sanction than bodily detention

would coerce Debtor’s compliance with the turnover order and remanded her into

custody. SER 2566–67; Ex. 67.

B.

Debtor timely appealed the bankruptcy court’s civil contempt order to this

Court. Dkt. No. 1; Fed. R. Bankr. P. 8002. Debtor’s notice of appeal was

accompanied by an emergency motion to stay the contempt order pending

resolution of this appeal. Dkt. Nos. 1, 10. The Court denied Debtor’s emergency

motion and her subsequent request to reconsider the denial. Dkt. Nos. 11, 22, 27.7

This appeal has been fully briefed. Dkt. Nos. 33 (opening brief), 36 (answering

brief), 38 (reply brief).8

6 The Trustee filed an adversarial complaint against Debtor and SchoolsFirst

Federal Credit Union (SchoolsFirst) on January 4, 2023. SER 2022–35. The

bankruptcy court enjoined SchoolsFirst from allowing transfers from Debtor’s

accounts at the credit union. SER 2121–22.

7 Debtor has moved under Federal Rule of Civil Procedure 59(e) for

reconsideration of the Court’s order denying reconsideration of her emergency stay

motion. Dkt. No. 34. Debtor’s motion is procedurally improper and fails on the

merits for the reasons explained in this Order. Debtor’s motion is DENIED.

8 Debtor’s reply brief greatly exceeds the length permitted under Federal Rule of

Bankruptcy Procedure 8015(a)(7). The Court elects to consider the reply brief, but

Debtor is warned that further failures to comply with briefing rules in any pending

or future appeal may result in the Court striking the offending filing.

II.

This Court has jurisdiction under 28 U.S.C. § 158(a)(1). A bankruptcy

court’s civil contempt order is a final order subject to appellate review. See In re

Taggart, 980 F.3d 1340, 1347 (9th Cir. 2020); Shuffler v. Heritage Bank, 720 F.2d

1141, 1145 (9th Cir. 1983). District courts review decisions of bankruptcy courts

as appellate courts, applying the same standards of review as the federal courts of

appeal. In re Guadarrama, 284 B.R. 463, 468 (C.D. Cal. 2002). Civil contempt

orders are reviewed for abuse of discretion. In re Freeman, 608 B.R. 228, 233

(B.A.P. 9th Cir. 2019). Reversal under this standard requires “a definite and firm

conviction that the [lower] court committed a clear error of judgment after

weighing the relevant factors.” In re Dual-Deck Video Cassette Recorder Antitrust

Litig., 10 F.3d 693, 695 (9th Cir. 1993). The rejection of an impossibility defense

is reviewed for clear error. F.T.C. v. Affordable Media, LLC, 179 F.3d 1228, 1239

(9th Cir. 1999). Whether lower courts provided an alleged contemnor due process

is reviewed de novo. Thomas, Head and Greisen Employees Trust v. Buster, 95

F.3d 1449, 1458 (9th Cir. 1996).

Civil contempt is warranted when a party “violated a specific and definite

order of the court.” In re Dyer, 322 F.3d 1178, 1190–91 (9th Cir. 2003). This

occurs when the party failed to “take all the reasonable steps within [her] power to

insure compliance with the court’s order.” Shuffler, 720 F.2d at 1146–47 (cleaned

up). Civil contempt must not be imposed unless “there is no objectively

reasonable basis for concluding” that the contemnor’s conduct might be lawful.

Taggart v. Lorenzen, 139 S. Ct. 1795, 1799 (2019). An alleged contemnor bears

the burden of demonstrating why compliance with the order would be impossible.

Affordable Media, 179 F.3d at 1239. Thus, the disposition of this appeal turns on

whether Debtor was subject to a specific court order, whether she knowingly failed

to comply with it, and whether it would be impossible for her to comply with the

order.

III.

The bankruptcy court did not abuse its discretion in finding clear and

convincing evidence that Debtor willfully violated the homestead turnover order.

It is undisputed that the bankruptcy court ordered Debtor to turn over

$300,000 (i.e., the lapsed homestead funds) and provide an accounting for any

withheld funds. Faced with substantial evidence that Debtor failed to comply with

the order and actively engaged in the dissipation of the funds, the bankruptcy court

issued an order to “show cause why she should not be held in civil contempt of the

Homestead Turnover Order.” Ex. 64. The hearing was set for January 12, 2023.

On January 12, the bankruptcy court conducted an evidentiary hearing at

which Debtor testified. Debtor was evasive throughout her testimony and refused

to answer basic questions about the funds she was ordered to turn over. Debtor

would not answer questions about where she deposited the homestead exemption

funds, initially claiming that she could not answer and then stating that she had no

memory of where she deposited the money:

Q. Ms. Richards, is it true that you deposited the $300,000

homestead check that the Trustee gave you at SchoolsFirst

Federal Credit Union?

A. Well, again, I can’t answer that question because of the appeal

that’s pending on the sale order. So, I’m not . . . really sure

about anything. . . .

* * *

Q. Ms. Richards, do you recall the Trustee providing you with a

$300,000 check in the spring of 2022?

A. I don’t remember when that –

Q. Do you recall receiving a $300,000 check from the –

A. I don’t remember.

Q. I’m sorry?

A. I don’t remember.

Q. And do you recall depositing $300,000 at SchoolsFirst in early

2022?

A. I don’t remember.

SER 2533–34.

When asked whether she withdrew any of the deposited funds, Debtor

continued to claim a lack of memory:

Q. Ms. Richards, in -- on November 14 of 2022, is it true that

[you] withdrew a $50,000 cashier’s check payable to yourself,

and $20,000 of cash money from SchoolsFirst?

A. I don’t remember. And I object to all of these questions.

Q. Ms. Richards, what is the disposition of the cash money that

you took out of SchoolsFirst.

A. I -- I don’t know. I don’t know.

* * *

Q. Ms. Richards, on the day prior to the November 17, 2022

hearing, isn’t it true that you went to SchoolsFirst and took out

10 separate cashier’s checks, each in the amount of $10,000

payable to yourself?

A. I don’t know.

* * *

Q. Ms. Richards, is it true that on the morning of January 5, 2023

[i.e., 7 days ago] . . . that you went to two separate branches of

SchoolsFirst Credit Union to negotiate two separate $10,000

cashier’s checks payable to yourself?

A. I don’t remember that.

* * *

Q. And what happened to the cash that you received when you cashed

those cashier’s checks?

A. I don’t remember.

SER 2539, 2542-45.

The bankruptcy court fared no better when questioning Debtor about the

funds that were ordered to be turned over:

Q. Ms. Richards, have you turned over any money at all to the

Chapter 7 Trustee in the past five months?

A. You mean my money?

Q. Any money. Any money whatsoever, have you turned over any

money whatsoever to the Chapter 7 Trustee, Mr. Marshack, in

the last five months?

A. I -- I can’t remember, but I do know --

Q. In the -- how about in the last month?

A. I do know that they have all of my child support, alimony and

all of that.

Q. I didn’t ask -- have you turned over –

A. So, I don’t know, would that be considered a turnover?

Q. Have you given them any money?

A. And that’s like $400,000.

Q. Have you personally given them any money in the last 45 days?

A. Have I given them any money? Gosh, I don’t know.

SER 2532–2533.

If there were any doubt about whether Debtor intended to comply with the

turnover order, she made it clear to Trustee’s counsel that she would not do so.

Asked whether she would comply with the turnover order, Debtor testified that she

had no intention of complying with what she viewed as an invalid order:

Q. Ms. Richards, do you have any intention of turning over money

to the Trustee pursuant to the Court’s order?

A. I don’t know how to answer that question, because based on

United States Supreme Court precedent, a void order is void

even before reversal. And so the way I see things, there is no

order. . . .

Q. * * * Has any court determined that the homestead order is

void?

A. Yes. That would be United States Supreme Court precedent,

Arbaugh v. YH Corp, 546 U.S. 500 (2006) . . . .9

SER 2545–46.

Before finding Debtor in contempt, the bankruptcy court pleaded with

Debtor to comply with its order to avoid being held in contempt, but Debtor

remained resolute. SER 2551 (“Q. Is there anything I can do to convince you to

turn the money that you have over to the Trustee? A. I don’t even know what I

have. So, I don’t know anything.”); SER 2556 (Q. “I’m imploring you to purge

yourself . . . of this contempt. I’m begging you to -- A. What contempt, your

Honor?”).

By clear and convincing evidence, the bankruptcy court found Debtor to be

in civil contempt and ordered her detained until she agreed to comply with the

turnover and accounting order. In its written order, the bankruptcy court made the

following findings based on the relevant record, including “the statements and

demeanor of Debtor at the hearing”:

In response to questioning by counsel for Trustee and the Court,

Debtor failed to provide any information regarding her receipt and

disposition of funds from the sale of the Property. Debtor also

9 Debtor continues to insist that the bankruptcy court was required to stay the case

under Arbaugh v. Y&H Corp., 546 U.S. 500 (2006), after she challenged the

bankruptcy court’s jurisdiction over the home. Arbaugh, which held that Title

VII’s limitation to employers with 15 or more employees is not a jurisdictional

requirement, stands for no such proposition.

admitted that she had no recollection of turning over any funds to

Trustee in the past five months. Counsel for Trustee also represented

to the Court that no funds or accounting had been turned over to

Trustee in compliance with the Homestead Order. The Court finds

that Trustee has shown by clear and convincing evidence that Debtor

has willfully disobeyed the Homestead Order including by making

large withdrawals of the homestead funds from her account at

SchoolsFirst Federal Credit Union in the days prior to the hearing on

the homestead motion and after Trustee filed an application for

temporary restraining order to prohibit the cashier’s checks from

being negotiated. Based on the record in the bankruptcy and

adversary cases including Debtor’s testimony at the hearing on the

OSC, the Court finds that Debtor has not met her burden of proof to

establish any satisfactory defense to being adjudged in civil contempt

of the Homestead Order. Additionally, no party identified any order

by any court of competent jurisdiction effectuating a stay of the

proceedings on the Homestead Order or OSC.

SER 2019–20. The bankruptcy court further found that “there is no lesser sanction

available to coerce compliance with the Court’s Homestead Order other than to

order the immediate bodily detention” of Debtor.” Id. The bankruptcy court stated

that Debtor could “purge her contempt by turning over the required funds and

accounting or demonstrat[ing] to the satisfaction of the Court that no such

compliance is possible.” Id. The bankruptcy court then scheduled a status

conference for one week later to see if Debtor had “purged her contempt” and

allowed Debtor to “contact the Court to request a hearing on shortened time if she

decides to purge her contempt and demonstrate compliance with the Homestead

Order.” Id.

Having reviewed the record before the bankruptcy judge, this Court does not

find an abuse of discretion. The record strongly supports the bankruptcy’s findings

that Debtor knew of the turnover order and willfully decided not to comply with it.

The record also strongly supports the bankruptcy’s rejection of Debtor’s claim that

compliance was impossible. Even if Debtor could not turn over the entire amount

owed because she dissipated some of the funds, the order specifically directed her

to turn over the money she had and account for the balance. Yet Debtor refused to

provide any meaningful accounting or demonstrate any good-faith effort to

cooperate. In these circumstances, the bankruptcy court did not clearly err in

finding Debtor willfully disobedient and did not abuse its discretion in holding her

in civil contempt.

IV.

A.

Debtor’s attempt to disturb the bankruptcy court’s contempt order is

unavailing.

First, Debtor challenges the validity of the bankruptcy court’s turnover order

on jurisdictional grounds. She argues that her home in Newport Beach was not

property of the estate because of deficiencies in the state court divorce proceedings

between her and her ex-husband. This argument has already been presented on

appeal to the Bankruptcy Appellate Panel (BAP), which deemed it “factually and

legally meritless.” Case No. CC-21-1262-SGL, Dkt. No. 50 (B.A.P. 9th Cir. Nov.

7, 2022), at 11. The BAP explained: “The [California] Court of Appeal has

affirmed the dissolution judgment and the community property nature of the

Residence. While [Debtor and her father] want to set aside these decisions, the

bankruptcy court is bound by those decisions.” Id. at 8. Debtor has not shown that

this Court can disregard the BAP’s determination, which appears at this point to be

the law of the case. See Ingle v. Circuit City, 408 F.3d 592, 594 (9th Cir. 2005)

(explaining that the law of the case doctrine prevents reconsideration of previously

decided issues in the course of a single continuing lawsuit); Wisdom v. Gugino,

787 Fed. App’x 390, 392 (9th Cir. 2019) (applying the law of the case doctrine in a

bankruptcy proceeding). Moreover, this Court has already rejected Debtor’s

jurisdictional challenge, Richards v. Marshack, 644 B.R. 544, 550 (C.D. Cal.

2022), and sees no basis to reconsider that ruling. Debtor has not shown that she

was entitled to ignore the turnover order because the bankruptcy court lacked

jurisdiction to administer the property as part of the bankruptcy estate.

Second, Debtor argues that the bankruptcy court’s turnover order is void.

“A judgment is not void . . . simply because it is or may have been erroneous.”

United Student Aid Funds, Inc. v. Espinoza, 559 U.S. 260, 270 (2010). Rather, “a

void judgment is one so affected by a fundamental infirmity that the infirmity may

be raised even after the judgment becomes final.” Id. “The list of such infirmities

is exceedingly short . . . .” Id. Since “a court has jurisdiction to determine its own

jurisdiction[,]” if there is even an arguable basis for jurisdiction, an order is not

void. 12 Moore’s Federal Practice, § 60.44 (Matthew Bender 3d ed.). Further, a

subjective belief that an order is void does not undermine contempt sanctions

imposed for violating the order. Taggart, 139 S. Ct. at 1799. Debtor’s voidness

argument appears to be based on her jurisdictional arguments. Dkt. No. 33 at 32

(“The Turnover Order and Money Judgment in this matter filed on November 22,

2022, are not a definite and specific Order because they are void for lack of due

process, gives effect to the void sale order that gives effect to the void dissolution

of divorce judgment.”). Since Debtor’s jurisdictional arguments fail, so too must

her voidness challenge. Debtor has presented no basis for concluding that she was

not obligated to turn over the homestead funds and provide an accounting for any

funds withheld.'° Accordingly, the turnover order is a “specific and definite order

of the court” with which Debtor is required to comply. Dyer, 322 F.3d at 1190-91.

Third, Debtor asserts that the civil contempt order is defective because the

bankruptcy court did not support the order with “sufficient findings.” Dkt. No. 33,

at 50. Debtor’s argument is largely based on her belief that the turnover and

contempt orders are invalid, which is incorrect as explained above, and her

position that the contempt order is criminal in nature, which is incorrect as

explained below.

Fourth, Debtor insists that her compliance with the turnover order was and is

impossible. Debtor conclusorily asserted at the contempt hearing that complying

with the turnover order was impossible. SER 2558:18—19 (“It’s impossible. It’s

absolutely impossible for me to do that.”); see also SER 2565:22—23 (“[I]t’s

impossible for me to comply with that order. It’s absolutely impossible.”). When

the bankruptcy judge inquired about Debtor’s ability to provide an accounting for

any withheld funds, Debtor replied that doing so was “impossible” because the

court “froze [her] account.” SER 2565:14—15. Debtor has not demonstrated clear

error in the bankruptcy court’s rejection of her impossibility defense. Debtor’s

conclusory statements do not demonstrate “categorically and in detail” why her

compliance with the turnover order was impossible. Affordable Media, 179 F.3d at

1240-41. The fact that Debtor apparently spent some of the homestead funds does

not make her compliance impossible. See Shapiro v. Henson, 739 F.3d 1198,

1203-04 (9th Cir. 2014) (holding that present possession of property is not a

requirement for the trustee to seek turnover of estate property that was once in a

party’s possession). Even if Debtor is unable to turn over the entirety of the

$300,000, she has not demonstrated that she has taken “all the reasonable steps

within [her] power” to comply with the turnover order, such as by turning over any

funds that remain in her possession. Shuffler, 720 F.2d at 1146-47. Further, she

'0 Debtor also asserts that “the contempt order is void as a matter of law.” Dkt. No.

33 at 28. This assertion appears to be based on her erroneous belief that the

underlying turnover order is void.

12

did not provide an accounting of withheld funds as the bankruptcy court ordered.

Debtor’s assertion that the freezing of her account now prevents her from doing so

is unpersuasive. Freezing an account does not prevent access to information about

deposits and withdrawals, and Debtor withdrew cash and cashier’s checks from her

accounts before the hearing on the turnover motion yet did not make any attempt to

provide information as to the status of these funds.

Debtor does not appear to have made any attempt at compliance with the

turnover order before the bankruptcy court held her in contempt, and Debtor’s

jurisdictional, voidness, and merits arguments do not persuade the Court that the

bankruptcy judge erred in doing so.

B.

Debtor also challenges the adequacy of the bankruptcy court’s procedures

for imposing contempt. She presents two procedural challenges.

First, she argues that she was denied due process because she did not receive

notice and an opportunity to be heard before the bankruptcy court held her in civil

contempt. Debtor is mistaken. The bankruptcy court’s turnover order itself

warned Debtor that failure to comply with the order could result in “an order to

show cause why Debtor should not be adjudicated in contempt” and “an order and

writ for bodily detention.” Ex. 53. Consistent with that admonition, the

bankruptcy court issued an OSC on December 27, 2022. In the OSC, the

bankruptcy court specifically identified the contempt issues (i.e., failing to turn

over $300,000 and provide an accounting by November 25, 2022), allowed Debtor

to file a written response (albeit on shortened time), and set a hearing on January

12, 2023. Debtor appeared at the scheduled hearing and was given the opportunity

to explain her position and demonstrate a willingness to comply with the turnover

order. See discussion supra. Debtor has not established a due process violation—

she had adequate notice and an opportunity to be heard.

Second, Debtor asserts that the bankruptcy court did not adhere to the

applicable local rules before it held her in civil contempt. She argues that Local

Bankruptcy Rule 9020-1 required the Trustee to apply to the bankruptcy court for

issuance of an OSC re: civil contempt and required the bankruptcy court to allow

her seven days to object to the issuance of the OSC. The rule on which Debtor

relies, however, applies when a party seeks to initiate contempt proceedings. It

does not limit the bankruptcy court’s ability to initiate contempt proceedings sua

sponte. See C.D. Cal. L. Bankr. R. 9020-1 (noting that “[u]nless otherwise ordered

by the court, contempt proceedings are initiated by filing a motion . . .”). Indeed,

the local bankruptcy rules expressly provide that they “are not intended to limit the

discretion of the court” and that the bankruptcy court may “make additional orders

as it deems appropriate, in the interest of justice.” C.D. Cal. L. Bankr. R. 1001-

1(d). Debtor’s procedural objections lack merit.

C.

Debtor next argues that the bankruptcy court exceeded its authority and

violated her constitutional rights by issuing what amounted to a criminal contempt

order. It is true that a bankruptcy court cannot impose criminal contempt

sanctions. See Dyer, 322 F.3d at 1193 (noting that a bankruptcy court has civil but

not criminal contempt authority). But the contempt order here is not criminal in

nature.

“The paradigmatic coercive, civil contempt sanction, . . . involves confining

a contemnor indefinitely until he complies with an affirmative command such as

an order to . . . surrender property ordered to be turned over to a receiver . . . .”

Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 828 (1994)

(internal citation omitted). Civil contempt is coercive so long as the contemnor

retains the ability to purge the contempt. See Gompers v. Buck’s Stove & Range

Co., 221 U.S. 418, 442 (1911) (explaining that a contemnor who is subject to

bodily detention “carries the keys of his prison in his own pocket”). The contempt

order imposed on Debtor required detention “until she . . . has either purged her

contempt by turning over the required funds and accounting or demonstrated to the

satisfaction of the Court that no such compliance is possible.” SER 2020. The fact

that the contempt order resulted in her detention does not make it criminal in

nature because the order gives Debtor the ability to purge her contempt at any

point. Because the contempt order is civil in character, the bankruptcy court did

not exceed its authority.

Since the bankruptcy court held Debtor in civil contempt, Debtor’s

remaining constitutional challenges are unpersuasive. Debtor’s detention does not

violate the Eighth Amendment’s prohibition against cruel and unusual punishment

or the Sixth’s Amendment’s jury trial right. See Bloom v. State of Ill., 391 U.S.

194, 209 (1968) (judicial interests “are amply served by preserving the power to

commit for civil contempt and by recognizing that many contempts are not serious

crimes but petty offenses not within the jury trial provisions of the Constitution”);

Spallone v. United States, 487 U.S. 1251, 1257 (1988) (Marshall, J., concurring in

part and dissenting in part) (“[I]t appears settled that the Cruel and Unusual

Punishments Clause does not apply to civil contempt sanctions.”). Nor does the

contempt order violate Debtor’s First Amendment rights. The First Amendment

does not give Debtor the right to violate a bankruptcy court’s turnover order, and

the record is clear that the contempt finding is based on Debtor’s violation of that

order rather than on any retaliation against Debtor for engaging in protected

activity.

D.

Finally, Debtor argues that the bankruptcy court’s entry of a separate

judgment in the Trustee’s favor for $300,000 means that the turnover order is

moot. Debtor correctly points out that a “term of punishment for civil contempt

cannot extend beyond the trial proceedings since at the termination of the trial the

contemnor’s actions can no longer be purged.” United States v. Powers, 629 F.2d

619, 627 (9th Cir. 1980). It does not follow, however, that the turnover order is

moot because of entry of a separate judgment in the same amount. A separate

judgment may serve to compensate the Trustee for estate property that has been

dissipated. See In re Newman, 487 B.R. 193, 202 (B.A.P. 9th Cir. 2013)

(explaining the purpose of a money judgment in the turnover context). The

turnover order itself explained that “[a]ny funds turned over pursuant to this Order

shall be a credit against the Judgment. This Order and the separate judgment

represent a single obligation... .” Ex. 53. Debtor admitted to having dissipated

some estate funds but provided no information about the dissipation or the

whereabouts of the remaining funds. In this context, the bankruptcy court did not

err in requiring Debtor to provide this information and turn over any remaining

funds, while also giving the Trustee a separate judgment to satisfy the balance of

Debtor’s obligation. The entry of judgment in the Trustee’s favor does not render

the turnover order moot.

V.

Debtor has not presented any argument that undermines the bankruptcy

court’s civil contempt order. The contempt order is therefore AFFIRMED.

IT IS SO ORDERED.

Date: August 1, 2023

Stanley Blumenfeld, Jr.

United States District Judge

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