# In Re: Alicia Marie Richards

> District Court, C.D. California · August 1, 2023

URL: https://www.frixlaw.com/law-library/cases/9983984

## Case

- **Court:** District Court, C.D. California
- **Decided:** August 1, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9983984

## How later opinions describe it (automated extraction)

- noting that a bankruptcy court has civil but not criminal contempt authority
- explaining that a contemnor who is subject to bodily detention “carries the keys of his prison in his own pocket”
- explaining that the law of the case doctrine prevents reconsideration of previously decided issues in the course of a single continuing lawsuit
- explaining the purpose of a money judgment in the turnover context

## Opinion text

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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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9983984. Public record. Not legal advice.