United States District Court, District of Columbia
N. McFadden United States District Judge
in rem proceeding against two General Electric
aircraft engines started in 2014, when the United States
filed a complaint seeking forfeiture of the engines and
alleging that Evans Meridians Ltd. intended to transfer the
engines to an Iranian entity with terrorist ties. Evans
Meridians filed a counter-claim asserting lawful ownership of
the property. In 2016, it failed to comply with a court order
directing it to repatriate the engines or post a $6 million
bond, and the Court entered a coercive contempt order
directing the company to pay the Court a fine of $15, 000 for
each day that it continued in noncompliance. In 2018, Evans
Meridians gave up its claim to the property, saying the
engines had been dismantled for parts, and the United States
moved for a compensatory contempt order directing the company
to pay the United States Marshals Service a $4 million fine.
Because Evans Meridians has relinquished its claim and there
are no other counter-claimants, I will enter default judgment
in favor of the United States. At a hearing on February 14,
2018, I requested further briefing regarding the United
States' motion for compensatory sanctions. Because Evans
Meridians's contempt led to the destruction of the
engines, I will grant the United States' motion for a
compensatory contempt order. In the interest of justice, I
will reduce the outstanding fine under the Court's prior
contempt order to $2 million.
The United States Is Entitled to Default Judgment in Its
Forfeiture Case Against the Engines
must enter default judgment when the “party against
whom a judgment . . . is sought has failed to plead or
otherwise defend, and that failure is shown by affidavit or
otherwise.” Fed. R. Civ. Pro. 55(a). A party who has
voluntarily relinquished its claim to property subject to a
forfeiture proceeding has relinquished its right to an
adversarial hearing or notice of default judgment. United
States v. 8 Gilcrease Lane, 638 F.3d 297, 300 (D.C. Cir.
2011). Default judgment in an in rem forfeiture
proceeding is appropriate when no further defenses against
forfeiture remain. See, e.g., United States v. 2
North Adams Street, 2010 WL 6714756 at *2 (D.D.C. 2010).
January 24, 2018, Evans Meridians voluntarily withdrew its
claim to the engines. Notice of Vol. Dismissal 1. That
withdrawal left no further claimants adverse to the United
States' forfeiture claim. I construe the United
States' April 2018 supplemental memorandum, asserting
that “the government is now entitled to default
judgment and an order of forfeiture in the government's
favor” as a motion for default judgment. Pl.'s
Suppl. Mem. 7; cf. Estate of Botvin ex rel. Ellis v.
Islamic Republic of Iran, 772 F.Supp.2d 218, 221 n.1
(D.D.C. 2011) (construing motion for default judgment in part
as motion for reconsideration because it argued that a prior
ruling was erroneous and because reconsideration was
necessary to grant the requested relief). Because Evans
Meridians “voluntarily relinquished its claim” to
the engines, it also relinquished its right to challenge
default judgment in the underlying forfeiture case. See 8
Gilcrease Lane, 638 F.3d at 300-02. As no further
claimants to the engines remain to present defenses against
forfeiture, default judgment is proper. See 2 North Adams
Street, 2010 WL 6714756 at *2. An order of forfeiture
will be entered in favor of the United States.
to the engines vests retroactively in the United States from
the “commission of the act giving rise to
forfeiture.” 18 U.S.C. § 981(f) (2012). The
Complaint here alleges several acts potentially giving rise
to forfeiture, none of which are disputed. For example, the
Complaint alleges that the engines are subject to forfeiture
because an attempt was made to transfer them to Iran in
violation of the International Emergency Economic Powers Act
in late 2013 or early 2014. Compl. ¶¶ 21-23. The
Complaint also alleges that the engines are subject to
forfeiture as property involved in money laundering
transactions or attempted money laundering transactions, the
first of which took place on October 25, 2013. Id.
¶¶ 2, 27. The acts giving rise to forfeiture took
place before the Complaint was filed and before the engines
were dismantled. Because title vests retroactively, the
United States has held title to the engines throughout the
pendency of this lawsuit.
A $4 Million Sanction Will Be Awarded to the United States to
Compensate It for Its Actual Loss
federal court has inherent and statutory power to impose
civil sanctions upon a contemptuous party. See 18
U.S.C. § 401 (2012); Shillitani v. United
States, 384 U.S. 364, 370 (1966). Courts may impose
civil sanctions either to coerce the contemnor into
compliance with the court's order or “to compensate
the complainant for losses sustained” from the
contempt. United States v. United Mine Workers of
Am., 330 U.S. 258, 303-04 (1947). Compensatory sanctions
are paid to the complainant, “based upon evidence of
complainant's actual loss.” Id. at 304.
adversarial hearing is required for a civil contempt sanction
only if there is a genuine issue of material fact in dispute
about the contempt. See Food Lion, Inc. v. United Food
& Commercial Workers Int'l Union, 103
F.3d 1007, 1019-20 (D.C. Cir. 1997). “In a contempt
proceeding, the moving party has the burden of showing by
clear and convincing evidence that (1) a court order was in
effect, (2) the order required certain conduct by the
respondent, and (3) the respondent failed to comply with the
court's order.” SEC v. Bankers All. Corp.,
881 F.Supp. 673, 678 (D.D.C. 1995).
material facts relevant to Evans Meridians's contempt
were established in the October 2016 adversarial hearing.
Mem. Op. 2. The Court determined then that (1) a repatriation
order was in effect, (2) the order required Evans Meridians
to repatriate the engines or post $6 million bond, and (3)
Evans Meridians had failed to do so. Id. at 5. No.
genuine issue of material fact remains unresolved after that
hearing on Evans Meridians's continued failure to
repatriate the engines. Evans Meridians readily admits that
it “was ordered to repatriate the two engines . . . but
it did not do so.” Evans's Suppl. Mem. 7-8.
According to a letter forwarded to the government by Evans
Meridians the engines were destroyed while they remained
overseas in China. Mot. for Comp. Fine, Ex. A; see
also Resp. to Mot. For Comp. Fine 4. Evans
Meridians's contempt in failing to repatriate the engines
caused the destruction of the engines. And the destruction of
the engines deprived the United States of its property
interest in the engines and in the litigation of its claim.
Meridians insists that it did not “willfully”
violate the repatriation order. Evans's Suppl. Mem. 6.
Willfulness, however, is not an element of civil contempt.
See Bankers All., 881 F.Supp. 678. Evans Meridians
also claims that “[t]here has not been any showing that
Evans Meridians had the ability to repatriate the engines
after the Contempt Order was entered.” Evans's
Suppl. Mem. 6. But in pleading an impossibility defense to
civil contempt, “the defendant has the burden of
production.” United States v. Rylander, 460
U.S. 752, 757 (1983).
relevant fact is that there has been no showing that Evans
Meridians could not repatriate the engines. Mem. Op. 5. The
burden of that showing rests on Evans Meridians, and Evans
Meridians has not met its burden.
relief granted to the United States today remediates the
property loss suffered as a result of the destruction of the
engines. Because a forfeiture award vests title
retroactively, the United States has held title to the
engines throughout the lawsuit. See 18 U.S.C. §
981(f). During the time in which the engines remained
overseas as a direct result of Evans Meridians's contempt
of the repatriation order, a Chinese warehouse destroyed the
engines; this destruction deprived the United States of its
property. See Evans's Suppl. Mem. 2; see
also Order to Repatriate. It is an appropriate civil
sanction to order Evans Meridians to “compensate the
[United States] for losses caused by the violation of the
[repatriation] order.” Landmark Legal Found. v.
EPA, 272 F.Supp.2d 70, 75 (D.D.C. 2003).
United States is entitled to $4 million as compensation for
the actual loss of the engines. This is a reasonable
valuation of the engines as it reflects the price of Evans
Meridians's most recent contract to sell the engines.
See Pl.'s Suppl. Mem. 9. Evans Meridians claims
that the engines “no longer exist, ” so an
approximation of their current market value would be futile.
Evans's Resp. to Mot. for Compensatory Fine 4. The proper
measure of the United States' loss is the value of the
engines at the time Evans Meridians's contempt interfered
with the United States' property rights in the engines.
The $4 million figure provided by Evans Meridians's own
sales negotiations is a fair estimate of that value. See
United Mine Workers of Am., 330 U.S. 304 (noting that
compensatory contempt fines should be based on evidence of
the complainant's actual loss); see also Mem.
Op. at 10 (noting that Evans Meridians ...