U.S. v. Waterbury

DECISION AND ORDER I. INTRODUCTION The United States of America (“USA” or “Plaintiff”) seeks a court order finding Defendants in contempt for their failure to abide by the parties’ Consent Decree and Order (“Decree”) (Dkt. No. 63), which was so-ordered by the Court on August 9, 2019, and for sanctions related to Defendants’ alleged failures. (Dkt. No. 70.) Defendants oppose the motion in all respects. (Dkt. No. 77.) Plaintiff filed a reply. (Dkt. No. 80.) For the following reasons, Plaintiff’s motion is granted in part and denied in part. II. BACKGROUND Plaintiff commenced this action by the filing of a Complaint on April 11, 2018, alleging violations of the Fair Housing Act, 42 U.S.C. §§3601-3631. (Dkt. No. 1.) Defendants answered (Dkt. Nos. 14, 15) and discovery commenced. (See generally Dkt. No. 19.) Ultimately, the parties settled the matter and, as noted, the Decree was entered on August 9, 2019. Among other restrictions, the Decree enjoined Defendants from managing the subject designated rental properties (“rental properties”) (Dkt. No. 63, App’x A, at

1-21¹) with various directives to accomplish that goal, and also enjoined Defendant Douglas Waterbury from engaging in any direct conduct related to the rental properties. (See generally Dkt. No. 63.) In the context of this motion, Plaintiff asserts Defendants Douglas Waterbury and Carol Waterbury violated the following parts of the Decree: Decree 18(d), enjoining Defendants from engaging in intimidating, threatening, or interfering conduct; Decree 20, enjoining Defendant Douglas Waterbury from engaging in contact or communications with current or past tenants; Decree 21, enjoining Defendants from directly or indirectly engaging in or conducting any Property Management Responsibilities as defined in the Decree²; Decree 22, enjoining Defendant Douglas Waterbury from entering any of the Subject Properties³; Decree 26, enjoining Defendant Carol Waterbury from performing any Property Management Responsibilities at the Subject Properties, except in limited circumstances specifically provided by the Decree⁴; Decree 27, requiring Defendants to hire an Independent Manager that is approved in advance by the United States; Decree 32(a), entrusting the Independent Manager with all Property Management Responsibilities; and Decree 40, prohibiting Defendant Douglas Waterbury from accompanying Defendant Carol Waterbury when she is exercising Property Management Responsibilities and requiring Carol Waterbury to provide written notification of that conduct within five days of learning of any such incident. (Dkt. No. 70-1 at 5-6.) Plaintiff requests that the Court: (1) find Defendants in contempt; (2) order “Defendants to pay monetary sanctions;” and (3) “order additional injunctive relief to enforce the terms of the Decree.” Id. at 18. Defendants claim that Plaintiff has failed to show that Douglas Waterbury entered the subject rental properties in violation of the Decree, and that Defendants have cured any other alleged violations of the Decree. (Dkt. No. 77 at 18-21.) Therefore, Defendants assert they should not be found in contempt, sanctioned, or enjoined further. Id. at 21-24. III. LEGAL STANDARD “[T]he power to punish for contempt is inherent in all courts.” Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991) (internal quotation marks and citation omitted). The underlying concern is “disobedience to the orders of the Judiciary” not “merely the disruption of court proceedings.” Id. (citation omitted). For a contempt order to issue, the moving party must establish “[b]y clear and convincing evidence that the alleged contemnor violated the district court’s edict.” King v. Allied Vision, Ltd., 65 F.3d 1051, 1058 (2d Cir. 1995) (citation omitted). “More specifically, a movant must establish that (1) the order the contemnor failed to comply with is clear and unambiguous, (2) the proof of noncompliance is clear and convincing, and (3) the contemnor has not diligently attempted to comply in a reasonable manner.” Id. (citation omitted). “Generally, the sanctions imposed after a finding of civil contempt serve two functions: to coerce future compliance and to remedy past noncompliance.” Vuitton et Fils S.A. v. Carousel Handbags, 592 F.2d 126, 130 (2d Cir. 1979) (citations omitted). If found in contempt, monetary sanctions may be awarded to either compensate the moving party for harm resulting from the noncompliance or to deter further disobedience. Manhattan Indus., Inc. v. Sweater Bee by Banff, Ltd., 885 F.2d 1, 5 (2d Cir. 1989) (citations omitted). Courts have “wide discretion” to determine a coercive remedy to ensure future compliance. Vuitton et Fils S.A., 592 F.2d at 130 (citations omitted). IV. DISCUSSION First, Plaintiff notes the Decree is a “clear and unambiguous” order of the Court since its terms were negotiated by Defendants. (Dkt. No. 70-1 at 18-19.) “Consent decrees are entered into by parties to a case after careful negotiation has produced agreement on their precise terms.” United States v. Armour & Co., 402 U.S. 673, 681 (1971). Defendants do not contest the preciseness of the Decree. Indeed, the Decree represents a comprehensive settlement of the parties’ claims in this case, including provisions addressing injunctive relief, monetary damages to affected individuals, and civil penalties. (See generally Dkt. No. 63.) Defendants do, however, argue that Plaintiff has not produced “clear and convincing evidence” that the alleged violations occurred. (Dkt. No. 77 at 18-20.) “Clear and convincing evidence means something more than a preponderance of the evidence, and something less than beyond a reasonable doubt. The clear-and-convincing burden of proof requires the government to prove that a factual contention is highly probable.” Blandon v. Barr, 434 F. Supp. 3d 30, 38 (W.D.N.Y. 2020) (internal quotations and citations omitted). “In the context of civil contempt, the clear and convincing evidence standard requires a quantum of proof adequate to demonstrate a reasonable certainty that a violation has occurred.” Levin v. Tiber Holding Corp., 277 F.3d 243, 250 (2d Cir. 2002) (internal quotations and citation omitted). Lastly, Plaintiff contends that Defendants have not diligently attempted to comply with the Decree and that Defendants “have engaged in a pattern of concealing and denying their noncompliance, and of taking only half-measures to cure their violations when caught.” (Dkt. No. 70-1 at 20.) Defendants argue they have diligently taken all legitimate and substantial steps necessary to cure any violations brought to their attention. (Dkt. No. 77 at 20-21.) A. Alleged Violations Related to Retaining the Independent Property Manager Per the Decree, Defendants were required to notify Plaintiff of the proposed “independent management company or Independent Manager” (“Independent Manager”) within 30 days of the entry of the Decree, and the Independent Manager was required to be “a professional property manager or a licensed real estate professional, to whom no Defendant has any financial, personal, or familial connection or interest.” (Dkt. No. 63 at