In this decision reported by West Publishing, the United States District Court of Massachusetts scheduled a contempt hearing on the debtor’s alleged failure to comply with a preliminary injunction that Massachusetts Collections Attorney Alan M. Cohen obtained in his eventually successful efforts to collect bad debts owed to attorneys from their out of state client. The use of preliminary injunctions against out of state debtors is a useful tool to collect bad debts.
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United States District Court
RISSMAN HENDRICKS & OLIVERIO, LLP f.k.a. Rissman Josbe Hendricks & Oliverio, LLP f.k.a. Kudirka & Jobse, LLP, Plaintiff,
MIV THERAPEUTICS INC., MIV Scientific Holdings, Ltd, Biosync Scientific Pvt, Alan P. Lindsay a.k.a Alan Lindsay, Patrick McGowan, and Chris Xunan Chen a.k.a. Chris Chen, Defendants.
C.A. No. 11–10791–MLW.
Sept. 17, 2013.
Charles R. Bennett, Jr., Damien R. Savoie, Murphy & King, PC, Boston, MA, for Defendants.
MEMORANDUM AND ORDER CONCERNING CONTEMPT
WOLF, District Judge.
*1 This case was filed in the Suffolk Superior Court of the Commonwealth of Massachusetts on April 6, 2011. After giving notice to defendants MIV Therapeutics, Inc., MIV Scientific Holdings PVT, Biosync Scientific PVT, Alan P. Lindsay, Patrick McGowan, and Chris Xunan Chen, on April 13, 2011, the Superior Court issued the Preliminary Injunction that is attached hereto as Exhibit A.
The defendants, represented by counsel, subsequently removed the case to this United States District Court. They did not ask to have the Preliminary Injunction removed or altered.
On December 6, 2011, the court allowed plaintiff Rissman, Hendricks, Oliverio LLP’s (“Rissman”) motions for default judgments on all counts except Counts 15 and 16, which seek permanent injunctive relief, against defendants MIV Therapeutics, Inc., MIV Scientific Holdings, Ltd., Biosync Scientific PVT, and Chris Xunan Chen (the “Defaulted Defendants”). Default Judgments were entered on December 6, 2011, and amended as to the amount of the judgment in December 22, 2011.FN1 As Counts 15 and 16 were not resolved, the court continues to have jurisdiction over the Defaulted Defendants.
FN1. The default judgments entered on December 6 and 22, 2011 mistakenly failed to state that judgment was not being entered on Counts 15 and 16. An amended judgment was entered on September 17, 2013, to correct that error.
In addition, the court denied Lindsay’s motion to dismiss for lack of personal jurisdiction. Therefore, the court has jurisdiction over him.FN2
FN2. Rissman voluntarily dismissed its claims against McGowan.
The Preliminary Injunction, among other things, prohibits defendants from converting or transferring any of their assets, including stock, unless the first $480,000 of the proceeds were provided to counsel for Rissman to hold in escrow pending further order of the court. Rissman has recently provided the court with evidence that suggests that each of the defendants may have knowingly and wilfully violated the Preliminary Injunction by participating in the sale of MIV Therapeutics, Inc.’s stock in MIV Therapeutics (India) PVT Ltd. to Purple Medical Solutions PVT Ltd. (“Purple Medical”). The evidence suggesting that each defendant knowingly and wilfully violated the Preliminary Injunction includes the July 27, 2011 email, attached hereto as Exhibit B, from Brian Lancelot of Purple Medical to Chen, Lindsay, and defendants’ counsel Thomas Deutsch, which states, in part: “The order [ ] puts an injunction against the sale of shares, assets and involves affiliates and subsidiaries and would make the sale invalid.”
The foregoing presents the question of whether any or all of the defendants should be held in civil and/or criminal contempt for violating the Preliminary Injunction. The court will proceed to determine first whether any defendant should be held in civil contempt, without prejudice to the possibility of commencing criminal contempt proceedings. As criminal contempt preceding are possible, defendants are advised that they have the right to an attorney and, if they demonstrate that they cannot afford to retain counsel and are otherwise eligible, an attorney may be appointed to represent them upon request. In addition, defendants are advised that anything they say may be used against them in a criminal proceeding and, therefore, depending on the circumstances, they may have a right under the Fifth Amendment of the United States Constitution not to testify in any civil and/or criminal contempt proceedings.
*2 In view of the foregoing, it is hereby ORDERED that:
1. An evidentiary hearing will begin on October 15, 2013, at 9:30 a.m., to determine whether MIV Therapeutics, Inc., MIV Scientific Holdings, Ltd., Biosync Scientific PVT, Alan P. Lindsay, and/or Chris Xunan Chen should be held in civil contempt for violating the Preliminary Injunction by their conduct relating to the sale of MIV Therapeutics (India) PVT. Ltd. stock to Purple Medical Solution PVT Ltd. Each of the defendants shall attend the hearing, which will, if necessary, continue on October 16, 17, and 18.
2. If a defendant cannot afford counsel and wishes to request appointment of an attorney, the defendant shall, by October 3, 2013, file an accurate and complete Financial Affidavit in the form attached hereto as Exhibit C.
3. The court shall attempt to serve the defendants named in paragraph 1 hereinabove.
4. Riemer & Braunstein LLP shall promptly send this Order to the defendants named in paragraph 1 hereinabove, except for Lindsay, with the September 17, 2013 Memorandum and Order Concerning Subpoena and, by October 2, 2013, report on its efforts to have it delivered to each defendant and the results of that effort.