In a recently reported case, a New York Judge denied the judgment-creditor's motion to punish the debtor for contempt of court. The attorney for plaintiff contended that debtor made a number of false statements at his post-judgment examination as his basis for the motion.
The Judge restated New York State law that in order to prevail on a motion to hold a defendant in contempt, the movant must prove by clear and convincing evidence "(1) that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect, (2) that the order was disobeyed and the party disobeying the order had knowledge of its terms, and (3) that the movant was prejudiced by the offending conduct"
There didn't seem to be much debate as to (1) and (3) because the creditor's attorney made all the right allegations in his papers. Ultimately the Judge concluded that the creditor's attorney was not able to make out a case for contempt as to (2), but that the witness might be subject to a criminal perjury charge for any false swearing. The Court's decision was solid on the law in that the witness actually appeared for the examination and therefore could not be found in contempt of the subpoena obligating him to appear.
But the decision makes me wonder if punishing the civil contempt would have been a better option for the Judge. If the creditor pursues a criminal perjury charge, the purpose of judgment-enforcement is defeated. Now the debtor has to divert his/her assets to criminal defense rather than satisfying the judgment.
I think this Judge just wanted to watch the creditor's world burn.
Elliott Portman is a creditor's rights attorney with Portman Law Group, P.C. who regularly engages in creditor’s rights law matters. Mr. Portman is Counsel to Rosenthal & Goldhaber, P.C. and can be reached at Elliott@NYCollections.com or 631-979-8500.