Long Island Minimally Invasive Surgery P.C. v. Philip DiSalvio

Background

Philip DiSalvio started a Chapter 7 bankruptcy case. The bankruptcy court later entered an order finding Long Island Minimally Invasive Surgery P.C. and Sahn Ward Braff Koblez PLLC, now known as Sahn Ward Braff Coschignano PLLC, had willfully violated the bankruptcy discharge injunction. A discharge injunction is an order that limits efforts to collect debts covered by a bankruptcy discharge. The bankruptcy court ordered the company and Sahn Ward to pay DiSalvio $11,985.57 within 30 days.

The payment deadline was April 19, 2024. DiSalvio did not receive payment until April 23, 2024, fourteen minutes after he filed a motion seeking civil contempt and additional sanctions. The payment was also $5 short, and the missing $5 was not received until about June 6, 2024. The company filed its opposition to the contempt motion approximately three weeks late, and its counsel did not appear at the July 30, 2024 hearing.

At that hearing, the bankruptcy court held the company and Sahn Ward in civil contempt for refusing to comply with the March 20, 2024 order. It awarded DiSalvio an additional $750 for attorney fees, costs, and expenses related to bringing the contempt motion, rather than the full $2,934.68 he requested. The company appealed the written contempt order to the district court. Although its opening brief was filed one day late, the district court declined to dismiss the appeal on that procedural ground.

Arguments on Appeal

The company argued that the contempt order should be reversed because there was no evidence that it or its counsel intentionally or willfully disobeyed the bankruptcy court’s order. It also argued that it had complied with the order. DiSalvio maintained that the contempt motion was necessary to obtain complete compliance, including the final $5.

The district court reviewed the contempt order for abuse of discretion. That standard permits reversal if the bankruptcy court used the wrong legal rule, made a clearly mistaken factual finding, or reached a decision outside the range of permissible choices. The district court also explained that a bankruptcy court is better positioned to evaluate the facts supporting a contempt sanction.

The district court held that the payment order was clear and that the record showed the full amount was not paid by the deadline. It rejected the company’s claim that proof of willfulness was required. For civil contempt, the moving party generally must show that the order was clear, the failure to comply was shown by strong evidence, and the alleged contemnor did not make a reasonable and diligent effort to comply. The court stated that willfulness need not be established, particularly when noncompliance has been admitted.

The court also held that the company had waived its willfulness argument by not properly raising it in the bankruptcy court. Even assuming the argument was preserved, the court concluded that it failed on the merits. The court likewise noted that challenges to the attorney-fee sanction and its reasonableness were waived because they were not raised below. In any event, the $750 award was less than one-third of the amount requested and was within the bankruptcy court’s permissible range of decisions.

Ruling

Judge Philip M. Halpern affirmed the bankruptcy court’s Contempt Order. The district court concluded that the bankruptcy court did not abuse its discretion in finding Long Island Minimally Invasive Surgery P.C. and Sahn Ward in civil contempt or in imposing the additional $750 sanction. The Clerk was directed to terminate the district-court case.