Koshkalda v. Seiko Epson Corporation

Background

Artem Koshkalda, representing himself, appealed a contempt order issued by the Northern District of California Bankruptcy Court. Seiko Epson Corporation and Epson America, Inc. were pursuing an adversary bankruptcy proceeding seeking to deny Koshkalda a discharge from a judgment entered in earlier litigation. During discovery, Epson sought to depose Koshkalda’s parents and asked him to provide their current residential and employment addresses.

Koshkalda provided several different addresses. The bankruptcy court ordered him to appear and testify about accurate addresses for his parents’ residences and employers. After finding his testimony not credible and determining that he had not complied with the order, the bankruptcy court issued an order requiring him to explain why he should not be held in contempt and sanctioned. Koshkalda submitted additional information, but the bankruptcy court found that he still had not provided adequate, current information or explained the inconsistencies.

On August 15, 2019, the bankruptcy court found Koshkalda in contempt, imposed issue and evidentiary sanctions concerning Epson’s allegations about transfers involving his parents, and directed Epson to submit its fees and costs for consideration of monetary sanctions. The bankruptcy court later imposed monetary sanctions and reduced them to a separate judgment. It also denied Koshkalda’s motion to reconsider. Koshkalda appealed the contempt order. The opinion states that he did not challenge the evidentiary sanctions or the specific amount of the monetary sanctions on appeal.

Issues and standards of review

Koshkalda argued that the bankruptcy court clearly erred in finding that he had provided false or misleading addresses, failed to comply with the discovery order, misunderstood the order, and lacked a valid excuse. He also argued that the bankruptcy court abused its discretion by holding him in civil contempt and imposing monetary sanctions. He challenged the monetary sanctions based on the lack of a signature on Epson’s fees-and-costs declaration and on an alleged lack of a fair opportunity to respond.

The district court reviewed the bankruptcy court’s civil contempt decision and sanctions for abuse of discretion. Under that standard, reversal may be appropriate if the lower court applied the wrong legal standard, failed to follow required procedures, or relied on clearly erroneous factual findings. The district court reviewed factual findings for clear error, meaning it would not overturn them without a firm conviction that a mistake had been made.

Analysis

The district court upheld the bankruptcy court’s factual findings. It concluded that Koshkalda had provided different addresses in response to repeated requests and that the bankruptcy court did not clearly err in finding that the addresses were erroneous or provided in bad faith. The district court also agreed that Koshkalda failed to provide the information required by the First Order, including accurate residential addresses and employer or employment addresses.

The district court rejected Koshkalda’s claim that he misunderstood the First Order. It explained that the order sought addresses, not merely the locations where his parents happened to be at a particular time. The court also found no clear error in the bankruptcy court’s conclusion that Koshkalda lacked a sufficient excuse for not providing the San Jose address earlier and that the bankruptcy court reasonably questioned the validity of the final address based on the history of prior addresses.

On the legal issues, the district court held that the bankruptcy court had authority to impose civil contempt sanctions for failure to comply with discovery orders. The sanctions included evidentiary sanctions and compensatory monetary sanctions designed to reimburse Epson for attorney’s fees and costs associated with attempting to depose Koshkalda’s parents. The court concluded that the sanctions were authorized under the applicable civil and bankruptcy procedural rules and were not an abuse of discretion.

The district court also rejected Koshkalda’s challenges to the monetary sanctions. It held that the unsigned fees-and-costs declaration was valid under the bankruptcy court’s local rules because the filing identified the signatory and was submitted through the electronic filing system. It further held that Koshkalda received due process because the bankruptcy court warned him about possible sanctions, issued an order to show cause, allowed him to submit a response and a sur-reply, and held a hearing.

Disposition

Judge Yvonne Gonzalez Rogers affirmed the bankruptcy court’s Contempt Order on appeal for abuse of discretion. The clerk was directed to close the matter.