H.M.S. Hussar, Inc. v. The Unidentified

Background

On June 28, 2022, the court ordered Joseph Governali, identified as the president of H.M.S. Hussar, Inc., to appear on July 7, 2022, and explain why he should not be held in civil contempt. The proposed contempt was based on his alleged willful failure or refusal to comply with an April 1, 2022 subpoena and the court’s May 2, 2022 order.

The subpoena required Governali to appear for a deposition on April 25, 2022, and to produce corporate books and records, tax records, bank records, and other materials dating from 1998 to the present. The subpoena was served on April 5, 2022, but Governali did not appear. The May 2 order required him to appear for examination on May 26, 2022, and bring the subpoenaed materials. The opinion states that he also did not appear for examination on June 30, 2022. The June 28 order and supporting declaration were served on him on June 30, 2022, but the court received no response from him.

Contempt Ruling

The court explained that civil contempt is used to compel future compliance with a court order or to compensate for losses. To enforce a lawful order through contempt, the court required three things: a clear and unambiguous order, clear and convincing proof of noncompliance, and a lack of reasonable diligence in trying to comply.

The court found all three conditions satisfied. The May 2 order stated when and where Governali’s examination would occur and warned that noncompliance could result in sanctions. Richard Monaco submitted evidence showing service of the subpoena and the court orders, as well as Governali’s failures to appear. The court also found that Governali had not acted diligently, noting that the court had received no response and that Monaco had not heard from him since April 22, 2022.

Sanctions and Enforcement

For the reasons stated at the July 7, 2022 hearing, the court held Governali in civil contempt. Beginning July 20, 2022, it assessed him a fine of $100 for each day that he failed to appear for his deposition and produce the documents demanded in the subpoena.

The court warned that if Governali failed to appear and produce the documents within 30 days of July 20, 2022, it might order the U.S. Marshals to arrest him, take him into custody using force up to and including entering a residence where they believed he lived, and hold him until he fully complied or the court ordered otherwise.

The court also granted Richard Monaco’s request for sanctions under Rule 30(d)(2) of the Federal Rules of Civil Procedure. That rule permits an appropriate sanction, including reasonable expenses and attorney’s fees, against a person who impedes, delays, or frustrates a fair deposition. The court found that Governali had twice failed to appear for his deposition and had also failed to appear to explain those failures. It ordered him to pay Monaco $671 for the costs of the failed examinations within five business days.