United States District Court, D. New Jersey
LAWN DOCTOR, INC. Plaintiff,
JOSEPH RIZZO, et al., Defendants.
HONORABLE TONIANNE J. BONGIOVANNI UNITED STATES MAGISTRATE
before the Court is Lawn Doctor, Inc.'s (“Lawn
Doctor”) supplemental motion for sanctions filed
pursuant to the Court's January 31, 2017 Order. (Docket
Entry No. 80). Defendants Joseph Rizzo (“J.
Rizzo” or “Mr. Rizzo”) and Annamaria Rizzo
(“A. Rizzo”) (collectively, the
“Rizzos”) oppose Lawn Doctor's motion. The
Court administratively terminated Lawn Doctor's motion
via its Memorandum Opinion and Order entered on October 25,
2017, holding its decision on same in abeyance pending
limited additional discovery. Docket Entry Nos. 86 & 87.
That discovery is complete. As such, the Court now considers
Lawn Doctor's supplemental motion for sanctions. The
Court has fully reviewed all arguments raised in support of
and opposition to Lawn Doctor's motion. The Court
considers Lawn Doctor's motion without argument pursuant
to L.Civ.R. 78.1(b). For the reasons set forth more fully
below, Lawn Doctor's supplemental motion for sanctions is
Background and Procedural History
the parties and the Court's familiarity with this matter,
the Court does not restate the facts of this case at length
herein. Instead, the Court focuses only on those facts most
pertinent to its consideration of Lawn Doctor's
supplemental motion for sanctions.
March 14, 2014, the Court entered a Letter Order in which it
found that the Rizzos violated the terms of the Consent
Injunction entered in this matter on January 25, 2013 and,
thus, were in contempt of court. Letter Order of 3/14/2014 at
4; Docket Entry No. 55. Having determined that the Rizzos
were in contempt, the Court turned to the appropriate civil
contempt sanction. Id. After reviewing the
parties' arguments and the proofs submitted, the Court
determined that requiring the Rizzos to pay $178, 000, the
established fair market value of Lawn Doctor's customer
list, represented the appropriate remedy. In reaching this
conclusion, the Court noted:
[T]he Consent Injunction which was entered in this matter on
January 25, 2013, and with the benefit of counsel for the
Defendants, clearly prohibited Defendants from either
operating Advanced Enviro Care in the restricted territory
themselves or acting as a competitive lender to someone
buying and intending to operate the company in said area.
Defendants not only violated the Consent Injunction when
Rizzo entered into the Wilkerson Deal, but then, after being
specifically informed by the Court that the Wilkerson Deal
violated the Consent Injunction and, after being given the
opportunity to remedy the violation before the Court
determined what sanction should be entered, Defendants took
no actions to try to ameliorate their violation. Nor have the
Defendants submitted any evidence that the Wilkerson Deal did
not include Plaintiff's customer list. Defendants'
actions post the September 13, 2013 motion hearing,
i.e., Rizzo's assignment of the promissory note
for $275, 000 back to Advance Enviro Care, only exacerbated
Id. at 5-6.
Rizzos appealed the Court's decision to the Court of
Appeals for the Third Circuit. While the Third Circuit
determined that “[a]mple evidence supports the
Court's finding that the Rizzos violated the consent
injunction[, ]” it remanded the issue of what the
appropriate sanction should be, finding that this Court, in
awarding $178, 156.45 as a civil contempt sanction,
“erred in shifting the burden onto the Rizzos to prove
that the customer service list had not been
transferred as part of the Wilkerson Deal.” Lawn
Doctor Inc. v. Rizzo. 646 Fed.Appx. 195, 199, 201 (3d
Cir. 2016). Specifically, the Third Circuit determined that
it was an abuse of discretion for the sanctions award to be
based on the value of a customer list that the Court assumed,
“in the absence of evidence to the contrary,
had been transferred to a third party.” Id. at
201. As such, the Third Circuit vacated the sanctions award
of $178, 156.45, and remanded the issue “for
consideration of compensatory damages consistent with the
evidence in the record.” Id.
receipt of the Third Circuit's Opinion, the Court
directed the parties to submit supplemental briefing on the
issue of the appropriate civil contempt sanction.
See Letter Order entered 5/25/2016; Docket Entry No.
68. After considering the parties' briefing, “the
Court determined that the information submitted by Lawn
Doctor did not adequately support the lost profits sanction
it sought. As a result, the Court denied Lawn Doctor's
supplemental motion for sanctions without prejudice and gave
Lawn Doctor an opportunity to submit additional evidence in
support of its request for contempt sanctions.” Mem.
Op. entered on 10/25/2017 at 9; Docket Entry No. 86 (citing
Order of 1/31/2017 at 1-2; Docket Entry No. 78). In response,
Lawn Doctor filed the instant supplemental motion for
noted above, On October 25, 2017, the Court administratively
terminated Lawn Doctor's supplemental motion for
sanctions in order to permit limited additional discovery
regarding “the Rizzos' violation of the Consent
Injunction and the appropriate sanction to be imposed in
light of same.” Id. at 18. In this regard, the
Court permitted discovery from (1) Advanced Enviro Care,
regarding its customer and financial records between January
2013 and July 2014; (2) Daniel Wilkerson, regarding the
Wilkerson Deal and what was transferred to him in return for
the $275, 000 promissory note; and (3) Ken Chapman, Esq.,
regarding the Wilkerson Deal. See Id. at 18. The
Court denied the Rizzos' request for additional
discovery, finding the scope of same, i.e.,
“‘documents and testimony regarding Lawn
Doctor's alleged irrigation services, services they
surrendered to third parties, records of winterizing systems
and service contracts within the zone that AEC provided
similar services[, ]'” to be irrelevant.
Id. at 18-19 (quoting Rizzos Op. Br. at 10; Docket
Entry No. 85).
Doctor subpoenaed the three witnesses identified above.
Messrs. Wilkerson and Chapman acknowledged receipt of the
subpoenas, as did Mr. Rizzo on behalf of Advanced Enviro
Care. Lawn Doctor deposed Messrs. Chapman and Rizzo on
December 1, 2017. While Mr. Wilkerson was also set to be
deposed, he “did not appear for deposition, citing a
change in location as making it impossible for him to comply
with the subpoena.” (Letter from Ronald A. Giller to
Hon. Tonianne J. Bongiovanni of 12/21/2017 at 2; Docket Entry
party requested additional discovery at the conclusion of the
aforementioned depositions; nor were any discovery issues
raised. On December 21, 2017, Lawn Doctor submitted a letter
brief, outlining additional evidence it obtained from Mr.
Rizzo's deposition that it believed further supported the
conclusion that the customer list was an asset exchanged in
the Wilkerson Deal. No. additional briefing was submitted.
The Court now considers the appropriate civil contempt
sanction to be imposed against the Rizzos.
Third Circuit explained, “[t]he burden in a civil
contempt proceeding is on the petitioning party. Lawn
Doctor, Inc. v. Rizzo, 646 Fed.Appx. 195, 201 (3d Cir.
2016) (citing Howard Johnson, Co. v. Khimari, 892
F.2d 1512, 1516 (11th Cir. 1990)). “Sanctions for civil
contempt serve two purposes: ‘to coerce the defendant
into compliance with the court's order and to compensate
for losses sustained by the disobedience.'”
Robin Woods, 28 F.3d at 400 (citing
McDonald's Corp. v. Victory Investments, 727
F.2d 82, 87 (3d Cir. 1984)). The purpose of a compensatory
award is “to make reparation to the injured party and
restore the parties to the position they would have held ...