In its October 20, 2015 decision in El-Dehdan v. El-Dehdan, New York’s highest court restates the elements of civil contempt, the burdens of proof needed to support a finding, and the effect of the assertion of a Fifth Amendment privilege against incrimination. Doing so, the Court of Appeals affirmed a 2013 decision of the Appellate Division, Second Department, which in turn upheld the finding of civil contempt made by Kings County Supreme Court Justice Eric I. Prus.
In January 2010, an Order to Show Cause was signed to bring on the wife’s motion to hold the husband in contempt for having violated a 2008 order that supposedly restrained the transfer of assets. The husband had transferred certain parcels of realty. In addition to scheduling a hearing on the contempt motion, a Temporary Restraining Order was issued directing the husband to deposit immediately with the wife’s attorney the sum of $950,000.00 “which is the sum of money he purportedly received from the transfer of [the property] 171 Ainslie Street, Brooklyn, New York and 64-17 60th Road, Maspeth, New York, minus the money paid for [the] real estate broker, transfer taxes and payment of the underlying mortgage.” The husband was personally served with this Order to Show Cause.
As it turns out, the 2008 order did not, in fact, prohibit the transactions in which the husband engaged. However, here, the husband was not found in civil contempt for having violated the 2008 order, but for violating the Temporary Restraining Order contained in the January, 2010 Order to Show Cause that looked to preserve marital assets and the status quo while the court considered whether the husband violated the 2008 order.
The husband failed to make the transfers required by the January, 2010 Temporary Restraining Order and in August, 2010, the wife moved to hold the husband in civil and criminal contempt for violating the January, 2010 order. That motion was referred to a referee for a hearing.
Although the husband conceded he sold the Brooklyn property, he disputed the amount of the proceeds, claiming he received $561,046.21, not $950,000 as the wife alleged. He further asserted that he no longer had any of these funds. With respect to the Maspeth property, he claimed he received no money for the transfer, never had possession of the property, and, in fact, he only took title as a favor to friends so that they could secure a new mortgage. He also claimed that the property since had been transferred back to the owners through their son. He further contended that he did not act in willful disobedience of a judicial mandate because no order was in place when he actually transferred the properties.
At the hearing, the husband’s counsel stipulated that the husband was served with a copy of the January 2010 order, and that he failed to deposit the funds in the wife’s counsel’s escrow account as required by that order. He further stipulated to submission of the recorded deed that evidenced the transfer of the Brooklyn property. The wife testified that she received none of the proceeds from the transfer of the Brooklyn property and submitted into evidence proof of the transfer. The wife also called the husband as a witness. During his testimony he refused to answer any questions related to the proceeds from the transfer, and invoked his Fifth Amendment right against self-incrimination. Specifically, he refused to explain what he did with the proceeds from the transfer and whether he was currently in possession of the money.
The referee found that defendant had actual knowledge of the terms of the January 2010 order, he dissipated marital assets after the commencement of the matrimonial action, namely the Brooklyn and Maspeth properties, and had not deposited the proceeds from the transfer. However, the referee concluded that plaintiff failed to establish that defendant could deposit the funds after the order was issued, and therefore recommended denial of the motion for civil contempt. The referee also recommended denial of the motion for criminal contempt, finding that plaintiff failed to establish defendant’s wilful violation of the January 2010 order.
In September 2011, Kings County Supreme Court Justice Prus granted the wife’s motion to set aside the referee’s report, concluding that the referee’s findings were not supported by the record. After finding that all the elements of civil contempt were satisfied in this case, the court noted that the Fifth Amendment did not relieve the husband of the usual evidentiary burden in a civil proceeding, and also found that the husband’s actions were wilful. Supreme Court thus found the husband in contempt of court for failing to comply with the January 2010 order, and provided that he “could purge himself of the contempt” by depositing his passport and the proceeds from the Brooklyn property transfer within 20 days of the contempt order. Failure to do so would result in his incarceration.
The Appellate Division unanimously affirmed, treating Supreme Court’s decision as, in effect, granting only plaintiff’s motion for civil contempt because the court did not impose a definite jail term without opportunity to purge the contempt.
The Court of Appeals affirmed. The Court reviewed the elements necessary which must be established by clear and convincing evidence to support a finding of civil contempt:
It must be determined that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect.
It must appear, with reasonable certainty, that the order has been disobeyed.
The party to be held in contempt must have had knowledge of the court’s order, although it is not necessary that the order actually have been served upon the party.
Prejudice to the right of a party to the litigation must be demonstrated.
In order to carry her burden, the wife had to establish by clear and convincing evidence defendant’s violation of the January 2010 order.
First, the unequivocal mandate was found in the unambiguous directive, describing the property and the exact amount of the proceeds, and directing defendant to immediately deposit those funds with counsel, left no doubt as to its requirements and time frame.
Second, the transfers required by the order were not made.
Third, the husband had been served with the order establishing his knowledge.
Fourth, the wife established prejudice: she was unable to preserve funds to protect her rights to equitable distribution.
Willfulness is not an element of civil contempt, only intentionality. The alleged contemnor’s actions must be conscious, reflecting an awareness of the act that is other than “unwitting conduct.”
Once the wife met her burden and established that the husband violated the order to deposit the proceeds from the transfer, it was incumbent upon the husband to proffer evidence of his inability to pay. To do that, required the husband to make a specific showing of his economic status, with evidentiary support.
Moreover, the court was entitled to draw a negative inference from the husband’s invocation of his Fifth Amendment privilege against self-incrimination. That privilege did not relieve him of his burden to present adequate evidence of his financial inability to comply with the January 2010 order so as to avoid civil contempt liability. While a party may not be compelled to answer questions that might adversely affect his criminal interest, the privilege does not relieve the party of the usual evidentiary burden attendant upon a civil proceeding; nor does it afford any protection against the consequences of failing to submit competent evidence.
If the husband was concerned about the spill-over effect of invoking his Fifth Amendment right, he could have sought to bifurcate the hearing so that the court would first consider plaintiff’s criminal contempt allegations (a finding of criminal contempt would carry with it a definite jail term without opportunity to purge the contempt by specified conduct). He chose not to do so. Thus, because he failed to seek this relief before Supreme Court, in the first instance, he cannot complain that Supreme Court erred in drawing negative inferences specifically allowed by law.
We are especially reticent in the context of matrimonial proceedings to issue a decision that may, unintentionally, undermine legislative efforts to protect parties from unauthorized unilateral dissipation of marital assets.
“To permit defendant to avoid contempt by refusing to answer, even though he failed to request that the court hold the civil contempt branch of plaintiff’s motion in abeyance pending the outcome of the criminal contempt branch, would incentivize defendant, and those similarly situated, to refrain from seeking relief initially before the contempt court, and later argue on appeal that the proceeding was constitutionally infirm. We decline to sanction this conduct where doing so will result in prejudice to those, like plaintiff, who have established the existence of conduct evincing civil contempt, and will thereby further delay and obstruct plaintiff’s efforts to secure any remaining marital assets she may be entitled to under the prior equitable distribution determination.”
The Court of Appeals also noted that in 2009, the New York legislature amended the Domestic Relations Law to provide upon commencement of a divorce action for automatic orders restraining the parties from transferring or disposing of marital assets, without written consent of the other party or consent of the court (Domestic Relations Law §236[B][b]).
As described in a letter from the Chair of the Assembly Judiciary Committee to the Governor, “Having standardized orders automatically in effect from the commencement of a case would ensure timely prevention of dissipation of assets and would eliminate the expense and delays involved in making applications for temporary restraining orders. It is not uncommon for parties to dissipate assets as soon as divorce papers are served. This results in extreme hardship to one party in the divorce action.”