Court Opinions: 10th Circuit Court of Appeals Opinion for March 31

The 10th Circuit Court of Appeals

Editor’s Note: Law Week Colorado edits court opinion summaries for style and, when necessary, length.

Federal Trade Commission, et al. v. Zurixx, LLC, et al.

In September 2019, the Federal Trade Commission and the Utah Division of Consumer Protection brought an enforcement action against Zurixx, LLC and other entities. On Nov. 1, 2019, the parties entered into a stipulated preliminary injunction, which appointed David Broadbent, the receiver. The injunction froze the defendants’ assets and directed the holders of the assets to cooperate with Broadbent taking possession and control of them. It also prohibited third parties from taking action that would interfere with the jurisdiction of the court, including commencing judicial actions, enforcing liens, attempting to take possession of assets or attempting to foreclose or terminate the defendants’ interest in assets. 

Efron Dorado, a Puerto Rico special partnership, leased to Zurixx an office in Puerto Rico. David Efron, an attorney, is a partner in Efron Dorado, according to the record. In November 2019, Broadbent notified Efron of the injunction and filed court documents in Puerto Rico. Broadbent and Efron had discussions about the property, but came to no resolution.

On Feb. 3, 2020, Efron Dorado filed an eviction proceeding Zurixx in Puerto Rico court. Broadbent’s agents, near the end of February, visited to assess the property, and the next day Efron told the agents he had taken possession of the property and initiated the eviction suit against Zurixx. Efron allowed Broadband’s agents to remove some electronic and paper records, but not the removal of remaining property. 

On July 27, 2020, the district court found Efron and Efron Dorado in contempt of court for violating the injunction. It found Broadbent gave actually notice of the injunction and properly filed it, but it found Efron and Efron Dorado prevented Broadbent from taking control of the assets. Efron and Efron Dorado moved for reconsideration, which the district court denied and they also filed a notice of appeal. 

Notwithstanding the district court’s contempt order, the situation remained unresolved. Broadbent moved again to hold Efron and Efron Dorado in contempt, this time for both violating the injunction and the contempt order. In November 2021, the district court found Efron and Efron Dorado violated the injunction and the first contempt order because their conduct caused considerable delays. The district court awarded Broadbent reasonable attorney’s fees and costs incurred and directed him to file documents demonstrating those fees and costs. Efron and Efron Dorado filed a notice of appeal from the November 2021 order. 

On Dec. 8, 2021, Broadbent filed his statement of fees and costs with supporting documentation. Efron and Efron Dorado didn’t respond. Broadbent filed a request to submit for decision his statement of fees and costs. Again Efron and Efron Dorado didn’t respond. On January 7, 2022, the magistrate judge granted and approved Broadbent’s statement of fees and costs, assessing fees of $67,615.85 and costs of $208.40 against Efron and Efron Dorado. On Jan. 19, 2022, Braodbent requested entry of a federal rule of civil procedure judgment in his favor. 

On Jan. 26, 2022, Efron filed a “Motion for Stay Pending Appeal and in Opposition to Award of Attorney’s Fees and Costs and to Hold Any Judgment in Abeyance,” and he generally objected to the award of fees and costs, stating the claimed rates and hours were unreasonable. He requested a stay pending appeal. Broadbent opposed the motion and renewed his request for the district court to enter a Rule 58 judgment. The district court found Efron’s opposition to be untimely, denied a stay pending appeal and granted Broadbent’s request. Efron then appealed.

The 10th Circuit Court of Appeals affirmed the lower court’s decision, stating the Supreme Court decision in AMG Capital Management, LLC v. Federal Trade Commission didn’t excuse his contempt and that his Jan. 26, 2022, filing was untimely, applying the firm waiver rule. 

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