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Friday, March 01, 2013
Ind. Decisions - 7th Circuit decides one Indiana case today
In SEC v. First Choice (ND Ind., Miller), a 7-page opinion, Judge Posner concludes:
And as the judge explained and the appellees have demonstrated at length, $600,000 is a gross underestimate of the harm caused by SonCo’s contempt. SonCo had agreed as part of the “agreed order” to take over the operation of Alco’s wells within 90 days. By failing to do so for more than a year after the order was issued, SonCo exposed Alco to an estimated $490,000 to $780,000 in additional environmental compliance costs because the Texas Railroad Commission refused to authorize operation of the wells without costly rehabilitation, and, left nonproducing, the wells had to be capped as otherwise they would have continued to cause environmental damage for which Alco, as their operator, would have been liable. In addition, SonCo had agreed in the order to replace the $250,000 bond that Alco had been required to post with its own $250,000 bond, and it had not done so. Furthermore, as part of the agreed order the receiver had released either $375,000 or $2 million (the record is unclear on which figure is correct) in claims of fraud and disgorgement that had been lodged against SonCo in Eaton v. HMS Financial. The receiver has also charged $70,000 in additional receivership fees because SonCo’s procrastination prolonged the receivership. And he has incurred a further $30,000 in expenses of overseeing the property in receivership during the period of procrastination. The harm inflicted by the contempt exceeded $600,000 by a large margin. A plausible estimate of the total harm would be $2 million. SonCo has gotten off lightly.
The district judge remarked SonCo’s “record of truly brazen intransigence” in this protracted proceeding. That is an understatement. SonCo will be courting additional sanctions, of increasing severity, if it does not desist forthwith from its obstructionist tactics. AFFIRMED.
Posted by Marcia Oddi on March 1, 2013 10:54 AM
Posted to Ind. (7th Cir.) Decisions