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Victor Stanley, Inc. v. SCH Enterprises, LLC

United States District Court, D. Maryland

October 25, 2018

VICTOR STANLEY, INC. Plaintiff
v.
SCH Enterprises, LLC, et al. Defendants

          MEMORANDUM & ORDER RE: REPORT & RECOMMENDATION

          RICHARD D. BENNETT UNITED STATES DISTRICT JUDGE

         The Court has before it Magistrate Judge Sullivan's Report and Recommendation [ECF No. 818], Defendant's Objections to Magistratie [sic] Judge's Report and Recommendation [ECF No. 821], and the materials submitted by the parties relating thereto. The Court finds that a hearing is unnecessary. For the reasons that follow, the Report & Recommendation is ADOPTED and the Defendants, SCH Enterprises, LLC and Mark T. Pappas, shall make the assignments, transfers, and cash payments to the Plaintiff, Victor Stanley, Inc., as ordered.

         BACKGROUND

         Inasmuch as the parties are fully familiar with the pertinent background, it suffices to state that currently, the status of this litigation is that Plaintiff, Victor Stanley, Inc. (“VSI”) is seeking to collect on its judgment and on sanctions that have been awarded.[1] This effort has been ongoing since the first sanctions were awarded in November 2010, final judgment in favor of VSI in November 2011, and further sanctions awarded during the collections process. See, e.g., ECF Nos. 721, 747 (summarizing the various judgments and failures to comply by the Defendants[2]).

         More recently, in August 2017, Judge Garbis held “that the evidence clearly and convincingly establishes that Defendants failed to comply with their obligation to pay VSI . . . . [and t]hey most certainly did not take all reasonable steps within their power to ensure at least partial compliance.” ECF No. 747 at 14. The Court found Defendants in contempt, ordered certain specific steps to be taken to purge the nonpayment contempt, and allowed VSI the opportunity to request that further specific actions be required. Id. at 14-17. Judge Garbis then ordered, ECF No. 750, counsel to file statements of compliance, which resulted in a hearing on October 2, 2017, during which Defendant Pappas testified. Judge Garbis found that Defendants had substantially complied with the Court's Order, but VSI requested that Defendant Pappas be ordered to address the shortfall “by making payments from his considerable income, liquidation of other assets, and recovery of the various fraudulent transfers he made to his wife.” ECF No. 758 at 1. The matter was referred to Magistrate Judge Sullivan for a Report and Recommendation. Id. at 2. Judge Sullivan provided the requested Report and Recommendation [ECF No. 818] to this Court on July 3, 2018, which this Court now ADOPTS.

         In February 2018, Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction [ECF No. 792] and an emergency Motion for Immediate Hearing [ECF No. 793] was filed by Plaintiff. VSI requested that the Court enjoin Pappas from “collecting, depositing or cashing any accounts receivable payments for SCH Enterprises, LLC (“SCH”) until further order of the Court.” ECF No. 792 at 1. Judge Garbis granted the motion for a hearing, ECF No. 795, held a hearing on February 23, 2018, and granted a Temporary Injunction [ECF No. 802] to be in effect until the Court ruled on Plaintiff's Motion. Shortly thereafter, on February 27, 2018, a Consent Order [ECF No. 808] was entered granting VSI's Motion to Substitute Party [ECF No. 762], substituting SCH in place of Defendant Creative Pipe, Inc. as a defendant and judgment-debtor for all purposes. An Amended Judgment [ECF No. 809] was issued on the same date in favor of VSI against Defendants Pappas and SCH. This Court then entered a Supplemental Procedural Order [ECF No. 810], asking Magistrate Judge Sullivan[3] to also:

consider matters relating to the Court's ordering Defendant Pappas to take specific actions to address his payment shortfalls including but not limited to any transfer of ownership of: any assets owned by Pappas, assets owned by SCH, LLC, the pertinence of any contracts or obligations to which SCH may be subject, any assets owned by SCH, any intellectual property owned by, or controlled by, Pappas and/or entities that he owns or controls, imposing restrictions upon the payment of Pappas' personal expenses (rather than payments to Pappas which could be used to pay Plaintiff) by others or other devices utilized to avoid the payment of available funds to Plaintiff in satisfaction of existing payment obligations.
In addition, the Magistrate Judge may consider any contentions that may be made regarding any alleged past or ongoing violations of Court Orders that may warrant consideration for further action including possible contempt proceedings.

ECF No. 810 at 1-2.

         Magistrate Judge Sullivan held the hearing on April 4, 2018.[4] Defendant Pappas did not appear. A Report and Recommendation [ECF No. 818] was provided to this Court on July 3, 2018, to which Defendants timely filed Objections [ECF No. 821]. VSI filed a response [ECF No. 824] to Defendants' objections, and the matter is ripe for review.

         Magistrate Judge Sullivan recommended that this Court grant VSI's requests in full, as follows:

1. Pappas, Creative Pipe, Inc. (CPI) and SCH individually and jointly shall transfer and assign all their rights to any and all of the following intellectual property [of] Pappas, CPI or SCH in the form of papers prepared by VSI:
a. all site furnishing patents owned by Pappas, CPI or SCH, including those patents identified by Pappas in his response to the Post Hearing Order of February 28, 2018 (ECF No. 811);
b. all copyrights to the names of the products used by CPI and SCH, including the product names for the products that appeared in either the CPI or SCH on-line catalog; and
c. the right to use the name “Creative Pipe, Inc.” in connection with the sale and marketing of site ...

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