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7th Circuit vacates sanction in contempt judgment

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The 7th Circuit Court of Appeals found that an order, while unclear, did require a company to become the operator of leases involving oil and gas fields in Texas. But the judges held the District Court judge didn’t fully explain why he was imposing the sanction he did, so the 7th Circuit vacated the sanction.

At issue in Securities and Exchange Commission v. First Choice Management Services Inc. et al.; SonCo Holdings LLC v. Joseph D. Bradley, receiver, and ALCO Oil & Gas Co. LLC, No. 11-1702, is the sanction imposed stemming from a settlement SonCo Holdings entered into with the receiver of First Choice Management Services, which had defrauded victims out of $31 million. Some of First Choice’s assets had been used to acquire “Hull-Silk” oil and gas leases in Texas through a sham corporation. SonCo claimed to have a valid legal interest in the leases obtained through the sham corporation. ALCO Oil & Gas Co. was the operator of the leases.

As part of the settlement, SonCo paid the receiver $600,000 and was ordered to "obtain a bond … that shall replace ALCO’s bond so that ALCO and the receiver may obtain the release of its bond paid for with the defrauded investor funds." ALCO had paid a $250,000 cash bond with the Texas Railroad Commission to assure payment of any costs the commission might impose on ALCO for failing as operator of the wells.  
 
SonCo failed to post the bond that would replace ALCO’s bond and didn’t obtain the commission’s authorization to operate the wells. The District Court held SonCo in contempt, ordered it to return the Hull-Silk leases to the receiver, and allowed the receiver to keep the $600,000 SonCo paid to the receiver. The receiver then assigned them to another company, which in turn assigned them to an unrelated party.

The 7th Circuit found the agreed order was poorly drafted but the language did indicate that SonCo posted a bond so ALCO’s could be released. The order doesn’t say that SonCo must be the operator; it could have engaged with another oil company to become the operator, noted Judge Richard Posner.

Since the District judge in this case used the term “contempt” when sanctioning SonCo, he had to prove the contempt by clear and convincing evidence, which he did not do. The 7th Circuit vacated the sanction and remanded with instructions: the District judge can reimpose the sanction he imposed upon demonstration that it is a compensatory remedy for a civil contempt after all; impose a different or even no sanction, whether for civil contempt or for misconduct not characterized as contempt; or proceed under the rules governing criminal contempts, wrote Posner.

 

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  1. My mother got temporary guardianship of my children in 2012. my husband and I got divorced 2015 the judge ordered me to have full custody of all my children. Does this mean the temporary guardianship is over? I'm confused because my divorce papers say I have custody and he gets visits and i get to claim the kids every year on my taxes. So just wondered since I have in black and white that I have custody if I can go get my kids from my moms and not go to jail?

  2. Someone off their meds? C'mon John, it is called the politics of Empire. Get with the program, will ya? How can we build one world under secularist ideals without breaking a few eggs? Of course, once it is fully built, is the American public who will feel the deadly grip of the velvet glove. One cannot lay down with dogs without getting fleas. The cup of wrath is nearly full, John Smith, nearly full. Oops, there I go, almost sounding as alarmist as Smith. Guess he and I both need to listen to this again: https://www.youtube.com/watch?v=CRnQ65J02XA

  3. Charles Rice was one of the greatest of the so-called great generation in America. I was privileged to count him among my mentors. He stood firm for Christ and Christ's Church in the Spirit of Thomas More, always quick to be a good servant of the King, but always God's first. I had Rice come speak to 700 in Fort Wayne as Obama took office. Rice was concerned that this rise of aggressive secularism and militant Islam were dual threats to Christendom,er, please forgive, I meant to say "Western Civilization". RIP Charlie. You are safe at home.

  4. It's a big fat black mark against the US that they radicalized a lot of these Afghan jihadis in the 80s to fight the soviets and then when they predictably got around to biting the hand that fed them, the US had to invade their homelands, install a bunch of corrupt drug kingpins and kleptocrats, take these guys and torture the hell out of them. Why for example did the US have to sodomize them? Dubya said "they hate us for our freedoms!" Here, try some of that freedom whether you like it or not!!! Now they got even more reasons to hate us-- lets just keep bombing the crap out of their populations, installing more puppet regimes, arming one faction against another, etc etc etc.... the US is becoming a monster. No wonder they hate us. Here's my modest recommendation. How about we follow "Just War" theory in the future. St Augustine had it right. How about we treat these obvious prisoners of war according to the Geneva convention instead of torturing them in sadistic and perverted ways.

  5. As usual, John is "spot-on." The subtle but poignant points he makes are numerous and warrant reflection by mediators and users. Oh but were it so simple.

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