United States District Court, S.D. Texas, Houston Division
WILLIAM O'KANE, SYNERGY SOURCE, LLC, and AZKARTA CREST CORPORATION, Plaintiffs,
VERLEY SEMBRITZKY, JR., a/k/a ROCKY SEMBRITZKY, et al., Defendants.
MEMORANDUM AND ORDER
ROSENTHAL, CHIEF UNITED STATES DISTRICT JUDGE
O'Kane, Synergy Source, LLC, and Azkarta Crest
Corporation have sued Verley Sembritzky, aka “Rocky
Sembritzky, ” Goldie Rose, and others over an allegedly
fraudulent investment scheme. During this litigation, the
court ordered Goldie Rose to pay real-estate taxes owed on a
luxury condominium titled in Rose's name. (Docket Entry
No. 111 at 13). The plaintiffs moved for sanctions against
Rose, claiming that she violated the order by not paying the
real-estate taxes. (Docket Entry No. 127). Rose responded,
the plaintiffs replied, and both filed a surreply and
surresponse. (Docket Entry Nos. 131, 132, 134, 140). After
carefully considering the parties' arguments, the record,
and the applicable law, the court grants the plaintiffs'
motion for sanctions, for reasons explained in detail below.
case arises out of the plaintiffs' large investment in
Rasli Bahari Kenya Limited. The facts are set out in the June
19, 2019, Memorandum and Order, (Docket Entry No. 111), and
are set out here only as background.
2015, O'Kane, Synergy, and Azkarta invested a total of
$1, 404, 000 in Rasli Bahari Kenya Limited. (Docket Entry No.
38 at ¶¶ 20-22, 34-35, 43, 51). “Rocky”
Sembritzky gave the plaintiffs Regulation D, Rule 506 Private
Placement Letters, and told the plaintiffs that the
investment would be used to design, build, and operate Kenyan
desalination plants that would earn hundreds of millions of
dollars starting in 2019. (Id. at ¶¶
20-24). Sembritzky transferred the plaintiffs' money to
Compass Bank accounts that he or his then-wife, Goldie Rose,
owned. (Docket Entry No. 102-1 at ¶¶ 10-12; Docket
Entry No. 102-2 at ¶¶ 10-12; see Docket
Entry No. 110-2 at 297). Sembritzky eventually transferred
the money to a title company. (Docket Entry No. 105-1 at 2).
The plaintiffs allege that the money never made it to a
Kenyan desalination plant project. (Id.).
plaintiffs allege that Sembritzky and Rose bought a luxury
condominium, the “Kirby Condominium, ” with some
of the money, and that Rasli Nahari Kenya Limited never
attempted to build or operate a desalination plant. (Docket
Entry No. 5-1 at ¶¶ 12-16; Docket Entry No. 102-1
at ¶ 12; Docket Entry No. 102-2 at ¶ 12; Docket
Entry No. 105-1 at 2; Docket Entry No. 110-2 at 111). The
Kirby Condominium was deeded to Rose in December 2015.
(Docket Entry No. 5-1 at ¶ 14). On March 6, 2019, Rose
and Sembritzky divorced, leaving Sembritzky with no rights,
title, or interest in the Kirby Condominium. (Docket Entry
No. 107 at 1, 9-10; Docket Entry No. 107-4 at 4).
September 2018, the court issued a preliminary injunction
prohibiting Sembritzky and Rose “from selling,
assigning, transferring, encumbering, or otherwise disposing
of any interest in the Kirby Condominium and from receiving
or acquiring any interest in the Kirby Condominium, without
order from a court of competent jurisdiction.” (Docket
Entry No. 11 at 3). The plaintiffs later moved for another
order, seeking to compel Rose to pay the ad valorem property
taxes assessed against the Kirby Condominium. (Docket Entry
No. 105). The court granted the motion, finding that
“[t]he plaintiffs seek a constructive trust as an
equitable remedy for the alleged fraudulent transfer, which
the court could not provide if the Kirby Condominium were
lost in a tax sale, ” and ordered payment of the taxes.
(Docket Entry No. 111 at 11-12). Rose did not pay. (Docket
Entry No. 127-1 at 2). The plaintiffs moved for civil
contempt sanctions against Rose for violating the court's
order. (Docket Entry No. 127).
contempt can serve two purposes, either coercing compliance
with an order or compensat[ing] a party who has suffered
unnecessary injuries or costs because of contemptuous
conduct.” In re Bradley, 588 F.3d 254, 263
(5th Cir. 2009) (citations omitted) (alteration in original).
Civil contempt requires “(1) that a court order was
in effect, and (2) that the order required certain
conduct by the respondent, and (3) that the respondent failed
to comply with the court's order.”
Bradley, 588 F.3d at 264.
parties do not dispute that the plaintiffs seek civil
contempt sanctions to coerce Rose to comply with the
court's order, not to compensate the plaintiffs. (Docket
Entry No. 132 at 2; Docket Entry No. 134 at 1). Nor do the
parties dispute that this court's order, requiring Rose
to pay the ad valorem taxes, is currently in effect, and that
Rose has not paid the taxes. (Docket Entry No. 127 at 3-4;
Docket Entry No. 131 at 3). Instead, Rose argues that she has
no ability to pay the ad valorem taxes and is simply unable
to comply with this court's order. (Docket Entry No. 131
alleged contemnor may assert “a present
inability to comply with the order in question” as a
defense. United States v. Rylander, 460 U.S. 752,
757 (1983). The alleged contemnor bears the burden to show
that compliance with the court order is impossible.
Quilling v. Funding Res. Grp., 227 F.3d 231, 235
(5th Cir. 2000) (citing United States v. Sorrells,
877 F.2d 346, 349-50 & n.4 (5th Cir. 1989)). The
contemnor may meet this burden only by producing credible
evidence. Sorrells, 877 F.2d at 349 n.4.
has produced an affidavit, an application for tax deferral, a
personal bank account statement, and deposition testimony.
(Docket Entry Nos. 131-1, 134). But she has not met her
burden to produce credible evidence showing a present
inability to pay the taxes. Her unsworn affidavit is
contradicted and undermined by evidence produced in
discovery. Her application for tax deferral has no effect on
her present ability to pay the taxes she currently owes. Her
bank statements show regular, large deposits, further
undermining her affidavit statements, and her deposition
testimony reveals an incomplete picture of her finances.
plaintiffs argue that Rose has substantial assets and point
to evidence produced in discovery indicating that Rose's
assets in 2015 were valued at about $3.8 million. (Docket
Entry No. 127-1 at 3-4, 26-27, 39). Rose counters that
“despite the assets listed by Plaintiffs-all of which
are illiquid, ” she is unable to pay the ad valorem
taxes. (Docket Entry No. 131 at 7-8). She attaches an unsworn
affidavit in support, stating that:
• she applied for the Harris County Appraisal District
Deferral Program, which would defer ad valorem taxes on the
Kirby Condominium until her death or sale of the property;
• the Kirby Condominium is valued in excess of $2.6
million, which is more than the $1, 404, 000 the ...