LUIS MARTINEZ v. MARILU H. REGA and ANA A. REYES.

In the underlying action pertinent to this complaint for civil contempt, the plaintiff Luis Martinez seeks reformation of a deed by which he conveyed an undivided fee interest in his property at 5 South Elm Street, Lynn, (the "Property") to the defendant Ana A. Reyes and himself as joint tenants. Plaintiff's claim in the underlying action is that the defendant Reyes and her daughter, defendant Marilu H. Rega, defrauded him into conveying an interest in the Property, on the basis of misrepresentations that they could help him achieve a modification of his outstanding mortgage loan, which was then in default, but only if he conveyed an interest in the Property to Ms. Reyes. The defendants, although served, did not attend an initial hearing on the plaintiff's motion for a preliminary injunction held on July 28, 2016. Following the July 28, 2016 hearing, I issued a preliminary injunction that provided in part as follows:

It is…ORDERED that, during the pendency of this action, or until further order of the court, the defendants Marilu Rega and Ana A. Reyes, their agents, representatives, employees, contractors, and others acting in concert with them or otherwise having actual knowledge of this Order, are hereby ENJOINED and RESTRAINED from entering upon 5 South Elm Street, Lynn, Essex County, Massachusetts, collecting rents for any part of said property, and from exercising any rights to ownership thereof, and are further ENJOINED and RESTRAINED from interfering with plaintiff Luis Martinez's exercise of ownership rights to 5 South Elm Street, Lynn, Essex County, Massachusetts, including without limitation, his entry into and maintenance of any part of said property, and other rights of ownership consistent with this Order.

Following a second hearing, held on August 17, 2016 at the request of the defendants, attended by defendant Marilu H. Rega but not by her mother, defendant Ana A. Reyes, I issued a Further Order on Plaintiff's Motion for Preliminary Injunction granting the same relief (the two orders are hereinafter collectively referred to as the "Order").

On January 26, 2017, the plaintiff Luis Martinez filed a complaint for civil contempt in accordance with Mass. R. Civ. P. 65.3, alleging that Rega and Reyes, as well as the contempt complaint defendant Lynn Housing Authority (the "Authority") violated the preliminary injunction as issued by the court on July 28, 2016 and August 17, 2016. The gravamen of the complaint for civil contempt is that the defendants continued to collect rent for the subject property from the tenant Ahmed Ghaled Al Rubaye ("Rubaye"), and continued to collect rent subsidy payments from the Authority despite the clear prohibition in the Order against them doing so. The Authority was alleged to have continued making rent subsidy payments to Reyes despite having actual knowledge of the Order. Following the issuance of contempt summonses to the defendants and to the Authority, I held an initial hearing as required by Mass. R. Civ. P. 65.3 and scheduled a trial on the merits of the complaint for civil contempt. [Note 1] Both defendant Rega and defendant Reyes failed to appear for the rescheduled trial on April 19, 2017. As defendant Rega notified the court at that time in writing that she was the petitioner in a pending bankruptcy case, the action was stayed as to her upon confirmation of the pending bankruptcy. The trial went forward with respect to defendant Reyes and the Authority. For the reasons stated below, following trial I find and rule that Reyes and the Authority are in contempt of the Order.

FACTS

Based on the facts stipulated by the parties, the documentary and testimonial evidence admitted at trial, and my assessment as the trier of fact of the credibility, weight, and inferences reasonably to be drawn from the evidence admitted at trial, I make factual findings as follows:

1. On July 28, 2016 and again on August 17, 2016, the court issued preliminary injunctive relief in the underlying action as follows: "It is…ORDERED that, during the pendency of this action, or until further order of the court, the defendants Marilu Rega and Ana A. Reyes, their agents, representatives, employees, contractors, and others acting in concert with them or otherwise having actual knowledge of this Order, are hereby ENJOINED and RESTRAINED from entering upon 5 South Elm Street, Lynn, Essex County, Massachusetts, collecting rents for any part of said property, and from exercising any rights to ownership thereof, and are further ENJOINED and RESTRAINED from interfering with plaintiff Luis Martinez's exercise of ownership rights to 5 South Elm Street, Lynn, Essex County, Massachusetts, including without limitation, his entry into and maintenance of any part of said property, and other rights of ownership consistent with this Order."

2. The defendant Ana A. Reyes had been properly served in this action and was bound by the Order.

3. Notwithstanding the Order, Reyes continued to collect rent from Ahmed Ghaled Al Rubaye, a tenant at the Property. [Note 2] The rent for Rubaye's apartment at the Property was $2,700.00 per month, of which he was to pay a portion, and the Authority was to pay a portion pursuant to a rent subsidy voucher. For a part of July, 2016, and from August, 2016 through January, 2017, Rubaye paid his portion of the rent to Reyes and Rega by delivering the rent personally to them at 120 Arnold Street, Revere.

4. On an undetermined date in August, 2016, the plaintiff Luis Martinez brought a copy of the Order to the Authority. He delivered the copy of the Order to Rom K. Nop, a case representative at the Authority who had been assigned as Rubaye's case worker. She took a copy of the Order and told Martinez that she would check with her manager about what to do with respect to the injunction. She told her manager, David J. Moore, that there was a court dispute concerning the Property, but does not remember if she gave him a copy of the Order.

5. The Authority paid Reyes, as the "landlord/owner" of the Property, a "rent subsidy" for Rubaye's apartment for part of July, for August, and for the month of September, 2016, but on September 22, 2016, Nop sent Reyes a letter indicating that the payment for September had been made in error because Reyes had not yet signed a Massachusetts Rental Voucher Program Lease ("MRVP Lease") and a Massachusetts Rental Voucher Program Payment Contract ("Voucher Contract"). Reyes was advised to come in to the Authority to sign the MRVP Lease and the Voucher Contract with the Authority concerning Rubaye's tenancy and the Authority's agreement to pay her a rent subsidy, or to return the September payment. [Note 3] The Authority suspended any further payments pending the execution of these documents.

6. On September 28, 2016, Martinez's counsel sent an e-mail to Moore, Nop's supervisor, stating in part, "Attached is an order from Land Court as to preliminary injunction prohibiting Rega/Reyes from collecting rent from tenants of 5 So. Elm St., Lynn MA & noting no interference with Mr. Martinez' ownership rights." A copy of the Order was attached to the e-mail.

7. Moore, who is a law school graduate but not a practicing attorney, read the Order, but concluded that, as the Authority was paying Reyes a "rent subsidy" and not "rent", the Order did not preclude the Authority from continuing to make payments to Reyes.

8. Reyes signed and sent a letter dated October 11, 2016 to the Authority, which the Authority received that same day. In the letter, signed by "Ana Reyes", representing herself as "Landlord/Owner" of the Property, Reyes purported to inform the Authority that "I Ana Reyes continue [to] be the Owner of Unit #2 on 5 S. Elm Street, Lynn, Ma 01905," informed the Authority that the Order was only issued because she was not present in court, and that the Order "DO NOT AUTHORIZED" [sic] the plaintiff to collect rent from Rubaye; the letter further informed the Authority that Reyes planned to inform the court that the plaintiff was trying to collect rent from Rubaye and the Authority "without authorization from me and/or the Court."

9. On November 30, 2016, Reyes came in to the Authority's offices and met with Nop, and signed both the MRVP Lease and the Voucher Contract. By signing the MRVP Lease and the Voucher Contract, Reyes represented herself to be the "owner" of the Property, and represented that she was entitled to receive rent payments from Rubaye and rent subsidy payments from the Authority. [Note 4]

10. Upon receiving the signed MRVP Lease and Voucher Contract from Reyes, Nop "unfroze" the rent subsidy account, and released rent subsidy payments to Reyes for the months of October and November, and subsequently paid Reyes a rent subsidy for December, 2016 and January, 2017. The signing of the documents also meant that the Authority was no longer seeking the return of the September, 2016 payment or other earlier payments.

11. The total amount of payments made by the Authority to Reyes as "owner" of the Property for rent subsidies attributable to Rubaye's tenancy at the Property from July, 2016 through January, 2017 was $11,033.00.

12. In addition to the $11,033.00 in payments made by the Authority to Reyes, Rubaye made rent payments to Reyes from July, 2016 through January, 2017 in the total amount of $6,204.00.

DISCUSSION

"In order to constitute contempt, there must be, in addition to a clear and unequivocal command, an 'equally clear and undoubted disobedience.'" Demoulas v. Demoulas Super Markets, Inc., 424 Mass. 501 , 567 (1997), quoting in part Nickerson v. Dowd, 342 Mass. 462 , 464 (1961). "The purpose of civil contempt proceedings is remedial, and the formulation of the remedy is within the judge's discretion." Eldim, Inc. v. Mullen, 47 Mass. App. Ct. 125 , 129 (1999).

The preliminary injunction issued by the court in July, 2016, and again in August, 2016, was explicit, unequivocal, and clear. Both Rega and Reyes were enjoined from exercising any rights of ownership with respect to the Property, and in particular they were prohibited from collecting rent or interfering with the plaintiff's ability to collect rent. They were to refrain "from exercising any rights to ownership" of the Property, and "from interfering with plaintiff Luis Martinez's exercise of ownership rights." Also bound were those with "actual knowledge" of the Order. As of August, 2016, this included the Authority.

For the reasons discussed below, I find and rule that the evidence presented in this action, with respect to both Reyes and the Authority, constitutes "clear and convincing evidence of disobedience of a clear and unequivocal command." In re Birchall, 454 Mass. 837 , 853 (2009). Violation of the Preliminary Injunction by Reyes.

Notwithstanding the "clear and unequivocal command" of the Order, Reyes not only continued to collect rent from Rubaye and to collect "rent subsidies" from the Authority, she continued to represent herself to both Rubaye and the Authority as the "landlord/owner" of the Property, and she actively encouraged the Authority to disobey the Order so as to enable her to continue to receive rent that the Order explicitly prohibited her from receiving. She further represented to the Authority that the plaintiff had no right to collect rent. This conduct was not only contumacious, it was outrageously so. Her October 11, 2016 letter to the Authority makes clear that she understood what the Order required, and not only sought to violate it herself, but sought to convince others to violate it, for the benefit of herself and her daughter. Accordingly, Reyes will be ordered to remit to the plaintiff all amounts collected by her as rent from Rubaye or rent subsidies from the Authority.

Violation of the Preliminary Injunction by the Lynn Housing Authority.

The Authority, although not a party to the underlying action, is equally liable with Reyes if, with actual knowledge of the court's Order, it aided Reyes in disobeying the Order. "A person who was not a party to an action in which an order was entered may in certain circumstances be found to be in contempt of that order. 'Any person ... though not a party to the cause, who counsels or aids a party in disobeying a decree, is himself punishable.'" Bird v. Capital Site Management Co., 423 Mass. 172 , 178 (1996), quoting in part Commonwealth v. Hudson, 315 Mass. 335 , 347 (1943).

The Authority made payments to Reyes for one half of the July rent subsidy payment, in the amount of $1,037.00, and $2,073.00 for each of August and September, in a total amount of $5,183.00, before it froze those payments, not because it sought to comply with the Order, but because Reyes had not yet signed the appropriate paperwork with the Authority to be signed by the owner of the Property. Nop informed Reyes in September that the September rent subsidy had been paid in error and requested that it (but inexplicably, not the July or August payments) be returned pending the signing of the MRVP Lease and the Voucher Contract. At some point in August, Martinez delivered a copy of the Order to Nop, and although it is unclear whether she understood what he was delivering, that does not excuse the Authority from failing to obey the Order. She testified that she "only read the first page, a little bit." Failure to read a contract provision or a court order does not free one from its obligations. See Miller v. Cotter, 448 Mass. 671 , 680 (2007). Additional actual notice to the Authority was provided on September 28, 2016, when Nop's supervisor Moore received an e-mail from the plaintiff's attorney stating in part, "Attached is order from Land Court as to preliminary injunction prohibiting Rega/Reyes from collecting rent from tenants of 5 So. Elm St., Lynn MA & noting no interference with Mr. Martinez' ownership rights." A copy of the Order was attached to the e-mail. Moore admits he received the e-mail and the attached Order and decided not to do anything about it, based on his conclusion that the prohibition against payment of rent to Reyes did not apply to the Authority's payment of "rent subsidies" to Reyes. This was a deliberate decision to disobey the Order.

It has long been a basic principle of our law that "[i]t is not for [one subject to an order of the court] to decide whether the…order was valid." Wireless Specialty Apparatus Co. v. Priess, 246 Mass. 274 , 277 (1923). Those subject to an injunction may seek its modification or may appeal it, but must continue to obey its commands while it remains in force. New England Novelty Co. v. Sandberg, 315 Mass. 739 , 753 (1944). Notwithstanding the clarity of the Order on this point, to the extent Moore was unsure whether the term "rent" in the Order covered the rent subsidies payable by the Authority, "if [he] saw the decree as ambiguous on the point in question, he could have sought clarification from the court before he engaged in the questionable conduct." Demoulas v. Demoulas Super Markets, Inc., supra, 424 Mass. at 569.

Following Moore's purposeful inaction, and following the signing of the MRVP Lease and the Voucher Contract by Reyes on November 30, 2017, the Authority, accepting Reyes as the owner of the Property, allowed Reyes to keep past payments made in error, released payments for October and November, 2016, and made new payments for December, 2016 and January, 2017.

I find and rule that the delivery of the Order to Nop in August was actual notice to the Authority of the existence of the Order, and that even if it had not been such notice, the delivery of the Order to Moore on September 28, 2017 further put the Authority on actual notice of the Order. Payments made to Reyes once the Authority had notice of the Order, which include all payments but the one half month's payment for July, 2016, and possibly the August payment, constituted a clear and unambiguous violation of a clear and unequivocal order. The Authority's argument that there is a distinction to be made between "rent" and "rent subsidies" in the context of the Authority's obligation to obey the Order of this court is not a convincing one. As the MRVP Lease and the Voucher Contract make clear, the goal of these documents is to see that between the tenant's payment and the Authority's subsidy, a landlord is paid a fair market rent, so as to encourage the landlord to rent to qualified applicants for the subsidy. "Rent" is customarily defined as, "Consideration paid, usu[ally] periodically, for the use or occupancy of property." Black's Law Dictionary (10th ed. 2014). From the landlord's perspective, what is received from the Authority is rent: the Authority pays money directly to the landlord, and regardless of its source, such a payment to the landlord for the purpose of satisfying the tenant's residential lease obligations must unavoidably be considered "rent" as that term is universally defined and understood. From the tenant's perspective, the Authority is paying a subsidy to assist the tenant with the tenant's rent obligation, but its objective function of compensating the landlord for the tenant's occupancy remains the same. To suggest that the payments to Reyes were not rent covered by the Order is to split hairs that are not to be found in the Order, and is a deliberate refusal to acknowledge both the true and obvious nature of the payments and the broad coverage of the Order.

Furthermore, by allowing Reyes to sign the MRVP Lease and the Voucher Contract, thereby recognizing her as the "landlord/owner," the Authority aided and abetted her in violating the Order by assisting her in her efforts to continue to act as owner of the property. The two payments made before the Authority had actual notice of the order in August are just as tainted as the later payments, because the Authority, even once it had actual notice, ratified these early payments by rescinding its direction to Reyes to return the payments made in error. By telling Reyes that it no longer sought the return of the payments made to her before she signed the MRVP Lease and the Voucher Contract, the Authority ratified her contumacious holding out of herself as "owner" of the Property, ratified its earlier payments to her as "landlord/owner", and thereby further violated the Order. The Authority acknowledges that it was not only Reyes' receipt of the rent payments that violated the Order, but also her retention of those payments. The Authority acknowledges this, but does so without owning up to its own responsibility for aiding Reyes in her conduct by enabling and ratifying her retention of the improper payments and her efforts to continue to act as the "owner" of the Property despite the explicit prohibition in the Order against her doing so.

"The purpose of civil contempt proceedings is remedial, and the formulation of the remedy is within the judge's discretion." Eldim, Inc. v. Mullen, supra, 47 Mass. App. Ct. at 129. The remedial purpose of civil contempt allows for the payment of damages: "[I]t is settled law that 'criminal contempt sanctions are punitive in nature and are imposed to vindicate the authority of the court. On the other hand, sanctions in civil contempt proceedings may be employed 'for either or both of two purposes: to coerce the defendant into compliance with the court's order, and to compensate the complainant for losses sustained.'" Labor Rels. Comm'n v. Salem Teachers Union, Local 1258, 46 Mass. App. Ct. 431 , 435 (1999), quoting Mahoney v. Commonwealth, 415 Mass. 278 , 284 (1993). Accordingly, in order to compensate the plaintiff for the damages he has incurred as a result of the Authority's violation of the preliminary injunction, the Authority is required to remit to the plaintiff the full amount of $11,033.00 paid by the Authority to Reyes in violation of the Order.

Attorneys' Fees.

"As matter of law, the awarding of attorney's fees and costs is an appropriate element of a successful civil contempt proceeding…This award is proper regardless of whether the court has considered the violation of the underlying order to be wilful, and it is within the court's discretion to formulate a remedy in a civil contempt proceeding." Demoulas v. Demoulas Super Mkts., supra, 424 Mass. at 571. "[T]here is no question that counsel fees and costs are allowable in determining a compensatory fine payable to the prevailing party in a civil contempt proceeding…" Giannetti v. Thomas, 32 Mass. App. Ct. 960 , 961 (1992), The court's task in determining attorneys' fees to be awarded was generally stated in Linthicum v. Archambault, 379 Mass. 381 , 388 (1979), overruled on other grounds, Knapp Shoes, Inc. v. Sylvania Shoe Manufacturing Corp., 418 Mass. 737 (1994): "While the amount of a reasonable attorney's fee is largely discretionary, the judge on remand should consider the nature of the case and the issues presented, the time and labor required, the amount of damages involved, the result obtained, the experience, reputation and ability of the attorney, the usual price charged for similar services by other attorneys in the same area, and the amount of awards in similar cases." Where the judge awarding the attorneys' fees is the judge who presided over the underlying action, and where the attorneys' fees are not being awarded on the basis of a contractual relationship between the parties, there is no need for the court to hold a separate evidentiary hearing with respect to the award of attorneys' fees. See Heller v. Silverbranch Construction Corp., 376 Mass. 621 , 629-630 (1978).

Plaintiff Martinez has submitted a request for award of attorneys' fees in the amount of $16,132.50, plus $704.55 in costs, supported by the affidavit of plaintiff's counsel and by counsel's contemporaneous time records. Counsel, who practices in the metropolitan Boston area and has been practicing since 1998, has billed his time at a billing rate of $225 per hour, which I find to be a below-market rate and which I find to be reasonable under all of the circumstances of this case. I further find that while the issues in this case are not novel, the obstreperous conduct of the individual defendants, and the "head-in-the-sand" conduct of the Authority until present counsel for the Authority became involved in January of this year, required plaintiff's counsel to be especially tenacious and diligent in asserting the claims of his client. I find that he ably represented his client in presenting those claims, and in obtaining a desirable result in the contempt portion of this action.

I find the amount of time spent on this matter by plaintiff's counsel to be generally reasonable, and given my conclusion that the conduct of the Authority aided and abetted Reyes in her contumacious conduct, there is no reasonable basis for allocating the award of attorneys' fees between Reyes and the Authority; their responsibility for attorneys' fees is properly joint and several. Accordingly, I decline to parse the itemized billing records submitted by plaintiff's counsel to determine which items are attributable to the conduct of Reyes and Rega, and which only to the conduct of the Authority. Further, I do not find the "block billing" by date utilized by plaintiff's counsel to be a deterrent to assessing the appropriateness of the time spent, since all of the items listed for each day are clearly related to the present matter, and the total time for each day appears to me to be reasonable and appropriate. Additionally, with one exception, I find the disbursements for which plaintiff seeks reimbursement to be appropriate and reasonable. In particular, the significant expenses for a process server are to my knowledge attributable to plaintiff's efforts to obtain in-hand service of the complaint for contempt, and are therefore reasonable. The only expense item that is not properly attributable to the contempt action is the "ADR-REBA" mediation-related disbursement of $75.00. This expense will be deducted from the award.

CONCLUSION

Having found that there was clear and undoubted disobedience, by both Reyes and the Authority, of a clear and unequivocal command, and having further found that the Authority had actual notice of the Order, I find and rule that Reyes is liable in contempt to the plaintiff for $17,237.00 ($6,204.00 collected from Rubaye, plus $11,033.00 received from the Authority), plus $16,762.05 in attorneys' fees and costs ($16,132.50 in attorneys' fees and $649.55 in costs); and the Lynn Housing Authority is liable to the plaintiff for $11,033.00, plus $16,762.05 in attorneys' fees and costs. The liability of Reyes and the Authority shall be joint and several, with rights of contribution.

Judgment will issue accordingly.