9 10 i 12 14 15 16 17 19 20 John R. MeDowall (WSBA # 25128) Camey Badley Spellman, P.S. 701 Fifth Avenue, Suite 3600 Seattle, WA 98104 ‘Telephone: 206-622-8020 Attomeys for ADAK Seafood, LLC ALEUT ENTERPRISE, LLC, an Alaska limited liability company-, Plaintiff, vs || ADAK SEAFOOD, LLC, a Delaware limited liability company, Defendant, | and INDEPENDENCE BANK, a Rhode Island Banking Institution, Intervenor, v, ALEUTIAN SPRAY FISHERIES, INC., a Washington corporation; PACIFIC PELAGIC GROUP, LLC, a Washington limited liability company; JOHN YOUNG, an individual; and TRIDENT SEAFOODS CORPORATION, a Washington corporation, ‘Third-Party Defendants. DEFENDANT ADAK SEAFOOD’S OPPOSITION TO PLAINTIFF'S MOTION FOR CONTEMPT AND SANCTIONS (5:10-cv-00017 RRB) ~ I [ADAOLS 0005 mb025626dh 2011-02-07 Honorable Ralph R. Beistline UNITED STATES DISTRICT COURT DISTRICT OF ALASKA (ANCHORAGE) NO. 3:10-ev-00017 RRB DEFENDANT ADAK SEAFOOD’S OPPOSITION TO PLAINTIFF'S MOTION FOR CONTEMPT AND SANCTIONSnv 10 it 12 B 4 19 20 Defendant Adak Seafood, LLC (“AS”) respectfully requests that this Court deny plaintiff Aleut’s Motion for Contempt and Sanctions. ' Plaintiff's Motion is procedurally and substantively incorrect. It is based on Federal Rule of Civil Procedure 70(c), but that rule pertains to Enforcement of Judgments for Specific Acts, and specifically the failure to comply with a judgment, i., the failure to vacate certain premises. No judgment has been entered against AS, and the Writ of Assistance entered by this Court (Dkt. 187) was entered upon stipulation with Intervenor Independence Bank, after AS willingly relinquished control of the Adak fish processing plant to the Aleuts so as not to hinder plaintiff Aleut from finding another tenant, The partial judgment entered on behalf of plaintiff Aleut at Dkt. 186 is limited solely to the issue of possession, and no other matters. Rule 70(e) would only be applicable to AS if it refused to relinquish control afier the Writ of Assistance was entered. Indeed, plaintiff's motion does not rely upon the Writ of Assistance nor Partial Judgment that were entered at Dkt Nos. 186 and 187 because they were entered by Stipulation and against no particular parties. The goal of all parties was to return the subject premises to plaintiff Aleut so it could attempt to find another tenant. As evidenced by the Motions of AS’s counsel to withdraw in the same time period, AS had no further resources. Instead plaintiff relies upon the Court's September 2, 2010 Order Establishing Conditions of Occupancy at Dkt. 123, which means plaintiff Aleut essentially concedes that Fed. R. Civ. Proc. 70 is inapplicable. Defendant AS willingly and ' Plaintiff's counsel confirmed in a conference call last week that plaintiff does not seek sanctions against AS’s counsel, although this was not clear from the Motion. In any event, sanctions against either AS or its counsel are unwarranted for the reasons stated herein, DEFENDANT ADAK SEAFOOD'S OPPOSITION TO PLAINTIFF'S MOTION FOR CONTEMPT AND SANCTIONS (3:10-cy-00017 RRB) ~ 2 -ADAO14 0005 mb28626dk 2011-02-0710 WW 12 3 14 15 16 7 cooperatively relinquished control of the plant, and has not “disobeyed” any judgment or Court Order. Given AS’s cooperation, plaintiff Aleut’s request for contempt and sanctions is frankly somewhat appalling. Plaintiff skillfully disguises its claim for damages, i¢., alleged back rent, as a “sanctions” request. It is really a claim for damages, however, which is classical factual issue that should not be awarded until a full adjudication on the merits is held. As this Court observed, whether rent was due under the lease, or was subject to defendant AS"s counterclaims and offsets due as a result of damages caused by the actions of plaintiff, is an issue to be decided by a trier of fact and not in motion practice. See Dkt. 123, p.7. The Court did not hold as a matter of law at Dkt. 123 that defendant AS actually owed the amounts claimed by Aleut, and it is improper for plaintiff to attempt to treat the Court's Order sa Final Judgment on the merits regarding plaintiff's claimed damages. Plaintiff's request for sanctions is really an end-run around a trial on the merits that should be denied. Furthermore, despite having knowledge of the Court’s Order at Dkt, 123 in September, 2010, plaintiff had agreed to accept only $100,000.00 total for minimum due rent under the lease for 2010. (See Dkt 172-2 and 172-3, Mike Grisham December ! and 2, 2010 letters, and also Declaration of Asbjo Drevik.) Plaintiff has arguably waived any amounts in excess of $100,000.00 for rent. Waiver arises from conduct evidencing the intentional relinquishment of a known right. See Milne v. Anderson, 576 P.2d 109, 112 (Alaska 1978) Plaintiff Aleut and defendant AS engaged in several months of lease amendment discussions starting in July 2010, and agreed to terms that contemplated payments of only $100,000 for DEFENDANT ADAK SEAFOOD’S OPPOSITION TO PLAINTIFF'S MOTION FOR CONTEMPT AND SANCTIONS (3:10-cv-00017 RRB) ~ 3 [ADADI4 00 mb25626 2011-02-071B 14 15 16 7 18, 19 20 rent in 2010. A basic agreement was reached in early October 2010, and one month later plaintiff Aleut presented lease amendments with significant additional terms. AS"s investors then pulled out and AS cooperatively relinquished control of the plant. For all of these reasons, sanctions also are not warranted under plaintiff's general cite to 18 U.S.C. 401(3). Defendant AS is not a “disobedient” party and actually thought it had an agreement to pay only $100,000 total then all negotiations fell apart. In reality, AS has not been able to operate the Adak plant since March 2010 because (1) plaintiff Aleut would not sell oil through its wholly owned subsidiary, and (2) the 2010 season was a complete financial disaster. (The A fishing season is when profit is made, which pays for operations throughout the rest of the year.) AS lawfully occupied the plant pursuant to the Courts Order denying Aleut’s first Motion for Writ of Assistance (Dkt. No. 45) in February 2010, and attempted negotiations for amended terms, but simply could not make it happen. Finally, it is worth noting that defendant AS sought to put the funds in question to use for the people of Adak, but plaintiff Aleut apparently refused. AS sought consent from plaintiff Aleut to use the funds held in trust at Carney Badley Spellman to pay certain wage claims. (See Ex. | to Drevik Decl.) Pl iff never responded to this reasonable requ * Plaintiff's lack of response to AS’s proposal typifies the double standard that they have applied throughout this ‘ease, not fo mention the history of the Adak plant. The Aleuts denied the existence of a lease but wanted the lease terms enforced. AS offered to pay certain rent moneys to the Aleuts in escrow, yet they refused to take the ‘money, argued non-payment as a default, and now argue they are entitled to the money they refused. Plaintiff ‘opposed withdrawal of AS’s attomey and now seek sanctions and contempt findings. Now plaintiff will not ‘agree that AS money be used to pay AS employees and Adak residents, but instead wants all sums held by AS to be used to pay themselves. It is no wonder that AS was forced out of business and the plant and Adak Island ‘wallow in solitude. DEFENDANT ADAK SEAFOOD'S OPPOSITION TO PLAINTIFF'S MOTION FOR CONTEMPT AND SANCTIONS (3:10-cv-00017 RRB) ~ 4 [ADADIS 0005 25626 2011-02-0710 W 12 B The Court should not order any amounts due for so-called back rent until a trial on the merits can be heard regarding this issue, as well as counterclaims and offsets due to defendant AS for the loss of the 2010 fishing season as a result of plaintiff Aleut’s anti-competitive and other tortious behavior. The most the Court should order is due for rent is an additional $33,000, the amount the parties agreed to for 2010 while attempting to negotiate over certain lease terms, and the Court should deny any contempt or sanctions requests because they have no legal or factual basis. DATED this 7" day of February, 2011 CARNEY BADLEY SPELLMAN, PS. By _sWohn R. McDowall John R. McDowall, WSBA No. 25128 701 Fifth Avenue, Suite 3600 Seattle, WA 98104 Phone: 206-622-8020 Email: —medowall@cameylaw.com Attorneys for ADAK Seafood, LLC DEFENDANT ADAK SEAFOOD'S OPPOSITION TO PLAINTIFF'S MOTION FOR CONTEMPT AND SANCTIONS (3:10-ev-00017 RRB) ~ 5 |ADAOLS 0005 mbo25626« 2011-02-0710 i 13 14 1s 16 7 19 20 Cettificate of Service’ I certify that on February], 2011, a copy of the foregoing was served by ECF on: Amold M, Willig, arnie@hackerwillig.com Christopher M. Mulheam, emulheam@mulheamnlawri.com Dean G, von Kallenbach, davk@ydnlaw.com Mare Gerhard Wilhelm, mwilhelm@richmondquinn.com Michael a. Grisham, grisham.michael@dorsey.com Michael R. Mills, mills. mike@dorsey.com Markos Scheer, mscheer@ydnlaw.com Jeffrey M. Feldman, feldman@frozenlaw.com Kevin M. Cuddy, cuddy@frozenlaw.com €aroline Mundy, Legal Assistant DEFENDANT ADAK SEAFOOD’S OPPOSITION TO PLAINTIFF'S MOTION FOR CONTEMPT AND SANCTIONS (3:10-2v-00017 RRB) ~ 6 ADAD14 0005 mb0256264k 2011.02.07