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Cargill, Inc. v. WDS, Inc.

United States District Court, W.D. North Carolina, Charlotte Division

July 27, 2018



          Frank D. Whitney Chief United States District Judge.

         THIS MATTER is before the Court on Jonathan D. Feit of James, McElroy & Diehl, P.A.'s Motion to Withdraw or Dismiss this Court's Order to Show Cause (the “Motion”). (Doc. No. 445). This Court issued an Order to Show Cause on June 22, 2018, ordering Mr. Feit to show cause and appear before the Court on July 9, 2018. (Doc. No. 432). Mr. Feit appeared at the July 9, 2018 show cause hearing as ordered by the Court. Following this hearing, where Mr. Feit had a full opportunity to respond and be heard, Mr. Feit filed this Motion on July 13, 2018. (Doc. No. 445). In the exercise of its discretion, the Court considers Mr. Feit's Motion despite its filing after the show cause hearing.

         I. BACKGROUND[1]

         On January 22, 2018, after a seven day trial, the jury found Defendants WDS, Inc., Jennifer Maier, and Brian Ewert liable to Plaintiffs Cargill, Inc. and Cargill Meat Solutions, Corp. (“Cargill”) for several claims and found for each of the claims that Cargill was entitled to recover $35, 177, 269. (Doc. No. 314). In its Order addressing Defendants' post-trial motions under Federal Rules of Civil Procedure 50(b) and 59(a), the Court allowed judgment on the verdict on all claims. (Doc. No. 366). Claims against Brian Ewert included conversion, fraud, conspiracy to defraud Cargill or engage in commercial bribery that damaged Cargill, violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) § 1962(a), (c), and (d), and violation of the Unfair and Deceptive Trade Practices Act. (Doc. No. 366). The resulting amended judgment against all Defendants, reflecting trebled/threefold damages, pre-judgment interest, attorneys' fees, and taxable costs, totals $111, 173, 491.51. (Doc. No. 366). Eventually, a writ of execution against Brian Ewert was entered on April 12, 2018. (Doc. No. 373). Cargill filed a Motion to Charge Interests of Judgment Debtor Brian Ewert on April 13, 2018. (Doc. No. 375).

         In addition to prior correspondences with subject lines referencing “Ewert” and “Cargill, ” on April 28, 2018, C. Richard Rayburn, Jr. of Rayburn Cooper & Durham, P.A., emailed Ed Hinson of James, McElroy & Diehl, P.A. (Doc. No. 443-2). Rayburn Cooper and Durham P.A., as clarified in later emails to counsel for Cargill, represents entities owned by Brian Ewert, including DLP, RFS, RTL, and DLP Holdings. (Doc. No. 443-4). Mr. Hinson and Mr. Feit, the subject of this Court's Show Cause Order, work for the same firm, James, McElroy & Diehl, P.A. The April 28, 2018 email had the subject “Tracy Ewert.” (Doc. No. 443-2 at 4). Tracy Ewert is Brian Ewert's wife. The April 28, 2018 email stated:

I have heard from my client that everyone is scrambling to come up with the retainer and have you in for Tracey ASAP.

         Rick (Doc. No. 443-2 at 4).

         On April 30, 2018, the Court granted in part and denied in part the Motion to Charge Interests of Judgment Debtor Brian Ewert. (Doc. No. 395). The Court's April 30, 2018 Order addressed Plaintiffs' application for an order charging the limited liability company and partnership interests held by Judgment Debtor Brian Ewert with payment of the judgment and post-judgment interest (the “Charging Order”). This Court held:

Ewert's ownership interests in the NC Entities are subject to the entry of a charging order under N.C. Gen. Stat. §§ 57D-5-03 and 59-703. Plaintiffs shall have the rights of an assignee of such interests, namely, the right to receive the distributions and allocations or any other payment obligation to Ewert to which Ewert becomes entitled based on his ownership interest in a NC entity.

(Doc. No. 395 at 2). The Court then ordered, adjudged, and decreed:

2. Ewert's ownership interests in ODDS, LLC; DLP, LLC (or any iteration of DLP, including, without limitation, “Diverse Label Printing” and “DLP Distributions”); DLP Holdings, LLC; Jet Me Around, LLC (or any iteration of the same, including, without limitation, “JMA, LLC”); B-Pak Manufacturing Solutions, LLC; Refrigerated Trucking & Logistics, LLC; WDS Canada, LLC; WDS Laundry Services, LLC; or TBE, LLC are charged with payment of the Judgment, including post-judgment interest.
4. Each NC Entity shall pay directly to Plaintiffs all distributions, allocations, dividends, or payments owing to Ewert by such NC Entity in satisfaction of the Judgment until the Judgment is satisfied or further Order of the Court.
6. Ewert is enjoined and prohibited from circumventing the terms or purposes of this Order.

(Doc. No. 395 at 2- 3).

         In an email dated April 30, 2018, Mr. Rayburn forwarded to Mr. Hinson an email from counsel for Cargill. The forwarded email had an attachment entitled “Charging Order.pdf.” The body of the forwarded email stated:

Attached is an order Judge Whitney entered today directing various entities owned in part or in whole by Brian Ewert, including DLP, to make all distributions allocations, dividends and payments owing to Ewert to Cargill, Inc. and Cargill Meat Solutions, Corp.
Can you let us know which of these entities you represent?
Thank you, Jane Maschka

(Doc. No. 443-2 at 7).

         On May 7, 2018, a Salary Advance Promissory Note in the amount of $20, 000 was signed by Tracy Ewert. (Doc. No. 448-3 at 2). The Note states “the undersigned promises to pay DIVERSE LABEL PRINTING, LLC or order, the principal sum of TWENTY THOUSAND AND NO/100 DOLLARS ($20, 000.00), with interest at the rate of two and eighteen hundredths per cent (2.18%) per annum, accrued annually[.]” (Doc. No. 448-3 at 2). The Note indicates payments “shall be withheld from the maker's salary paycheck for a total of seventy-nine bi-weekly pay periods[.]” (Doc. No. 448-3 at 2). DLP's bank statement reflects, a wire out of $20, 000.000 with the description of “BNF JAMES MCELROY AND DIEHL;REF TRACY EWERT” on May 8, 2018. (Doc. No. 448-4 at 5).

         In an email dated May 8, 2018, Mr. Feit of James, McElroy & Diehl, P.A. emailed Mr. Rayburn stating:

I hope you are well. I was hoping you would have some time to have a chat about the Ewert matter(s). Thanks.

(Doc. No. 443-2 at 11). The $20, 000 Note was marked as satisfied May 9, 2018. (Doc. No. 448-3 at 2).

         In May 2018, Tracy Ewert retained Mr. Feit to represent her in a domestic case against her husband, Brian Ewert. (Doc. No. 445-7 at 1). On May 9, 2018, Raboteau T. Wilder, Jr. of Terpening Wilder Law appeared on behalf of Brian Ewert in this proceeding (Doc. No. 406) and filed a response to Cargill's Motion for Issuance of An Arrest Warrant and Injunctive Relief Against Defendant Brian Ewert, Diverse Label Printing, LLC, ODDS, LLC, Resnex Mfg., Inc., DLP Holdings, LLC, Refrigerated Trucking & Logistics, LLC, Jet Me Around LLC, B-Pak Manufacturing Solutions, LLC, RFS, Inc., H. Vaughn Ramsey, as Trustee of the Brian C. Ewert Irrevocable Trust, and Brian Ewert, as Trustee of the Brian C. Ewert Revocable Trust (Doc. No. 407).

         On May 16, 2018, but effective May 1, 2018, Diverse Label Printing, LLC (“DLP”) and Brian Ewert executed an employment agreement. (Doc. No. 443-3 at 1). The employment agreement states:

During the Employment Period, as compensation for the services rendered by Employee to Company, Company will pay to Employee compensation of $50, 000.00/month less federal and state income tax withholding and other customary employee deductions as required by law, payable in accordance with Company's customary payroll practices.

(Doc. No. 443-3 at 1).

         Also, on May 16, 2018, Mr. Feit on behalf of Tracy Ewert filed a Verified Complaint in Mecklenburg County against Brian Ewert, ODDS, LLC, DLP Holdings, LLC, RFS, Inc., Refrigerated Trucking and Logistics, LLC, Jet Me Around, LLC, Diverse Label Printing, LLC, WDS, Inc., B-Pak Manufacturing Solutions, LLC, WDS Canada, LLC, WDS Laundry Services LLC, and TBE LLC (the “Complaint”). (Doc. Nos. 442-1, 445-2, 445-8). This state court case was assigned docket number 18-CVD-9391. (Doc. Nos. 442-1, 445-2). Tracy Ewert, alleging a separation date of April 17, 2018, sought postseparation support, alimony, child support, child custody, equitable distribution, and injunctive relief in the Complaint. (Doc. Nos. 442-1, 445-2, 445-7). The Complaint had three exhibits: the jury's verdict in this case, the initial amended judgment from this case, and Tracy and Brian Ewert's premarital agreement. (Doc. No. 442-1, 445-2).

         Relying on Chapter 7A's delegation of authority to district courts on domestic claims, Mr. Feit sought injunctive relief for his client under N.C. Gen. Stat. 50-20(i) and N.C. Gen. Stat. 1A-1, Rule 65 in the district court division of North Carolina's General Court of Justice. (Doc. No. 445-7 at 2). Mr. Feit, on behalf of Tracy Ewert, also moved and obtained an ex parte temporary restraining order before the Honorable Christy T. Mann. (Doc. No. 445-7 at 2; Doc. No. 445-8 at 2). The May 16, 2018 Temporary Restraining Order (“TRO”) entered by Judge Mann (“TRO”) held:

Pending further Order of this Court, Defendant ODDS, LLC; DLP Holdings, LLC; RFS, Inc.; Refrigerated Trucking and Logistics, LLC; Jet Me Around, LLC; Diverse Label Printing, LLC; WDS, Inc.; B-Pak Manufacturing Solutions, LLC; WDS Canada, LLC; WDS Laundry Services LLC; and TBE LLC shall not make any distributions to Defendant/Father; Cargill, Inc. and/or Cargill Meat Solutions, Corp.; or any other creditor.

(Doc. Nos. 429-1, 445-4).

         Benjamin E. Shook of Rayburn Cooper & Durham, P.A. sent a letter to Mr. Feit on May 25, 2018. He stated in the letter:

As you are aware, my firm represents Diverse Label Printing, LLC, DLP Holdings, LLC, Refrigerated Trucking & Logistics, LLC, and RFS, Inc. with respect to certain business matters. I have reviewed the Ex Parte Temporary Restraining Order as it relates to my clients. As we discussed, we interpret and understand paragraph 2 of the decretal portion on page 3 of the Order to mean that the referenced entities, including my clients, are enjoined from making any distributions to Mr. Ewert on account of his ownership in such entity. In addition, we interpret the Order to prohibit any distribution or other payment or transfer of assets (on account of a charging order or otherwise) to Cargill, Inc. and/or Cargill Meat Solutions, Corp. or any other creditor where such distributions payments, or transfers would be outside the ordinary course of business.
Based on the above interpretation, we do not believe the regular salary payments to Mr. Ewert and regular payments to creditors and others made in the ordinary course of business are prohibited or enjoined by this Order. Please confirm that this is your understanding as well.

(Doc. No. 443-2 at 14).

         Mr. Feit responded:

Dear Ben, I have your letter of May 25 and I agree with your interpretation of the Ex Parte ...

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