Reliance on Advice of Counsel Not a Defense to Contempt Motion for Failure to Comply With Court Order

On July 12, 2024, Justice Andrea Masley of the New York County Commercial Division issued a decision in TGT, LLC v. Avenues World Holdings, LLC, Index No. 156744/2020, holding a respondent in contempt for failure to comply with a court order requiring post-judgment document production, and rejecting the respondent's claim that he should not be held in contempt because he was relying on the advice of counsel, explaining:

Even accepting Richard’s excuse, that “[he] was advised by counsel . . . that production of documents relating to assets owned by the Trust was not required under the [2022 Decision]” (NYSCEF 170, Richard aff, response to ¶ 16), this does not explain his failure to produce the agreements forming the Trusts. The agreements were between Joseph, as grantor, and Richard, as trustee, and assigned to the trusts Joseph’s interest in various assets. (See index No. 153682/2023, NYSCEF 5 [the J4 Trust Agreement, executed on June 22, 2020]; index No. 153682/2023, NYSCEF 6 [the 4JS Trust Agreement, executed on February 23, 2021].) The 2022 Decision unequivocally requires their production under the demand for “any and all agreements, or drafts thereof, between Richard Meli and Advance Entertainment, Meli, and/or a Meli Entity.” (NYSCEF 99, 2022 Decision, Demand 21.)

In any event, Richard does not provide any legal authority for the proposition that he may escape being held in contempt by demonstrating reliance on the advice of counsel. This may be because “there is no rule or practice which absolutely protects a party in a contempt proceeding from an untenable position taken under advice of counsel.” (Matter of Howard, 201 App Div 123, 124 [1st Dept 1922].) Nor is the court inclined to exercise its discretion to relieve respondent of responsibility, as the effect of counsel’s mistake is not jail time for Richard and, moreover, as will be discussed in more detail, his noncompliance is calculated. (See contra id. at 125-126 [finding that “substantial justice and a wise exercise of the discretion vested in the court require[d] [it] to relieve the client, where the effect of the counsel’s mistake may [have] be[en] to keep her in jail indefinitely by reason of her inability to comply with the order”].)

While the court here holds that reliance on advice of counsel is not a defense to a motion for contempt for failure to comply with a court order anyway, it's pretty clear that the court didn't really believe reliance on advice of counsel (if any) was a material factor in the noncompliance here. If there had been a good-faith dispute about what the court's order required, the outcome could have certainly been different. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning contempt proceedings for failure to comply with court-ordered discovery.