IME WatchDog, Inc. v. Gelardi et al

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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IME WATCHDOG, INC.,
Plaintiff,
- against -
SAFA ABDULRAHIM GELARDI, et al.,
Defendants.
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MEMORANDUM & ORDER
22-CV-1032 (PKC) (JRC)
PAMELA K. CHEN, United States District Judge:
This case began nearly four years ago as a lawsuit for misappropriation of trade secrets
between competitors in the personal injury litigation business. Since then, the case has devolved
beyond recognition into a case not about trade secrets, but about contempt and abuse of the
litigation process. For the reasons set forth below, the Court orders case-ending sanctions against
the remaining Defendants in this case.
BACKGROUND
The Court assumes the parties’ familiarity with the extensive factual and procedural history
of this case, and so only sets forth those facts relevant to this Memorandum and Order.
I. Pre-Litigation Background
In this case, Plaintiff IME Watchdog, Inc. (“Watchdog”) has sued Defendants Safa
Abdulrahim Gelardi (“Safa”), Vito Gelardi (“Vito”), IME Companions LLC (“Companions”),
Client Exam Services LLC (“CES”), and IME Management & Consulting LLC (“IME M&C”)
(collectively, “Defendants”).1
1 The corporate Defendants—Companions, CES, and IME M&C—are all unrepresented
by counsel and are therefore in default. See 28 U.S.C. § 1654; Lattanzio v. COMTA, 481 F.3d 137,
139–40 (2d Cir. 2007) (interpreting 28 U.S.C. § 1654 to require an LLC to be represented by a
licensed attorney to appear in federal court); (see also 10/30/2025 Dkt. Order (deeming
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Watchdog and Companions are competitors in the personal injury litigation business. IME
Watchdog, Inc. v. Gelardi, 732 F. Supp. 3d 224, 232 (E.D.N.Y. 2024). When a plaintiff brings a
personal injury lawsuit, the defendant in that lawsuit can obtain an independent medical
examination, or IME, of the plaintiff to evaluate their alleged injuries. Id. Both Watchdog and
Companions provide third-party services to personal injury attorneys, in which Watchdog or
Companions associates (or “observers”) accompany plaintiffs to IMEs, observe the IME, take
notes, and help plaintiffs fill out forms. Id. The observers produce reports of the IMEs for the
plaintiffs’ counsel to use in the personal injury lawsuits. Id.
Watchdog was established in May 2011 by Daniella Levi (“Levi”). Id. Companions was
established in November 2017 by Safa and Vito (together, the “Gelardis”), who are married to one
another. Id. Safa “got Companions off the ground” by using confidential materials and
information misappropriated from Watchdog. IME Watchdog, Inc., No. 22-CV-1032 (PKC)
(JRC), 2022 WL 1525486, at *3 (E.D.N.Y. May 13, 2022). More specifically, the Gelardis paid
Watchdog’s President, Adam Rosenblatt (“Rosenblatt”), to surreptitiously provide them with
Watchdog’s materials and information in or around April 2017. IME Watchdog, Inc., 732 F. Supp.
3d at 232–35, 239.
II. Prior Contempt Findings by the Court
Plaintiff Watchdog initiated this action on February 25, 2022 against Safa, Vito, and
Companions, alleging misappropriation of Watchdog’s confidential information and trade secrets,
and seeking monetary and injunctive relief. (Compl., Dkt. 1, ¶ 1.) Throughout the pendency of
this case, the Court has issued multiple temporary restraining orders (“TROs”) and preliminary
Companions to be in default)). Additionally, while other defendants were previously named in
this action, they have since been dismissed. (See Stipulation of Dismissal, Dkt. 131; 1/17/2023
Order Dismissing Parties; Stipulation of Dismissal, Dkt. 592; 9/4/2025 Order Dismissing Parties.)
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injunctions (“PIs”), along with other orders directing the parties to act or refrain from acting in
certain ways. Without detailing the extensive factual and procedural history leading to each, the
Court summarizes the relevant orders and injunctions.
A. Relevant Court Orders
1. April 2022 PI
In April 2022, the Court issued its first preliminary injunction in this case, which enjoined
Defendants from (1) using Plaintiff’s trade secrets “in any manner whatsoever,” (2) franchising
Companions, and (3) contacting Plaintiff’s current clients, employees, and agents. (See Mar. 2025
Mem. & Order (“M&O”), Dkt. 448, at 2 (quoting Apr. 2022 Inj., Dkt. 66-1, at 2).) The Court also
ordered Defendants “to return to Plaintiff all originals and copies of documents, records, and
information . . . that contain Plaintiff’s trade secrets and confidential and proprietary information,”
including “customer information.” (Id. (quoting same at 2–3).)
2. June 2022 Amended PI
In June 2022, the Court amended the portion of the injunction enjoining Defendants from
contacting Plaintiff’s current clients, employees, and agents to apply not only to Defendants but
also to “their agents, officers and employees, and all other persons and entities in active concert or
participation with them.” (Id. at 3 (quoting Am. Inj., Dkt. 80, at 2; 6/8/2022 Dkt. Order).) Also
as of that date, the Court prohibited both parties from making misleading or defamatory statements
about one another. (Id. at 2–3; Am. Inj., Dkt. 80, at 3.)2
2 Notably, the Court’s expansion of the April 2022 PI was prompted by Plaintiff’s motion
for contempt based, in part, on the Gelardis’ posting of a GoFundMe page that contained
disparaging statements seemingly about Watchdog and Levi that Plaintiff claimed were
“defamatory.” (Pl.’s Mot. for Contempt, Dkt. 79, at 2.) Although the Court did not find that the
statements met the legal definition of defamation as to Watchdog and Levi, (6/10/2022 Dkt.
Order), the Court noted that such statements were barred by the Court’s prior instruction, at the
April 2022 show cause hearing, to refrain from making statements that could be construed as
defamatory, (see Am. Inj., Dkt. 80). The Court warned Safa “that any further attempts to make
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3. March 2023 TRO and Expanded PI
On March 10, 2023, the Court issued a TRO that temporarily restrained Defendants from
operating Companions, or “any other business that unfairly competes with Plaintiff in violation of
the law,” pending a hearing on March 27, 2023. (Mar. 2023 TRO, Dkt. 156, at 2–3.) At the March
27 hearing, the Court converted the TRO into a PI that allowed Companions to resume operations
but enjoined Defendants from “providing services to all customers as to whom there is evidence
that Defendants misappropriated the customer from Plaintiff.” (4/3/2023 Dkt. Order (summarizing
ruling on the record at 3/27/2023 hearing); 3/27/2023 Min. Entry.) Those customers were listed
on a spreadsheet filed in the case under seal (the “Enjoined Customers List”), (Enjoined Customers
List, Dkt. 180-7).
4. Summary of Restrictions on Defendants’ Conduct Since April 2022
As a result of the TROs and PIs issued by the Court in this case beginning in April 2022,
Defendants have been prohibited from doing the following:
• Using Plaintiff’s trade secrets in any manner (since April 2022);
• Retaining copies of any documents containing Plaintiff’s trade secrets, including
customer information (since April 2022);
• Contacting Plaintiff’s current clients, employees, or agents (since April 2022);
statements regarding any parties in this action that can be interpreted as disparaging will result in
sanctions—whether they are ‘defamatory’ or not.” (6/10/2022 Dkt. Order.) The Court rejected
Defendants’ argument that Safa, as a layperson, “did not understand what ‘defamatory’ meant”
because “Safa Gelardi [was] represented by counsel and it is counsel’s responsibility to advise
their client regarding proper compliance with Court orders and directives.” (Id.) The Court also
rejected the argument that “Safa Gelardi’s statements [were] mere opinions,” finding instead that
had the statements “identified Watchdog or Levi in any manner, they would have been defamatory
per se.” (Id. (citing Celle v. Filipino Reporter Enter. Inc., 209 F.3d 163, 179 (2d Cir. 2000) (“A
writing which tends to disparage a person in the way of his office, profession or trade is defamatory
per se . . . .” (internal quotation marks and citation omitted))).)
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• Going through Defendants’ agents to contact Plaintiff’s current clients, employees, or
agents (since June 2022);
• Making misleading or defamatory statements about Plaintiff (since June 2022);
• Operating Companions (between March 10–27, 2023); and
• Operating Companions to provide services to customers on the Enjoined Customers
List (since March 27, 2023).
B. Defendants’ Contumacious and Otherwise Improper Conduct
Defendants have repeatedly violated the Court’s orders and injunctions, and the Court has
already found them in contempt multiple times. In particular, the Court has found that Safa
“understood the Court’s Orders very well” and took steps “to conceal her efforts to violate them,
including by making multiple successor entities and attempting to hide the related paper trails.”
(Mar. 2025 M&O, Dkt. 448, at 40.) “Indeed, Safa’s only frustration appears to be that she was not
more successful in violating this Court’s Orders.” (Id. (citing 7/29/2024 Hr’g Tr., Dkt. 437-1, at
55:14–18, 51:24–25).) Relatedly, the Court has found that Safa has directly lied to the Court while
under oath throughout this litigation. (See id. at 13 (“Throughout this lengthy, hearing-filled
lawsuit, the Court has found ‘that Safa Gelardi has repeatedly perjured herself . . . .’” (quoting IME
Watchdog, Inc., 732 F. Supp. 3d at 232 n.4)).) The Court has thus formed the opinion that Safa is
“wholly uncredible as a witness.” IME Watchdog, Inc., 732 F. Supp. 3d at 232 n.4.
1. Safa’s Contempt as to the April 2022 PI: Retaining Plaintiff’s Customer
Information
Safa violated the April 2022 PI requiring Defendants to return all of Plaintiff’s trade
secrets, including customer information. In February 2023, Safa sent Watchdog’s client list to a
third party, proving that she had kept the client list in her possession after April 2022, in
contravention of the April 2022 PI. (Mar. 2025 M&O, Dkt. 448, at 16 (citing 5/29/2024 Hr’g Tr.,
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Dkt. 355-1, at 87:1–89:16).) In March 2025, the Court found that “Safa failed to comply with the
Court’s Orders by not deleting Watchdog’s client list from her computer as of February 2023,”
(id.), and held her in contempt for this conduct, (see id. at 39–41).
2. Safa’s Contempt as to the June 2022 Expanded PI: Contacting Carlos Roa
Safa violated the June 2022 expanded PI that prohibited her from initiating contact with
Plaintiff’s employees through Defendants’ agents. In November 2022, Safa hired a private
investigator to contact and track Plaintiff’s employee, Carlos Roa. IME Watchdog, Inc., 732 F.
Supp. 3d at 236. Among other things, Safa paid the private investigator to place a GPS tracker on
Roa’s car. Id. The Court found Safa in contempt for this conduct. (Mar. 2025 M&O, Dkt. 448,
at 5 (citing Sec. Am. Inj. M&O, Dkt. 254, at 26–32; Attach. & TRO M&O, Dkt. 284, at 3 n.3).)
3. The Gelardis’ Contempt as to the March 2023 TRO: Continuing to
Operate Companions as CES
After the March 10, 2023 TRO went into effect, preventing Defendants from operating
Companions, the Gelardis went through Safa’s nephew and a family friend to create CES, a
Companions copycat using the “exact same” business model and client list as Companions.
(Mar. 2025 M&O, Dkt. 448, at 4 (quoting 3/27/2023 Hr’g Tr., Dkt. 199, at 97–100, 106, 114–15,
118).) Based on an evidentiary hearing held on March 27, 2023, the Court determined that the
creation of CES was “an effort to end run the condition of the [Court’s prior order],” and found
that Defendants had engaged in “contemptuous,” “contumacious conduct.” (Id. (quoting same).)
As the Court stated on the record, “[i]t’s clear . . . that it was [Safa] continuing [Companions]
under a different name and using family members or a family member and a friend to perpetrate
what I consider quite frankly a fraud on this court and very, very disturbing.” (3/27/2023 Hr’g Tr.,
Dkt. 199, at 120:17–20.) The Court issued a written decision, dated October 20, 2023,
memorializing its finding that the Gelardis and Companions were in contempt for starting or
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helping to start CES in violation of the March 2023 TRO. (Mar. 2025 M&O, Dkt. 448, at 5 (citing
Sec. Am. Inj. M&O, Dkt. 254, at 26–32; Attach. & TRO M&O, Dkt. 284, at 3 n.3).)3 Despite
denying this fact at the March 27, 2023 hearing, Safa later admitted that she had, in fact, “helped
create” CES “for the purpose of [evading] the TRO.” (See Defs.’ Final Resp. to Order on Contempt
& Sanctions (“Third Opp’n”), Dkt. 605, at ECF4 1, 54.)
4. Safa’s Failed Effort to Violate the March 2023 TRO: Attempting to
Continue Operating Companions as Accompanied Exam Services
Three days after the Court issued the March 2023 TRO, Safa’s brother purchased the
domain name for a company called “Accompanied Exam Services” (“AES”). (Mar. 2025 M&O,
Dkt. 448, at 15 (quoting 7/29/2024 Hr’g Tr., Dkt. 437-1, at 45:14–48:3).) Safa initially lied to the
Court about her involvement with AES, testifying under oath at a contempt hearing on May 29,
2024 that she had “heard of” a company called Accompanied Exam Services, but was “not familiar
with who they [were].” (Id. at 14 (quoting 5/29/2024 Hr’g Tr., Dkt. 355-1, at 64:3–5).) Even after
being confronted with an email she had sent three days after the March 10, 2023 TRO, explaining
to a customer that Companions was “not allowed to service [their] law firm anymore” and
“recommend[ed]” that the customer use “Accompanied Exams,” (see id. at 14 (citation omitted)),
Safa again denied owning or operating AES, (id. at 14 (citing 5/29/2024 Hr’g Tr., Dkt. 355-1, at
65:19–66:2)). Months later, however, at a contempt hearing on July 29, 2024, Safa admitted that
3 The Court later amended its October 2023 order to clarify that it had found “Safa in civil
contempt of the Amended Injunction and the March 2023 TRO,” but reserved “making a final
ruling on damages and imposing sanctions” until the parties briefed the issue of compensatory
damages, including attorneys’ fees, relating to the March 27, 2023 contempt proceedings. (Am.
Sec. Am. Inj. M&O, Dkt. 299, at 33.) The amended order is reported at IME Watchdog, Inc. v.
Gelardi, 732 F. Supp. 3d 224.
4 Citations to “ECF” refer to the pagination generated by the Court’s CM/ECF docketing
system and not the document’s internal pagination.
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her brother had purchased the AES domain name because Safa had “proposed to [her] brother to
start a business with [her].” (Id. (alterations in original) (quoting 7/29/2024 Hr’g Tr., Dkt. 437-1,
at 45:14–48:3).) Although Safa contended that AES never went into business, the Court found
that, regardless, AES “was yet another attempt by Safa to circumvent this Court’s Orders and to
continue to provide IME services to customers on the Enjoined Customers List.” (Id. at 15.)
5. Defendants’ Contempt of the March 2023 Expanded PI: Continuing to
Operate Companions as IME Legal Representatives
As of at least April 2023, Defendants operated yet another IME company, IME Legal
Representatives (“IMELR”), with third party Eugene Liddie. (See id. at 16–23.) Again, at first,
Defendants denied being involved with IMELR. (Id. at 6–7.) This time, they were initially
successful in convincing the Court of the lie. (See id.) After a hearing in May 2023, the Court
stated that “it found Liddie’s claim that he had started IMELR on his own credible, and that the
Court was not convinced that the Gelardis had used Liddie to ‘end-run’” the Court’s prior orders.
(Id. at 6 (citing 5/4/2023 Hr’g Tr., Dkt. 219-1, at 147–48); see also id. at 6–7 (describing the
Court’s written decision reaffirming its findings at the evidentiary hearing (July 2023 M&O,
Dkt. 231,5 at 3)).)
However, Plaintiff continued to pursue its claim that Defendants were serving customers
on the Enjoined Customers List through IMELR, which Plaintiff alleged was operating as a
proxy/alter ego for Companions. (See id. at 8–11 (citing, inter alia, Dkts. 315, 317, 321, 348,
353–55, 411, 423, 429-1, and 429-2).) The Court held additional hearings in May 2024, July 2024,
and September 2024 that addressed, inter alia, the allegation that Defendants were involved in
IMELR. (See id.)
5 The July 2023 M&O is reported at IME Watchdog, Inc. v. Gelardi, No. 22-CV-1032
(PKC) (JRC), 2023 WL 4532459 (E.D.N.Y. July 13, 2023).
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Finally, in March 2025, after reviewing the extensive evidence presented to the Court
through the parties’ submissions and the four in-person hearings addressing this issue, the Court
concluded that “at least as of April 2023, Defendants were, in fact, operating IMELR with Liddie,
contrary to the Court’s prior findings.” (Id. at 17.) The Court specifically held that “it is clear that
IMELR was Safa’s creation, and that Liddie’s role was to serve just as ‘the face’ of the business.”
(Id. at 39 (quoting Apr. 2023 Zoom Tr., Dkt 345-1, at 1).) Indeed, Safa eventually conceded, in
effect, that she had attempted to work with Liddie through IMELR, and that, although she claimed
her plan never came to fruition, she “would have loved for [the plan] to go through at the time,”
i.e., in April 2023. (Id. at 21–22 (quoting 7/29/2024 Hr’g Tr., Dkt. 437-1, at 51:24–25, 55:14–18).)
Safa also admitted that “it would have been a blatant violation” of the Court’s orders if the plan
had succeeded. (Id. (quoting same).) The Court ultimately found Safa’s and Liddie’s denials of
an attempted partnership uncredible, (see id. at 23), and that although Safa took the lead, “all three
Defendants—Safa and Vito Gelardi and their company Companions—were involved in the plan
to create and run IMELR as an IME business and solicit work from the Enjoined Customers List,”
(id. at 39 n.33). Notably, as of July 2024, 98% of IMELR’s income came from customers on the
Enjoined Customers List. (Id. at 23 (citing 7/29/2024 Hr’g Tr., Dkt. 437-1, at 128:23–129:1).)
6. Failure to Pay the Forensic Examiner Berkeley Research Group, LLC
In tandem with the June 2022 Expanded PI, the Court issued an order on June 27, 2022
appointing Berkeley Research Group, LLC (“BRG”) to conduct a forensic examination of Safa’s,
Vito’s, and Companions’s personal and business digital electronic devices. (6/27/2022 Dkt. Order;
Consent Order for Forensic Exam., Dkt. 90-1, at 2–3.) The Court required the parties to share
equally in the cost of the examination. (Consent Order for Forensic Exam., Dkt. 90-1, at 7.)
Defendants, however, failed to pay their portion of BRG’s invoice, prompting the Court to issue
multiple orders directing Defendants to pay. (See, e.g., 9/11/2023 Dkt. Order for Dkt. 234 (“The
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Court has been apprised . . . that [BRG] . . . is still owed almost $50,000 for its services, with
Defendants owing $32,716.46, and Plaintiff owing $16,234.80. The Court orders both parties to
resolve their share of the outstanding bill by 9/25/23 and confirm such resolution by that date, or
risk sanctions.”); 1/29/2024 Dkt. Order for Dkt. 271 (observing that BRG “is still owed by
Defendants the full amount of $32,716.46” and ordering Defendants “to resolve their share of the
outstanding bill by 2/9/2024 and confirm such resolution by that date or risk sanctions”); 2/14/2025
Dkt. Order for Dkt. 441 (ordering a show-cause hearing regarding sanctions because “BRG once
again . . . has apprised the Court that Defendants Safa and Vito Gelardi still owe BRG”).)
Ultimately, the Court has been forced to issue repeated civil contempt sanctions against
Defendants based on their disregard of the Court’s orders requiring them to pay. (4/2/2025 Min.
Entry (ordering Safa to pay $2,000 to BRG by 4/4/2025, $500 on the first of each month after,
imposing a $500 sanction per late or missed payment, and stating that “Defendants are again
warned about the risk of criminal contempt, including jail, if these coercive sanctions do not result
in their compliance with the Court’s Orders”); 5/5/2025 Dkt. Order for Dkt. 482 (requiring Safa to
pay $500 in sanctions because while she “paid the $2,000 payment the Court ordered . . . she did
not pay BRG the $500 payment due May 1, 2025”); 7/7/2025 Dkt. Order for Dkt. 540 (imposing
$500 in sanctions and ordering Safa to pay $500 to BRG after BRG informed the Court that it “did
not receive a payment from Defendant Safa Gelardi by close of business on July 1, 2025”);
8/28/2025 Dkt. Order for Dkt. 589 (imposing “yet another $500 in sanctions” because “Individual
Defendants have failed to make the $500 payments due on July 1 and August 1 [2025], and have
failed to pay the additional $500 in sanctions the Court imposed for the missed July 1 payment”);
10/6/2025 Dkt. Order for Dkt. 599 (“BRG did not receive the $1,500 payment that was due [for
July, August, and September 2025] . . . nor did [BRG] receive the additional $500 that was due on
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October 1, 2025. . . . Individual Defendants still owe BRG $29,216.47 in unpaid fees, which goes
up to $41,040.19 when accounting for interest owed as set forth in their engagement
letter. . . . Individual Defendants [also] failed to pay the $1,000 in sanctions ordered by the
Court . . . . The Court sanctions them an additional $500 for both [the September and October
2025] missed payments, for a total in sanctions of $2,000.”); 1/28/2026 Dkt. Order for Dkt. 615
(imposing $1000 in civil contempt sanctions for the Gelardis’ failure to timely pay BRG on
December 1, 2025 and January 1, 2026).)
7. Summary of Contumacious Conduct
In sum, Defendants have repeatedly flouted the Court’s orders by retaining Plaintiff’s
customer information; contacting Plaintiff’s employees; continuing—or attempting to continue—
Companions’ IME work as AES, CES, and IMELR; and failing to pay BRG. Although the Court
has already imposed sanctions for some of Defendants’ contumacious conduct, it has yet to impose
sanctions for its March 2025 findings of contempt. (Mar. 2025 M&O, Dkt. 448, at 54.)
DISCUSSION
There are several pending matters in this case that the Court addresses here. First, Plaintiff
has brought new contempt allegations against Defendants. The Court will make findings of fact
and issue conclusions of law as to those allegations, and, for the reasons stated below, the Court
finds Defendants in contempt yet again. Second, the Court will discuss the appropriate sanctions
for the contempt found here, as well as for the contempt found in the Court’s March 2025
Memorandum and Order, (Dkt. 448). As discussed below, the Court finds that, based on
Defendants’ repeated and flagrant violations of the Court’s orders and their willful efforts to
dissipate assets that the Court ordered preserved for purposes of paying a potential judgment, case-
ending sanctions, in addition to compensatory monetary sanctions for Plaintiff’s attorneys’ fees,
are warranted.
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I. Plaintiff’s Current Contempt Motion Based on the Gelardis’ Dissipation of Assets
After Plaintiff filed this lawsuit, the Gelardis sold three of their properties: (1) a home in
East Stroudsburg, Pennsylvania for $569,400 on April 29, 2022; (2) a home in Philadelphia,
Pennsylvania for $229,000 on December 5, 2023; and (3) a home in Champions Gate, Florida for
$760,000 on December 15, 2023. (Attach. & TRO M&O, Dkt. 284, at 8 (citing Levi Decl.,
Dkt. 279, ¶¶ 10–16).) In January 2024, Plaintiff informed the Court that the Gelardis were
planning to sell a fourth property located at 148 Clay Pit Road in Staten Island, New York (the
“Staten Island” property). (Id. at 3 (citing Pl.’s Attach. Mot., Dkt. 270, at 3).) Plaintiff requested
an order of attachment on the Staten Island property and/or an order requiring the Gelardis to place
the proceeds from the sale in escrow until the Court rendered a final decision on one of Plaintiff’s
earlier requests for contempt sanctions. (Id. at 3–4 (citing same).) The Court found that the
Gelardis were selling their properties with fraudulent intent in order to frustrate Plaintiff’s ability
to enforce a potential judgment against them, and the Court therefore attached the net proceeds
from any potential sale of the Staten Island property. (Id. at 8–10, 12.)
The following week, on March 8, 2024, the Court ordered the Gelardis to “notify the Court
within three (3) days of entering into any contract to sell their ownership interest in any other
property, including the identity(ies) of the buyers and an anticipated closing date.” (3/8/2024 Dkt.
Order (the “Property Sale Order”).)
On May 2, 2025, Plaintiff filed a motion for contempt, (Dkt. 477), alleging that the Gelardis
had violated the Property Sale Order by selling their property located at 9 Woods End, Lake
Harmony, PA (the “Woods End” property) without notifying the Court, in order “to avoid having
the net proceeds [of the sale] attached by this Court.” (Pl.’s Mem. in Supp. Mot. for Contempt
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(“Contempt Mot.”), Dkt. 478, at 1, 5.)6 As evidence, Plaintiff attached public records obtained
from the Carbon County, Pennsylvania recorder of deeds. (Roa Decl., Dkt. 479, ¶ 7; Deed, Dkt.
479-1.) Those records show that the sale of the Woods End property was, in fact, recorded on
March 20, 2025. (Deed, Dkt. 479-1, at ECF 2.) The records also include an indenture agreement,
dated February 27, 2025, between the Gelardis and Evermark Investments, LLC, for the sale of
the Woods End property in the amount of $390,000. (Id. at ECF 3–5.) The indenture is signed by
both Safa and Vito, and their signatures are notarized. (Id. at ECF 4.)
Based on this conduct, Plaintiff requests that the Court find Safa and Vito in criminal
contempt and issue case-ending sanctions. (Contempt Mot., Dkt. 478, at 7–10.)7
A. Procedural Background
On May 5, 2025, the Court issued an Order to Show Cause “[i]n light of what appear[ed]
to be the [Gelardis’] clear and direct defiance of the Court’s March 8, 2024 Order, and the need to
ensure that the proceeds of any property sales by the [Gelardis] are not dissipated, concealed, or
rendered unattachable.” (O.S.C., Dkt. 482, at 2.) The Court ordered the Gelardis to provide a
summary of their financial information from the last two years, including details about the sales
6 Plaintiff also alleged that the Gelardis had entered into a contract to sell their property
located at 5265 Milford Road, East Stroudsburg, PA (the “Milford Road” property) without
informing the Court for the same reason. (Contempt Mot., Dkt. 478, at 1, 5.) Safa responded that
they had not sold the Milford Road property. (Dkt. 508 at ECF 3.) On June 26, 2025, the Gelardis
filed an emergency motion asking the Court to allow them to sell the Milford Road property due
to their severe financial distress. (Dkt. 516.) The Court ruled that the sale could go through, but
that “each and every dollar and cent of the proceeds of that sale” were to be deposited into the
Court Registration Investment System “within one (1) business day of receipt of the proceeds of
that sale.” (July 2025 M&O, Dkt. 561, at 5–6.)
7 Plaintiff also requests that the Court issue an order of pre-judgment attachment for the
Woods End property and “any other properties sold by the Gelardis.” (Id. at 14.) The Court has
already granted the request as to the Woods End property, (see May 2025 Attach. & O.S.C. M&O,
Dkt. 500), and denied Plaintiff’s request as to any other properties as moot given the Court’s Order
to Show Cause, (O.S.C., Dkt. 482), which is described next.
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of any real property since March 8, 2024. (Id.) The Court further ordered the Gelardis to show
cause “why they should not be required to deposit all proceeds from any sales of their properties
since March 8, 2024, with the Court Registration Investment System (‘CRIS’) during the pendency
of this case.” (Id. at 3.) On May 19, 2025, the Gelardis filed a letter in response to the Court’s
Order to Show Cause, (Dkt. 485), along with various financial disclosures, (Dkts. 487, 489–91).
They confirmed that they had sold the Woods End property, but argued that the proceeds should
not be attached because they were financially destitute and needed those proceeds to avoid
insolvency. (Dkt. 485, at 1–2.) Shortly thereafter, the Court ordered the Gelardis to deposit the
proceeds of the Woods End property sale into CRIS by June 6, 2025. (May 2025 Attach. & O.S.C.
M&O, Dkt. 500, at 1–2.) The Gelardis were further directed that, if they no longer had the entire
proceeds from the sale, they must “(1) deposit all remaining proceeds into CRIS, and (2) submit a
detailed, itemized summary . . . explaining what they have done with the outstanding proceeds.”
(Id. at 2.) On June 6, 2025, the Gelardis filed a letter explaining that they had spent all of the
proceeds from the Woods End property sale. (See Dkt. 508, at 3.)
On May 28, 2025, the Gelardis submitted an opposition to Plaintiff’s motion for contempt.
(Defs.’ First Opp’n to Contempt Mot. (“First Opp’n”), Dkt. 498.)8 They argued that the Court
should not hold them in contempt for selling the property without notifying the Court because they
had “kept [their former] Attorney Jonath[o]n Warner fully informed at every step,” including by
updating him “once [they] had . . . a contract.” (Id. at ECF 1–2.) Safa filed another opposition on
June 9, 2025, which argued that the Gelardis should not be held in criminal contempt because
“[t]he law does not permit incarceration for unproven civil claims, and this motion should be seen
8 In their opposition, Defendants also asked the Court to “[v]acate the contempt for
transferring the business” and “[d]rop the contempt for the PI investigation.” (Id. at ECF 3.) The
Court denied those requests. (May 2025 Attach. & O.S.C. M&O, Dkt. 500.)
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for what it is—an act of intimidation.” (Defs.’ Second Opp’n to Contempt Mot. (“Second Opp’n”),
Dkt. 509, at ECF 1.)
On May 30, 2025, the Court notified the Gelardis that “they ha[d], in effect, waived their
attorney-client privilege regarding whether they told their former counsel about the impending
sale” of the Woods End property. (May 2025 Attach. & O.S.C. M&O, Dkt. 500, at 3.) The Court
ordered Attorney Jonathon Warner (“Warner”) to submit a sworn affidavit by August 1, 2025,
stating whether the Gelardis “ever advised him that they had sold the Woods End property and, if
so, when and how that communication occurred.” (7/18/2025 Dkt. Order.) On July 21, 2025,
Warner submitted a letter requesting that the Court reconsider its finding that the Gelardis had
waived their attorney-client privilege. (Warner Letter, Dkt. 566-1, at 1.) He repeated this request
in another letter dated July 31, 2025. (Warner Letter, Dkt. 572, at 2.) On August 25, 2025, the
Court denied Warner’s requests and affirmed its finding that the Gelardis had waived their
attorney-client privilege. (Aug. 2025 M&O, Dkt. 585, at 10.) The Court gave Warner a new
deadline of September 2, 2025 to file a responsive affidavit. (Id.)
On August 29, 2025, Warner submitted the affidavit requested by the Court. (Warner
Decl., Dkt. 590-1.) In it, he stated that the Gelardis had not informed him when they entered into
a contract to sell the Woods End property. (Id. ¶¶ 3–5.) Instead, Warner swore that Safa told him
about the contract for the first time on March 11, 2025, after the property had already been sold.
(Id. ¶ 2.) Finally, he stated that “[a]fter [he] learned about the closing, [he] did not notify the Court
that the closing had already occurred because [he] was specifically instructed by Safa not to do
so.” (Id. ¶ 7.)
On September 2, 2025, the Court ordered the Gelardis to respond again to Plaintiff’s
motion for contempt and to “explain why the Court should not hold them in criminal contempt
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and/or issue case-ending sanctions” given their “clear violation” of the Court’s Property Sale
Order. (9/2/2025 Dkt. Order for Dkt. 590 (emphasis omitted).) On November 11, 2025, the
Gelardis submitted a third response. (Third Opp’n, Dkt. 605.) They argue that the Property Sale
Order was “ambiguous,” that “any failure of notice . . . was counsel’s duty and not attributable to
[the Gelardis],” and that “the record shows continuous disclosure and good-faith compliance.” (Id.
at ECF 10, 13 (emphasis omitted).)
B. The Court Finds Defendants Safa and Vito Gelardi in Civil Contempt of the
Property Sale Order9
“A court may hold a party in [civil] contempt if (1) the order the party failed to comply
with is clear and unambiguous, (2) the proof of noncompliance is clear and convincing, and (3)
the party has not diligently attempted to comply in a reasonable manner.” CBS Broad. Inc. v.
FilmOn.com, Inc., 814 F.3d 91, 98 (2d Cir. 2016) (citing Paramedics Electromedicina Comercial,
Ltd. v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645, 655 (2d Cir. 2004)). Here, the Court finds
the standard for civil contempt has been met with respect to the Gelardis’ sale of the Woods End
property.
First, the Court’s Property Sale Order was clear and unambiguous. An order “is
sufficiently clear and unambiguous if it leaves ‘no doubt in the minds of those to whom it was
addressed . . . precisely what acts are forbidden.’” Id. (quoting Drywall Tapers & Pointers v. Loc.
9 Defendants have not requested a hearing on the contempt allegations per Local Civil
Rule 83.6(b). Moreover, it is clear from “unchallenged documentary evidence before the [C]ourt,”
as well as the Court’s prior findings of fact throughout this case, “that [Defendants] ha[ve]
continually and wil[l]fully disobeyed court orders.” Sassower v. Sheriff of Westchester Cnty., 824
F.2d 184, 190 (2d Cir. 1987). Therefore, “a full-blown hearing is not required before [Defendants]
may be held in [civil] contempt.” Id. Additionally, because the Court ultimately declines to hold
Defendants in criminal contempt (as discussed further below), they are not entitled to the
procedural protections that a criminal contempt finding or conviction might otherwise require. See
Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 831–34 (1994).
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530, 889 F.2d 389, 395 (2d Cir. 1989)). The exact language of the Court’s Property Sale Order
reads: “The Individual Defendants shall also notify the Court within three (3) days of entering into
any contract to sell their ownership interest in any other property [besides the Gelardis’ Staten
Island property], including the identity(ies) of the buyers and an anticipated closing date.”
(3/8/2024 Dkt. Order.) This language could leave no doubt in the Gelardis’ minds about precisely
what they were required to do. See CBS Broad. Inc., 814 F.3d at 98.
The Gelardis’ response states, without any additional explanation, that “[t]he order was
ambiguous as applied to [them].” (Third Opp’n, Dkt. 605, at 10.) Because this point was
“‘adverted to [only] in a perfunctory manner, unaccompanied by [any] effort at developed
argumentation,’ it must be ‘deemed waived,’—or, more precisely, forfeited.” In re Demetriades,
58 F.4th 37, 54 (2d Cir. 2023) (alterations in original) (internal citations omitted); Espinoza v.
Foundry Workers LLC, 792 F. Supp. 3d 344, 353 (E.D.N.Y. 2025) (same). Regardless, the
argument is meritless, since the Property Sale Order’s unambiguous directive was plainly
addressed to the “Individual Defendants,” Safa and Vito. (See 3/8/2024 Dkt. Order.)
Second, the evidence that the Gelardis violated the Court’s order is clear and convincing.
Proof of noncompliance is “clear and convincing” if it is “adequate to demonstrate a reasonable
certainty that a violation occurred.” Levin v. Tiber Holding Corp., 277 F.3d 243, 250 (2d
Cir. 2002) (citation and internal quotation marks omitted). It is undisputed that on or around
December 18, 2024, the Gelardis executed a contract to sell the Woods End property for $390,000.
(Third Opp’n, Dkt. 605, at ECF 5.) It is also undisputed that on or around March 10, 2025, the
Gelardis closed on the sale of the Woods End property. (See id. at ECF 5, 57.)10 Finally, it is
10 The Gelardis submitted to the Court an unsigned “Settlement Statement (HUD-1)” for
the Woods End property dated March 10, 2025, with a contract sale price of $390,000. (Id. at
ECF 57–59.)
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undisputed that the Gelardis did not inform the Court that they had entered into a contract to sell
or had sold the Woods End property.11 (See generally id.) Therefore, the undisputed evidence
demonstrates with a reasonable certainty—in fact, beyond any doubt—that the Gelardis violated
the Court’s order.
Third, the Gelardis did not diligently attempt to comply with the Property Sale Order in a
reasonable manner. The Gelardis’ claim that they kept their former attorney Warner informed
about the status of the sale is directly refuted by Warner in a sworn affidavit; indeed, he states that
he “was specifically instructed by Safa” not to advise the Court of the Woods End property sale,
(see Warner Decl., Dkt. 590-1, ¶¶ 2–7). The Gelardis thus have put forth no credible evidence that
they made any attempt to comply with the Property Sale Order, let alone a diligent attempt.
The Court therefore holds the Gelardis in civil contempt for violating the Property Sale
Order by failing to notify the Court of the Woods End property sale.12
C. The Court Declines to Initiate the Criminal Contempt Process at This Time
“Unlike civil contempt, which is aimed at ‘compel[ling] future compliance with a court
order’ and is ‘remedial[] and for the benefit of the complainant,’ criminal contempt is ‘punitive’
and meant to ‘vindicate the authority of the court.’” United States v. Donziger, 38 F.4th 290, 305
(2d Cir. 2022) (alterations in original) (quoting Bagwell, 512 U.S. at 827–28). “Although the
power of a court to punish for contempt may be ‘inherent,’ the power of a United States court
11 The sale was first brought to the Court’s attention on May 2, 2025, when Plaintiff filed
its motion for contempt. (Dkts. 477–78.)
12 Although the Gelardis attempt to blame their former attorney, Warner, for not notifying
the Court of the Woods End property sale, (see Third Opp’n, Dkt. 605, at ECF 5–6), it is well-
established that reliance on counsel is not a defense to an act of contempt, see SEC v. Musella, 818
F. Supp. 600, 606–07 (S.D.N.Y. 1993) (collecting cases). The Gelardis’ purported reliance on
their counsel may be considered only to determine the appropriate sanction. See id. The Court
therefore addresses this issue in its discussion of sanctions below.
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today to impose criminal penalties for contempt of court is provided by criminal statutes.” Mackler
Prods., Inc. v. Cohen, 146 F.3d 126, 129 (2d Cir. 1998) (first quoting Ex Parte Robinson, 86 U.S.
505, 510 (1873), and then citing 18 U.S.C. §§ 401, 402). The criminal statute provides:
A court of the United States shall have the power to punish by fine or imprisonment,
or both, at its discretion, such contempt of authority, and none other, as—
(1) Misbehavior of any person in its presence or so near thereto as to obstruct the
administration of justice;
(2) Misbehavior of any of its officers in their official transactions; [and]
(3) Disobedience or resistance to its lawful writ, process, order, rule, decree, or
command.
18 U.S.C. § 401.
For purposes of procedure, there are two recognized categories of criminal contempt. See
3A Wright & Miller’s Federal Practice and Procedure Criminal §§ 701, 705 (4th ed. 2025).
“Direct” contempt, which occurs in the presence of the court, can be prosecuted through a
summary process. Id. § 706; Fed. R. Crim. P. 42(b) (the Court can “summarily punish a person
who commits criminal contempt in its presence if the judge saw or heard the contemptuous conduct
and so certifies” by issuing an order that “recite[s] the facts, [is] signed by the judge, and [is] filed
with the clerk”). “The summary contempt power is generally limited to cases in which ‘immediate
corrective steps are needed to restore order and maintain the dignity and authority of the court,’
and in which there is an ‘open, serious threat to orderly procedure.’” United States v. Cooper, 353
F.3d 161, 164 (2d Cir. 2003) (internal citations omitted) (first quoting Johnson v. Mississippi 403
U.S. 212, 214 (1971); and then quoting Harris v. United States, 382 U.S. 162, 165 (1965)).
For “indirect” criminal contempt that occurs outside the presence of the court, or where
summary proceedings are otherwise inappropriate, the criminal prosecution must be pursued
through a more formal process. See Bagwell, 512 U.S. at 833–34; 3A Wright & Miller’s Federal
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Practice and Procedure Criminal §§ 701, 705, 708; Fed. R. Crim. P. 42(a). The defendant must
receive notice, which must “state the time and place of the trial,” “allow the defendant a reasonable
time to prepare a defense,” and “state the essential facts constituting the charged criminal
contempt.” Fed. R. Crim P. 42(a)(1)(A)–(C). The court must appoint a prosecutor, which in most
cases must be an attorney for the government. See id. 42(a)(2). Finally, the defendant has the
right to a jury trial, and the court can only impose punishment after a guilty finding or verdict. See
id. 42(a)(3).
Here, although Defendants—in particular, Safa—have committed acts of contempt in the
Court’s presence, such as lying under oath, to obstruct the administration of justice and disobey
the Court’s orders or commands, 18 U.S.C. §§ 401(1), (3), the Woods End property sale did not
happen in Court’s immediate presence, and was thus indirect contempt. This means that before
the Court can punish the Gelardis for criminal contempt based on the Woods End sale, they must
be afforded the procedural protections of the prosecution-on-notice process. Fed. R. Crim.
P. 42(a). The Gelardis have not been afforded those protections, and therefore the Court cannot
hold them in criminal contempt at this time. See CBS Broad. Inc., 814 F.3d at 101 (“A district
court cannot impose criminal sanctions without affording the defendant the constitutional
procedural protections of a jury trial.” (citing Bagwell, 512 U.S. at 837–38)). Because criminal
contempt currently is not an option, the Court need not evaluate whether the evidence is sufficient
to meet the substantive standard for criminal contempt. Plaintiff’s request for the Court to hold
the Gelardis in criminal contempt for selling the Woods End property is denied.
II. Appropriate Sanctions for Defendants’ Civil Contempt
The Court is now tasked with determining the appropriate sanctions for both the instant
finding of civil contempt as well as the civil contempt described in the Court’s March 2025
Memorandum and Order, as to which the Court has yet to determine sanctions. (See Mar. 2025
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M&O, Dkt. 448, at 35, 41, 43–44.) In that order, the Court held that: (1) “Companions knowingly
violated the March 2023 TRO and Expanded PI by performing IMEs for [a client on the Enjoined
Customers List] through March 30, 2023,” (id. at 38); (2) the Gelardis and Companions violated
the Court’s March 2023 TRO and Expanded PI “by attempting to partner with Liddie and helping
to create IMELR,” (id. at 38–39, 39 n.33); and (3) Safa violated the Court’s April 2022 PI (and the
June 2022 amended version of that PI) “by still possessing Plaintiff’s customer list in
February 2023, and then by emailing it” to a third party, (id. at 39–40).13 Despite finding
Defendants in civil contempt, the Court could not “enter an order finding them in civil contempt
at [that] time because Plaintiff [had] not submitted the required affidavit ‘set[ting] out with
particularity . . . the claim, if any, for damages occasioned [by Defendants’ contemptuous actions]
and such evidence as to the amount of damages as may be available to the moving party.’”
(Mar. 2025 M&O, Dkt. 448, at 41 (first two alterations added) (first quoting Loc. R. 83.6(a), and
then citing Loc. R. 83.6(c)).) The Court ordered Plaintiff to file supplemental briefing setting forth
the specific amounts of compensatory damages and attorneys’ fees it was claiming. (Id.
at 43–44, 54.) Plaintiff filed supplemental briefing on July 1, 2025, (Dkts. 521–24), which the
Court denied as overbroad, (7/21/2025 Dkt. Order). Plaintiff filed revised supplemental briefing
on August 25, 2025. (Dkts. 580–83.) The Gelardis responded on September 15, 2025. (Dkt. 595.)
Based on the Court’s contempt findings from the March 2025 Memorandum and Order,
Plaintiff seeks case-ending sanctions, lost profits, attorneys’ fees, and an immediate entry of
judgment. (See Contempt Mot., Dkt. 478; Pl.’s Am. Mem. Supp. Compensatory Damages
13 The Court also found non-parties Liddie and IMELR in civil contempt. (See Mar. 2025
M&O, Dkt. 448, at 41–43.) Plaintiff has since entered a settlement agreement with Liddie and
IMELR, and “does not seek damages from them in connection with the Court’s contempt finding.”
(Levi Decl., Dkt. 584, at 1 n.1.)
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(“Compensatory Damages Mem.”), Dkt. 582.) For the Woods End property sale, Plaintiff requests
case-ending sanctions and attorneys’ fees. (See Contempt Mot., Dkt. 478.)14
For the reasons set forth below, the Court finds that case-ending sanctions are warranted
based on Defendants’ continuous and brazen pattern of contumacious conduct, which has risen to
the level of fraud upon this Court. While the Court finds that Plaintiff has failed to show that lost
profits should be awarded as a sanction for Defendants’ contempt, given the case-ending sanctions,
Plaintiff will have an opportunity to seek lost profits as part of Plaintiff’s overall damages request
for the underlying conduct charged in its complaint. Finally, the Court awards Plaintiff
$105,881.78 in attorneys’ fees as a sanction for Defendants’ civil contempt in connection with the
Court’s March 2025 Memorandum and Order.
A. Case-Ending Sanctions
1. Legal Standard
“[I]t is firmly established that the power to punish for contempts is inherent in all courts.”
Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991) (internal quotation marks and alterations
omitted); see also 11A Wright & Miller’s Federal Practice and Procedure, § 2960 (3d ed. Sep.
2025) (“A court’s ability to punish contempt is thought to be an inherent and integral element of
its power and has deep historical roots.”). This inherent authority is “governed not by rule or
statute but by the control necessarily vested in courts to manage their own affairs so as to achieve
the orderly and expeditious disposition of cases.” Chambers, 501 U.S. at 43 (quoting Link v.
Wabash R.R. Co., 370 U.S. 626, 630–631 (1962)); Int’l Techs. Mktg., Inc. v. Verint Sys., Ltd., 991
14 Plaintiff also requested that the Court find the Gelardis in criminal contempt, which the
Court has denied supra, and that the Court issue a pre-judgment attachment order for the proceeds
of any of the Gelardis’ property sales, which the Court granted as to the Woods End property, (see
May 2025 Attach. & O.S.C. M&O, Dkt 500; see also O.S.C., Dkt. 482 (denying Plaintiff’s request
as to other properties as moot)).
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F.3d 361, 367 (2d Cir. 2021). The Court “has the inherent power to do whatever is reasonably
necessary to deter abuse of the judicial process and assure a level playing field for all litigants.”
Shangold v. Walt Disney Co., No. 03-CV-9522 (WHP), 2006 WL 71672, at *1 (S.D.N.Y.
Jan. 12, 2006) (citing Chambers, 501 U.S. at 44), aff’d, 275 F. App’x 72 (2d Cir. 2008) (summary
order); see Potts v. Postal Trucking Co., No. 17-CV-2386 (ARR) (VMS), 2018 WL 794550, at *2
(E.D.N.Y. Feb. 8, 2018) (compiling cases). Additionally, the Second Circuit has made clear that
Federal Rule of Civil Procedure (“Rule”) 55(a) empowers district courts to enter a default against
defendants that fail to “otherwise defend,” which is a term broadly construed. City of New York v.
Mickalis Pawn Shop, LLC, 645 F.3d 114, 128–31 (2d Cir. 2011). A defendant can fail to
“otherwise defend” by failing to comply with court orders. Id. (citing Cotton v. Slone, 4 F.3d 176,
179, 181 (2d Cir. 1993); Eagle Assocs. v. Bank of Montr., 926 F.2d 1305, 1310 (2d Cir. 1991)).
Similarly, under Rule 41(c), the Court may dismiss a defendant’s counterclaims pursuant to
Rule 41(b) if the counterclaimant has failed to “comply with . . . a court order.” Fed. R. Civ.
P. 41(b); see id. 41(c).
Harsh sanctions, such as the dismissal of a case or an entry of a default judgment, may be
“appropriate if there is a showing of willfulness, bad faith, or fault on the part of the sanctioned
party.” Shangold, 275 F. App’x at 74 (quoting West v. Goodyear Tire & Rubber Co., 167 F.3d
776, 779 (2d Cir. 1999)); cf. S. New England Tel. Co. v. Glob. NAPs Inc., 624 F.3d 123, 147–48
(2d Cir. 2010) (affirming district court’s imposition of default as sanction under Rule 37 against
defendants who acted “willfully and in bad faith” and whose conduct formed a “pattern of
prolonged and vexatious obstruction” (citations and internal quotation marks omitted)).
“Fraud upon the court” is a paradigmatic example of extreme misconduct warranting harsh
sanctions. See McMunn v. Mem’l Sloan-Kettering Cancer Ctr., 191 F. Supp. 2d 440, 461
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(S.D.N.Y. 2002) (acknowledging that case-ending sanctions are “only to be used in extreme
situations,” but holding that “[w]hen faced with a fraud upon the court, . . . such a[] powerful
sanction is entirely appropriate”); see also Chambers, 501 U.S. at 42, 44 (affirming lower court’s
holding that the “wielding of that inherent power [to sanction] is particularly appropriate when the
offending parties have practiced a fraud upon the court”). As recognized by other courts in this
Circuit, examples of fraud upon the court include “improperly influenc[ing] the trier,” “unfairly
hamper[ing] the presentation of the opposing party’s claim or defense,” “l[ying] to the court and
[the party’s] adversary intentionally, repeatedly, and about issues that are central to the truth-
finding process,” and “knowingly submit[ting] fraudulent documents to the [c]ourt.” Passlogix,
Inc. v. 2FA Tech., LLC, 708 F. Supp. 2d 378, 395 (S.D.N.Y. 2010) (internal citations, quotation
marks, and alterations omitted). In these situations, “it can fairly be said that [the offending party]
has forfeited his right to have his claim decided on the merits.” McMunn, 191 F. Supp. 2d at 445.
“This is the essence of a fraud upon the court.” Id.
For the court to grant sanctions based on fraud upon the court, “it must be established by
clear and convincing evidence that [the party at fault] has ‘sentiently set in motion some
unconscionable scheme calculated to interfere with the judicial system’s ability impartially to
adjudicate’ the action.” Scholastic, Inc. v. Stouffer, 221 F. Supp. 2d 425, 439 (S.D.N.Y. 2002)
(quoting Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir. 1989)), aff’d, 81 F. App’x 396
(2d Cir. 2003) (summary order). Courts in this Circuit generally consider the following factors
when evaluating if case-ending sanctions for fraud upon the court are warranted: (1) “whether the
misconduct was the product of intentional bad faith”; (2) “whether and to what extent the
misconduct prejudiced the other party”; (3) “whether there is a pattern of misbehavior, rather than
an isolated instance”; (4) “whether and when the misconduct was corrected”; and (5) “whether
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further misconduct is likely to continue in the future.” McMunn, 191 F. Supp. 2d at 446 (citing
Skywark v. Isaacson, No. 96-CV-2815 (JFK) (NRB), 1999 WL 1489038, at *15 (S.D.N.Y.
Oct. 14, 1999) (collecting cases)).
2. Plaintiff’s Request for Case-Ending Sanctions
Here, the Court considers the extensive evidence of the Gelardis’ willful, bad-faith,
contumacious conduct. This “conduct was not isolated but rather formed a pattern of ‘prolonged
and vexatious’” behavior. S. New England Tel. Co., 624 F.3d at 148 (quoting Penthouse Int’l, Ltd.
v. Playboy Enters., Inc., 663 F.2d 371, 388 (2d Cir. 1981)) (affirming imposition of default on
defendants for bad-faith conduct). Indeed, the Gelardis’ efforts to perpetrate a fraud on the Court
began with the very first TRO hearing, during which Safa denied under oath that she and Vito had
stolen Plaintiff’s confidential information and customer list by paying Watchdog’s President,
Rosenblatt, to provide that information15—only to be flatly contradicted moments later by an audio
recording of a call between the Gelardis and Rosenblatt confirming that they had been paying
Rosenblatt for that information.16 In a subsequent hearing, the Court admonished the Gelardis for
15 (4/4/2022 Hr’g Tr., Dkt. 98, at 46:10–47:12 (Safa stating that “[Rosenblatt] took it upon
himself to send [her] whatever it is he sent” but averring that she “never used the information” he
sent to build her business); id. at 86:10–25 (Safa declaring that she “[a]bsolutely . . . did not pay
[Rosenblatt] for any of the documents he sent,” denying “ask[ing] him to send them,” and claiming
she did not give him “any reward or benefit of any kind for the documents that he sent to [her] in
2017”); id. at 124:7–125:16 (Safa attempting to “plead the Fifth” when asked whether she believed
the information Rosenblatt sent her “was confidential business information of IME WatchDog,”
admitting she “paid Rosenblatt for this information,” but denying doing so “pursuant to some
agreement with Mr. Rosenblatt that he would give [her] this information in exchange for money”).)
16 The Court noted: “I just heard a recording where it is clear to me the defendants, Mr. and
Mrs. Gelardi, are acknowledging that they have this ongoing relationship or had it with Mr.
Rosenblatt where they were willing to pay him money to get information and then provide him
safe haven by bringing him over to their company and possibly paying him $2500 in that
moment . . . .” (4/4/2022 Hr’g Tr., Dkt. 98, at 154:21–155:3.) As a result, the Court concluded, “I
don’t believe for a moment that [Safa] thought that the information Rosenblatt was sharing with
[her], even if it was volunteered in the beginning, was anything other than confidential. . . . I
believe that [she] and [her] husband knew full well [they] were essentially stealing this information
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attempting to “perpetrate . . . a fraud on this [C]ourt” by establishing CES as an attempt to get
around the Court’s TRO on Companions. (3/27/2023 Hr’g Tr., Dkt. 199, at 120:17–20.) The
Gelardis’ scheme with IMELR, which is described in detail in the Court’s March 2025
Memorandum and Order and established by clear and convincing evidence, is an even more
flagrant instance of fraud upon the Court. (See Mar. 2025 M&O, Dkt. 448, at 16–23, 54.) The
Court has imposed many lesser sanctions, none of which have proven effective against the
Gelardis’ “undeterrable resolve to circumvent this Court’s Orders and improperly use Plaintiff’s
trade secrets.” (Id. at 51.) And the Court has given the Gelardis more than sufficient warning that
their continued contemptuous conduct could result in case-ending sanctions. (See, e.g., id. at 50
n.35 (“The Court might revisit Plaintiff’s request for case-ending sanctions . . . .”); O.S.C.,
Dkt. 482, at 4–5 (“Failure to timely comply with any direction in this Order could result
in . . . additional sanctions, including case-ending sanctions—i.e., the issuance of a default
judgment against Defendants . . . .”).)
The Gelardis argue that their noncompliance can be blamed on their former attorney
Warner, and that the “record shows continuous disclosure and good-faith compliance.” (Third
Opp’n, Dkt. 605, at ECF 10.) The Court disagrees. Even if the Court were persuaded that Warner
was responsible for the Gelardis’ persistent, contumacious conduct, the law is clear that “a client-
principal is ‘bound by the acts of his lawyer agent,’” Chevron, 833 F.3d at 150 (quoting Link, 370
or buying it from Mr. Rosenblatt at least as of 2019. . . . [I]t makes sense to me that [Safa] started
paying for this information to grow [her] business just as [she] said in the phone call with Mr.
Rosenblatt, that in fact it sounds like [her] business took off from 2019, which coincided with
when [she was] getting all this information from Mr. Rosenblatt.” (Id. at 155:15–156:15.)
Although the Court admitted the recording into the record, (see id. at 131:24), Plaintiff did not
prepare a written transcript of the recording and the recording’s contents were not transcribed as
part of the hearing transcript, (see id. at 132:7 (noting only “Audio recording played”)).
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U.S. at 634), and “even innocent clients may not benefit from the fraud of their attorney,” id. And
here, the Court does not find that Warner was responsible.
The Woods End property sale provides the clearest example of why the Gelardis’ reliance-
on-counsel argument is disingenuous at best. The Gelardis claim that they provided “continuous
written notice” to Warner about the status of the sale. (Third Opp’n, Dkt. 605, at ECF 13.) Despite
offering several emails and texts between the Gelardis and Warner regarding the Gelardis’ efforts
to sell the Woods End property, (id. at ECF 61–63), these messages ended in January 2025 and
none of them indicated that the Gelardis had entered into a contract to sell the Woods End property,
which occurred in December 2024 and closed in March 2025. Contrary to Defendants’ claim,
these messages do nothing to “resolve[] this dispute” or show that “Warner had months of notice”
that the Gelardis had entered into a contract of sale. (Id. at ECF 4.) Indeed, they conspicuously
do not include any such messages. And, notably, the Gelardis do not allege that they ever
affirmatively instructed Warner to inform the Court. (See generally First Opp’n, Dkt. 498; Second
Opp’n, Dkt. 509; Third Opp’n, Dkt. 605; Warner Decl., Dkt. 590-1, ¶ 7.)
Given that Safa is “wholly uncredible as a witness,” IME Watchdog, Inc., 732 F. Supp. 3d
at 232 n.4, the Court credits Warner’s sworn affidavit as a more reliable source of evidence than
the Gelardis’ unsupported, self-serving assertions. Warner explains that on March 11, 2025, the
Gelardis informed him by phone that they had sold the Woods End property. (Warner Decl.,
Dkt. 590-1, ¶ 2.) On March 14, 2025, Warner forwarded the Gelardis a copy of the Court’s
Property Sale Order. (Id. Ex. 1, at ECF 6.) In his email, Warner stated:
Judge Chen’s March 8 Order below, which I sent to you on March 8, 2024, and
which you replied to, required that you notify the Court within 3 days of entering
into a contract for the sale of “any of” your properties. You have advised me that
on Monday of this week you closed on the sale of one of the two PA properties, but
you never sent me a copy of the contract, much less within “three days” of its being
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signed. How do you expect me to defend you when the next contempt motion is
made (as it surely will)?
(Id.) The Gelardis did not respond to this email. (Id. ¶ 9.) On or around March 21, 2025, Warner’s
bank processed and cleared a $10,000 check from the Gelardis for “New York Coruption [sic].”
(Id. at ECF 2–4.)17
Warner did not notify the Court that the property had sold because he “was specifically
instructed by Safa not to do so.” (Warner Decl., Dkt. 590-1, ¶ 7.) According to Warner, he was
“unsure what to do . . . other than to move to be relieved as counsel at a time when such application
would least prejudice [his] clients.” (Id. ¶ 8.) On April 17, 2025, Warner filed a motion seeking
to withdraw as counsel, along with his firm, Warner & Scheuerman. (See Warner Decl., Dkt. 464.)
In his declaration in support of the motion, Warner stated that he could not, “in good conscience[,]
continue to represent Defendants (and zealously advocate for them) while saddled with the concern
that [his] continued representation [would] cause [him] to be accused of engaging in wrongdoing
or in breaching any duties either to [his] clients or the Court.” (Id. ¶ 10.)
Thus, contrary to the Gelardis’ claim that they continuously disclosed and attempted to
comply with the Court’s order in good faith, (Third Opp’n, Dkt. 605, at ECF 10), the evidence
shows that they in fact actively tried to evade the Court’s order both by concealing information
from their attorney and by instructing their attorney to withhold that information from the Court
and Plaintiff after it was belatedly disclosed to him, (Warner Decl., Dkt. 590-1, ¶ 7).
Defendants’ misconduct with respect to the Woods End property sale is emblematic of
their conduct throughout this case and starting from the very beginning. (See, e.g., 4/4/2022 Hr’g
Tr.) Plaintiff and the Court have had to chase Defendants to get to the truth and to uncover and
17 The check itself is dated October 13, 2025, but Defendants explain that this date was an
error. (Third Opp’n, Dkt. 605, at ECF 64; Dkt. 564, at ECF 1–2.)
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deter their pernicious non-compliance at every turn. Every motion and Court order has been met
with obfuscation, deception, concealment, and defiance by Defendants. Defendants’ persistent
efforts to obstruct the progress of this matter, while simultaneously dissipating assets that might
be used to pay a judgment, if allowed to continue, will almost certainly prevent this matter from
reaching a fair and just resolution on the merits. Because Defendants’ contumacious conduct has
“infected the evidentiary record and continues to impair the search for truth,” case-ending
sanctions, “it turns out, represents the only fair resolution of this case.” Esposito v. Suffolk Cnty.
Cmty. Coll., 517 F. Supp. 3d 126, 127 (E.D.N.Y. 2021).
Case-ending sanctions are a harsh remedy, but the Gelardis’ misconduct is well within the
range of conduct that other courts in this Circuit have deemed to warrant the harshest sanctions.
See, e.g., McMunn, 191 F. Supp. 2d at 446–62 (imposing case-ending sanctions where the plaintiff
lied and convinced others to lie about issues material to the case); Skywark, 1999 WL 1489038, at
*1–18 (finding case-ending sanctions appropriate where the plaintiff violated discovery order and
lied throughout discovery); Ptak Bros. Jewelry v. Ptak, No. 06-CV-13732 (DC), 2009 WL 807725,
at *7–11 (S.D.N.Y. Mar. 30, 2009) (issuing case-ending sanctions because the defendants
demonstrated a history of failing to comply with court orders, made misrepresentations to the
court, and refused to comply with discovery obligations); Abbott Lab’ys v. Adelphia Supply USA,
No. 15-CV-5826 (CBA) (LB), 2019 WL 3281324, at *4–15 (E.D.N.Y. May 2, 2019)
(recommending case-ending sanctions where defendants purposefully withheld documents and
lied in deposition testimony), report and recommendation adopted, 2020 WL 1429472 (E.D.N.Y.
Mar. 24, 2020), aff’d sub nom. Abbott Lab’ys v. H&H Wholesale Servs., Inc., No. 23-446-CV,
2024 WL 4297472 (2d Cir. Sep. 26, 2024) (summary order); Lawrence v. City of New York,
No. 15-CV-8947 (WHP), 2018 WL 3611963, at *1–3, *6–8 (S.D.N.Y. July 27, 2018) (imposing
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case-ending sanctions where the plaintiff staged photos of the incident alleged in the complaint
and engaged in deceptive conduct that undermined her credibility); Esposito, 517 F. Supp. 3d
at 127, 135–37 (issuing case-ending sanctions where the plaintiff “altered, forged and tampered
with evidence, and repeatedly perjured herself to conceal these misdeeds”).
Finally, while the Court strongly prefers that cases be resolved on their merits, the Court
has no hesitation about imposing case-ending sanctions here because it has already found, many
times, that Plaintiff is likely to succeed on the merits. That conclusion is based on the extensive
findings of fact the Court has made for the numerous TROs, PIs, and contempt orders in this case.
(See, e.g., 4/5/2022 Dkt. Order (finding, after an in-person hearing in April 2022, that Plaintiff had
“demonstrated likelihood of success on the merits of its claims against Defendants,” and that
Defendants “clearly and convincingly” appeared to have “wrongfully obtained [Plaintiff’s] trade
secrets”); 7/1/2024 Dkt. Order (noting that the Court would not require Plaintiff to post bond in
connection with motion for TRO and preliminary injunction because the Court had “determined it
very likely that Plaintiff[] will prevail on the merits of [its] claims”); Mar. 2025 M&O, Dkt. 448,
at 53 (concluding that “Plaintiff is highly likely to prevail on the merits in this litigation”)); IME
Watchdog, Inc., 2022 WL 1525486, at *6 (applying the general standard for preliminary
injunctions and “reiterat[ing the Court’s] finding, made at the close of the show-cause hearing, that
Plaintiff has established a likelihood of success”); IME Watchdog, Inc., 732 F. Supp. 3d at 240
(applying the heightened standard for mandatory injunctions and finding “that Plaintiff’s customer
lists constitute trade secrets and that Plaintiff is likely to succeed on the merits of their trade secret
claims against Defendants,” and that “there are volumes of undisputed evidence that Defendants
did not gain Plaintiff’s customers through publicly accessible databases, but rather, by paying
Plaintiff’s employee, Rosenblatt, to steal them for Defendants”). The Court has held at least seven
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show cause or evidentiary hearings, at which both parties have had the opportunity to present
documentary evidence and examine (and cross-examine) witnesses. (See 4/4/2022 Min. Entry;
3/27/2023 Min. Entry; 5/4/2023 Min. Entry; 5/29/2024 Min. Entry; 7/29/2024 Min. Entry;
9/25/2024 Min. Entry; 4/2/2025 Min. Entry.) Neither party can be heard to complain that they
have not had their day in court. Based on the well-developed record, and even despite the Gelardis’
persistent efforts to impair the Court’s search for truth, the Court would almost certainly find that
Plaintiff is entitled to judgment as a matter of law.
Therefore, under this Court’s inherent powers, as well as Rules 41 and 55 of the Federal
Rules of Civil Procedure, the Court orders case-ending sanctions against the Gelardis. Along with
the other remaining Defendants in this case—Companions, CES, and IME M&C—the Gelardis
are adjudged to be in default. Safa’s counterclaims, (Dkt. 547), are dismissed, and her request for
the Court to take judicial notice “of a pattern of bad faith litigation, coercive settlement practices,
and extrajudicial intimidation,” (Dkt. 569), is denied.
B. Lost Profits
In addition to case-ending sanctions, Plaintiff seeks compensation for its lost profits related
to the conduct described in the Court’s March 2025 Memorandum and Order. (Compensatory
Damages Mem., Dkt. 582, at 1–4.) As discussed below, the Court denies this request.
1. Legal Standard
“A civil contempt sanction may . . . serve either to coerce the contemnor into future
compliance with the court’s order or to compensate the complainant for losses resulting from the
contemnor’s past noncompliance.” N.Y. State Nat’l Org. for Women v. Terry, 886 F.2d 1339, 1352
(2d Cir. 1989) (citations omitted). “Compensatory sanctions should reimburse the injured party
for its actual damages” and be “based upon evidence of such loss or injury.” Id. at 1353 (citing
United States v. United Mine Workers of Am., 330 U.S. 258, 304 (1947)). Lost profits may be “an
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appropriate measure of actual damages” for civil contempt sanctions “so long as [the lost profits]
can be traced back to the contemnor’s contemptuous actions.” Broker Genius Inc. v. Seat Scouts
LLC, No. 17-CV-8627 (SHS), 2019 WL 2462333, at *3 (S.D.N.Y. June 13, 2019) (citing Grand
v. Schwarz, No. 15-CV-8779 (KMW), 2018 WL 4026735, at *3 (S.D.N.Y. Aug. 18, 2018); Upjohn
Co. v. Medtron Lab’ys, Inc., 894 F. Supp. 126, 135 (S.D.N.Y. 1995)). To prove such damages,
the “moving party must demonstrate a causal connection between the contemnor’s contemptuous
behavior and the alleged damages.” Broker Genius, 2019 WL 2462333, at *3 (citations omitted).
2. Plaintiff’s Lost-Profits Claim
Plaintiff requests $1,077,898.46 in sanctions as compensation for its lost profits from
March 10, 2023 to March 31, 2025 related to Defendants’ conduct described in the Court’s
March 2025 M&O. (Compensatory Damages Mem., Dkt. 582, at 1–4.) Of that figure, Plaintiff
attributes $973,574.40 of the alleged lost profits to Companions, and $104,324.06 to IMELR. (Id.
at 3–4.)
For Companions, Plaintiff estimates its lost profits using the following assumptions and
calculations:
• First, Plaintiff alleges that “[b]etween 2018 and 2022 . . . Defendants stole at least
sixty-seven (67) customers from Plaintiff.” (Id. at 1.)
• Second, Plaintiff states that “[d]uring the period of contempt spanning from March 10,
2023 through March 31, 2025, . . . Defendants continued to serve some of these sixty-
seven (67) customers.” (Id. at 2 (citing Mar. 2025 M&O, Dkt. 448).)
• Third, Plaintiff extrapolates Companions’ sales for the period between March 10, 2023,
and March 31, 2025, assuming that Companions’ yearly revenue is $883,046 based on
Companions’ revenue from 2022. (Id. at 3.)
• Fourth, Plaintiff relies on the Court’s previous finding that, as of the March 27, 2023
hearing, “98.3% of the total revenue Defendants ha[d] generated since Companions’
inception was obtained through sales from Plaintiff’s former customers.” (Id. at 3
(citing IME Watchdog, Inc. v. Gelardi, No. 22-CV-1032 (PKC) (JRC), 2023 WL
6958855, at *4 (E.D.N.Y. Oct. 20, 2023)).) Plaintiff thus assumes that 98.3% of
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Companions’ revenue between March 10, 2023 and March 31, 2025 also came from
Plaintiff’s former customers. (Id. at 3–4.)
• Fifth, Plaintiff asserts that it charges 5.59% more than Companions for each IME, and
so it asserts that “Plaintiff’s revenue . . . would have been 5.59% higher than
Companions’ revenue.” (Id. at 3–4.)
• Sixth, Plaintiff calculates its estimated lost profit by applying its typical profit margin
to the estimated revenue. (Id. at 3–4.)18
For IMELR, Plaintiff estimates its lost profits using similar assumptions and calculations:
• First, Plaintiff estimates IMELR’s revenue for “services it performed for Plaintiff’s
former customers,” (Compensatory Damages Mem., Dkt. 582, at 4), based on a
“summary of all of IMELR’s income which IMELR produced to Plaintiff in response
to a subpoena,” (Levi Decl., Dkt. 584, ¶ 19). That summary shows “[a]ll payments
made to date” to IMELR from 14 customers. (Ex. D to Levi Decl., Dkt. 584-4.) The
summary is not dated. (See generally id.)
• Second, Plaintiff estimates that its revenue would have been 5.59% higher than
IMELR’s if it had served those same customers because Plaintiff charges 5.59% more
per IME. (Compensatory Damages Mem., Dkt. 582, at 4.)
• Third, Plaintiff calculates its estimated lost profits by applying its typical profit margin
to the estimated revenue. (Id.)
The Gelardis argue that Plaintiff’s lost profits estimate is speculative and based on
“[i]nflated and [u]nreliable [i]nputs.” (Defs.’ Resp. to Compensatory Damages Mem., Dkt. 595,
at ECF 1–3.) They state that Plaintiff should be awarded $0 because Plaintiff failed to prove
“actual, net loss cause by contempt, proven with reasonable certainty.” (Id. at ECF 1.) The
Gelardis also argue that they should not be made to pay damages based on IMELR’s revenues
because Plaintiff already settled with IMELR and Liddie. (Id. at ECF 2–3.)
Here, the Court agrees with the Gelardis that Plaintiff’s proposed sanctions for lost profits
would not be compensatory because they are not appropriately “calibrat[ed] . . . to the injuries
18 Plaintiff’s profit margin is redacted in the publicly-filed document. (See id. at 3; see also
Dkt. 581 (sealed and unredacted version).)
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inflicted on the victims of the contumacious conduct.” See Terry, 159 F.3d at 94 (emphasis added).
For example, it is untenable to assume that Companions continued making revenue at its 2022
level after the Court enjoined Companions in 2023 from serving nearly all of the customers that
formed the basis for that revenue. (3/27/2023 Dkt. Order.) And, contrary to Plaintiff’s
assumptions, the Court did not find that, between March 2023 and March 2025, Companions
continued to serve all of the customers that Defendants had misappropriated from Plaintiff. At
most, the Court found that Companions continued performing IMEs for one such customer. (See
Mar. 2025 M&O, Dkt. 448, at 14, 37–38.) And the Court only found that Companions continued
serving that customer through March 30, 2023, which was 20 days after the Court’s TRO and three
days after the Court’s injunction. (See id.) These findings do not justify awarding Plaintiff the 24
months of alleged lost profits it claims, (Compensatory Damages Mem., Dkt. 582, at 4).
Therefore, based on these untenable assumptions and others, the Court cannot award Plaintiff the
lost-profits sanctions it seeks on compensatory grounds.
Most importantly, because the Court has decided to issue case-ending sanctions against the
Gelardis, Plaintiff can now seek to recover its lost profits as damages for its underlying claims.
(See 11/4/2024 Dkt. Order (clarifying that where there is an overlap between the damages “caused
by the contumacious conduct at issue and the damages caused by Defendants’ conduct that forms
the basis of Plaintiff[’s] underlying claims,” Plaintiff would not be precluded from seeking the
latter).) Awarding lost profits as sanctions here would risk allowing Plaintiff double recovery. See
Broker Genius Inc., 2019 WL 2462333, at *3 (declining to award lost profits damages as sanction
for contempt when jury award included lost profits for the same time period).
For the same reasons, the Court will also not award Plaintiff lost-profits sanctions related
to IMELR. The Court therefore does not address Plaintiff’s argument that it can recover its lost
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profits related to IMELR from the Gelardis and Companions instead of Liddie and IMELR. (See
Levi Decl., Dkt. 584, at 1 n.1.)
C. Attorneys’ Fees
Plaintiff’s motion for contempt regarding the Woods End property sale asks the Court to
order “reasonable attorneys’ fees and costs incurred in connection with the instant motion.”
(Contempt Mot., Dkt. 478, at 2.) However, it provides no information about the amount of
attorneys’ fees and costs it has incurred. Plaintiff did not attach an affidavit setting forth its
damages pursuant to Local Rule 83.6. (See generally Roa Decl., Dkt. 479 (supporting contempt
motion with no description of damages sustained such as attorneys’ fees or costs).) The Court has
made Plaintiff aware of this requirement multiple times, see, e.g., 732 F. Supp. 3d at 248, and so
the Court takes Plaintiff’s failure to include the requisite affidavit as a concession that Plaintiff is
not seeking damages, including attorneys’ fees and costs, in association with its filings regarding
the Woods End property sale.
The Court will, however, grant Plaintiff’s request for attorneys’ fees associated with the
contempt found in the March 2025 M&O.19 Again, given the complex procedural history of this
case, it is helpful to first summarize the relevant events and filings. On March 6, 2024, Plaintiff
filed a contempt motion alleging that Defendants were continuing to serve a customer or customers
on the Enjoined Customers List, (Dkt. 288). (See Mar. 2025 M&O, Dkt. 448, at 7.) On
19 The March 2025 M&O addressed both Plaintiff’s motion for contempt, (Dkt. 288), as
well as its motion for a TRO and PI, (Dkt. 353). As this Court has previously held, a party who
prevails on a motion for a preliminary injunction under the Defend Trade Secrets Act is not entitled
to attorneys’ fees for that motion until they obtain a final judgment or establish that they will not
obtain a final judgment. (Nov. 2022 M&O, Dkt. 117, reported at IME Watchdog, Inc. v. Gelardi,
No. 22-CV-1032 (PKC) (JRC), 2022 WL 16636766 (E.D.N.Y. Nov. 2, 2022).) Therefore, the
Court only considers Plaintiff’s attorneys’ fees associated with its motion for contempt, but not its
motion for a TRO and PI.
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April 15, 2024, the Court directed Plaintiff to file a supporting affidavit. (4/15/2024 Dkt. Order.)
On April 21 and May 3, 2024, Plaintiff filed supplemental declarations from Levi. (Dkts. 317,
321.) The Court held three hearings related to the contempt allegations, in May 2024, July 2024,
and September 2024. (See Mar. 2025 M&O, Dkt. 448, at 6–11, 54.) In the March 2025 M&O,
the Court found Defendants in contempt, but also found Plaintiff’s briefing on compensatory
damages (including attorneys’ fees) insufficient and ordered Plaintiff to file supplemental briefing
setting forth the actual damages it incurred related to the contempt proceedings. (Id. at 43 (citing
Pl.’s Post-Hr’g Letter, Dkt. 411, at 8).) Plaintiff filed revised supplemental briefing on August 25,
2025. (Dkts. 580–83.) Plaintiff states that it “incurred $151,259.69 in attorneys’ fees since March
28, 2023, in connection with Defendants’ contempt.” (Compensatory Damages Mem., Dkt. 582,
at 4 (citing Levi Decl., Dkt. 584, ¶ 23).) The Gelardis responded on September 15, 2025. (Defs.’
Resp. to Compensatory Damages Mem., Dkt. 595.)
1. Legal Standard
As stated above, a civil contempt sanction can “serve either to coerce the contemnor into
future compliance with the court’s order or to compensate the complainant for losses resulting
from the contemnor’s past noncompliance.” Terry, 886 F.2d at 1352. An award of attorneys’ fees
and costs to the contempt victim can “serve either goal—the coercive or the compensatory.” Al
Hirschfeld Found. v. Margo Feiden Galleries Ltd., 438 F. Supp. 3d 203, 208 (S.D.N.Y. 2020);
(see also, e.g., Sep. 2024 M&O, Dkt. 394 (issuing contempt sanction of attorneys’ fees and costs)).
Once a court has determined that an attorneys’ fees award is appropriate, it must calculate
the presumptively reasonable fee using the “lodestar” method. See Treyger v. First Class
Furniture & Rugs Inc., No. 21-CV-2902 (EK) (RLM), 2022 WL 18356256, at *5 (E.D.N.Y.
July 14, 2022) (applying the lodestar method to calculate presumptively reasonable attorneys’ fees
on contempt motion), report and recommendation adopted, 2023 WL 199698 (E.D.N.Y.
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Jan. 17, 2023); see also id. (collecting cases). The lodestar is “the product of a reasonable hourly
rate and the reasonable number of hours required by the case.” Stanczyk v. City of New York, 752
F.3d 273, 284 (2d Cir. 2014) (quoting Millea v. Metro-N. R.R. Co., 658 F.3d 154, 166 (2d
Cir. 2011)).
“District courts have broad discretion, using ‘their experience with the case, as well as their
experience with the practice of law, to assess the reasonableness’ of each component of a fee
award.” Gunawan v. Sake Sushi Rest., 897 F. Supp. 2d 76, 94 (E.D.N.Y. 2012) (quoting Fox
Indus., Inc. v. Gurovich, No. 03-CV-5166 (TCP) (WDW), 2005 WL 2305002, at *2 (E.D.N.Y.
Sep. 21, 2005)). Among other considerations, the district court must determine a reasonable hourly
rate for the attorneys’ work. Reasonable hourly rates are informed in part by the rates “prevailing
in the community for similar services by lawyers of reasonably comparable skill, experience, and
reputation.” Luciano v. Olsten Corp., 109 F.3d 111, 115 (2d Cir. 1997) (quoting Blum v. Stenson,
465 U.S. 886, 896 n.11 (1984)). In assessing fees, then, district courts “bear in mind all of the
case-specific variables that . . . courts have identified as relevant to the reasonableness of
[attorneys’] fees in setting a reasonable hourly rate.” Arbor Hill Concerned Citizens
Neighborhood Ass’n v. County of Albany, 522 F.3d 182, 190 (2d Cir. 2008) (emphasis omitted).
Ultimately, a “presumptively reasonable [attorneys’] fee boils down to what a reasonable, paying
client would be willing to pay, given that such a party wishes to spend the minimum necessary to
litigate the case effectively.” Simmons v. N.Y.C. Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009)
(citation and internal quotation marks omitted).
Moreover, a fee applicant bears the burden of demonstrating the hours expended and the
nature of the work performed through contemporaneous records. Marion S. Mishkin L. Off. v.
Lopalo, 767 F.3d 144, 148 (2d Cir. 2014) (citing N.Y. State Ass’n for Retarded Child., Inc. v.
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Carey, 711 F.2d 1136, 1147–48 (2d Cir. 1983)). If a court finds that claimed hours are “excessive,
redundant, or otherwise unnecessary,” it should exclude those hours in calculating a fee award.
See Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). “A district court is not, however, required to
set forth item-by-item findings concerning what may be countless objections to individual billing
items, and may either subtract uncompensable hours or use percentage reductions to eliminate
excessive or duplicative hours.” Marshall v. Reisman, No. 11-CV-5764 (AAR) (VV), 2013 WL
1563335, at *4 (E.D.N.Y. Mar. 25, 2013) (citations and internal quotation marks omitted), report
and recommendation adopted, 2013 WL 1561478 (E.D.N.Y. Apr. 12, 2013).
2. Plaintiff’s Attorneys’ Fees Claim
Adhering to the lodestar method, the Court calculates a presumptively reasonable
attorneys’ fees award by first considering the reasonable hourly rate and then considering the
reasonable number of hours required. Here, Plaintiff seeks hourly rates of $300 for Emanuel
Kataev and $450 for Jamie Felsen of Milman Labuda Law Group PLLC (“MLLG”), (Levi Decl.,
Dkt. 584, ¶ 24), and $300 for work performed by Sage Legal LLC (“Sage”), (id. ¶ 25). The
Gelardis do not argue that these rates are unreasonable. (See generally Defs.’ Resp. to
Compensatory Damages Mem., Dkt. 595.)
As the Court has already held, “MLLG’s hourly rates [of $300 and $450] are in-line with
the prevailing hourly rates for attorneys within this District.” (Sep. 2024 M&O, Dkt. 394,
at 11–12.) The Court incorporates its reasoning and analysis from that prior decision and again
holds that, “based on the Court’s knowledge of the case and the attorneys’ performance,” MLLG’s
hourly rates are reasonable. (Id. at 12.) For the same reason, Sage’s hourly rate of $300 is also
reasonable.
Regarding the number of hours, Plaintiff seeks attorneys’ fees for 250.6 hours of work
from MLLG and 128.3 hours of work from Sage. (Levi Decl., Dkt. 584, ¶¶ 24–25.) Plaintiff
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attaches MLLG’s “billing descriptions provided in the invoices Plaintiff received,” and Sage’s
“invoices to Plaintiff.” (Id.; MLLG Billing Records, Dkt. 584-5; Sage Invoices, Dkt. 584-6.) The
Gelardis argue that Plaintiff’s request is “overbroad,” that any attorneys’ fee award should be
“limit[ed] to compliance-related tasks,” and that Plaintiff’s requested fee should be reduced
accordingly. (Defs.’ Resp. to Compensatory Damages Mem., Dkt. 595, at ECF 4; see also id. at
ECF 6 (arguing that “if fees are considered at all, they must be task-specific, non-duplicative, and
reduced”).)
The Court agrees with the Gelardis. As noted above, the Court “is not required to ‘set forth
item-by-item findings concerning what may be countless objections to individual billing items.’”
Gagasoules v. MBF Leasing LLC, 296 F.R.D. 107, 111 (E.D.N.Y. 2013) (quoting Siracuse v.
Program for the Dev. of Hum. Potential, No. 07-CV-2205 (CLP), 2012 WL 1624291, at *26
(E.D.N.Y. Apr. 30, 2012)). Nonetheless, a review of MLLG’s billing descriptions shows that
Plaintiff seeks to recover for numerous entries unrelated to Defendants’ alleged non-compliance
as set forth in the Court’s March 2025 M&O. (See generally MLLG Billing Records, Dkt. 584-5.)
MLLG’s time entries include, for example, drafting a letter requesting to extend discovery;
emailing the client and opposing counsel about settlement; and a call with opposing counsel about
discovery deficiencies, among other things. (See id.) The Court is yet again “troubled by MLLG’s
‘efforts to inappropriately inflate their attorneys’ fees,’ . . . by including so many extraneous time
entries.” (Sep. 2024 M&O, Dkt. 394, at 14–15 (quoting Wang v. XBB, Inc., No. 18-CV-7341
(PKC) (ST), 2023 WL 2614143, at *5 (E.D.N.Y. Mar. 23, 2023), reconsideration denied, 2024
WL 184263 (E.D.N.Y. Jan. 17, 2024)).) Similarly, a review of Sage’s invoices shows numerous
unrelated entries, as well as pervasive block-billing. (See generally Sage Invoices, Dkt. 584-6.)
Sage’s time entries include, for example, correspondences about settlement, judgment enforcement
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strategy, and discovery; conducting legal research regarding cybersquatting; and reviewing various
third-party subpoena responses, among other things; and many of the entries include more than
ten different tasks billed in a single block. (Id.)
“[I]n dealing with such surplusage, the [C]ourt has the discretion simply to deduct a
reasonable percentage of the number of hours claimed ‘as a practical means of trimming fat from
a fee application.’” Gagasoules, 296 F.R.D. at 111 (quoting Kirsch v. Fleet Street, Ltd., 148 F.3d
149, 173 (2d Cir. 1998)). As a result, the Court reduces the number of hours for which Plaintiff
seeks attorneys’ fees by 30%. See Broker Genius, 2019 WL 3773856, at *3 (reducing attorneys’
fees award for contempt sanction by 30% to account for inclusion of work unrelated to contempt
motion, vague entries, and block-billing).
The Court therefore holds that Plaintiff may recover $105,881.78 as reasonable attorneys’
fees related to the contempt proceedings described in the March 2025 M&O, which represents a
30% reduction from the $151,259.69 Plaintiff seeks.
D. Immediate Entry of Judgment
Finally, Plaintiff asks the Court to enter an immediate judgment for any monetary sanctions
the Court issues. (Compensatory Damages Mem., Dkt. 582, at 4–6.) Plaintiff correctly observes
that the Court previously granted Plaintiff’s motion for entry of judgment regarding an earlier
contempt sanction of attorneys’ fees and costs that Defendants had failed to pay. (Id. (citing
Aug. 2025 M&O, Dkt. 578).) The reasoning behind the Court’s earlier decision applies with equal
force here. Therefore, for the reasons stated in that Memorandum and Order, (Dkt. 578), the Court
grants Plaintiff’s request for immediate entry of judgment pursuant to Rule 58(d) and 58(a).
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CONCLUSION
For the reasons set forth above, Plaintiff’s motion for contempt, (Dkt. 477), is granted in
part and denied in part:
1. The Court denies Plaintiff’s request for the Court to hold the Gelardis in criminal contempt.
2. The Court finds the Gelardis in civil contempt and orders case-ending sanctions. Default
will be entered against the Gelardis under Rule 55(a) of the Federal Rules of Civil
Procedure. The Court orders Plaintiff to file a motion for default judgment pursuant to
Rule 55(b)(2) within thirty (30) days of this Memorandum and Order. The Gelardis shall
submit any objections to Plaintiff’s proposed judgment within thirty (30) days thereafter.
3. Safa’s counterclaims, (Dkt. 547), are dismissed pursuant to Rule 41(c), and Safa’s request
for the Court to take judicial notice, (Dkt. 569), is denied.
4. The Court sanctions Defendants $105,881.78 for the contempt found in the Court’s March
2025 Memorandum and Order, (Dkt. 448), which represents Plaintiff’s reasonable
associated attorneys’ fees. The Court grants Plaintiff’s request for immediate entry of
judgment as to that amount, (Dkt. 582), pursuant to Rule 58(d) and 58(a).
The Clerk of Court is respectfully directed to enter default against all Defendants pursuant
to Rule 55(a). The Clerk of Court is also respectfully directed to enter judgment in favor of
Plaintiff against Defendants for $105,881.78 pursuant to Rule 58(d) and 58(a).
SO ORDERED.
/s/ Pamela K. Chen
Pamela K. Chen
United States District Judge
Dated: February 9, 2026
Brooklyn, New York
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