2:22-cv-02433•Barns et al v. Payne et al
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1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS NATHAN BARNS, et al., Judgment Creditors, v. LAWRENCE PAYNE and PATRICIA PAYNE, Judgment Debtors. Case No. 22-2433-HLT-BGS REPORT AND RECOMMENDATION The matter comes before the Court on the Judgment Creditors’ motion to hold the Judgment Debtors in contempt of court. Doc. 165. The Judgment Creditors, Nathan Barns, Susannah Kilpatrick, and Darren Kilpatrick, contend that the Judgment Debtors, Lawrence Payne and Patricia Payne, failed to comply with the Court’s March 10 and June 10, 2025 orders. The Judgment Debtors maintain that they have complied with the Court’s prior orders and argue that a finding of contempt would be premature and punitive. For the reasons set forth below, the Court recommends that Judgment Debtors Lawrence Payne and Patricia Payne be found in civil contempt. I. Background This case has a lengthy procedural history and has been highlighted by repeated delays, disregard for court orders, and dilatory conduct on the part of the Judgment Debtors. The case was initially brought on October 21, 2022. Judgment Creditors brought claims for (1) breach of contract; (2) fraud and fraudulent inducement; (3) breach of fiduciary duty; (4) unjust enrichment; and (5) conversion. See generally Doc. 1. After a litigious discovery period, the parties agreed to a confidential settlement agreement in which they had certain rights and obligations that needed to be completed. See Doc. 113. Ultimately, the parties submitted a joint stipulation of judgment, agreeing Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 1 of 13
2 that judgment would be entered in favor of Judgment Creditors on all claims in the amount of $3,400,000. Doc. 115. On August 13, 2024, the Court then entered Judgment pursuant to the Joint Stipulation. Doc. 116. On February 18, 2025, after unsuccessful collection efforts, Judgment Creditors filed a motion for hearing in aid of execution pursuant to K.S.A. 60-2419, requesting that the Court order Judgment Debtors to appear, testify concerning their property and income, and produce certain categories of documents. Doc. 122. Judgment Debtors did not file a response to the motion. On March 10, 2025, the Court granted the motion and ordered the Judgment Debtors to appear on April 24, 2025, at 10:00 a.m. in Courtroom 236 of the Robert J. Dole United States Courthouse in Kansas City, Kansas. Doc. 129. The Court’s order further required the Judgment Debtors to produce the documents identified by the Judgment Creditors in Exhibit 1 to their motion. Doc. 122-1; 129, at 2 n.2. Exhibit 1 primarily sought documents relating to the Judgment Debtors’ financial assets and bank account information. Doc. 122-1. Judgment Debtors were properly served with the order and notice of the hearing in accordance with K.S.A. § 60-205(b). On April 24, 2025, Judgment Creditors’ counsel and a certified court reporter appeared at the scheduled time and place for the hearing. However, the Judgment Debtors failed to personally attend the hearing. Instead, counsel for the Judgment Debtors attended and requested a continuance. 1 The Court denied the request for a continuance and pursuant to K.S.A. 60-2419, issued an order directing the Judgment Debtors to appear on June 5, 2025, at 9:00 a.m. at the Kansas City federal courthouse and show cause why they should not be held in contempt for failure to appear. Doc. 144. The Court emphasized that their appearance was not discretionary but compulsory. Merely sending legal counsel on their behalf failed to satisfy the fundamental purpose 1 Judgment Debtors were proceeding pro se since their counsel withdrew on February 28, 2025. Doc. 128. The counsel that appeared on April 24 had only been recently retained and formally entered his appearance following the hearing. See Doc. 140. Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 2 of 13
3 of a hearing in aid of execution, which specifically required personal attendance to respond to questions regarding their financial circumstances. Further, Judgment Debtors, to this point, failed to produce any documents pursuant to the Court’s order. After the April 24 hearing, Judgment Creditors filed a motion for attorneys’ fees requesting that they be reimbursed for the time and expense incurred for attending and preparing for the hearing. See Doc. 154. Ultimately, the Court granted in part Judgment Creditors’ motion for attorneys’ fees. See Doc. 164. On June 5, 2025, the Court held a show cause hearing in which the Judgment Debtors personally appeared and submitted themselves for an in-person examination. 2 Doc. 161. Counsel for Judgment Debtors made a limited document production, but the documents were largely nonresponsive to the document requests at issue and duplicative of discovery produced in the underlying case. The document production also contained no financial information. As discussed on the record during the hearing, the Judgment Debtors had not produced all the documents required by the March 10 order and were again directed to do so no later than July 3, 2025. Doc. 161. Because the examination could not be completed in a single day, the Court scheduled a second in-person examination for July 17, 2025. On June 30, 2025, in anticipation of the ordered document production, counsel for the Judgment Creditors contacted counsel for the Judgment Debtors and identified numerous documents that the Judgment Debtors should possess but had not produced. The July 3, 2025, deadline passed without any documents being produced. As a result, the day before the second in- person examination, the Judgment Creditors filed a motion for contempt seeking sanctions against the Judgment Debtors for failing to comply with the Court’s prior order compelling document 2 The Court subsequently found that their previous failure to appear was not justified but given that they appeared and submitted themselves for an examination on June 5 and July 17, the Court did not make any civil contempt findings for their initial failure to appear. See Doc. 171. Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 3 of 13
4 production. See Doc. 165. The motion to hold Judgment Debtors in contempt requests (1) Judgment Debtors be held in civil contempt; (2) Judgment Debtors produce all responsive materials required by the March 10 Order; (3) the Court to impose daily monetary fines of $500 per day beginning on July 17, 2025, and continuing until compliance is achieved; (4) the Court hold Judgment Debtors in contempt until they have fully complied with all record production obligations; and (5) an order requiring Judgment Debtors to produce all of their electronic devices so that Judgment Creditor may obtain images of the information on them. Judgment Debtors appeared for the July 17 examination and produced some additional documents to Judgment Creditors. Following the hearing, the Court set a briefing schedule on the motion for contempt and reminded the Judgment Debtors that failure to comply with its prior order may result in sanctions, “including, but not limited to, a recommendation to the district judge that they be held in civil contempt, the imposition of fines, and/or an award of attorneys' fees.” Doc. 167. The Judgment Debtors filed a short response indicating they produced documents during the July 17 hearing and that they view their obligations as satisfied. Doc. 169. After reviewing the briefing on the motion, the Court found that it did not have sufficient information to rule on the motion. Judgment Debtors’ response brief indicated that they “responded to Plaintiff’s discovery requests to the best of their ability and knowledge, and have not withheld documents or information intentionally or negligently.” Id., at 2. However, the response contained no affidavits or declarations attesting that the Judgment Debtors have diligently searched for all responsive documents or have produced all responsive documents in their possession or control. Further, the Court did not know whether the July 17 document production alleviated Judgment Creditors’ concerns or whether there remained a dispute. To ensure the Court had all the information it needed to rule on the motion, the Court ordered supplemental briefing. See Doc. 170. Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 4 of 13
5 In the Court’s order for supplemental briefing, it required the Judgment Creditor to “identify, with particularity, all deficiencies with the current document production. Any noted deficiencies should be specific enough to allow the Judgment Debtors to fully respond to the allegation(s), and if necessary, supplement production.” Id., at 2. Judgment Debtors were ordered as follows: Judgment Debtors shall file a response brief no longer than 5 pages on or before October 22, 2025. The response brief should, if necessary, address all alleged deficiencies noted in Judgment Creditors’ supplemental brief. If the Judgment Debtors maintain that their production is complete, then their brief should be backed by affidavits and declarations to that effect. If Judgment Debtors deem that supplemental production is necessary, then they should provide a date certain of when all remaining documents will be produced. Id., at 2. The Judgment Creditors filed their supplemental brief on October 1, 2025, and the Judgment Debtors filed their response on November 3, 2025, nearly two weeks after the deadline. Briefing on the motion for contempt is now complete, and the Court is prepared to issue its recommendation. II. Legal Standard The Court has broad discretion to use its contempt powers to ensure adherence to its orders. See Rodriguez v. IBP, Inc., 243 F.3d 1221, 1231 (10th Cir. 2001). Contempt proceedings can be civil or criminal. Yates v. United States, 355 U.S. 66, 74 (1957). Civil contempt sanctions compel compliance with a court order or compensate litigants for injuries sustained from the contemnor's disobedience. Ager v. Janice C. Stormont Hosp. & Training Sch. for Nurses, 622 F.2d 496, 500 (10th Cir. 1980). However, a magistrate judge does not have the authority to impose sanctions for civil contempt— that power is committed only to the district court. KCI Auto Auction, Inc. v. Anderson, No. 19-1138- EFM-GEB, 2020 WL 1166178, at *3-4 (D. Kan. Mar. 11, 2020). In civil contempt proceedings, the moving party has the initial burden of proving by clear and convincing evidence that (1) a valid court order existed, (2) the non-moving party had Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 5 of 13
6 knowledge of the order and (3) that party disobeyed the Court's order. United States v. Ford, 514 F.3d 1047, 1051 (10th Cir. 2008). If the moving party makes such a showing, the burden shifts to the non-moving party to show either that he complied with the order or that he could not do so. Id. Willfulness is not an element of civil contempt but may assist the Court in determining an appropriate sanction. Taggart v. Lorenzen, 587 U.S. 554, 561–62 (2019). Once the Court finds the non-moving party in civil contempt, it may impose a variety of civil contempt sanctions, including ordering the contemnor to pay attorney's fees, see Universal Motor Oils Co. v. Amoco Oil Co., 743 F. Supp. 1484, 1487 (D. Kan. 1990), and related fees and expenses which the moving party incurred during the litigation, see Premium Nutritional Prods., Inc. v. Ducote, 571 F. Supp. 2d 1216, 1220 (D. Kan. 2008). Where a fine is compensatory, the amount must be based on the moving party's actual loss sustained as a result of the contemptuous conduct. O'Connor v. Midwest Pipe Fabrications, Inc., 972 F.2d 1204, 1211 (10th Cir. 1992). In exercising its discretion, the Court may incarcerate non-compliant parties if doing so would serve the purpose of coercing compliance. Ager, 622 F.2d at 500. III. Analysis First, the Court has no problem finding that a valid court order existed and that the Judgment Debtors had knowledge of the court order—the first two essential elements of a contempt finding. Judgment Debtors do not challenge the first two elements in their response. The Court’s March 10 Order (Doc. 129) clearly stated that Judgment Debtors were required to appear at the hearing in aid, submit themselves to an examination concerning their financial assets, and be prepared to provide all the information set forth in Exhibit 1 of the underlying motion. Doc. 129, at 2. Exhibit 1 contained 21 different requests for documents concerning Judgment Debtors’ financial assets and financial circumstances. Doc. 122-1. Judgment Debtors were mailed a copy of the Order via regular and certified mail. Doc. 129, at 3. The Order and its requirements were also Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 6 of 13
7 acknowledged by Judgment Debtors during the numerous hearings in the post-judgment proceedings. See Docs. 136, 160, 166. During the June 5, 2025 show cause hearing, the Judgment Debtors were directed to produce all documents no later than July 3, 2025. See Doc. 161. Given the directives in the underlying order and the numerous opportunities provided to Judgment Debtors to comply with the order, the Court finds by clear and convincing evidence that the first two elements are satisfied: a valid order existed and the Judgment Debtors had full knowledge of it. Next, the Court turns to the contested issue of whether the Judgment Debtors disobeyed the Court order. The final element the Court must determine is whether Judgment Debtors disobeyed the March 10 and June 10 orders. The motion for contempt and supplemental briefing provided by the Judgment Creditors reveal serious concerns regarding Judgment Debtors’ compliance with the Court’s prior orders. Judgment Creditors first inform the Court that the Judgment Debtors failed to produce any documents by the July 3, 2025, deadline which was set during the June 5, 2025 show cause hearing. See Doc. 161. Further, the documents produced—nearly two weeks late—on the morning of the July 17 debtors’ examination consisted of a flash drive containing a limited number of additional documents and screenshots purporting to show the Judgment Debtors’ efforts to access certain financial accounts. Those screenshots are attached as an exhibit to Judgment Creditors’ supplemental brief. Based on the Judgment Creditors’ review of the document production to date, it is “woefully inadequate,” and they highlight numerous deficiencies in their briefs. Judgment Creditors identify specific and articulable deficiencies in Requests Nos. 2-5, 11, 12, and 17. It is apparent that the Judgment Debtors have produced little to no responsive documentation, despite the fact that such records are within their possession, custody, or control. For example, in Request No. 4, the Judgment Creditors request [A]ll documents which identify all accounts receivable of Judgment Debtors and/or the Relevant Entities which provide information to each of those accounts Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 7 of 13
8 receivable; including, but not limited to, the account name, what the receivable is for, the 12-month aging history of the receivable, and the current balance of the receivable. The Judgment Creditors note that at least one of the Relevant Entities—Lions Only, L.L.C.—was engaged in product sales and therefore should possess the categories of documentation requested. Lions Only, L.L.C. is an entity owned or controlled by the Judgment Debtors. In response to a subpoena, U.S. Bank produced records showing that Lions Only, L.L.C. maintained an account into which deposits totaling $2,308,360.44 were made between January 2, 2024, and June 14, 2024. Despite the existence of these records, the Judgment Debtors have produced no updated bank statements for this account, including any statements covering the relevant 2024 period during which more than $2 million was deposited. The same is true with respect to Request Nos. 11 and 12, which broadly seek documents relating to cash journals and payments made for employee and shareholder compensation by entities owned or controlled by the Judgment Debtors. Despite these requests, the Judgment Creditors have received no responsive documents. As reflected in the supplemental briefing, Lions Only, L.L.C. had more than $2 million deposited into its bank account. Yet, notwithstanding the existence of this financial activity, the Judgment Debtors have produced no responsive documents whatsoever. Request No. 17 seeks bank account records that have not been produced. Judgment Creditors have obtained documents from third parties demonstrating that responsive records to Request No. 17 exist yet remain unproduced. In response to a subpoena, the online bank Bluevine produced account statements for four accounts held by Hardbody Energy, L.L.C., an entity owned and controlled by the Judgment Debtors. Those statements reflect wire transfers totaling $1,905,280.96 between May 31, 2023, and August 2, 2024. Despite clear evidence that these statements exist, the Judgment Debtors have not produced them. Similarly, another online bank, Wise, responded to a subpoena by producing documents for four accounts held by various entities Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 8 of 13
9 owned and/or operated by the Judgment Debtors. The Judgment Debtors, however, have failed to produce any documents relating to these entities. The Judgment Creditors also served a subpoena on Fidelity Bank. In response, Fidelity Bank produced documents showing that the Judgment Debtors used accounts at Evolve Bank & Trust and Community Federal Savings Bank to make mortgage payments. The Judgment Debtors, however, did not produce any records from either of those banks. Fidelity Bank’s production further revealed that the Judgment Debtors maintained an account at Spirit Bank for their entity, Savage Investor, L.L.C.. Despite this account falling squarely within the scope of the document requests, the Judgment Debtors likewise failed to produce any records from Spirit Bank. The record further reflects that the Judgment Debtors failed to produce multiple categories of documents, including income tax returns for the years 2021 through 2024 (Request No. 2), organizational documents for entities owned or controlled by the Judgment Debtors (Request No. 1), and documents relating to asset transfers, real property, and luxury vehicles (Requests Nos. 15 and 16). These failures persist despite evidence demonstrating that such documents exist and fall within the Judgment Debtors’ possession, custody, or control. With respect to Requests Nos. 6–10, 14, 18, 19, and 21, the Judgment Debtors have produced no responsive documents whatsoever. Based on its review of the screenshots, the parties’ briefs, and the identified deficiencies, the Court finds that the Judgment Creditors have met their burden of establishing, by clear and convincing evidence, that the Judgment Debtors disobeyed the Court’s orders. 3 The Court is satisfied that the Judgment Debtors failed to comply with the Court’s orders and failed to produce responsive documents. The burden therefore shifts to the Judgment 3 Judgment Creditors argue, and the Court agrees, that the Judgment Debtors are in the best position to know what documents exist and are responsive to the Court’s orders. The examples of deficient production identified above are non-exhaustive and illustrative. Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 9 of 13
10 Debtors to demonstrate either that they complied with the Court’s order or that compliance was impossible. Judgment Debtors’ supplemental response brief is wholly insufficient to carry that burden. First, in the Court’s order setting the briefing schedule, it specifically stated that “[i]f the Judgment Debtors maintain that their production is complete, then their brief should be backed by affidavits and declarations to that effect.” Doc. 170, at 2. Perhaps unsurprisingly, the Judgment Debtors’ response brief did not follow any of the instructions provided. The brief was filed nearly two weeks late and contains no affidavits or declarations of any kind. This failure alone is sufficient for the Court to find that the Judgment Debtors have not met their burden of demonstrating compliance with the Court’s orders. The response brief is also internally inconsistent and incoherent. On the one hand, the Judgment Debtors assert that they have complied with all Court orders. On the other, the brief concedes that their document production is incomplete. For example, the Judgment Debtors acknowledge that they have produced only some responsive materials—not all. The brief likewise makes no meaningful attempt to challenge the Judgment Creditors’ factual assertions. Under the Court’s order requiring supplemental briefing, the Judgment Debtors were required to “address all alleged deficiencies noted in Judgment Creditors’ supplemental brief.” Doc. 170, at 2. They made no effort to do so. The Judgment Debtors also assert ambiguity in the requests as a justification for their failure to produce all responsive documents. At the same time, they request “additional time to address the alleged deficiencies and produce any remaining responsive documents,” claiming that “[t]he July 3, 2025 deadline may have been insufficient given the volume and complexity of the requests.” Doc. 174, at 2. The Court’s order requiring the Judgment Debtors to produce documents was entered on March 10, 2025. See Doc. 129. Since that time, the Judgment Debtors have been afforded Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 10 of 13
11 numerous opportunities and ample time to comply. It is now January 2026. The Court is confident that granting additional time would result in the same pattern of conduct that has characterized this litigation: obfuscation, delay, and repeated requests for extensions. The Judgment Debtors have made no showing that they complied with the Court’s orders or that compliance was impossible. Accordingly, based on the briefing and the proceedings discussed herein, the Court finds, based on clear and convincing evidence, that Judgment Debtors violated the March 10 and June 10 orders and recommends that the Judgment Debtors be held in contempt. The remaining issue before the Court is the appropriate sanctions for the Judgment Debtors’ contempt, if they fail to purge the contempt findings. IV. Recommendation Federal courts possess the power to punish contempt by fine or imprisonment pursuant to 18 U.S.C. § 401. “A district court may exercise broad discretion in using its contempt power to assure compliance with its orders.” Rodriguez v. IBP, Inc., 243 F.3d 1221, 1231 (10th Cir. 2001). Civil contempt sanctions serve two primary purposes: to compel future compliance with court orders (coercive sanctions) and to compensate parties injured by noncompliance (compensatory sanctions). Int'l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 827-28 (1994). Coercive sanctions may include incarceration and daily monetary fines intended to compel compliance. United States v. Rapower-3, LLC, 470 F. Supp. 3d 1232, 1249 (D. Utah 2020); Bagwell, 512 U.S. at 829. Compensatory sanctions, by contrast, may include costs and attorneys’ fees awarded to the opposing party. Law v. Nat'l Collegiate Athletic Ass'n, 134 F.3d 1438, 1443 (10th Cir. 1998). However, any compensatory fine payable to the opposing party must be based on evidence of actual loss. United Mine Workers of Am., 330 U.S. at 304. Where the purpose of the sanction is coercive, however, the Court’s discretion is broader. In such circumstances, the Court must Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 11 of 13
12 consider “the character and magnitude of the harm threatened by continued contumacy, and the probable effectiveness of any suggested sanction in bringing about the result desired.” Id. Based on the files, records, and proceedings herein, and for the foregoing reasons, the Court finds, based on clear and convincing evidence, that Judgment Debtors violated the Court’s prior orders and HEREBY RECOMMENDS that: 1. The Judgment Creditors’ motion to hold Judgment Debtors in contempt of Court (Doc. 165) be GRANTED in part and DENIED in part. 2. Judgment Debtors be found in civil contempt of court for failure to comply with the Court's orders as set forth above. 3. Judgment Debtors produce all responsive materials required by this Court’s March 10 and June 10 Orders. 4. Judgment Debtors shall be jointly and severally liable for a daily sanction of $500.00 for each day until full compliance with the March 10 and June 10 Orders are achieved. 5. This order be stayed for 30 days from the date of the District Judge's Order on this Report and Recommendation to permit Judgment Debtors an opportunity to purge contempt by complying with the Court’s prior orders. 6. Judgment Debtors be held jointly and severally liable for all reasonable attorneys’ fees and expenses incurred by the Judgment Creditors in pursuing collection efforts, including fees and expenses associated with the hearings in aid of execution, the show-cause hearings, and the filing and prosecution of the motion for contempt, excluding any fees or expenses previously awarded by the Court in this action, so as to avoid duplication or double recovery. This recommendation is not stayed and is made regardless of whether the Judgment Debtors subsequently purge their contempt. 4 4 The Court will not recommend that the Judgment Debtors be compelled to produce their personal cell phones or laptop computers for forensic imaging. The Judgment Creditors have not met their burden of demonstrating that such compelled imaging is an available or appropriate remedy as a civil contempt sanction, nor have they shown that the Judgment Debtors’ personal electronic devices contain responsive information subject to the Court’s March 10 order. The Court likewise declines to recommend incarceration (despite it being authorized by statute). Cases in which incarceration has been ordered typically involve circumstances where a party adamantly refused to recognize its obligations, demonstrated gross disregard for court orders, or exhibited utter disdain for the judicial institution. See, e.g., ClearOne Commc’ns, Inc. v. Bowers, No. 07-cv-37, 2016 WL 6068122, at *1 (D. Utah Oct. 14, 2016); Commercial Credit Grp., Inc. v. Protégé Excavation, Inc., No. 19-558, 2020 WL 6196167, at *1 (D.N.M. Oct. 22, 2020). The conduct at issue here does not rise to the level of an “utter disdain for the Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 12 of 13
13 Pursuant to 28 U.S.C. § 636(b)(1), Fed R. Civ. P. 72, and D. Kan, Rule 72.1.4, Judgment Debtors shall have fourteen (14) days after service of a copy of these proposed findings and recommendations to serve and file with the U.S. District Judge assigned to the case, any written objections to the findings of fact, conclusions of law, or recommendations of the undersigned Magistrate Judge. Judgment Debtors’ failure to file such written, specific objections within the 14- day period will bar appellate review of the proposed findings of fact, conclusions of law, and the recommended disposition. See Moore v. United States, 950 F.2d 656 (10th Cir. 1991). IT IS SO RECOMMENDED. Dated January 6, 2026, at Wichita, Kansas. /s/ BROOKS S EVERSON Brooks G. Severson United States Magistrate Judge judicial institution” or an adamant refusal to comply. See id. Nevertheless, the Judgment Debtors’ continued noncompliance is unacceptable, and the imposition of the sanctions above are warranted. Case 2:22-cv-02433-HLT-BGS Document 176 Filed 01/06/26 Page 13 of 13
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