United States District Court, W.D. Virginia, Harrisonburg Division
Michael F. Urbanski United States District Judge.
case is proceeding in the post-judgment phase of litigation.
On January 23, 2014, the court entered judgment in favor of
DIRECTV, LLC against defendants Randy Coley and East Coast
Cablevision, LLC (collectively, the "Coley
defendants"), jointly and severally, in die amount of
$2, 393, 000, representing 2, 393 violations of 47 U.S.C.
§ 605(a) at the statutory minimum rate of $1, 000 per
violation, with interest. 47 U.S.C. §
605(e)(3)(C)(i)(II). The court subsequently ordered awards of
attorney's fees and costs and monetary sanctions against
the Coley defendants. They have paid nothing to date.
asks the court to reverse-pierce the corporate veil and
declare that Randy Coley is the alter ego of his three
limited liability companies, such that the assets held by
those LLCs are subject to the judgment in this case. In
furtherance of that effort, DIRECTV has filed a Motion for
Supplemental Proceeding to Determine Whether Assets
Controlled by Judgment Debtor Randy Coley are Subject to the
Judgment (ECF No. 271). DIRECTV also asks the court to
appoint a receiver to prevent fraud during the judgment
execution process (ECF No. 292).
facts of this case are egregious and warrant die
extraordinary relief sought by DIRECTV. Justice requires a
finding that Randy Coley is the alter ego of his sham
corporate entities. Additionally, given Coley's history
of deception and efforts to evade judgment, a receivership is
appropriate in this case. Thus, the court will reverse-pierce
the corporate veil and set this matter down for further
proceedings concerning appointment of a receiver.
case concerns the Coley defendants' receipt and
unauthorized distribution of DIRECTV satellite programming at
Massanutten Resort in violation of 47 U.S.C § 605. The
underlying facts have been detailed in numerous opinions
issued by the court over the course of this five year
litigation and need not be repeated here. Suffice it to say
that for over a decade, the Coley defendants collected
programming revenue from more than 2, 000 subscriber units at
Massanutten Resort while reporting to DIRECTV the provision
of service to only 168 units, pocketing approximately $38,
000 in unauthorized subscriber fees on a monthly basis. The
court entered summary judgment in DIRECTV's favor against
the Coley defendants on the § 605 claim. ECF Nos. 203,
204. DIRECTV elected statutory rather than actual damages at
the minimum amount of $1, 000 per violation for the two years
prior to the filing of DIRECTV's crossclaim. See ECF Nos.
213, 214, 219, 220. DIRECTV thereafter agreed to voluntarily
dismiss all remaining claims against the Coley defendants and
against Randy Coley's wife, Kimberli Coley, leaving no
factual issues to be resolved by a jury. ECF Nos. 225, 226.
Accordingly, the court entered judgment against the Coley
defendants, jointly and severally, in the amount of $2, 393,
000, and dismissed the case. ECF Nos. 219, 220, 224. The
clerk taxed costs against the Coley defendants in the amount
of $3, 052.99 at DIRECTV's request, ECF No. 234, and the
court awarded DIRECTV $236, 013.85 in attorney's fees and
costs, adopting the recommendation of the United States
Magistrate Judge without objection, ECF Nos. 235, 236.
Related interpleader action
filing of the instant case gave rise to two related
interpleader cases, which were later consolidated into Case
No. 5:llcv00123. In this action, Great Eastern Resort
Management, Inc. (GERM) and various Massanutten homeowners
associations sought a determination of rights to monies owed
for DIRECTV programming provided for a period of time
beginning in 2011, after the instant case was filed and the
Coley defendants' underreporting scheme was exposed.
entry of judgment in the underlying case, plaintiffs in the
interpleader action moved for partial judgment on the
pleadings against the Coley defendants and to compel
arbitration. Case No. 5:11cv123, ECF No. 69. The motion
concerned the Coley defendants' refusal to perform under
a January 3, 2012 settlement agreement entered into between
the parties in connection with the Chapter 11 bankruptcy
proceedings of defendant East Coast Cablevision, LLC. The
Coley defendants had agreed to convey to GERM whatever
interests they had in certain cable television infrastructure
at Massanutten Resort and to arbitrate the amount to be paid
for that infrastructure. In exchange, East Coast Cablevision
obtained a dismissal of its bankruptcy and resumed use of the
company's remaining assets. This agreement was negotiated
and drafted by counsel and recited at a January 3, 2012
hearing before the bankruptcy court, at which Randy Coley was
present. Based on the representations by the parties as to
the terms of the settlement, the bankruptcy court approved
the joint settlement agreement, granted the plaintiffs'
motion for relief from the automatic stay, and ultimately
dismissed East Coast Cablevision's bankruptcy.
the Coley defendants refused to comply with their obligations
under the agreement, alleging one of the signatories to that
agreement, Kimberli Coley, never assented to its
terms-notwithstanding the fact the bankruptcy court had
expressly found that: "On January 3, 2012, the
Massanutten Parties, the Debtor, by and through its Debtor
Designee, Randy P. Coley, Resort Cable, LLC, and Kimberli
Coley reached an agreement resolving numerous issues related
to certain Cable Service Infrastructure at the Massanutten
Resort." See Case No. 5:11cv123, ECF No. 58-3,
at 2-3 (emphasis added).
Coley defendants' actions forced the Massanutten
plaintiffs to turn to the court for relief. Plaintiffs
accused the Coley defendants of "playing fast and loose
with the federal judiciary." Case No. 5:11cv1123, ECF
No. 70, at 3. That appears to be accurate.
Coley defendants elected not to file a written response to
plaintiffs' motion for partial judgment on the pleadings
and to compel arbitration. The court entered a show cause
order directing Randy Coley to appear on behalf of himself
and the Coley defendants at a hearing on July 25, 2014. Case
No. 5:11cv123, ECF No. 79. At that hearing, Coley (and his
counsel) agreed to and endorsed, on behalf of himself and the
Coley defendants, a Consent Judgment Order that gave effect
to the terms of the parties' January 3, 2012 settlement
agreement and required the Coley defendants to execute and
deliver within sixty days the instruments necessary to convey
their interest in the cable infrastructure to GERM. The Coley
defendants further agreed to and endorsed a separate Consent
Order granting plaintiffs' motion to compel arbitration.
Case No. 5:11cv123, ECF Nos. 82, 84.
signature did nothing to secure his compliance with his
obligations under those orders, however. Coley inexplicably
refused, numerous times, to properly execute and deliver to
counsel for GERM the necessary conveyance documents,
notwithstanding the fact that those documents had been
approved by the Coley defendants' counsel. Additionally,
Coley resisted efforts to commence arbitration by refusing to
execute the arbitration engagement agreement and pay the
Coley defendants' share of the retainer. GERM was again
forced to turn to the court for assistance.
a hearing on December 10, 2014, the court held Randy Coley in
contempt and awarded $8, 571.95 in sanctions against the
Coley defendants. Pursuant to Rule 70 of the Federal Rules of
Civil Procedure, the court divested the Coley defendants'
interest in the cable infrastructure and vested title in
GERM. Case No. 5:11cv123, ECF No. 103.
recalcitrance continued following the withdrawal of his
counsel from both the interpleader action and the underlying
case. Acting on a written directive from Coley to cease
representation, counsel for the Coley defendants moved to
withdraw from the related actions on December 23, 2014. A
hearing was held on January 9, 2015 and, the same day, the
court entered an order granting the motion to withdraw and
directing the defendant limited liability companies to secure
counsel on or before January 16, 2015. Case No. 5:11cv123,
ECF No. 110. No counsel ever entered an appearance for any of
the Coley defendants in the interpleader action.
memorandum opinion and order entered February 25, 2015, the
court vacated the Consent Order compelling arbitration and
entered summary judgment in favor of DIRECTV, dismissing with
prejudice any claim by the Coley defendants to the
interpleaded funds. Case No. 5:11cv123, ECF Nos. 115, 116.
Coley's obstructionist tactics did not end with the
dismissal of the interpleader action. The underlying case was
by then pending in the post-judgment phase of proceedings
when Coley failed to secure counsel for his LLCs by the
court's deadline of January 16, 2015. See ECF No. 241.
also failed to timely respond to discovery requests issued to
the Coley defendants in December 2014 in aid of judgment
execution pursuant to Federal Rule of Civil Procedure
69(a)(2). Attempts by DIRECTV to confer with Randy Coley on
this discovery issue were futile, and on January 28, 2015,
DIRECTV filed a motion to compel. ECF No. 243. The court
granted the motion and, by order entered February 26, 2015,
required the Coley defendants to respond by March 26th to the
discovery requests and to DIRECTV's fee request filed
pursuant to Rule 37(a)(5). ECF No. 244. The Coley defendants
filed no response whatsoever.
then filed a motion for sanctions and finding of contempt on
April 6, 2015. ECF No. 245. The court issued a show cause
order, directing Randy Coley to appear at a hearing on May
15, 2015 and show cause why he should not be held in contempt
of court. ECF No. 249. Coley appeared pro se at the
May 15th hearing, insisting he had not received the discovery
requests, the motion to compel, or the court's February
26, 2015 order. The court took DIRECTV's motion for
sanctions under advisement and ordered Coley: 1) to respond
to DIRECTV's discovery requests on or before June 1,
2015; 2) to notify the court whom he retained as counsel on
or before June 1, 2015; and 3) to appear before the
magistrate judge for a sworn deposition on June 16, 2015 and
bring with him all books or financial records related to Its
Thundertime, LLC and any properties owned or held by Its
Thundertime, LLC, as well as all information concerning
assets held by Randy Coley personally and by East Coast
Cablevision, LLC and related entities. ECF No. 254.
did retain counsel, respond to the discovery requests, and
appear at the June 16, 2015 deposition, to which he claims to
have brought "a full trailer load of documents."
ECF No. 264, at 5. Coley thereafter took the position that
DIRECTV's motion for sanctions was moot, as he had
fulfilled all of his obligations to DIRECTV and the court.
ECF No. 264. DIRECTV saw things differently. It argued
Coley's June 16, 2015 deposition testimony contradicted
his previous sworn testimony and discovery responses, that
Coley could not answer basic questions about the flow of
money between his entities and himself, and that certain
documents he produced related to Its Thundertime, LLC were
fraudulent and back-dated. DIRECTV stated that in a
forthcoming motion, it would ask the court to reverse-pierce
the corporate veil given Coley's abuse of the corporate
form. DIRECTV indicated it no longer sought assistance from
the court in securing the Coley defendants' participation
in the post-trial discovery process but renewed its motion
for monetary sanctions against the Coley defendants for their
previous failures to comply with court; orders. ECF No. 265.
The court granted DIRECTV's motion and awarded sanctions
against the Coley defendants in the amount of $5, 285. ECF
Nos. 268, 269.
promised, DIRECTV filed a motion for a supplemental
proceeding to determine whether assets controlled by Randy
Coley are subject to the judgment in this case. DIRECTV seeks
a declaration that Coley is the alter ego of his
single-member LLCs, namely Its Thundertime, LLC, East Coast
Sales, LLC, and South Raleigh Air, LLC. A hearing was held on
November 19, 2015, at which Randy Coley appeared in person
and by counsel. DIRECTV filed a supplemental request to
appoint a receiver. Both motions are currently pending before
Coley defendants owe DIRECTV more than $2.6 million. As Randy
Coley allegedly holds no assets in his own name, the focus of
these post-judgment proceedings is on his limited liability
THE CORPORATE ENTITIES
Coley's limited liability companies
Its Thundertime, LLC
to an operating agreement (and amendment thereto) produced by
Coley in discovery in 2012, Its Thundertime, LLC, a Delaware
limited liability company, was formed on April 10, 2008.
Randy Coley is its sole member. Jamnback Decl., ECF No.
272-2, at Ex. 13.
to an operating agreement produced by Coley in response to
post-judgment discovery requests in 2015, Its Thundertime,
LLC has two members-Randy Coley and Kimberli Coley. Jamnback
Decl., ECF No. 272-2, at Ex. 11. This discrepancy is
discussed infra in greater detail.
event, Coley described this corporate entity in his September
2012 deposition as "a real estate holding company."
Jamnback Decl., ECF No. 272-1, at Ex. 3, p. 51. Evidence
presented by DIRECTV indicates Its Thundertime owns a total
of 19 properties, including Coley's primary residence and
vacation home, with a total combined assessed value of $5,
232, 151. Id. at Ex. 4; see also id. at Ex.
3, pp. 73, 75, 98. The profit from the rents collected from
these properties goes to Its Thundertime, according to
Coley's June 16, 2015 testimony. Id. at Ex. 1,
East Coast Sales, LLC
2012 deposition, Randy Coley described East Coast Sales as
"a trailer company." Jamnback Decl., ECF No. 272-1,
at Ex. 3, p. 89. Coley recently testified that East Coast
Sales was formed around 2005, id. at Ex. 1, p. 11,
is a separate entity from Its Thundertime, id. at
Ex. 1, p. 13, and "was originally set up as a property
management many years ago. It was just a way that we did
property management. And later on we started selling trailers
and it became a trailer business, " Id. at Ex.
1, p. 10. Corporate documents produced by Coley indicate East
Coast Sales is a Delaware limited liability company formed in
2008. Coley Decl., ECF No. 277-1, at Ex. 7. These documents
suggest both Randy and Kimberli Coley are members of East
Coast Sales, contradicting Coley's prior testimony about
Kimberli's involvement in the business. Id.; see
2015 testimony, Coley described this LLC's primary
business as selling trailers and its secondary business as
"[m]anagement for rental properties." Jamnback
Decl., ECF No. 272-1, at Ex. 1, p. 11; see Coley Decl., ECF
No. 277-1, at Ex. 9 (business records for East Coast Sales).
Coley explained that East Coast Sales acts as "a primary
management company" that "oversee[s] certain
properties with Its Thundertime"-specifically, rental
properties owned by Its Thundertime, for which East Coast
collects rental income. Jamnback Decl., ECF No. 272-1, at Ex.
1, pp. 12, 80, 118. When asked why East Coast Sales needed to
oversee properties held by Its Thundertime, Coley responded,
Its Thundertime was located in Delaware. We didn't have
an office, per se, in Delaware. We do have a registered agent
there. And we wanted-it was beneficial to us-prior to
creating Its Thundertime, that's where the rental income
came to. It always came to us in that fashion prior to it
being a business, prior to Its Thundertime being a business.
The original thought was-of East Coast Sales was selling real
estate; buy, sell rental real estate. That was the original
plan. It's not-actually still not called East Coast
Trailer Sales, it's just called East Coast Sales.
Id. at Ex. 1, pp. 12-13.
South Raleigh Air, ULC
to Coley, South Raleigh Air "manages and collects rent
money from the properties that East Coast Sales does
not." Id. at Ex. 1, p. 29; see Coley Decl., ECF
No. 277-1, at ¶ 32. Randy Coley testified that this is
the oldest of his LLCs, created after Coley and his wife
bought 4 airport hangers in Raleigh. Jamnback Decl., ECF No.
272-1, at Ex. 1, pp. 29-30. These properties-as well as the
single family home in Wilson, North Carolina where Coley grew
up-are owned by Its Thundertime but managed by South Raleigh
Air. Id. at Ex. 1, pp. 31-32, 115. South Raleigh Air
collects rent on these properties, pays the operating
expenses, and then the profit is paid to Its Thundertime.
Kimberli Coley's membership interest
rather surprising turn of events, Kimberli Coley's
membership interest in the above-referenced LLCs has become a
point of contention in these post-judgment proceedings.
Throughout the underlying litigation, Randy and Kimberli
Coley adamantly maintained that Kimberli Coley had no
involvement whatsoever in her husband's cable business or
in his business ventures generally. For example, in a brief
in support of her motion to dismiss for lack of personal
jurisdiction, Kimberli Coley represented that she "is
not and has never been involved as an owner, member,
stockholder, director, officer, partner, agent, or employee
of any entities associated with her husband's work. (EC
Coley Dec. ¶ 4) (EL Coley Dec. ¶ 15)." ECF No.
76, at 3; see also K. Coley Aff., ECF No. 77, at
¶ 4. In his 2012 deposition, Randy Coley testified that
Kimberli Coley "hadn't worked a day in her life as
far as [he has] known her . . . She's a homemaker. She
takes care of two boys." Jamnback Decl., ECF No. 272-1,
at Ex. 3, p. 139. He explained:
I don't think my wife has ever seen a bill. As long as
I've known her for nineteen years, and we've been
married for nineteen years, my wife has never paid die first
bill. Not a light bill. Not a phone bill. She ain't paid
a mortgage payment. She ain't paid a water bill. She
doesn't work. She never worked. Mr. Jamnback, my
wife's beyond reproach. Do you understand what I'm
saying? And going to tell you why. She donates every day,
every hour of her time to die community. She ain't worked
since I've known her.
Id. at Ex. 3, p. 80.
much of die focus in die underlying case was on Coley's
cable business and die extent of Kimberli Coley's
involvement with East Coast Cablevision, LLC, Randy Coley was
asked specifically in his 2012 deposition whether his wife
had any involvement in Its Thundertime, LLC and East Coast
Sales, LLC. He testified that he was die sole member/manager
of Its Thundertime, id. at Ex. 3, p. 50, and that
his wife had no involvement with East Coast Sales,
id. at Ex. 3, p. 90. Testifying on behalf of East
Coast Cablevision, LLC in a Rule 30(b)(6) deposition,
Coley stated he was the sole member of both Its Thundertime
and South Raleigh Air. Jamnback Decl., ECF No. 272-2, at Ex.
10, p. 167. Coley's deposition testimony was supported by
Kimberli Coley's sworn interrogatory responses, in which
she stated she had no interest in Its Thundertime, LLC, East
Coast Sales, or any "joint ventures, partnerships, or
other business enterprises." Jamnback Decl., ECF No.
272-1, at Ex. 5, ¶¶ 6, 8; Ex. 7, ¶ 20. In
fact, while testifying under oath at a December 20, 2012
hearing before this court, Kimberli Coley was asked whether
she has any ownership interest in Its Thundertime and she
responded, "No, sir." Id. at Ex. 9, p. 16.
Coleys' assertions concerning Kimberli Goley's lack
of involvement in her husband's business dealings
ultimately served them well in the underlying
litigation-DIRECTV voluntarily dismissed its claims against
Kimberli Coley electing instead to pursue judgment against
her husband and East Coast Cablevision on the § 605
claim. See ECF Nos. 220, 224, 225. Now in the post-judgment
phase of proceedings, when his assets are at stake, Randy
Coley's position on his wife's membership interest
has changed drastically.
contradicting his prior testimony, Coley testified at his
June 16, 2015 deposition that his wife has been a co-member
of Its Thundertime, LLC since "day one, " Jamnback
Decl., ECF No. 272-1, at Ex. 1, p. 44; that he and his wife
are both members of East Coast Sales, Id. at Ex. 1,
p. 19; and that he is "not sure" whether his wife
is a member of South Raleigh Air, Id. at Ex. 1, pp.
33-34. Not only is his wife a member of these LLCs, according
to Coley's 2015 testimony, but she is an active
participant in these companies, managing financial records of
East Coast Sales, Id. at Ex. 1, p. 20, and taking
meeting minutes and doing the filing and billing records for
Its Thundertime, id. at Ex. 1, pp. 45, 48-51. Coley,
in fact, stated: "She's more of a - she is more of a
active participant in [Its Thundertime] than I am."
Id. at Ex. 1, p. 45. He then qualified this
testimony as follows:
Oh, she doesn't go to work; she helps manage and maintain
the paperwork for Its Thundertime. She comes to my office
where Its Thundertime records are held at, and she does
filings, she does reconciliation, she's got this book she
has that outlines money that comes in and all that stuff. But
she doesn't go out and work. She doesn't go out and
do anything. And she only spends several hours maybe a week.
She'll come in there once a week.
Id. at Ex. 1, p. 46.
confronted with his prior 2012 deposition testimony, in which
he stated he was the sole member of Its Thundertime, Coley
I don't recall it. I don't recall it, but it looks
accurate. But my wife has been-my wife has been-I don't
consider her a member; I consider her as a wife-as my wife.
She's been a-if you want to consider her a member-.
But I am the only one that actually does any work-work
outside. She's - the only thing that she does is file
paperwork. That's the only thing she does.
Id. at Ex. 1, p. 53. Pressed further on his prior
testimony that Kimberli Coley played no role whatsoever in
Its Thundertime, Coley testified on June 16, 2015:
I'm telling you my wife has always been a member since
day one. And she doesn't have a full role in Its
Thundertime. She doesn't work. She doesn't do any
work. All she does is go to my office and file paperwork.
She's not an employee.
Id. at Ex. 1, pp. 53-54. Coley insisted any
discrepancy in his testimony must have been the result of
confusion and continued to maintain that his wife "has a
major role in Its Thundertime and East Coast Sales, "
id. at Ex. 1, p. 59, and that "she has been a
huge, huge part of these companies that we operate. Huge
part. More than I have." Id. at Ex. 1, p. 56.
addition to his inconsistent testimony, Coley has produced
contradictory operating agreements for Its Thundertime, LLC.
The operating agreement and amendment he produced in
discovery in 2012 state Its Thundertime is a single-member
limited liability company. Jamnback Decl., ECF No. 272-2, at
Ex. 13. The operating agreement he produced in 2015
post-judgment discovery-which has a different format than the
previously-produced document-states Its Thundertime has two
members, Randy Coley and Kimberli Coley. Id. at Ex.
11. Coley testified at his June 2015 deposition that this
recently-produced version is the effective operating
agreement of Its Thundertime. Jamnback Decl., ECF No. 272-1,
at Ex. 1, pp. 47-48; see ...