United States District Court, E.D. Virginia, Alexandria Division
M. BRINKEMA UNITED STATES DISTRICT JUDGE.
the Court is respondents' Joint Motion to Vacate for Lack
of Subject Matter Jurisdiction [Dkt. No. 323]. For the
reasons that follow, defendants' Motion will be granted.
William Hawkins ("Hawkins"), Eric Keller
("Keller"), Thomas Zato ("Zato"), Kristof
Gabor ("Gabor"), and Justin Panchley
("Panchley") (collectively, "plaintiffs")
are currently attempting to enforce an eleven-year-old
default judgment against corporate affiliates of one of the
original defendants in this civil action. They assert a right
to relief under both Fed.R.Civ.P. 65 civil contempt and
Fed.R.Civ.P. 25 successor liability.
defendants are Laszlo Borsy ("Borsy"); Mediaware
Corporation ("Mediaware"); MediaTechnik Kft.
("MediaTechnik"); DMCC Kommunikacios Rt.
("DMCC"), which changed its name to DIGI Zrt. on
January 31, 2007, and changed its name again to i-TV
("i-TV") on June 12, 2012; and Peterfia Kft.
("Peterfia"). The respondents are DIGI
Communications N.V. ("DIGI Comms.") (formerly known
as Cable Communications Systems, N.V., or "CCS");
RCS & RDS S.A. ("RCS/RDS"); RCS Management S.A.
("RCS"); DIGI Tavkozlesi es Szolgaltato Kft.
("DIGI Kft.") (formerly known as Egyesiilt Magyar
Kabeltelevizio, or "EMKTV"); and Zoltan Teszari
description of the background events is needed to appreciate
the current posture of this litigation. Borsy first
approached Hawkins in 2001 about investing in his company
MediaTechnik. Mem. Op. [Dkt. No. 94] 7. Hawkins was
interested in the investment and paid $330, 000 for 35% of
MediaTechnik's stock and 33.33% of Peterfia's stock.
Id. In 2003, Borsy approached Hawkins again, this
time about a "roll up" deal in which MediaTechnik,
Mediaware, Peterfia, and DMCC would become part of the same
corporate family. Id. at 7-8. After negotiations,
Hawkins and Borsy agreed that Hawkins would pay $1 million
for a 49% stake in MediaTechnik, which would entitle him to a
corresponding 49% stake in Mediaware, DMCC, and Peterfia.
Id. at 8. Hawkins subsequently paid the $1 million.
diverted those funds, using them to purchase the remaining
interest in DMCC, which made Borsy that company's sole
owner. Id. Hawkins did not receive a 49% stake in
DMCC or Peterfia as provided for in the agreement.
Id. Borsy also forged Hawkins's signature on a
document Borsy prepared that purported to give Hawkins's
Mediaware voting rights to Borsy. Id. The remaining
plaintiffs had been offered management positions in the
combined companies in exchange for their services and were to
be compensated with salaries ranging from $72, 000 to $250,
000 and equity in one or more of the companies. Id.
at 9-11. None received any compensation from any of the
began the tortured procedural history of this civil action.
Plaintiffs filed a Complaint on October 31, 2005, alleging
fraud, breach of contract, conversion, breach of fiduciary
duties (against Borsy), and unjust enrichment and seeking an
accounting of all transactions by or among defendants and a
declaration establishing their ownership interests in the
corporate defendants. Id. at 2. Borsy belatedly
filed several documents on behalf of all defendants, but they
* were written in Hungarian. Id. at 3. The Court
struck those filings, giving defendants an opportunity to
file translations, which they failed to do. Id.
Accordingly, at plaintiffs' request, default was entered
on March 13, 2006. Id.
subsequently obtained counsel and filed a motion to set aside
the default, which was granted. Id. After DMCC's
and Peterfia's motions to dismiss were denied, their
counsel withdrew, citing nonpayment of legal fees.
Id. After defendants failed to obtain new counsel or
participate in discovery requests, a new default was entered
against them on June 15, 2006. Id. at 3-4. On
September 15, 2006, following an ex parte hearing on
damages at which no one appeared for any defendant, the
magistrate judge issued a Report and Recommendation
("Report"), recommending that a default judgment be
entered against defendants.
September 28, 2006, the Court received a letter from Borsy
seeking a 30-day extension to file objections to the Report,
which request was granted. Id. at 5. The next day,
September 29, 2006, plaintiffs filed an Emergency Motion to
Reconsider the order granting Borsy an extension. [Dkt. No.
109] Ex. 8, at 2. The Court did not revoke the extension of
time but did impose an injunction on October 2, 2006 "to
prevent the defendants from disposing or dissipating assets
subject to this litigation or undertaking transactions
affecting the property at issue without consent of the
to plaintiffs, just four days later, despite the
injunction's command that Borsy refrain from
"undertaking any transactions out of the ordinary course
of business" involving the companies at the heart of the
litigation, Borsy transferred most of his shares in DMCC to
two different entities: Digital Media Communications and
Technology Fund S.A. ("DMCT") and DIGI Kft. [Dkt.
No. 109] 6; id Ex. 10. In December 2006, RCS/RDS formally
registered as majority shareholder of DIGI Kft.
ultimately filed his objections to the Report, which this
Court overruled. Mem. Op. 17. Accordingly, judgment was
entered on February 8, 2007 against all defendants jointly
and severally as follows:
Monetary Award Equity in Defendant Companies
$1, 807, 573.70
[Dkt. No. 97].
4, 2007, Keller contacted DIGI Kft.'s general counsel by
email. [Dkt. No. 109] Ex. 13. He wrote:
I understand that you spoke with my colleague, Kris Gabor,
last week concerning the DMCC [Le,, i-TV]/EMKTV [Le\, DIGI
Kft.] transaction. We both appreciate your prompt reply to
his call and your attention to this matter....
I represent a group of US-based shareholers in DMCC.
Recently, as part of a larger judgment involving Laszlo Borsy
and DMCC, as well as some other companies, Judge Brinkema in
the United States Federal District Court for the Eastern
District of Virginia awarded me and the other U.S.
shareholders just over 56% of DMCC. However, we have recently
learned that, apparently, after Judge Brinkema issued an
injunction on October 2 blocking any sale of DMCC, it was
sold to your company. I am attaching a copy of the October 2
Order as well as the February 6, 2007 Order awarding us
ownership of ...