The opinion of the court was delivered by: Tucker, J.
Presently before this Court is Plaintiff's Motion for Contempt of the Temporary Restraining Order against Defendants (Doc. 12). For the reasons set forth below, the Court will grant Plaintiff's Motion in part.
The pertinent facts giving rise to Plaintiffs' Complaint are as follows. Plaintiff, a New Jersey bank, initiated this action against Defendants Gallco Enterprises, Inc., a New Jersey corporation, and Arthur Gallagher, president of Gallco and New Jersey resident, for breach of contract among other claims. On June 29, 2001, the parties entered into a Loan and Security Agreement ("2001 Agreement"), whereby Plaintiff agreed to provide Defendants with financing to purchase motor vehicles for lease to third parties. Pursuant to the Agreement, all of Defendants' leases to third parties were immediately assigned to Plaintiff and the third parties were directed to make all payments to Plaintiff. As of July 31, 2010, Plaintiff's collateral consisted of 151 leases and other related assets and property. Pursuant to several other provisions of the agreement, Defendant agreed, inter alia, not to modify any lease without Plaintiff's permission and to provide information regarding the collateral upon Plaintiff's request.
Plaintiff claims that Defendants have failed to make payments since May 2010 and have otherwise defaulted on the 2001 Agreement by selling and transferring the collateral. The value of the collateral at issue is approximately $2.3 million.*fn1 Plaintiff filed a Complaint (Doc. 1) against Defendants on September 13, 2010. Plaintiff's Complaint contains the following four counts: breach of contract, replevin, conversion, and injunctive and declaratory relief.
B. The Parties' Consent Temporary Restraining Order
Plaintiff avers that even after filing the Complaint, Defendants continued to dissipate its assets by selling and re-leasing vehicles, hiding vehicles, and receiving directly and refusing to turn over lease proceeds. In response, on September 22, 2010, Plaintiff filed an Emergency Motion for Temporary Restraining Order and Preliminary Injunction (Doc. 4). The parties negotiated an agreement concerning Plaintiff's motion and on September 29, 2010, the Court approved the parties' TRO and Preliminary Injunction by Consent ("Consent TRO") (Doc. 6).
In the Consent TRO, Defendants agreed to, inter alia, (1) refrain from using any of the proceeds derived from the lease or sale of any vehicles or equipment used as collateral pursuant to the parties' 2001 Agreement; (2) place the proceeds from any transactions in Plaintiff's escrow account; (3) provide records concerning the identity, location, lease details, and proceeds received for all collateral; and (4) immediately return to Plaintiff all collateral that has yet to be sold or leased to third parties. In the Consent TRO, Plaintiffs agreed to, inter alia, (1) provide Defendants with an explanation of the outstanding amount due; (2) provide Defendants with Dealer Activity Reports; (3) apply amounts deposited into its escrow account to the outstanding balance; and (4) send Defendants the titles of the vehicles upon termination of the leases or once the payoff amounts have been satisfied.
C. Plaintiff's Motion for Contempt of the Consent TRO
On December 15, 2010, Plaintiff filed a Motion for Contempt of the Consent TRO against Defendants (Doc. 12). In the Motion, Plaintiff alleges that Defendants have violated the Consent TRO by, inter alia, (1) using proceeds of the lease or sale of collateral; (2) failing to deposit the proceeds from such transactions into Plaintiff's escrow account; (3) failing to keep and provide Plaintiff with detailed records of all collateral in Defendants' possession and control; and (4) failing to return equipment that has not yet been leased or sold pending the final resolution of this matter. Defendants did not file a response to Plaintiff's Motion.
D. January 3, 2001 Hearing on Plaintiff's Contempt Motion
On January 3, 2011, the Court held a hearing on Plaintiff's Motion where both parties presented oral argument. At the hearing, Plaintiff presented testimony through its witness, Anne Marie Brusseler, Plaintiff's Risk Manager responsible for liquidating all collateral in connection with the 2001 Agreement. Brusseler testified that Defendants failed to make any deposits into the escrow account in October 2010 and November 2010 when deposits should have been made. She stated that Defendants did not make the first deposit until December 16, 2010 and both of the checks contained restrictions in violation of the Consent TRO. Brusseler further testified that an investigation revealed that Defendant Gallagher transferred funds from the escrow account into his own account. According to Brusseler, an employee in Plaintiff's Loss Prevention Group advised Gallagher that he must immediately return the funds or be subject to prosecution. Defendant Gallagher ultimately returned the funds to the escrow account one week before the hearing. Brusseler further testified that she did not know whether Plaintiff complied with its responsibility under the Consent TRO to provide monthly Dealer Activity Reports to Defendants as those reports are ...