From Camerons Hardware Inc. v. Independence Blue Cross, 2010 U.S. App. LEXIS 2028 (3d Cir. Jan. 15, 2010):

On July 28, 2008, the District Court, after a hearing, granted the motions for sanctions. The Court concluded that "[a]t the time Mr. Otter filed the Complaint on behalf of his clients, he had been informed four times previously his claim had no basis in fact or law. Yet, he unreasonably brought the same claim without any additional law or evidence to support." *** The Court found that Otter "did not challenge the amount of the fees and costs claimed," and held that the "little mitigating evidence" put forth was insufficient to reduce the "unopposed lodestar calculations" under the factors articulated in Doering v. Union County Board of Chosen Freeholders, 857 F.2d 191 (3d Cir. 1988). *** The Court ordered payment of sanctions within thirty days of the Order. Otter did not appeal.

Neither the Commonwealth nor IBC received payment within the thirty day period prescribed by the District Court, and so, in November 2008, they filed motions to hold Otter in civil contempt. The Court held a hearing on March 5, 2009. ***

Claiming that he lacked the financial resources to pay the sanctions that had been imposed, Otter submitted his 2008 income tax return, and informed the District Court that his law practice had grossed under $ 1,000 since the beginning of 2009 and that he had "received notices" that he was behind on his electric and phone bills. He stated that his "non-compliance has not been willfull," and that although he would have liked to comply with the sanctions order, he "simply [did] not have the funds to do that." *** The Court then addressed the Commonwealth and IBC: "What do you want me to do? You can't get blood from a stone, and the argument he's making is that he doesn't have the capacity to comply, so it's not a willful disobeyance of my order." ***

Following the hearing, the District Court issued a written order holding Otter in contempt of the July 28, 2008 order imposing sanctions and entering judgment on that order. The March 5, 2009 order did not make a finding as to Otter's ability to pay those sanctions. ***

In order for a party to be held in civil contempt, 7 three elements must be established by clear and convincing evidence: "(1) that a valid order of the court existed; (2) that the defendant had knowledge of the order; and (3) that the defendant disobeyed the order." Berne Corp. v. Gov't of the V.I., 570 F.3d 130, 139 (3d Cir. 2009).... To the extent there are ambiguities in the evidence, they "must be resolved in favor of the party charged with contempt." John T. v. Del. County Intermediate Unit, 318 F.3d 545, 552 (3d Cir. 2003). Because "willfulness is not a necessary element of civil contempt . . . , [any evidence of defendant's] good faith does not bar the conclusion . . . that [the defendant] acted in contempt." Robin Woods Inc. v. Woods, 28 F.3d 396, 399 (3d Cir. 1994).... The Supreme Court has explained, however, that in "a civil contempt proceeding . . . a defendant may assert a present inability to comply with the order in question. United States v. Rylander, 460 U.S. 752, 757 (1983). Similarly, we have recently made clear that "an order of civil contempt [is or will become] punitive if a contemnor is unable to comply with the order." United States v. Harris, 582 F.3d 512, 520 (3d Cir. 2009). While the party raising the impossibility defense has the burden of proving it, courts "will not be blind to evidence that compliance is now factually impossible." Rylander, 460 U.S. at 757.

Otter does not argue that he did not violate a known court order imposing sanctions; rather, the thrust of his argument is that the District Court "disregarded the financial evidence presented at the contempt proceeding," which he claims demonstrates his inability to pay the ordered amount.... At the contempt hearing, Otter presented the Court with his 2008 tax return while explaining, "I tried to comply with the Court's order, but I simply do not have the funds to do that." ... He informed the Court that although he might eventually be able to make some payments if he was successful in his representation of various clients in pending matters, "$ 40,000 would just bankrupt [him]." ... Despite recognizing Otter's precarious financial state at the hearing when it observed that "[y]ou can't get blood from a stone," the Court made no findings orally or in its written order as to whether Otter was then unable to comply with the order or would be unable to do so in the foreseeable future and, if so, whether an order of civil contempt would be punitive. This was an abuse of discretion.