Gonzales v. Surgidev Corp.

899 P.2d 594, 120 N.M. 151
New Mexico Supreme Court·Decided June 13, 1995·No. 22009·Published·Cited by 71 cases

Opinion

OPINION

BACA Chief Justice.

Appellant Surgidev Corporation appeals the imposition of sanctions in the amount of $151,000 by the trial court while the underlying case was pending on appeal. We address two issues: (1) Whether the court had jurisdiction to impose sanctions, and if so, (2) whether the imposition of sanctions was an abuse of discretion. We review this case pursuant to SCRA 1986, 12-102(A)(1) (Repl. Pamp.1992) (appeals from district court sounding in contract shall be taken to Supreme Court), and affirm.

I

The trial underlying the imposition of sanctions involved personal injuries to Appellees Enrique Gonzales and Ricardo Garduño. 1 Each was blinded in one eye as a result of the use of a defectively designed and marketed intraocular lens (IOL), termed Style 10. The jury found Appellant 60 percent liable for the injuries and returned a total judgment of $1,179,990.18. Gonzales was awarded $434,990.18 in compensatory damages and $350,000 in punitive damages. Garduño was awarded $45,000 in compensatory damages and $350,000 in punitive damages. Judgment was entered on January 18, 1991. In the trial below, Appellant challenged, among other matters, the state court’s jurisdiction based on federal preemption under the Medical Device Amendments of 1976 to the Food, Drug and Cosmetic Act of 1938, 21 U.S.C. § 360c-k (1988). Appellees requested certification to this court to determine whether their state law claims were preempted by federal law. This preemption matter was one of the issues addressed on appeal in Gonzales v. Surgidev Corp., 120 N.M. 133, 139, 899 P.2d 576, 582 (1995) (No. 21,703) [hereinafter Surgidev /].

On January 21,1992, at the threat of a new trial, Appellees requested leave to depose Appellant’s former counsel, Hugh Jaeger, under SCRA 1986, 1-027(B) (Repl.Pamp.1992) (perpetuating testimony while appeal is pending), to preserve evidence about document production, violations of court orders, and damaging information concerning the Style 10 IOL. The court took notice of Appellant’s efforts to conceal evidence during the trial and granted the request. The first deposition was taken on February 29, 1992. Appellant moved to have any deposition by Jaeger be put under seal, arguing that his statements might violate attorney-client privileges and that in-camera rulings by the court might be required before the testimony could be used for any purpose. This motion was granted. • Alleging that Appellant had engaged in “obstructive tactics” during the deposition, Appellees deposed Jaeger a second time on March 6, 1993, in order to complete the first deposition.

On May 6,1993, Appellees moved to unseal the deposition. In the telephonic conference concerning this motion, the court commented that the issue of sanctions for discovery abuses remained unresolved. The court instructed Appellees to draft an order to unseal the deposition.

On May 13,1993, after a second telephonic presentment hearing concerning the drafted order, the court again expressed its frustration with Appellant. During this hearing, Appellant objected to the phrase in the drafted order, “The Court being fully advised.” Appellant argued that this- statement did not adequately express the fact that the court had reviewed only briefs and affidavits and therefore was not “fully advised.” Appellant also argued that the “decision [to unseal the deposition had] to be made question by question, line by line” before the court could order Jaeger’s deposition to be unsealed. The court stated that it found these objections “absurd” and that these arguments consisted of “maneuvering” and “machinations” that were “obstructive.” The court noted that “[a]t some point if we have to have a hearing for everything that is here so that Surgidev can stall a little longer, I’m going to start taking some sanctions against them.” The court granted the motion to unseal the deposition upon finding that the attorney-client privilege no longer existed because Jaeger’s employment with Appellant had terminated by December 1990, at the latest. The court also found that Appellant engaged in “real stonewalling” with respect to taking Jaeger’s deposition. The court noted that even the jury had grave concerns that Appellant had concealed facts in Surgidev I. The court then asked Appellees to “set your hearing involving sanctions, based upon the information contained in the deposition.”

On May 26, 1993, Appellees requested sanctions against Appellant, based on Jaeger’s deposition and the deposition of Appellant’s president, Dennis T. Grendahl, taken on March 4,1993, in preparation for a similar trial in New Jersey. In his deposition, Jaeger testified that he stored approximately 300 boxes of material. Appellant never requested these documents from Jaeger during the Surgidev I trial or informed Appellees of their existence, even though some of the materials were relevant to the trial. Appellant’s counsel retrieved this material in December 1990, about two weeks after the end of the trial. The trial ended on November 16, 1990, and final judgment was entered on January 18, 1991. Appellant then prepared an incomplete inventory of this material that indicated 100 boxes were possibly relevant in product liability litigation. The boxes contained internal memoranda, sales materials, and tapes. Jaeger also testified that when Appellant’s counsel retrieved the documents, they stated that they intended to “deep-six” the documents and that they were aware that Appellant was in contempt of court.

In addition, during Surgidev I Appellant and its counsel concealed the existence of Food and Drug Administration (FDA) transcripts concerning the' pressure FDA brought to bear on Appellant to remove the Style 10 IOL from the market. Instead of providing discovery information that was damaging or harmful, Appellant was evasive about the reason the Style 10 IOL was taken off the market, the criticism of the lens, and the existence of internal and sales memoranda about the lens. On January 14, 1994, the court entered a final judgment ordering sanctions in the amount of $151,000. This judgment forms the basis for this appeal.

II

Appellant raises two arguments to support its contention that the court lacked subject matter jurisdiction. First, Appellant asserts that the issue of discovery abuses was raised in the lower court and was part of the basis for the award of punitive damages. Therefore, the award of sanctions simply provides Appellees with additional punitive damages. According to Appellant, this constitutes reopening the judgment. See SCRA 1-060(B)(2), (3) (permitting relief from final judgment when newly discovered evidence or misconduct of adverse party shown). Appellant argues that newly discovered evidence or fraud cannot, under SCRA 1-060(B)(6), justify reopening the judgment beyond one year after final judgment is entered. Therefore, the court erred in awarding sanctions, which were really just additional punitive damages, more than two years after entry of the judgment. We disagree with Appellant that these sanctions are additional punitive damages under SCRA 1-060.

Appellant’s second argument is that SCRA 1-037(B) and (D) permit the imposition of sanctions only by the court in which an action is pending.

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Gonzales v. Surgidev Corp., 899 P.2d 594, 120 N.M. 151 (N.M. 1995).

899 P.2d 594 (Gonzales v. Surgidev Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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