In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-19-00285-CV __________________
IN RE SAM HOUSTON ELECTRIC COOPERATIVE, INC. __________________________________________________________________
Original Proceeding 253rd District Court of Liberty County, Texas Trial Cause No. CV1510279 __________________________________________________________________
MEMORANDUM OPINION
Relator Sam Houston Electric Cooperative, Inc. (“SHEC”) filed a petition for
writ of mandamus, in which it asks this Court to compel the trial court to vacate its
order compelling the depositions of its Board of Directors and to grant its motion for
protection from the depositions. We conditionally grant the writ of mandamus.
BACKGROUND
Joe D. Berry (“Berry”), individually, on behalf of the surviving heirs and
children of Lester B. Berry (“Lester”), as next friend of Kevin M. Berry, and as
administrator of the Estate of Lester B. Berry, filed this suit against SHEC, alleging
1 that SHEC shut off power to the home of Lester B. Berry without proper notice,
“causing horrendous suffering to and ultimately the awful death of Lester Berry.”
According to Berry, Lester was disabled and required an oxygen concentrator around
the clock, and to work properly the oxygen concentrator needed a constant supply
of electricity. Berry asserted causes of action for negligence, gross negligence,
survival, and wrongful death.
In his second amended petition, Berry purported to assert a class action “as
representative of all others similarly situated,” and he added individual defendants,
who he alleged were current officers, directors, advisory directors, or advisory
directors-at-large of SHEC. Berry pleaded, among other things, that SHEC had
breached its fiduciary duties by failing to return margins periodically to its members
as required by statute, and that rather than operating as a nonprofit entity, SHEC was
confiscating each member’s equity. Additionally, Berry asserted that SHEC had
failed to retire capital credits.
SHEC and the individual defendants moved to compel arbitration and to stay
the class action claims pending arbitration. The trial court signed an order denying
the motion, and the defendants appealed. On appeal, this Court reversed the trial
court’s order and remanded the cause for entry of an order compelling arbitration
and staying further proceedings as to the class action claims pending arbitration. Sam
2 Houston Elec. Coop. v. Berry, No. 09-16-00346-CV, ___ S.W.3d ___, 2017 WL
4319849, at *7 (Tex. App.—Beaumont Sept. 28, 2017, no pet.) (not yet released for
publication). The trial judge signed an order severing the class action from the
wrongful death and survival claims.
Berry then filed a motion in the wrongful death and survival portion of the
lawsuit to compel the depositions of the members of SHEC’s Board of Directors. In
the motion, Berry asserted that he had a right to take the depositions because the
Board grants an applicant membership into SHEC and the Board would have
knowledge of Lester’s membership. Attached to the motion to compel was, among
other things, a letter from defense counsel stating that no deposition dates would be
offered because members of the Board “have no personal knowledge relevant to this
lawsuit.”
SHEC responded to the motion to compel and argued that the plaintiffs were
“effectively ignoring the court ordered severance of the class action claims from the
current survival and wrongful death actions.” SHEC alleged that the depositions
were unrelated to the pending lawsuit and constituted an abuse of process.
Additionally, SHEC asserted that the plaintiffs had not explained the relevance of
the Board members’ depositions and that the depositions were impermissible under
the apex doctrine. According to SHEC, the deposition notices constituted “an
3 attempt to obtain discovery related to the severed putative class action – not the
wrongful death allegations currently pending before the Court.” SHEC asserted that
depositions of SHEC’s corporate representatives had been scheduled. The
mandamus record reflects that Berry’s counsel passed on the depositions of two
corporate representatives, whose depositions had been scheduled for June 13, 2019.
Attached to SHEC’s response were the affidavits of the Board members, in
which they claimed that they lacked personal involvement with the acceptance of
Lester’s membership and in which they explained that they were generally involved
with strategic decision making at a high level, but they were not involved with or
personally aware of SHEC’s day to day operations and had no knowledge about the
circumstances surrounding Lester’s death or his relationship with SHEC. SHEC also
filed a motion to quash the depositions.
Berry responded and asserted that he has a right to take the depositions of the
Board members “because it is permitted by the rules, despite the Board of
Directors[’] status as a nonparty in this case.” In addition, Berry asserted that the
requested depositions were reasonably calculated to lead to the discovery of
admissible evidence. According to Berry, each individual member of SHEC’s Board
“has unique and superior personal knowledge of the information sought, for
example[,] determining whether an applicant . . . is approved for a membership and
4 disbursements of capital credits.” Berry argued that (1) SHEC’s documents
produced in response to written discovery requests clearly associated SHEC’s Board
of Directors to membership approval and control of capital credits, and (2) and each
individual board member has greater knowledge about the approval of applications
than the corporate representatives because applications must be approved by the
Board before membership is extended.
Berry asserted that the individual Board members possessed greater
knowledge about the quality and quantity of capital credits because the Board
determines whether to pay capital credits. According to Berry, the apex doctrine does
not protect high-level corporate officials who have firsthand or personal knowledge
of particular facts. Berry contended that the Board members’ affidavits did not
sufficiently deny knowledge of relevant facts, but instead “simply states each
individual is not involved with the day to day operations of SHEC and was not
personally involved [in] the acceptance of Plaintiff’s membership.” Finally, Berry
asserted that less intrusive means of discovery were not required because the Board
members possessed “unique and superior personal knowledge of discoverable
information.” Berry’s fifth amended petition did not include the Board members as
parties to the lawsuit.
5 At the hearing on the motion to compel, SHEC’s counsel argued that the
Board members make policy and upper level decisions, but they have no superior or
unique knowledge about Lester’s death. SHEC’s counsel asserted that, once a
motion for protection has been filed, Berry must show that the Board members have
superior or unique knowledge and must make a good-faith effort to obtain the
discovery through less intrusive methods. SHEC’s counsel argued that the
depositions of the corporate representatives, which had been scheduled, did not
occur because Berry canceled them. In addition, SHEC’s counsel stated that Berry
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In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-19-00285-CV __________________
IN RE SAM HOUSTON ELECTRIC COOPERATIVE, INC. __________________________________________________________________
Original Proceeding 253rd District Court of Liberty County, Texas Trial Cause No. CV1510279 __________________________________________________________________
MEMORANDUM OPINION
Relator Sam Houston Electric Cooperative, Inc. (“SHEC”) filed a petition for
writ of mandamus, in which it asks this Court to compel the trial court to vacate its
order compelling the depositions of its Board of Directors and to grant its motion for
protection from the depositions. We conditionally grant the writ of mandamus.
BACKGROUND
Joe D. Berry (“Berry”), individually, on behalf of the surviving heirs and
children of Lester B. Berry (“Lester”), as next friend of Kevin M. Berry, and as
administrator of the Estate of Lester B. Berry, filed this suit against SHEC, alleging
1 that SHEC shut off power to the home of Lester B. Berry without proper notice,
“causing horrendous suffering to and ultimately the awful death of Lester Berry.”
According to Berry, Lester was disabled and required an oxygen concentrator around
the clock, and to work properly the oxygen concentrator needed a constant supply
of electricity. Berry asserted causes of action for negligence, gross negligence,
survival, and wrongful death.
In his second amended petition, Berry purported to assert a class action “as
representative of all others similarly situated,” and he added individual defendants,
who he alleged were current officers, directors, advisory directors, or advisory
directors-at-large of SHEC. Berry pleaded, among other things, that SHEC had
breached its fiduciary duties by failing to return margins periodically to its members
as required by statute, and that rather than operating as a nonprofit entity, SHEC was
confiscating each member’s equity. Additionally, Berry asserted that SHEC had
failed to retire capital credits.
SHEC and the individual defendants moved to compel arbitration and to stay
the class action claims pending arbitration. The trial court signed an order denying
the motion, and the defendants appealed. On appeal, this Court reversed the trial
court’s order and remanded the cause for entry of an order compelling arbitration
and staying further proceedings as to the class action claims pending arbitration. Sam
2 Houston Elec. Coop. v. Berry, No. 09-16-00346-CV, ___ S.W.3d ___, 2017 WL
4319849, at *7 (Tex. App.—Beaumont Sept. 28, 2017, no pet.) (not yet released for
publication). The trial judge signed an order severing the class action from the
wrongful death and survival claims.
Berry then filed a motion in the wrongful death and survival portion of the
lawsuit to compel the depositions of the members of SHEC’s Board of Directors. In
the motion, Berry asserted that he had a right to take the depositions because the
Board grants an applicant membership into SHEC and the Board would have
knowledge of Lester’s membership. Attached to the motion to compel was, among
other things, a letter from defense counsel stating that no deposition dates would be
offered because members of the Board “have no personal knowledge relevant to this
lawsuit.”
SHEC responded to the motion to compel and argued that the plaintiffs were
“effectively ignoring the court ordered severance of the class action claims from the
current survival and wrongful death actions.” SHEC alleged that the depositions
were unrelated to the pending lawsuit and constituted an abuse of process.
Additionally, SHEC asserted that the plaintiffs had not explained the relevance of
the Board members’ depositions and that the depositions were impermissible under
the apex doctrine. According to SHEC, the deposition notices constituted “an
3 attempt to obtain discovery related to the severed putative class action – not the
wrongful death allegations currently pending before the Court.” SHEC asserted that
depositions of SHEC’s corporate representatives had been scheduled. The
mandamus record reflects that Berry’s counsel passed on the depositions of two
corporate representatives, whose depositions had been scheduled for June 13, 2019.
Attached to SHEC’s response were the affidavits of the Board members, in
which they claimed that they lacked personal involvement with the acceptance of
Lester’s membership and in which they explained that they were generally involved
with strategic decision making at a high level, but they were not involved with or
personally aware of SHEC’s day to day operations and had no knowledge about the
circumstances surrounding Lester’s death or his relationship with SHEC. SHEC also
filed a motion to quash the depositions.
Berry responded and asserted that he has a right to take the depositions of the
Board members “because it is permitted by the rules, despite the Board of
Directors[’] status as a nonparty in this case.” In addition, Berry asserted that the
requested depositions were reasonably calculated to lead to the discovery of
admissible evidence. According to Berry, each individual member of SHEC’s Board
“has unique and superior personal knowledge of the information sought, for
example[,] determining whether an applicant . . . is approved for a membership and
4 disbursements of capital credits.” Berry argued that (1) SHEC’s documents
produced in response to written discovery requests clearly associated SHEC’s Board
of Directors to membership approval and control of capital credits, and (2) and each
individual board member has greater knowledge about the approval of applications
than the corporate representatives because applications must be approved by the
Board before membership is extended.
Berry asserted that the individual Board members possessed greater
knowledge about the quality and quantity of capital credits because the Board
determines whether to pay capital credits. According to Berry, the apex doctrine does
not protect high-level corporate officials who have firsthand or personal knowledge
of particular facts. Berry contended that the Board members’ affidavits did not
sufficiently deny knowledge of relevant facts, but instead “simply states each
individual is not involved with the day to day operations of SHEC and was not
personally involved [in] the acceptance of Plaintiff’s membership.” Finally, Berry
asserted that less intrusive means of discovery were not required because the Board
members possessed “unique and superior personal knowledge of discoverable
information.” Berry’s fifth amended petition did not include the Board members as
parties to the lawsuit.
5 At the hearing on the motion to compel, SHEC’s counsel argued that the
Board members make policy and upper level decisions, but they have no superior or
unique knowledge about Lester’s death. SHEC’s counsel asserted that, once a
motion for protection has been filed, Berry must show that the Board members have
superior or unique knowledge and must make a good-faith effort to obtain the
discovery through less intrusive methods. SHEC’s counsel argued that the
depositions of the corporate representatives, which had been scheduled, did not
occur because Berry canceled them. In addition, SHEC’s counsel stated that Berry
had not shown that the Board members had any superior or unique knowledge and
pointed out that Berry’s response repeatedly mentioned capital credits, which are
unrelated to a cause of action for wrongful death.
Berry’s counsel argued that because the Board had to approve every member
of the cooperative, he is entitled to depositions to find out “what knowledge they
had[]” and “if they reviewed the application.” According to Berry’s counsel, “if it is
as [SHEC is] saying and representing, it will be a very short deposition, because if
they don’t know anything, they don’t know anything. But we’re entitled to take their
deposition to find out what they know.” Berry’s counsel asserted that because the
Board had to approve applications for membership in the cooperative, Berry has a
right to take the depositions of the Board members. When SHEC’s counsel asked
6 the trial judge to clarify for the record the unique or superior knowledge on which
the court was relying in granting the motion to compel, the following colloquy
occurred:
[THE COURT]: He’s elicited sufficient facts that he wants to ask questions of these board members, . . . he certainly has a right to take the deposition.
...
[SHEC’s counsel]: So this Court has no finding of a unique or superior knowledge?
[THE COURT]: . . . I don’t need to make a finding today.
[SHEC’s counsel]: Well, Your Honor, that’s what Crown says, that you do.
[THE COURT]: Then appeal it.
[THE COURT]: Your Motion to Compel is granted.
SHEC then filed an application for writ of mandamus. Berry did not file a response.
ANALYSIS
Mandamus will issue to correct a clear abuse of discretion when there is no
other adequate remedy at law. In re Alcatel USA, Inc., 11 S.W.3d 173, 175 (Tex.
2000) (orig. proceeding). A trial court abuses its discretion when its ruling is ‘“so
arbitrary and unreasonable as to amount to a clear and prejudicial error of law.”’ In
re CSX Corp., 124 S.W.3d 149, 151 (Tex. 2003) (orig. proceeding). A trial court has
7 no discretion in determining what the law is or applying the law to the facts. Walker
v. Packer, 827 S.W.2d 833, 840 (Tex. 1992). “Mandamus relief is appropriate when
a trial court allows an apex deposition to go forward in violation of the standard
governing such discovery.” In re Miscavige, 436 S.W.3d 430, 435 (Tex. App.—
Austin 2014, orig. proceeding).
“An apex deposition is the deposition of a corporate officer at the apex of the
corporate hierarchy.” AMR Corp. v. Enlow, 926 S.W.2d 640, 642 (Tex. App.—Fort
Worth 1996, orig. proceeding). The apex deposition rule applies when a party seeks
to depose a corporate president or other high-level corporate official. Crown Cent.
Petroleum Corp. v. Garcia, 904 S.W.2d 125, 128 (Tex. 1995). “To initiate the apex
protections, the party seeking to avoid deposition must move for protection and
attach an affidavit from the relevant corporate official denying any knowledge of
relevant facts.” In re Miscavige, 436 S.W.3d at 436.
Once the party opposing the deposition has filed a motion for protection
accompanied by an affidavit from the official denying knowledge of relevant facts,
the trial court must first determine whether the party seeking the deposition “has
arguably shown that the official has any unique or superior personal knowledge of
discoverable information.” Crown Cent., 904 S.W.2d at 128. A person has unique
or superior personal knowledge if he is “the only person with personal knowledge
8 of the information sought” or “arguably possesses relevant knowledge greater in
quality or quantity than other available sources.” In re Alcatel USA, 11 S.W.3d at
179. “If the party seeking the deposition cannot show that the official has any unique
or superior personal knowledge of discoverable information, the trial court should
grant the motion for protective order and first require the party seeking the deposition
to attempt to obtain the discovery through less intrusive methods.” Crown Cent., 904
S.W.2d at 128.
As discussed above, SHEC filed a motion for protection and provided
affidavits from the individual Board members Berry sought to depose. In their
affidavits, the Board members stated they were not personally involved with the
acceptance of Lester Berry’s membership, that they lacked personal knowledge of
the facts surrounding Lester’s “passing” and they were not involved in the “day to
day operations” including “member communications or service termination.” The
record reflects that the trial court did not determine that the Board members
possessed unique or superior personal knowledge. There is no indication in the
record before us that the trial court determined that the Board members were the
only individuals with personal knowledge of the information sought or that the
Board members might possess relevant knowledge greater in quality or quantity than
other available sources. See In re Alcatel USA, 11 S.W.3d at 179. We agree with
9 SHEC that the trial court abused its discretion by compelling the depositions of
SHEC Board members when Berry did not show that the Board members had unique
or personal knowledge about Berry’s alleged wrongful death cause of action. In
addition, potential knowledge of capital credits, which Berry advanced as one of the
subjects of the depositions, is not reasonably calculated to lead to the discovery of
admissible evidence in the underlying wrongful death cause of action. See Tex. R.
Civ. P. 192.3(a) (providing that the general scope of discovery includes unprivileged
information that is relevant to the subject of the action, as long as the information
sought is reasonably calculated to lead to the discovery of admissible evidence); Tex.
R. Evid. 401 (stating that evidence is relevant if it has any tendency to make a fact
of consequence more or less probable than it would be without the evidence).
The trial court abused its discretion by ordering the depositions of SHEC’s
Board members without following the procedures set forth in Crown Central and its
progeny. We conditionally grant the writ of mandamus and order the trial court to
vacate its orders compelling the depositions of the members of SHEC’s Board of
Directors and orders denying the motions for protection against the apex depositions.
The writ will issue only if the trial court fails to do so.
PETITION CONDITIONALLY GRANTED.
PER CURIAM
10 Submitted on September 9, 2019 Opinion Delivered October 3, 2019
Before McKeithen, C.J., Kreger and Johnson, JJ.