in Re the Cit Group/Sales Financing, Inc.

• Court: Court of Appeals of Texas
• Decided: January 9, 2002
• Docket: 04-01-00650-CV
• Status: Published

Opinion

No. 04-01-00650-CV IN RE THE CIT GROUP/SALES FINANCING, INC. Original Mandamus Proceeding Arising from the 218th Judicial District Court, Wilson County, Texas Trial Court No. 99-11-0448-CVW Honorable Stella Saxon, Judge Presiding

Opinion by: Phil Hardberger, Chief Justice

Sitting: Phil Hardberger, Chief Justice

Paul W. Green, Justice

Karen Angelini, Justice

Delivered and Filed: January 9, 2002

PETITION FOR WRIT OF MANDAMUS CONDITIONALLY GRANTED

The CIT Group/Sales Financing, Inc. ("CIT") seeks mandamus relief from the trial court's order sanctioning CIT for discovery rule violations and failing to appear at a hearing on a motion to compel. The trial court ordered CIT to produce the documents and awarded Tommy and Deborah Scogin (the "Scogins"), the plaintiffs in the underlying lawsuit, attorneys' fees. The trial court's order provided that if CIT failed to produce the documents and pay the fees as ordered a default judgment would be granted. The trial court further ordered that: (1) CIT is refused to support or prosecute any claim or defense against the Scogins; (2) CIT is disallowed any discovery against the Scogins; and (3) CIT's pleadings against the Scogins are struck. Because the record does not reflect that the trial court considered the availability of lesser sanctions, we conditionally grant the writ of mandamus and order the trial court to consider lesser sanctions and reform its order to clarify the sanctions imposed.

Procedural History

The Scogins sued San Angelo Mobile Homes, Inc., Signal Homes, Inc., and CIT for numerous causes of action arising from the Scogins's purchase of a manufactured home. In April of 2000, the Scogins served CIT with their first set of requests for production of documents. In June of 2000, CIT served its response to the request asserting numerous general objections.

On April 5, 2001, the Scogins' attorney forwarded a letter to CIT's attorney stating that since no documents were forthcoming following a conversation between the attorneys at the courthouse on March 5, 2001, the Scogins had filed a motion to compel which was set for hearing on April 11, 2001. On April 11, 2001, the trial court held a hearing on the Scogins's motion. The order stated that CIT did not appear at the hearing. The trial court granted the Scogins's motion and ordered CIT: (1) to produce all requested documents; and (2) to pay $400 in attorney's fees. The trial court's order provided that if CIT failed to produce the documents and pay the fees as ordered a default judgment would be granted. The trial court further ordered that: (1) CIT is refused to support or prosecute any claim or defense against the Scogins; (2) CIT is disallowed any discovery against the Scogins; and (3) CIT's pleadings against the Scogins are struck.

On April 23, 2001, CIT filed a motion to reconsider. Two affidavits were attached to the motion to reconsider. In CIT's attorney's affidavit, he stated that he was out of town and did not receive the notice of hearing until after the hearing. The attorney's secretary, who is the only person employed by the attorney, stated in her affidavit that she and her infant son were ill on April 5, 6, 9, and 10, 2001, so she did not see the notice until after the April 11, 2001 hearing.

On May 3, 2001, CIT filed a supplement to the motion to reconsider. The supplement notes that rule 191.2 requires the parties to confer regarding discovery and attempt to resolve differences without court intervention; however, CIT contended that the Scogins's attorney made no effort to arrange a date and time to review/inspect CIT documents. In addition, the supplement notes that CIT's counsel did not receive a copy of the order from the Scogins's attorney until April 18, 2001, the date the order required the production and payment to be complete. A letter dated April 18, 2001 is attached to the supplement reflecting a rule 11 agreement, extending the date of required production and payment to April 25, 2001. The trial court denied the motion to reconsider.

Discussion

Mandamus relief is available from a trial court's discovery order if the party's ability to present a viable claim or defense is vitiated or severely compromised. In re Ford Motor Co., 988 S.W.2d 714, 721 (Tex. 1998). In this case, the trial court struck CIT's pleadings and prohibited it from pursuing discovery and asserting a claim or defense; therefore, CIT does not have an adequate remedy by appeal, making mandamus relief appropriate. TransAmerican Natural Gas Corp. v. Powell, 811 S.W.2d 913, 919 (Tex. 1991).

A trial court's imposition of sanctions is reviewed under an abuse of discretion standard. Roberts v. Rose, 37 S.W.3d 31, 33 (Tex. App.--San Antonio 2000, no pet. h.). A trial court abuses its discretion when it acts without reference to any guiding rules or principles. Roberts, 37 S.W.3d at 33 (quoting Johnson v.. Fourth Court of Appeals, 700 S.W.2d 916, 918 (Tex.1985)).

Whether an imposition of sanctions is just is measured by two standards. Powell, 811 S.W.2d at 917. First, a direct relationship must exist between the offensive conduct and the sanction imposed. Id. Under this standard, the trial court should attempt to determine whether the offensive conduct is attributable to counsel only, or the party only, or both. Id. Second, just sanctions must not be excessive. Id. A sanction imposed for discovery abuse should be no more severe than is necessary to satisfy its legitimate purposes. Id.

Sanctions which are so severe that they preclude presentation on the merits should not be assessed absent a party's bad faith or counsel's flagrant disregard for the responsibilities of discovery under the rules. Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 849 (Tex. 1992). Discovery sanctions should not be used to adjudicate the merits of a claim or defense unless a party's obstruction of the discovery process justifies the presumption that the claim or defense lacks merit. Powell, 811 S.W.2d at 918. Even then, lesser sanctions should be tested first to determine if they are adequate to secure compliance, deterrence, and punishment of the offender. Powell, 811 S.W.2d at 917.

The record must reflect that the court considered the availability of lesser sanctions. GTE Communications Systems Corp. v. Tanner, 856 S.W.2d 725, 729 (Tex. 1993). Case determinative sanctions may be imposed in the first instance only in exceptional cases when they are clearly justified and it is fully apparent that no lesser sanctions would promote compliance with the rules. Id. A trial court's unsupported conclusion that lesser sanctions would not be effective is entitled to no deference by a reviewing court. Id.

During oral argument before this court, counsel for the Scogins contended that the trial court's order was not intended to be case determinative. Instead, counsel for the Scogins asserted that the order was intended to leave CIT an "escape" from any "death penalty" sanction if CIT timely produced its documents. Notwithstanding the representations made by counsel for the Scogins, the language of the order can be construed as imposing "death penalty" sanctions in view of its language prohibiting CIT from supporting or prosecuting any claim or defense, disallowing any discovery, and striking its pleadings against the Scogins. Counsel for the Scogins assured this court that he simply submitted a boilerplate order to the trial court and had no intentions of precluding CIT from their day in court. Counsel for the Scogins stated that the only purpose in obtaining the order was to compel the desired discovery. It is certainly possible that this was the Scogins's intent, as well as that of the trial court. If so, however, the order is overly broad and needs to be reformed.

The guiding rules with respect to discovery abuse sanctions require the trial court to consider the availability of lesser sanctions. See Tanner, 856 S.W.2d at 729; Powell, 811 S.W.2d at 917. Based on the record before this court, the trial court abused its discretion in imposing case determinative sanctions because the record does not demonstrate that the trial court considered whether lesser sanctions would promote compliance.

Conclusion

The petition for writ of mandamus is conditionally granted. The trial court is ordered to consider the availability of lesser sanctions with regard to those portions of its order directing that: (1) CIT is refused to support or prosecute any claim or defense against the Scogins; (2) CIT is disallowed any discovery against the Scogins; and (3) CIT's pleadings against the Scogins are struck. The trial court is directed to reform its order to clarify the nature of the sanctions to be imposed. The

writ will only issue upon certification to this court that the trial court has failed to reform its order within ten days from the date of our opinion and order.

PHIL HARDBERGER,

CHIEF JUSTICE

DO NOT PUBLISH