Jessica Chandler and Sculpt Pod, Inc. v. KMCC Enterprises, LLC, Kenneth Wall, and Maria Wall

Court of Appeals of Texas·Decided October 14, 2021·No. 02-20-00344-CV·Published

Opinion

In the

Court of Appeals

Second Appellate District of Texas at Fort Worth

No. 02-20-00344-CV

JESSICA CHANDLER AND SCULPT POD, INC., Appellants V.

KMCC ENTERPRISES, LLC; KENNETH WALL; AND MARIA WALL, Appellees

On Appeal from the 462nd District Court Denton County, Texas

Trial Court No. 17-10144-393

Before Bassel and Womack, JJ.1 Memorandum Opinion by Justice Bassel

1 Justice Walker was a member of the panel and was present for argument;

however, he did not participate in this decision. The two remaining justices, agreeing on a judgment, decided the appeal. See Tex. R. App. P. 41.1(a).

MEMORANDUM OPINION

Appellants Jessica Chandler and Sculpt Pod, Inc. appeal from the trial court’s default judgment against them after the trial court struck their pleadings as a death- penalty, discovery sanction. Because there was no evidence that Chandler and Sculpt Pod were personally aware of or carried some responsibility for the sanctionable conduct, the trial court abused its discretion by imposing death-penalty sanctions. As a result, we reverse the trial court and remand the case for further proceedings.

I. BACKGROUND

A. FACTS LEADING TO LAWSUIT Because this case arises from death-penalty sanctions, we rely on the facts as alleged by appellees KMCC Enterprises, LLC, Kenneth Wall, and Maria Wall and on evidence proffered regarding their sanctions motions to provide a factual background for their claims against Chandler and Sculpt Pod. This is the approach used by Chandler and Sculpt Pod in their appellate brief; however, they note that they denied these facts in the trial court before their pleadings were struck.

Chandler owned a nonsurgical body-sculpting business, The Sculpting Shoppe.

She incorporated Savvy Chic Management, Inc. to franchise her business. In late 2016, the Walls talked with Chandler about possibly purchasing franchises. On January 11, 2017, the Walls signed a franchise agreement with Savvy Chic to purchase a Sculpting Shoppe franchise to be located in Hollywood, Florida. Chandler signed as the franchisor and as “Chief Executive Officer” of Savvy Chic; the Walls signed as the

franchisee. On February 16, 2017, these same parties signed an agreement for a franchise to be located in Palm Beach Gardens, Florida.2 The Walls quickly became dissatisfied with the revenue realized by both locations, believing that Chandler had told them their revenue would be much higher. On November 29, 2017, the Walls and the entity they had formed to operate the franchises, KMCC, filed suit against Savvy Chic and Chandler, “in her individual capacity and/or in her capacity as owner, founder, and chief executive officer” of Savvy Chic. Chandler and Savvy Chic timely answered the petition. On February 9, 2018, the Walls and KMCC amended their petition to add Sculpt Pod, Inc. as a defendant. They alleged that Sculpt Pod’s president was Chandler and that Sculpt Pod was “a new venture recently formed by Chandler.” They raised claims for deceptive trade practices, breach of contract, fraud, negligent misrepresentation, and conspiracy. They further sought a declaratory judgment and rescission of the franchise agreements.

On May 16, 2018, the Walls and KMCC served discovery requests on counsel for Chandler and Savvy Chic (Attorney One). One month later, Attorney One withdrew and a newly retained attorney was substituted (Attorney Two). Attorney Two then filed an answer to the amended petition on behalf of Sculpt Pod.

2 Chandler and Sculpt Pod point out that the Palm Beach franchise agreement that is in the clerk’s record is not signed by the Walls, only by Chandler. However, Chandler and Sculpt Pod expressly state in their brief the Walls did, in fact, sign the agreement. See Tex. R. App. P. 38.1(g).

In May and June 2018, the Walls closed both Sculpting Shoppe franchises.

B. DISCOVERY DISPUTE

1. First Motion to Compel and Bankruptcy Proceedings On July 9, 2018, Attorney Two answered the amended petition on Sculpt Pod’s behalf. The next day, the Walls and KMCC (collectively, the Wall Parties) filed a motion to compel Chandler, Savvy Chic, and Sculpt Pod to respond to its written discovery, which had been served on Attorney One on May 16, 2018, and had been due no later than July 8, 2018. The Wall Parties argued that Chandler, Savvy Chic, and Sculpt Pod had engaged in “a pattern of dilatory conduct” and pointed out that Chandler, Savvy Chic, and Sculpt Pod were “engaged in at least five other lawsuits involving similar allegations” and were not producing discovery in those cases as well. The trial court set the motion for an August 31, 2018 hearing. This hearing was later canceled based on a “Scheduling Conflict.” The hearing was reset for December 14, 2018, but was again rescheduled for January 25, 2019, at 11:00 a.m.

Ninety minutes before the January hearing, Savvy Chic filed for bankruptcy.

There is no reporter’s record from the January hearing, but the Wall Parties assert that Chandler, Savvy Chic, Sculpt Pod, and Attorney Two did not appear. In any event, the trial court granted the motion and compelled the discovery responses no later than February 24, 2019. Further, the trial court recognized that the Wall Parties’ requests for admission were deemed admitted and barred “Defendants”—Chandler, Savvy Chic, and Sculpt Pod—from offering evidence contrary to the deemed

admissions. See Tex. R. Civ. P. 198.2(c), 198.3. The “Defendants” were ordered to pay $500 as a sanction to the Wall Parties’ attorney. Although the Wall Parties’ attorney sent Attorney Two a copy of the order, Attorney Two did not serve any discovery responses.

The bankruptcy stay was partially lifted on April 17, 2019, allowing the Wall Parties to “Pursue Claims Against Non-Debtors in State Court” and allowing them to seek to sever their claims against Savvy Chic from those against Chandler and Sculpt Pod. On May 6, 2019, Savvy Chic removed the Wall Parties’ petition to the bankruptcy court. In the bankruptcy court, the Wall Parties stated that they were “willing to dismiss [their] claim(s)” against Savvy Chic. Accordingly, on June 26, 2019, the bankruptcy court dismissed the Wall Parties’ claims against Savvy Chic and remanded the case as to Chandler and Sculpt Pod back to the state trial court.

On June 3, 2019, Attorney Two informed the Wall Parties’ attorney that he believed the trial court’s January 2019 order was void “because there was an automatic stay in place at the time the motion was heard and the order signed.” Attorney Two explained that “was the reason we did not appear” at the January hearing.

2. First Motion for Sanctions and Alternative Second Motion to Compel On July 30, 2019, the Wall Parties filed a motion for sanctions and an alternative second motion to compel. They asked that the trial court sanction Chandler and Sculpt Pod by disallowing “them from opposing [the Wall Parties’] claims, supporting any defense or challenge to [their] claims, and from introducing

any evidence relating to the subject matter of [their] written discovery.” The trial court held a hearing on August 21, 2019, but Chandler, Sculpt Pod, and Attorney Two again did not appear. Attorney Two later explained that although he and the Wall Parties’ attorney had agreed to the date, he had not been given notice that the hearing was actually set for that date. The trial court granted the motion and ordered Chandler and Sculpt Pod to pay the Wall Parties’ attorney $1,000 as a monetary sanction. Further, the trial court ordered Chandler and Sculpt Pod to respond to the Wall Parties’ discovery requests no later than September 20, 2019, again recognized that the requests for admission were deemed admitted, and barred any evidence contrary to the admissions.3 Even though he was served with a copy of the order, Attorney Two did not serve any discovery responses.

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Jessica Chandler and Sculpt Pod, Inc. v. KMCC Enterprises, LLC, Kenneth Wall, and Maria Wall, (Tex. Ct. App. 2021).

Jessica Chandler and Sculpt Pod, Inc. v. KMCC Enterprises, LLC, Kenneth Wall, and Maria Wall (Jessica Chandler and Sculpt Pod, Inc. v. KMCC Enterprises, LLC, Kenneth Wall, and Maria Wall) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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