Johnson v. Allis-Chalmers Corp.

455 N.W.2d 657, 155 Wis. 2d 344, 1990 Wisc. App. LEXIS 231

• Court: Court of Appeals of Wisconsin
• Decided: March 15, 1990
• Docket: 89-0649
• Status: Published

Opinions

EICH, C.J.

Robert and Cheryl Johnson (collectively, "Johnson") appeal from a judgment and an order dismissing their products liability personal injury action against Allis-Chalmers Corporation and Sperry Rand Corporation for their failure to comply with the trial court's scheduling and discovery orders. The issue is whether the trial court abused its discretion in imposing dismissal as a sanction for the violations. Because we see no abuse, we affirm the judgment and order.

The facts, while long in the telling, are not in serious dispute. In essence, they comprise a chronology. Robert Johnson was injured in a farm accident involving a tractor and bale handler on December 20,1979. Just short of three years later, on December 17, 1982, he and his wife sued Allis-Chalmers, the manufacturer of the tractor, and Sperry Rand, the manufacturer of the bale handler, seeking to recover damages on grounds of strict liability and negligence.

During the first half of 1983 Sperry pursued discovery of various items which, after two motions and an order to compel compliance, was apparently completed by mid-August of that year.

On November 11, 1983, Allis-Chalmers served a demand for production of documents on Johnson. No response was forthcoming, although Johnson's counsel permitted Allis-Chalmers' attorney to inspect some materials. On December 5, 1983, Allis-Chalmers' attorney requested that Johnson respond to the demand. The request was renewed in writing on three separate occasions between January 5, 1984, and January 3, 1985, without any response from Johnson.

Following a pretrial conference on December 10, 1985, the court issued an order requiring Johnson to name expert witnesses and provide an itemization of special damages by February 1,1986. Allis-Chalmers and Sperry were to name their expert witnesses by June 1, 1986, and all discovery was to be completed prior to a second pretrial conference scheduled for October, 1986. On February 3, 1986, two days after the deadline for Johnson's disclosure of experts and itemization of damages, Johnson submitted a list of thirteen names designated as "expert witnesses" and a statement of "nonexclusive particulars as special damages." The latter document was a brief list of various categories of damage. Alongside each item was a dollar figure preceded by the phrase "at least. . .."

Between February 4 and April 9, 1986, Allis-Chal-mers' counsel made five unsuccessful attempts to schedule a deposition of Johnson's liability expert. On April 9, Johnson's attorney indicated that he would not make the witness available until May 12,1986 — less than three weeks before the date on which Allis-Chalmers and Sperry were required to disclose their own experts. Consequently, both companies moved to extend their expert witness deadlines from June 1, 1986, to a date thirty days after Johnson produced his experts for deposition. The motion also requested an order directing Johnson to provide a specific itemized list of his special damages. The court heard the motion on April 17, 1986, and granted it by an order issued on June 18,1986, but made effective as of April 22, 1986.

Among other things, the order required Johnson to: (1) provide the defendants, by May 5,1986, with a list of all medical witnesses expected to testify at trial, together with "three alternative dates" (none later than June 30) on which they would be available for deposition; and (2) provide "specific information ... for each . . . item of special damages" by May 15,1986.

Johnson failed to comply with the order by the indicated dates. Then, on May 19, 1986, his counsel sent Allis-Chalmers' lawyer a letter setting deposition dates for five of the thirteen experts. No alternative dates were provided for several of the witnesses despite several requests by Allis-Chalmers' counsel in the ensuing months.

On November 5, 1986, Sperry and Allis-Chalmers filed motions seeking dismissal of the action for Johnson's failure to comply with the court's orders and applicable procedural statutes and rules. The motion asserted that the defendants still had received no response to Allis-Chalmers' November 11, 1983, demand for documents, nor any response to the court's order requiring more specific information regarding the claimed damages and a list of medical trial witnesses.

On July 13,1987, the court issued a decision finding that Johnson had violated the prior orders. The court concluded, however, that "the sanction of dismissal. . . is at this point too drastic a sanction," and instead set a date for further hearing to compel discovery and to consider an award of reasonable attorney fees to Sperry and Allis-Chalmers. The hearing was adjourned to allow the parties to work matters out, which they apparently failed to do, and several more months passed with no response from Johnson to various orders. In March, 1988, Sperry again moved for dismissal.

Allis-Chalmers did not join in the motion because it had in the meantime filed for bankruptcy and further proceedings in this action had been stayed by the bankruptcy court.¹ After the hearing on Sperry's motion, but before a decision, Johnson provided both defendants with several hundred pages of documents purportedly dealing with his special damage claims. By this time, nearly two years had passed since the deadline for providing this information specified in the 1986 order.

On September 29, 1988, the trial court granted Sperry's motion to dismiss. The court began by noting that this was the second motion seeking dismissal for Johnson's failure to comply with the same discovery orders. Then, after discussing the purposes and policies underlying pretrial discovery and noting that "[t]wo scheduling orders have been breached by [Johnson] with no reason given or modification requested until the defendants brought their motion [to dismiss]," the court concluded:

This court is reluctant to dismiss lawsuits for nominal technical reasons. It is loath to impose sanctions that have effects beyond those to counsel. There is a point, however, at which further tolerance regarding a parties [sic] actions cannot be extended.

The actions of the plaintiffs have been neither nominal nor technical. They have been substantial and egregious and for which justification has not been provided.

On October 26, 1988, after the bankruptcy stay was lifted, Allis-Chalmers filed its own motion to dismiss for the same reasons set forth in Sperry's earlier motion. At about the same time, Johnson moved the court to reconsider the Sperry decision. At the hearing on the motions on January 20, 1989, Johnson provided the defendants with a formal response to Allis-Chalmers' November 11, 1983, request for production of documents.

At the conclusion of the hearing the court, noting that Allis-Chalmers was in the same position as Sperry had been when its dismissal motion was heard, granted Allis-Chalmers' motion to dismiss and denied Johnson's motion for reconsideration of the Sperry decision. On March 13, 1989, the court entered a written order confirming the oral decision. The court began by discussing its earlier findings that Johnson had failed to comply with the earlier orders and applicable procedural statutes and ruled that he had also violated the December 10, 1985, and April 22, 1986, orders relating to expert witness depositions and disclosure of special damages. Then, noting that Johnson had "failed to show a clear and justifiable excuse" for the violations and had "made no attempt at any time to obtain an extension or modification of the . . . order[s]," the court directed entry of judgment dismissing the action against both defendants.

It is beyond dispute that trial courts have the authority to impose sanctions — including dismissal — for failure to prosecute, failure to comply with procedural statutes or rules, or for failure to obey pretrial discovery or scheduling orders. Secs. 805.03, 804.12(2)(a)3, and 802.10(3) (d), Stats. Whether sanctions are appropriate in the first instance and, if so, the choice of a particular sanction in a given case are matters within the court's discretion. "Thus, we examine . . . whether . . . the court abused its discretion in dismissing the appellant's complaint for failure to comply with the pre-trial orders . . .." Trispel v. Haefer, 89 Wis. 2d 725, 731, 279 N.W.2d 242, 245 (1979).

We will not reverse a discretionary determination if the record shows that discretion was in fact exercised and we can perceive a reasonable basis for the court's decision. Prahl v. Brosamle, 142 Wis. 2d 658, 667, 420 N.W.2d 372, 376 (Ct. App. 1987). The exercise of discretion requires something more than an unexplained choice between alternatives. Argonaut Ins. v. LIRC, 132 Wis. 2d 385, 391, 392 N.W.2d 837, 839 (Ct. App. 1986). The term contemplates a reasoning process considering the facts of record and leading to a conclusion a reasonable judge could reach. Hartung v. Hartung, 102 Wis. 2d 58, 66, 306 N.W.2d 16, 20-21 (1981). Where we can ascertain that the trial court has engaged in such a process, and the result is reasonable, we will affirm. Indeed, as a general rule we look for reasons to sustain a trial court's discretionary determination. Prahl, 142 Wis. 2d at 667, 420 N.W.2d at 376.

Because dismissal is a harsh sanction for violation of procedural rules and orders, however, additional considerations come into play. Dismissal will be granted for failure to obey pretrial orders or to comply with procedural statutes and rules only in "extreme circumstances" or in cases of "egregious conduct." Trispel, 89 Wis. 2d at 732, 279 N.W.2d at 245. Finally, in order to demonstrate an abuse of discretion in the dismissal, Johnson must show "a clear and justifiable excuse" for his failure to comply with the court's orders. Id. at 734, 279 N.W.2d at 246.

The trial court dismissed Johnson's case for violation of two orders: one requiring him to disclose expert witnesses and specifically describe his special damages; and another requiring him to provide alternative dates for the defendants' deposition of his experts. In addition, it appears that he never made any formal response to Allis-Chalmers' request for documents until, over four years after the request, he was facing a second motion to dismiss.

In deciding the earlier motion to dismiss for Johnson's failure to comply with discovery rules and pretrial orders, the trial court agreed with Allis-Chalmers and Sperry that the violations had occurred. The court stated, however, that rather than dismiss the action it would instead award reasonable attorney fees to the defendants and allow Johnson a second chance to bring himself into compliance. The court's warning was clear, and we believe that Johnson's unexplained failure to take advantage of the reprieve under the circumstances of this case amounts to the kind of "extreme" or "egregious" conduct for which dismissal is an appropriate sanction.

Johnson argues, however, that it is an abuse of discretion to order dismissal in the absence of a showing by the defendants that "they have been unfairly affected in their ability to try the case," citing Jenzake v. City of Brookfield, 108 Wis. 2d 537, 545, 322 N.W.2d 516, 521 (Ct. App. 1982). In other words, he contends that the defendants must show prejudice in order to gain dismissal for violation of the pretrial orders. Jenzake was a case in which the plaintiff had "concealed" a witness — she failed to disclose an expert — and, relying on cases involving similar witness disclosure violations, we affirmed the trial court's denial of the motion to exclude the witness holding that it was not an abuse of discretion to do so where the moving party had not " requested] a continuance" or shown "how the concealment unfairly affects the party's ability to adequately try the case." Id. at 545, 322 N.W.2d at 521.

This case is something else altogether. It does not involve a violation easily "curable" by a continuance, as in Jenzake. Rather, it involves a failure to comply with discovery orders over a period of nearly five years, and in our opinion Johnson's actions implicate the court's ability to function as an adjudicative body. We believe the case is much more in line with Furrenes v. Ford Motor Co., 79 Wis. 2d 260, 255 N.W.2d 511 (1977).

In Furrenes, the plaintiff sued Ford for injuries claimed to have been caused by a defectively designed tie rod in his automobile. When the plaintiff failed to produce the tie rod for inspection and testing by Ford, the company sought and obtained an order directing him to produce it. When compliance was not forthcoming, Ford moved to dismiss. As here, the trial court declined to dismiss and instead extended the production date with a warning that dismissal would follow if the extended deadline was not met. When it was not and, again as here, when Ford filed a second motion to dismiss for failure to comply with the discovery order, the court granted the motion.

The supreme court upheld the dismissal relying primarily on National Hockey League v. Metro. Hockey Club, 427 U.S. 639 (1976), a case in which the United States Supreme Court sustained a dismissal where several of the defendant's interrogatories had remained substantially unanswered after seventeen months despite a court order directing that they be answered and despite extensions and admonitions by the trial court. Id. at 640. The Furrenes court, noting that the plaintiff had not sought an extension of time to comply with Ford's discovery request despite the trial court's "warning . . . that the consequence of noncompliance would be dismissal," saw no abuse of discretion, stating:

If matters of expediting court proceedings and assuring proper and prompt administration of justice are to be more than mere matters on the agenda at judicial or bar association workshops, the lead of the nation's high court is to be followed in upholding dismissals on the merits where, as the trial court found in the National Hockey League Case, and we see in the case before us, there has been a "callous disregard of responsibilities" owed by plaintiff and plaintiffs counsel to the court and to the adversary parties. Id. at 267, 255 N.W.2d at 515.

We believe the same is true here. Johnson went through one hearing on a motion to dismiss for his failure to comply with the orders and the trial court, showing leniency, chose a lesser sanction than dismissal. To us, that is a "warning" indistinguishable from that given with somewhat greater specificity by the trial court in Furrenes. And, also as in Furrenes, Johnson never sought modification or extension of the orders. In such a situation, we do not believe a defendant must show prejudice in order to prevail on a motion to dismiss.² It is enough that the integrity of the system and the court's ability to exercise its administrative and adjudicative functions in a reasonable manner are implicated by the culpable party's conduct. "It is considered well established that a court has the inherent power to resort to a dismissed of an action in the interest of orderly administration of justice. The general control of the judicial business before it is essential to the court if it is to function." Latham v. Casey & King Corp., 23 Wis. 2d 311, 314, 127 N.W.2d 225, 226 (1964). "The dismissal of an action where counsel fails to comply with an important term of a pretrial order without justifiable excuse is not an extreme measure if the trial courts are to be encouraged to facilitate and expedite the trials of their cases." Carlson Heating, Inc. v. Onchuck, 104 Wis. 2d 175, 182, 311 N.W.2d 673, 677 (Ct. App. 1981).

Finally, Johnson asserts that he should not be penalized for his attorney's failure to respond to the court's orders. He contends that an award of fees and costs against his attorney should suffice and that he should not suffer dismissal of his action for his lawyer's shortcomings. It is an argument that engenders some sympathy, as is evidenced in the dissenting opinion. But we do not believe it should control.

Even where a litigant may be "blameless" in that he or she did not participate in the lawyers' decisions on discovery matters or lacked knowledge of the manner in which the lawyers proceeded, we would be reluctant to hold that, in all cases, the action should be allowed to continue with only some monetary sanctions against the lawyers.

First, we believe such a rule would nullify the provisions of various statutes and rules governing pretrial practice that permit the trial court, in the exercise of its discretion, to impose the sanction of dismissal for procedural violations — to say nothing of the many cases defining the court's inherent powers to control the efficient adjudication of cases coming before it. If remaining aloof from his or her attorney's conduct of the case will insure a party against any ill effects from such failures — if sanctions affecting the case itself, such as barring the testimony of undisclosed witnesses or prohibiting the introduction of evidence deliberately withheld from discovery, may never be imposed and we must rely instead on the imposition of costs against a party's lawyer as the sole means of ensuring compliance with court orders and procedural rules — then we agree with the assertion in Sperry's brief that such orders and rules would be "toothless," for they would be subject to avoidance by a simple claim that the party was personally unaware of his or her lawyer's actions. It is for this reason that ''[p]arties are deemed bound by the acts of their attorneys and are considered to have 'notice of all facts, notice of which can be charged upon the attorney.' '' Gaertner v. 880 Corp., 131 Wis. 2d 492, 501, 389 N.W.2d 59, 63 (Ct. App. 1986), quoting Link v. Wabash R. Co., 370 U.S. 626, 634 (1962) (citation omitted).

Second, a monetary sanction against the lawyer is no answer to a party whose ability to try the case has been affected by the offending lawyer's conduct. As we have noted, there was evidence in this case that, in the years that passed as a result of Johnson's failure to comply with the discovery orders, Allis-Chalmers’ plant had been closed and all its employees — many of whom would be witnesses in the case — had scattered. In addition, all of the records relating to the manufacture of the equipment involved in the accident were no longer in its possession or control. Where the party's ability to try the case is so implicated an award of motion costs is an inadequate remedy.

We realize, as the dissent suggests, that it is not always the most satisfactory answer to leave a party to malpractice or other remedies for counsel's actions, but on the facts of this case we cannot say that the trial court abused its discretion in deciding as it did.

By the Court. — Judgment and order affirmed.

1 During a portion of this time the parties apparently had agreed to hold discovery in abeyance pending ascertainment of Allis-Chalmers' status in the case.

2 Even so, there was evidence of prejudice. In support of its motion to dismiss, Allis-Chalmers submitted an affidavit indicating that since the time of Johnson's accident some nine years earlier its tractor plant had been closed and all employees, including several engineers expected to testify at trial, had retired or moved away, and all records regarding the design, testing and manufacture of the tractor involved in the accident were no longer in its custody or control.