League City v. Texas Windstorm Insurance Association
Opinion
ACCEPTED 01-15-00117-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 10/8/2015 2:03:06 PM CHRISTOPHER PRINE CLERK
No. 01-15-00117-CV FILED IN 1st COURT OF APPEALS In the Court of Appeals HOUSTON, TEXAS 10/8/2015 2:03:06 PM for the First District of Texas CHRISTOPHER A. PRINE Clerk
LEAGUE CITY, Appellant/Cross-Appellee, v.
TEXAS WINDSTORM INSURANCE ASSOCIATION, Appellee/Cross-Appellant.
BRIEF OF CROSS-APPELLEE LEAGUE CITY
Gregory F. Cox Jennifer Bruch Hogan THE MOSTYN LAW FIRM Richard P. Hogan, Jr. 6280 Delaware Street James C. Marrow Beaumont, Texas 77706 HOGAN & HOGAN 409.832.2777–telephone Pennzoil Place 409.832.2703–facsimile 711 Louisiana, Suite 500 Houston, Texas 77002-2721 Rene M. Sigman 713.222.8800–telephone THE MOSTYN LAW FIRM 713.222.8810–facsimile 3810 W. Alabama Houston, Texas 77027 Randal Cashiola 713.861.6616–telephone CASHIOLA & BEAN 713.861.8084–facsimile 2090 Broadway Street, Suite A Beaumont, Texas 77701 409.813.1443–telephone 409.813.1467–facsimile
Attorneys for Cross-Appellee League City
Oral Argument Requested October 8, 2015
48146_1 TABLE OF CONTENTS
Page INDEX OF AUTHORITIES.................................................................................... iv
STATEMENT OF THE CASE ............................................................................... vii
ISSUES PRESENTED........................................................................................... viii
STATEMENT OF FACTS ........................................................................................1
SUMMARY OF ARGUMENT .................................................................................2
ARGUMENT .............................................................................................................3
I. Notice Is Not at Issue Here. .............................................................................3
A. TWIA has not briefed any notice complaint. ........................................4
B. TWIA did not preserve any notice complaint below. ...........................4
II. The November 7, 2013 Monetary-Sanctions Order Is Not Before the Court. ...............................................................................................................5
A. The November 7 order was superseded by the judgment. ....................5
B. TWIA does not challenge the court’s ruling offsetting its cost recovery by the amount of monetary sanctions.....................................7
III. Alternatively, the Trial Court Properly Assessed Monetary Sanctions against TWIA...................................................................................................8
A. Reviewing courts must defer to trial courts’ considerable discretion in imposing sanctions. ..........................................................8
B. The record shows a nexus between TWIA’s discovery abuse and the sanctions imposed. ..................................................................10
1. TWIA engaged in persistent discovery abuse and disobeyed several court orders. .................................................10
48146_1 i 2. A finding of “intentional disrespect” is not necessary to impose sanctions, and even if it were, the record supports such a finding. ...........................................................................17
3. The record supports the court’s finding that TWIA’s discovery abuse prejudiced League City. .................................18
4. The sanctions directly relate to TWIA’s discovery abuse. .......22
C. Monetary sanctions were not excessive but instead compensated League City for the prejudice it suffered. .....................22
1. The record supports the amount of monetary sanctions found by the court. ....................................................................22
2. The court considered the availability of lesser sanctions. ........24
IV. The Court Properly Struck TWIA’s Affirmative Defenses for Continued Discovery Abuse Justifying the Presumption Its Defenses Lacked Merit. .................................................................................................25
A. The entire course of proceedings justified the conclusion that TWIA’s affirmative defenses lacked merit. ........................................26
1. The court’s unchallenged findings of fact are binding on this Court. ..................................................................................27
2. TWIA continued to disregard the court’s orders after the imposition of monetary sanctions. ............................................27
B. There is a direct nexus between TWIA’s refusal to cooperate with discovery into its affirmative defenses and the striking of those affirmative defenses. ..................................................................34
C. The trial court properly considered lesser sanctions. ..........................35
PRAYER ..................................................................................................................36
CERTIFICATE OF COMPLIANCE .......................................................................38
CERTIFICATE OF SERVICE ................................................................................39
48146_1 ii
November 7, 2013 order on Plaintiff’s Motion to Enforce Court’s order and Motion for Sanctions (CR160) ...................................Tab A
April 17, 2014 order striking Defendant’s affirmative defenses (CR187-95) .............................................................................................. Tab B
48146_1 iii INDEX OF AUTHORITIES Page(s) Cases Am. Flood Research, Inc. v. Jones, 192 S.W.3d 581 (Tex. 2006) ..................................................................... 9, 22, 26 Andras v. Mem’l Hosp. Sys., 888 S.W.2d 567 (Tex. App.—Houston [1st Dist.] 1994, writ denied) ................24 Banda v. Garcia, 955 S.W.2d 270 (Tex. 1997) ......................................................................... 21, 23
Barnett v. Home of Tex. & Warranty Underwriters Ins. Co., No. 14-09-01005-CV, 2011 WL 665309 (Tex. App.—Houston [14th Dist.] Feb. 24, 2011, no pet.) (mem. op.) .........................................................................6
Bd. of Adjustment, City of Corpus Christi v. McBride, 676 S.W.2d 705 (Tex. App.—Corpus Christi 1984, no writ) ................................6 Britton v. Tex. Dep’t of Criminal Justice, 95 S.W.3d 676 (Tex. App.—Houston [1st Dist.] 2002, no pet.) ...........................7
Chasewood Oaks Condo. Homeowners Ass’n v. Amatek Holdings, Inc., 977 S.W.2d 840 (Tex. App.—Fort Worth 1998, pet. denied) .............................26 Chrysler Corp. v. Blackmon, 841 S.W.2d 844 (Tex. 1992) (orig. proceeding) ..................................................18 Cire v. Cummings, 134 S.W.3d 835 (Tex. 2004) ............................................................................9, 24 Dao v. Md. Cas. Co., No. 09-13-00353-CV, 2015 WL 2255263 (Tex. App.—Beaumont May 14, 2015, no pet.) (mem. op.) ......................................................................17
Downer v.
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ACCEPTED 01-15-00117-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 10/8/2015 2:03:06 PM CHRISTOPHER PRINE CLERK
No. 01-15-00117-CV FILED IN 1st COURT OF APPEALS In the Court of Appeals HOUSTON, TEXAS 10/8/2015 2:03:06 PM for the First District of Texas CHRISTOPHER A. PRINE Clerk
LEAGUE CITY, Appellant/Cross-Appellee, v.
TEXAS WINDSTORM INSURANCE ASSOCIATION, Appellee/Cross-Appellant.
BRIEF OF CROSS-APPELLEE LEAGUE CITY
Gregory F. Cox Jennifer Bruch Hogan THE MOSTYN LAW FIRM Richard P. Hogan, Jr. 6280 Delaware Street James C. Marrow Beaumont, Texas 77706 HOGAN & HOGAN 409.832.2777–telephone Pennzoil Place 409.832.2703–facsimile 711 Louisiana, Suite 500 Houston, Texas 77002-2721 Rene M. Sigman 713.222.8800–telephone THE MOSTYN LAW FIRM 713.222.8810–facsimile 3810 W. Alabama Houston, Texas 77027 Randal Cashiola 713.861.6616–telephone CASHIOLA & BEAN 713.861.8084–facsimile 2090 Broadway Street, Suite A Beaumont, Texas 77701 409.813.1443–telephone 409.813.1467–facsimile
Attorneys for Cross-Appellee League City
Oral Argument Requested October 8, 2015
48146_1 TABLE OF CONTENTS
Page INDEX OF AUTHORITIES.................................................................................... iv
STATEMENT OF THE CASE ............................................................................... vii
ISSUES PRESENTED........................................................................................... viii
STATEMENT OF FACTS ........................................................................................1
SUMMARY OF ARGUMENT .................................................................................2
ARGUMENT .............................................................................................................3
I. Notice Is Not at Issue Here. .............................................................................3
A. TWIA has not briefed any notice complaint. ........................................4
B. TWIA did not preserve any notice complaint below. ...........................4
II. The November 7, 2013 Monetary-Sanctions Order Is Not Before the Court. ...............................................................................................................5
A. The November 7 order was superseded by the judgment. ....................5
B. TWIA does not challenge the court’s ruling offsetting its cost recovery by the amount of monetary sanctions.....................................7
III. Alternatively, the Trial Court Properly Assessed Monetary Sanctions against TWIA...................................................................................................8
A. Reviewing courts must defer to trial courts’ considerable discretion in imposing sanctions. ..........................................................8
B. The record shows a nexus between TWIA’s discovery abuse and the sanctions imposed. ..................................................................10
1. TWIA engaged in persistent discovery abuse and disobeyed several court orders. .................................................10
48146_1 i 2. A finding of “intentional disrespect” is not necessary to impose sanctions, and even if it were, the record supports such a finding. ...........................................................................17
3. The record supports the court’s finding that TWIA’s discovery abuse prejudiced League City. .................................18
4. The sanctions directly relate to TWIA’s discovery abuse. .......22
C. Monetary sanctions were not excessive but instead compensated League City for the prejudice it suffered. .....................22
1. The record supports the amount of monetary sanctions found by the court. ....................................................................22
2. The court considered the availability of lesser sanctions. ........24
IV. The Court Properly Struck TWIA’s Affirmative Defenses for Continued Discovery Abuse Justifying the Presumption Its Defenses Lacked Merit. .................................................................................................25
A. The entire course of proceedings justified the conclusion that TWIA’s affirmative defenses lacked merit. ........................................26
1. The court’s unchallenged findings of fact are binding on this Court. ..................................................................................27
2. TWIA continued to disregard the court’s orders after the imposition of monetary sanctions. ............................................27
B. There is a direct nexus between TWIA’s refusal to cooperate with discovery into its affirmative defenses and the striking of those affirmative defenses. ..................................................................34
C. The trial court properly considered lesser sanctions. ..........................35
PRAYER ..................................................................................................................36
CERTIFICATE OF COMPLIANCE .......................................................................38
CERTIFICATE OF SERVICE ................................................................................39
48146_1 ii
November 7, 2013 order on Plaintiff’s Motion to Enforce Court’s order and Motion for Sanctions (CR160) ...................................Tab A
April 17, 2014 order striking Defendant’s affirmative defenses (CR187-95) .............................................................................................. Tab B
48146_1 iii INDEX OF AUTHORITIES Page(s) Cases Am. Flood Research, Inc. v. Jones, 192 S.W.3d 581 (Tex. 2006) ..................................................................... 9, 22, 26 Andras v. Mem’l Hosp. Sys., 888 S.W.2d 567 (Tex. App.—Houston [1st Dist.] 1994, writ denied) ................24 Banda v. Garcia, 955 S.W.2d 270 (Tex. 1997) ......................................................................... 21, 23
Barnett v. Home of Tex. & Warranty Underwriters Ins. Co., No. 14-09-01005-CV, 2011 WL 665309 (Tex. App.—Houston [14th Dist.] Feb. 24, 2011, no pet.) (mem. op.) .........................................................................6
Bd. of Adjustment, City of Corpus Christi v. McBride, 676 S.W.2d 705 (Tex. App.—Corpus Christi 1984, no writ) ................................6 Britton v. Tex. Dep’t of Criminal Justice, 95 S.W.3d 676 (Tex. App.—Houston [1st Dist.] 2002, no pet.) ...........................7
Chasewood Oaks Condo. Homeowners Ass’n v. Amatek Holdings, Inc., 977 S.W.2d 840 (Tex. App.—Fort Worth 1998, pet. denied) .............................26 Chrysler Corp. v. Blackmon, 841 S.W.2d 844 (Tex. 1992) (orig. proceeding) ..................................................18 Cire v. Cummings, 134 S.W.3d 835 (Tex. 2004) ............................................................................9, 24 Dao v. Md. Cas. Co., No. 09-13-00353-CV, 2015 WL 2255263 (Tex. App.—Beaumont May 14, 2015, no pet.) (mem. op.) ......................................................................17
Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (Tex. 1985) ..................................................................................9
Finlay v. Olive, 77 S.W.3d 520 (Tex. App.—Houston [1st Dist.] 2002, no pet.) .........................23
48146_1 iv Franz v. Katy Indep. Sch. Dist., 35 S.W.3d 749 (Tex. App.—Houston [1st Dist.] 2000, no pet.) ...........................4
Green v. Allied Interests, Inc., No. 03-97-00510-CV, 1998 WL 105154 (Tex. App.—Austin Mar. 12, 1998, pet. denied) (not designated for publication) ............................6, 7 Headington Oil Co. v. White, 287 S.W.3d 204 (Tex. App.—Houston [14th Dist.] 2009, no pet.) .......................7 In re Harvest Communities of Houston, Inc., 88 S.W.3d 343 (Tex. App.—San Antonio 2002, orig. proceeding) ............. 10, 27
Int’l Paper Co. v. Harris County, 445 S.W.3d 379 (Tex. App.—Houston [1st Dist.] 2013, no pet.) .........................6 Keith v. Keith, 221 S.W.3d 156 (Tex. App.—Houston [1st Dist.] 2006, no pet.) .......................21 Kroger Co. v. Am. Alternative Ins. Corp., ___ S.W.3d ___, No. 14-13-01135-CV, 2015 WL 3878097 (Tex. App.—Houston [14th Dist.] June 23, 2015, no pet.) ...................................7 Low v. Henry, 221 S.W.3d 609 (Tex. 2007) ..................................................................................4 McMillin v. State Farm Lloyds, 180 S.W.3d 183 (Tex. App.—Austin 2005, pet. denied) ........................... 8, 9, 17 Prize Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537 (Tex. App.—San Antonio 2011, no pet.)................. 9, 18, 21, 26
San Antonio Hous. Auth. v. Underwood, 782 S.W.2d 25 (Tex. App.—San Antonio 1989, no writ) .....................................7
Scott Bader, Inc. v. Sandstone Prods., Inc., 248 S.W.3d 802 (Tex. App.—Houston [1st Dist.] 2008, no pet.) ............... passim
State Farm Mut. Auto. Ins. Co. v. Engelke, 824 S.W.2d 747 (Tex. App.—Houston [1st Dist.] 1992, orig. proceeding) ..................................................................................................11
48146_1 v State v. Castle Hills Forest, Inc., 842 S.W.2d 370 (Tex. App.—San Antonio 1992, writ denied) ............................7
Teate v. CBL/Parkdale Mall, L.P., 262 S.W.3d 486 (Tex. App.—Beaumont 2008, no pet.) .....................................27
TransAmerican Natural Gas Corp. v. Powell, 811 S.W.2d 913 (Tex. 1991) (orig. proceeding) .......................................... passim
Van Es v. Frazier, 230 S.W.3d 770 (Tex. App.—Waco 2007, pet. denied) ................... 19, 25, 34, 36
Vulcan Materials Co. v. Bowers, No. 04-04-00062-CV, 2004 WL 2997852 (Tex. App.—San Antonio Dec. 29, 2004, pet. denied) (mem. op.)................................................................17 Warwick Oil & Gas, Inc. v. FBS Props., Inc., No. 01-14-00290-CV, 2015 WL 3637988 (Tex. App.—Houston [1st Dist.] June 11, 2015, no pet.) (mem. op.) ............................................................... 35, 36 Weinberger v. Longer, 222 S.W.3d 557 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) ....... 35, 36 Wright v. Wentzel, 749 S.W.2d 228 (Tex. App.—Houston [1st Dist.] 1988, no writ).........................6
Rules TEX. R. APP. P. 38.1(i) ................................................................................................4 TEX. R. CIV. P. 11 .....................................................................................................31
TEX. R. CIV. P. 141 .....................................................................................................7 TEX. R. CIV. P. 191.2 ..................................................................................................7
TEX. R. CIV. P. 215.2(b) ...........................................................................................17
TEX. R. CIV. P. 215.2(b)(8) ........................................................................................8
48146_1 vi STATEMENT OF THE CASE Nature of the case: League City sued TWIA for breach of contract, violations of the Insurance Code, breach of the duty of good faith and fair dealing, and fraud. CR7. TWIA answered the lawsuit and later demanded an appraisal. CR31, 43. Following an appraisal, TWIA refused to pay the award, and a jury trial followed.
Trial Court: Hon. Kerry L. Neves 10th Judicial District Court Galveston County, Texas
Plaintiff/Appellant/Cross-Appellee: League City
Defendant/Appellee/Cross-Appellant: TWIA
Trial Court’s Action: The jury found that TWIA failed to comply with the insurance policy, failed to comply with the Insurance Code, and failed to comply with its duty of good faith and fair dealing, and the jury awarded League City damages and attorney’s fees. The trial court disregarded all of these findings and rendered judgment that League City take nothing on its claims against TWIA. League City appealed the take-nothing judgment.
TWIA then filed this cross-appeal, complaining of two pretrial rulings. First, on November 7, 2013, the pretrial court imposed $15,000 in monetary sanctions on TWIA for discovery abuse. CR160. Second, on April 17, 2014, the court struck some of TWIA’s affirmative defenses for continued discovery abuse. CR187-95. TWIA appeals from both orders.
48146_1 vii ISSUES PRESENTED 1. Whether the November 7, 2013 monetary sanctions order is properly before
the Court after the order was superseded by the trial court’s final judgment and
apportionment of costs, which TWIA does not challenge or brief.
2. Whether the trial court abused its discretion by imposing monetary sanctions
after finding a nexus between TWIA’s discovery abuse and the sanctions imposed,
and whether such sanctions were excessive in compensating League City for the
prejudice it suffered from TWIA’s actions.
3. Whether the trial court abused its discretion by striking TWIA’s affirmative
defenses, after finding that TWIA’s continuing abuse of the discovery process
justified the presumption that its defenses lacked merit.
48146_1 viii STATEMENT OF FACTS The underlying lawsuit arose from TWIA’s failure to properly adjust League
City’s claims for property damage caused by Hurricane Ike. CR271-85, 286-325.
TWIA’s adjuster, Paul Gauthier, should have inspected the damaged properties,
determined what was and was not damaged, written estimates, applied appropriate
depreciation, and made recommendations. RR16:68-69. Instead, Gauthier made
League City complete repairs and submit receipts, after which Gauthier purported
to determine whether the repair was covered under the policy. RR11:69-71, 93;
13:88, 91-92, 140-42; 16:176. Because of TWIA’s failure to properly adjust the
claim, League City did not receive any payment on its claim for nine months,
RR16:129-30; 29:472, 509-10, and did not receive proper compensation for its
windstorm losses. RR16:71, 73; 12:136-37; 13:13-15, 135-38, 140-44.
The jury found that TWIA failed to comply with the insurance policy,
violated the Insurance Code, and breached its duty of good faith and fair dealing,
and awarded damages. CR286-325. Nevertheless, the trial court disregarded the
jury’s findings in favor of League City and rendered judgment that League City
take nothing. CR678-79. League City has appealed from that take-nothing
judgment.
48146_1 1 TWIA filed a cross-appeal and now complains of two interlocutory orders:
a November 7, 2013 order imposing monetary sanctions for discovery abuse,
CR160, and an April 17, 2014 order striking some of TWIA’s affirmative defenses
after Judge Lonnie Cox found that TWIA had continued to engage in discovery
abuse, that its conduct justified the presumption that its affirmative defenses lacked
merit, and that lesser sanctions would not suffice. CR187-95.
The facts regarding these orders are laid out in significantly more detail
below.
SUMMARY OF ARGUMENT TWIA challenges an interlocutory monetary-sanctions order that was
incorporated into, and superseded, by the trial court’s final judgment apportioning
costs between the parties. However, TWIA does not complain about the judgment
or cost apportionment. Thus, any reversal of the superseded November 7, 2013
order would have no effect on the final judgment and the trial court’s order
offsetting TWIA’s cost recovery by the amount of the earlier sanctions.
Alternatively, the trial court properly exercised its discretion by imposing
$15,000 in monetary sanctions. The record supports its finding that TWIA
engaged in a pattern of discovery abuse, by refusing to answer proper discovery,
failing to produce relevant documents, and disobeying court orders. TWIA’s abuse
prejudiced League City by necessitating a second deposition of TWIA’s adjuster
48146_1 2 and forcing League City to prepare several motions to compel and attend multiple
hearings in efforts to secure TWIA’s compliance. Finally, the record demonstrates
that the court tested several lesser sanctions that did not work, that monetary
sanctions were appropriate, and that the amount of sanctions was not excessive.
Despite the imposition of monetary sanctions, TWIA continued to abuse the
discovery process by obstructing legitimate discovery requests, and TWIA violated
several more court orders. Therefore, the court properly concluded that TWIA’s
discovery abuse warranted the presumption that its affirmative defenses lacked
merit. Accordingly, this Court should affirm the dismissal of TWIA’s affirmative
defenses.
ARGUMENT I. Notice Is Not at Issue Here. TWIA’s brief assails only two orders: the November 7, 2013 monetary-
sanctions order and the April 17, 2014 order striking affirmative defenses. ANT
Br. at x, xi, 18-25, 25-40. TWIA does not ask this Court to review any of the
orders striking its objections or compelling TWIA to produce documents, respond
to discovery requests, or comply with the court’s orders. See CR52-53, 165, 875-
76, 879, 881-82, 887, 890, 895-96, 906; SuppCR376-77, 379, 395, 501, 1036,
1105, 1566; SuppCR2:4. Thus, notice is not relevant as to any hearings other than
those of November 7 and April 10 (which led to the April 17 order). Regarding
those two hearings, TWIA has not preserved any notice complaint.
48146_1 3 A. TWIA has not briefed any notice complaint. TWIA’s argument contains no discussion of the notice issue or legal
authority. Therefore, it has not adequately raised any complaint about notice.
TEX. R. APP. P. 38.1(i); Franz v. Katy Indep. Sch. Dist., 35 S.W.3d 749, 755 (Tex.
App.—Houston [1st Dist.] 2000, no pet.).
B. TWIA did not preserve any notice complaint below. To preserve a notice complaint, a party must alert the court to the lack of
notice, object to the hearing or request a continuance, and obtain a ruling. See Low
v. Henry, 221 S.W.3d 609, 618 (Tex. 2007). TWIA did not comply with these
preservation requirements for the hearings of November 7 and April 10.
TWIA did not complain about notice of the November 7 hearing, either in its
written response1 or during the hearing,2 and it did not follow the preservation
steps discussed above. CR105-09; RR2:1-59. A month after monetary sanctions
were imposed, TWIA moved for reconsideration. SuppCR508-13. That motion
did not raise any complaint about notice, and any such objection would be
untimely. See Low, 221 S.W.3d at 618-19. TWIA did not preserve any complaint
about notice of the monetary-sanctions hearing.
1 TWIA’s response complains about the sufficiency of the sanctions motion, but its sole mentions about notice consist of retroactive, untimely complaints about earlier hearings, not the November 7 hearing. CR107-08. 2 TWIA raised notice after sanctions were awarded, but its complaint related to a different hearing. RR2:54.
48146_1 4 TWIA did not object to notice of the April 10 hearing, either.3 TWIA also
did not request a continuance or obtain a ruling from the court. SuppRR(4-10-
14):1-16. TWIA did not preserve any complaint about notice of the April 10
hearing. Id.
II. The November 7, 2013 Monetary-Sanctions Order Is Not Before the Court. TWIA’s second issue attacks the November 7, 2013 monetary-sanctions
order. CR160. ANT Br. at x, 7, 15, 18-25, 40. That order was superseded by, and
incorporated into, the apportionment of costs in the final judgment. TWIA does
not challenge the judgment or the court’s cost apportionment; to the contrary,
TWIA urges the Court to affirm the judgment. ANT Br. at x. Instead, TWIA’s
argument is expressly confined to the November 7 sanctions order: “This cross-
appeal addresses a monetary sanction discovery order erroneously ordered by the
first pre-trial court, (CR.160) ...” Id.
A. The November 7 order was superseded by the judgment. TWIA disobeyed two orders to pay the monetary sanctions, SuppCR505,
600; SuppCR3:4, 8-9, and those sanctions remained unpaid when the court was
asked to apportion costs. SuppCR3:9. Rather than further sanctioning TWIA for
disobeying court orders, the court instead incorporated the monetary-sanctions
3 TWIA initially complained about “insufficient time” to respond to League City’s motion before the then-scheduled hearing on March 20. But the hearing was reset to April 10, and TWIA never objected to notice of that hearing.
48146_1 5 order into its cost apportionment in the final judgment.4 CR663, 678-69;
SuppCR2968-70; SuppCR3:8-19, 15. Thus, the pretrial sanctions order was
superseded by the amended final judgment, reflecting the court’s finding of good
cause to apply the unpaid sanctions against TWIA’s cost recovery. CR678-79.
A complaint about a temporary order becomes moot after a final order is
entered if reversal of the temporary order would have no effect on the final order
that superseded it. Wright v. Wentzel, 749 S.W.2d 228, 234 (Tex. App.—Houston
[1st Dist.] 1988, no writ); Bd. of Adjustment, City of Corpus Christi v. McBride,
676 S.W.2d 705, 709 (Tex. App.—Corpus Christi 1984, no writ). Here, TWIA
does not challenge the final judgment that superseded and mooted the pretrial
sanctions order. Therefore, the mooted November 7 order is not before the Court.
See Int’l Paper Co. v. Harris County, 445 S.W.3d 379, 385-86 (Tex. App.—
Houston [1st Dist.] 2013, no pet.); Barnett v. Home of Tex. & Warranty
Underwriters Ins. Co., No. 14-09-01005-CV, 2011 WL 665309, at *6 (Tex.
App.—Houston [14th Dist.] Feb. 24, 2011, no pet.) (mem. op.) (“Because
appellees’ challenge to question 9 would have no impact on the court’s final
judgment, such challenge is moot.”); see also Green v. Allied Interests, Inc., No.
03-97-00510-CV, 1998 WL 105154, at *2 (Tex. App.—Austin Mar. 12, 1998, pet.
4 TWIA requested $39,901.95 in costs. SuppCR2968-70. At League City’s urging, however, Judge Neves offset that requested amount by the $15,000 in unpaid sanctions and further excluded $1,714.63 that did not qualify as taxable costs, resulting in a final award of $23,187.32. Compare SuppCR2968-70 with SuppCR3:8-15 and CR663, 679.
48146_1 6 denied) (not designated for publication) (holding appellant’s complaint was moot
where sanctions order was incorporated into and superseded by final judgment).
B. TWIA does not challenge the court’s ruling offsetting its cost recovery by the amount of monetary sanctions. The apportionment of costs is committed to the trial court’s sound
discretion. San Antonio Hous. Auth. v. Underwood, 782 S.W.2d 25, 27 (Tex.
App.—San Antonio 1989, no writ). The trial court may set the amount of
recoverable costs and, as here, offset a party’s cost recovery for earlier discovery
abuse. TEX. R. CIV. P. 141; see State v. Castle Hills Forest, Inc., 842 S.W.2d 370,
373 (Tex. App.—San Antonio 1992, writ denied); cf. Headington Oil Co. v. White,
287 S.W.3d 204, 213 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (noting that
party’s failure to cooperate in discovery, or abuse of discovery process, constitutes
“good cause” under Rule 141) (citing TEX. R. CIV. P. 191.2).
TWIA does not challenge the judgment or the court’s cost apportionment,
decision to incorporate monetary sanctions into such apportionment, or Rule 141
determination that TWIA’s discovery abuse justified such an offset. Thus, even if
TWIA could revive the mooted sanctions order, it still could not prevail for failure
to attack the court’s cost apportionment. Kroger Co. v. Am. Alternative Ins. Corp.,
___ S.W.3d ___, No. 14-13-01135-CV, 2015 WL 3878097, at *3, *5 (Tex. App.—
Houston [14th Dist.] June 23, 2015, no pet.); see Britton v. Tex. Dep’t of Criminal
Justice, 95 S.W.3d 676, 681 (Tex. App.—Houston [1st Dist.] 2002, no pet.).
48146_1 7 III. Alternatively, the Trial Court Properly Assessed Monetary Sanctions against TWIA. Even if the November 7 order were properly before the Court, the trial court
acted within its discretion by sanctioning TWIA.
A. Reviewing courts must defer to trial courts’ considerable discretion in imposing sanctions. Abuse of the discovery process through unwarranted delays and
unresponsiveness subverts justice, and such conduct is (and should be) condemned.
McMillin v. State Farm Lloyds, 180 S.W.3d 183, 199 (Tex. App.—Austin 2005,
pet. denied). Trial courts are therefore empowered to sanction parties for abusing
the discovery process; if a party fails to comply with proper discovery requests, the
court may enter orders “as are just,” including monetary sanctions awarding
attorney’s fees. TEX. R. CIV. P. 215.2(b)(8).
Trial courts are better equipped than appellate courts to “evaluate the often
complex facts and equities of discovery disputes” and determine whether a party
has abused the discovery process, the relative culpability and harm of such
conduct, and the credibility of a party’s attempts to explain delays and
unresponsiveness. McMillin, 180 S.W.3d at 199. The trial court has more
complete access to relevant information than does a reviewing court, including the
entire history of litigation—which may not be fully captured in the record the
48146_1 8 appellant chooses to bring forward—plus the progression of events and firsthand
experience with the parties’ explanations and complaints. See id. at 200.
Therefore, the decision to impose discovery sanctions is reviewed for an
abuse of discretion. Id. at 199. In exercising its discretion, the trial court may
consider not only the specific violation for which sanctions are finally imposed, but
also everything that has occurred during the history of the litigation. See Downer
v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241 (Tex. 1985).
An appellate court cannot substitute its judgment or simply decide whether
“the facts present an appropriate case for the trial court’s action” but instead must
determine whether the trial court acted arbitrarily or unreasonably, that is, without
reference to guiding rules and principles. See id. at 241-42; Cire v. Cummings, 134
S.W.3d 835, 838-39 (Tex. 2004).
The appellate court is not limited to reviewing the “sufficiency of the
evidence” supporting the trial court’s finding but instead must independently
review the entire record, including any evidence, the arguments of counsel, written
discovery on file, and circumstances surrounding the discovery abuse. See Am.
Flood Research, Inc. v. Jones, 192 S.W.3d 581, 583 (Tex. 2006); Scott Bader, Inc.
v. Sandstone Prods., Inc., 248 S.W.3d 802, 812 (Tex. App.—Houston [1st Dist.]
2008, no pet.); Prize Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537, 575
(Tex. App.—San Antonio 2011, no pet.).
48146_1 9 B. The record shows a nexus between TWIA’s discovery abuse and the sanctions imposed. TWIA’s argument centers on the transcript from the sanctions hearing.
ANT Br. at 18-25. But the trial court was not limited to “what [TWIA] wish[es] to
present in isolation for inspection,” and neither is this Court. See In re Harvest
Communities of Houston, Inc., 88 S.W.3d 343, 347 (Tex. App.—San Antonio
2002, orig. proceeding). Here, the entire course of discovery shows a pattern of
discovery abuse justifying sanctions.
1. TWIA engaged in persistent discovery abuse and disobeyed several court orders. League City served discovery requests on TWIA on March 4, 2013. CR94;
SuppCR109, 399. The requests sought, among other things, information about
TWIA’s contentions and production of files from the TWIA agent(s) or
representative(s) who adjusted League City’s claim. Id.
TWIA did not serve its responses until September 3, 2013. SuppCR123.
Despite having six months to respond, TWIA provided few substantive answers.
SuppCR109-201. Its responses were preceded by four pages of “general
objections” to the interrogatories and requests for production, SuppCR127-28, 166-
67, and raised countless stock objections to individual questions. SuppCR129-201.
48146_1 10 Specifically, TWIA objected and did not provide substantive answers to
proper contention interrogatories, instead referring League City to an 869-page
claims file. SuppCR137-42. TWIA would not provide basic information about
individuals involved in handling the claim, and it refused to provide training
materials, SuppCR113-15, that have long been held discoverable. See State Farm
Mut. Auto. Ins. Co. v. Engelke, 824 S.W.2d 747, 753 (Tex. App.—Houston [1st
Dist.] 1992, orig. proceeding). TWIA also refused to produce other categories of
discoverable documents, such as photographs and other documents used to
estimate League City’s claim. SuppCR115-20.
On October 1, the court ordered TWIA to “narrow down what your real
objections [are] versus what you just [have] written down.” SuppRR(10-02-
13):14. But TWIA admittedly did not comply with the court’s order: “[T]he direct
answer is, no, we didn’t deal with my discovery objections[.]” Id. The court
reminded TWIA, “I told you ‘don’t come here without having had it done,’”
SuppRR(10-02-13):17, and ordered TWIA to produce responsive documents
before October 11, 2013. SuppCR379. TWIA did not comply with that order,
either.
On October 14, the court heard League City’s motion to compel responses to
its discovery requests. CR94; SuppRR(10-14-13). TWIA first told the court that it
already had produced all non-privileged documents, SuppRR(10-14-13):6, a
48146_1 11 representation that TWIA repeats in its brief to this Court. ANT Br. at 19 n.4. But
TWIA did not tell the trial court—and does not tell this Court, either—that it had
not produced “a large amount of documentation,” that is, “a very large file,” from
the claim adjuster. SuppRR(10-14-13):6-7. TWIA also did not produce all
relevant emails. SuppRR(10-22-13):17.
Moreover, TWIA could not and would not assure the court that it had, in
fact, produced all responsive, non-privileged materials. SuppRR(10-14-13):11-12.
The trial court recessed the hearing and instructed TWIA “to come back at 3:00 …
[and] be clear on the record what you have and haven’t given and what you have
withheld and why.” SuppRR(10-14-13):38. Even after the recess, however,
TWIA could not answer the court’s question: “If the court wants a definitive
statement that we have produced every responsive document, we can’t make that.
We will never be [] able to make that definitive statement. It won’t happen.”
SuppRR(10-14-13):44; see SuppRR(10-14-13):38-41, 42.
The trial court warned TWIA about “try[ing] to … run the clock” by failing
to cooperate with discovery. SuppRR(10-14-13):44. Then, the court proceeded to
specifically rule on each objection relevant to League City’s motion to compel, a
process that took more than 90 minutes. SuppRR(10-14-13):50-146.
48146_1 12 TWIA asked the court to order the deposition of League City’s corporate
representative, but League City objected to having to produce its witness without
the benefit of TWIA’s documents “to prep my people with. I need their
documents[.]” SuppRR(10-14-13):147-48. Accordingly, the court ordered League
City to produce its corporate representative for deposition by Wednesday, October
23, but also ordered TWIA to supplement its discovery responses, per that day’s
rulings on the objections, before that deposition. SuppRR(10-14-13):148, 151.
TWIA did not supplement its responses as ordered. SuppRR(10-22-13):29.
Its disobedience was the subject of yet another hearing, on October 22. The topic
came up during a discussion about TWIA’s desire to depose its own adjuster, Paul
Gauthier. League City wanted that deposition, too, but it could not take the
deposition without TWIA’s still-overdue discovery responses. SuppRR(10-22-
13):5-7, 10-11, 14, 29. The court asked TWIA to explain its non-compliance with
the October 14 order. SuppRR(10-22-13):32. TWIA claimed misunderstanding
about the court’s rulings on its objections, but the court did not accept that excuse.
SuppRR(10-22-13):33, 37. When pressed for details, TWIA could not identify any
particular ruling that it questioned. SuppRR(10-22-13):34, 36.
The court ordered the parties to depose Gauthier on Monday, October 28,
but specifically ordered TWIA to supplement its responses by October 25, in
advance of the deposition. CR94, 99; SuppCR396; SuppRR(10-22-13):37-38.
48146_1 13 Once again, TWIA disobeyed the trial court by failing to supplement
discovery responses by October 25. CR94-95. League City was forced to take
Gauthier’s court-ordered deposition on October 28 without discovery that it had
repeatedly requested to prepare for the deposition, and which the court had ordered
twice. SuppCR396. To make matters worse, it was discovered during the
deposition that TWIA had not produced Gauthier’s physical file from his
adjustment of the claim, which contained relevant emails and photographs not
previously produced. SuppCR399-400; see also CR93; SuppRR(11-07-
13)(volume 2).
On October 29, League City reminded TWIA of the court’s October 25
deadline and again requested supplementation, but TWIA still did not comply.
CR103. Instead, TWIA purported to grant itself an extension from the court’s
order to November 1st or 4th. CR103. League City reiterated its request on
October 31, and also requested production of Gauthier’s physical file, CR 100, but
TWIA did not respond.
TWIA did not produce the court-ordered discovery, or Gauthier’s file, by its
own self-extended November 4 “deadline.” CR94, 103. Finally, at the end of the
day, League City again had to seek the court’s assistance. The court was asked to:
compel the production of Gauthier’s file, SuppCR399-400;
strike TWIA’s objections and compel answers to yet another set of outstanding discovery, CR62-93; and
48146_1 14 enforce its previous orders, and impose sanctions, as compensation for its attorney’s fees and costs incurred from TWIA’s discovery abuse. CR94-104.
TWIA waited until November 6—twelve days after the court-ordered
deadline—to finally respond to the discovery requests. CR105-09. Its response
offered no explanation for disobeying the court’s orders. CR121-33.
The court heard League City’s motion for sanctions on November 7, 2013.
RR2:1-59. League City expressed frustration with TWIA’s persistent non-
compliance, RR2:6, reiterated that it needed TWIA’s discovery responses prior to
Gauthier’s deposition, RR2:18-19, and complained that TWIA’s failure to produce
Gauthier’s file precluded a proper cross-examination of the witness and
necessitated another deposition, with incumbent costs that “[League City]
shouldn’t have to bear the expenses of.” RR2:19-21.
The court asked TWIA to explain its non-compliance with the court’s
orders, but TWIA’s counsel replied, “I can’t give you a full reason because I don’t
know all of the reasons why.” RR2:8. TWIA could only explain its failure to
respond by its self-granted November 1st extension, but not for its non-compliance
with the court’s October 25 deadline. RR2:8-10. And its attorney’s sole excuse
for not complying by November 1—a week late—was that he did not have “final
approval” from TWIA, but he could not identify whose approval was needed or
“why [those people] were not available.” RR2:8-11. The court recessed the
48146_1 15 hearing to give TWIA additional time to justify its disobedience, RR2:15-16, but,
even after the break, TWIA still had no explanation. RR2:16-17.
Nevertheless, TWIA’s attorney tried to “assure” the court that his client did
not intend to disrespect the court’s rulings. Id. The court did not believe that
claim, however, and explained why:
What did you think was going to happen when you spent the past month openly defying my orders…? You have done, nothing, nothing, nothing to comply with my orders. You have done everything you can to show me you don’t have to comply with my orders.
RR2:17-18.
Accordingly, the court granted League City’s motion to enforce and for
sanctions and, after hearing further argument, ordered TWIA to pay $15,000 “as a
sanction for violations of the Court’s order, which includes the amount of
attorney’s fees and expenses Plaintiff incurred in preparing Plaintiff’s Motions, and
attending the hearing on the Motions.” CR160; RR2:31-32. The court also
ordered TWIA to re-produce Gauthier for another six-hour deposition “since
[League City] didn’t have the information before that [it] needed.” RR2:32.
48146_1 16 2. A finding of “intentional disrespect” is not necessary to impose sanctions, and even if it were, the record supports such a finding. The sole basis for TWIA’s claim that its conduct was not sanctionable is its
attorney’s bare assertion that TWIA’s non-compliance “wasn’t intentional and it
wasn’t out of disrespect.” ANT Br. at 25 (quoting RR2:27). TWIA cites no
authority for the proposition that “intentional … disrespect” is a prerequisite to the
imposition of monetary sanctions. There is none.
Rule 215 authorizes “just” orders, including sanctions, for the “fail[ure] to
comply with proper discovery requests or to obey an order to provide or permit
discovery,” irrespective of intent. See TEX. R. CIV. P. 215.2(b). “While lack of
intentional disrespect may be considered, it is a matter for the trial court’s
determination.” Vulcan Materials Co. v. Bowers, No. 04-04-00062-CV, 2004 WL
2997852, at *3 (Tex. App.—San Antonio Dec. 29, 2004, pet. denied) (mem. op.).
The court did not accept counsel’s claim, RR2:17-18, as was its prerogative.
Id.; see Scott Bader, 248 S.W.3d at 813 (affirming trial court’s ability to judge
credibility of witnesses and to reject non-credible explanations). The abuse-of-
discretion standard recognizes that the trial court is in the best position to judge the
credibility of a party’s explanations for its conduct. See McMillin, 180 S.W.3d at
199; Dao v. Md. Cas. Co., No. 09-13-00353-CV, 2015 WL 2255263, at *7 (Tex.
App.—Beaumont May 14, 2015, no pet.) (mem. op.).
48146_1 17 3. The record supports the court’s finding that TWIA’s discovery abuse prejudiced League City. TWIA asserts there is an absence of “evidence” of prejudice from its
discovery abuse. TWIA’s argument misreads TransAmerican Natural Gas Corp.
v. Powell5 and also Chrysler Corp., in which the supreme court recognized that
prejudice can be presumed from the record: “It seems obvious that the Garcias
would be prejudiced by the expenditure of attorneys’ fees and expenses in pursuing
motions to compel discovery and sanctions.” Chrysler Corp. v. Blackmon, 841
S.W.2d 844, 850 (Tex. 1992) (orig. proceeding); see Scott Bader, 248 S.W.3d at
817 (upholding award of attorney’s fees based on work performed, and
“surmis[ing]” that counsel spent additional time on filings not even contained in
record).
TWIA’s contention also ignores the weight of case law, including
controlling authority from this Court, holding that courts are not limited to
“evidence” introduced at the sanctions hearing in imposing—or upholding—
sanctions. See Scott Bader, 248 S.W.3d at 812; Prize Energy, 345 S.W.3d at 575.
As the Waco court has explained:
[A] trial court may consider factors other than “evidence” in determining whether to impose a discovery sanction. Thus, the court did not abuse its discretion by imposing sanctions even though the Fraziers did not formally present “evidence” in the sanctions hearings.
5 811 S.W.2d 913 (Tex. 1991) (orig. proceeding).
48146_1 18 *****
[O]ur review extends to the entire record and is not limited to “evidence” offered at a hearing. ... Thus, no abuse of discretion is shown by any failure of the Fraziers to proffer “evidence” of the manner in which they were prejudiced by Van Es’s failure to comply with their discovery requests. Van Es v. Frazier, 230 S.W.3d 770, 778, 783 (Tex. App.—Waco 2007, pet.
denied) (citations omitted).
The record affirmatively shows that TWIA’s non-compliance with court
orders, and its failure to produce Gauthier’s physical file, prejudiced League City
and caused it to incur additional attorney’s fees and expenses. Even before
Gauthier’s deposition, League City demonstrated that it needed TWIA’s discovery
responses, including basic information about TWIA’s contentions, to properly
depose Gauthier. The trial court heard all of the following:
“[League City] shouldn’t have to be forced to go take [Gauthier’s] deposition which is the key witness without the information that we are—this court has ruled now twice that we are entitled to.” SuppRR(10-22-13):6.
“[W]e can move the discovery period back to take [Gauthier’s deposition] next week, but I’ve got to have that information provided to me ...” Id.
“These are basic questions I need answered so I can ask the insurance adjuster.” SuppRR(10-22-13):7.
“I don’t want to go down and take this adjuster’s depo without basic information to question him on. ... I need some time to get ready for it and I need to get prepared.” SuppRR(10-22-13):11.
48146_1 19 “[T]hey have not given me any of the discovery you ordered them to give me. I don’t have any of the information I need to depose this adjuster.” SuppRR(10-22-13):29.
Based on these statements, the court specifically ordered TWIA to supplement its
discovery responses by October 25, before Gauthier’s deposition. CR94, 99;
SuppCR396; SuppRR(10-22-13):37-38. The record thus shows that League City
would be prejudiced by TWIA’s failure to supplement discovery responses.
Then, after the deposition, League City showed that it was prejudiced by
TWIA’s disobedience of the court’s order and failure to produce Gauthier’s file:
“[I]t would have been really helpful to have the information on the Friday before the Monday and Tuesday deposition [of Gauthier].” RR2:19.
“I had no access to those materials, no way to know whether he was telling the truth to cross-examine him or present him with that evidence. So I basically wasted a lot of my time there on Monday and Tuesday[.]” RR2:20.
“[Gauthier] has a complete additional set of [unproduced] physical files, so that means we are going to have to start over.” RR2:23.
“There is going to be time. There is going to be the time of re- deposing [Gauthier] and re-preparing for that deposition. I think those are direct costs that are directly related to them disregarding your order.” RR2:21.
The requested re-deposition of Gauthier is “going to be quite an undertaking and probably an expensive undertaking that [League City] shouldn’t have to bear the expenses of.” RR2:19-20.
48146_1 20 “I’m going to have to probably spend another weekend getting ready [for Gauthier’s second deposition] like I spent the whole weekend before his deposition getting ready. I’m probably going to have to do this again at least for some amount of time . ...” RR2:20.
The court expressly found that League City was prejudiced, and was entitled to a
second deposition of Gauthier, “since you didn’t have the information before that
you needed.” RR2:32.
Prejudice can be shown through a variety of ways, including, among other
things, the arguments of counsel6 and written materials on file with the court. See
Scott Bader, 248 S.W.3d at 812, 817; Prize Energy, 345 S.W.3d at 574. Here, the
record shows, and the trial court knew, that League City had filed several motions,
written TWIA numerous times, and attended multiple hearings trying to secure
TWIA’s participation in discovery and compliance with the court’s orders. The
record thus supports the court’s finding that League City was prejudiced by
TWIA’s discovery abuse.
6 Moreover, unsworn statements by attorneys of record in open court can constitute evidence. See Banda v. Garcia, 955 S.W.2d 270, 272 (Tex. 1997). TWIA did not object to counsel’s statements as unsworn or non-evidentiary and therefore waived any complaint that League City’s attorneys were not under oath while clearly attempting to show prejudice. See id.; Keith v. Keith, 221 S.W.3d 156, 170 (Tex. App.—Houston [1st Dist.] 2006, no pet.).
48146_1 21 4. The sanctions directly relate to TWIA’s discovery abuse. The record supports a direct relationship between TWIA’s discovery abuse
and the sanctions imposed. See Am. Flood Research, 192 S.W.3d at 583;
TransAmerican, 811 S.W.2d at 917. The trial court properly considered the entire
course of litigation. See Scott Bader, 248 S.W.3d at 814. TWIA’s pattern of
discovery abuse directly caused League City to incur attorney’s fees in preparing
several motions to compel, attending several hearings, preparing an entire weekend
and attending a two-day deposition of Gauthier that “wast[ed]” counsel’s time, and
having to prepare for a second deposition of Gauthier. The sanctions imposed by
the trial court directly compensate League City for these expenses. CR 160;
RR2:31-32. Thus, the record shows the requisite direct nexus. See Am. Flood
Research, 192 S.W.3d at 583; TransAmerican, 811 S.W.2d at 917.
C. Monetary sanctions were not excessive but instead compensated League City for the prejudice it suffered. 1. The record supports the amount of monetary sanctions found by the court. League City suggested monetary sanctions of $5,000 for each day of
TWIA’s non-compliance. CR97. In the hearing, its attorney opined that such a per
diem amount would “capture all of the other things that might flow from the
delays.” RR2:24. Counsel opined that a total sanction of $30,000 “would be an
appropriate amount … [and] would encompass probably the cost of having to go
48146_1 22 and re-depose [Gauthier].” RR2:24. That amount of requested sanctions was
further justified because:
“I’m going to have to probably spend another weekend getting ready [for the second deposition] like I spent the whole weekend before his deposition getting ready. I’m probably going to have to do this again at least for some amount of time … when we do get [Gauthier’s physical file],” RR2:20; and
“[Gauthier] has a complete additional set of [unproduced] physical files, so that means we are going to have to start over.” RR2:23.
The trial court also heard—from TWIA, no less—that the hourly rate for League
City’s attorney was $600. RR2:30. Not only did TWIA not quibble with that rate,
it encouraged the court to use that rate in setting the amount of sanctions. RR2:30.
TWIA mentions a lack of affidavits, ANT Br. at 20, but affidavits were not
required here because attorney’s fees were imposed as sanctions, not as a
recoverable element of damages. See Scott Bader, 248 S.W.3d at 816-17. Further,
the statements of counsel in open court were sufficient to prove that $30,000
“would be an appropriate amount” to reimburse League City for “the cost of
having to … re-depose” Gauthier. RR2:24. See Banda, 955 S.W.2d at 272.
In reviewing the amount of sanctions, this Court has focused on the work
that was performed. See Scott Bader, 248 S.W.3d at 817 (describing work required
because of opponent’s sanctionable conduct); see Finlay v. Olive, 77 S.W.3d 520,
527 (Tex. App.—Houston [1st Dist.] 2002, no pet.) (affirming sanctions order,
48146_1 23 despite absence of testimony about number of hours incurred by counsel, because
trial court was aware of counsel’s hourly rate and could see counsel’s work
product).
Here, the record supports the trial court’s conclusion that $15,000—that is,
25 hours of work at $600 per hour—would adequately compensate League City for
having to (1) prepare two motions to compel, (2) attend three hearings (including
an all-day hearing) in connection with the motions to compel and for sanctions, (3)
spend an entire weekend preparing for a second deposition, and (4) take Gauthier’s
deposition a second time, as a result of TWIA’s discovery abuse. That finding is
not excessive, particularly where the record supported an award of twice that
amount. See Scott Bader, 248 S.W.3d at 817. Accordingly, TWIA has not shown
that the trial court abused its discretion by awarding $15,000 in attorney’s fees and
expenses. CR160.
2. The court considered the availability of lesser sanctions. Case law holds that requiring the offending party to pay its opponent’s
attorney’s fees is itself a “lesser” sanction. See TransAmerican, 811 S.W.2d at
918; see also Cire, 134 S.W.3d at 840 (describing as “lesser sanctions” an award of
attorney’s fees); Andras v. Mem’l Hosp. Sys., 888 S.W.2d 567, 572 (Tex. App.—
Houston [1st Dist.] 1994, writ denied) (categorizing monetary penalties and
attorney’s fees as “lesser” sanctions).
48146_1 24 The record also shows that the court did not begin with monetary sanctions
but instead tested several other alternatives, including two orders to compel
production, and several warnings that TWIA was not following the Rules and that
it was abusing the process. CR94, 99; SuppCR379; SuppRR(10-14-13):26-27,
148, 151; SuppRR(10-22-13):19-20. See Van Es, 230 S.W.3d at 783 (“[A]
warning is, in itself, a lesser sanction[.]”). These lesser sanctions did not promote
TWIA’s compliance with the Rules and the court’s explicit orders, and further
“lesser sanctions” would not have cured the prejudice League City suffered, so the
trial court was justified in imposing monetary sanctions against TWIA.
IV. The Court Properly Struck TWIA’s Affirmative Defenses for Continued Discovery Abuse Justifying the Presumption Its Defenses Lacked Merit. TWIA’s third issue complains about a second order, in which a different
judge struck some of its affirmative defenses for continued discovery abuse.
TWIA tries to cabin this Court’s review of that order solely to statements made
during the April 10 hearing. See ANT Br. at 28 (“The pre-trial court stated the
reason for its order at the third and final hearing on this matter[.]”). But Judge Cox
thoroughly explained his reasoning in a nine-page order, CR187-95, and that order
shows the court properly struck TWIA’s affirmative defenses for continued
discovery abuse.
48146_1 25 A. The entire course of proceedings justified the conclusion that TWIA’s affirmative defenses lacked merit. When monetary sanctions fail to effectuate compliance, a party’s continued
failure or refusal to cooperate in discovery justifies the trial court in assuming that
the party’s claims lack merit. See TransAmerican, 811 S.W.2d at 918 (“[I]f a party
refuses to produce material evidence, despite the imposition of lesser sanctions, the
court may presume that an asserted … defense lacks merit and dispose of it.”).
Thus, when a party makes a claim—as TWIA did here, with its affirmative
defenses—and then frustrates legitimate attempts to define the scope of that claim
and investigate possible responses, there is a direct relationship between the
conduct and dismissal of the claim. See Chasewood Oaks Condo. Homeowners
Ass’n v. Amatek Holdings, Inc., 977 S.W.2d 840, 845 (Tex. App.—Fort Worth
1998, pet. denied). “A party who will not ‘play by the rules’ even after repeated
orders to do so should not be allowed to play at all.” Id. Repeated non-compliance
thus justifies the trial court in assuming that the party either has no claim or is
“dragging its feet in mustering evidence of one.” Id.
TWIA continues to make “trees” arguments, but this remains a “forest”
issue: the Court must independently review the entire record, including the
evidence, arguments of counsel, written discovery on file, and circumstances
surrounding TWIA’s discovery abuse. See Am. Flood Research, 192 S.W.3d at
583; Prize Energy, 345 S.W.3d at 574. Notably, although TWIA makes much of
48146_1 26 discovery that may have taken place after the court’s order, and the evidence at
trial, this Court may consider only “the record that was before the trial court” at the
time of its ruling, and not subsequent events. See Harvest, 88 S.W.3d at 348-49.
1. The court’s unchallenged findings of fact are binding on this Court. To the extent that TWIA does not challenge the trial court’s findings of fact,
CR187-95, those findings are binding on this Court unless the record establishes
the contrary proposition as a “matter of law” or there is “no evidence” to support
the finding. See Teate v. CBL/Parkdale Mall, L.P., 262 S.W.3d 486, 490 (Tex.
App.—Beaumont 2008, no pet.).
2. TWIA continued to disregard the court’s orders after the imposition of monetary sanctions. This case does not present “[a] supposed failure to comply with a single
court order,” ANT Br. at 34. The record, and the court’s detailed April 17 order,
shows a pattern of discovery abuse that continued well after the imposition of
monetary sanctions, including non-compliance with at least seven court orders.
CR188-95.
TWIA’s violation of the first three court orders (October 1, October 14, and
October 22) are detailed above. Further, TWIA did not comply with the court’s
November 7th order to provide information about its ability to pay the sanctions,
RR2:44-45; SuppCR505, and also ignored the court’s December 2nd order to pay
48146_1 27 sanctions by December 9, 2013. CR165, 188. TWIA never complied with either
of those orders—the fourth and fifth court orders that TWIA ignored—and Judge
Cox found that TWIA’s disobedience of those orders “demonstrate its contempt for
judicial process and the inability of lesser sanctions to deter Defendant’s discovery
abuse.” CR188. TWIA does not challenge this finding on appeal.
In addition, TWIA refused to cooperate with discovery into its affirmative
defenses challenging the appraisal award. CR182, 188-89. TWIA pleaded several
defenses to the appraisal award but provided no factual basis for these allegations,
id., so League City sent discovery requests inquiring about TWIA’s challenges to
the appraisal process. CR188.
As before, TWIA responded with “numerous objections and few answers.”
CR189; SuppCR866-79. Specifically, TWIA refused to identify individuals with
knowledge about its contentions regarding the appraisal award or answer
interrogatories seeking information about those contentions. SuppCR868-72.
TWIA claimed it did not have to answer these interrogatories because “Plaintiff
has already used all of its interrogatories,” SuppCR952 (capitalization normalized),
yet TWIA still refused to respond to requests for production—which have no such
limitation—seeking similar information. SuppCR873-79.
48146_1 28 On February 17, 2014, Judge Cox held a hearing to resolve several
discovery issues, including TWIA’s failure to provide answers to written
interrogatories concerning the appraisal process. CR189; SuppRR(2-17-14):32-50.
TWIA wanted to depose the appraisal umpire, Judge Burgess. SuppRR(2-17-
14):31. League City agreed to take that deposition but first asked for more
information about TWIA’s contentions “because I don’t even know what to
question these people about if I don’t know what [TWIA’s] allegations are [and]
what would be the legal theories for setting aside” the appraisal award. SuppRR(2-
17-14):33-34, 39.
Judge Cox reviewed TWIA’s discovery responses and found that they
“consisted mainly of objections, with few substantive answers.” SuppRR(2-17-
14):34; CR189. In exchange for an order for Burgess’s deposition, Judge Cox
required that TWIA answer League City’s interrogatories prior to the deposition.
CR189. TWIA agreed to answer the interrogatories within 10 days:
THE COURT: What concession are y’all willing to make now about Judge Burgess in getting the interrogatories prior to the depositions of Judge Burgess? … And that interrogatory needs to go before the deposition. When can you do it?
[TWIA]: Ten days. …
THE COURT: Then we will do that. SuppRR(2-17-14):40 (emphasis added).
48146_1 29 TWIA later claimed it made no such agreement, and it now cherry-picks the
record in representing to this Court that it agreed only to try to “work out”
disagreements with League City. ANT Br. at 29; see, e.g., SuppCR880. But the
record reveals no ambiguity about TWIA’s agreement to answer the
interrogatories:
TWIA: And if we get those interrogatories answered soon, we will do it. . . . I am not exactly sure what his complaint is about them, but we can work with them to try to work that out. THE COURT: What is the deal? LEAGUE CITY: Well, I think there are very few actual answers in those interrogatory responses. THE COURT: Are there a whole lot of objections to answers? That’s a problem.
TWIA: Your Honor, I understand that. And we will do what we can. SuppRR(2-17-14):41 (emphases added).
The record shows that Judge Cox expected TWIA to answer the
interrogatories within ten days, SuppRR(2-17-14):40-41, and that TWIA
understood its court-ordered obligation was to “get those interrogatories
answered.” Id. Thus, the court found that “Defendant affirmatively represented on
the record that Defendant would answer the interrogatories regarding appraisal
within ten days,” and the court “accepted Defendant’s stipulation that it would
48146_1 30 provide supplemental answers within ten days and ordered the parties to proceed in
that fashion.” CR189. The record supports that finding.
On February 26, League City asked TWIA about its interrogatory answers;
TWIA responded, “We have no more information to offer.” SuppCR880. In a
further display of gamesmanship, TWIA claimed it did not have to answer
discovery without a written court order, notwithstanding the court’s order and the
parties’ agreement in open court. SuppCR945. See TEX. R. CIV. P. 11. TWIA did
not answer League City’s appraisal interrogatories, within ten days or at all.
CR190. This, then, was the sixth court order that TWIA ignored.
In a follow-up hearing on March 12, TWIA denied any agreement and
claimed it was under no order to answer interrogatories.7 CR190; SuppRR(3-12-
14):5. The court reviewed the transcript and found otherwise. CR190.
Accordingly, Judge Cox enforced the parties’ open-court agreement, overruled
TWIA’s discovery objections, and ordered TWIA to “fully answer[]” the
interrogatories by the following day. SuppRR(3-12-14):5, 12; CR191;
SuppCR1036.
7 TWIA instead characterized its promise as one simply to “visit” with League City’s attorney but later acknowledged it didn’t do that, either. SuppRR(3-20-14):15-16. Thus, whatever its agreement, TWIA did not comply.
48146_1 31 TWIA insinuates that the trial court imposed sanctions based solely on a
supposed “miscommunication[] or misunderstanding[].” ANT Br. at 30. But the
record shows TWIA persisted in discovery abuse even after these hearings.
On March 13, TWIA served amended objections and answers to League
City’s appraisal interrogatories. CR191; SuppCR1176-83. Once again, TWIA
disobeyed the court’s order—now for the seventh time—as, instead of actually
answering the interrogatories, TWIA instead asserted new objections “but few
substantive answers.” CR191; SuppCR1178-83. TWIA still refused to identify
witnesses with knowledge of its contentions regarding the appraisal process,
SuppCR1178-79, and did not answer interrogatories about those contentions.
CR191; SuppCR1181-82. League City was once again forced to move for
sanctions. SuppCR1085-1218.
In response, TWIA exhorted the court to postpone its ruling because its
corporate representative, Paul Strickland, was due to be deposed and would explain
“the appraisal itself and his work in sorting through the appraisal in determining
what the merits of the appraisal are.” CR191; SuppRR(3-20-14):40. TWIA also
told the court that League City would “know more” about its contentions after the
deposition. SuppRR(3-20-14):40. Based on those representations, the court
agreed to take League City’s request for sanctions under advisement. CR192;
SuppRR(3-20-14):41.
48146_1 32 Then, TWIA repeatedly instructed Strickland not to answer questions about
the appraisal process, the identity of witnesses involved, and TWIA’s contentions
underlying its affirmative defenses, including questions asking simply whether
TWIA contended that the appraisal award was the result of an accident. 8 CR192-
93; SuppCR1340, 1342, 1345-74.
On March 28, TWIA filed supplemental answers to League City’s appraisal
discovery. CR193; SuppCR1378-94. TWIA still raised numerous objections and
refused to provide any factual answers about its legal contentions regarding its
affirmative defenses or witnesses with knowledge of such contentions.
SuppCR1381.
On April 10, the court held another hearing on TWIA’s non-compliance
with discovery requests and League City’s motion for sanctions. SuppRR(4-10-
14):8-16. The court was notified of TWIA’s interference and refusal to allow
Strickland to testify about its affirmative defenses. SuppRR(4-10-14):8-12. TWIA
argued, “We have more than adequately given the Plaintiffs a flavor or an
understanding of … what TWIA’s position is on appraisal.” Id. at 16. The trial
court responded, “I think more than a flavor is required. I just don’t think that
8 Even if TWIA were “substantially justified” in refusing to answer contention interrogatories premised on its claim that Judge Cox did not expressly expand the maximum number of interrogatories allowed to League City, see ANT Br. at 30-31; but see CR191 (overruling TWIA’s objections), there is no “substantial justification” for refusing to answer proper contention questions during deposition.
48146_1 33 TWIA has participated appropriately in this discovery, so I am striking the three
affirmative defenses.” Id. The court’s subsequent order clearly articulated its
reasoning. CR193-94.
The record demonstrates a persistent pattern of discovery abuse over a long
period of time. Numerous efforts were made to obtain TWIA’s compliance.
However, TWIA persisted in its discovery abuse and in disobeying numerous court
orders. Therefore, and for the reasons provided below, the trial court properly
struck TWIA’s affirmative defenses because it was justified in assuming that those
defenses lacked merit. See Van Es, 230 S.W.3d at 783-84.
B. There is a direct nexus between TWIA’s refusal to cooperate with discovery into its affirmative defenses and the striking of those affirmative defenses. The record shows a direct relationship between TWIA’s refusal to allow
discovery into the factual bases for its affirmative-defense contentions, and the
striking of those defenses. See TransAmerican, 811 S.W.2d at 917. Despite
several orders to compel, warnings, and hours of court hearings at which the court
repeatedly emphasized the importance of TWIA’s participation in the discovery
process, TWIA still failed to disclose the factual bases for its affirmative defenses.
Further, TWIA was ordered to pay monetary sanctions for discovery abuse,
disobeyed that order, was again ordered to pay monetary sanctions, and disobeyed
that order, too. These are appropriate grounds for the striking of its affirmative
48146_1 34 defenses. See Warwick Oil & Gas, Inc. v. FBS Props., Inc., No. 01-14-00290-CV,
2015 WL 3637988, at *5-6 (Tex. App.—Houston [1st Dist.] June 11, 2015, no
pet.) (mem. op.); Weinberger v. Longer, 222 S.W.3d 557, 571 (Tex. App.—
Houston [14th Dist.] 2007, pet. denied).
C. The trial court properly considered lesser sanctions. The record affirmatively demonstrates the court’s consideration of lesser
sanctions and its finding, with reasons, why such sanctions would not deter
TWIA’s discovery abuse. CR187-95. Specifically, the trial court held countless
hearings in which it warned TWIA to cooperate in discovery, gave TWIA more
time to respond, granted numerous motions to compel, struck objections, awarded
attorney’s fees to League City, and twice ordered TWIA to pay those monetary
sanctions. TWIA disregarded no fewer than seven court orders.
Thus, the trial court was well justified in concluding that lesser sanctions
would not deter abuse because the court had already tried such efforts and they
had failed. CR188, 193-94. Similar to Van Es,
[TWIA] made only modest efforts to comply and frequently engaged in dilatory tactics in an apparent effort to avoid complying. [TWIA] fully aired [its] objections ... on several occasions, and the trial court rejected them. If the trial court’s rulings were erroneous, they were subject to review in this Court. Nevertheless, after repeatedly receiving adverse rulings on these discovery issues, [TWIA] still failed to comply. Therefore ... the trial court would not have abused its discretion to conclude that [TWIA] never intended to comply with those orders.
48146_1 35 Van Es, 230 S.W.3d at 780; see Warwick Oil, 2015 WL 3637988, at *5-6;
Weinberger, 222 S.W.3d at 571.
PRAYER League City, as Appellant, respectfully prays that the trial court’s judgment
should be reversed and a new trial granted on all of League City’s issues, or
alternatively, that judgment should be rendered in favor of League City. If League
City’s appellate attorney’s fees are not established as a matter of law, a new trial
should be granted on that issue.
League City, as Cross-Appellee, also respectfully prays that this Court
affirm the trial court’s imposition of monetary sanctions against TWIA and striking
of TWIA’s affirmative defenses.
Finally, League City also respectfully prays for all relief to which it is
entitled.
48146_1 36 Respectfully Submitted,
THE MOSTYN LAW FIRM HOGAN & HOGAN
Gregory F. Cox By: /s/ Jennifer Bruch Hogan State Bar No. 00793561 Jennifer Bruch Hogan gfcox@mostynlaw.com State Bar No. 03239100 6280 Delaware Street jhogan@hoganfirm.com Beaumont, Texas 77706 Richard P. Hogan, Jr. 409.832.2777–telephone State Bar No. 09802010 409.832.2703–facsimile rhogan@hoganfirm.com James C. Marrow Rene M. Sigman State Bar No. 24013103 State Bar No. 24037492 jmarrow@hoganfirm.com rmsigman@mostynlaw.com 711 Louisiana, Suite 500 3810 W. Alabama Houston, Texas 77002-2721 Houston, Texas 77027 713.222.8800–telephone 713.861.6616–telephone 713.222.8810–facsimile 713.861.8084–facsimile CASHIOLA & BEAN
Randal Cashiola State Bar No. 03966802 rcashiola@cashiolabeanlaw.com 2090 Broadway Street, Suite A Beaumont, Texas 77701-1944 409.813.1443–telephone 409.813.1467–facsimile
Attorneys for Cross-Appellee League City
48146_1 37 CERTIFICATE OF COMPLIANCE 1. This brief complies with the type-volume limitation of TEX. R. APP. 9.4(i)(2)(B) because this brief contains 7,895 words, excluding the parts of the brief exempted by TEX. R. APP. 9.4(i)(1).
2. This brief complies with the typeface requirements of TEX. R. APP. 9.4(e) because this brief has been prepared in a proportionally spaced typeface using Microsoft Word 2010 software in Times New Roman 14 point font in text and Times New Roman 12 point font in footnotes.
/s/ James C. Marrow James C. Marrow Dated: October 8, 2015
48146_1 38 CERTIFICATE OF SERVICE I certify that a true and correct copy of the above and foregoing was forwarded to all counsel of record by the Electronic Filing Service Provider, if registered; a true and correct copy of this document was forwarded to all counsel of record not registered with an Electronic Filing Service Provider and to all other parties as follows: Counsel for Cross-Appellant:
Dale Wainwright BRACEWELL & GIULIANI LLP 111 Congress Avenue Suite 2300 Austin, Texas 78701-4061 Via TexFile
Andrew T. McKinney IV LITCHFIELD CAVO LLP One Riverway, Suite 1000 Houston, Texas 77056 Via TexFile
James R. Old, Jr. JAY OLD & ASSOCIATES, PLLC 3560 Delaware, Suite 308 Beaumont, Texas 77706 Via TexFile
/s/ James C. Marrow James C. Marrow Dated: October 8, 2015
48146_1 39 Tab A November 7, 2013 order on Plaintiff’s Motion to Enforce Court’s order and Motion for Sanctions (CR160)
45141_1 160 Tab B April 17, 2014 order striking Defendant’s affirmative defenses (CR187-95)
45141_1 187 188 189 190 191 192 193 194 195
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