Traxler v. Ford Motor Co.

576 N.W.2d 398, 227 Mich. App. 276

• Court: Michigan Court of Appeals
• Decided: March 26, 1998
• Docket: Docket 200704, 200856
• Status: Published

Opinions

Wahls, J.

Defendants Ford Motor Company and Ford Motor Company of Canada (hereinafter Ford) appeal by leave granted from an order of default. We affirm in part, reverse in part, and remand.

This case stems from an automobile accident in 1990. At the time of the accident, two-month-old Sarah Traxler was strapped into a child safety seat in the back of her parents’ 1986 Ford Tempo. Her mother was driving, and her father was seated next to her in the back seat. As the Traxlers were waiting to make a left turn, they were rear-ended by another vehicle traveling at approximately fifty miles an hour. The force of the collision caused the driver’s seat of the Traxler’s car to move rearward into the back seat, striking Sarah in the head. Sarah was left with severe and permanent injuries. Apparently, no one else was injured in the crash.

Plaintiffs filed suit against the driver of the other vehicle, the maker of the child safety seat, and Ford. This appeal involves only Ford.¹ Plaintiffs’ theory regarding Ford’s liability revolved around the design of the driver’s seat in the Ford Tempo. Their discovery requests thus focused on Ford’s design process, on Ford’s knowledge regarding the tendency of its seats to give way in rear-end collisions, and on other lawsuits filed against Ford alleging front-seat design defects. Discovery took place over more than two years and was marked by Ford’s numerous objections and by plaintiffs’ repeated motions to compel. Most of plaintiffs’ motions to compel were withdrawn before the trial court could hear them, apparently because the parties agreed to work out their differences between themselves. Eventually, however, the trial court heard and granted one of plaintiffs’ motions to compel. In granting the motion, the trial court warned Ford that its failure to comply with the discovery order would result in a default. In response to the trial court’s order, Ford provided plaintiffs with sixty-two boxes of documents. After reviewing this new information, plaintiffs asked the trial court to order a default against Ford. They argued that the documents produced as a result of the trial court’s order should have been produced far earlier and that the delay had prejudiced them to the point that default was the only appropriate remedy. The trial court agreed and entered an order of default against Ford. In its written opinion, the trial court lambasted Ford for its conduct during discovery:

What plaintiffs’ counsel discovered when they read those documents was disgusting; no other word would be accurate. For over two years, Ford had concealed very significant documents and information, and, worse, had blatantly lied about those documents and about the information in them; any word other than “lied” would understate what Ford did. . . . After carefully reviewing plaintiffs’ discovery requests and some of Ford’s responses (hundreds of pages), studying several rounds of briefs, and listening to counsels’ very helpful oral argument, this Court had to agree that an outrageous fraud has been perpetrated by Ford ... and that the sanction of a default... is the appropriate response.

Ford raises several issues on appeal. It argues that the trial court (1) did not have the power to impose a default, (2) erred in finding that Ford committed fraud, and (3) erred in denying Ford’s request for an evidentiary hearing. In addition, Ford argues that the trial court failed to consider alternative sanctions, failed to consider how Ford’s errors were made and who made them, and made findings of fact that were not supported by the record. We begin by addressing the extent of a trial court’s power to sanction discovery abuses.

The scope of a trial court’s powers is a question of law. We review questions of law de novo. Smith v Henry Ford Hosp, 219 Mich App 555, 557; 557 NW2d 154 (1996). The Michigan Court Rules specifically authorize a default judgment as a sanction for certain discovery abuses. Such abuses include a failure to comply with a discovery order, MCR 2.313(B)(2)(c), failure to serve answers to interrogatories, MCR 2.313(D)(1)(b), and, under certain circumstances, failure to supplement responses to discovery requests, MCR 2.302(E)(2). Ford argues that, even assuming the trial court’s factual findings were correct, none of these rules apply in this case. We disagree.

First, it is clear that the trial court did not find a violation of a discovery order, and thus, MCR 2.313(B)(2)(c) does not apply directly. Second, there is no allegation that Ford failed to serve answers to plaintiffs’ various interrogatories, and thus MCR 2.313(D)(1)(b) does not appear to apply.² However, assuming the trial court’s factual findings were correct, we believe that MCR 2.302(E) does apply.³ That subrule states, in part:

(1) Duty to Supplement. . . .

(a) A party is under a duty seasonably to amend a prior response if the party obtains information on the basis of which the party knows that

(1) the response was incorrect when made; or

(ii) the response, though correct when made, is no longer true and the circumstances are such that a failure to amend the response is in substance a knowing concealment.

* * *

(2) Failure to Supplement.

If the court finds, by way of motion or otherwise, that a party has not seasonably supplemented responses as required by this subrule the court may enter an order as is just, including an order providing the sanctions stated in MCR 2.313(B), and, in particular, MCR 2.313(B)(2)(b). [MCR 2.302(E). ]

Here, the trial court concluded that Ford “lied” and was guilty of “an outrageous fraud.” Any response that can be characterized as fraudulent or as a lie was obviously incorrect when made. Thus, to the extent that the trial court found that Ford’s responses constituted lies or fraud, Ford had a duty to seasonably supplement those responses. On the basis of the trial court’s findings, Ford clearly failed to fulfill this duty. Therefore, the trial court had the power to order a default pursuant to MCR 2.302(E)(2).

Ford next argues that the evidence in the record does not support the trial court’s conclusion that Ford lied or committed fraud. We disagree. We review a trial court’s findings of fact for clear error. Triple E Produce Corp v Mastronardi Produce, Ltd, 209 Mich App 165, 171; 530 NW2d 772 (1995). A finding of fact is clearly erroneous when, although there is evidence to support it, the reviewing court is left with a definite and firm conviction that a mistake has been made. Id. In this case, we are not left with a definite and firm conviction that a mistake has been made. On the contrary, the record makes it clear that Ford failed to disclose relevant, non-privileged information in its responses to plaintiffs’ early discovery requests. While Ford objected to plaintiffs’ discovery requests, we do not believe that those objections were sufficient to excuse Ford’s conduct.

The parties and the trial court address numerous examples of Ford’s conduct during discovery. Here, we simply address two interrogatories that are illustrative. We begin with an interrogatory and a response that highlight Ford’s position during the early stages of discovery:

35. How many 4-door Ford Tempos were sold in 1986 by Ford dealers in the United States and Canada?

35. Ford objects to this Interrogatory on the ground that it is overly broad, vague, irrelevant, oppressive and not calculated to lead to the discovery of admissible evidence. Without waiving its objections and in the spirit of discovery, Ford states 176,976 Four-Door Tempo vehicles were sold in the United States and Canada.

This exchange is significant for two reasons. First, it illustrates the fact that Ford objected to interrogatories even where its objections were groundless on their face; how can an interrogatory that asks for a simple numerical answer be overly broad or vague? What is the purpose of objecting on the ground that a request is oppressive when the objection is followed by the answer to the request? How could Ford argue that information regarding the number of products sold is irrelevant or not calculated to lead to the discovery of admissible evidence in a products liability suit? Clearly, Ford’s objections were boilerplate, and plaintiffs were justified in ignoring them when they were followed by an answer that was responsive to their request. Ford’s response also highlights the fact that, “in the spirit of discovery,” Ford provided apparently complete answers to at least some of plaintiffs’ requests, despite its objections. The significance of these observations becomes clear when we review one of the more important interrogatories. The parties and the trial court offer contrasting interpretations of the following interrogatory and answer:

10. State whether the same left front driver’s seat and right front passenger seat tracks and seat backs, as identified previously in this set of interrogatories as having been installed on the subject vehicle, were ever installed on any other Ford Motor Company vehicle, including but not limited to Mustang, [Capri], Escort, Lynx station wagon, Thunderbird, Cougar, Taurus, Sable, Topaz, and Tempo, of any model year. If the answer is yes, state which vehicles, which model years and which seat (driver or passenger). ANSWER:

10. Ford objects to this Interrogatory on the ground that it is overly broad, vague, irrelevant, oppressive and not calculated to lead to the discovery of admissible evidence. Without waiving its objections and in the spirit of discovery, Ford states that the seat track assemblies used in the Tempo are unique to the Tempo/Topaz car lines only.

The trial court and plaintiffs characterized Ford’s response similarly. According to the trial court:

That answer was not true. Plaintiffs have learned that the Tempo/Topaz seat was derived from the Escort/Lynx seat and that that seat had been used in numerous other models. Ford admits that now, but only after having been caught in a he.

How Ford answered plaintiffs’ interrogatories about seats reveals much about its handling of discovery in this case. Ford insists that it is true that “the seat track assemblies used in the Tempo are unique to the Tempo/Topaz car lines only.” That may be, but the question asked of Ford was not so limited. Ford was asked whether the front “seat tracks and seat backs” installed in 1986 Tempos “were ever installed on any other Ford Motor Company vehicle.” If they were, particulars were requested. Ford objected to the interrogatory . . . and then responded that “the seat track assemblies used in the Tempo are unique to the Tempo/Topaz car lines only.” What it did was craftily reformulate the question to ask only what it wanted to say, namely: that the seat track assemblies, not the seats themselves, were unique, thereby creating the misleading impression that the seats had not been used in any other vehicles. With that impression, plaintiffs would not expect to be told about tests and lawsuits involving the seats and other models, even though the seats were, it now turns out, the same. That was as dishonest as saying in so many words that the seats, not just the seat track assemblies, were unique to the vehicle. . . . Ford’s answer was not simply a precise answer to a poor question; it was a dishonest answer, carefully crafted to mislead the reader. An impression can be so strong and so obviously what someone wanted to impart that it is a statement to that effect, in this case, a false statement.

As will be discussed below, we are concerned with the evidentiary basis for some of the trial court’s conclusions. However, none of its findings are clearly erroneous. Ford’s arguments to the contrary are not well taken. According to Ford:

[T]he trial court leapt to his conclusion that Ford’s answer was “dishonest” and a “lie” by focusing on only one sentence of one response to one interrogatory. Ford’s response to Interrogatory 10 also objected that the interrogatory was overly broad and that answering it would be unduly burdensome. There is no [sic] almost no burden associated with simply saying that the entire seat is unique to the Tempo/Topaz. Therefore, if that is what Ford meant to say, there would have been no objectionable burden and no point to the objection. The only interpretation of the entire response that gives effect to the objection and the partial answer is that only the seat track was unique and that the other numerous components of the seat — such as seatbacks, seat cushions, frames, recliner mechanisms, attachment bolts, springs, fabric, etc.— were so widely used that it would be unduly burdensome for Ford to try to identify all of the models and model years in which all of those components were used. [Emphasis in original; parentheticals omitted.]

Ford’s position is belied by its answers to other interrogatories. As noted above, Ford made some objections that were groundless on their face. Thus, with respect to some interrogatories, there was no interpretation of the entire response that could give effect to both Ford’s objection and its answer. Under these circumstances, Ford is not entitled to a presumption that its objections had any significance whatsoever. Ford’s position also lacks any logical appeal. If Ford meant to say that only the seat tracks were unique, and that the other components were so common that answering the interrogatory would be unduly burdensome, it needed only say so. Instead, Ford gave what it now claims was a “partial” answer, which clearly omitted relevant information. By doing so, Ford created the appearance that it was lying or intentionally concealing relevant information. We cannot conclude that the trial court’s findings in this regard were clearly erroneous.

Next, Ford raises a number of arguments regarding the trial court’s decision to order a default, rather than some less serious sanction. Default is a drastic measure and should be used with caution. Mink v Masters, 204 Mich App 242, 244; 514 NW2d 235 (1994). Another panel of this Court articulated the factors that a trial court should consider before ordering a default:

Before imposing the sanction of a default judgment, a trial court should consider whether the failure to respond to discovery requests extends over a substantial period of time, whether an existing discovery order was violated, the amount of time that has elapsed between the violation and the motion for a default judgment, the prejudice to [the party requesting default], and whether wilfulness has been shown. The court should evaluate other options before concluding that a drastic sanction is warranted. [Thorne v Bell, 206 Mich App 625, 632-633; 522 NW2d 711 (1994) (citations omitted).]

In addition, “[t]he sanction of default judgment should be employed only when there has been a flagrant and wanton refusal to facilitate discovery and not when failure to comply with a discovery request is accidental or involuntary.” Mink, supra at 244. We review discovery sanctions for an abuse of discretion. Thorne, supra at 633.

First, Ford argues that the trial court ordered a default without considering alternative sanctions. This argument finds no support in the record. The trial court clearly recognized its duty to consider alternative sanctions; it simply concluded that any lesser sanction was insufficient to remedy the damage caused by Ford’s misconduct. Next, Ford argues that the trial court’s conclusions regarding the prejudice caused by Ford’s conduct are not supported by the record. We disagree. As will be discussed, we are concerned about the trial court’s evidentiary basis for its conclusions regarding this issue. However, we do not believe that the trial court’s findings regarding prejudice are clearly erroneous.

Finally, Ford argues that, to the extent that it erred in its discovery responses, the trial court failed to consider how those errors occurred. Again, we disagree. It is clear that the trial court considered the nature of Ford’s errors and concluded that they were not simple mistakes or oversights. Instead, the trial court concluded that Ford had lied and perpetrated “an outrageous fraud.” We find no evidence in the record to contradict the trial court’s findings, and they are not clearly erroneous. Ford’s related argument, that the trial court failed to consider whether a default should be ordered against Ford for the conduct of its attorneys, is without merit. The trial court had the authority to order a default against Ford even if its attorneys were responsible for the misconduct. See White v Sadler, 350 Mich 511, 522; 87 NW2d 192 (1957) (“the neglect of an attorney is generally regarded as attributable to his client”). See also American Way Service Corp v Comm’r of Ins, 113 Mich App 423, 434-435; 317 NW2d 870 (1982).

We have discussed the prejudice caused by Ford’s conduct and Ford’s culpability for that conduct only briefly because we are compelled to remand this case for an evidentiary hearing regarding these issues. Ford argues, and we agree, that it is entitled to an evidentiary hearing where it may introduce evidence (1) that its failure to comply with plaintiffs’ discovery requests was accidental or involuntary and (2) that plaintiffs were not prejudiced by Ford’s mistakes. We believe that due process requires such a hearing:

Due process in civil cases generally requires notice of the nature of the proceedings, an opportunity to be heard in a meaningful time and manner, and an impartial decisionmaker. The opportunity to be heard does not mean a full trial-like proceeding, but it does require a hearing to allow a party the chance to know and respond to the evidence. [Cummings v Wayne Co, 210 Mich App 249, 253; 533 NW2d 13 (1995). ]

Here, the parties should be permitted to introduce evidence regarding Ford’s conduct during discovery and the extent of any prejudice to plaintiffs. After the evidentiary hearing, the trial court must determine whether Ford’s misconduct constituted a flagrant and wanton refusal to facilitate discovery.⁴ Mink, supra at 244. In addition, the trial court should again consider whether a default is an appropriate sanction in light of the available alternatives. Thorne, supra at 633.

Finally, in order to avoid confusion on remand, we address the parties’ dispute regarding the standard of proof required to support a finding of fraud. Ford argues that the trial court improperly applied the “preponderance of the evidence” standard in finding that Ford committed fraud. Indeed, it is unclear whether a court should apply the preponderance of the evidence standard or the “clear and convincing evidence” standard in considering an allegation of fraud.⁵ However, this issue is essentially irrelevant: A trial court need not find fraud to justify an order of default. Rather, the relevant consideration is whether Ford’s conduct constituted a “flagrant and wanton refusal to facilitate discovery.” Mink, supra at 244. We see no reason to require clear and convincing evidence to support such a finding. Thus, on remand, the trial court must consider whether the factors set out in Thorne and Mink are met by a preponderance of the evidence.

For the foregoing reasons, we affirm the trial court’s conclusion that it had the power to order a default where Ford lied or committed fraud. However, we reverse the trial court’s order of default against Ford and remand for an evidentiary hearing in accordance with this opinion. We do not retain jurisdiction. No costs are taxable, neither party having prevailed in full.

Griffin, P.J., concurred.

1 The driver of the other vehicle apparently settled with plaintiffs. The manufacturer of the child safety seat was dismissed below on plaintiffs’ motion.

2 Plaintiffs argue that Ford’s answers were incomplete and that they therefore constituted a failure to answer. By its express terms, MCR 2.313(D)(1)(b) applies only to a failure to serve answers or objections to interrogatories. Thus, it appears that MCR 2.313(D)(1)(b) applies only where a party completely fails to answer, rather than where a party’s answers are somehow deficient.

3 We recognize that the trial court did not rely on MCR 2.302(E) when it ordered a default against Ford. However, we need not reverse where the trial court reached the correct result, albeit for the wrong reason. Cox v Dearborn Heights, 210 Mich App 389, 391; 534 NW2d 135 (1995). Thus, we may properly consider the applicability of MCR 2.302(E).

4 Our conclusion that the trial court’s original findings were not clearly erroneous does not preclude the trial court from making different findings on remand.

5 Generally, fraud must be proved by “clear and convincing” evidence rather than by the preponderance of the evidence. Foodland Distributors v Al-Naimi, 220 Mich App 453, 459; 559 NW2d 379 (1996). But see Mina v General Star Indemnity Co, 218 Mich App 678, 684-685; 555 NW2d 1 (1996), rev’d in part on other grounds 455 Mich 865 (1997) (“we are unable to say with any degree of certainty exactly what standard of proof courts should apply in fraud cases.”).

1 [Footnotes to trial court’s opinion:]

1 It is unfortunate that there are so many published cases which have dealt with obstructionism during discovery. The prevalence of it reinforces why it must be sternly punished. Otherwise, the inclination to it will not be deterred.

2 To simplify the upcoming trial of this case, plaintiffs have agreed to dismiss the babyseat’s manufacturer.

3 Courts must often form opinions as to the merits of matters before them, “often, as to the bona fides of the parties.’’ People v Houston, 179 Mich App 753, 759-760 [446 NW2d 543] (1989), lv app den 434 Mich 855 (1990). “If the judge did not form judgments of the actors in those courthouse dramas called trials, he could never render decisions.” Liteky v United States, 510 US [540, 551]; 114 S Ct 1147; 127 L Ed 2d 474 (1994).

4 The parties were informed in October, 1996, by letter of the Court’s decision. Drafting and re-drafting an opinion was going to take time. The Court wanted the parties to know its decision as soon as possible so they could meaningfully prepare for mediation, settlement negotiations, and trial. The parties’ counsel were told at oral argument that they would promptly be informed of the Court’s decision, but that an opinion would be delayed. The Court apologizes for how long it has taken to issue this opinion. It has been in trial consistently since mid-October.

5 Unnecessary decisions are inappropriate because the risk of error is too great. Unnecessary decisions are often incorrect because they are made without the. crucial focus provided by knowing that they will actually make a difference in a case. Cohen v Virginia, 6 Wheat 264, 299; 5 L Ed 257, 290 (1821), quoted in, Breckon v Franklin Fuel Co, 383 Mich 251, 267 [174 NW2d 836] (1970); and Alar v Mercy Memorial Hospital, 208 Mich App 518, 532 (1995). In judging, as in many things, it is, to paraphrase Samuel Johnson, only the imminence of a hanging which can adequately concentrate the mind. Boswell, Life of Johnson [September 1,1777], A striking example of why courts should not make unnecessary decisions is United States v Williams, 872 F2d 773 (6th Cir, 1989). Prior to that case, dozens of published opinions had volunteered that a certain factual scenario, a scenario not involved in any of those cases, would call for a certain outcome. In Williams, the Sixth Circuit was actually confronted with that other scenario. When it was, the law so often previously espoused was revealed to be wrong. See Staples v United States, 511 US 600; 114 S Ct 1793, 1813, fn 22; 128 L Ed 2d 608 (1994).