Smith v. Robert Todd Gebhardt, Michael Coyne, & Triple S&D, Inc.

• Decision Date: 06 April 2018
• Docket Number: No. 17-0206,17-0206
• Citation: 813 S.E.2d 79
• Court: West Virginia Supreme Court
• Parties: Terri SMITH and Kenneth Smith, Plaintiffs Below, Petitioners v. Robert Todd GEBHARDT, Michael Coyne, and Triple S&D, Inc., Defendants Below, Respondents

813 S.E.2d 79

Terri SMITH and Kenneth Smith, Plaintiffs Below, Petitioners

v.Robert Todd GEBHARDT, Michael Coyne, and Triple S&D, Inc., Defendants Below, Respondents

No. 17-0206

Supreme Court of Appeals of West Virginia.

Submitted: February 13, 2018

Filed: April 6, 2018

Ronald Wm Kasserman, Esq., Kasserman Law Offices, PLLC, Wheeling, West Virginia, Counsel for Petitioners

P. Joseph Craycraft, Esq., Katherine N. Dean, Esq., Swartz Campbell LLC, Wheeling, West Virginia, Counsel for Respondent Robert Todd Gebhardt

Mark Kepple, Esq., Bailey & Wyant, PLLC, Wheeling, West Virginia, Counsel for Respondents Michael Coyne and Triple S&D, Inc.

Workman, Chief Justice:

This case is before the Court upon the appeal of Terri and Kenneth Smith (hereinafter "the Petitioners") from a February 3, 2017, order of the Circuit Court of Ohio County dismissing their civil action as a sanction for alleged discovery violations. Upon review of the briefs, arguments of counsel, appendix record, and applicable precedent, this Court reverses the circuit court's decision and remands this matter for further proceedings consistent with this opinion.

I. Factual and Procedural History

The Petitioners contracted with the Respondent Robert Gebhardt (hereinafter "Gebhardt") in 2009 to construct a single story home with cement block foundation and concrete basement flooring for $226,102.23. Portions of the basement were to be finished with dry wall and ceiling. Brick was to be placed on the home's exterior, creating a three-foot veneer around the bottom wall of the home, with the remainder of the exterior finished with aluminum siding.

Approximately four months after the Petitioners took occupancy of the home, they informed Gebhardt that the block in the basement was wet. According to the Petitioners, Gebhardt unsuccessfully attempted to remedy the water infiltration for the following three years. On September 27, 2013, with an amended complaint filed on December 18, 2014, the Petitioners instituted a civil action alleging unfair and deceptive acts; breach of express and implied warranties; breach of contract; negligence; intentional interference with warranty contracts; common law fraud and fraudulent inducement; and intentional, willful, wanton, malice or outrageous conduct.¹ On September 21, 2015, Gebhardt filed multiple motions in limine, a motion for sanctions, and a motion to strike regarding the Petitioners' experts. He also filed five motions for summary judgment on various theories of liability and a motion to dismiss based upon spoliation of evidence. Respondent Coyne also filed twelve motions with the circuit court.

During an October 16, 2015, pretrial conference, the circuit court considered Gebhardt's motion to dismiss. The motion to dismiss was based upon Gebhardt's allegations that the Petitioners intentionally caused water damage by positioning a garden hose at the exterior corners of the home; that their expert collected mold samples without notice to the defendants; that they blocked their foundation drainage system; that they inappropriately removed part of the exterior brick; and that they deconstructed an interior bannister post.

The circuit court ultimately postponed trial until November 14, 2016, due to the "volume of pretrial motions, responses, exhibits and expert testimony for the Court to address. ..." In April 2016, the circuit court denied Gebhardt's motion to dismiss, finding that dismissal was not an appropriate remedy for the conduct alleged.² In October 2016, the circuit court ruled on various discovery motions, addressing the defendants' concerns by limiting expert testimony, excluding certain evidence, and indicating that adverse inference jury instructions would be considered at trial. No more drastic sanctions, such as dismissal, were mentioned at that time.

On November 8, 2016, Gebhardt was personally served by a professional process server, John Dan Livingston, with a subpoena duces tecum requesting Gebhardt to bring to trial on November 14, 2016, "receipts for gravel applied to the basement floor ... before the concrete was poured." Gebhardt's counsel was not served.

Gebhardt filed a second motion to dismiss the civil action on November 9, 2016, arguing that service of the subpoena duces tecum directly upon him, without notice to his counsel, constituted "harassment and intimidation of a key party-defendant in litigation on the eve of trial." The circuit court responded by cancelling the November 14, 2016, trial and setting the matter for a November 15, 2016, evidentiary hearing.

The Petitioners and Gebhardt testified during the evidentiary hearing. Gebhardt denied being harassed, intimidated, or threatened by the service of the subpoena directly upon him. The subcontractor defendants, Coyne and Triple S&D, indicated that they "did not take any position on the Motion" to dismiss. Gebhardt did not file a motion to quash the subpoena.

On February 3, 2017, the circuit court granted Gebhardt's motion to dismiss as a sanction for the alleged discovery violations. The circuit court identified ten instances of alleged wrongful conduct by the Petitioners. These instances, developed in further detail in the discussion portion of this opinion, generally include the following: placing orange paint on portions of the basement wall to mark areas of hollow walls; intentionally causing water damage to the home; removal of some brick; blocking a drain; performing testing on a bannister without notice to the defendants; performing mold tests without notice to the defendants; presenting inaccurate expert disclosures; inappropriately recording a conversation with Gebhardt; inappropriately communicating with Gebhardt's Rule 26(b)(4)³ non-testifying consultant; and improperly serving a subpoena duces tecum directly upon Gebhardt without notice to his counsel.

The Petitioners appeal, contending that the circuit court based its sanction upon a variety of erroneous legal conclusions and that dismissal of the civil action was an abuse of discretion.

II. Standard of Review

This Court has consistently applied an abuse of discretion standard in our review of matters regarding the imposition of sanctions by a lower court.

Bartles v. Hinkle , 196 W.Va. 381, 472 S.E.2d 827 (1996). Recognizing the authority of a circuit court "to fashion an appropriate sanction for conduct which abuses the judicial process," this Court has also provided guidance to courts in fashioning sanctions for discovery misconduct. Id. at 389, 472 S.E.2d at 835 (internal quotations omitted). In syllabus point two of Bartles , this Court explained:

In formulating the appropriate sanction, a court shall be guided by equitable principles. Initially, the court must identify the alleged wrongful conduct and determine if it warrants a sanction. The court must explain its reasons clearly on the record if it decides a sanction is appropriate. To determine what will constitute an appropriate sanction, the court may consider the seriousness of the conduct, the impact the conduct had in the case and in the administration of justice, any mitigating circumstances, and whether the conduct was an isolated occurrence or was a pattern of wrongdoing throughout the case.

This Court also cautioned in Bartles that although no formal procedures are required when issuing a sanction,

a court must ensure it has an adequate foundation ... and [t]he Due Process Clause of Section 10 of Article III of the West Virginia Constitution requires that there exist a relationship between the sanctioned party's misconduct and the matters in controversy such that the transgression threatens to interfere with the rightful decision of the case. Thus, a court must ensure any sanction imposed is fashioned to address the identified harm caused by the party's misconduct.

196 W.Va. at 384, 472 S.E.2d at 830. With those standards as guidance, we address the contentions of the parties to this appeal.

III. Discussion

Dismissal of a civil action as a sanction for a party's inappropriate conduct during discovery is a severe result to be used sparingly. Imposition of such a drastic sanction is justified only where an offending party has engaged in willfulness, bad faith, or fault. This principle was explained in syllabus point seven of State ex rel. Richmond American Homes of West Virginia, Inc. v. Sanders , 226 W.Va. 103, 697 S.E.2d 139 (2010), as follows:

Imposition of sanctions of dismissal and default judgment for serious litigation misconduct pursuant to the inherent powers of the court to regulate its proceedings will be upheld upon review as a proper exercise of discretion when trial court findings adequately demonstrate and establish willfulness, bad faith or fault of the offending party.

This Court also articulated the basis for this approach in Richmond :

As was stated in Cattrell Cos. v. Carlton, Inc ., 217 W.Va. 1, 14, 614 S.E.2d 1, 14 (2005), "dismissal and default [judgment] are [considered] drastic sanctions that should be imposed only in extreme circumstances." See also Doulamis v. Alpine Lake Prop. Owners Ass'n, Inc ., 184 W.Va. 107, 112, 399 S.E.2d 689, 694 (1990) (stating that "dismissal, the harshest sanction, should be used sparingly and only after other sanctions have failed to bring about compliance."); Bell v. Inland Mut. Ins. Co. , 175 W.Va. at 172, 332 S.E.2d at 134 (1985) (advising that the sanction of default judgment "should be used sparingly and only in extreme situations [in order to effectuate] the policy of the law favoring the disposition of cases on their merits.").

226 W.Va. at 113, 697 S.E.2d at 149.

Clearly compelling a two-step inquiry upon appellate review, this Court explained in Richmond that our evaluation must include separate components. First, we must examine "whether the sanctioning court identified the wrongful conduct with clear explanation on the record of why it decided that a sanction was appropriate." Id. Second,

[w]e then must determine whether the sanction actually imposed fits the

...