PHI Fin. Servs., Inc. v. Johnston Law Office, P.C.

• Decision Date: 10 June 2016
• Docket Number: No. 20150301.,20150301.
• Parties: PHI FINANCIAL SERVICES, Inc., Plaintiff and Appellee v. JOHNSTON LAW OFFICE, P.C., and Choice Financial Group, Defendants. Johnston Law Office, P.C., Appellant.
• Court: North Dakota Supreme Court

881 N.W.2d 216

PHI FINANCIAL SERVICES, Inc., Plaintiff and Appellee

v. JOHNSTON LAW OFFICE, P.C., and Choice Financial Group, Defendants.Johnston Law Office, P.C., Appellant.

No. 20150301.

Supreme Court of North Dakota.

June 10, 2016.

Rehearing Denied July 28, 2016.

Jon R. Brakke, Fargo, ND, for plaintiff and appellee.

DeWayne A. Johnston, Grand Forks, ND, for appellant.

VANDE WALLE, Chief Justice.

[¶ 1] Johnston Law Office, P.C., appealed from an order compelling discovery and an order finding it in contempt of court. We affirm.

I

[¶ 2] Our recent decision in

PHI Fin. Serv., Inc. v. Johnston Law Office, P.C., 2016 ND 20, ¶¶ 2–6, 874 N.W.2d 910

, sets forth the factual background of the dispute giving rise to this appeal. We repeat such facts only insofar as necessary for this appeal. PHI Financial Services, Inc., (“PHI”) sued Johnston Law Office, P.C., (“Johnston”) for alleged fraudulent transfers relating to a federal crop payment made to Johnston's client. After trial, the district court entered judgment against Johnston in the amount of $167,203.24. On appeal, this Court affirmed and reversed in part and remanded for further proceedings. Id. at ¶ 1.

[¶ 3] While that appeal was pending, PHI began post-judgment discovery in aid of execution. PHI served Johnston with various interrogatories pertaining to Johnston's financial assets. Johnston returned the interrogatories on April 4, 2015, answering the first two interrogatories in their entirety, answering a portion of the third interrogatory, and objecting to the remainder of the third interrogatory and all other remaining interrogatories. Johnston claimed the unanswered interrogatories violated N.D.R.Civ.P. 33(a)(3)

.

[¶ 4] According to the affidavit of PHI's counsel, Jon Brakke, he sent a letter to Johnston on May 8, 2015, informing Johnston its April 4, 2015 answers were incomplete. Johnston replied on May 19, 2015, again informing PHI it believed the unanswered interrogatories violated N.D.R.Civ.P. 33(a)(3)

. According to Brakke's affidavit, he called Johnston on May 19, 2015, but he received no answer. Brakke left a voicemail, to which Johnston did not respond. Brakke's affidavit attests no further communication occurred on or prior to May 28, 2015. On May 29, 2015, PHI moved for an order compelling Johnston to answer the remaining interrogatories. In its motion, PHI certified its May 8 letter and May 19 attempt to contact Johnston via telephone was a good faith attempt to confer to resolve the discovery dispute without judicial intervention, as required by N.D.R.Civ.P. 37(a)(1).

[¶ 5] The district court granted PHI's motion. The court concluded N.D.R.Civ.P. 33(a)(3)

did not bar PHI's interrogatories because, after including all discrete subparts, PHI served thirty-seven interrogatories. The court also concluded PHI's pre-judgment interrogatories should not be considered in determining whether PHI's post-judgment interrogatories exceeded the limits under N.D.R.Civ.P. 33(a)(3). Further, the court concluded PHI's efforts to contact Johnston regarding the discovery dispute, and Johnston's resulting inaction, constituted a good faith attempt to confer to resolve the discovery dispute before seeking judicial intervention. The court entered its order to compel. PHI served notice of entry of the order on July 2, 2015. After Johnston did not comply with the order to compel, PHI moved to hold Johnston in contempt of court. The district court granted the motion, concluding Johnston had actual notice or knowledge of the order to compel and it had a willful and inexcusable intent to violate the order. PHI served notice of entry of this order on September 25, 2015. Johnston appealed both orders on October 5, 2015.

II

[¶ 6] PHI argues Johnston's appeal was untimely as it relates to the order to compel because Johnston's appeal on October 5, 2015 was more than sixty days after PHI served notice of entry of the order to compel on July 2, 2015. Johnston argues the order to compel was an interlocutory order and the time to appeal the order ran from the date of service of the appealable order—here, the order of contempt. Because its appeal on October 5, 2015 was within sixty days of PHI serving notice of entry of the order of contempt on September 25, 2015, Johnston argues its appeal of the order to compel was timely.

[¶ 7] Regarding post-judgment discovery, we have said: “[o]rders denying discovery in aid of execution ... are appealable, but orders granting discovery are not appealable if review is available by way of disobedience and contempt.” Inv. Title Ins. Co. v. Herzig, 2010 ND 138, ¶ 30, 785 N.W.2d 863

(quoting 15B Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 3916 (2d ed.1992) ). Because a post-judgment order granting discovery may be reviewed by way of an order of contempt, an order granting post-judgment discovery is a nonappealable interlocutory order. Id.; see also

Dietz v. Kautzman, 2004 ND 164, ¶ 10, 686 N.W.2d 110 (characterizing orders compelling discovery as interlocutory). Where a party seeks to appeal an interlocutory order, the order is reviewable on an appeal from a final order or judgment, resulting in the time to appeal the interlocutory order running from service of notice of the appealable order or judgment, not from service of notice of the interlocutory order. See

Sec. State Bank v. Orvik, 2001 ND 197, ¶ 6, 636 N.W.2d 664 (concluding an appeal from a nonappealable partial summary judgment was timely when the appeal from the final appealable judgment was timely).

[¶ 8] Here, the order to compel was a nonappealable interlocutory order that was reviewable on an appeal from the order holding Johnston in contempt of court. See N.D.C.C. § 27–10–01.3(3)

(stating “[a]n order or judgment finding a person guilty of contempt is a final order or judgment for purposes of appeal.”). Under N.D.R.App.P. 4(a)(1), a party has sixty days “from service of notice of entry of the judgment or order being appealed” to appeal. Johnston appealed the order of contempt on October 5, 2015, notice of entry of which PHI served on September 25, 2015. Johnston's appeal from the order of contempt was within sixty days of PHI's service of notice of entry of the order of contempt and we review the order to compel as part of that appeal.

III

[¶ 9] Johnston argues the district court abused its discretion in compelling Johnston to answer the remaining interrogatories. On appeal, we review orders compelling discovery under the abuse of discretion standard. See W. Horizons Living Ctr. v. Feland, 2014 ND 175, ¶ 11, 853 N.W.2d 36

. “A court abuses its discretion when it acts in an unreasonable, arbitrary, or unconscionable manner, when its decision is not the product of a rational mental process leading to a reasoned decision, or when it misinterprets or misapplies the law.” Id.

A

[¶ 10] Johnston argues the district court abused its discretion because PHI did not, in good faith, confer or attempt to confer with Johnston before seeking the order. Rule 37(a)(1), N.D.R.Civ.P

., provides:

On notice to other parties and all affected persons, a party may move for an order compelling discovery. The motion must include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make discovery in an effort to obtain it without court action.

The rules of civil procedure do not define what constitutes good faith under N.D.R.Civ.P. 37(a)(1)

, nor have we addressed this matter. We also have not articulated a standard under which we review good faith determinations under N.D.R.Civ.P. 37(a)(1).

[¶ 11] As with most of the North Dakota Rules of Civil Procedure, N.D.R.Civ.P. 37(a)(1)

is modeled after the Federal Rules of Civil Procedure, specifically Fed.R.Civ.P. 37(a)(1). “Although not binding, federal court interpretations of a corresponding federal rule of civil procedure are highly persuasive in construing our rule.” Choice Fin. Group v. Schellpfeffer, 2006 ND 87, ¶ 12, 712 N.W.2d 855 (quoting Thompson v. Peterson, 546 N.W.2d 856, 860 (N.D.1996) ). One leading federal case discussing whether a party made a good faith effort to confer or attempt to confer under Fed.R.Civ.P. 37(a)(1) outlines the good faith standard as follows:

“Good faith” under [Fed.R.Civ.P. 37(a)(1)

] contemplates, among other things, honesty in one's purpose to meaningfully discuss the discovery dispute, freedom from intention to defraud or abuse the discovery process, and faithfulness to one's obligation to secure information without court action. “Good faith” is tested by the court according to the nature of the dispute, the reasonableness of the positions held by the respective parties, and the means by which both sides conferred. Accordingly, good faith cannot be shown merely through the perfunctory parroting of statutory language on the certificate to secure court intervention; rather it mandates a genuine attempt to resolve the discovery dispute through non-judicial means.

Shuffle Master, Inc. v. Progressive Games, Inc. 170 F.R.D. 166, 171 (D.Nev.1996)

(internal citation omitted). This standard, and its non-exhaustive list of circumstances to consider, is persuasive as a guide to courts in looking to the totality of the circumstances to determine the existence or nonexistence of good faith under N.D.R.Civ.P. 37(a)(1).

[¶ 12] Because good faith determinations must be predicated upon the particularities of a given situation, whether a party acted in good faith under N.D.R.Civ.P. 37(a)(1)

is a question of fact. See

Shuffle Master, Inc., 170 F.R.D. at 171 ; cf.

N. Oil & Gas, Inc. v. Creighton, 2013 ND 73, ¶ 15, 830 N.W.2d 556 (stating “[w]hether a party acted in good faith is a question of fact” for determining good faith purchaser status); Ruud v. Larson, 392 N.W.2d 62, 63 (N.D.1986) (stating “[t]he determination whether the landlord has made a good faith effort to mitigate damages is a finding of fact....”). Under N.D.R.Civ.P. 52(a)(6), we...