American Velodur Metal, Inc. v. Schinabeck

• Decision Date: 29 July 1985
• Citation: 20 Mass.App.Ct. 460,481 N.E.2d 209
• Parties: AMERICAN VELODUR METAL, INC. v. Norma SCHINABECK.
• Court: Appeals Court of Massachusetts

Page 209

481 N.E.2d 209

20 Mass.App.Ct. 460

AMERICAN VELODUR METAL, INC. v. Norma SCHINABECK.

Appeals Court of Massachusetts,

Plymouth.

Argued May 6, 1985.

Decided July 29, 1985.

Brian E. Concannon, Marshfield (Daniel E. Kudzma, Marshfield, with him) for plaintiff.

Danielle E. deBenedictis, Boston, (James B. Conroy, Hingham, with her), for defendant.

Before GRANT, CUTTER and PERRETTA, JJ.

CUTTER, Justice.

In 1981, the defendant, also plaintiff-in-counterclaim (the wife), and Rainer Schinabeck had been married for some years. The wife sought a divorce from Schinabeck in Switzerland, where the couple owned a house. In 1982, Schinabeck sold the Swiss house, and the wife and the couple's two children were evicted (in a manner at least inconsiderate). The wife and the children later returned to Scituate, Massachusetts, to a house there ¹ which in past years had been owned by Schinabeck and the wife as tenants by the entirety. She filed a complaint for divorce in the Probate Court, Plymouth County, on July 23, 1982.

Schinabeck was president of American Velodur Metal, Inc. (AVM), a family business. For a time prior to 1981, part of the Scituate premises was used as an office for AVM. ² On November 3, 1981, Schinabeck purported to revoke the trust, with the consequence, at least by the terms of the trust, that he would have gained title to the Scituate premises. On August 30, 1982, Schinabeck purported to convey the Scituate premises to AVM for $150,000. In part at least because of the town zoning board's denial of a variance, AVM's business was moved elsewhere.

On July 15, 1982, AVM filed a complaint in the Superior Court claiming the right to exclusive possession of the Scituate premises under the lease and seeking to enjoin the wife from using the Scituate premises. A hearing on a restraining order was set for July 22, 1982. Before that hearing the wife and AVM entered into a stipulation, which essentially separated the Scituate premises into two parts, so that (for the time being at least) the wife would have control of the main house and pool and certain access routes, and AVM would have control of the balance of the premises.

AVM's complaint was amended on September 30, 1983, and the wife's answer to that complaint and her amended counterclaim were filed on November 4, 1983. The complaint set out the substance of the transactions affecting the Scituate premises already mentioned (and see note 1, supra ) and sought to enjoin the wife from using all or most of the premises. The wife's answer admitted the existence of the various documents already mentioned but disputed their validity. The answer and her counterclaim alleged (a) the existence of the Swiss and Plymouth County divorce proceedings; (b) that the present complaint had been brought by AVM to coerce the wife to "settle the divorce action [a separate lawsuit] on terms ... favorable to" Schinabeck (as an improper use of court process); (c) that the wife had "suffered emotional, physical, and financial damage"; (d) that the transactions relating to the Scituate premises were carried out (with AVM's actual or constructive knowledge) to hinder the wife in recovering her fair share of property in the divorce proceedings; and (e) that the transactions were fraudulent under G.L. c. 109A. The counterclaim also asserted that, at all relevant times, AVM was wholly owned by Schinabeck, that he has been its president, a director, and stockholder, and that he is the beneficial owner of its stock.

The wife, with her original answer to the unamended complaint, gave notice of intention to take Schinabeck's deposition on October 5, 1982. His counsel notified the wife's counsel on that morning that Schinabeck would not be available for a deposition. As a consequence of a hearing before a Superior Court judge (Judge A), no action was taken then upon the wife's motion to compel discovery and for sanctions for Schinabeck's failure to appear. Notice, however, was given by the wife's counsel of intention to take the depositions of various officers and employees of AVM in an attempt to establish the then existing relationship between Schinabeck and AVM.

As a consequence of three such depositions (which gave strong indication that Schinabeck was still the controlling force behind AVM), the wife renewed on November 22, 1982, her attempt to obtain an order compelling AVM to produce Schinabeck for a deposition and for sanctions in the event that he should not appear. An order was issued, after hearing on December 17, 1982, before another Superior Court judge (Judge B), for a writ of protection against service of process on Schinabeck in the divorce proceeding while in Massachusetts to give depositions. ³ In the writ of protection it was stated that Schinabeck's deposition was to take place on or before February 7, 1983.

On April 20, 1983, a further motion by the wife for sanctions for AVM's failure to produce Schinabeck for a deposition (as required by Judge B's order of December 17, 1982) was allowed by Judge B "unless ... Schinabeck is made available for a deposition within 60 days." The motion had requested that "the allegations of ... [the wife's] first and second counterclaim ... [be] deemed admitted."

On June 7, 1983, the wife gave notice of a deposition of Schinabeck to be taken in Boston on June 14, 1983. A motion by AVM to extend the time for producing Schinabeck for a deposition was denied on June 10, 1983, by another Superior Court judge (Judge C). On June 16, 1983, the writ of protection was extended by order of Judge C, to midnight on June 20, 1983, on motion of AVM. ⁴

Judge C on June 30, 1983, after hearing, denied a motion filed on June 23, 1983 (three days after the expiration of the time specified in Judge B's order of April 20, 1983). The motion was to extend the time for compliance and to transfer the deposition to Zug, Switzerland, to be held on July 11, 1983, upon payment by Schinabeck of the travel expenses to Zug of one attorney and a stenographer. Judge C then also ordered that the "first and second counterclaims [be] deemed admitted," pursuant to Judge B's order of April 20, 1983, ⁵ and that the case be placed on the jury trial list for October, 1983. The order of June 30, 1983, was based expressly on findings (among others) by Judge C that the new motion for a continuance was filed after the time limit set in the order of April 20 had expired; that no affidavit supported the new motion; and that no satisfactory proof whatsoever underlay the assertions of Schinabeck's counsel concerning the reasons for Schinabeck's failure to appear for a deposition. ⁶

The case, essentially limited to a hearing on damages on the first counterclaim alleging abuse of process, ⁷ was tried before another Superior Court judge (Judge D) and a jury from January 4 to 17, 1984. Judge D denied motions by AVM for a directed verdict and (after the jury had returned a verdict for Mrs. Schinabeck of $285,000) for judgment n.o.v., and for a new trial. Judgment was entered on the verdict thus returned. We consider the plaintiff's appeals on the issues (1) whether the sanctions imposed upon it were too harsh, and, in addition to the evidence matter discussed below in part 2 of this opinion, (2) whether the damages awarded upon the wife's counterclaim for abuse of process were excessive.

1. Schinabeck's course of obstructive tactics was appropriately described by Judge C (at the hearing on June 10, 1983) as a "continuing pattern of making himself unavailable for ... deposition and ... a conscious design on his part to avoid doing so." ⁸ Judge B apparently had perceived this pattern when he entered his order of April 20, 1983, giving Schinabeck sixty days in which to appear for a deposition. No affidavit had or has been filed in behalf of AVM which contradicts the affidavits and contentions of the wife and others, or that tends to negate the depositions of AVM's employees (in part called to the attention of Judge B) indicating that Schinabeck still controlled AVM. Writs of protection had been issued to prevent Schinabeck from being served with process in the Plymouth County divorce action if he had come to, or been present in, Massachusetts for a deposition. No affidavit established that he was unable to attend a deposition by reason of illness or other reasons than his business travels and his own recalcitrance. Judge B gave AVM (which, on the basis of the depositions of AVM's employees, he was justified in treating as Schinabeck's controlled entity) a long enough period to produce Schinabeck. Judge C was well justified, on this record, in enforcing Judge B's perceptive order when the sixty-day period for producing Schinabeck had expired. Schinabeck's own flagrantly egregious conduct called for a serious sanction. ⁹

We recognize fully that Mass.R.Civ.P. 37(b), 365 Mass. 798 (1974), and the authorities following it, and the comparable Federal rule, require that the failure to provide discovery must take place "wilfully" and that any sanction for violation of the rule be "just." See Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707-708, 102 S.Ct. 2099, 2106-2107, 72 L.Ed.2d 492 (1982); Partlow v. Hertz Corp., 370 Mass. 787, 790-791, 352 N.E.2d 902 (1976); Litton Business Tel. Systems, Inc. v. Schwartz, 13 Mass.App. 113, 116-118, 430 N.E.2d 862 (1982). See also Levings v. Forbes & Wallace, Inc., 8 Mass.App. 498, 505, 396 N.E.2d 149 (1979); M. Clifton Edson & Son v. McConnell, 9 Mass.App. 930, 404 N.E.2d 692 (1980). Contrast Henshaw v. Travelers Ins. Co., 377 Mass. 910, 911, 386 N.E.2d 1029 (1979, where a sanction of default in the particular circumstances was deemed too severe and lesser sanctions were imposed); Bob Berman Assocs., Inc. v. Gross, 15 Mass.App. 1000, 1001, 448 N.E.2d 80 (1983, where the record showed "some tardiness" but also "indications of 'extensive efforts at compliance' "). Compare also Arnesen v. Shawmut...