Azalea Garden Board & Care, Inc. v. Vanhoy

• Court: Superior Court of North Carolina
• Writing for the Court: Tennille, Judge.
• Citation: Azalea Garden Board & Care, Inc. v. Vanhoy, 2009 NCBC 9, 06 CVS 0948 (N.C. Super. Ct. Mar 26, 2009)
• Decision Date: 26 March 2009
• Docket Number: 06 CVS 0948
• Parties: AZALEA GARDEN BOARD & CARE, INC., Plaintiff, v. MEREDITH DODSON VANHOY, Personal Representative of the Estate of Ricky C. Dodson, Deceased; LARRY S. GIBSON, NINA G. GIBSON, DANIEL W. TUTTLE; TIMOTHY D. SMITH; and HARVEY ALLEN, JR., Defendants.

2009 NCBC 9

AZALEA GARDEN BOARD & CARE, INC., Plaintiff, v. MEREDITH DODSON VANHOY, Personal Representative of the Estate of Ricky C. Dodson, Deceased; LARRY S. GIBSON, NINA G. GIBSON, DANIEL W. TUTTLE; TIMOTHY D. SMITH; and HARVEY ALLEN, JR., Defendants.

No. 06 CVS 0948

Superior Court of North Carolina, Davidson

March 26, 2009

Biesecker, Tripp, Sink & Fritts, LLP by Joe E. Biesecker and Christopher A. Raines for Plaintiff.

Spilman Thomas & Battle, PLLC by Jeffrey D. Patton and Nathan B. Atkinson for Defendant Daniel W. Tuttle.

ORDER & OPINION

Tennille, Judge.

{1} This matter is before the Court on Defendant Daniel W. Tuttle's ("Tuttle") Motion for Sanctions (the "Motion"), dated July 25, 2008. Defendant Tuttle seeks sanctions pursuant to Rule 26(g) and Rule 37 of the North Carolina Rules of Civil Procedure for Plaintiff's actions in response to discovery concerning expert opinions. The Court heard oral arguments on the Motion on October 7, 2008. Having considered Defendant Tuttle's Motion and Brief in Support, Plaintiff's Brief in Opposition, and the arguments of counsel, the Court hereby GRANTS Defendant Tuttle's Motion.

I. FACTS

{2} This is a suit to recover damages for the alleged breach of a contract to purchase a nursing care facility owned by Azalea Garden Board & Care, Inc. ("Plaintiff"). At issue is Plaintiff's response to discovery directed to the expert opinions of David Wagner ("Wagner") and Gene Tarr ("Tarr").

{3} Wagner was the owner and President of Plaintiff. He has a law degree, but he has not recently engaged in the private practice of law. Wagner was actively involved in the negotiations that led to the execution of the contract at issue in this litigation. In response to interrogatories in this case, he was listed as someone who may provide expert opinions on behalf of Plaintiff.

{4} Tarr is an attorney in Winston-Salem, North Carolina. During negotiations for the sale of Plaintiff, Plaintiff was under the supervision of the United States Bankruptcy Court for the Middle District of North Carolina. Prior to the closing, Tarr sent an e-mail to a partner in his firm who was representing the lender that was financing the purchase of Plaintiff. The e-mail purportedly expressed Tarr's advice to his partner that certain orders in the bankruptcy proceedings would not prevent Plaintiff from closing the transaction. Tarr was also listed as someone who may provide expert opinions on behalf of Plaintiff.

{5} A first action was filed against Defendants in Davidson County in 2002, shortly before expiration of the three (3)-year statute of limitation for breach of contract. At trial, during Plaintiff's evidence, Plaintiff took a voluntary dismissal without prejudice as to all claims. One (1) day before the one (1)-year period to re-file expired, Plaintiff filed this new suit. At the 2002 trial, both Wagner and Tarr were listed as fact witnesses, not experts.

{6} In the present action, this Court entered a Case Management Order requiring all parties to designate their experts and provide the information required by Rule 26 with respect to disclosure of expert opinions. (See Case Management Order 1, Sept. 10, 2007.) On August 14, 2007, in response to an interrogatory from another defendant, Plaintiff designated Wagner and Tarr as "possible" testifying expert witnesses. (Def.'s Br. Supp. Mot. Sanctions 1; Pl.'s Br. Opp'n Mot. Sanctions 4.) Based on these designations, on March 11, 2008, Tuttle served interrogatories and document requests on Plaintiff directed to the expert testimony to be provided by Wagner and Tarr as required by Rule 26(b)(4). (Def.'s Br. Supp. Mot. Sanctions 1-2; Pl.'s Br. Opp'n Mot. Sanctions 5.) Tuttle also noticed Wagner's deposition as an expert for April 29, 2008. (Def.'s Br. Supp. Mot. Sanctions 2; Pl.'s Br. Opp'n Mot. Sanctions 5.)

{7} Plaintiff hand-delivered responses to Tuttle's interrogatories and document requests on April 22, 2008. (Def.'s Br. Supp. Mot. Sanctions 2; Pl.'s Br. Opp'n Mot. Sanctions 6.) Plaintiff responded to Tuttle's discovery requests by, among other things, asserting the attorney-client privilege with respect to Wagner. (Def.'s Br. Supp. Mot. Sanctions 2; Pl.'s Br. Opp'n Mot. Sanctions 6-7.) On April 23, 2008 and April 24, 2008, Plaintiff and Tuttle communicated via e-mail and written letters about the merits of designating "possible" expert witnesses and Plaintiff's assertion of the attorney-client privilege with respect to the basis of Wagner's expert opinions. (Def.'s Br. Supp. Mot. Sanctions 3; Def.'s Br. Supp. Mot. Sanctions, Ex. A-C; Pl.'s Br. Opp'n Mot. Sanctions 6.) In an e-mail dated April 23, 2008, Plaintiff's counsel explicitly declined to communicate with Tuttle's counsel over the telephone. (See Def.'s Br. Supp. Mot. Sanctions 3; Def.'s Br. Supp. Mot. Sanctions, Ex. B.)

{8} In a letter dated April 23, 2008, Tuttle explicitly asked Plaintiff whether Tarr had been retained as an expert witness and informed Plaintiff that there is no attorney-client privilege associated with communications related to a witness's service as an expert. (Def.'s Br. Supp. Mot. Sanctions 3; Def.'s Br. Supp. Mot. Sanctions, Ex. A.) In a response letter, dated April 24, 2008, Plaintiff again stated that Wagner and Tarr were identified as "possible" expert witnesses who may testify. (Def.'s Br. Supp. Mot. Sanctions 3; Def.'s Br. Supp. Mot. Sanctions, Ex. A.) The response letter further stated that there had been no communication between Wagner and Plaintiff in Wagner's role as an expert witness, and, indeed, there had been no communication between Plaintiff and Tarr at all. (Def.'s Br. Supp. Mot. Sanctions 3; Def.'s Br. Supp. Mot. Sanctions, Ex. C.)

{9} On April 25, 2008, Tuttle filed a Motion to Compel seeking an order finding that no attorney-client privilege existed and that Defendant Tuttle was entitled to the discovery sought. (Def.'s Mot. Compel 1; Def.'s Br. Supp. Mot. Sanctions 3.) On May 6, 2008, the Court filed the Second Order on Motion to Compel (the "Second Order").^1[] The Second Order stated that because Plaintiff designated Wagner as a testifying expert witness, Plaintiff was required to produce the requested discovery regarding the facts relied upon by Wagner in forming his expert opinions. (Second Order Mot. Compel 1, May 6, 2008.) The Court noted that the responses furnished by counsel up to that point were "deficient in several respects." (Second Order Mot. Compel 1, May 6, 2008.) The Court explicitly stated that Plaintiff's "assertion of the attorney client privilege to shield discovery of any communications with counsel involving [Wagner's] expert opinions [was] misplaced." (Second Order Mot. Compel 1, May 6, 2008.) The Second Order required Plaintiff to produce the requested information relied upon by Wagner in forming his expert opinions within twenty (20) days of entry thereof. (Second Order Mot. Compel 2, May 6, 2008.) The Court also gave Plaintiff twenty (20) days to retain Tarr and provide responses from him regarding his expert opinions and stated that he would not be permitted to testify as an expert if Plaintiff failed to comply with that deadline. (Second Order Mot. Compel 2, May 6, 2008.)

{10} On May 19, 2008, Plaintiff filed a Motion for Instruction seeking clarification of the Second Order. (Pl.'s Mot. Instruction 1.) In the Motion for Instruction, Plaintiff asserted that Tarr was previously designated as a "possible" expert witness. (Pl.'s Mot. Instruction 2.) The Motion for Instruction sought the Court's guidance on whether Tarr could testify as a fact witness rather than an expert witness. (Pl.'s Mot. Instruction 2.) On May 28, 2008, the Court, in an Order on Motion for Clarification, stated that the Court's prior orders were clear and that the North Carolina Rules of Civil Procedure make no provision for designation of "possible" expert witnesses. (Order Mot. Clarification 1, May 28, 2008.)

{11} After the Court's Order on Motion for Clarification, Tuttle sent a letter to Plaintiff on June 5, 2008, again seeking discovery of Wagner in his capacity as an expert witness. (Def.'s Br. Supp. Mot. Sanctions 4; Def.'s Br. Supp. Mot. Sanctions, Ex. H; Pl.'s Br. Opp'n Mot. Sanctions 9-10.) Plaintiff replied in a letter dated June 11, 2008, by withdrawing the designations of Wagner and Tarr as expert witnesses. (Def.'s Br. Supp. Mot. Sanctions 4; Def.'s Br. Supp. Mot. Sanctions, Ex. D; Pl.'s Br. Opp'n Mot. Sanctions 9-10.) The letter stated that upon further review, counsel had determined that Wagner was not qualified as an expert. (Def.'s Br. Supp. Mot. Sanctions 4; Def.'s Br. Supp. Mot. Sanctions, Ex. D.)

II. DISCUSSION

A. RULE 26

{12} North Carolina courts have inherent authority to impose sanctions. Couch v. Private Diagnostic Clinic, 146 N.C.App. 658, 663, 554 S.E.2d 356, 361 (2001). A trial court's inherent "authority encompasses not only the 'power but also the duty to discipline attorneys, who are officers of the court, for unprofessional conduct.'" Id. at 665-66, 247 S.E.2d at 362 (citing In re Hunoval, 294 N.C. 740, 744, 247 S.E.2d 230, 233 (1977)); see also Dunn v. Canoy, 180 N.C. App 30, 45, 636 S.E.2d 243, 253 (2006). For a more limited view of the trial court's authority to sanction, see Egelhof v. Szulik, COA08-452 (N.C. Ct. App. Nov. 18, 2008). That limited view, however, is inapplicable where, as here, the motion for sanctions is clearly directed to a violation of Rule 26(g). See Brooks v. Giesey, 334 N.C. 303, 317-19, 432 S.E.2d 339, 347-48 (1993) (holding that discovery responses were the subject of sanctions under Rule 26(g), not Rule 11). Unprofessional conduct includes "misconduct, malpractice, or deficiency in character . . . and any dereliction of duty except mere negligence or mismanagement." Couch, 146 N.C.App. at 666, 554 S.E.2d at 362. When a court exercises its power to sanction, it is reviewed for abuse of discretion. Id. at 663, 554 S.E.2d at 361.

{13} Expert witnesses are subject to...