Barnett v. Simmons

• Decision Date: 10 November 2008
• Docket Number: No. 103,708.,103,708.
• Citation: 197 P.3d 12,2008 OK 100
• Parties: Richard C. BARNETT, Appellee, v. Darryl K. SIMMONS and Paul A. Franks, Individually, and as Partners d/b/a Rock Oil Company, Appellants.
• Court: Oklahoma Supreme Court

197 P.3d 12

2008 OK 100

Richard C. BARNETT, Appellee, v. Darryl K. SIMMONS and Paul A. Franks, Individually, and as Partners d/b/a Rock Oil Company, Appellants.

No. 103,708.

Supreme Court of Oklahoma.

November 10, 2008.

CERTIORARI TO THE COURT OF CIVIL APPEALS DIVISION 1

¶ 0 Tulsa County District Court, Honorable Gordon D. McAllister, Jr., denied defendants/appellants motion for sanctions/contempt against plaintiff/appellee for violation of trial court's discovery order and alleged destruction of evidence. The trial judge determined that sanctions should be imposed only upon a finding that plaintiff's conduct was willful and that defendants had failed in their burden to show that plaintiff's actions were willful rather than being the innocent acts of a computer novice. The Court of Civil Appeals reversed and remanded in part. Both sides petitioned for writs of certiorari and both petitions were granted. We find that the trial court erred as a matter of law in determining that sanctions could be imposed only upon a showing of plaintiff's willfulness.

CERTIORARI HAVING BEEN PREVIOUSLY GRANTED, THE OPINION OF THE COURT OF CIVIL APPEALS IS VACATED AND THE TRIAL COURT'S ORDER IS REVERSED AND REMANDED.

Roger K. Eldredge and Norman Wohlgemuth, Norman Wohlgemuth Chandler & Dowdell, Tulsa, Oklahoma for Defendants/Appellants.

James W. Rusher and Heath E. Hardcastle, Albright, Rusher & Hardcastle, PC, Tulsa, Oklahoma, for Plaintiff/Appellee.

HARGRAVE, J.

¶1 Plaintiff Richard C. Barnett (Barnett) sued defendants Darryl K. Simmons and Paul A. Franks, individually and as partners doing business as Rock Oil Company (Rock Oil), seeking unpaid royalties on sales of oil allegedly owed to him by Rock Oil as operator of a well producing on the Osborn lease. Barnett alleged that he had been underpaid for royalties on the Osborn lease and that Rock Oil had breached its fiduciary duty by inappropriately limiting production and by transporting oil produced from the Osborn lease to other leases. The petition was filed March 22, 2002. Rock Oil generally and specifically denied plaintiff's allegations.

¶2 Discovery established that plaintiff kept files on his computer that were related to his claims against Rock Oil. For example, Barnett measured and kept records of the amount of oil stored in tanks on the Osborn lease and claimed that his calculations varied from the production reported to the Oklahoma Corporation Commission. Barnett produced two undated "affidavits" from the pumper (who is also Barnett's son-in-law) on the Osborn lease, which were identical except for the amounts of daily production from that lease: one stated that production was 14-15 barrels per day and the other stated that production was 18-19 barrels per day. Both affidavits state that Rock Oil was moving oil from the Osborn lease to another lease and selling it as if it had been produced there. These affidavits were neither dated nor notarized and Rock Oil asserted that the affidavit stating that production was 18-19 barrels per day had been created by Barnett to support his claim of oil stolen from the Osborn lease. Rock Oil desired to discover the dates the affidavits were created on Barnett's computer in order to establish a possible statute of limitations defense. In addition, Barnett relied on an affidavit of a former employee of Rock Oil, Jim Cable, to support his claim that Rock Oil had agreed to drill a lateral well on the lease in order to increase production. Rock Oil maintained that there was no such agreement. Finally, Barnett testified that he may have prepared correspondence to the Oklahoma State Bureau of Investigation (OSBI) and the Oklahoma Corporation Commission relating to the Osborn lease on his computer, but Barnett failed to produce any such correspondence.

¶3 Rock Oil sought production of plaintiff's computer hard drive by document request. Plaintiff objected that the request was overly broad and unduly burdensome, as well as vague and ambiguous. Counsel attempted to negotiate a way to obtain the information sought, and a series of letters and emails from July 1, 2004 through September 2004 reflect that counsel for Rock Oil was actively pursuing production of plaintiff's computer hard drive. One letter suggested that a "clone" be made of plaintiff's computer's hard drive and stated that an understanding had been reached with plaintiff's counsel that the parties would agree on an independent third-party computer expert to perform all work necessary to produce all relevant information and data on the hard drive to the defendants, while preserving the confidentiality of non-relevant information and data. A letter dated September 15, 2004 from Rock Oil's counsel to plaintiff's counsel refers to plaintiff's counsel's expressed resistance to a "clone" of plaintiff's computer. The letter assures plaintiff's counsel that the production of the computer files could be handled without cloning the hard drive. Rock Oil's counsel submitted a list of files that he intended to have the computer technician retrieve, and Data Sleuths, Inc., was suggested as a possible expert to accomplish this. Finally, the letter refers to modification of the parties' prior agreement so that plaintiff could use his own computer expert to monitor and participate in the production process.

¶4 On October 8, 2004, citing plaintiff's breach of their agreement regarding production of the computer files, defendants filed a motion to compel production of plaintiff's hard drive. Defendants' motion explained the relevance of the information on plaintiff's hard drive that it sought to discover and detailed the efforts that defendants had made to obtain the information and the parties' agreement that plaintiff allegedly breached. Defendants sought entry of an order compelling the plaintiff to allow inspection and review of the hard drive of his personal computer in connection with the production of all non-privileged electronic files that refer or relate to any of the following:

1. People: Darryl Simmons, Paul "Andy" Franks, Rock Oil, Al Mullins, Cartwright Trucking, Robert Olson, Richard Osborn, Billie Osborn, Perry Gilstrap, Jim Cable, Robert Terhune, Fred Perry, Roger McMillian;

2. Places: Osborn Lease, Murray Lease, Barnett Lease, TEC Lease

3. Themes: Stolen oil, overriding royalty, drainage of oil, motion activated cameras, oil production, photographs of oil leases and surrounding area;

4. Governmental Agencies: OSBI, Oklahoma corporation Commission, Oklahoma Tax Commission, United States Attorney's Office.

¶5 Judge Jane Wiseman orally granted the motion to compel on October 25, 2004 and a minute order was entered. The parties again attempted to arrange access to Barnett's computer by finding a neutral computer expert to examine it. As of December 23, 2004, the parties had agreed on Gary Glanz, of Glanz and Associates. On January 5, 2005, however, the plaintiff voluntarily dismissed his claims against the defendants without prejudice, pursuant to 12 O.S. § 684. Plaintiff's counsel indicated an intention to refile some of the claims within three months.¹

¶6 On January 24, 2005, Rock Oil filed a motion for appointment of a neutral computer forensic expert and a motion for sanctions and contempt of court based upon plaintiff's apparent destruction of electronic computer files. Rock Oil argued that under Judge Wiseman's order compelling production, plaintiff had a duty to preserve the evidence and to produce it as ordered. Rock Oil stated that it learned, through the company selected to be the neutral third party, that plaintiff's computer had been worked on by others and may have been compromised. Rock Oil asserted that plaintiff should be held responsible for all fees and expenses associated with the examination of the plaintiff's hard drive by a neutral forensics expert and for reimbursing Rock Oil for all fees and costs associated with its briefs and all further discovery required relating to spoliation of plaintiff's hard drive. They asserted that the ultimate sanctions that could be entered by the court, such as payment of punitive damages, attorneys' fees and costs and/or a judgment against plaintiff on his claims against Rock Oil could be made at a final hearing after conclusion of the spoliation-related discovery.

¶7 Barnett's response to the motion admitted that the trial court had entered an order allowing discovery of certain electronic files contained on Barnett's hard drive and had ordered that the hard drive be searched for documents containing the identified terms. The response admits that subsequent to the order, the parties worked toward the production of those files, but that the files were not produced prior to the dismissal of the case. Barnett does not dispute that he had work done on his computer and he attached a "Computer Repair Report" as Exhibit 1. The plaintiff argues that dispositive sanctions are imposed only when the failure to comply with discovery demands it as the result of willfulness, bad faith or some fault of a party, citing Gates Rubber v. Bando Chemical Industries, 167 F.R.D. 90, 103 (D.Colo.1996). Barnett argues that there could be no showing of willfulness or bad faith on his part since he did nothing inappropriate.

¶8 Ultimately Barnett's hard drive was examined on two different occasions by a neutral third party computer forensic expert, Stadler, and his reports were submitted to the court. Hearings were held before trial judge Gordon D. McAllister, Jr., on August 31, 2005, December 1, 2005, February 13, 2006 and May 23, 2006. Numerous witnesses testified and volumes of exhibits were introduced which included a great deal of technical information. Rock Oil contended that plaintiff was aware at all relevant times of Rock Oil's attempts to have his hard drive produced and inspected and was aware of the motion to compel and the court's order requiring the production and inspection of his hard drive. Rock Oil...