Birds Intern. Corp. v. Arizona Maintenance Co., Inc.
| Decision Date | 31 January 1983 |
| Docket Number | CA-CIV,No. 2,2 |
| Citation | 135 Ariz. 545,662 P.2d 1052 |
| Parties | BIRDS INTERNATIONAL CORPORATION, Plaintiff/Appellant, v. ARIZONA MAINTENANCE CO., INC., and Elliott Feldman and Jane Doe Feldman, his wife, Defendants/Appellees. 4472. |
| Court | Arizona Court of Appeals |
The plaintiff/appellant, Birds International Corporation, appeals from the trial court's orders dismissing the plaintiff's complaint, entering judgment in favor of the defendants/appellees, Arizona Maintenance Co., Inc. et al. and denying the plaintiff's motion to set aside the dismissal or the underlying default. For the reasons set forth below, we reverse and remand.
The appellant, a breeder of exotic birds, brought an action for damages for loss of profits and loss of breeding stock resulting from the delivery of allegedly contaminated water to the appellant's aviary by the appellees. On August 31, 1981, counsel for the appellees filed a request for production under Rule 34, Rules of Civil Procedure, 16 A.R.S. It requested the appellant to make various tax returns available for inspection within thirty days. A copy of the request was mailed to the appellant's trial counsel, Neal T. Roberts, at his stated address in Phoenix. Roberts and Richard A. Wilson were shown as co-counsel for the appellant in the trial court. Having received no response by the deadline, the appellees filed a motion on October 19, 1981, for an order compelling discovery. In the motion the appellees further moved that the order provide that if the returns were not furnished within a reasonable time the "action will be dismissed upon defendants filing with the Court an Affidavit to the effect that such Order was not complied with, without further notice or hearing thereon." A copy of the motion was mailed to the same address. The motion was set for hearing on November 30, 1981. The appellant failed to respond and failed to appear at the hearing. The trial court granted the unopposed motion, its minute entry including the following language:
"It is further ordered that the Income Tax Returns for the years 1975 through 1980 shall be furnished within thirty (30) days from this date, and upon the filing of an affidavit that such has not been done, the Court will dismiss the complaint."
A copy of the minute entry was mailed to the same address. On January 7, 1982, the appellees filed an affidavit of non-compliance, and the trial court dismissed the complaint.
On January 20, 1982, the appellant, by his same counsel, filed a "Motion to Set Aside Dismissal of Action and to Reinstate Same, or in the Alternative, Setting Aside Default." The appellees filed an opposition on January 29, and by stipulation the matter was submitted without argument. The trial court denied the motion on February 12.
The appellant argues on appeal that the trial court abused its discretion by dismissing the complaint without a hearing to determine whether the non-compliance, with the discovery order was due to willfulness or bad faith and to determine the most appropriate sanction under Rule 37(b), Rules of Civil Procedure, 16 A.R.S. The appellant also argues that the negligence, misconduct, or fault of the former counsel should not be attributed to the appellant for purposes of imposing sanctions of dismissal or entry of default for the violation of a discovery rule or order.
We agree with the appellant on both issues.
The determination to impose the sanction of dismissal under Rule 37 must take into account the competing policies of enforcing discovery procedures to ensure a "just, speedy, and inexpensive determination of every action," Rule 1, Rules of Civil Procedure, 16 A.R.S., and reaching a decision on the merits of a case. The two primary United States Supreme Court decisions on the Rule 37 sanction of dismissal are Societe Internationale, Etc. v. Rogers, 357 U.S. 197, 78 S.Ct. 1087, 2 L.Ed.2d 1255 (1958) and National Hockey League v. Metro Hockey Club, Inc., 427 U.S. 639, 96 S.Ct. 2778, 49 L.Ed.2d 747 (1976). In Societe Internationale, the court emphasized the "reach the merits" doctrine by holding that a Rule 37 dismissal is not authorized where "the failure to comply has been due to inability, and not to willfulness, bad faith, or any fault of petitioner." In that case, the noncomplying party, a Swiss holding company, could only have complied by violating Swiss law. The court held that the company's "failure to satisfy fully the requirements of this production order was due to inability fostered neither by its own conduct nor by circumstances within its control." Societe Internationale, supra, 357 U.S. at 211, 78 S.Ct. at 1095, 2 L.Ed.2d at 1266-67.
On the other hand, in National Hockey League, the court stressed the need to enforce discovery requirements by dismissal as a deterrent to future abuses by attorneys and parties. In that case, a 17-month course of evasive conduct in response to a discovery request led to a dismissal order.
In balancing the competing policies, lower courts have attempted to determine what constitutes "willfulness, bad faith or fault." Societe Internationale, supra. Gross negligence as opposed to willfulness or bad faith has been deemed sufficient to warrant dismissal. See Cine Forty-Second St. Theatre v. Allied Artists, 602 F.2d 1062 (2nd Cir.1979).
Arizona courts have expressed a preference for less drastic sanctions than dismissal. See A.G. Rancho Equipment v. Massey-Ferguson, Inc., 123 Ariz. 122, 598 P.2d 100 (1979); Zakroff v. May, 8 Ariz.App. 101, 443 P.2d 916 (1968). That preference extends to a hearing prior to dismissal to determine whether the non-compliance was due to willfulness or bad faith. A.G. Rancho Equipment, supra; Zakroff, supra. In Zakroff, supra, this court suggested that, prior to dismissal, "the trial court should determine whether the failure to answer interrogatories was willful ... and whether the circumstances are so aggravated as to justify the drastic action." 8 Ariz.App. at 104, 443 P.2d at 919.
In A.G. Rancho Equipment, supra, the Arizona Supreme Court cited with approval the following language from ...
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