Cattrell Companies, Inc. v. Carlton, Inc.

• Citation: 614 S.E.2d 1
• Decision Date: 10 May 2005
• Docket Number: No. 31730.,31730.
• Court: West Virginia Supreme Court
• Parties: CATTRELL COMPANIES, INC., Plaintiff Below, Appellee, v. CARLTON, INC., a West Virginia corporation; Charles V. Maescher & Company, a foreign corporation; BBL-Carlton, L.L.C., a West Virginia limited liability company; Maescher Industries, Inc., a foreign corporation; Barry Bette & Led Duke, Inc., a foreign corporation; BBL-Central, L.L.C., a limited liability company; Donald Led Duke; Carl F. Agsten; Robert Compton; Grant V. Hesser; John Doe; and Douglas W. Barker, Defendants Below, BARRY BETTE & LED DUKE, INC., a foreign corporation, and Grant V. Hesser, Defendants Below, Appellants.

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614 S.E.2d 1

CATTRELL COMPANIES, INC., Plaintiff Below, Appellee, v. CARLTON, INC., a West Virginia corporation; Charles V. Maescher & Company, a foreign corporation; BBL-Carlton, L.L.C., a West Virginia limited liability company; Maescher Industries, Inc., a foreign corporation; Barry Bette & Led Duke, Inc., a foreign corporation; BBL-Central, L.L.C., a limited liability company; Donald Led Duke; Carl F. Agsten; Robert Compton; Grant V. Hesser; John Doe; and Douglas W. Barker, Defendants Below BARRY BETTE & LED DUKE, INC., a foreign corporation, and Grant V. Hesser, Defendants Below, Appellants.

No. 31730.

Supreme Court of Appeals of West Virginia.

Submitted January 11, 2005.

Decided May 10, 2005.

COPYRIGHT MATERIAL OMITTED

Charles L. Woody, Clifford F. Kinney, Jr., Robert Patrick Paulson, Spilman Thomas & Battle, PLLC, Charleston, West Virginia, Attorneys for the Appellants.

Vincent Trivelli, Morgantown, West Virginia, Attorney for Amicus Curiae, Affiliated Construction Trades Foundation.

Roger D. Williams, Barrett Chafin Lowry Amos & McHugh, Charleston, West Virginia, Attorney for Amicus Curiae, The West Virginia Laborers' District Council and The International Union of Operating Engineers Local 132.

Marc. B. Chernenko, William E. Watson, William E. Watson & Associates, Wellsburg, West Virginia, Attorneys for the Appellee.

William L. Casto, Charleston, West Virginia, Pro se for Amicus Curiae, Ironworkers No. 301.

DAVIS, Justice:

This is an appeal by Barry, Bette & Led Duke, Inc. (hereinafter referred to as "Duke") and Grant V. Hesser (hereinafter referred to as "Mr. Hesser"), appellants/defendants below, from an order of the Circuit Court of Tyler County granting judgment to Cattrell Companies, Inc. (hereinafter referred to as "Cattrell"), appellee/plaintiff below. The judgment against Duke and Mr. Hesser was imposed under Rules 37(b) and (d) of the West Virginia Rules of Civil Procedure as a sanction for discovery violations.¹ In this appeal, Duke and Mr. Hesser argue that the sanction was improper and unduly harsh. Upon review of the parties' arguments,² the pertinent authorities, and the record designated for appellate consideration, we affirm in part, reverse in part, and remand for further proceedings.

I. FACTUAL AND PROCEDURAL HISTORY

This case has its origins in a prior action brought by Cattrell against other defendants.³ The prior case was a breach of contract action in which Cattrell sought to recover damages for work it performed on a construction project.⁴ Cattrell prevailed in the action and was awarded a judgment in the amount of $1,798,706.00. Part of the judgment was satisfied by one of the co-defendants. In order to collect the balance, approximately $562,647.84, Cattrell instituted the present action against Duke and Mr. Hesser, and several other defendants.⁵

The complaint in the instant action alleged essentially that Duke and Mr. Hesser assisted defendants in the prior case in carrying out a scheme to fraudulently transfer assets and property to avoid payment of the judgment rendered in that action. Duke and Mr. Hesser, who were represented by the same counsel, filed a joint answer to the complaint.⁶ During the discovery phase of the proceeding Cattrell served interrogatories and requests for production of documents upon Duke and Mr. Hesser on November 1, 1999.⁷ Duke and Mr. Hesser failed to respond to the discovery requests. Consequently, on December 15, 1999, Cattrell filed a motion to compel.⁸ A hearing was held on the motion on January 6, 2000. Subsequent to the hearing, but prior to the entry of a court order on the motion to compel, Duke and Mr. Hesser provided responses to the discovery requests. Thereafter, on February 8, 2000, the circuit court entered an order directing Duke and Mr. Hesser to respond fully to the discovery requests within twenty days and to pay attorney's fees incurred by Cattrell in bringing the motion.⁹

On May 3, 2000, Cattrell filed a motion pursuant to Rule 37(b), seeking sanctions against Duke and Mr. Hesser for allegedly failing to fully respond to the discovery requests.¹⁰ The motion sought to have Duke and Mr. Hesser's defenses struck and default judgment rendered against them. The circuit court took the motion under advisement and did not immediately rule upon the matter.

On March 29, 2001 and June 20, 2001, Cattrell wrote to Duke and Mr. Hesser and requested deposition dates for Mr. Hesser and a representative of Duke. Duke and Mr. Hesser did not respond to either letter. Consequently, on July 6, 2001, Cattrell noticed the depositions to take place on July 19, 2001. Subsequently, on July 18, 2001, counsel for Duke and Mr. Hesser telephoned Cattrell to advise that the depositions needed to be rescheduled because the deponents were not available. Alternative deposition dates were offered by Duke and Mr. Hesser, but Cattrell refused to cooperate in rescheduling the depositions. Instead, Cattrell filed another motion for sanctions, this time under Rule 37(d) for failure to attend depositions. In the second motion for sanctions, Cattrell again sought to have Duke and Mr. Hesser's defenses struck and default judgment rendered against them.

A hearing was held on the second motion for sanctions on August 9, 2001.¹¹ At the conclusion of the hearing, the circuit court granted Cattrell's previous motion for discovery sanctions under Rule 37(b), based on a failure to comply with the court's order of February 8, 2000, and granted Cattrell's motion under Rule 37(d), based on a failure to appear at a deposition. By order rendered October 1, 2003, the circuit court struck Duke and Mr. Hesser's defenses and entered default judgment against them under both Rule 37(b) and Rule 37(d). The order also awarded $562,647.83 in damages, and prejudgment interest in the amount of $226,292.32.¹² This appeal followed.¹³

II. STANDARD OF REVIEW

The case presented to this Court requires an analysis of the trial court's imposition of discovery sanctions under Rules 37(b) and (d). With respect to Rule 37(b), we have held that

[t]he imposition of sanctions by a circuit court under W. Va. R. Civ. P. 37(b) for the failure of a party to obey the court's order to provide or permit discovery is within the sound discretion of the court and will not be disturbed upon appeal unless there has been an abuse of that discretion.

Syl. pt. 1, Bell v. Inland Mut. Ins. Co., 175 W.Va. 165, 332 S.E.2d 127 (1985). Likewise, we now specifically hold that the imposition of sanctions by a circuit court under Rule 37(d) of the West Virginia Rules of Civil Procedure is within the discretion of the trial court and will not be disturbed absent an abuse of discretion. See, e.g., Aziz v. Wright, 34 F.3d 587 (8th Cir.1994) (applying abuse of discretion standard in reviewing Rule 37(d) of the Federal Rules of Civil Procedure).

Our resolution of this case also requires an independent analysis of Rule 37(d) to determine what constitutes a "failure to appear" within the meaning of the rule. In cases where we are called upon to analyze and interpret a rule, we are guided by the proposition that "[a]n interpretation of the West Virginia Rules of Civil Procedure presents a question of law subject to a de novo review." Syl. pt. 4, Keesecker v. Bird, 200 W.Va. 667, 490 S.E.2d 754 (1997). Mindful of these applicable standards, we now consider the substantive issues herein raised.

III. DISCUSSION

This appeal requires us to determine whether the trial court abused its discretion in rendering judgment against Duke and Mr. Hesser as a sanction under Rules 37(b) and (d).¹⁴ In resolving this matter we will address both rules separately.

A. Sanctions under Rule 37(b)

The circuit court relied on Rule 37(b) in sanctioning Duke and Mr. Hesser for failing to obey its February 8, 2000, order.¹⁵ Under that order, Duke and Mr. Hesser were obligated to respond to discovery requests made by Cattrell. In our review of the discovery request material we find that the only discovery request that was relevant to Duke and Mr. Hesser involved the request for production of documents.¹⁶

As previously indicated, prior to the trial court's actual entry of the order compelling responses to discovery requests, Duke and Mr. Hesser had responded generally to the requests. Further, the record discloses that because the request for production of documents was couched in broad terms, Duke and Mr. Hesser had contacted Cattrell on several occasions seeking to clarify what specific documents were being requested.¹⁷ Cattrell refused to clarify what documents were being sought. Cattrell's conduct in refusing to honor a request for clarification is the dispositive issue for resolving the sanctions imposed under Rule 37(b).

No prior decision of this Court, or our Rules of Civil Procedure, addresses the issue of a party's duty to clarify discovery issues, when requested, before seeking sanctions based on a perceived violation of a prior order compelling discovery. Many federal district courts have local rules that require parties to use good faith in resolving discovery issues, after an order to compel is entered, before seeking sanctions. See Kayhill v. Unified Gov't of Wyandotte County/Kansas City, Kansas, 197 F.R.D. 454, 460 (D.Kan.2000) ("Defense counsel made a good faith effort to obtain these [discovery] responses without court action, and plaintiff has not shown that her failure to respond was substantially justified or that other circumstances make [a sanction] unjust."); Airlines Reporting Corp. v. Grecian Travel, Inc., 170 F.R.D. 351, 353-354 (E.D.N.Y.1995) ("[Local] Rule 3(f) ... requires that before a party moves for sanctions under Federal Rule 37, the moving party's attorney must file an affidavit certifying that the attorney has conferred with opposing counsel and worked in good faith to resolve the issues raised in the motion."). We note, however, that the duty to confer in this situation "does not require [a par...