Farrell v. Hursh Agency, Inc., 85-43

• Decision Date: 06 February 1986
• Docket Number: No. 85-43,85-43
• Citation: Farrell v. Hursh Agency, Inc., 713 P.2d 1174 (Wyo. 1986)
• Parties: Norman L. FARRELL and Helen L. Farrell, Appellants (Defendants), Safeway Stores, Inc., a corporation, and Mall Centers Intermountain, Inc., a corporation, (Defendants), v. HURSH AGENCY, INC., a Wyoming Corporation, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 1174

713 P.2d 1174

Norman L. FARRELL and Helen L. Farrell, Appellants (Defendants)Safeway Stores, Inc., a corporation, and Mall Centers Intermountain, Inc., a corporation, (Defendants), v.HURSH AGENCY, INC., a Wyoming Corporation, Appellee (Plaintiff).

No. 85-43.

Supreme Court of Wyoming.

Feb. 6, 1986.

Charles E. Hamilton and Eric A. Easton of Hamilton Law Associates, P.C., Riverton, for appellants.

F.M. Andrews, Jr. of Andrews and Anderson, P.C., Riverton, for appellees.

Before THOMAS, C.J., and ROSE, ^*ROONEY, ^**BROWN and CARDINE, JJ.

ROSE, Justice.

This appeal asks whether error was committed when the trial court entered a default judgment pursuant to Rule 37(b)(2)(C), W.R.C.P., for the reason that the appellants failed to comply with the court's discovery orders.Appellants contend the default was improperly granted and that the hearing on damages after the default judgment was not correctly conducted.

We will affirm.

AppelleeHursh Agency, Inc.(Hursh) brought suit against appellantsNorman Farrell and Helen Farrell and against Safeway Stores, Inc. and the Mall Centers Intermountain, Inc.By stipulation of counsel, Safeway Stores, Inc. and Mall Centers Intermountain, Inc. were dismissed from the suit.The complaint alleged that Norman Farrell breached his fiduciary duty with Hursh in the taking and conversion of various real estate and rental commissions when Farrell was the general manager and stockholder in Hursh's insurance and real estate business.Hursh also alleged that Farrell took corporate opportunity and caused other damage to Hursh by acting negligently in not renewing an errors-and-omissions policy for Hursh's business.

Hursh served the Farrells with interrogatories and a request for production of documents on February 22, 1983, and the Farrells failed to provide responsive answers to a number of the interrogatories.Hursh then moved for an order requiring the Farrells to respond to those interrogatories and to produce the Farrells' income tax returns for the years 1975 through 1982.An order requiring these responses and production was entered by the court on May 10, 1983, and the Farrells responded to this order by supplementing their answers to the interrogatories, but did not produce the income tax returns as ordered.On June 24, 1983, Hursh made a motion for the production of the returns, and on August 4, 1983, moved for sanctions pursuant to Rule 37(d), W.R.C.P., because of the Farrells' failure to furnish full response to the interrogatory dealing with Norman Farrell's annual income and the appellants' failure to produce the requested income tax returns.Again on November 30, 1983, Hursh sought an order compelling Norman Farrell to produce documents relating to his current financial condition.

On March 12, 1984, Hursh again moved for sanctions, this time seeking to dismiss the Farrells' counterclaim, and for judgment by default due to the Farrells' failure to produce all of their 1975 through 1979 tax returns and their complete failure to produce the 1980 through 1982 tax returns.The court responded to this motion by entering an order on March 20 directing that the information be provided by March 28, 1984, and further admonishing that the appellants' failure to comply would result in judgment being entered in favor of Hursh.The Farrells' response was to seek a protective order under Rule 26(c), W.R.C.P.It was their position that they did not possess the remaining portions of the 1975 through 1979 returns and that the 1980 through 1982 returns were only necessary to establish Hursh's claim for punitive damages and, therefore, the later returns could not be compelled until the plaintiff had made "a prima facie showing that punitive damages is a viable claim."The Farrells further contended that records relating to their current financial condition were also relevant to punitive damages only and were therefore not discoverable under the condition of the pleadings at the time in question.The court denied the motion for a protective order on April 5, 1984, and on April 6, 1984 Hursh filed an application for entry of default and for judgment based on the Farrells' failure to comply with the order for production of March 20, 1984.An entry of default and judgment was filed on April 6, 1984.

The Farrells moved to set aside the default, and their motion was denied, whereupon a number of hearings on damages only were held.Following the trial on damages, at which both parties presented evidence, the court entered judgment on January 8, 1985, against Norman Farrell in the amount of $78,089.01 and against Norman and Helen Farrell jointly and severally for $42,500.From this judgment the Farrells appeal.¹

On appeal the Farrells raise the following issues:

"A.Should the Motion For Protective Order filed March 23, 1984 have been granted.

"B.Were the procedures mandated under Wyoming Rules of Civil Procedure 55(c) properly followed.

"C.Was the denial of the Appellant's Motion To Set Aside Default an abuse of discretion.

"D.Were the Damage Hearings correctly conducted."

Hursh, appellee, agrees with this statement of the issues with one exception.Appellee claims that the second issue is whether Rule 37(b)(2)(C), not Rule 55(c), was properly followed when the judgment in default was entered.

THE PROTECTIVE ORDER

The court first ordered the appellants to produce the requested documents on May 10, 1983.After a number of requests for production and motions for sanctions due to the Farrells' failure to satisfactorily produce the various documents, the court, nearly one year later, again ordered production.It was only after this last order was entered that the Farrells first moved for a protective order under Rule 26(c), W.R.C.P.²Now they claim that the court erred in not granting their motion.

The rule is that the trial court has broad discretion in controlling discovery.Mauch v. Stanley Structures, Inc., Wyo., 641 P.2d 1247(1982).This broad discretion has been applied in the specific area of protective orders.Penthouse International Ltd. v. Playboy Enterprises, Inc., 663 F.2d 371, 391(2d Cir.1981).Under the facts in the present case and in light of the broad discretion allowed the trial court in this area, we cannot say that denying the protective order was an abuse of discretion.

The trial court could have justifiably refused to grant the protective order for the reason that appellants' motion was untimely.A motion for a protective order under Rule 26(c) is not timely when it is filed after a party has failed to comply with previous orders of the court compelling production.

When documents are first demanded, a party is obligated to produce them unless he asserts a nonfrivolous objection or moves for a protective order.Penthouse International Ltd. v. Playboy Enterprises Inc., supra.Appellants did originally object to the production of any of the returns based on their lack of relevancy, forcing Hursh to seek a court order requiring the production of the returns, and on May 10, 1983the court did order production.After a number of motions for sanctions due to appellants' failure to respond, the court on March 20, 1984 ordered that appellants produce the returns or else have default entered against them under Rule 37(b)(2)(C), W.R.C.P.³It was only after this last order had been entered--nearly one year after the returns were first ordered produced--that appellants sought a protective order.Appellants requested this order without complying with, or seeking relief from, the court's first order compelling production.

The timeliness of a motion for a protective order is within the discretion of the trail court, and, under these circumstances, there is no abuse of discretion in denying the motion as being untimely.Jolly v. Superior Court of Pinal County, 112 Ariz. 186, 540 P.2d 658, 660(1975).In Amoco Oil Co. v. Segall, 118 Ill.App.3d 1002, 74 Ill.Dec. 447, 455 N.E.2d 876(1983), the appellant, like the Farrells here, failed to cooperate in discovery, made no response to a motion to compel, and finally moved for a protective order only after an order compelling discovery was entered.The court in that case had no problem affirming the trial court's refusal to grant the motion for the protective order due to untimeliness.We agree that the motion by the Farrells was untimely.There was no abuse in discretion in denying the protective order.

THE ENTRY OF DEFAULT

Appellants urge that the trial court erred in entering default and judgment because it did not follow Rule 55(b), W.R.C.P., which provides in part:

"(b) Judgment.--Judgment by default may be entered as follows:

"(1) By the Clerk.--When the plaintiff's claim against a defendant is for a sum certain, or for a sum which can by computation be made certain, the clerk upon request of the plaintiff and upon affidavit of the amount due shall enter judgment for that amount and costs against the defendant, if he has been defaulted for failure to appear and if he is not an infant or incompetent person;

"(2) By the Court.--In all other casesthe party entitled to a judgment by default shall apply to the court therefor * * *.If the party against whom a judgment by default is sought has appeared in the action, he(or, if appearing by representative, his representative) shall be served with written notice of the application for judgment at least 3 days prior to the hearing on such application. * * * * "⁴

They suggest that the court failed to provide written notice at least three days prior to any hearing on the application for default.They state that there was, in fact, no hearing held prior to the entry of the default judgment and that this too was error.

Appellee, while failing to cite authority for its contention, argues that when an entry of default is made under Rule 37(b)(2)(C), there is no need to comply with the requirements of Rule 55.The only authority we can find supporting appellee's...