Ford Motor Co., In re

• Decision Date: 14 July 1998
• Docket Number: No. 97-0430,97-0430
• Citation: 988 S.W.2d 714
• Parties: 41 Tex. Sup. Ct. J. 1283 In re FORD MOTOR COMPANY, Relator.
• Court: Texas Supreme Court

Page 714

988 S.W.2d 714

41 Tex. Sup. Ct. J. 1283

In re FORD MOTOR COMPANY, Relator.

No. 97-0430.

Supreme Court of Texas.

Argued Nov. 4, 1997.

Decided July 14, 1998.

Joe R. Greenhill, Bob E. Shannon, Joseph R. Knight, Austin, Claudia Wilson Frost, Michael S. Goldberg, Houston, Robert W. Jordan, Peter A. Moir, Jeffrey Cox, Dallas, Margaret Niver McGann, Salt Lake City, UT, for Relator.

Joel M. Fineberg, Michael L. Parham, Frank L. Branson, Ted Z. Robertson, George (Tex) Quesada, Steven M. Johnson, Dallas, for Respondent.

ABBOTT, Justice, delivered the opinion of the Court, in which PHILLIPS, Chief Justice, GONZALEZ, HECHT and OWEN, Justices, join.

In this mandamus proceeding, we must decide whether the trial court abused its discretion by imposing discovery sanctions against Ford Motor Company. As part of the sanction order, the trial court excluded evidence Ford obtained from a nonparty and ordered Ford to pay plaintiffs' attorney's fees for both the trial court and appellate proceedings. We conclude that the trial court abused its discretion by determining that Ford's conduct was sanctionable and by awarding attorney's fees. However, because we conclude that an appeal is adequate to rectify the trial court's exclusion of evidence and award of attorney's fees for the trial court proceedings, we deny the writ as to those sanctions. However, because we conclude that Ford does not have an adequate remedy on appeal from the trial court's unconditional award of appellate attorney's fees, we conditionally grant the writ and direct the trial court to vacate that award.

I

Heather Cohen was killed in November 1991 when the Ford Probe she was driving collided with a stopped tractor-trailer at the end of an interstate off-ramp near Weatherford, Texas. Cohen's sister, Andrea Archer, who owned the car, and Cohen's daughter, Alyssa Tiner, were both injured in the collision.

State Farm Mutual Automobile Insurance Company insured both Cohen and Archer. Shortly after the accident, State Farm assigned Cheryl Moore as the adjuster for Archer's claim. In December 1991, Moore recorded a statement by Archer, in which Archer claimed that the cruise control on the car would not disengage and that the brakes had failed. Because of Archer's statement, State Farm hired Garrett Engineering, Inc. and paid $6,000 for Garrett's engineer, J.B. Kent, to examine, inspect, and test the car.

Kent's report concluded that the cruise control wouldnot properly set prior to the accident and that the car's brakes had not failed. Garrett provided Kent's report to State Farm.

At about this same time, the Archers, including Andrea Archer, individually and as administrator of Heather Cohen's estate, and her parents, individually and as guardians of Alyssa Tiner, retained lawyers to pursue claims arising from the accident. In August 1993, the Archers sued Ford in Harrison County alleging, among other things, that the car's brakes or cruise control system had failed. State Farm was not a party to this suit. In fact, the Archers' lawyer specifically informed Moore, the State Farm adjuster, that there was no need for State Farm to be involved in the case against Ford.

In October 1993, Ford and the Archers entered into a Rule 11 agreement that Ford would not have to answer discovery already issued by the Archers and, in return, Ford would not "submit discovery" until the parties had first discussed settlement. In February 1994, while the Rule 11 agreement was still in effect, an investigator for Ford, James Childress, learned about the Kent report. Childress contacted Moore at State Farm, identified himself as Ford's investigator, and requested a copy of the Kent report. Moore said she would need to talk to her supervisor before she could release a copy of the report.

A few days later, Ford authorized a court reporter to issue a deposition notice on written questions asking State Farm to produce and authenticate Archer's claim file, including the Kent report. On February 28, 1994, the notice of deposition was served on the Archers, but not on StateFarm. That same day, Moore informed Childress that her supervisor had authorized her to provide Childress with a copy of the report, but that State Farm wanted to recover some of the cost of the report. On March 2, 1994, Moore faxed a copy of the Kent report to Childress in exchange for $500. Also on that day, the Archers filed a motion to quash the deposition on written questions, asserting various privileges and exemptions from discovery. The motion to quash was never set for a hearing and was never considered by the trial court.

In May 1994, Ford served State Farm with the notice of deposition and subpoena duces tecum. By that time, the parties' Rule 11 agreement abating discovery had expired. State Farm did not object to the deposition notice and produced 283 pages of the claim file, including the Kent report.

On June 27, 1994, the Archers filed a motion for sanctions, asserting that Ford had violated the parties' Rule 11 agreement and the motion to quash by obtaining the claim file from State Farm. The trial court did not hear or rule on that motion for sanctions. In October 1995, on Ford's motion, the trial court transferred the case from Harrison County to Dallas County. Before the case was assigned to a district court in Dallas County, Ford filed an original petition and application for a temporary restraining order in the 44 th Judicial District Court of Dallas County, the Honorable Candace Tyson presiding. In this action, Ford sought to prevent the Archers from conducting allegedly destructive testing of the car. Ford's petition also asserted a claim for contribution and indemnity from Cohen's parents and Tiner, Cohen's minor daughter. Without the presence of the Archers or their counsel, a visiting judge granted Ford the temporary restraining order.

The Archers answered Ford's temporary restraining order petition and asserted counterclaims against Ford consistent with the causes of action they asserted against Ford in the original lawsuit. The Archers also requested that the trial court sanction Ford under Rule 13 of the Texas Rules of Civil Procedure for filing a frivolous pleading in which Ford asserted claims for contribution and indemnity against Cohen's parents, who were not in the car when the accident occurred, and Cohen's minor daughter. The Archers also sought sanctions based on Ford's alleged violation of the Dallas Civil District Court Rules requiring a party seeking a temporary restraining order to first attempt to contact opposing counsel. Before any hearing on this motion for sanctions, the temporary restraining order expired, and Ford voluntarily dismissed its temporary restraining In March 1996, the Archers filed another motion for sanctions, claiming, among other things, that Ford had obtained the claim file from State Farm through improper means. The trial court conducted a hearing on the Archers' March 1996 motion for sanctions over the course of three separate days during April and July 1996. On August 2, 1996, the trial court signed an order finding that Ford had abused the discovery process. Specifically, the trial court found that Ford had: (1) purchased the Kent report and obtained Archer's State Farm file through improper means; (2) violated a Rule 11 agreement abating discovery; (3) violated a timely filed motion to quash; (4) improperly obtained an ex parte restraining order; and (5) made frivolous allegations for contribution and indemnity against Tiner and Cohen's parents. As sanctions, the trial court ordered that: (1) Ford pay to the Archers $10,000,000 within ten days; (2) the State Farm claim file, including the Kent report and any direct or indirect reference thereto by Ford or its experts, be excluded from evidence at trial; and (3) Ford pay the Archers' attorney's fees of $25,000, plus an additional $25,000 in attorney's fees if Ford sought mandamus review of the sanctions order.

                order petition.  At the hearing on this motion for sanctions on February 23, 1996, the parties signed a Rule 11 agreement settling "all claims for sanctions or other relief ... regarding the alleged improperly obtaining the temporary restraining order and petition."   Also at this hearing, Judge Tyson notified the parties that the underlying case transferred from Harrison County would be assigned to her court
                

The court of appeals granted Ford's petition for writ of mandamus in part, directing the trial court to vacate the $10,000,000 sanction, which the court found to be an "arbitrary fine" not authorized by Rule 215 of the Texas Rules of Civil Procedure. 943 S.W.2d 527. However, the court of appeals left undisturbed the remainder of the trial court's sanction order, concluding that the remaining sanctions could be remedied on appeal.

II

Mandamus is an extraordinary remedy, available only when a trial court clearly abuses its discretion and when there is no adequate remedy on appeal. Walker v. Packer, 827 S.W.2d 833, 840-44 (Tex.1992). We first determine whether the trial court abused its discretion in sanctioning Ford for abuse of the discovery process.

When a trial court finds that a party has abused the discovery process, Rule 215(3) authorizes a trial court to impose an appropriate sanction. TEX.R. CIV. P. 215(3). But, sanctions imposed under Rule 215 must be just under the circumstances. TEX.R. CIV. P. 215(2)(b); TransAmerican Natural Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex.1991). When determining whether the sanctions a trial court imposes are just, we consider two factors. First, we consider whether there is a direct relationship between the offensive conduct and the sanctions. TransAmerican, 811 S.W.2d at 917. This analysis necessarily requires determining whether the underlying conduct actually constitutes an abuse of the discovery process. Second, we consider whether the sanctions are excessive. Id. Because the record does not support the trial court's...