Garcia Distributing, Inc. v. Fedders Air Conditioning, U.S.A., Inc., 04-88-00430-CV

• Decision Date: 19 July 1989
• Docket Number: No. 04-88-00430-CV,04-88-00430-CV
• Citation: 773 S.W.2d 802
• Parties: GARCIA DISTRIBUTING, INC., and Eddie Garcia, Individually, Appellants, v. FEDDERS AIR CONDITIONING, USA, INC., d/b/a Fedders USA and Fedders Corporation, Appellees.
• Court: Texas Court of Appeals

Page 802

773 S.W.2d 802

GARCIA DISTRIBUTING, INC., and Eddie Garcia, Individually, Appellants, v. FEDDERS AIR CONDITIONING, USA, INC., d/b/a Fedders USA and Fedders Corporation, Appellees.

No. 04-88-00430-CV.

Court of Appeals of Texas San Antonio.

July 19, 1989.

James William Blagg, Edward N. Daneri, San Antonio, for appellants.

Sharon E. Callaway, San Antonio, for appellees.

Before BUTTS, REEVES and BISSETT, ¹ JJ.

OPINION

BISSETT, Justice (Assigned).

The question to be resolved in this appeal is whether the trial court abused its discretion in striking Garcia Distributing, Inc.'s and Eddie Garcia's claims for fraud and for actual damages because of discovery abuse. We answer the question in the negative.

The appellants Garcia Distributing, Inc. and Eddie Garcia, in their brief, offered this Court approximately thirteen pages of factual statements (thirteen references to be exact, several of which refer to the identical page and volume of the transcript or the statement of facts, as the case may be). Some of the factual statements do not have any basis in the record, such as the conversations between the attorneys for the parties; some are immaterial to the instant appeal in that no evidence was presented to the trial court of the distributorship dealings between the parties to this lawsuit. They are mere statements with no relevance to the discovery sanction asserted as error in this appeal. This Court will not expend its time searching through a 758-page transcript and a 3-volume statement of facts to determine if such factual statements have any foundation in the record. On the other hand, the brief of Fedders Air Conditioning, USA, Inc., d/b/a Fedders USA and Fedders Corporation, appellees is adequately and properly referenced. We, therefore look to the statements made in that brief in setting out the nature, factual background and procedural history of the case.

In the interest of clarity, the parties will hereafter be referred to as "Fedders" (including both Fedders USA and Fedders Corporation) and "Garcia" (including both Eddie Garcia, Individually, and Garcia Distributing, Inc.) except where a distinction is necessary.

In February of 1987, Fedders sued Garcia Distributing, Inc. for payment on an open account and breach of contract, and Eddie Garcia, Individually, for enforcement of a personal guarantee. Attorney fees were sought against both Eddie Garcia and Garcia Distributing. In July of 1987, Fedders also sued Thousand Oaks National Bank for a breach of a letter of credit issued in behalf of Garcia Distributing, Inc. In August of 1987, Thousand Oaks counterclaimed against Fedders and filed a cross-action against Garcia. It amended its answer to include counterclaims against Fedders for breach of contract, fraud, interference with contractual relations, and wrongful termination of a distributorship agreement. The two cases were consolidated in February of 1988. On April 4, 1988, Fedders and Thousand Oaks dismissed their causes of action against one another, and Fedders nonsuited its causes of action against Garcia. That left pending Thousand Oaks' cross-action against Garcia and Garcia's counterclaims against Fedders.

Judge Peeples, by order signed on June 3, 1988, granted Fedders' second motion for sanctions and struck the claims of fraud prior to the distributorship agreement asserted by Garcia in their counterclaims against Fedders with prejudice to refiling of same, and further struck Garcia Distributing, Inc.'s claim for $750,000.00 as damages against Fedders with prejudice to refiling same.

Subsequent to the rendition of the sanctions order of June 3, 1988, Garcia filed its fifth amended counterclaim (June 14, 1988) against Fedders. It alleged breach of contract, negligence, breach of duty of good faith and fair dealing, tortious interference with contract, violations of the Deceptive Trade Practices-Consumer Protection Act and the Business Opportunity Act, and the usury claim.

The case was called for trial before Judge Peter Michael Curry on June 27, 1988. Fedders announced ready and Garcia's attorneys described Judge Peeples' discovery sanction order to Judge Curry, asking that the trial court render judgment dismissing the case with prejudice for discovery abuse so that they could appeal Judge Peeples' order. The attorneys for Garcia argued that it was useless for them to go to trial on their claims when they could not win any damages because under the dismissal order they could not present any evidence of damages on any claim for fraud "that we had."

The attorney for Fedders announced to the trial court: "We are ready to hear what relief they (Garcia) are seeking from the court," and that Garcia had pled several causes of action other than fraud in their fifth amended counterclaim.

The trial court then announced:

... he (Fedders) has announced ready; you (Garcia) have announced ready; you (Garcia) put on no evidence. I grant judgment for Fedders ...

A take-nothing judgment in favor of Fedders was signed by Judge Curry on June 30, 1988. This appeal ensued.

Two points of error are brought forward. Garcia contends in its first point:

The trial court abused its discretion in dismissing with prejudice because the appellants did not act in bad faith and did not engage in a long course of conduct of discovery abuse and that no harm resulted to the appellees from appellant's conduct.

Garcia asserts in its second point:

The trial court erred in allowing such severe sanction since proper notice was not afforded by the contemplated sanctions to be sought.

On June 27, 1988, only Garcia's counterclaims against Fedders remained to be tried because of the settlements of Thousand Oaks with Fedders and with Garcia and the nonsuiting of Fedders' claims against Garcia. The record shows that Garcia did not present any evidence when the case was called for trial by Judge Curry.

We now review the controlling discovery history of this case by setting out the following chronology of events:

3-11-88--Fedders served "Notice Duces Tecum of Intention to take oral depositions of Eddie Garcia and Garcia Distributing, Inc.," with specific lists of 35 categories of documents to bring with them at the taking of the deposition, and to designate at that time "persons knowledgeable and competent to testify regarding" the 35 categories.

3-24-88--An agreed order was signed by Judge Curry whereby Eddie Garcia and Garcia Distributing, Inc. were ordered to amend their Counterclaims by "stating all specific items of special damages and the maximum amount of these special damages; and stating the maximum amount of actual damages and punitive damages sought."

3-30-88--Fedders filed a motion to strike Garcia's Counterclaims for failure to amend its pleadings in accordance with the agreed order of 3-24-88, and for Garcia's giving incomplete answers and failing to list assets in response to Fedders' First Set of Interrogatories; for failure to produce income tax returns, books, and ledgers in response to Request for Production; and for failure to bring requested documents to Eddie Garcia's deposition in response to duces tecum notices both for Eddie Garcia and Garcia Distributing, Inc.

3-30-88--Garcia filed its Fourth Amended Answer and Counterclaim in an effort to comply with the Order of 3-24-88, which ordered Garcia to file its amended pleadings by the "close of business on March 28, 1988."

3-30-88--Garcia, by letter, advised Fedders that neither Mario Sanchez nor Henry Garcia will agree to appear for deposition even though Garcia, upon deposition, maintained that he did not know or have access to the financial information supporting damages, but that his accountant Sanchez did.

4-7-88--Fedders filed a motion to quash three deposition notices because Garcia had served supplemental answers on 4-1-88 naming 18 previously undisclosed persons with knowledge of relevant facts and was now trying to take depositions of 3 of those persons on 4-8-88 even though case was specially set for trial for 4-11-88 by agreement.

4-18-88--Fedders filed its second motion for sanctions. It recited that it sent its second set of interrogatories to Garcia on 4-12-88, which were received by Garcia on 4-12-88; Garcia's responses were due on 5-12-88 and the requested documents were to be produced on 5-13-88; on 4-15-88, Garcia received Fedders second request for production of documents, and its responses were due by 5-16-88; Garcia had not filed any responses to either the interrogatories or the request for production of documents by May 18, 1988, at 4:18 p.m., when the second motion for sanctions was filed.

4-18-88--Fedders' second motion for sanctions was set for hearing at 8:30 a.m. on 5-23-88.

5-19-88--Garcia's responses to Fedders' second set of interrogatories and request for production of documents were delivered to Fedders.

5-20-88--Garcia's supplementary responses to Fedders' second set of interrogatories were delivered to Fedders.

Eddie Garcia testified at the hearing on Fedders' second motion for sanctions, which was held on May 23, 1988. He told the court on direct-examination: 1) he received the second set of interrogatories and request for production of documents about April 25 or 26 (1988), and he supplied his attorney with his answers and responses about May 17 or 18; 2) he had problems getting the information together because his secretary had been sick and had been out of his office for "the last four weeks"; 3) he was "never showed how to do the documents"; 4) he was "never showed how to do the credit memos"; and 5) prior to entering into the distributorship agreement with Fedders, he had a credit line of $300,000.00 and "when all this happened it ruined my relationship with the bank and damaged my credit totally." On cross-examination, Eddie Garcia was most evasive in his answers to questions propounded to him by the attorney for Fedders; most of his answers, in essence, amounted to excuses...