GTE Communications Systems Corp. v. Tanner
| Decision Date | 30 June 1993 |
| Docket Number | No. D-3089,D-3089 |
| Citation | 856 S.W.2d 725 |
| Parties | GTE COMMUNICATIONS SYSTEMS CORPORATION, Relator, v. The Honorable Martha TANNER, Judge, Respondent. |
| Court | Texas Supreme Court |
In this original mandamus proceeding, relator GTE Communication Systems Corporation, a defendant in pending litigation, seeks review of sanctions imposed against it by the respondent district court. The district court concluded that four of GCSC's amended answers, its motion for summary judgment, and two affidavits in support of the motion were groundless and filed in bad faith, in violation of Rule 13, TEX.R.CIV.P. The district court also concluded that GCSC failed to produce a certain document in response to a discovery request, in violation of Rule 215, TEX.R.CIV.P. As sanctions, the district court struck GCSC's pleadings and ordered it to pay plaintiffs $150,000 in attorney fees. We granted leave to file application for writ of mandamus to review these rulings. For reasons that follow, we conditionally grant the writ.
The litigation pending in the district court arises out of the following circumstances. Rene Duran and Jesse Ramirez, Jr. were riding bicycles along the sidewalk outside a grocery store when Duran struck a sharp-edged metal cable which had been stretched across the sidewalk at the level of his neck. Duran was nearly decapitated by the cable and died of his injuries. At the shock of this accident, Ramirez fell from his bicycle and sustained injuries. The cable, which was several feet long, had been made by unwinding the 18"' flexible sheath that protected the cord of electric wires connecting a telephone handset to the body of a pay telephone mounted on the wall outside the grocery store. Police investigating Duran's death obtained information that a young man, the grandson of the proprietor of the grocery store, had stretched the cable across the sidewalk as a prank. Before the young man could be arrested and charged with murder, he committed suicide.
Duran's estate and survivors, along with Ramirez and his next friends, filed suit claiming that the telephone was unreasonably dangerous as designed, manufactured and distributed, because the metal sheath covering the telephone handset cord could easily be disassembled and stretched into a cable. In their original petition, plaintiffs alleged that defendant ATS Pay Phone Supply, Inc., had manufactured the telephone, and did not name GTE Communication Systems Corporation as a defendant. Subsequently, plaintiffs amended their petition to add GCSC as a defendant, alleging that it was the manufacturer of the telephone. In answer to plaintiffs' allegations, GCSC denied that it had designed, manufactured, marketed, sold or distributed the sheathed cord.
After some discovery had been conducted, GCSC moved for summary judgment on several grounds, including: that it had not designed, manufactured, or marketed the sheathed cord that caused Duran's injuries; that the sheath was not defective; that if the sheath was unreasonably dangerous, it was solely because it had been altered; that the alteration of the sheathed cord which led to plaintiffs' injuries was unforeseeable; and that the criminal conduct involved in stretching the cable across the sidewalk was a new, independent, superseding or intervening cause of plaintiffs' injuries. The first of these grounds was supported by the affidavits of Robert Zimmerman, a long-time employee of GCSC, and Oscar Jiminez, an employee of General Cable Company, a manufacturer of telephone handset cables. Zimmerman's affidavit stated that in manufacturing telephone handsets GCSC had used only sheathed cords made by General Cable, and that if the sheath that injured Duran was not General Cable's, then the handset was not GCSC's. Jiminez' affidavit stated that he had examined the remnants of the sheath that injured Duran and found six distinct differences between those remnants and sheaths manufactured by General Cable. Thus, Jiminez concluded that General Cable had not designed, assembled or distributed the cord involved in the accident.
In response to GCSC's motion for summary judgment, plaintiffs asserted that the identity of the manufacturer of the cord had not been established but was much in dispute. Plaintiffs argued that even if GCSC had not made the cord, it had certainly made the telephone, and that the telephone was defective because the cord was part of it. The trial court denied summary judgment without indicating a specific reason.
Several months later, plaintiffs filed a motion for sanctions requesting that the district court strike GCSC's pleadings and award plaintiffs $150,000 in attorney fees. This motion complained that GCSC's assertions that it was not involved in making and distributing the sheathed cord which injured the plaintiffs had been interposed in bad faith and with knowledge that the assertions were false. The motion also complained that GCSC had failed to produce unspecified documents (actually, as it later developed, a single document) which showed that it knew of the dangers inherent in the cord and could have foreseen the type of accident in which plaintiffs were injured. The motion requested sanctions for discovery abuse and under Rule 13, TEX.R.CIV.P. After an evidentiary hearing the district court granted plaintiffs' motion without indicating the reasons for its ruling.
GCSC petitioned the court of appeals for a writ of mandamus directing the district court to vacate its order. The appeals court conditionally granted its writ, holding that the order did not state "the particulars" of good cause warranting the imposition of sanctions, as required by Rule 13. GTE Communication Systems Corp. v. Curry, 819 S.W.2d 652, 653 (Tex.App.--San Antonio 1991, orig. proc.). Immediately after the court of appeals issued its opinion, the district court vacated its original order and, without notice to GCSC, signed a new order prepared by plaintiffs, setting out in 24 paragraphs three reasons for sanctioning GCSC by dismissing its pleadings and assessing $150,000 attorney fees against it.
One reason the district court gave for imposing sanctions was that GCSC had abused the discovery process by failing to produce a certain memorandum prepared by employees of a corporation, GTE of Florida, Inc., for circulation to several departments within that corporation. GTFL, as it is referred to, and GCSC are separate corporations. It is unclear from the record before us how or even whether they are related. The relevant portion of the memorandum states: Plaintiffs obtained this memo from another party in the litigation. To show that GCSC was aware of the memo and had failed to produce it, plaintiffs offered as their only evidence the testimony of Charles James, president of ATS, the corporation plaintiffs once alleged was the manufacturer of the sheath. James stated that, based upon his experience in the pay telephone industry, it was "totally inconceivable" that GCSC did not have the memo, and GCSC could compel its production from GTFL because the two corporations were affiliated. The district court "credited" James' testimony and "discredited" GCSC's evidence that it was unaware of the memo and that it had no control over GTFL to compel that entity to produce the memo. James also admitted, however, that he had never worked for GCSC or GTFL and did not actually know whether GCSC had ever been in possession of the GTFL memo.
A second reason the district court gave for imposing sanctions was that GCSC had acted in bad faith in asserting in its summary judgment motion that, as a matter of law, plaintiffs' accident was unforeseeable. The court assumed that GCSC knew of the GTFL memo when it filed its motion for summary judgment, and therefore knew of the problems with the sheathed cord. Possessed of this knowledge, the court reasoned, GCSC's assertion that plaintiffs' accident was unforeseeable as a matter of law was groundless and could only have been made in bad faith. Based upon this analysis, the district court concluded that GCSC's summary judgment motion violated Rule 13.
The district court also concluded, as its third reason for sanctions, that GCSC's amended answers, motion for summary judgment and supporting affidavits in which it denied that it had manufactured the sheathed cord were groundless and brought in bad faith, in violation of Rule 13. The court based this conclusion upon the testimony of two experts, one of whom was James. Plaintiffs first developed this testimony after GCSC's motion for summary judgment was denied and offered it at the hearing on the motion for sanctions. Both witnesses testified that they had concluded from examining the sheath that GCSC had manufactured it. At the hearing, GCSC introduced the affidavits that it had filed in support of its motion for summary judgment, in addition to other evidence that it had not manufactured the sheath.
GCSC again sought a writ of mandamus from the court of appeals, but this time the court denied leave to file the petition. GCSC then moved for leave to file its petition in this Court, which we granted. 36 TEX.SUP.CT.J. 686 (April 3, 1993).
We first consider whether the district court abused its discretion in sanctioning GCSC for abuse of the discovery process under Rule 215, TEX.R.CIV.P. To answer this question we must answer two others: did the district court properly find that GCSC had "possession, custody or control" of the GTFL memo within the meaning of Rule 166b(2)(b), TEX.R.CIV.P., such that GCSC...
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