Henry v. Low

• Decision Date: 01 April 2004
• Docket Number: No. 13-02-440-CV.,13-02-440-CV.
• Parties: Thomas J. HENRY and the Law Offices of Thomas J. Henry, Appellants, v. Robert LOW, D.O., and Stephen Smith, M.D., Appellees.
• Court: Texas Court of Appeals

132 S.W.3d 180

Thomas J. HENRY and the Law Offices of Thomas J. Henry, Appellants, v. Robert LOW, D.O., and Stephen Smith, M.D., Appellees.

No. 13-02-440-CV.

Court of Appeals of Texas, Corpus Christi-Edinburg.

April 1, 2004.

Paul D. Andrews, Corpus Christi, for appellants.

Brian C. Miller, Carlos Villarreal, Hermansen, McKibben, Woolsey & Villarreal, Corpus Christi, for appellees.

Before the court en banc.

OPINION

Opinion by Justice WITTIG.¹

This is an attorney sanction case arising out of a products liability and medical malpractice lawsuit. The underlying suit involved the death of Henry White, alleged to have been caused by the drug Propulsid and the related medical treatment. Thomas J. Henry and the Law Office of Thomas J. Henry ("Henry"), appellants, were attorneys for the widow, Joyce White, and the estate of Henry White. Henry appeals an order granting $50,000 in sanctions sought by two of the multiple defendants in the underlying cause, Robert Low, D.O., and Stephen Smith, M.D. (the "Doctors"), appellees. Henry contends that the trial court abused its discretion both by granting sanctions and in the amount of the sanctions it imposed. We reverse and render.

I. PROCEDURAL BACKGROUND

Henry filed suit on behalf of the widow and the estate of White against Johnson and Johnson, Inc., Janssen Pharmaceutica and related companies, Coastal Bend Hospital, Inc., a nurse, and eight physicians, including the Doctors, on January 31, 2002. Contemporaneously, Henry filed a motion to withdraw, stating he had a conflict of interest. The suit was filed five days before the statute of limitations ran. The trial court signed an order granting the motion to withdraw on May 6, 2002. The Doctors answered and filed motions for sanctions pursuant to rule 13² of the rules of civil procedure and chapters 9³ and 10⁴ of the civil practice and remedies code, seeking, among other relief, payment by Henry of a monetary penalty into the court. The plaintiffs filed a pro se notice of nonsuit on June 10, 2002. On July 2, 2002, the trial court signed an order of nonsuit.⁵ The sanctions proceedings continued.

After notice to the parties, the trial court held a hearing on July 30, 2002 based on the two sanction motions filed by the Doctors. Henry appeared at the hearing by counsel only. The trial court took judicial notice of the pleadings and other papers in the file. The Doctors testified that they did not prescribe or administer the drug Propulsid to the deceased. Over multiple objections, two other doctors testified that Henry had asserted claims against them that had no reasonable basis or that he asserted virtually identical claims. On July 31, 2002, the trial court signed an order granting the Doctors' motions for sanctions and ordered payment by Henry of $50,000 into the registry of the court. The fine consisted of $25,000 for each of the Doctors' motions. On August 2, 2002, the trial court signed findings of fact and conclusions of law regarding its imposition of sanctions as well as a revised order incorporating its findings and conclusions. Henry filed post-sanction motions to modify, vacate, or reform the order and a motion for new trial. The trial court heard Henry's post-sanction motions on October 15, 2002. Henry appeared and testified during the hearing. The trial court denied the motions. This appeal ensued.

II. JURISDICTION

The Doctors filed their sanction motions before the plaintiffs nonsuited their claims. Thus, the trial court had continuing jurisdiction to hear and determine the sanction motions after the nonsuit. TEX.R. CIV. P. 162; In re Bennett, 960 S.W.2d 35, 38 (Tex.1997).

III. STANDARDS

A. Presumptions and Burdens of Proof in Sanctions Motions

Generally, courts presume that pleadings and other papers are filed in good faith. GTE Communications Sys. Corp. v. Tanner, 856 S.W.2d 725, 730 (Tex. 1993) (orig.proceeding).⁶ In determining if sanctions are proper, the trial court must examine the circumstances existing when the litigant filed the pleading. Home Owners Funding Corp. of Am. v. Scheppler, 815 S.W.2d 884, 889 (Tex.App.-Corpus Christi 1991, no writ) (applying presumption of good faith to rule 13 sanction). The trial court considers the acts or omissions of the represented party or counsel, not merely the legal merit of a pleading or motion. Griffin Indus. v. Grimes, No. 04-02-00430-CV, 2003 WL 1911993, * 4, (San Antonio Apr. 23, 2003, no pet.); N.Y. Underwriters Ins. Co. v. State Farm Mut. Auto. Ins. Co., 856 S.W.2d 194, 205 (Tex. App.-Dallas 1993, no writ). The party seeking sanctions bears the burden of overcoming the presumption of good faith in the filing of pleadings. Tanner, 856 S.W.2d at 731.

B. Standard of Review

A trial court's imposition of sanctions is reviewed under an abuse of discretion standard. In re Bennett, 960 S.W.2d at 40; Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 853 (Tex.1992); Koslow's v. Mackie, 796 S.W.2d 700, 704 (Tex.1990); Rudisell v. Paquette, 89 S.W.3d 233, 236 (Tex.App.-Corpus Christi 2002, no pet.). Under an abuse of discretion standard, the appellate court reviews the entire record to determine if the trial court acted arbitrarily and unreasonably and thus abused its discretion. IKB Indus. (Nigeria) Ltd. v. Pro-Line Corp., 938 S.W.2d 440, 444 (Tex.1997). We may not substitute our judgment for that of the trial court. Davis v. Huey, 571 S.W.2d 859, 862 (Tex.1978). The test for determining whether the trial court abused its discretion is whether it acted without reference to any guiding rules and principles to the extent the act was arbitrary or unreasonable. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.1985); Alejandro v. Bell, 84 S.W.3d 383, 392 (Tex.App.-Corpus Christi 2002, no pet.). A trial court abuses its discretion in imposing sanctions if it bases its order on an incorrect view of the law or an erroneous assessment of the evidence. Randolph v. Jackson Walker, L.L.P., 29 S.W.3d 271, 276 (Tex.App.-Houston [14th Dist.] 2000, pet. denied).

IV. ANALYSIS

The Trial Court's Discretion to Sanction under Chapter 10

Henry's first issue asserts that the trial court abused its discretion in imposing sanctions. More specifically, Henry argues: (1) chapter 10's stringent requirements do not apply to alternative pleadings; (2) that the trial court should not have based its decision solely on one allegation when alternatives existed; (3) that the trial court should have allowed evidence of alternative complaints; (4) there was no evidence of Henry's intent; (5) the trial court erred in basing sanctions on other grounds not pled; (6) the trial court erred in basing chapter 10 sanctions on findings under rule 13 and chapter 9; and (7) the trial court erred by failing to comply with the findings requirements of chapter 10. We will only address Henry's sub issues one, two, five, and seven. See Tex.R.App. P. 47.1.

The trial court in its order for sanctions stated that sanctions were warranted "pursuant to § 10.004(b)."⁷ The order also recited that the sanction of $25,000 per sanction motion should be paid "as a penalty into the Court pursuant to § 10.004(c)(2)."⁸ The order invokes only chapter 10 when ordering sanctions and orders those sanctions paid into the court, a remedy available only under chapter 10. See Sterling v. Alexander, 99 S.W.3d 793, 799-800 (Tex.App.-Houston [14th Dist.] 2003, no pet.). When an order of sanctions refers to one specific rule, either by citing the rule, tracking its language or both, we are confined to determining whether sanctions are appropriate under that particular rule. Finlay v. Olive, 77 S.W.3d 520, 524 (Tex.App.-Houston [1st. Dist.] 2002, no pet.). Thus, we review the order for abuse of discretion only under chapter 10 and not under rule 13 of the rules of civil procedure or chapter 9 of the civil practice and remedies code.

Section 10.001 of chapter 10 provides:

The signing of a pleading or motion as required by the Texas Rules of Civil Procedure constitutes a certificate by the signatory that to the signatory's best knowledge, information, and belief, formed after reasonable inquiry:

(1) the pleading or motion is not being presented for any improper purpose, including to harass or to cause unnecessary delay or needless increase in the cost of litigation;

(2) each claim, defense, or other legal contention in the pleading or motion is warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law;

(3) each allegation or other factual contention in the pleading or motion has evidentiary support or, for a specifically identified allegation or factual contention, is likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and

(4) each denial in the pleading or motion of a factual contention is warranted on the evidence or, for a specifically identified denial, is reasonably based on a lack of information or belief.

TEX. CIV. PRAC. & REM.CODE ANN. § 10.001 (Vernon 2002). A court may punish violations of chapter 10 by imposing sanctions on the "person, [the] party represented by the person, or both" who "has signed [the] pleading or motion in violation of Section 10.001." Tex. Civ. Prac. & Rem.Code Ann. § 10.004(a) (Vernon 2002).

In his first two sub-issues, Henry complains the trial court abused its discretion in concluding that sanctions lie for a pleading that asserts alternative claims even though there is no identification of the particular defendants to which each claim applies. The trial court should not sanction for an alternative pleading while ignoring other applicable alternatives. In the petition he drafted and signed, multiple allegations were made against four drug manufacturers, a hospital, a nurse, and eight physicians. Under strict liability, the petition alleged ten claims against the drug manufacturers. Twenty-five negligence allegations were also made...