Hill v. Tevogt
| Decision Date | 22 April 2016 |
| Docket Number | No. S–15–311.,S–15–311. |
| Citation | 293 Neb. 429,879 N.W.2d 369 |
| Parties | Jody A. Hill and Dean Owen Thorsen, Appellees, v. Mark Tevogt, Appellant. |
| Court | Nebraska Supreme Court |
James D. Sherrets and Jared C. Olson, of Sherrets, Bruno & Vogt, L.L.C., Omaha, for appellant.
Brian J. Muench, Omaha, for appellees.
Heavican, C.J., Wright, Connolly, Miller–Lerman, Cassel, Stacy, and Kelch, JJ.
In 2012, Mark Tevogt purchased the interests of Jody A. Hill and Dean Owen Thorsen in a business formed as JGP, LLC. Tevogt financed the purchase by executing a promissory note under which Hill and Thorsen are the payees. Tevogt soon defaulted, and Hill and Thorsen (collectively the plaintiffs) sued him for damages under the promissory note. Tevogt alleged in his answer that the plaintiffs had made misrepresentations and committed fraud. The court overruled the plaintiffs' first motion for summary judgment because of statements Tevogt made in his affidavit about the plaintiffs' failure to inform him of business debts.
The plaintiffs moved for summary judgment again after Tevogt twice failed to attend his deposition. At a hearing on the motion, the plaintiffs asked the court to sanction Tevogt because he had not given them an opportunity to depose him about the statements in his affidavit. The court sanctioned Tevogt by excluding the statements Tevogt made in his affidavit, and ultimately entered summary judgment for the plaintiffs. Tevogt appeals and argues that the court imposed an unduly harsh discovery sanction. We conclude that the severity of the sanction was an abuse of discretion. We therefore reverse the summary judgment and remand the cause for further proceedings.
In 2013, the plaintiffs sued Tevogt, alleging that he had defaulted on a promissory note payable to them. The plaintiffs claimed that the unpaid principal was about $120,000. They asked the court to award them damages for the unpaid principal, with interest accruing from the date of default.
Tevogt listed 12 affirmative defenses in his answer, including “fraud and/or fraud in the inducement.” He also included a “Counterclaim” which set out four causes of action: fraudulent misrepresentation, negligent misrepresentation, fraudulent concealment, and breach of contract. He alleged that the plaintiffs had misrepresented or concealed the financial status of JGP.
The plaintiffs moved for summary judgment and offered an affidavit that Hill signed in February 2014. Hill averred that Tevogt had defaulted on a promissory note with an unpaid principal of about $120,000 and a default interest rate of 6 percent per year. Hill stated that she and Thorsen did not misrepresent JGP's finances or withhold information from Tevogt. She acknowledged that “there was $65,000.00 due” to an underwriter, but stated that JGP's manager told Tevogt about the shortfall.
Tevogt offered his own affidavit. He claimed that the plaintiffs told him that “all bills/expenses/accounts were current.” He alleged that after he executed the promissory note, he learned that the “account used for holding premiums collected to be paid to the insurer/underwriter” was “approximately $60,000.00 short.” Tevogt further stated that the plaintiffs gave JGP's employees large raises and failed to pay income taxes, which he learned “at the 11th hour before the closing.”
The court overruled the plaintiffs' motion for summary judgment. It stated that Tevogt's allegation in his affidavit that the plaintiffs failed to pay income taxes did not create a genuine issue of material fact, because Tevogt knew about the problem before he signed the promissory note. The court was also not impressed by Tevogt's allegation that the plaintiffs gave JGP's employees large raises, because it reasoned that Tevogt could simply reverse the raises. But the court concluded that Tevogt's statements about a shortfall in the underwriting account created a genuine issue of material fact preventing a summary judgment.
In February 2015, the plaintiffs again moved for summary judgment. They claimed that they had “attempted twice to take [Tevogt's] deposition and [Tevogt] twice failed to appear for said deposition.”
At the hearing on their motion, the plaintiffs offered an affidavit signed by Hill in February 2015. The affidavit was largely the same as Hill's February 2014 affidavit, but it included more details about Tevogt's relationship with JGP's business manager. Hill stated that Tevogt learned of the underwriting account shortfall before he executed the promissory note.
The court also received a notice that the plaintiffs sent to Tevogt stating that they intended to depose him on November 4, 2014. The plaintiffs' attorney signed the notice and mailed it to Tevogt's attorney on October 24.
The November 4, 2014, deposition shows that Tevogt's attorney was present, but not Tevogt himself. The plaintiffs' attorney said that the plaintiffs had tried to contact Tevogt's attorney twice before mailing the notice on October 24. On October 29, the plaintiffs' attorney received a postal notification that the notice of deposition sent to Tevogt's attorney had been forwarded to another address. On November 3, Tevogt's attorney left a message for the plaintiffs' attorney stating that Tevogt was “ ‘out of the country all week.’ ” Tevogt's attorney claimed that he had tried to reschedule.
On December 11, 2014, the plaintiffs tried to depose Tevogt again. Their attorney mailed a notice of deposition to Tevogt's attorney on December 1. Neither Tevogt nor his attorney arrived at the scheduled location.
In the plaintiffs' attorney's affidavit, he stated that Tevogt's attorney had been unresponsive. The plaintiffs' attorney claimed that he had asked Tevogt's attorney for dates when Tevogt would be available after November 4, 2014, but that Tevogt's attorney did not answer.
At the summary judgment hearing, the plaintiffs asked the court to sanction Tevogt:
[W]e're asking the Court that, based upon our inability to question ... Tevogt on his—the allegations in his affidavit and the affirmative defense that he raised and that the Court has found previously that there's a factual dispute regarding, that he not be allowed to testify or to offer evidence as to that alleged lack of knowledge, because he hasn't showed up twice for a deposition. I mean, we're trying to cross-examine him as to what he knew and when he knew it.
Tevogt's attorney said that Tevogt was “out of town” for the first deposition. Tevogt's attorney said that when he tried to reschedule, the plaintiffs' attorney “[b]asically said no.” As for the second deposition, Tevogt's attorney said he never received the notice. Tevogt's attorney suggested that the court continue the trial so the plaintiffs could depose Tevogt. He promised to “make sure that [Tevogt is] there for it.” The plaintiffs' attorney responded that the address of Tevogt's attorney was hard to pin down and that his “trial calendar for the next three weeks is just loaded.”
On March 5, 2015, the court entered an order sanctioning Tevogt by excluding the statements in his affidavit that the plaintiffs had misrepresented the financial status of JGP and did not disclose that JPG's “underwriting account was short $60,000.00.” A week later, the court entered a summary judgment for the plaintiffs and dismissed Tevogt's “Counterclaim.”
Tevogt assigns, restated, that the court erred by (1) sanctioning him for his failure to attend his depositions and (2) sustaining the plaintiffs' second motion for summary judgment.
The determination of an appropriate discovery sanction rests within the discretion of the trial court, and an appellate court will not disturb it absent an abuse of discretion.1 A judicial abuse of discretion exists when the reasons or rulings of a trial judge are clearly untenable, unfairly depriving a litigant of a substantial right and denying just results in matters submitted for disposition.2
Tevogt argues that the court abused its discretion by sanctioning him for his failure to attend two depositions. The parties agree that the court sanctioned Tevogt by excluding the statements in his affidavit that the plaintiffs misrepresented the financial status of JGP and did not disclose an approximately $60,000 shortfall in the underwriting account. This was the only evidence offered by Tevogt to support his affirmative defense of fraud and his counterclaims.
The main purpose of the discovery process is to narrow the factual issues in controversy so that the trial is efficient and economical.3 The discovery process helps the litigants conduct an informed cross-examination and avoid tactical surprise, a circumstance which might lead to a result based more on legal maneuvering than on the merits of the case.4
If the parties fall short of their discovery obligations, Neb. Ct. R. Disc. § 6–337 (rule 37) allows the court to sanction them. In relevant part, rule 37 states:
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