In re Jacobs

• Decision Date: 20 October 2009
• Docket Number: No. 14-09-00123-CV.,14-09-00123-CV.
• Citation: 300 S.W.3d 35
• Parties: In re Mark A. JACOBS, M.D., Debra C. Gunn, M.D., and Obstetrical and Gynecologist Associates, P.A., Relators.
• Court: Texas Court of Appeals

300 S.W.3d 35

In re Mark A. JACOBS, M.D., Debra C. Gunn, M.D., and Obstetrical and Gynecologist Associates, P.A., Relators.

No. 14-09-00123-CV.

Court of Appeals of Texas, Houston (14th Dist.).

October 20, 2009.

Diana L. Faust, Richard C. Harrist, Ronda M. Blackwell, Dallas, TX, Barbara Hilburn, Elizabeth A. Kaufman, Houston, TX, for Relators.

Alexander Klein, III, Joseph Todd Trombley, Houston, TX, for Real Party in Interest.

Panel consists of Justices BROWN, BOYCE, and SULLIVAN.

MAJORITY OPINION

JEFFREY V. BROWN, Justice.

In this original proceeding, the relators, Mark A. Jacobs, M.D., Debra C. Gunn, M.D., and Obstetrical and Gynecologist Associates, P.A., seek a writ of mandamus ordering the Honorable Mike Wood, presiding judge of Probate Court No. 2 of Harris County, to set aside his two orders of January 23, 2009 — one compelling the deposition of Dr. Jacobs and one compelling net-worth discovery for the past two years — and his order of January 30, 2009, clarifying the two January 23 orders. We conditionally grant the petition in part and deny it in part.

I

Real parties in interest, Andre McCoy, Individually and as Permanent Guardian of Shannon Miles McCoy, an Incapacitated Person (the "McCoys"), have sued the relators and others¹ for negligence and gross negligence in providing medical care and treatment to Shannon while she was an obstetrical patient at Woman's Hospital of Texas from September 13, 2004 to September 14, 2004. On November 16, 2007, the McCoys served the relators with requests for discovery of net-worth information. When the relators objected to the requests for production, the McCoys filed a motion to compel discovery.

On January 23, 2009, the trial court held a hearing and signed an order directing the McCoys to amend their pleadings to provide more specific allegations of gross negligence against the relators following the completion of the depositions of Dr. Jacobs and Dr. Gunn. Subject to the filing of a sufficient pleading as to gross negligence, the trial court further ordered the relators to produce "the actual financial statements they have provided to a lender within the past two (2) years that identifies the assets and liabilities of each Defendant." Alternatively, if the relators had not submitted any such financial statement to a lender within the two years preceding the date of the order, the court ordered each relator to:

(i) Produce an affidavit swearing that no such financial statement has actually been submitted to a lender in the past two (2) years; and

(ii) Produce an affidavit under oath in the format of what would have been provided to a lender as to net worth.

The order directed that the relators produce such net-worth information no later than thirty days after the McCoys sufficiently pleaded gross negligence. In the order, Judge Wood also prohibited the McCoys from seeking to compel any additional responses to their outstanding net-worth discovery requests, and announced that any net-worth information provided to the McCoys would be "safeguarded by a protective order." On January 23, Judge Wood signed another order granting the McCoys' motion to compel the deposition of Dr. Jacobs, and directed that the deposition may not exceed three hours on the record.

On January 26, the relators filed a motion to clarify the order regarding the discoverability of net worth. The relators stated they did not understand when to produce the net-worth information to comply with the order and requested the trial court to so specify. Also, the relators requested a written order on what net-worth matters, if any, the McCoys would be allowed to cover during the depositions of Dr. Jacobs and Dr. Gunn.

On January 30, the trial court signed an order clarifying its prior orders regarding the discoverability of net-worth information. The trial court directed the relators to produce the information by February 6, 2009, and ruled that the McCoys would be permitted to depose Dr. Gunn and Dr. Jacobs about their net worth.

In their petition, the relators argue that the trial court abused its discretion with respect to the orders of January 23 and 30 by directing the relators to (1) produce net-worth information for the past two years in the form of actual financial statements they have provided to lenders; (2) create a net-worth document in the format of what would have been provided to a lender; and (3) present Dr. Jacobs and Dr. Gunn for deposition regarding their net worth without any temporal or subject-matter limitations. The relators further assert they have no adequate remedy by appeal because their rights to due process and privacy are in jeopardy of being permanently lost or compromised.

II

To be entitled to the extraordinary relief of a writ of mandamus, the relator must show that the trial court clearly abused its discretion and he has no adequate remedy by appeal. In re Team Rocket, L.P., 256 S.W.3d 257, 259 (Tex. 2008) (orig. proceeding). The party resisting discovery bears the heavy burden of establishing an abuse of discretion and an inadequate remedy by appeal. In re CSX Corp., 124 S.W.3d 149, 151 (Tex.2003) (orig. proceeding) (per curiam). A trial court abuses its discretion if it reaches a decision so arbitrary and unreasonable as to constitute a clear and prejudicial error of law, or if it clearly fails to correctly analyze or apply the law. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex.2005) (orig. proceeding) (per curiam); Walker v. Packer, 827 S.W.2d 833, 839 (Tex.1992) (orig. proceeding).

Whether a clear abuse of discretion can be adequately remedied by appeal depends on a careful analysis of costs and benefits of interlocutory review. In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 464 (Tex.2008) (orig. proceeding). Because this balance depends heavily on circumstances, it must be guided by analysis of principles rather than simple rules that treat cases as categories. Id. "Mandamus review of significant rulings in exceptional cases may be essential to preserve important substantive and procedural rights from impairment or loss, allow the appellate courts to give needed and helpful direction to the law that would otherwise prove elusive in appeals from final judgments, and spare private parties and the public the time and money utterly wasted enduring eventual reversal of improperly conducted proceedings." In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004) (orig. proceeding); see also In re Columbia Med. Ctr. of Las Colinas, Subsidiary, L.P., 290 S.W.3d 204, 207 (Tex. 2009) (orig. proceeding) ("Used selectively, mandamus can `correct clear errors in exceptional cases and afford appropriate guidance to the law without the disruption and burden of interlocutory appeal.'") (quoting In re Prudential, 148 S.W.3d at 138). Thus, in determining whether appeal is an adequate remedy, we consider whether the benefits of mandamus review outweigh the detriments. In re BP Prods. N. Am., Inc., 244 S.W.3d 840, 845 (Tex. 2008) (orig. proceeding). Appeal is not an adequate remedy when the appellate court would not be able to cure the trial court's discovery error. In re Dana Corp., 138 S.W.3d 298, 301 (Tex.2004) (per curiam) (orig. proceeding); In re Kuntz, 124 S.W.3d 179, 181 (Tex.2003) (orig. proceeding).

A

The relators assert the trial court abused its discretion by ordering them to produce their net-worth information to the McCoys. A defendant's net worth is relevant in a suit involving exemplary damages. Lunsford v. Morris, 746 S.W.2d 471, 473 (Tex.1988) (orig. proceeding), overruled on other grounds, Walker, 827 S.W.2d at 842; Miller v. O'Neill, 775 S.W.2d 56, 58 (Tex.App.-Houston [1st Dist.] 1989, orig. proceeding). Therefore, in cases where punitive or exemplary damages may be awarded, parties may discover and offer evidence of a defendant's net worth. Lunsford, 746 S.W.2d at 473. Generally, in cases concerning the production of financial records, the burden rests upon the party seeking to prevent production. In re Brewer Leasing, Inc., 255 S.W.3d 708, 712 (Tex.App.-Houston [1st Dist.] 2008, orig. proceeding [mand. denied]); In re Patel, 218 S.W.3d 911, 916 (Tex.App.-Corpus Christi 2007, orig. proceeding).

The relators argue the McCoys are not entitled to discovery on net worth until they have established a prima facie case of gross negligence. However, the Texas Supreme Court has expressly rejected this contention. See Lunsford, 746 S.W.2d at 473 (rejecting requirement of prima facie showing because "[o]ur rules of civil procedure and evidence do not require similar practices before net worth may be discovered").² Therefore, under Texas law, a party seeking discovery of net-worth information need not satisfy any evidentiary prerequisite, such as making a prima facie showing of entitlement to punitive damages, before discovery of net worth is permitted. In re House of Yahweh, 266 S.W.3d 668, 673 (Tex.App.-Eastland 2008, orig. proceeding); In re Garth, 214 S.W.3d 190, 192 (Tex.App.-Beaumont 2007, orig. proceeding [mand. dism'd]); In re W. Star Trucks US, Inc., 112 S.W.3d 756, 763 (Tex. App.-Eastland 2003, orig. proceeding); Al Parker Buick Co. v. Touchy, 788 S.W.2d 129, 131 (Tex.App.-Houston [1st Dist.] 1990, orig. proceeding).

The relators acknowledge the Texas Supreme Court's express holding in Lunsford, but argue that we should follow other jurisdictions that require a plaintiff to demonstrate a factual basis for punitive damages before being allowed to do net-worth discovery.³ Even though Lunsford is over twenty years old, the Texas Supreme Court has not revisited this issue.⁴ As an intermediate court of appeals, we are bound by the supreme court's ruling in Lunsford and, therefore, we decline the relators' invitation. See Dallas Area Rapid Transit v. Amalgamated Transit Union Local No. 1338, 273 S.W.3d 659, 666 (Tex. 2008), cert. denied, ___ U.S. ___, 129 S.Ct. 2767, 174 L.Ed.2d 284 (2009) ("It is fundamental to the very...