Sechler Family Partnership v. Prime Group, A02A1018.

• Court: Georgia Court of Appeals
• Writing for the Court: JOHNSON, Presiding.
• Citation: Sechler Family Partnership v. Prime Group, 255 Ga. App. 854, 567 S.E.2d 24 (Ga. App. 2002)
• Decision Date: 29 May 2002
• Docket Number: No. A02A1018.,A02A1018.
• Parties: SECHLER FAMILY PARTNERSHIP et al. v. PRIME GROUP, INC. et al.

567 S.E.2d 24

255 Ga. App. 854

SECHLER FAMILY PARTNERSHIP et al. v. PRIME GROUP, INC. et al.

No. A02A1018.

Court of Appeals of Georgia.

May 29, 2002.

Reconsideration Denied June 18, 2002.

Schreeder, Wheeler & Flint, David H. Flint, Alexander J. Simmons, Jr., Julia C. Thompson, Atlanta, for appellants.

King & Spalding, Michael W. Johnston, Rebecca C. Moore, David J. Onorato, Bettina W. Yip, Atlanta, Hull, Towill, Norman, Barrett & Salley, David E. Hudson, Augusta, for appellees.

JOHNSON, Presiding Judge.

This case involves an appeal by nonparties from a contempt order entered after the nonparties failed to comply with a court order directing them to respond to a party's subpoenas. The thrust of the appeal is a challenge to the correctness of the discovery order compelling the nonparties to respond to the party's subpoenas. Because we find that the trial court did not abuse its discretion in ordering the nonparties to respond to the party's subpoenas, we affirm the trial court's contempt order.

The underlying lawsuit is a contract dispute arising out of three agreements executed by plaintiffs Prime Group, Inc., Victor Mills, and Oliver Owens ("Prime Group") and defendant Tucker Federal Bank on November 23, 1992. The three agreements at issue are: (1) an operating agreement between Prime Group and Tucker Federal Bank pursuant to which Prime Group agreed to sell and service construction loans and permanent residential loans for Tucker Federal Bank, (2) an employment agreement between Tucker Federal Bank and Mills, and (3) an employment agreement between Tucker Federal Bank and Owens. The claims to be tried in the underlying suit involve breach of contract arising out of the operating agreement and employment agreements. ¹

On September 30, 1999, Prime Group directed subpoenas for the production of documents to appellants Sechler Family Partnership, Empire Mortgage & Investment Company, Central Underwriters, Inc., Atlas Smith, Inc., Gwinnett Development & Investment Corporation, Georgia Commercial Properties Corporation, Key Property Management Services, Inc., Daniel Park Community Association, Inc., Baltimore Insurance, Sechler & Associates, and DeFoore House, Inc. ("the Sechler entities"). The subpoenas directed the Sechler entities, none of whom are parties to the underlying proceeding, to appear for deposition and produce the following designated documents:

(1) All documents evidencing, or referring or relating to work performed by Conrad J. Sechler, Sr., Conrad Sechler, Jr. or Frank Barton from November 23, 1992 to the present. (2) All documents evidencing, or referring or relating to any transactions, contracts or agreements between you and Tucker Federal Bank. (3) All documents constituting communications between you and any financial institution from November 23, 1992 to present. (4) All documents referring or relating to any corporation, partnership or other business entity in which Conrad J. Sechler, Sr., Conrad J. Sechler, Jr. or Frank Barton, individually or collectively, are believed by you to have or to have had an interest. (5) All documents evidencing, or referring or relating to any loan or other extension of credit obtained by you from November 23, 1992 to the present.

Conrad Jerome Sechler, Jr. ("Sechler") is the chairman and CEO of Tucker Federal Bank. Either Sechler or his father is an officer, director, managing partner, and/or stockholder of the Sechler entities.

On October 7, 1999, the Sechler entities filed a joint motion to quash the subpoenas, arguing that the subpoenaed documents are not relevant to the underlying action, the subpoenas were promulgated solely for the harassment of Sechler and improperly sought sensitive financial information, and the subpoenas failed to allow sufficient time for the Sechler entities to respond. Prime Group argued that the subpoenaed documents are relevant to their defense to Tucker Federal Bank's counterclaim that Owens breached the terms of his employment agreement. Following oral argument, the motion to quash was denied, although compliance was limited to include only documents that concerned the activities of Sechler.

Rather than respond to the trial court's order, the Sechler entities attempted to appeal the order to this Court. We denied review, holding that the trial court's discovery order was a nonfinal order not subject to direct appeal.² The Sechler entities sought review by the Supreme Court of Georgia, and review was denied.³ Prime Group subsequently filed a motion for contempt, which the trial court granted. The Sechler entities appeal from this contempt order, arguing that the trial court abused its discretion in denying their motion to quash the subpoenas issued by Prime Group and in entering its order of contempt.

1. Before reaching the merits of the Sechler entities' enumerations of error, we must first address Prime Group's argument that the sole issue on appeal is whether the trial court abused its discretion in ruling that the Sechler entities wilfully violated its discovery order. According to Prime Group, the merits of the discovery order, which the Sechler entities admit they violated, are not relevant to the issue of contempt, and the Sechler entities are limited to arguing error in the trial court's contempt order, and not error in the trial court's original order directing the Sechler entities to respond to Prime Group's subpoenas. We disagree.

This Court has previously held that in every case where a person is charged with contempt of court for alleged violations of a court's order, the legal correctness of the underlying order may be challenged on appeal.⁴ Thus, the Sechler entities have the right in this appeal to challenge the correctness of the discovery order compelling them to respond to Prime Group's subpoenas.

2. We also must address the Sechler entities' request that this Court adopt a standard of review other than abuse of discretion in this case. The Sechler entities acknowledge that, ordinarily, discovery matters are within the trial court's sound discretion and, absent a clear abuse of that discretion, this Court will not interfere with the trial court's decision.⁵ The rationale for the rule is clear: the trial judge, who is familiar with the particulars of the case, is in the best position to rule on discovery matters. However, citing federal district cases from Texas, New York, and South Carolina, the Sechler entities urge this Court to adopt a standard of review recognizing that a nonparty who receives discovery is entitled to additional deference so as to protect against harassment, inconvenience, or unnecessary disclosure of confidential documents. We decline to adopt such a standard.

OCGA § 9-11-34(a)(1) provides that a party may request that another party produce documents containing matter discoverable

[ 567 S.E.2d 27]

within the scope of OCGA § 9-11-26(b), which is the general discovery provision establishing that parties may discover any nonprivileged matter which is relevant to the subject matter involved in the pending action. OCGA § 9-11-34(c)(1) establishes that the discovery of nonprivileged documents also applies to nonparties. As with discovery requested from parties, the only requirements placed by the Georgia legislature on discovery requested from nonparties is that the documents must be relevant and nonprivileged.

Furthermore, the trial court has wide discretion in the entering of orders permitting or preventing the use of discovery which is oppressive, unreasonable, unduly burdensome or expensive, harassing, harsh, insulting, annoying, embarrassing, incriminating, or directed to wholly irrelevant and immaterial or privileged matters or as to matter concerning which full information is already at hand.⁶ This use of discretion applies to nonparties as well as parties to an action. In fact, using the abuse of discretion standard, this Court has previously reversed a trial court's grant of a protective order to nonparties, holding that the trial court improperly limited a party's document requests from nonparties.⁷ We will employ the abuse of discretion standard in this case.

3. In their first enumeration of error, the Sechler entities argue that the trial court abused its discretion in denying their motion to quash the subpoenas and entering its order of contempt based on the expression, "what's good for the goose is good for the gander." According to the Sechler entities, this rule is inapplicable to discovery disputes and has been rejected by various federal courts. Moreover, since the Sechler entities are neither plaintiffs nor defendants in the underlying action, they cannot be characterized as the "goose" or the "gander."

While the trial court's use of this expression was unfortunate, it does not negate the fact that the trial court used the correct standard in...