State Of West Va. Ex Rel. Richmond Am. Homes Of West Va. Inc v. Sanders

• Decision Date: 16 June 2010
• Docket Number: No. 35440.,35440.
• Citation: 697 S.E.2d 139,226 W.Va. 103
• Court: West Virginia Supreme Court
• Parties: STATE of West Virginia ex rel. RICHMOND AMERICAN HOMES OF WEST VIRGINIA, INC. and M.D.C. Holdings, Inc., Petitioners,v.Honorable David H. SANDERS, Judge of the Circuit Court of Jefferson County, Breeden Mechanical, Inc., J.S.C. Concrete, Inc., Kevin Joy, Loudon Valley Concrete, Inc., Modern Enterprises, Inc., North Star Foundations, Inc., Respondents.

226 W.Va. 103

697 S.E.2d 139

West Virginia.

STATE of West Virginia ex rel. RICHMOND AMERICAN HOMES OF WEST VIRGINIA, INC. and M.D.C. Holdings, Inc., Petitioners,v.Honorable David H. SANDERS, Judge of the Circuit Court of Jefferson County, Breeden Mechanical, Inc., J.S.C. Concrete, Inc., Kevin Joy, Loudon Valley Concrete, Inc., Modern Enterprises, Inc., North Star Foundations, Inc., Respondents.

No. 35440.

Supreme Court of Appeals of

Submitted March 31, 2010.

Decided June 16, 2010.

COPYRIGHT MATERIAL OMITTED

Syllabus by the Court

1. “Prohibition lies only to restrain inferior courts from proceeding in causes over which they have no jurisdiction, or, in which, having jurisdiction, they are exceeding their legitimate powers and may not be used as a substitute for writ of error, appeal or certiorari.” Syl. Pt. 1 Crawford v. Taylor, 138 W.Va. 207, 75 S.E.2d 370 (1953).

2. “In determining whether to entertain and issue the writ of prohibition for cases not involving an absence of jurisdiction but only where it is claimed that the lower tribunal exceeded its legitimate powers, this Court will examine five factors: (1) whether the party seeking the writ has no other adequate means, such as direct appeal, to obtain the desired relief; (2) whether the petitioner will be damaged or prejudiced in a way that is not correctable on appeal; (3) whether the lower tribunal's order is clearly erroneous as a matter of law; (4) whether the lower tribunal's order is an oft repeated error or manifests persistent disregard for either procedural or substantive law; and (5) whether the lower tribunal's order raises new and important problems or issues of law of first impression.” Syl. Pt. 4, in part State ex rel. Hoover v. Berger, 199 W.Va. 12, 483 S.E.2d 12 (1996).

3. “A court ‘has inherent power to do all things that are reasonably necessary for the administration of justice within the scope of its jurisdiction.’ 14 Am. Juris., Courts, section 171.” Syl. Pt. 3 Shields v. Romine, 122 W.Va. 639, 13 S.E.2d 16 (1940).

4. The inherent power of courts to sanction misconduct includes the authority to enter default judgment orders in appropriate circumstances.

5. “Although Rules 11, 16, and 37 of the West Virginia Rules of Civil Procedure do not formally require any particular procedure, before issuing a sanction, a court must ensure it has an adequate foundation either pursuant to the rules or by virtue of its inherent powers to exercise its authority. The Due Process Clause of Section 10 of Article III of the West Virginia Constitution requires that there exist a relationship between the sanctioned party's misconduct and the matters in controversy such that the transgression threatens to interfere with the rightful decision of the case. Thus, a court must ensure any sanction imposed is fashioned to address the identified harm caused by the party's misconduct.” Syl. Pt. 1 Bartles v. Hinkle, 196 W.Va. 381, 472 S.E.2d 827 (1996).

6. “In formulating the appropriate sanction, a court shall be guided by equitable principles. Initially, the court must identify the alleged wrongful conduct and determine if it warrants a sanction. The court must explain its reasons clearly on the record if it decides a sanction is appropriate. To determine what will constitute an appropriate sanction, the court may consider the seriousness of the conduct, the impact the conduct had in the case and in the administration of justice, any mitigating circumstances, and whether the conduct was an isolated occurrence or was a pattern of wrongdoing throughout the case.” Syl. Pt. 2, Bartles v. Hinkle, 196 W.Va. 381, 472 S.E.2d 827 (1996).

7. Imposition of sanctions of dismissal and default judgment for serious litigation misconduct pursuant to the inherent powers of the court to regulate its proceedings will be upheld upon review as a proper exercise of discretion when trial court findings adequately demonstrate and establish willfulness, bad faith or fault of the offending party.

Niall A. Paul, Charles L. Woody, Spilman, Thomas & Battle, PLLC, Alvin L. Emch, Jackson Kelly, PLLC, Charleston, WV, for Petitioners.

Andrew C. Skinner, Laura C. Davis, Stephen G. Skinner, Skinner Law Firm, Charles Town, WV, for Respondents, Skinner Plaintiffs.

James Graham Bordas, III, Christopher J. Regan, Bordas & Bordas, PLLC, Wheeling, WV, for Respondents, Plaintiffs Kevin Joy, et al.

McHUGH, Justice:

This case is before the Court on a petition for a writ of prohibition. Two of the eight defendants below,¹ Richmond American Homes of West Virginia, Inc. (hereinafter “Richmond”) and M.D.C. Holdings, Inc., (hereinafter “MDC”), ² invoke the original jurisdiction ³ of this Court in an effort to enjoin enforcement of the November 4, 2009, and November 18, 2009, orders of the Circuit Court of Jefferson County. The orders resulted in the striking of Petitioners' defenses and default judgment entered against them on the issue of liability in the underlying tort litigation based on the allegation of the plaintiffs below (hereinafter “Respondents”) that inadequate radon mitigation systems were installed in their homes.⁴ Petitioners maintain that the circuit court exceeded its legitimate powers in issuing such harsh sanctions, which warrants the issuance of a writ of prohibition with direction to the lower court to vacate the orders. Upon due consideration of the briefs and arguments of counsel, review of numerous exhibits supplied by the parties ⁵ and examination of the relevant law, we issue the writ of prohibition as moulded.

I. Factual and Procedural Background

Richmond and MDC as its parent company have built a number of houses in the Eastern Panhandle of West Virginia, including the homes in the Locust Hill Subdivision in Jefferson County, West Virginia. Presumably the houses were built and sold with some representation made by the companies that the houses had radon mitigation systems. In December 2006, homeowners in the Locust Hill Subdivision contacted Richmond through an attorney and fellow homeowner, Andrew Skinner, regarding problems with the radon systems the company installed in their homes. According to an exhibit filed with the petition in this case,⁶ Richmond's corporate counsel sent a letter to Mr. Skinner offering to remediate the problems with the radon systems, which offer Mr. Skinner rejected. In May 2008, Mr. Skinner filed the complaint in the Joy case on behalf of sixteen Locust Hill Subdivision homeowner families (consisting of sixty-six individuals) against Richmond, MDC and six Richmond subcontractors. See n. 1 supra. Two other related cases were filed in the fall of 2008. See n. 4 supra. The initial trial date in the Joy case was set for April 2010. The assertions made in all of the suits are based on the improper installation of radon mitigation systems in the homes, with particular allegations that homes were built with no radon removal system, a defective system or a fake system, which is apparently the reason why the cases were consolidated for discovery purposes.

The writ of prohibition sought in this case involves two intertwined orders ⁷ issued by the lower court after hearing was held on “Plaintiffs' Motion for Default Judgment, Motion to Strike the Defendants' Answers and Defenses, Motion for Sanctions.” The sanctions were imposed as a result of the lower court finding that Richmond had “engaged in a pattern of extensive litigation misconduct.” The misconduct identified in the orders included: (1) direct contact by letter of Richmond's President, Patrick Annessa, to some of the homeowners in the Joy case over the homeowners' counsels' prior objection to such contact; (2) discovery misconduct; and (3) attempts during a settlement conference by Richmond's in-house counsel to enter into discussions with the homeowners' counsel about potential employment with the company. The information supplied in this proceeding regarding each of these subjects follows.

Annessa Letter

According to copies of e-mails supplied by the parties before us, Richmond renewed its remediation efforts after the Joy suit was filed. Richmond's counsel retained to defend the company in the Joy suit sent an e-mail in March 2009 to Mr. Skinner asking for a list of clients who had not yet had active radon systems installed in their homes. In an April 2009 e-mail, Richmond's retained counsel attached a draft letter for Mr. Skinner's clients from Richmond's President, Patrick Annessa, outlining Richmond's offer to arrange for the installation of active radon detection systems. In that e-mail, Richmond's counsel asked: “Please let me know by Tuesday (4/14/09) if you will accept the letter on behalf of your clients or if Mr. Annessa should send a letter to each of your clients directly.” Mr. Skinner's colleague, Laura Davis, responded by return e-mail disputing portions of the letter and stating: “I cannot agree to permit this communication to be sent directly to represented parties in the litigation. I agree that it is wise to formalize the terms of remediation in writing. However, I would prefer that you do so in correspondence to us as opposed to our clients.” According to the affidavits of two of the attorneys retained to represent Richmond dated August 27, 2009 negotiations regarding the contents of the letter continued, but Respondents' counsel never accepted the letter on behalf of their clients nor did they agree to give the letter to their clients. In June 2009,⁸ a letter signed by Mr. Annessa ⁹ was sent to at least eleven of the sixteen families involved in the Joy case.¹⁰

Discovery

In preparing for trial, Respondents served MDC and Richmond with a set of interrogatories, request for production of documents and request for admissions along with the Joy complaint. Apparently a second, third and fourth set of interrogatories and request for production of documents in the Joy case were subsequently delivered to MDC and Richmond. Respondents maintain that MDC completely ignored the discovery...