TransAmerican Natural Gas Corp. v. Powell
| Citation | 811 S.W.2d 913 |
| Decision Date | 19 June 1991 |
| Docket Number | No. C-9294,C-9294 |
| Parties | TRANSAMERICAN NATURAL GAS CORPORATION, Relator, v. Hon. William R. POWELL, Judge of the 80th District Court of Harris County, Texas, Respondent. |
| Court | Supreme Court of Texas |
James Kronzer, Don Henderson, Robert V. Holland, Jr., John C. Nabors, Karen Zuckerman, Bill Jones, Kenneth E. McKay and Joe H. Reynolds, Houston, for relator.
Michael C. Feehan, Beverly Arleen Sandifer, G. Byron Sims, Daniel J. Kasprzak, Jonathan C.S. Cox, Ann Ryan Robertson and Donald F. Hawbaker, Houston, for respondent.
In this original mandamus proceeding, TransAmerican Natural Gas Corporation seeks to compel the Hon. William R. Powell, Judge of the 80th District Court, to set aside his orders imposing sanctions for discovery abuse. The district court struck TransAmerican's pleadings, dismissed its action against Toma Steel Supply, Inc., and granted Toma an interlocutory default judgment on its counterclaim against TransAmerican, reserving for trial only the amount of damages due Toma. We conditionally grant the writ of mandamus.
The underlying case is a complex, multi-party action arising out of Toma's sale of allegedly defective pipe casing to TransAmerican. TransAmerican withheld payment for the casing, apparently some $2.3 million, and sued Toma in April 1987 for damages allegedly caused by its use. Toma counterclaimed for $52 million damages resulting from TransAmerican's refusal to pay for the casing. Numerous other parties also joined in the litigation.
On July 3, 1988, the district court issued a docket control order pursuant to Rule 166 of the Texas Rules of Civil Procedure, which set a discovery cutoff date of April 3, 1989. The order allowed discovery to be conducted beyond that date only upon agreement of the parties.
On March 7, 1989, Toma noticed the deposition of TransAmerican's president, K. Craig Shephard, to take place March 16. Two days later TransAmerican's counsel, who at that time was one of the attorneys in its legal department, telephoned Toma's counsel to inform him that Shephard could not be available on March 16 because of a previously scheduled deposition in another case. When counsel could not agree on another date for Shephard's deposition, TransAmerican filed a motion for protection to quash the deposition notice and postpone the deposition. The motion stated that it would be submitted to the trial court for ruling on March 17. 1 However, the trial court did not rule on the motion on that date.
Beginning April 3, the deadline set by the district court for completion of discovery, the parties' smoldering discovery problem started to flare. On that date, counsel for TransAmerican and Toma agreed that Shephard would be deposed after April 10 on a date to be agreed upon. Despite this understanding, counsel again failed to agree upon a date, and on April 19 Toma noticed Shephard's deposition for May 2 without TransAmerican's consent. On April 20, upon receipt of this second deposition notice, TransAmerican's counsel wrote a letter to Toma's counsel informing him that Shephard would not be available May 2 because, as before, he already had a deposition in another matter scheduled for that day. Toma's counsel replied by letter that he would not agree to reschedule the deposition. On April 27, TransAmerican reset the date for submission of its motion for protection to the trial court for ruling to May 12. By this time, of course, the motion was moot, and it is not apparent why TransAmerican continued to seek a ruling. TransAmerican did not move the trial court to postpone the May 2 deposition.
Also on April 27, Shephard's other deposition scheduled for May 2 was cancelled, leaving him available to be deposed by Toma. However, TransAmerican's counsel did not advise Toma's counsel that Shephard's schedule had changed so that he could be deposed on May 2 after all, nor did Shephard appear on May 2 as noticed. TransAmerican ascribes its failure to produce Shephard for deposition to miscommunication concerning his schedule changes between attorneys in its legal department. Toma alleges that Shephard's failure to appear was purposeful and part of TransAmerican's intentional obstruction of the discovery process.
On May 8, Toma filed a response to TransAmerican's March 14 motion for protective order, even though it acknowledged that that motion was moot. Toma included in its response, however, a motion for sanctions against TransAmerican based on Shephard's failure to appear at the May 2 deposition. In return, TransAmerican filed its own sanctions motion on May 11, urging that Toma's motion for sanctions was itself an abuse of the discovery process. Toma's and TransAmerican's motions for sanctions both stated that they would be submitted to the court for ruling on May 12, the date set for submission of TransAmerican's original motion for protection.
On May 12, without hearing oral argument, 2 the district court signed an order granting Toma's motion for sanctions and striking TransAmerican's pleadings in their entirety. TransAmerican moved for reconsideration, which the district court denied after hearing argument of counsel but refusing to hear any evidence. Based upon his May 12 order striking TransAmerican's pleadings, the district court issued an order on October 6 dismissing TransAmerican's action with prejudice, rendering an interlocutory default judgment against TransAmerican and in favor of Toma on its counterclaim, and setting the case for trial solely on the issue of the damages to be awarded Toma.
TransAmerican sought mandamus relief from the court of appeals to compel the district court to set aside his May 12 and October 6 orders. A divided court of appeals denied TransAmerican leave to file its petition for writ of mandamus in an unpublished per curiam opinion. 3 TransAmerican then moved for leave to file its petition in this Court. We granted the motion in order to review the propriety of the discovery sanctions imposed by the district court.
The sanctions imposed by the district court are among those authorized for various discovery abuses under Rule 215 of the Texas Rules of Civil Procedure. The district court did not specify what provision of Rule 215 it relied upon. The portions of the rule applicable to the circumstances here are paragraphs 2(b)(5) and 3. Paragraph 2(b)(5) provides in part:
If a party or an officer ... of a party ... fails to comply with proper discovery requests or to obey an order to provide or permit discovery, ... the court in which the action is pending may, after notice and hearing, make such orders in regard to the failure as are just, and among others the following:
. . . . .
(5) An order striking out pleadings or parts thereof, ... or dismissing with or without prejudice the action or proceedings or any part thereof, or rendering a judgment by default against the disobedient party....
At the time of the district court's rulings, paragraph 3 of Rule 215 stated in part:
If the court finds a party is abusing the discovery process in seeking, making or resisting discovery ..., then the court in which the action is pending may impose any sanction authorized by paragraphs (1), (2), (3), (4), (5), and (8) of paragraph 2b of this rule. Such order of sanction shall be subject to review on appeal from the final judgment. 4 Both paragraphs leave the choice of sanctions to the sound discretion of the trial court. Bodnow Corp. v. City of Hondo, 721 S.W.2d 839, 840 (Tex.1986). However, paragraph 2(b) explicitly requires that any sanctions imposed be "just". By referring to paragraph 2(b), paragraph 3 incorporates the same requirement. Thus, whether the district court imposed sanctions under paragraph 2(b) or paragraph 3, we consider whether those sanctions were just. 5 See Bodnow, 721 S.W.2d at 840.
In our view, whether an imposition of sanctions is just is measured by two standards. First, a direct relationship must exist between the offensive conduct and the sanction imposed. This means that a just sanction must be directed against the abuse and toward remedying the prejudice caused the innocent party. It also means that the sanction should be visited upon the offender. The trial court must at least attempt to determine whether the offensive conduct is attributable to counsel only, or to the party only, or to both. This we recognize will not be an easy matter in many instances. On the one hand, a lawyer cannot shield his client from sanctions; a party must bear some responsibility for its counsel's discovery abuses when it is or should be aware of counsel's conduct and the violation of discovery rules. On the other hand, a party should not be punished for counsel's conduct in which it is not implicated apart from having entrusted to counsel its legal representation. The point is, the sanctions the trial court imposes must relate directly to the abuse found.
Second, just sanctions must not be excessive. The punishment should fit the crime. A sanction imposed for discovery abuse should be no more severe than necessary to satisfy its legitimate purposes. It follows that courts must consider the availability of less stringent sanctions and whether such lesser sanctions would fully promote compliance.
These standards set the bounds of permissible sanctions under Rule 215 within which the trial court is to exercise sound discretion. 6 The imposition of very severe sanctions is limited, not only by these standards, but by constitutional due process. The sanctions the district court imposed against TransAmerican are the most devastating a trial court can assess against a party. When a trial court strikes a party's pleadings and dismisses its action or renders a default judgment against it for abuse of the discovery process, the court adjudicates the party's claims without regard to their merits but based instead upon the parties' conduct of discovery. "[T]here are constitutional...
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