Welex, a Div. of Halliburton Co. v. Broom

• Decision Date: 08 January 1992
• Docket Number: No. 04-89-00377-CV,04-89-00377-CV
• Citation: 823 S.W.2d 704
• Parties: WELEX, A DIVISION OF HALLIBURTON COMPANY, Appellant, v. Jerry Wayne BROOM, Appellee.
• Court: Texas Court of Appeals

Page 704

823 S.W.2d 704

WELEX, A DIVISION OF HALLIBURTON COMPANY, Appellant, v. Jerry Wayne BROOM, Appellee.

No. 04-89-00377-CV.

Court of Appeals of Texas San Antonio.

Jan. 8, 1992.

Rehearing Denied Feb. 21, 1992.

William Powers, Jr., Austin, Marie R. Yeates, Penelope E. Nicholson, R. Glen Rigby, Eva C. Ramos, Harry M. Reasoner, Linda K. McCloud, Vinson & Elkins, Houston, M.W. Meredith, Jr., Meredith, Donnell & Abernethy, Corpus Christi, W. James Kronzer, Law Offices of W. James Kronzer, Houston, for appellant.

Arnulfo Gonzalez, Jr., Laredo, Russell H. McMains, Kimberley Hall Seger, McMains & Constant, Corpus Christi, for appellee.

Before CHAPA, BIERY and GARCIA, JJ.

OPINION

CHAPA, Justice.

This cause originated as an appeal from a judgment entered against appellant Welex, a Division of Halliburton Company. Appellee, Jerry Wayne Broom, ¹ brought a negligence action against Welex and Transamerican Natural Gas. Prior to trial, the trial court sanctioned Welex for discovery abuse by granting a defaulted judgment on the liability issue. Transamerican then settled with the appellee. At trial, evidence was heard on damages and on the comparative negligence of Broom, Transamerican and appellant. A jury found Broom not negligent, allocated comparative negligence at 1% on Transamerican and 99% on Welex, and awarded Broom over $2 million for his injuries.

On January 16, 1991, after applying the then existing appropriate standard of review, this court affirmed, holding among other things that the appellant had failed in its burden of establishing that the trial court abused its discretion in imposing the "death penalty" ² sanction against it. Welex v. Broom, 806 S.W.2d 855 (Tex.App.--San Antonio, 1991), judgment vacated by 816 S.W.2d 340 (Tex.1991). On October 16, 1991, after establishing a new standard of review for such cases, the Texas Supreme Court, without addressing the merits of appellants application for writ of error, remanded the case to this court in order to provide us with "the opportunity to reconsider the [sanction's] rulings of which [appellant] complains ... in light of [the supreme court's] recent opinion in TransAmerican Natural Gas Corp. v. Powell, 811 S.W.2d 913 (Tex.1991)." Welex v. Broom, 816 S.W.2d 340 (Tex.1991). This action by the supreme court was obviously due to the fact that at the time this court issued its opinion on January 16, 1991, the new standard of review in such cases did not exist, and could not, therefore, have been applied. Likewise, it should also be noted that when the trial court imposed the discovery abuse sanctions herein involved, the requirements thereafter imposed upon the trial court in TransAmerican, 811 S.W.2d 913, did not exist and were, therefore, unknown to and not required of the trial court.

Thus, the dispositive issue on remand is whether the trial court committed reversible error in imposing unfair "death penalty" sanctions against appellant for discovery abuse, as measured by the standard imposed by the supreme court in TransAmerican. Id.

Prior to October 16, 1991, the general abuse of discretion standard was the appropriate standard of review to be applied in appeals involving discovery abuse sanction. However, in Transamerican, 811 S.W.2d 913, the Texas Supreme Court established limitations on the trial court's exercise of sound discretion in imposing "death penalty" sanctions for discovery abuse. In TransAmerican, the supreme court granted mandamus relief to a party whose pleadings were struck, whose cause of action was dismissed, and against whom a default judgment was granted based on a counterclaim, reserving only the issue of damages. Id. The sanctions had been imposed by the trial court upon the relator as a result of discovery abuse. The supreme court held that mandamus lies:

when a trial court imposes discovery sanctions which have the effect of precluding a decision on the merits of a party's claims--such as by striking pleadings, dismissing an action, or rendering default judgment--a party's remedy by eventual appeal is inadequate, unless the sanctions are imposed simultaneously with the rendition of a final, appealable judgment.

Id. at 920.

The court further established standards which "set the bounds of permissible sanctions under Rule 215 within which the trial court is to exercise sound discretion ..." in granting a just sanction order. Id. at 917 (footnote omitted). The court held that in order for a sanction to be just, 1) it "must be directed against the abuse and toward remedying the prejudice caused the innocent party", which means that "the sanction should be visited upon the offender" requiring "the trial court [to] at least attempt to determine whether the offensive conduct is attributable to counsel only, or to the party only, or to both"; 2) and, it "must not be excessive" which means that "[t]he punishment should fit the crime" requiring that "courts must consider the availability of less stringent sanctions and whether such lesser sanctions would fully promote compliance". Id. Pertaining to "death penalty" sanctions, the court stated:

[w]hen 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 limitations upon the power of courts, even in aid of their own valid processes, to dismiss an action without affording a party the opportunity for a hearing on the merits of his cause.'

Id. at 918 (citations omitted).

The court also made the following recommendation in order to aid the appellate courts in their efforts to determine the propriety of the sanctions imposed:

The district court made no findings to support the sanctions imposed. Rule 215 does not require a trial court to make findings before imposing discovery sanctions, and we do not add such a requirement here. We note only that we do not have the benefit of any explanation by the district court for the severity of its ruling. It would obviously be helpful for appellate review of sanctions, especially when severe, to have the benefit of the trial court's findings concerning the conduct which it considered to merit sanctions, and we commend this practice to our trial courts....

Id. at 919 n. 9 (citations omitted).

In Braden v. Downey, 811 S.W.2d 922 (Tex.1991), the supreme court granted mandamus relief to a party and its attorney who had been sanctioned by the trial court for discovery abuse. The trial court had ordered the relator to pay the amount of $10,000 to the party seeking discovery, and the relator's attorney was ordered to perform ten hours of community service. The deadlines for the sanctions imposed both on the relator and the attorney preceded the conclusion of the litigation.

Including the exclusion of essential evidence and defenses under the standard established in TransAmerican, 811 S.W.2d 913, the supreme court stated Sanctions which terminate or inhibit the presentation of the merits of a party's claims for decision are authorized by Rule 215. These include exclusion of essential evidence, striking pleadings, dismissal and default. Rule 215, paragraph 2b(3), (4), (5). The effect of such sanctions is to adjudicate claims or defenses, not on their merits, but on the manner in which a party or his attorney has conducted discovery. We recognize that severe sanctions are sometimes necessary to prevent an abusive party from thwarting the administration of justice by concealing the merits of a case. However, such sanctions must be reserved for circumstances in which a party has so abused the rules of procedure, despite imposition of lesser sanctions, that the party's position can be presumed to lack merit and it would be unjust to permit the party to present the substance of that position before the court. TransAmerican Natural Gas Corp. v. Powell, 811 S.W.2d 913 (Tex.1991).

Braden, 811 S.W.2d at 929 (emphasis added).

With regards the imposition of monetary sanctions, the supreme court stated that "[i]f the imposition of monetary sanctions threatens a party's continuation of the litigation, appeal affords an adequate remedy only if payment of the sanctions is deferred until final judgment is rendered and the party has the opportunity to supersede the judgment and perfect his appeal." Id. In this respect, the supreme court adopted the solution enunciated by the Fifth Circuit:

We ... believe that the imposition of sanctions must not result in total, or even significant, preclusion of access to the courts.... However, if a district court imposes monetary sanctions that are made payable prior to the entry of a final appealable order, a litigant may suffer a substantial restriction on his access to the courts. Financially strapped because of the sanctions award, a litigant is unable to proceed with his case on the merits. To avoid this harsh, inequitable scenario, we conclude that if a litigant contends that a monetary sanction award precludes access to the court, the district judge must either (1) provide that the sanction is payable only at a date that coincides with or follows entry of a final order terminating the litigation; or (2) makes express written findings, after a prompt hearing, as to why the award does not have such a preclusive effect. (Emphasis added.)

Id., citing Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866, 882-883 n. 23 (5th Cir.1988) and Schaffer v. Iron Cloud, Inc., 865 F.2d 690, 691 (5th Cir.1989) (per curiam). Finally, the supreme court concluded that the trial court "must modify its order at least to allow" both relator and his attorney "an opportunity to appeal before such sanctions" are executed. Braden, 811 S.W.2d at 930.

The record reflects that suit was filed by appellee on March 5, 1987. On May 19, 1987, appellee sent its notice of intent to take the depositions of ...