Harvey Earth Moving, Inc. v. Georgetown Railroad Company

HEM v GRR TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN NO. 03-95-00480-CV Harvey Earth Moving, Inc., Appellant v. Georgetown Railroad Company, Appellee FROM THE DISTRICT COURT OF WILLIAMSON COUNTY, 277TH JUDICIAL DISTRICT NO. 94-279-C277, HONORABLE JOHN R. CARTER, JUDGE PRESIDING This is an appeal from a default judgment. Appellee Georgetown Railroad Company ("GRR") sued appellant Harvey Earth Moving, Inc. ("HEM") to recover accounts due for goods sold and transported. HEM failed to respond to requests for production, interrogatories and an agreed order compelling discovery. The trial court eventually imposed "death penalty" sanctions, striking appellant's pleadings and granting default judgment in favor of GRR. HEM contends that the trial court erred in granting a default judgment and failing to grant its motion for new trial. We will affirm the trial court's judgment. BACKGROUND In August 1994, GRR sued HEM on theories of sworn account, quantum meruit, constructive trust, assumpsit for money had and received, and for prejudgment interest to recover indebtedness owed by HEM. HEM's counsel received GRR's interrogatories and requests for admissions and production on October 21, 1994. On November 14, HEM filed responses to GRR's requests for admission. However, HEM did not serve any responses, answers or objections to GRR's interrogatories and requests for production. Nor did HEM obtain an extension of time to respond. By correspondence dated December 15, 1994, GRR demanded full and complete answers to all of its interrogatories and production of documents requested within fourteen days of the receipt of the letter. On January 3, 1995, HEM filed answers to the interrogatories without producing any documents. On March 10, GRR filed a motion to compel discovery. In its motion, GRR objected that the answers to the interrogatories were cursory, nonresponsive and wholly insufficient. GRR also complained that HEM failed to produce any of the requested documents. At a hearing on April 13, the court rendered an agreed order granting GRR's motion to compel. The order required HEM to produce any and all documents responsive to GRR's requests and to provide full and complete answers to the interrogatories by April 27. On April 27, HEM allegedly fired its attorney and claimed that it assumed that the attorney would notify GRR to send all future correspondence to HEM directly. As of May 1, HEM still had not complied with the agreed motion to compel, and GRR filed and served a motion to strike pleadings and for entry of default judgment. At a hearing on May 5, the trial court granted GRR's motion and rendered a default judgment for GRR. HEM complains that (1) it was unaware of both the April 13 hearing on the motion to compel discovery and the May 5 hearing on the motion for default judgment; (2) its attorney consented to the agreed order to compel without its knowledge or permission; and (3) it was unaware of the default judgment until May 8. Having retained new counsel, HEM filed a motion for new trial on June 5, alleging that its previous attorney failed to give it notice of the hearings and acted without authority. HEM's motion for new trial was overruled as a matter of law. DISCUSSION Late Cost Bond As a preliminary matter, GRR raises a cross-point urging that this court erred in granting HEM's motion to extend the time to file its cost bond. An appellate court may extend the deadline for perfecting an appeal if the cost bond is filed within fifteen days after the deadline along with a motion requesting leave to file late "reasonably explaining the need for such extension." See Tex. R. App. P. 41(a)(2). A reasonable explanation includes "inadvertence, mistake or mischance," so long as the conduct falls short of "deliberate or intentional noncompliance." Garcia v. Kastner Farms, Inc., 774 S.W.2d 668, 670 (Tex. 1989). The standard is very accommodating. Id. The owner, president, and corporate representative of HEM, Sentell Harvey, testified by affidavit that after final judgment, he needed time to consider his options and to obtain adequate and proper counsel for an appeal. There is no evidence of deliberate or intentional noncompliance. We do not find that HEM deliberately or intentionally failed to comply with the filing deadlines. We overrule GRR's cross-point of error and will reach the merits of the case. "Death Penalty" Sanctions The Rules of Civil Procedure authorize a trial court to strike the pleadings of, and render default judgment against, any party which repeatedly fails to comply with discovery requests and/or orders. See Tex. R. Civ. P. 215(2)(b)(5) Rule 215 leaves the choice of sanctions to the discretion of the trial court. TransAmerican Natural Gas v. Powell, 811 S.W.2d 913, 917 (Tex. 1991). However, Rule 215 requires that sanctions imposed be "just." Just sanctions are measured by two standards. First, there must be a direct relationship between the offensive conduct and the sanction imposed. The trial court must tailor the sanction towards countering the abuse and remedying any prejudice caused to the innocent party. Second, just sanctions must not be excessive. The court must consider the availability of less stringent sanctions and whether they would fully promote compliance. Id. After having found HEM's untimely answers to GRR's interrogatories unacceptable, the trial court rendered an agreed order compelling discovery compliance. HEM agreed to provide full and complete answers to the interrogatories and to produce any and all documents responsive to the requests for production by April 27. Once again, HEM failed to comply. Without the requested discovery, the record contained no evidence to support HEM's general denial and defensive pleas. If a party refuses to produce material evidence, the court can presume that any asserted claim or defense lacks merit and dispose of it. Id. at 918. Therefore, striking HEM's pleadings was directly related to HEM's failure to provide any material evidence supporting its defensive pleadings. Before the court struck HEM's pleadings and granted default judgment, both parties agreed to an order compelling discovery. The order required HEM to comply with GRR's requests by April 27 or risk having its pleadings stricken. An order to compel coupled with a threat to dismiss for noncompliance is a lesser sanction. Andras v. Memorial Hosp. Sys., 888 S.W. 567, 572 (Tex. App.--Houston [1st Dist.] 1994, writ denied). The trial court stated in its judgment that the threat to strike did not, and would not, fully promote compliance with the court's discovery orders. In light of HEM's repeated failure to comply, the trial court could correctly determine that the sanctions were not excessive. In two points of error, HEM argues that its attorney was the culpable party and that it should not be punished for its attorney's misconduct. HEM alleges that its attorney (1) consented to the agreed order without HEM's knowledge or permission; (2) was the one who failed to comply with the order; and (3) failed to notify HEM of the hearing to strike the pleadings and enter a default judgment. When imposing sanctions, the trial court must attempt to determine whether the offensive conduct is attributable to counsel, the client, or both. TransAmerican, 811 S.W.2d at 917. However, the trial court must be aware that a lawyer cannot shield a client from sanctions. The client must bear some responsibility when it is or should be aware of counsel's discovery abuses. Id. at 917. In the instant cause, when HEM fired its attorney, it was aware of long-overdue pending discovery requests and had a responsibility to take steps towards discovery compliance. The record reveals that HEM failed to notify the trial court or opposing counsel that it had terminated its attorney's representation. Moreover, there is no evidence that HEM requested GRR or the court to send future correspondence to HEM directly. HEM relies on Wetherholt v. Mercado Mexico Cafe, 844 S.W.2d 806 (Tex. App.--Eastland 1992, no writ), to argue that any culpable conduct in the instant cause is attributable solely to counsel. In Wetherholt, counsel (1) failed to respond to a request for written interrogatories although the client had provided counsel with the information; (2) failed to notify the client of a deposition, mediation, and two sanction hearings, and ignored these proceedings himself; and (3) testified at a hearing on a motion for new trial that he was solely responsible for the discovery abuses. Id. at 807. The instant cause is distinguishable from Wetherholt because HEM was aware of pending discovery requests and made little or no effort to comply. There is no evidence that HEM provided its attorney with the information and documents necessary to comply with the requests as in Wetherholt. More analogous to the instant cause is Allied Resources v. Mo-Vac Serv. Co., 871 S.W.2d 773 (Tex. App.--Corpus Christi 1994, writ denied), which also involved a suit on a sworn account to recover sums due and owing for goods and services. In Allied Resources, the defendants failed to comply with discovery requests, resulting in an order compelling discovery. As in the instant cause, the order threatened to strike the defendants' pleadings if they failed to provide the requested discovery by a certain date. The defendants again failed to comply, and the court struck their pleadings. As in the instant cause, the defendants argued on appeal that they received no notice of the hearing on whether to strike the pleadings and render default judgment. The court of appeals reasoned that the defendants had received notice through their attorney. Emphasizing basic principles of agency law, the court noted that during an attorney-client relationship, notice to an attorney is imputed to the client. Id. at 778. In the instant cause, HEM (1) was aware of pending discovery requests; (2) failed to comply with those requests; (3) knew that a motion to compel had been filed and should have known that a hearing on the motion to comply was imminent; (4) made no further attempt to comply; (5) failed to notify the trial court or opposing counsel that it had fired its attorney; and (6) did not request GRR to send future correspondence to HEM directly. We cannot say the trial court ordered unjust sanctions under these circumstances. CONCLUSION For the aforementioned reasons, we overrule both of appellant's points of error and affirm the trial court's judgment. Marilyn Aboussie, Justice Before Justices Powers, Aboussie and Kidd Affirmed Filed: January 10, 1996 Do Not Publish