Jesus Munoz and Randy Munoz v. Kenneth William Kuethe, Jr. ( 2020 )

Opinion filed January 9, 2020
In The
Eleventh Court of Appeals
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No. 11-17-00365-CV
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JESUS MUNOZ AND RANDY MUNOZ, Appellants
V.
KENNETH WILLIAM KUETHE, JR., Appellee
On Appeal from the County Court at Law
Ector County, Texas
Trial Court Cause No. CC-26450
MEMORANDUM OPINION
Jesus Munoz and Randy Munoz appeal from an order in which the trial court
assessed death-penalty sanctions against them as a result of their violating a pretrial
order. The trial court struck Appellants’ pleadings and exhibits; dismissed their
lawsuit against Appellee, Kenneth William Kuethe, Jr.; and rendered default
judgment for Appellee. Appellants subsequently filed a motion for new trial, and
the trial court denied it. We reverse and remand.
On appeal, Appellants contend that the trial court abused its discretion when
it struck their pleadings and exhibits, rendered default judgment for Appellee, and
subsequently denied their motion for new trial.
The underlying negligence action arose out of a motor vehicle accident.
Appellants filed suit and alleged that Appellee failed to yield the right-of-way at an
intersection and that Appellants were injured in the resulting collision. Jesus Munoz
filed his original petition in Ector County on May 4, 2015, and Randy Munoz joined
in the first amended petition, which was filed on November 23, 2015.
In November 2016, the trial court first set the case for trial on January 10,
2017. However, due to a special setting in another case, Appellee’s counsel sought
to continue that setting to April or May 2017. Appellants did not oppose Appellee’s
motion, and the trial court postponed the trial until May 2017.
On December 28, 2016, the trial court entered its “Scheduling Order/Level III
Discovery Control Plan” and set a new trial date for May 2, 2017, and a pretrial
exchange deadline of Friday, April 14, 2017. Pursuant to the trial court’s order,
counsel for each party was to provide opposing counsel with requested jury charges,
motions in limine, exhibit lists, copies of all marked exhibits to be offered at trial,
deposition excerpts, and all other pretrial matters. Appellee’s counsel met the
pretrial exchange deadline, but Appellants’ counsel did not.
On Monday, April 17, 2017, the trial court held a pretrial hearing.
Immediately prior to the hearing, local counsel for Appellants provided various
pretrial exchange documents to Appellee’s counsel. Under the trial court’s order,
the documents were late; Appellants’ counsel should have filed pretrial documents
the Friday before the hearing. Moreover, the late-filed documents were incomplete.
For instance, Appellants’ exhibit list was among those documents furnished, but
marked and tagged copies of Appellants’ exhibits were not. The trial court reset the
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hearing because Appellants’ lead attorney did not appear for the hearing and
Appellants’ local counsel was unprepared to proceed with the hearing. The trial
court reset the hearing for April 26, 2017, and instructed Appellants’ local counsel
that the attorney who had the authority to argue pretrial matters needed to be present
at the rescheduled hearing. No mention was made at the hearing that Appellants’
counsel had not produced copies of Appellants’ proposed exhibits as previously
ordered by the trial court.
On April 25, 2017, one day prior to the rescheduled pretrial hearing,
Appellants’ lead attorney filed a motion for continuance of the May 2 setting. In the
motion, lead counsel stated that counsel was scheduled to appear for trial in another
case that had been specially set to begin on May 1, 2017, in Dallas. Appellants’ lead
counsel also said in the motion that counsel had to attend a hearing in that cause on
April 26, 2017, the same day as the rescheduled pretrial hearing in this case.
On April 26, 2017, the trial court held a hearing on Appellants’ motion for
continuance. At the hearing, Appellee’s counsel strongly objected to a continuance.
Appellee’s counsel further urged that any continuance be limited solely to the trial
date, that the scheduling order deadlines remain intact, and that the trial court
disallow the addition of “any new exhibits” or filings. The trial court granted the
continuance “on the trial only” and stated that “discovery, according to the order,
ha[d] now closed.” The trial court emphasized that it would not permit any attempts
to submit additional items that had not been furnished in accordance with the
scheduling order deadlines.
The trial court reset the case for trial on November 14, 2017, and the pretrial
hearing for November 9, 2017. Counsel for Appellee and local counsel for
Appellants appeared at the November 9 hearing. Once again, lead counsel for
Appellants did not show up for the hearing.
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At the outset of the November 9 pretrial hearing, Appellee’s counsel referred
to the continuance that the trial court granted for Appellants in April. Appellee’s
counsel stated that he believed that lead counsel for Appellants had lied and made
misrepresentations to the court in connection with the motion for continuance.
Appellee’s counsel then informed the trial court that Appellants’ counsel had yet to
fully comply with the pretrial order and produce copies of Appellants’ exhibits.
Appellee had not filed a motion for sanctions but requested that the trial court strike
Appellants’ exhibits and pleadings and render default judgment for Appellee. The
trial court granted the request.
On November 24, 2017, the trial court held a hearing on Appellants’ motion
for reconsideration and for new trial. This time, both lead and local counsel for
Appellants attended the hearing. Appellants’ lead counsel explained that he had
filed a motion for continuance in the Dallas case, the setting for which was the basis
for the April motion for continuance filed in the present case, not anticipating that
the Dallas continuance would be granted. The Dallas court initially denied the
continuance, and by the time it was eventually granted, the trial court in the present
case had already granted Appellants’ continuance. Appellants’ counsel urged the
trial court to reconsider its decision to strike the pleadings based on counsel’s
mistakes and to consider the exclusion of Appellants’ exhibits as a lesser sanction.
The trial court denied Appellants’ motion.
We review a trial court’s order in which it imposes sanctions and a trial court’s
ruling on a motion for new trial for abuse of discretion. Koslow’s v. Mackie, 796
S.W.2d 700, 704 (Tex. 1990). We will first consider whether the trial court abused
its discretion when it imposed death-penalty sanctions against Appellants.
The sanctions imposed by the trial court “are the most devastating a trial court
can assess against a party.” TransAmerican Nat. Gas Corp. v. Powell, 811 S.W.2d
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913, 917–18 (Tex. 1991). In effect, a death-penalty sanction adjudicates a party’s
claims without regard to the merits. Id. at 918. These case-determinative sanctions
may be imposed only in “‘exceptional cases’ where they are ‘clearly justified’ and
it is ‘fully apparent that no lesser sanctions would promote compliance with the
rules.’” Cire v. Cummings, 134 S.W.3d 835, 840–41 (Tex. 2004) (quoting GTE
Commc’ns Sys. Corp. v. Tanner, 856 S.W.2d 725, 729 (Tex. 1993)). Thus, while
sanctions can promote the orderly conduct of its proceedings by securing compliance
and deterring noncompliance with court orders, a trial court should avoid a “trial by
sanctions” whenever possible. Altesse Healthcare Sols., Inc. v. Wilson, 540 S.W.3d
570, 575 (Tex. 2018) (quoting TransAmerican, 811 S.W.2d at 918).
Under Rule 166, a trial court has implicit power to impose sanctions
for violations of its pretrial orders. Koslow’s, 796 S.W.2d at 703; see TEX. R.
CIV. P. 166. Additionally, Rule 215 provides a trial court with the express power to
sanction for discovery abuses. See TEX. R. CIV. P. 215. However, sanctions ordered
under either rule must be “appropriate” to the circumstances of the case. Koslow’s,
796 S.W.2d at 703 n.1. Although whether to impose an available sanction is left to
the sound discretion of the trial court, a trial court abuses its discretion when it acts
without reference to guiding rules and principles or when it acts arbitrarily and
unreasonably under all the circumstances of the particular case. Id. at 703.
In TransAmerican, the Texas Supreme Court established a two-part standard
to be used in a determination of whether an imposition of sanctions is just. See
TransAmerican, 811 S.W.2d at 917. There must be a direct relationship between the
offensive conduct and the sanction imposed, and the sanction must not be excessive.
Id.
Appellee maintains that the sanctions standard introduced in TransAmerican
does not apply to this case. Because that case involved discovery sanctions ordered
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under Rule 215, Appellee asserts that TransAmerican does not and should not apply
to sanctions for violations of a pretrial order under Rule 166. We cannot agree.
In Koslow’s, the Texas Supreme Court held that the same standard for the
imposition of sanctions under Rule 215 governed sanctions ordered under Rule 166
for violations of a pretrial order. Koslow’s, 796 S.W.2d at 703 n.1. (holding that the
1990 amendment to Rule 215 expressly requiring that sanctions be “appropriate”
constituted a codification of the “pre-existing standards for review of sanctions
orders on appeal” and, thus, that sanctions ordered under Rule 166 “must likewise
be ‘appropriate’”). Subsequently, the court in TransAmerican developed two
standards for determining whether an imposition of sanctions is just and appropriate
under Rule 215. TransAmerican, 811 S.W.2d at 916 n.4, 917 (holding that, under
the language of Rule 215, whether an imposition of sanctions is “just” is equivalent
to the pre-existing requirement that sanctions be “appropriate”) (citing Koslow’s,
796 S.W.2d at 703 n.1). The Texas Supreme Court has recently applied the
TransAmerican standards outside of Rule 215 to a case in which the trial court had
imposed sanctions pursuant to its inherent authority to sanction. See Altesse
Healthcare Sols., 540 S.W.3d at 574–75 (holding that TransAmerican applied to
sanctions imposed for violations of a temporary restraining order).
Thus, to be appropriate, sanctions ordered under Rule 166 must bear a direct
relationship to the offensive conduct and must not be excessive. See Taylor v.
Taylor, 254 S.W.3d 527, 532 (Tex. App.—Houston [1st Dist.] 2008, no pet.)
(recognizing that trial court’s discretion in imposing sanctions under Rule 166 is
limited by the standards set out in TransAmerican); In re Patton, 47 S.W.3d 825,
827 (Tex. App.—Fort Worth 2001, no pet.); Wal-Mart Stores, Inc. v. Butler, 41
S.W.3d 816, 818 (Tex. App.—Dallas 2001, no pet.); In re Beldsoe, 41 S.W.3d 807,
812 (Tex. App.—Fort Worth 2001, no pet.).
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Appellants contend that the trial court abused its discretion because the
sanctions did not directly relate to counsel’s failure to exchange exhibits and to
attend the pretrial hearings and because death-penalty sanctions were excessive. We
agree.
First, for a direct relationship to exist between the offensive conduct and the
sanction imposed, the “sanction must be directed against the abuse and toward
remedying the prejudice caused the innocent party.” TransAmerican, 811 S.W.2d
at 917. Furthermore, to relate directly to the abuse found, the sanctions should be
visited upon the offender. Id. Although attorneys cannot shield their clients from
sanctions, a trial court should not punish a party for counsel’s conduct in which the
party is not implicated. Id.
Here, Appellants’ counsel failed to comply fully with the trial court’s pretrial
exchange deadline. Counsel for Appellants produced all pretrial exchange items
late—except for the copies of their tagged and marked exhibits, which were not
produced to Appellee’s counsel. Regarding the late items given to Appellee’s
counsel at the first pretrial hearing, the trial court noted that “[d]iscovery was a tad
bit late. . . . Not catastrophic, but a tad bit late.” Then, at the continuance hearing
in April 2017, the trial court told Appellants’ counsel that Appellants’ “exhibits
needed to be marked. I expect those to be done. . . . So whatever is in that discovery
and whatever was beforehand and whatever you were furnished, that completed it.
That’s all the exhibits that are going to exist in this case. In other words, that portion
is closed.” Yet, by November 2017, Appellants’ counsel still had not exchanged
Appellants’ marked and tagged exhibits with counsel for Appellee.
Nothing in the record suggests that counsel’s failure to comply with the trial
court’s orders was attributable to Appellants, nor is there any suggestion that the trial
court determined that Appellants should be faulted for the offensive conduct. In fact,
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at the hearing on Appellants’ motion for reconsideration, the trial court expressly
stated that it did not want to punish Jesus Munoz or Randy Munoz. Further, we do
not find that striking Appellants’ pleadings and exhibits bears a direct relationship
to counsel’s failure to exchange their marked and tagged trial exhibits. The expired
discovery deadlines had circumscribed the potential exhibits that could exist in this
case. Any prejudice to Appellee could have been remedied without the
extraordinary remedy of death-penalty sanctions in the first instance.
Second, a sanction must not be excessive: “The punishment should fit the
crime.” TransAmerican, 811 S.W.2d at 917. Before imposing death-penalty
sanctions, a trial court is required to consider the availability of lesser sanctions and,
“in all but the most exceptional cases, actually test the lesser sanctions before striking
the pleadings.” Cire, 134 S.W.3d at 840–41 (emphasis added). The purpose of this
requirement is to consider whether lesser sanctions would promote compliance.
TransAmerican, 811 S.W.2d at 917 (holding that “courts must consider the
availability of less stringent sanctions and whether such lesser sanctions would fully
promote compliance”(emphasis added)); see also Taylor, 254 S.W.3d at 533; In re
Patton, 47 S.W.3d at 827.
Here, the trial court did not test lesser sanctions before it struck Appellants’
pleadings. Rather, the trial court imposed death-penalty sanctions in the first
instance, upon an oral request by Appellee’s counsel, at a hearing set on pretrial
matters. Subsequently, Appellee’s counsel asked the trial court to take notice of
Appellee’s attorney’s fees incurred in counsel’s traveling to Ector County from
Lubbock to attend these hearings. In testifying as to those costs, Appellee’s counsel
made it clear that he was not seeking an award of attorney’s fees and expenses;
rather, he offered this testimony “to support the Court’s order for the death-penalty
sanctions that . . . the Court is prepared and announced that [it] is going to render in
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this case.” Indeed, the trial court could have assessed attorney’s fees against
Appellants’ counsel or limited its sanctions order to striking Appellants’ exhibits.
Appellee points to the trial court’s final order striking Appellants’ exhibits
and pleadings and asserts that the trial court did consider lesser, alternative sanctions.
However, this is not that “exceptional case” where it is clear that no lesser sanction
would promote compliance with the trial court’s orders. See Cire, 134 S.W.3d at
842 (holding that case was exceptional and trial court was not required to test lesser
sanctions where the sanctions order stated that less stringent sanctions would not be
effective due to the party’s concealing or destroying evidence and party’s testimony
that she had no money to pay monetary sanctions). Nothing in the record or the trial
court’s order suggests that lesser sanctions would not have been effective.
Accordingly, we hold that the trial court abused its discretion when it struck
Appellants’ pleadings and exhibits, rendered default judgment for Appellee, and
denied Appellants’ motion for new trial. We sustain Appellants’ issue on appeal.
We understand and appreciate the frustration experienced by the trial court in
this case when it sought to control the orderly progression of its docket and when
that very legitimate goal was thwarted. There are other avenues open to the trial
court in that regard.
Because the trial court erred when it assessed death-penalty sanctions against
Appellants, we need not address Appellants’ argument that the sanctions violated
their due process right to notice of a sanctions hearing. TEX. R. APP. P. 47.1.
We think that the record is clear that Appellants’ lead counsel’s conduct was
the catalyst that brought about the trial court’s entry of the death-penalty sanctions.
We also note that Appellee was the party that asked for the sanctions. We are of the
opinion, therefore, that good cause exists to tax appellate costs one-half against
Appellants and one-half against Appellee. See TEX. R. APP. P. 43.4.
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We reverse the judgment of the trial court and remand the cause for further
proceedings.
JIM R. WRIGHT
SENIOR CHIEF JUSTICE
January 9, 2020
Panel consists of: Bailey, C.J.,
Stretcher, J., and Wright, S.C.J. 1
Willson, J., not participating.
1
Jim R. Wright, Senior Chief Justice (Retired), Court of Appeals, 11th District of Texas at Eastland,
sitting by assignment.
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