in Re Bannum, Inc.

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-09-00512-CV

In re Bannum, Inc.

ORIGINAL PROCEEDING FROM TRAVIS COUNTY

D I S S E N T I N G O P I N I O N

The role of mandamus is not to micro-manage or second guess a trial court's

discretion to impose a measured sanction for discovery abuse. Yet that is the role the majority

prescribes to mandamus relief today. The majority undermines the district court's authority to

control discovery and rewards abusive tactics by concluding that the district court exceeded its

sanctioning authority pursuant to rule 215 of the Texas Rules of Civil Procedure. Because I would

conclude that relator Bannum, Inc., has fallen far short of its burden to show that it is entitled to the

extraordinary remedy of mandamus, I would deny Bannum's petition for writ of mandamus.

See In re Prudential Ins. Co. of Am. , 148 S.W.3d 124, 135-36 (Tex. 2004); Walker v. Packer ,

827 S.W.2d 833, 840 (Tex. 1992). I, therefore, respectfully dissent.

As an initial matter, a relator has the burden of providing this Court with a

sufficient record to establish its right to mandamus relief. See Walker , 827 S.W.2d at 837 ; see also

Tex. R. App. P. 52.3(g), (j); 52.7(a). Bannum's petition for writ of mandamus challenges the district

court's sanction order setting the deposition of John Rich, who is Bannum's president and a Florida

resident, in Austin, Texas. Bannum, however, failed to provide this Court with a reporter's record

of the hearing in which the district court considered Bannum's motion for protective order and to

quash Rich's deposition and the parties' competing requests for sanctions or the reporter's record

from a prior related hearing sanctioning Bannum. On this basis alone, I would deny mandamus

relief. See Walker , 827 S.W.2d at 837 ; Downer v. Aquamarine Operators, Inc ., 701 S.W.2d 238,

241 (Tex. 1985) (in considering sanctions, "presumed that the court is familiar with the entire case

up to and including motion to be considered"; trial court could consider evidence introduced

subsequent to sanctions hearing); see also Cire v. Cummings , 134 S.W.3d 835, 843 (Tex. 2004)

(no abuse of discretion where record from sanction hearing showed that trial court discussed

and considered lesser sanctions); In re Western Star Trucks , 112 S.W.3d 756, 761-62, 764-65

(Tex. App.--Eastland 2003, orig. proceeding) (transcript of hearing quoted at length and statements

by the trial court cited in determining that the trial court abused discretion).

Further, on the record that is before this Court, I would conclude that the district

court acted well within its discretion to order Rich's deposition in Austin as a sanction. See Cire ,

134 S.W.3d at 838-39 (sanctions imposed for discovery abuse reviewed for abuse of discretion);

TransAmerican Nat. Gas Corp. v. Powell , 811 S.W.2d 913, 916-17 (Tex. 1991) (same); see

also Tex. R. Civ. P. 215.2(b) (list of non-exclusive sanctions for failure to comply with order or

discovery request). Sanctions should be reversed only if the trial court acts without reference to any

guiding rules and principles, such that its ruling was arbitrary or unreasonable. See Cire , 134 S.W.3d

at 838-39 . And the choice of sanction is left to the "sound discretion" of the trial court. See

TransAmerican , 811 S.W.2d at 916-17 ; In re Western Star Trucks, Inc ., 112 S.W.3d at 765 .

Ordering Rich's deposition in Austin squares with the district court's prior order for

discovery abuse in which the district court sanctioned Bannum for its failure to produce a corporate

representative, see Tex. R. Civ. P. 199.2, 215, and the relief real party in interest Christopher Tovar

sought in his response to Bannum's motion for protective order and to quash Tovar's notice of

Rich's deposition.

Following a hearing in May 2009, the district court awarded sanctions against

Bannum for its failure to produce a corporate representative in response to several notices of intent

to take the deposition of Bannum's corporate representative, including notices that were served on

Bannum in April 2008 and July 2008. The district court set the corporate representative's

deposition, by court order, on June 18, 2009:

On the 26th day of May, 2009, the Joint Motion for Sanctions for Discovery Abuse

and Failure to Appear at Deposition filed by Plaintiff Christopher Tovar and

Defendant/Cross Plaintiff Eugene Mees against Defendant/Cross Defendant Bannum,

Inc. was considered by the Court. After considering the evidence and hearing the

arguments of counsel, the Court finds that the Joint Motion for sanctions should be

GRANTED and that the deposition of Bannum, Inc.'s corporate representative

should be set by court order.

* * *

IT IS THEREFORE ORDERED that the deposition of Bannum, Inc.'s corporate

designee(s), on the subjects to be stated in any other party's Notice of Deposition,

shall be taken [in] Austin, Texas . . . on the 18th day of June, 2009.[ (1) ]

Tovar thereafter served a notice of intent to depose Bannum's corporate

representative for the court-ordered date of June 18, 2009, and included as one of the subject areas

of the deposition communications between Tovar and Rich:

We intend to question Bannum, Inc. about the knowledge and details of all

communications (including but not limited to letters, and conversations, emails, and

facsimile transmissions) between Bannum, Inc.'s representative, John Rich, and

Christopher Tovar . . . .

Bannum produced David Lowry, a former employee and presently a consultant for Bannum, as the

corporate representative for the deposition on June 18, 2009. Bannum did not challenge the

May 2009 order setting the deposition or object to Tovar's subsequent notice for the deposition that

included the designated subject area of communications between Tovar and Rich.

Following Lowry's deposition, the parties' current dispute arose. Tovar served

Bannum with a notice of intent to depose Rich on July 29, 2009, in Austin, Texas, and Bannum

moved for the district court to quash the notice and for protective order. See Tex. R. Civ. P. 199.4.

Bannum contended, among its grounds, that the notice should be quashed because rules 176 and

199.3 bar the deposition of Rich, a resident of Florida, in Austin. See id . 176, 199.3. Tovar filed

a response requesting Bannum's motion be denied--i.e., that Rich be deposed in Austin pursuant

to Tovar's notice--and sought sanctions because Bannum was attempting to subvert rule 199.2.

Tovar argued:

Bannum has attempted to subvert Rule 199.2 and an Order of this Court by producing

David Lowry ("Lowry") as its corporate representative, to testify in Austin about

conversations and other communications between Tovar and Rich, a subject about

which he had no knowledge, and a subject specified in the notice as an area for

questioning.

See id. 199.2. Attached to Tovar's response were his prior notices to depose Bannum's corporate

representative and excerpts from the transcript of Lowry's deposition. (2) Bannum replied and sought

sanctions against Tovar.

After a hearing, the district court denied Bannum's motion for protective order and

to quash and ordered the deposition of Rich in Austin as a sanction. The district court expressly

found that the designation of Lowry as the "corporate representative" that Bannum produced per the

district court's prior order was inadequate:

After considering the evidence and hearing the arguments of counsel, the Court finds

that Bannum's motion should be DENIED and that the designation of David Lowry

as a corporate representative to testify concerning communications between

John Rich and Plaintiff, Christopher Tovar, was inadequate under Rule 199.2 of the

Texas Rules of Civil Procedure.

IT IS THEREFORE ORDERED that Bannum's Motion for Protective Order and

to Quash is DENIED .

IT IS FURTHER ORDERED that the deposition of John Rich, Bannum's

President, as a sanction, shall be taken in Austin, Texas, before the end of the

discovery period, at a time and place agreed to by the parties.

Given the district court's prior order that set the deposition of Bannum's corporate

representative and addressed the subject areas of the deposition, Bannum's failure to challenge the

prior order or object to Tovar's subject areas in the notice for the June deposition, and the district

court's finding that Bannum's designation of Lowry as a corporate representative was inadequate

under Rule 199.2, I would conclude that the district court acted with reference to guiding rules and

principles in its "choice" of sanction to require Rich's deposition in Austin. See Cire , 134 S.W.3d

at 839 ; TransAmerican , 811 S.W.2d at 916-17 ; Downer , 701 S.W.2d at 241 . This sanction choice

was just; there was a direct relationship between the improper conduct and the sanction imposed.

See Cire , 134 S.W.3d at 839 ; TransAmerican , 811 S.W.2d at 916-17 ; see also Tex. R.

Civ. P. 199.2, 215.

Without addressing Bannum's litigation tactics that resulted in a prior sanctions order

or the district court's finding that Bannum's designation of Lowry as the corporate representative

was inadequate, the majority concludes that the district court's sanction was not "just" because it was

contrary to the rules of civil procedure to order the deposition of a non-party Florida resident in

Austin, Texas.

The majority fails to recognize the distinction between the district court's power

over non-party witnesses and officers of parties. See Tex. R. Civ. P. 176.3, 199.2(b), 199.3, 215;

In re Prince , No. 14-06-00895-CV, 2006 Tex. App. LEXIS 10558 , at *10-11, n.2 (Tex.

App.--Houston [14th Dist.] 2006, orig. proceeding) (citing numerous cases holding no abuse of

discretion by trial court to order deposition of officer of party in county of suit or in place other than

county of witness's residence; distinction drawn between court's power to order depositions

of non-party witnesses and parties or officers of parties); Wal-Mart Stores, Inc. v. Street ,

761 S.W.2d 587, 590 (Tex. App.--Fort Worth 1988, orig. proceeding) (no abuse of discretion to

order deposition of chairman of board and past president of defendant taken in Fort Worth, the

county of suit, rather than in deponent's county of residence in Arkansas).

Further, the majority's reliance on Wal-Mart Stores, Inc. v. Street , 754 S.W.2d 153

(Tex. 1988), is misplaced. The majority cites Street to support its conclusion that the rules of civil

procedure do not allow a court to order an out-of-state party to appear. But, in the subsequent

mandamus proceeding in that case, the Fort Worth Court of Appeals denied Wal-Mart's petition for

writ of mandamus to direct the trial court to rescind a subsequent order that Walton's deposition be

taken in Fort Worth. Street , 761 S.W.2d at 588 . Our sister court expressly rejected Walton's

argument that, as a resident of Arkansas, he had the "absolute right to have his deposition taken in

the county of his residence." Id . at 591.

The majority also relies on Street to support its conclusion that "nothing in the

record before us demonstrates that it would be reasonable or convenient to depose Rich in Austin."

See 754 S.W.2d at 155 . But in the subsequent mandamus proceeding in that case, our sister court,

addressing a similar argument, found the trial court did not abuse its discretion in finding that the

county of suit, Fort Worth, was a "reasonable and convenient place" to take the deposition of Walton

who was a non-party and non-resident. 761 S.W.2d at 589 . The court listed factors that a trial court

may consider in determining this issue, including (i) the overall "situation," (ii) the relationship

between the witness and the party, and (iii) the location of counsel, and discussed the facts that the

trial court considered in ordering Walton's deposition in the county of suit, rather than the county

of his residence in Arkansas. Id . at 590. Here, the district court could have considered the entire

record up to Bannum's motion for protective order and to quash, including the transcript of Lowry's

deposition, (3) to find that Austin was a reasonable and convenient place for Rich's deposition based

upon the factors of the overall situation between the parties, the district court's prior order

sanctioning Bannum, the relationship between Rich and Bannum, and the location of Bannum's

counsel in Austin, Texas. See id.

On this record that includes the district court's prior order sanctioning Bannum for

failure to produce a corporate representative, ordering the deposition of Bannum's president in

Austin was not contrary to the rules of civil procedure and is far from the types of sanctions that

have supported mandamus relief. See Cire , 134 S.W.3d at 839-40 ; TransAmerican , 811 S.W.2d

at 916-17 . Because I would conclude that relator Bannum failed in its burden to show that it is

entitled to the extraordinary remedy of mandamus, I would deny the petition for writ of mandamus.

__________________________________________

Jan P. Patterson, Justice

Before Justices Patterson, Puryear and Pemberton

Filed: October 30, 2009

1. The district court additionally ordered Bannum to pay attorney's fees as sanctions at that

time. Bannum has not provided a reporter's record of the May 2009 hearing.

2. In his response, Tovar asserts that there were at least nine instances in which Lowry could

not answer questions pertaining to communications between Rich and Tovar. For example, Lowry

testified that he did not know and was unable to testify whether there were conversations between

Rich and Tovar during the time periods when Rich signed Tovar's bid and when Rich approved

certain payments to Tovar.

3. In his deposition, Lowry testified that (i) Bannum had been in business since 1984, it

currently had nine contracts to operate halfway houses for the Federal Bureau of Prisons, and it was

opening an additional one in South Carolina, (ii) Bannum contracted with the Bureau of Prisons to

operate a halfway house in Austin, (iii) Rich accepted Tovar's bid for renovation work on the

property that was to be the halfway house in Austin, (iv) Rich signed the contract between Tovar and

Bannum, (v) Rich authorized payments made to Tovar for the work Tovar performed, (vi) Rich was

the president of Bannum and an officer, (vii) Rich and his father own Bannum, a closely held

corporation, and (viii) Lowry was not an employee but a consultant for Bannum at the time of his

deposition.