in Re George Green and Garlan Green

ACCEPTED

03-14-00725-CV

3737749

THIRD COURT OF APPEALS

AUSTIN, TEXAS

1/12/2015 4:19:03 PM

JEFFREY D. KYLE

CLERK

No. 03-14-00725-CV

FILED IN

3rd COURT OF APPEALS

AUSTIN, TEXAS

In the Third Court of Appeals 1/12/2015 4:19:03 PM

Austin, Texas JEFFREY D. KYLE

Clerk

GEORGE GREEN AND GARLAN GREEN,

Appellants

v.

PORT OF CALL HOMEOWNERS ASSOCIATION

Appellee

APPEAL FROM CAUSE NO. 18314

RD

33 JUDICIAL DISTRICT COURT OF LLANO COUNTY, TEXAS

HON. ALLAN GARRETT, PRESIDING

APPELLANTS’ BRIEF

David Junkin

State Bar No. 11058020

Law Office of David Junkin

P.O. Box 2910

Wimberley, Texas 78676

512/847-8600

512/847-8604 (fax)

david@junkinlawoffice.com

Attorney for Appellants

ORAL ARGUMENT (CONDITIONALLY) REQUESTED

STATEMENT REGARDING ORAL ARGUMENT

Appellants believe that the briefs and records will adequately present

the facts and legal arguments involved in this appeal and that oral argument

would not aid the decisional process significantly. See Tex. R. App. P. 39.1.

However, should the Court conclude that oral argument would be helpful,

Appellants stand ready and request the opportunity to participate.

i

IDENTITY OF PARTIES AND COUNSEL

The following is a complete list of all parties to the trial court’s order

at issue, as well as the names and addresses of all trial and appellate counsel.

Plaintiff/Appellants: Counsel for Appellants:

George Green David Junkin

Garlan Green P.O. Box 2910

Wimberley, Texas 78676

Defendant/Appellees: Counsel for Appellees:

Port of Call Homeowners Association Brantley Ross Pringle, Jr.

Randolph Harig Heidi Coughlin

Phillip Jacobs Wright & Greenhill, PC

John Ross Buckholtz 221 West 6th Street, Suite 1800

Richard Pat McElroy Austin, TX 78701

ii

TABLE OF CONTENTS

Index of Authorities ..................................................................................... vi

Statement of the Case ....................................................................................1

Issues Presented

A. DID THE TRIAL COURT ABUSE ITS

DISCRETION IN HOLDING A HEARING ON

THE MOTION TO ENFORCE THE

PROTECTIVE ORDER WHICH SOUGHT

SANCTIONS AS RELIEF WITH LESS THAN 3

DAYS’ NOTICE TO APPELLANTS? .....................................3

B. DID THE TRIAL JUDGE ABUSE HIS

DISCRETION IN ENTERING AN ORDER

PROHIBITING APPELLANTS FROM MAKING

ANY COMMUNICATIONS TO APPELLEES,

EXCEPT THROUGH ATTORNEYS OF

RECORD? ................................................................................. 3

C. THE ORDER THAT IS THE BASIS OF THIS

APPEAL EXTENDED THE TIME FOR

APPELLEE PORT OF CALL HOMEOWNERS’

ASSOCIATION TO PRODUCE RECORDS

FROM EVERY FORTY-FIVE (45) DAYS TO

EVERY SIXTY (60) DAYS BEGINNING

NOVEMBER 15, 2014. DID THE TRIAL

JUDGE ABUSE HIS DISCRETION IN

CHANGING THE TIME FOR PRODUCTION

OF RECORDS IN THIS CASE NUNC PRO

TUNC? .......................................................................................3

D. DID THE TRIAL JUDGE ERR IN

SANCTIONING APPELLANTS WITHOUT

ANY EVIDENCE TO SUPPORT THE AWARD? ..................3

Background ....................................................................................................4

iii

Summary of the Argument ...........................................................................5

Standard of Review ........................................................................................5

Argument

A. THE TRIAL COURT ABUSED ITS

DISCRETION IN HOLDING A HEARING ON

THE MOTION TO ENFORCE THE

PROTECTIVE ORDER, WHICH SOUGHT

SANCTIONS AS RELIEF, WITH LESS THAN

THREE (3) DAYS’ NOTICE TO

APPELLANTS ..........................................................................5

B. THE TRIAL COURT ABUSED ITS

DISCRETION IN ENTERING AN ORDER

PROHIBITING APPELLANTS FROM

HAVING ANY COMMUNICATIONS WITH

APPELLEES EXCEPT THROUGH

ATTORNEYS OF RECORD .................................................. 7

i. THE ORDER IS AN UNCONSTITUTIONAL

PRIOR RESTRAINT ON FREE SPEECH ............................7

ii. THE REQUIREMENTS FOR INJUNCTIVE

RELIEF WERE NOT ESTABLISHED............................... 10

C. THE TRIAL COURT IMPROPERLY

EXTENDED THE TIME FOR THE

APPELLEE PORT OF CALL HOME

OWNERS ASSOCIATION TO

AUTOMATICALLY PRODUCE RECORDS

FROM EVERY FORTY-FIVE (45) DAYS TO

EVERY SIXTY (60) DAYS ................................................... 10

D. THE TRIAL COURT ERRED IN

SANCTIONING APPELLEES WITHOUT

ANY EVIDENCE TO SUPPORT THE

AWARD .................................................................................. 13

iv

Conclusion and Prayer ............................................................................... 15

Certificate of Service .................................................................................. 17

Appendix

Order Granting Motion for Enforcement (the “Order”) ................ Tab 1

Order Granting Defendants’ Motion to Compel

and Protective Order (the “Initial Order”) ..................................... Tab 2

Cases .............................................................................................. Tab 3

Statutes........................................................................................... Tab 4

Rules .............................................................................................. Tab 5

v

INDEX OF AUTHORITIES

Case Law Page(s)

Alexander v. United States,

509 U.S. 544, 113 S. Ct. 2766, 125 L.Ed.2d 441 (1993) ........................ 8

Bantam Books, Inc. v. Sullivan,

372 U.S. 58, 83 S.Ct. 631, 9 L.Ed.2d 584 (1963) ................................... 8

Burton v. Cravey,

759 S.W.2d 160 (Tex. App.—Houston [1st Dist.] 1988, no writ). .. 11, 12

Davenport v. Garcia,

834 S.W.2d 4 (Tex. 1992) ....................................................................... 8

Ex parte Chambers,

898 S.W.2d 257 (Tex. 1995) ................................................................. 15

Ex parte Price,

741 S.W.2d 366 (Tex. 1987) ................................................................. 15

Ex parte Tucker,

110 Tex. 335, 220 S.W. 75 (Tex. 1920). ............................................. 8, 9

Hajek v. Bill Mowbray Motors, Inc.,

647 S.W.2d 253 (Tex. 1983) ................................................................... 8

Huie v. DeShazo,

922 S.W.2d 920 (Tex. 1996) ................................................................... 7

Kinney v. Barnes,

443 S.W.3d 87 (Tex. 2014) .............................................................. 8, 9, 10

Kutch v. Del Mar College,

831 S.W.2d 506 (Tex. App. —Corpus Christi 1992, no writ) .............. 13

McWhorter v. Sheller,

993 S.W.2d 781 (Tex. App. —Houston [14th Dist.] 1999, pet. denied).13

vi

Nath v. Texas Children’s Hospital,

Cause No. 12-0620 (Tex. August 29, 2014) ........................................... 7

Neb. Press Ass'n v. Stuart,

427 U.S. 539, 96 S. Ct. 2791, 49 L.Ed.2d 683 (1976) ............................ 8

San Antonio Models, Inc. v. Peeples,

686 S.W.2d 666 (Tex. App.—San Antonio 1985, orig. proceeding).... 11

Sobel v. Taylor,

640 S.W.2d 704 (Tex. App—Houston [14th Dist.] 1982, no writ) .......... 10

Sprague v. Sprague,

363 S.W.3d 788 (Tex. App.—Houston [14th Dist.] 2012, pet denied)..13

Town of Palm Valley v. Johnson,

87 S.W.3d 110, 111 (Tex. 2001) ............................................................. 9

TransAmerican Natural Gas Corp. v. Powell,

811 S.W.2d 913 (Tex. 1991) .......................................................................7

Statutes

Tex. Const. art. I, § 8 ......................................................................................... 8

Tex. Const. art. I, § 8 interp. Commentary (West 2007) ................................... 8

Tex. Prop. Code § 81.209 ................................................................................ 11

Tex. Prop. Code § 82.114 ................................................................................ 11

Tex. Bus. Org. Code § 22.351 ......................................................................... 11

Tex. Bus. Org. Code § 252.010 ....................................................................... 11

Rules

Tex. R. Civ. P. 4............................................................................................. 5, 6

vii

Tex. R. Civ. P. 21........................................................................................... 5, 6

Tex. R. Civ. P. 682........................................................................................... 10

Tex. R. Civ. P. 683........................................................................................... 10

Tex. R. Civ. P. 684........................................................................................... 10

Other

A. Bickel, the Morality of Consent 61 (1975) ................................................... 8

viii

TO THE HONORABLE THIRD COURT OF APPEALS:

Appellants, George Green and Garlan Green file this brief asking the

Court to reverse or dissolve the trial court’s order granting injunctive and

related relief based on the following:

STATEMENT OF THE CASE

Order Signed by: The Honorable Allan Garrett

Trial Court: 33rd Judicial District Court

Appellants: Appellant Garlan Green is a property owner in the

Port of Call townhome development in Horseshoe

Bay, Texas. Appellant George Green is Garlan

Green’s son, lives with Garlan Green as a

caretaker, and has power of attorney for Garlan

Green. The Appellants are referred to as

“Apellants” or “Green.”

Appellees: Appellee Port of Call Homeowners Association

(“POC”) is the homeowners association of the Port

of Call development and was an unincorporated

association of persons until November, 2013 when

it incorporated as a non-profit corporation. The

individual Appellees, Randolph Harig, Phillip

Jacobs, John Ros Buchholtz, and Richard Pat

McElroy are current or former members of the Port

of Call Homeowners Association board of

directors.

Nature of the Case: This controversy essentially began as a request for

review of POC records due to what Appellants

believed to be misuses of POC funds. When

Appellants believed they were deprived of full

access to the records, Appellants brought a claim

in Justice Court in Llano County under the

Property Code for access to the records. The

Appellants’ Brief – Page 1

Justice Court ordered the documents produced and

entered judgment against POC for attorney’s fees

and court costs. See CR 100; RR, Vol. 2, Page 7,

lines 4 – 23 and Page 15, line 25 – page 16, line

18. The review of those records led to the instant

suit for misuse of funds by POC and individual

members of its board of directors.

Course of Proceedings: This case was filed on February 5, 2013. CR 8.

The case was, by agreement, abated for several

months to try to resolve the matter. Discovery

progressed and new parties were joined and new

claims added. CR 67 (Plaintiff’s First Amended

Original Petition, Request for Equitable Relief &

Request for Disclosure) and CR136 (Plaintiff’s

Second1 Amended Original Petition, Request for

Equitable Relief & Request for Disclosure).

In connection with discovery issues, both parties

filed Motions to Compel. CR 89 and CR 100. A

hearing was held on those motions on August 14,

2014. The Trial Court summarized its findings

(RR, Vol. 2, page 52, line 9 - page 62, line 11) and

an Order was entered (the “Initial Order”). CR

131. The Initial Order was an attempt by the Court

to fashion a compromise between the broad rights

of access to POC’s records under the Texas

Property Code and the POC governing documents

and the discovery obligations imposed on litigants

by ordering the automatic production of POC

records every forty-five (45) days. No objection

was made to the Initial Order by any party.

On October 10, 2014, POC served Defendants’

Motion to Enforce Protective Order and set the

matter for hearing on October 14, 2014. CR153

and 167. The motion was generally based on letter

requests for records made after the Initial Order.

Appellants objected to the setting because it failed

1

Incorrectly styled as Plaintiff’s First Amended Original Petition, Request for

Equitable Relief & Request for Disclosure (emphasis added).

Appellants’ Brief – Page 2

to give the required three (3) days’ notice under

the Texas Rules of Civil Procedure. CR 145.

Objection was made at the hearing as well and that

objection was overruled. RR, Vol. 3, page 4, line

12 – page 15. The hearing was conducted as a

non-evidentiary hearing. After the hearing, POC

filed Defendants’ Supplemental Motion to Enforce

Protective Order. CR 169.

Trial Court’s Disposition: On October 21, 2014, the Court entered an Order

Granting Motion for Enforcement which modified

the Initial Order “nunc pro tunc,” imposed

injunctive relief against Appellants, extended the

automatic record supplementation to every sixty

(60) days, and awarded sanctions against

Appellants. CR 175. It is this order that forms the

basis of this appeal (the “Order”).

ISSUES PRESENTED

A. The Court held a hearing on the Order with less than three (3) days’

notice under Rules 4 and 21 of the Texas Rules of Civil Procedure. Did

the trial judge correctly overrule Appellants’ objection to the defective

notice?

B. The Order requires, among other things, that “all communications

between the parties be had through attorneys of record” and Appellants

are ordered not to communicate with any Appellee for any reason at all.

Did the trial judge abuse his discretion in entering an order prohibiting

any communication except through attorneys?

C. The Order extended the time for POC to produce records to “every sixty

(60) days beginning November 15, 2014.” Did the trial judge abuse his

discretion in changing the time for production of records in this case, as a

nunc pro tunc order?

D. Did the trial judge err in entering sanctions without any evidence of costs

incurred, fees expended, etc.?

Appellants’ Brief – Page 3

BACKGROUND

As a property owner in the Port of Call development and his agent,

Appellants, exercising their rights by way of the POC governing documents and

under Texas statutes, began requesting inspection of POC records. Ultimately,

Appellants believed they were intentionally being deprived of full access to the

records, so Appellants brought a claim under the Property Code in Justice Court

in Llano County for access to the records. The Justice Court ordered the

documents produced and entered judgment against POC for over $3,000 in

attorney’s fees and court costs. See CR 100; RR, Vol. 2, Page 7, lines 4 – 23

and Page 15, line 25 – page 16, line 18. The review of those records led to this

suit for misuse of funds by POC and individual members of its board of

directors. In response to a motion for protection and motions to compel filed by

both Appellants and Appellees, in August, 2014 the Court entered the Initial

Order. In October, 2014 the Appellees filed, and with essentially one day

notice under the rules, set for hearing a motion to enforce the Initial Order. No

evidence was introduced at the hearing by Appellees. The Court then entered

the Order “nunc pro tunc”2 prohibiting any communication of any kind by

Appellants (their agents, heirs, etc.) with the Appellees (their agents, heirs,

etc.), modifying the Initial Order, and awarding sanctions against Appellants.

2

CR 175.

Appellants’ Brief – Page 4

SUMMARY OF THE ARGUMENT

The Order was entered after a hearing held on less than the three (3) days’

notice required by Rules 4 and 21 of the Texas Rules of Civil Procedure despite

sanctions being the only relief requested by Appellees, the unavailability of

Appellants, and no evidence being presented by Appellees. By prohibiting any

communication of any kind between Appellants and Appellees, except through

attorneys, the Order is overly broad and unconstitutionally prohibits the exercise

of free speech by Appellants. The Order also improperly, and without a pleading

or evidence from the Appellees to support it, modified the terms of the Initial

Order and extended the time for Appellees to produce records from forty-five (45)

days to sixty (60) days. There was no evidence to support an award, or the

amount, of sanctions against Appellants.

STANDARD OF REVIEW

The issues raised by Appellants are governed by an abuse of discretion

standard.

ARGUMENT

A. THE TRIAL COURT ABUSED ITS DISCRETION IN HOLDING A

HEARING ON THE MOTION TO ENFORCE THE PROTECTIVE

ORDER WHICH SOUGHT SANCTIONS AS RELIEF, WITH LESS

THAN THREE (3) DAYS’ NOTICE TO APPELLANTS.

1. Rule 21 of the Texas Rules of Civil Procedure provides: “[a]n

application to the court for an order and notice of any hearing thereon, not

Appellants’ Brief – Page 5

presented during a hearing or trial, must be served upon all other parties not

less than three days before the time specified for the hearing, unless

otherwise provided by these rules or shortened by the court.” In computing

the three day period in Rule 21, the day of the notice is not to be included

and “the last day of the period so computed is to be included, unless it is a

Saturday, Sunday, or legal holiday, in which event the period runs until the

end of the next day which is not a Saturday, Sunday, or legal holiday.” Tex.

R. Civ. P. 4.

2. On October 10, 2014, Appellees served Defendants’ Motion to

Enforce Protective Order and at the same time set the matter for hearing on

October 14, 2014. CR153 and 167. Green objected to the setting because it

failed to give the required three (3) days’ notice under Texas Rules of Civil

Procedure 4 and 21. CR 145. October 10, 2014 was a Friday and Monday,

October 13, 2014 was a federal holiday (Columbus Day). With the hearing

held on October 14, 2014 the Appellants got one (1) day notice under the

Texas Rules of Civil Procedure. Appellee claimed no further notice should

be given due to the impending birth of a child in 25 days and because

receiving letters from Appellants asking for a response in three (3) days

constituted an emergency. RR, Vol. 3, page 5, line 6 – page 8. Appellants

were not able to attend the hearing. However, Appellants’ objections to the

short notice were overruled. RR, Vol. 3, page 4, line 12 – page 15.

Appellants’ Brief – Page 6

3. There was no evidence introduced showing the necessity for

shortening the notice requirements. The Appellees did not show how the

impending birth of a child prohibited Appellee from giving proper notice.

The Appellees did not show how the receipt of a letter seeking a response in

three days constituted an “emergency,” particularly when Appellee did not

establish it intended to respond to such communication within the time

period and the time period had already passed as of the time of the hearing.

4. The relief sought in Appellees’ Motion to Enforce Protective

Order was sanctions for alleged violations of the Initial Order. CR 154.

While the Court has discretion with respect to shortening the time for a

hearing, the relief sought by Defendants further implicated due process

protections requiring Appellees to provide Appellants with, at a minimum,

three (3) days’ notice of the hearing.3

B. THE TRIAL JUDGE ABUSED HIS DISCRETION IN ENTERING AN

ORDER PROHIBITING APPELLANTS FROM MAKING ANY

COMMUNICATIONS TO APPELLEES, EXCEPT THROUGH

ATTORNEYS OF RECORD.

i. The Order is an unconstitutional prior restraint on free speech.

5. The prior restraint of free speech is presumptively overly broad

and unconstitutional. As the Texas Supreme Court recently reiterated:

3

A sanctions award that fails to comply with due process constitutes an abuse of

discretion because a trial court has no discretion in determining what the law is or

applying the law to the facts. See Nath v. Texas Children’s Hospital, Case No. 12-

0620 (Tex. 2014), citing, TransAmerican Natural Gas Corp. v. Powell, 811 S.W.2d

913, 917 (Tex. 1991); Huie v. DeShazo, 922 S.W.2d 920, 927 (Tex. 1996).

Appellants’ Brief – Page 7

"Every person shall be at liberty to speak, write or publish his opinions

on any subject, being responsible for the abuse of that privilege; and no

law shall ever be passed curtailing the liberty of speech or of the press."

Tex. Const. art. I, § 8. Enshrined in Texas law since 1836, this

fundamental right recognizes the "transcendent importance of such

freedom to the search for truth, the maintenance of democratic

institutions, and the happiness of individual men." Tex. Const. art. I, § 8

interp. commentary (West 2007). Commensurate with the respect Texas

affords this right is its skepticism toward restraining speech. While abuse

of the right to speak subjects a speaker to proper penalties, we have long

held that "pre-speech sanctions" are presumptively unconstitutional.

Davenport v. Garcia, 834 S.W.2d 4, 9 (Tex. 1992); see also Ex parte

Tucker, 110 Tex. 335, 220 S.W. 75, 76 (Tex. 1920).

The First Amendment of the U.S. Constitution is similarly suspicious of

prior restraints, which include judicial orders "forbidding certain

communications" that are "issued in advance of the time that such

communications are to occur." Alexander v. United States, 509 U.S. 544,

550, 113 S. Ct. 2766, 125 L.Ed.2d 441 (1993) (citation and internal

quotation marks omitted). The U.S. Supreme Court has long recognized

that "prior restraints on speech and publication are the most serious and

the least tolerable infringement on First Amendment rights." Neb. Press

Ass'n v. Stuart, 427 U.S. 539, 559, 96 S. Ct. 2791, 49 L.Ed.2d 683

(1976); see also id. ("If it can be said that a threat of criminal or civil

sanctions after publication 'chills' speech, prior restraint 'freezes' it at least

for the time." (quoting A. Bickel, the Morality of Consent 61 (1975)). As

such, they "bear a heavy presumption against [their] constitutional

validity." Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 70, 83 S.Ct. 631, 9

L.Ed.2d 584 (1963). This cornerstone of First Amendment protections

has been reaffirmed time and again by the Supreme Court, this Court,

Texas courts of appeals, legal treatises, and even popular culture.

Kinney v. Barnes, 443 S.W.3d 87, 90-91 (Tex. 2014) (footnotes omitted).

While free speech is not an absolute right and the court’s remedies to punish an

abuse of that right remains, a prior restraint on free speech by injunction is not

an appropriate remedy. Id. at 94, citing, Hajek v. Bill Mowbray Motors, Inc.,

Appellants’ Brief – Page 8

647 S.W.2d 253 (Tex. 1983) (per curiam); Ex parte Tucker, 110 Tex. 335, 220

S.W. 75 (Tex. 1920). The Texas Supreme Court went on to note that,

“[o]f course, the requirements for injunctive relief still must be met. A

plaintiff must show that damages are inadequate or cannot otherwise be

measured by any pecuniary standard.

Id. at 93, fn 8, citing, Town of Palm Valley v. Johnson, 87 S.W.3d 110, 111

(Tex. 2001) (per curiam).

6. The Order at issue in this appeal provides, in part, “all

communications between the parties be had through attorneys of record, and

George Green and Garlan Green, and any of their agents, assigns, officers,

executors or any person acting or working on their behalf in any way, [sic]

other than their attorney(s) of record, shall make no communication to

Defendants during this litigation.” CR 175. While the injunctive language is

not clear, it purports to be an overly broad and unconstitutional restraint on

Appellants exercise of free speech rights. The Order does not seek to limit the

scope, timing, or substance of the communications, it simply prohibits all

communications of any kind for any reason. By way of examples only and

carried to the extreme, the Order effectively prohibits:

(i) Appellants from speaking or asking questions at any meeting of the

Port of Call Homeowners Association,

(ii) Appellants from voting (at least from communicating in any

manner what their vote is) in any POC election,

(iii) Appellees from complying with the provisions of the Texas

Property Code in providing notice to Appellants of its meetings

except through counsel,

Appellants’ Brief – Page 9

(iv) Appellants from notifying Appellees of any problems or

emergencies on the common property, and

(v) contesting any demand for payment or even making a payment if it

includes any “communication.”

The scope of the relief in the injunctive provisions of the Order constitutes an

unconstitutional, overly broad limitation on the Appellants’ free speech rights.

ii. The requirements for injunctive relief were not established.

7. Further, as noted above, in order for the Court to issue injunctive

relief, the requirements for injunctive relief must still be met. Kinney, 443

S.W.3d 93fn 8. In this case, the Appellees did not pled for this relief,

introduced no evidence of irreparable injury or that no adequate remedy at law

is available, posted no bond, and the order does not include a trial date as

required by the Texas Rules of Civil Procedure. See Sobel v. Taylor, 640

S.W.2d 704, 708 (Tex. App—Houston [14th Dist.] 1982, no writ) (finding that

an order for injunctive relief was issued without compliance with the Texas

Rules of Civil Procedure and that portion of the order “must be dissolved.”).4

The Order should be dissolved with respect to the injunctive relief.

C. THE TRIAL COURT IMPROPERLY EXTENDED THE TIME FOR

APPELLEE PORT OF CALL HOMEOWNERS’ ASSOCIATION TO

PRODUCE RECORDS FROM EVERY FORTY-FIVE (45) DAYS TO

EVERY SIXTY (60) DAYS.

8. At the hearing on August 14, 2014 resulting in the issuance of the

Initial Order, the Court was provided with and referred to copies of relevant

4

See also., TEX. R. CIV. P. 682, 683, and 684.

Appellants’ Brief – Page 10

Texas statutes relating to access to property owner associations and non-profit

corporation records.5 See RR, Vol. 2, page 40, line 14 – page 45, line 5.6 These

authorities create independent requirements for POC to make its records

available to Appellants. These requirements are independent of the duties

related to discovery in litigation. As the Court in Burton v. Cravey pointed out:

Appellees sought the production of records that they were statutorily

entitled to inspect. Appellants’ complaints about the order appear to be

an attempt to engraft discovery notions upon the appellees’ statutory right

of inspection, which is independent of any right of discovery in litigation.

See San Antonio Models, Inc. v. Peeples, 686 S.W.2d 666 (Tex. App.—

San Antonio 1985, orig. proceeding). The right to inspect under article

1396-2.23 encompasses “all books and records.” . . .

Again, we note that appellants are attempting to engraft notions borrowed

from Texas discovery practice onto a statutory right to inspect. Article

1396-2.23 contains no limitations on the member’s right to inspect as

5

The provisions referred to include: (i) TEX. PROP. CODE §81.209 (“. . . (b) The

accounts and supporting vouchers of a condominium regime shall be made available

to the apartment owners for examination on working days at convenient, established,

and publicly announced hours.”); (ii) TEX. PROP. CODE §82.114 arguably applicable

after November 2013 (“. . . (b) All financial and other records of the association shall

be reasonably available at its registered office or its principal office in this state for

examination by a unit owner and the owner's agents.”), (iii) TEX, BUS. ORG. CODE §

22.351 (providing that a member of a non-profit organization, “on written demand

stating the purpose of the demand, is entitled to examine and copy at the member's

expense, in person or by agent, accountant, or attorney, at any reasonable time and for

a proper purpose, the books and records of the corporation relevant to that purpose.”),

(iv) TEX. BUS. ORG. CODE §252.010. (“. . . (a) A nonprofit association shall keep

correct and complete books and records of account for at least three years after the

end of each fiscal year and shall make the books and records available on request to

members of the association for inspection and copying.”).

6

The Trial Court was also provided with copies of governing documents for POC that

require the production of records to members of the association. However, the

Articles, Bylaws and recorded POC Records Production Policy were not introduced

into evidence.

Appellants’ Brief – Page 11

long as the books and records are those of the non-profit corporation and

the inspection is for “any proper purpose.”

Burton v. Cravey, 759 S.W.2d 160, 162 (Tex. App.—Houston [1st Dist.] 1988,

no writ). The obligations with respect to the inspection and production of

documents imposed by governing documents and Texas statutes are not the

same as those governing discovery.

9. In the Initial Order, the Court reasonably sought to strike a balance

between the requirements of production placed on Appellee Port of Call

Homeowners’ Association’s by statute and its own governing documents and its

discovery obligations in this litigation by ordering an automatic forty-five (45)

day supplementation of all of its records to Appellants. No party objected to

this order or sought to modify it. However, at the hearing on October 14, 2014,

without any supporting pleading or evidence being introduced, the trial Court

modified the automatic “supplementation” period and extended it to sixty (60)

days. There was no evidence that the forty-five (45) day period was

unreasonably burdensome or unworkable. The Trial Court should not have

modified the Initial Order as a “nunc pro tunc” order because there was no

evidence introduced to support the change, it was not requested by the

Appellants’ Brief – Page 12

Appellees in the Motion to Enforce or any other pleading, and the change in the

term of days is not correcting a clerical error.7

D. THE TRIAL COURT ERRED IN SANCTIONING APPELLANTS

WITHOUT ANY EVIDENCE TO SUPPORT THE AWARD.

10. Trial courts have inherent power to sanction "to the extent

necessary to deter, alleviate, and counteract bad faith abuse of the judicial

process, such as any significant interference with the traditional core

functions of Texas courts." Sprague v. Sprague, 363 S.W.3d 788, 803 (Tex.

App.—Houston [14th Dist.] 2012, pet denied), citing McWhorter v. Sheller,

993 S.W.2d 781, 789 (Tex. App. —Houston [14th Dist.] 1999, pet. denied),

citing Kutch v. Del Mar College, 831 S.W.2d 506, 509-10 (Tex. App.—

Corpus Christi 1992, no writ). These core functions include "hearing

evidence, deciding issues of fact raised by the pleadings, deciding questions

of law, entering final judgment and enforcing that judgment." Kutch, 831

S.W.2d at 510. For the trial court to exercise its inherent power to sanction,

there must be some evidence of significant interference with the core

functions of the court. McWhorter, 993 S.W.2d at 789 (citing Kutch, 831

S.W.2d at 510).

11. In this case, and to the extent that this Court has jurisdiction over

this part of the Order, the Appellees did not present any evidence to support

7

The Court initially thought supplementation every month (30 days) would be

appropriate then revised it to every forty-five (45) days. See RR, Vol. 2, page 53, line

25 – page 54, line 7.

Appellants’ Brief – Page 13

an award of sanctions. For example, Appellees introduced no admissible

evidence that one or more letters were sent by Appellants or that one was

sent with any particular content. Appellees offered no evidence of any costs,

delays, expenses, attorney fees, etc. that were incurred by Appellees.

Appellees offered no evidence of a significant interference with the core

functions of the Court or even of significant interference with its own

operations. For example, the Appellees offered no evidence that any letter

from Appellants caused them to behave or act differently than they would

have acted under the existing order. In other words, Appellees did not offer

evidence that any letter from Appellants caused them or would have caused

them to produce documents more often than the forty-five (45) automatic

supplementation provision in the Initial Order. There is no evidence to

support an award, or amount, of sanctions against Appellants.

12. Lastly, the Initial Order contains no language prohibiting the

Appellants from communicating with the Appellees or sending letters. At

best, the Court made an oral ruling that the Appellants should not,

individually, make requests for documents. While there was an oral

pronouncement from the bench at the time the Initial Order was signed to the

effect that “the client needs to step aside when it comes to document

requests” and “the plaintiff, individually, will not make specific requests

under the statute during the pendency of this litigation, but rather that will be

Appellants’ Brief – Page 14

dealt with by updating responses to discovery,”8 that language was not

included in the Initial Order. CR 131. Even though styled as a nunc pro

tunc order, the Order, by entering sanctions, effectively finds the Appellants

in contempt for violation of the Initial Order. Ordinarily, a party “cannot be

held in constructive contempt of a Court order that has not been reduced to

writing at the time the actions allegedly violated that order. See Ex parte

Chambers, 898 S.W.2d 257, 262 (Tex. 1995) (“A contemnor cannot be held

in constructive contempt of court for actions taken prior to the time that the

court’s order is reduced to writing.”); see also, Ex parte Price, 741 S.W.2d

366 (Tex. 1987) (noting that in the contempt context oral orders are poor

substitutes for a written order). The Trial Court should not have awarded

sanctions against the Appellants based solely on an oral instruction to “step

aside” when it comes to document requests or to “not make specific requests

under the statute” without identifying the statute or showing that the requests

were made under a statute as opposed to, for example, the POC governing

documents.

CONCLUSION AND PRAYER

Appellants respectfully move that the Order entered by the trial court on

October 21, 2014 be vacated in all respects, dissolved as to any injunctive

8

RR, Vol. 2, page 53, lines 9 – 21.

Appellants’ Brief – Page 15

relief, and further requests all such other and further relief, including general

relief, to which they might be entitled.

Respectfully submitted,

Law Office of David Junkin

_______________________

David Junkin

State Bar No. 11058020

P.O. Box 2910

Wimberley, Texas 78676

512/847-8600

512/847-8604 (fax)

david@junkinlawoffice.com

Attorney for Appellants

George and Garlan Green

CERTIFICATION REGARDING LENGTH OF BRIEF

Counsel for Appellants herby certifies that the length of Appellants’ Brief

as indicated by the word processing system used to generate the brief, excluding

appendices, is 4,707 words. While not required, this word count includes the

caption, identity of the parties and counsel, statement of oral argument, table of

contents, index of authorities, statement of the case and issues presented,

signature block, and certificate of service.

_______________________

David Junkin

Appellants’ Brief – Page 16

CERTIFICATE OF SERVICE

I hereby certify that a copy of this brief was served on the following

counsel of record and in the manner indicated on January 12, 2015.

CERTIFIED MAIL, RETURN RECEIPT REQUESTED

#7013 0600 0001 1397 6886 AND/OR EFILE

Brantley Ross Pringle, Jr.

Heidi Coughlin

Wright & Greenhill, PC

221 West 6th Street, Suite 1800

Austin, TX 78701

CERTIFIED MAIL, RETURN RECEIPT REQUESTED

#7013 3020 0001 5962 8986 AND/OR EFILE

L. Hayes Fuller, III

Naman, Howell, Smith, & Lee, PLLC

P.O. Box 1470

Waco, TX 76703-1470

___________________________

David Junkin

Appellants’ Brief – Page 17

175

176

131

132

Rahul K. Nath, M.D., Petitioner, employed by Baylor College of Medicine and affiliated

with Texas Children's Hospital (the Hospital). Nath

v. reported to Dr. Saleh Shenaq, the Chief of Baylor College

of Medicine's Division of Plastic Surgery, who also was

Texas Children's Hospital and Baylor College of Nath's partner at the Hospital's Obstetrical Brachial

Medicine, Respondents Plexus Clinic. Baylor received fifteen percent of the

clinic's patient fees, and Nath and Shenaq evenly split the

No. 12-0620

remainder of the fees.

Supreme Court of Texas

Nath's relationship with his colleagues turned

acrimonious in 2003, when several doctors complained

August 29, 2014

that Nath billed excessively, performed unnecessary

Argued February 5, 2014 procedures, and treated fellow colleagues in an

unprofessional manner. A letter from his faculty

On Petition for Review from the Court of Appeals supervisors states that, "there have been several

for the Fourteenth District of Texas complaints pertaining to your billing practices, ethics,

and professional conduct, " and described his academic

Justice Guzman delivered the opinion of the Court contributions as "minimal." For these reasons, the letter

in which Chief Justice Hecht, Justice Johnson, Justice announced that Nath's faculty appointment would not be

Willett, and Justice Devine joined. renewed, and his employment with Baylor was

terminated effective June 30, 2004. Nath's former office

Eva M. Guzman Justice manager also claimed Nath had a history of making

racially-provocative statements and seemed to harbor

In a civil suit, few areas of trial court discretion

delusions of grandeur.

implicate a party's due process rights more directly than

sanctions. This proceeding involves one of the highest Shortly after receiving the letter, Nath retained an

reported monetary sanctions awards in Texas history attorney and notified Baylor that its employees were

stemming from baseless pleadings and one of the largest making statements "potentially damaging to Dr. Nath's

such awards in the United States.[1] Further, the award reputation, " allegedly in an effort to get Nath's patients to

was levied against a party rather than an attorney. The remain at the clinic. In 2006, Nath sued Shenaq, Baylor,

Civil Practice and Remedies Code and our Rules of Civil and the Hospital. Nath and Shenaq settled two years later.

Procedure allow for pleadings sanctions against parties Shenaq and another clinic doctor subsequently died and

and attorneys when, among other things, a pleading was the clinic never reopened.

filed with an improper purpose or was unlikely to receive

evidentiary support. We have held that due process In his original pleading in 2006, Nath asserted

concerns impose additional layers of protection on claims for defamation and tortious interference with

sanctions awards by requiring, among other things, that business relations against Baylor and the Hospital.[2]

the awards be just and not excessive. Nath's third amended petition added claims for negligent

supervision and training predicated on the previously

In this suit between a physician and other medical alleged facts. Nath's fourth amended petition added

providers, the trial court imposed sanctions against the allegations that Shenaq had been operating on patients

physician well in excess of one million dollars for filing despite impaired vision. Similarly, Nath's fifth amended

groundless pleadings in bad faith and with an improper petition added that Shenaq had been operating on patients

purpose. We conclude the physician plaintiff's pleadings while afflicted with hepatitis. The fifth amended petition

asserted time-barred claims and addressed matters wholly also included a declaratory judgment claim (that Nath

irrelevant to the lawsuit in an attempt to leverage a more could or should disclose to his patients that Shenaq was

favorable settlement, and therefore are sanctionable. But in poor health). The Hospital counterclaimed for

in assessing the amount of sanctions, the trial court failed attorney's fees pursuant to the declaratory judgment act,

to consider whether, by litigating for over four years and in December 2009, moved for summary judgment on

before seeking sanctions, the defendants bore some all of the claims in Nath's fifth amended petition. Baylor

responsibility for the attorney's fees they incurred. moved for summary judgment in January 2010. In

Accordingly, we reverse the court of appeals' judgment response, Nath moved to compel additional depositions,

and remand to the trial court to reassess the amount of the extend the deadline to respond to the motions, and

sanctions award. continue the summary judgment hearing—all of

which the trial court granted. In March 2010, Nath again

I. Background

moved to continue the summary judgment hearing, which

the trial court denied. Nath retained new counsel, Daniel

Dr. Rahul K. Nath is a plastic surgeon who was

Shea, who appeared at the hearing and filed a motion to

recuse the judge. Nath also moved to recuse the judge sanctions.

assigned to hear the motion to recuse. Ultimately, the

motions to recuse were denied. Before the hearing on the Hospital's motion for

sanctions, Nath moved to sever the claims as to Baylor,

Nath also filed a sixth amended petition in April and after severance, Baylor also moved to modify the

2010, in which he abandoned his defamation, tortious judgment to assess fees as sanctions. After a hearing on

interference, negligence, and declaratory judgment claims Baylor's sanctions motion in November 2010, the trial

and brought a claim for intentional infliction of emotional court made similar findings and awarded Baylor's $644,

distress. The Hospital and Baylor moved for summary 500.16 in attorney's fees as sanctions against Nath. The

judgment on the new claim. Nath failed to respond to the court of appeals affirmed the awards, and we granted

motions and instead objected to the notice of hearing Nath's petition for review. 375 S.W.3d 403, 415.

based on a technical defect. All parties appeared at a

summary judgment hearing in June 2010, more than four II. Discussion

years after the suit began, where the trial court dismissed

Nath's claims.[3] Nath primarily argues in this Court that the

sanctions imposed against him as the client were not

Two months later, the Hospital nonsuited its visited on the true offender and were excessive. The

declaratory judgment counterclaim. The Hospital then Hospital and Baylor counter that Nath had personal,

moved to modify the judgment to assess attorney's fees as active involvement in the litigation and that the fee award

sanctions against Nath. Nath retained new counsel and was appropriate given the circumstances. We agree with

filed special exceptions to the motion for sanctions in the Hospital and Baylor that the trial court properly

September. After a hearing on the special exceptions and sanctioned Nath because he pursued time-barred claims

the Hospital's sanctions motions, the trial court denied the and irrelevant issues in order to leverage a more

special exceptions and granted the sanctions motion. The favorable settlement. But concerning the excessiveness of

court issued findings of fact and conclusions of law the award, the Hospital and Baylor waited almost four

indicating the sanctions were based on: (1) "Nath's years into the litigation before moving for summary

improper purposes in filing the pleadings in this case;" judgment on Nath's claims and only moved for sanctions

(2) "the bad faith that his actions manifest;" and (3) "the after obtaining a final judgment. We previously advised

lack of any factual predicate for his claims, as previously courts to consider a variety of factors when imposing

established by the Court's orders granting the motions for sanctions, including the degree to which the

summary judgment." The court explained that its finding non-sanctioned parties' behavior caused their own

of bad faith stemmed from Nath's conduct in seeking expenses. The trial court failed to discuss this relevant

information regarding Shenaq's health, conduct for which factor, and we reverse and remand for it to do so.

the court had previously admonished Nath.[4] Finally, the

court concluded that Nath's leveraging of this information A. Standard of Review

in an attempt to obtain a settlement constituted an

We review the imposition of sanctions under an

improper purpose.

abuse of discretion standard. Low v. Henry , 221 S.W.3d

The trial court further found that Nath took "a 609, 614 (Tex. 2007). Both Chapter 10 of the Texas Civil

personal, participatory role in this litigation." The court Practice and Remedies Code and Texas Rule of Civil

posited that Nath "is knowledgeable about the law and Procedure 13 are applicable to this case, and sanctions

legal issues, having previously studied the law, " for imposed pursuant to both are reviewed under this abuse

several semesters in the early 1980s in Canada. of discretion standard. Id. A sanctions award will not

According to the trial court, Nath insisted on delaying the withstand appellate scrutiny if the trial court acted

summary judgment hearing so he could be present at two without reference to guiding rules and principles to such

depositions. Nath also filed an affidavit in response to the an extent that its ruling was arbitrary or unreasonable.

motion for summary judgment indicating he authorized Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex.

the facts and theories set forth in the petitions. The court 2004). A sanctions award that fails to comply with due

further found that Nath met with one deponent shortly process constitutes an abuse of discretion because a trial

before his deposition to discuss his testimony. And the court has no discretion in determining what the law is or

trial court observed that "Nath has used the court system applying the law to the facts. See TransAmerican Natural

to intimidate adversaries and to stifle dissent with Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex. 1991);

baseless legal allegations" by suing an alleged defamer, Huie v. DeShazo, 922 S.W.2d 920, 927 (Tex. 1996). But

suing his former partner in a MRI business, suing two we will not hold that a trial court abused its discretion in

individuals associated with the Texas Medical Board levying sanctions if some evidence supports its decision.

(which later dismissed its proceedings against Nath), and Unifund CCR Partners v. Villa, 299 S.W.3d 92, 97 (Tex.

asserting claims in federal court related to the sale of his 2009). Generally, courts presume pleadings and other

home (on which he prevailed).[5]Ultimately, the trial papers are filed in good faith. GTE Commc'ns Sys. Corp.

court found that the Hospital's fees of $776, 607 in v. Tanner , 856 S.W.2d 725, 730 (Tex. 1993). The party

defending the suit were reasonable and awarded them as seeking sanctions bears the burden of overcoming this

presumption of good faith. Id. at 731. sanctions on the issue of groundlessness alone. Rather,

the filing in question must be groundless and also either

B. Substantive Law Governing Sanctions brought in bad faith, brought for the purpose of

harassment, or false when made. Id.

The sanction at issue here concerns pleadings, and

its propriety is thus primarily governed by Chapter 10 of We have held that in order to safeguard

the Texas Civil Practice and Remedies Code and Texas constitutional due process rights, a sanction must be

Rule of Civil Procedure 13.[6] Chapter 10 allows neither unjust nor excessive. We promulgated this

sanctions for pleadings filed with an improper purpose or standard most clearly in TransAmerican, 811 S.W.2d at

that lack legal or factual support. It provides that upon 913. The underlying case in TransAmerican was complex

signing a pleading or motion, a signatory attests that: and multi-partied. Id. at 914. In brief, TransAmerican's

president was sanctioned for discovery abuse pursuant to

(1) the pleading or motion is not being presented for any Rule of Civil Procedure 215 for failing to appear at a

improper purpose, including to harass or to cause deposition. Id. at 915–16. In considering whether

unnecessary delay or needless increase in the cost of those sanctions complied with due process, we

litigation; established a two-part test.

(2) each claim, defense, or other legal contention in the The first prong of the TransAmerican test concerns

pleading or motion is warranted by existing law or by a the relationship between the conduct evinced and the

nonfrivolous argument for the extension, modification, or sanction imposed and requires a direct nexus between the

reversal of existing law or the establishment of new law; offensive conduct, the offender, and the sanction award.

[and] See id. at 917. A just sanction must be directed against

the abusive conduct with an eye toward remedying the

(3) each allegation or other factual contention in the

prejudice caused to the innocent party, and the sanction

pleading or motion has evidentiary support or, for a

must be visited upon the true offender. Id. A court must

specifically identified allegation or factual contention, is

attempt to determine whether the offensive conduct is

likely to have evidentiary support after a reasonable

attributable to counsel only, to the party only, or to both.

opportunity for further investigation or discovery . . . .

Id. Yet we warily noted in TransAmerican that

Tex. Civ. Prac. & Rem. Code § 10.001.[7] Pleadings that apportioning blame between an attorney and a

violate these Chapter 10 requirements are sanctionable. represented party "will not be an easy matter in many

instances." Id. Such caution is warranted. The closeness

Id. § 10.004(a). But a court may not sanction a

represented party under section 10.001 for unfounded that typically defines interaction between a litigant and

legal contentions. Id. § 10.004(d). his attorney not only binds their interests but may lend an

overall opacity to the relationship that renders it difficult

Rule 13 provides that pleadings that are groundless to determine where a party's input ends and where an

and in bad faith, intended to harass, or false when made attorney's counsel begins.

are also sanctionable:

The second prong of the due process analysis under

The signatures of attorneys or parties constitute a TransAmerican considers the proportionality of the

certificate by them that they have read the pleading, punishment relative to the misconduct and warns "just

motion, or other paper; that to the best of their sanctions must not be excessive." Id. Not only should a

knowledge, information, and belief formed after punishment (i.e., sanctions) fit the crime (i.e., the

reasonable inquiry the instrument is not groundless and triggering offense), the sanction imposed should be no

brought in bad faith or groundless and brought for the more severe than necessary to satisfy its legitimate

purpose of harassment. Attorneys or parties who . . . purposes. Id. Legitimate purposes may include securing

make statements in pleading which they know to be compliance with the relevant rules of civil procedure,

groundless and false, for the purpose of securing a delay punishing violators, and deterring other litigants from

of the trial of the cause, shall be held guilty of a contempt similar misconduct. Spohn Hosp. v. Mayer , 104 S.W.3d

.... 878, 882 (Tex. 2003).

Courts shall presume that pleadings, motions, and other We require courts to consider less stringent

papers are filed in good faith. No sanctions under this sanctions and weigh whether such lesser sanctions would

rule may be imposed except for good cause, the serve to promote compliance. TransAmerican, 811

particulars of which must be stated in the sanction order. S.W.2d at 917.[8] Evidencing our reticence to wield the

"Groundless" for purposes of this rule means no basis in heavy hammer of sanctions, we have cautioned: "[c]ase

law or fact and not warranted by good faith argument for determinative sanctions may be imposed in the first

the extension, modification, or reversal of existing law . . instance only in exceptional cases when they are clearly

.. justified and it is fully apparent that no lesser sanctions

would promote compliance with the rules." Tanner, 856

Tex. R. Civ. P. 13. Importantly, Rule 13 does not permit

S.W.2d at 729. America—Eighth Amendment—and the

Excessive Fines clause of the Texas

Historically, awards for groundless pleadings in Constitution—Article I, section 13." Additionally,

Texas have been moderate, at least in monetary terms. Nath cited United States Supreme Court precedent to

See id. at 730 (reversing a sanctions award of $150, 000 bolster his contention that the trial court should consider

in attorney's fees for groundlessness and discovery "whether the penalties in question were excessive."[11]

non-compliance); Dike v. Peltier Chevrolet, Inc., 343 We are generally loath to turn away a meritorious claim

S.W.3d 179, 183 (Tex. App.—Texarkana 2011, no due to waiver; where the party has clearly and timely

pet.) (reversing a groundless pleadings sanction of $15, registered its objection, we find a waiver argument

353); Parker v. Walton, 233 S.W.3d 535, 538 (Tex. particularly unavailing. See Verburgt v. Dorner, 959

App.—Houston [14th Dist.] 2007, no pet.) S.W.2d 615, 616–17 (Tex. 1997). We conclude

(reversing a groundless pleading sanction of $3, 500 in Nath did not waive his objection to the excessiveness of

attorney's fees); Emmons v. Purser, 973 S.W.2d 696, 699 the sanctions award.

(Tex. App.—Austin 1998, no pet.) (reversing a

groundless pleadings sanctions award of $3, 200); see 2. Nath's Fourth, Fifth, and Sixth Amended

also Robson v. Gilbreath , 267 S.W.3d 401, 405 (Tex. Petitions

App.—Austin 2008, pet. denied) (affirming a

groundless pleadings sanction of $10, 000 for failure to Central to its ultimate imposition of sanctions, the

conduct a reasonable inquiry). While this tour d'horizon trial court found that Nath's pursuit of information

is not intended to be comprehensive, it is nonetheless relating to Shenaq's health was in bad faith, and that

representative of what our reported cases suggest have Nath's ostensible intent to use that information to

been typical groundless pleadings awards in this state.[9] leverage a favorable settlement for a baseless claim

constituted an improper purpose. Nath originally included

Though we specifically addressed sanctions allegations relating to Shenaq's health in his fourth

stemming from a charge of discovery abuse in amended petition, filed in November 2008.[12] Nath

TransAmerican, we have previously held the due process moved to compel discovery relating to Shenaq's health

requirements we established there apply to pleadings and in July 2009 filed a fifth amended petition that

sanctions as well. Low, 221 S.W.3d at 619–20. included a request for declaratory judgment relating to

Shenaq's health. The trial court admonished Nath's

C. Analysis counsel that the information was irrelevant to his lawsuit.

See supra note 4. Nath later filed a sixth amended

In the trial court, Nath brought claims for a petition that abandoned his prior claims and added a

declaratory judgment (regarding Shenaq's health), claim for intentional infliction of emotional distress. But

intentional infliction of emotional distress, defamation, that petition retained allegations regarding Shenaq's

tortious interference, and negligence. The trial court health.[13] For the reasons explained below, we agree

sanctioned Nath for (1) bad faith in his pursuit of with the court of appeals that the trial court properly

discovery on the irrelevant issue of Shenaq's health; (2) found Nath's pleadings sanctionable.

an improper purpose of leveraging information

concerning Shenaq's health to favorably settle a baseless The hallmarks of due process for sanctions awards

claim; and (3) bringing claims that lacked a factual are that they be just and not excessive. TransAmerican,

predicate. Chapter 10 requires that we analyze an 811 S.W.2d at 917. Sanctioning Nath for pleadings

improper purpose pleading-by-pleading, but we assess relating to Shenaq's health was demonstrably just. First,

claim-by-claim whether a claim lacked a legal or factual there was a direct nexus between this portion of the trial

basis.[10] court's sanctions and the offensive conduct. The trial

court found such pleadings to be in bad faith (due to their

1. Waiver irrelevance) and filed for an improper purpose

(leveraging a settlement). The trial court's finding is

As an initial matter, we address the claim of the

supported by some evidence and is therefore not an abuse

Hospital and Baylor that Nath waived his objection to the

of discretion. See Unifund, 299 S.W.3d at 97. Nath

size of the sanctions award by failing to raise the issue of

admittedly was seeking information relating to Shenaq's

excessiveness at the trial court level. The court of appeals

health so he could disclose it to Shenaq's patients. But

agreed, finding that the issue had not been properly

such disclosures would not be relevant to triable issues

preserved for review. 375 S.W.3d at 412. We disagree.

related to Nath's then-contemporaneous claims for

The record plainly reveals Nath's objections to the award,

defamation, tortious interference, and negligence.

including objections specifically predicated on the ground

of excessiveness. On December 20, 2010, Nath filed a Moreover, there was some evidence supporting the

motion for new trial and a motion to modify the trial trial court's determination that Nath was improperly

court's November judgment and sanctions order, arguing seeking irrelevant information to leverage a favorable

the sanctions award "violates the Excessive Fines clause settlement. On the eve of a mediation in June 2009,

of the Constitution of the United States of Nath's counsel sent a letter to the Hospital indicating

Nath was anxious to conduct discovery regarding amended petition contains facts regarding Shenaq's health

Shenaq's health conditions, the results of which"would from the prior petitions, and we have already determined

most certainly require prompt actions to notify patients so that information likely came from Nath himself. In

that they can undergo immediate testing and obtain legal addition, Nath almost certainly knew of the inclusion of

counsel to advise them of their rights." During Nath's those allegations in the sixth amended petition because

deposition, attorneys for Baylor and the Hospital likened his attorney "kept Dr. Nath reasonably

Nath's use of legal process in this manner to extortion. informed"—as was his professional obligation.[15]

The trial court agreed with this assessment, characterizing Accordingly, we reject Nath's argument and conclude the

Nath's conduct in seeking information related to Shenaq's trial court did not abuse its discretion in labeling Nath the

health as "an abuse of process" and "a form of extortion." true offender, insofar as the sixth amended petition

Accordingly, the improper purpose of Nath's pleadings continued to make issue of Shenaq's health.

regarding Shenaq's health indicates the trial court

appropriately levied sanctions regarding this conduct.[14] We note, however, that while Nath may be properly

deemed the true offender, his attorneys possess ethical

In addition to considerations described, the obligations and may share in the blame for sanctionable

just-award prong of the due process analysis also conduct. An attorney has ethical obligations to both his

examines whether the sanction was visited on the true client and to the judicial system as an officer of the

offender. The trial court made various findings of fact court.[16] Though zealous advocacy is expected of an

regarding Nath's direct involvement in the case, attorney—indeed, it is a professional

particularly noting his effort to seek information relating obligation—the attorney must not permit client

to Shenaq's health, and the record supports these findings. desires to supersede the attorney's obligation to maintain

Relations between Nath and Shenaq deteriorated to the confidence in our judicial system.[17] As our rules of

point of acrimony in the time leading up to Nath's professional conduct unambiguously require: "A lawyer

departure from Baylor, and they only worsened as should use the law's procedures only for legitimate

litigation ensued. The affidavit Nath filed in response to purposes and not to harass or intimidate

the motions for summary judgment claimed the others."[18]Further, these rules of conduct require an

relationship between Nath and Shenaq grew tense when attorney to "maintain the highest standards of ethical

Nath confronted Shenaq for performing surgery with conduct" throughout representation.[19] Regardless,

allegedly impaired vision. And Nath, by his own Baylor and the Hospital only moved to

admission, specifically sought information related to sanctionNath—not his lawyers—and the

Shenaq's health so that he could inform former patients of trial court declined to sanction the lawyers sua

Shenaq's health problems. Nath's affidavit also lists sponte.[20] Thus, under the true-offender inquiry, we

forty-five patient surgeries Shenaq performed with must uphold the trial court's decision to sanction Nath

allegedly impaired vision. Further, Nath personally personally because some evidence supports the sanction.

attended two depositions of Shenaq's colleagues where See Unifund, 299 S.W.3d at 97.

his counsel asked questions concerning Shenaq's health.

Ultimately, Nath's conduct surrounding Shenaq's health We are mindful of course that due process analysis

appears to be less about pursuing a legal redress for an for sanctions must encompass analyzing whether the

injury (the province of the attorney) and more about award was excessive. But we will refrain from engaging

seeking irrelevant personal information (an extrajudicial in this analysis until we have examined all pleadings and

desire of the client). While litigation is contentious by claims for which Nath may appropriately be sanctioned.

definition and often utilized to compel a desired end, we

agree with the trial court that, on these facts, using a legal 3. Defamation

mechanism to force damaging, irrelevant information into

Nath's initial petitions included claims for

the public domain and thereby compel a more favorable

defamation, tortious interference, and negligence. We

settlement constitutes an improper purpose. Against this

address them in turn. The trial court made discrete

backdrop and the logical inferences that flow from it, we

findings as to Nath's defamation claim. Specifically, the

cannot say the trial court abused its discretion by

trial court found the defamation claim was time-barred by

imposing the sanction against Nath personally.

a one-year statute of limitations[21] and that some of the

Nath claims that even if some of the sanctions statements Nath claimed were defamatory were not

against him were proper, sanctions against him for the actually defamatory.[22] But Chapter 10 expressly

sixth amended petition were improper because the lawyer disallows sanctions against a party for improper legal

who drafted that petition swore in an affidavit that Nath contentions when the party is represented by counsel.

had no involvement with the claim in that petition. Tex. Civ. Prac. & Rem. Code § 10.004(d). The trial court

Specifically, the attorney indicated he "exercised [his] did not find that the statements did not occur. Rather, it

own legal judgment" when deciding what claims to file in sanctioned Nath because of legal impediments to

the sixth amended petition and asserted that Nath "had no recovering for the alleged statements.[23] Thus, Chapter

involvement in the selection of what pleadings and 10 precluded the trial court from sanctioning Nath for

motions were filed in this case." Nonetheless, the sixth groundlessness based upon improper legal contentions

when he was represented by counsel. defamatory statements. As explained below, the trial

court's first rationale violates the Legislature's directive in

However, the trial court also held that the Chapter 10, but some evidence supports its second

time-barred status and nondefamatory nature of some of rationale.

the statements in his defamation claim indicated Nath

filed the claim in bad faith and for an improper purpose. Generally, groundless pleadings are sanctionable

Defamation claims are subject to a one-year limitations under either Rule 13 or Chapter 10. Under Rule 13,

period, and Nath filed suit in February 2006. The trial groundlessness in and of itself is an insufficient basis for

court found that most of the allegedly defamatory sanctions. A pleading must also be in bad faith, intended

statements occurred in June or July of 2004, and none to harass, or knowingly false to justify sanctions.

occurred after the end of 2004, when the Hospital closed Tex.R.Civ.P. 13.[25] The trial court made no findings of

the clinic. Nath's affidavit opposing summary judgment bad faith, improper purpose, or falsity regarding the

detailed the allegedly defamatory statements and claimed tortious interference claim. Accordingly, Rule 13 cannot

they damaged his medical practice and caused him support the sanctions as to this claim.

financial harm. Further, Nath's affidavit admits he learned

of eight of these allegedly defamatory statements in However, Chapter 10 provides that a claim that

2004—over one year before he filed suit.[24] As lacks a legal or factual basis—without

previously addressed, this matter involves legal more—is sanctionable. Tex. Civ. Prac. & Rem.

contentions—which Chapter 10 does not allow Code § 10.001; see also Low, 221 S.W.3d at 617.

Nath to be sanctioned for on the basis of legally Legally, the claim must be warranted by existing law or a

groundless pleadings because he was represented by nonfrivolous argument to change existing law. Tex. Civ.

counsel. Id. But Chapter 10 offers no similar stricture for Prac. & Rem. Code § 10.001(2). But Chapter 10

sanctions based on improper purpose. And in any event, expressly prohibits monetary sanctions against a

Nath was represented by counsel no later than June 8, represented party based on the legal contentions in a

2004, when he claimed the statements were "potentially pleading. Id. § 10.004(d) ("The court may not award

damaging to [his] reputation." Because there is some monetary sanctions against a represented party for a

evidence supporting the finding that Nath brought his violation of Section 10.001(2)."). Accordingly, the trial

defamation claim with an improper purpose, the trial court could not have properly awarded sanctions against

court did not abuse its discretion in sanctioning Nath for Nath for groundless legal contentions in his tortious

this claim. interference claim.

Nath nonetheless argues such sanctions violate the Chapter 10 requires that each factual contention

constitutional requirement that the sanction be visited on must have evidentiary support or be likely to receive it

the true offender. We disagree. The fact that Chapter 10 after a reasonable opportunity for discovery. Id. §

does not shelter parties from sanctions for flawed legal 10.001(3); Low, 221 S.W.3d at 616–17. We held

contentions that demonstrate an improper purpose is in Low that a pleading was sanctionable because it

simply a reflection of our warning in TransAmerican that alleged two doctors prescribed a drug that medical

the attorney-client relationship is opaque by default. Nath records in the attorney's possession demonstrated they did

only diminished that opacity for his sixth amended not prescribe. 221 S.W.3d at 616. Thus, in holding the

petition, which contained a claim for intentional infliction pleading was sanctionable, we held that the allegations

of emotional distress. The attorney who filed that claim did not have, and were not likely to subsequently receive,

indicated Nath had no involvement in drafting the claim. evidentiary support in light of the evidence the attorney

But Nath presented no similar evidence with respect to possessed when filing the claim. Id.

the pleadings containing Nath's defamation claim.

Accordingly, because some evidence supports the trial Unlike in Low, the trial court's findings here only

court's finding, and no evidence clarifies the respective indicate it viewed the pleadings as groundless as of the

roles of Nath and his attorneys in regards to his time it granted summary judgment. But the court's

defamation claim, we conclude the trial court did not findings miss the mark, as the vantage point for assessing

abuse its discretion in sanctioning Nath for that claim. evidentiary support is at the time the pleading is

filed.[26] Establishing a vantage point at the time of a

4. Tortious Interference merits adjudication four years or more into a proceeding

would unnecessarily chill litigation in cases where

Nath's remaining claims are for tortious interference claimants in good faith believe they possess a claim, but

and negligence. The trial court did not find that Nath filed have not yet discovered sufficient evidence on every

his tortious interference claim in bad faith or for an essential element of their claim. We cannot endorse a

improper purpose. Rather, the trial court generally found view that runs so contrary to the Legislature's chosen

Nath's claims to be sanctionable because they lacked words in Chapter 10 and our construction of them.

merit, as evidenced by the court's summary judgment

dismissal. The trial court also found Nath's claim to be Nonetheless, a distinction between sanctions for

groundless to the extent it relied on time-barred groundless pleadings and sanctions for discovery abuse is

worth noting. A claim may be likely to receive with Nath's tortious interference claim, the trial court (1)

evidentiary support when filed and thus not be groundless generally found Nath's claims to be sanctionable because

under Chapter 10. But if a party later learns through they lacked merit due to their dismissal at summary

discovery that no factual support for the contention exists judgment, and (2) specifically found the negligence claim

and still pursues litigation, such conduct might be to be groundless to the extent it relied on time-barred

sanctionable. But the sanctionable conduct would likely defamatory statements. As explained above, assessing

be the abuse of the discovery process, not the filing of groundlessness only at the time of a merits dismissal over

pleadings, as our rules of civil procedure specify that a four years into the litigation contravenes the requirement

court may sanction a party or counsel if the court "finds in Chapter 10 that groundlessness is assessed as of the

that any interrogatory or request for inspection or time of filing. Thus, the trial court's first rationale cannot

production is unreasonably frivolous, oppressive, or support sanctions as to the negligence claim.

harassing." Tex.R.Civ.P. 215.3. While the ultimate

penalty may be similar in its effect on the sanctioned But the trial court's second rationale—that

party, its application is predicated on a different the negligence claim relied on time-barred

ground.[27] statements—is a sufficient basis for sanctions.

Nath filed his negligence claim in his third amended

But in addition to concluding that Nath's claims petition in September 2008, over four years after learning

ultimately lacked merit, the trial court also specifically of the first allegedly defamatory statements in June 2004.

noted in a footnote in its findings of fact and conclusions Regardless of whether the two-year limitations window

of law that "Nath's claims of negligence and tortious for negligence claims was truncated to one year because

interference are also groundless to the extent that those Nath's claim was predicated solely on defamatory

claims rely on time-barred, allegedly defamatory statements (as with the tortious interference claim),

statements." Defamation is subject to a one-year statute limitations barred the negligence claim. For the same

of limitations, Tex. Civ. Prac. & Rem. Code § 16.002(a), reason sanctions are appropriate for Nath's defamation

while tortious interference is subject to at least a two-year and tortious interference claims, they are appropriate for

statute of limitations, First Nat'l Bank of Eagle Pass v. his negligence claim.

Levine, 721 S.W.2d 287, 289 (Tex. 1986). However, the

Fifth Circuit and several Texas courts of appeals have D. Remand

held that, when the sole basis for a tortious interference

claim is defamatory statements, the one-year statute of In short, all of Nath's petitions are sanctionable. But

limitations for defamation applies.[28] Likewise, we have we must still assess whether the amount of the award was

applied a one-year statute of limitations to business excessive. A trial court abuses its discretion by failing to

disparagement claims when the gravamen of the adhere to guiding rules and principles. Cire, 134 S.W.3d

complaint is defamatory injury to reputation and there is at 838–39. We set forth these guiding rules and

no evidence of special damages. See Hurlbut v. Gulf Atl. principles for assessing the amount of pleadings sanctions

Life Ins. Co., 749 S.W.2d 762, 766 (Tex. 1987). We now in Low.[29] 221 S.W.3d at 620 n.5. This nonexclusive list

similarly conclude that if a tortious interference claim is of factors is helpful in guiding the often intangible

based solely on defamatory statements, the one-year process of determining a penalty for sanctionable

limitations period for defamation claims applies. behavior, and it provides context for our review of the

trial court's award. We advised in Low that "[a]lthough

Nath's tortious interference claim was predicated we do not require a trial court to address all of the factors

solely on the allegedly defamatory statement because it . . . to explain the basis of a monetary sanction . . . it

alleges the Hospital and Baylor tortiously interfered "by should consider relevant factors in assessing the amount

continuing to make false statements regarding" Dr. Nath of the sanction." Id. at 620–21 (emphasis added).

to third parties. Accordingly, Nath's tortious interference In practice, this means that when a factor is relevant to a

claim was subject to the one-year statute of limitations. party being sanctioned, that factor must inform the

The trial court correctly found the earliest of the allegedly issuance of the award. To take just one example, one

defamatory statements occurred in June 2004. Nath filed factor we referenced in Low is "any prior history of

his tortious interference claim in February 2006, after the sanctionable conduct on the part of the offender." Id. at

one-year limitations period had run. Thus, some evidence 620 n.5. A court obviously need not consider prior

supports the trial court's finding that Nath's tortious sanctionable conduct in calibrating a sanction award for a

interference claim (as with his defamation claim) was first-time litigant for the self-evident reason that no such

time-barred and demonstrated an improper purpose. conduct exists. Yet, were the example reversed and a

sanctioned litigant possessed a lengthy history of prior

5. Negligence sanctions, the court "should consider" that party's

checkered history in levying a sanction. Id. at

Nath's final claim was for negligence, in which 620–21 & 620 n.5.

Nath claimed that Baylor and the Hospital's negligent

training and supervision of its employees led them to Here, the trial court cited and then considered

defame him and tortiously interfere with his practice. As nearly all of the relevant Low factors. In the context of

this matter, however, one factor made relevant by the relevant issue but fails to discuss it, we cannot

protracted nature of this litigation is "the degree to which automatically conclude that such cursory mention is

the offended person's own behavior caused the expenses tantamount to compliance. This was true in the case of

for which recovery is sought." Id. at 620 n.5 (quotation the $50, 000 sanction we reversed in Low, and it is

marks omitted). The trial court failed to address this equally as true of the $1.4 million sanction presented

factor, though it is unquestionably relevant. The here.

statements Nath addressed in his original petition were

made in 2004, and Nath filed suit well after the one-year Additionally, the dissent contends that our

limitations period had run. Yet, the record indicates that admonishment that trial courts "should" consider the

all three parties litigated a host of merits issues for nearly relevant Low factors is permissive. Notably, the dissent

a half-decade before the Hospital and Baylor moved for does not contend the extent to which the Hospital and

summary judgment on such grounds as limitations. Thus, Baylor caused their attorney's fees is irrelevant. And

while Nath was the initiator of this litigation, the degree regardless of whether consideration of the relevant Low

to which the Hospital and Baylor caused their attorney's factors is permissive, the trial court went to great lengths

fees is a relevant inquiry. to examine all the relevant Low factors except for the

extent to which the non-sanctioned parties caused their

A party is entitled to thoroughly and vigorously own injuries. We do not believe the standard of review

litigate a matter. But if issues asserted in pleadings are allows a trial court that dutifully considers almost all of

revealed to be frivolous, and the defending party delays the relevant Low factors to essentially ignore a relevant

moving for summary judgment and sanctions, the factor. As noted, failure to adhere to guiding rules and

defending party adopts some responsibility for the overall principles constitutes an abuse of discretion. Cire, 134

increase in litigation costs. Of course, placing the entire S.W.3d at 838–39. Low offered these guiding

cost of litigation on a plaintiff may be proper and rules and principles, the trial court failed to adhere to

deserved if the plaintiff was the party responsible for them, and this amounted to an abuse of discretion.

sustaining frivolous litigation over a prolonged period.

Here, the trial court found the defamation claims were III. Conclusion

friviolous ab initio because the statements were alleged to

have been made at least one year before suit was filed. Due process requires that sanctions be just, meaning

Moreover, the time-barred statements permeated that there be a direct nexus between the sanction and the

subsequent pleadings. The defendants, however, did not sanctionable conduct, and be visited on the true offender.

file a summary judgment for years after the allegations Here, the trial court's sanctions award complied with

were first made. A defending party cannot arbitrarily shift these requirements because Nath's petitions were filed for

the entirety of its costs on its adversary simply because it the improper purpose of pursuing an unrelated issue and

ultimately prevails on a motion for sanctions. Because the advancing time-barred claims. However, when assessing

trial court did not discernibly examine this relevant Low the amount of sanctions, the trial court failed to examine

factor, we remand for it to do so.[30] the extent to which the Hospital and Baylor caused the

expenses they accrued in litigating a variety of issues

E. Response to the Dissent over several years. Accordingly, we remand for the trial

court to reassess the amount of the sanctions award while

The dissent tacitly agrees with our analysis, but considering the omitted factor. See Low, 221 S.W.3d at

would affirm the sanctions award rather than remand for 622.

the trial court to assess the relevant Low factor.

Specifically, the dissent argues that we should outright Justice Green, joined by Justice Lehrmann, Justice

affirm the award of sanctions because, among other Boyd and Justice Brown, dissenting.

things: (1) the findings of fact and conclusions of law

contained a typographical error, and (2) our direction that The Court holds that the trial court abused its

trial courts "should" consider the relevant Low factors is discretion when it assessed sanctions against Dr. Rahul

permissive. K. Nath without examining the extent to which Texas

Children's Hospital and Baylor College of Medicine

The dissent first contends the trial court made a caused the accrual of their own attorney's fees. __ S.W.3d

typographical error in stating that it considered the extent __, __. Because I read the trial court's orders as having

to which Nath caused the Hospital and Baylor's fees. But addressed that specific factor, and because I believe the

viewing the findings and conclusions as a whole belies trial court's discretion is broader in this context than the

the dissent's position. The trial court was careful to detail Court does, I respectfully dissent.

its rationale for the Low factors it found to be

relevant—except the extent to which the Hospital The abuse of discretion standard is critical to our

and Baylor caused their own injuries. For example, the analysis in this case. Under this standard, we may reverse

findings and conclusions spent considerable time the trial court only if it acted "without reference to any

discussing Nath's bad faith, his degree of willfulness, and guiding rules and principles, such that its ruling was

his knowledge and expertise. When a trial court recites a arbitrary or unreasonable." Low v. Henry, 221 S.W.3d

609, 614 (Tex. 2007) (citing Cire v. Cummings , 134 (Emphasis added).

S.W.3d 835, 838–39 (Tex. 2004)).

The trial court reached a similarly-worded

The amount of a sanction is limited only by the conclusion in its findings of fact and conclusions of law

trial court's duty to act within its sound discretion in in support of its judgment granting Baylor's request for

accordance with the Due Process clause of the Texas sanctions. In both orders, the trial court expressly stated

Constitution. Low, 221 S.W.3d at 619; TransAmerican that it was familiar with the Low factors and had

Natural Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex. considered them in assessing sanctions. The Court

1991). In exercising its discretion, the trial court must claims, however, that in both orders, the trial court failed

ensure that the sanction: (1) relates directly to the abuse to "discernibly examine" an "unquestionably relevant"

found; and (2) is not excessive. Low, 221 S.W.3d at 620; Low factor. __ S.W.3d at __, __. However, reading the

Powell, 811 S.W.2d at 917. In Low, we provided a list of findings and conclusions as a whole, I can conclude only

non-exhaustive factors to assist a trial court in that the trial court did consider the factor that the majority

determining whether a sanction is appropriate. Low, 221 claims was omitted. In its findings and conclusions, the

S.W.3d at 620–21 n.5. We explained that a trial trial court expressly stated that it considered "the degree

court need not consider every factor listed, but rather to which Nath's own behavior caused the expenses for

"should consider relevant factors in assessing the amount which Texas Children's Hospital [and Baylor] seeks

of the sanction" in each case. Id. at 621. reimbursement." The trial court's list of considerations

mirrors the Low factors except in this one instance. While

The Court's holding that the trial court abused its the trial court appears to have transposed Nath's name

discretion in assessing the amount of sanctions rests on where Texas Children's Hospital or Baylor's name should

two erroneous propositions: (1) the trial court omitted have been, we should view this transposition as merely a

from its analysis a single Low factor regarding the extent typographical error which may be forgiven, rather than an

to which Texas Children's Hospital and Baylor caused the omission. Cf. Bd. of Adjustment of City of San Antonio v.

accrual of their own attorney's fees, see Low, 221 S.W.3d Wende, 92 S.W.3d 424, 428 n.2 (Tex. 2002) (reading the

at 620–21 n.5; and (2) the trial court was required printed word "riot" to mean "not" in a statute containing a

to consider that factor when assessing monetary typographical error); City of Amarillov Martin, 971

sanctions. S.W.3d at . S.W.2d 426, 428 n.1 (Tex. 1998) (inserting the word

"not" into a statute to indicate the obvious legislative

First, the trial court's exhaustive findings of fact and intent); Beall v. Chatham, 99 S.W. 1116, 1117–18

conclusions of law in support of its sanctions award (Tex. 1907) (affirming a judgment containing a

indicate that it considered all of the Low factors. typographical error which obscured the trial court's

Paragraph 91 of the Texas Children's Hospital order reasoning). After all, Nath's conduct was covered fully by

concluded: other Low factors that the trial court considered.

In determining the amount of sanctions, this Court has The trial court's extensive findings of fact and

considered the factors listed in Low v. Henry, 221 S.W.3d conclusions of law regarding Baylor's request for

at 620 & n.5. In light of Nath's bad faith and improper sanctions totaled forty-one pages and contained

purposes, as set forth herein; Nath's knowledge of the law ninety-five discrete findings and conclusions. The trial

as a former legal student; Nath's prior conduct as a court's findings and conclusions regarding Texas

litigant in numerous cases; the expenses incurred by Children's Hospital's request for sanctions totaled

Texas Children's Hospital as a result of the litigation and forty-two pages and contained ninety-four discrete

their reasonable proportion to the amount Nath sought in findings and conclusions. Given the trial court's

damages; the relative culpability of Nath, as set forth exhaustive effort to explain its decision and address the

above; the minimal risk of chilling legitimate litigation Low factors, it seems a waste of judicial resources to

activity posed by sanctions here; Nath's ability to pay for remand this case so that the trial court may correct a

the damages he has caused Texas Children's Hospital; the typographical error.

need for compensation to Texas Children's Hospital as a

result of the damages inflicted upon it in defending Second, contrary to the Court's holding, a trial court

against this lawsuit; the necessity of imposing a has as much discretion in determining which Low factors

substantial sanction to curtail Nath's abuse of the judicial to consider as it does in determining the amount of the

process and punish his bad faith and improper conduct; sanctions assessment. The Court cites Low for the

the burdens on the court system attributable to Nath's proposition that when a factor is relevant, a trial court

misconduct, including his consumption of extensive must consider it or risk reversal on appeal. __ S.W.3d at

judicial time and resources in prosecuting this case; and __ (citing Low, 221 S.W.3d at 620–21). This

the degree to which Nath's own behavior caused the reading of Low, which unnecessarily constrains a trial

expenses for which Texas Children's Hospital seeks court's discretion, begs the question—who is to

reimbursement, the Court concludes that Texas Children's determine whether a factor is relevant, and, under what

Hospital should be awarded a substantial portion of its standard is that decision reviewed? In my view, we must

attorney's fees to sanction Nath for his conduct. respect the trial court's discretion to determine which

factors are relevant and its discretion to ensure that the summary judgment stage. The trial court witnessed all of

amount of its sanctions assessment is appropriate and Nath's actions firsthand, found support in the record, and

supported by evidence. After all, the trial court witnessed relied upon the factors this Court set out in Low to arrive

the parties' behavior firsthand. at its assessment. Therefore, I would hold that the trial

court did not abuse its discretion in assessing sanctions

Furthermore, the Court's interpretation of Low's use against Nath.

of "should" as creating a mandatory requirement is

unconvincing. Just as this Court has held that a statute or The Court's remand of this case is especially

rule containing "shall" does not always mandate action, troubling because the trial court judge who presided over

surely our own use of "should" must likewise be the case for four years lost reelection in 2012. His

interpreted to be merely directory. Cf. Lewis v. replacement will face the same disadvantage in reviewing

Jacksonville Bldg. & Loan Ass'n, 540 S.W.2d 307, the sanctions assessment that the Court does

310–11 (Tex. 1976) (interpreting administrative today—she did not witness Nath's behavior

rule containing "shall" to be merely directory, not firsthand. The current trial court's unfamiliarity with the

mandatory); Chisholm v. Bewley Mills, 287 S.W.2d 943, parties and the litigation will require her to either conduct

945 (Tex. 1956) (interpreting statute containing "shall" to additional hearings or base her decision upon the same

be merely directory, not mandatory); Thomas v. Groebl , cold record this Court cautions against. E.g., In re United

212 S.W.2d 625, 630–32 (Tex. 1948) (same). Scaffolding, Inc., 377 S.W.3d 685, 688 (Tex. 2012).

Neither of these options are adequate substitutes for a

Again, I would caution against excessive scrutiny of trial court's firsthand observations, and the Court should

the trial court's application of the Low factors when the not remand the case for an unfamiliar trial court to

trial court's assessment of sanctions, as a whole, does not reconsider sanctions.

amount to an abuse of discretion. As we noted in Low,

the amount of a penalty under Chapter 10 of the Civil Low provides boundaries for trial courts assessing

Practice and Remedies Code should "begin with an sanctions. We must ensure that trial courts act within

acknowledgment of the costs and fees incurred because these boundaries; however, we cannot have appellate

of the sanctionable conduct." 221 S.W.3d at 621. The courts unnecessarily circumventing a trial court's

trial court found that a large sanction was "required to discretion. Detailed findings of fact and conclusions of

sufficiently punish Nath's conduct and deter similar law and an extensive record provide support for both the

conduct in the future." The record details Texas decision to sanction and the amount of the sanctions. On

Children's Hospital and Baylor's incurred attorneys' fees, the record here, I conclude that the trial court acted

and the trial court's sanctions assessment excludes fees within its discretion. Because the Court holds otherwise, I

related to the recusal proceedings.[1] The trial court, after respectfully dissent.

finding ten of the thirteen Low factors to be applicable,

had an ample basis for assessing sanctions at the amount ---------

of Texas Children's Hospital and Baylor's incurred

attorneys' fees. Notes:

We might critique the final amount of the sanctions [1] See Peter Vieth, 2013: The Year in Review , Virginia

imposed. We might reach a different result under de novo Lawyers Weekly, Dec. 9, 2013 ($881, 000 sanction

review. But that is simply not our task. We normally award in a divorce proceeding was "the largest sanction

afford the trial court considerable latitude under the abuse ever imposed" in Virginia); Cheryl Millet, Divorcee

of discretion standard. We should not modify our test Slapped with Record-Setting $552K Sanction in Custody

even when it yields unpalatable results. Provided that the Case, Daily Bus. Rev., Feb. 7, 2012 (discussing record

trial court relies upon the guiding principles this Court setting sanctions award of $552, 000 in a California

established in Low and supports its findings with divorce proceeding); Lisa Provence, Unusual outcome:

evidence in the record, we should affirm even debatable $722K in sanctions, juror judges judge, The Hook, Nov.

sanctions. Why? Because, as the trial judge wrote: "The 4, 2011, available at

Court has witnessed much of this behavior firsthand." www.readthehook.com/101759/final-order -plaintiffs

The trial court dealt with the parties throughout four sanctioned-722k-juror-judges-judge ($542, 000 sanction

years of litigation. The court watched Nath cycle through against counsel and $180, 000 sanction against litigant

claim after claim in multiple petitions. The court dealt was "one of the largest sanctions in Virginia legal

with numerous attorneys. The court dealt with Nath's history"); Hunton & Williams and Wachovia Obtain

last-minute effort to recuse the trial Largest Sanctions Award byTennesseeCourt , B US. W

judge—followed by Nath's attempt to recuse the IRE N EW S R E LE AS E S, Nov. 13, 2006,

judge overseeing the recusal process. The court availableathttp://www.businesswire.com/news/home/200

admonished Nath's attorneys to cease certain irrelevant 61113006140/en/Hunton-Williams-Wachovia-Obtain-Lar

pursuits, and then saw Nath ignore this admonishment in gest-Sanctions-Award#.U6Q_WPldX0s ($1.2 million

an affidavit reemphasizing irrelevant matters. Finally, the sanction against litigant was the "largest sanctions award

trial court dismissed all of Nath's remaining claims at the

ever granted by a Tennessee court"). Remedies Code only applies in proceedings in which

neither Rule 13 nor Chapter 10 applies"). Chapter 9 has

[2] Nath subsequently sued Dr. Allan Belzberg and his largely been subsumed by subsequent revisions to the

employer, Johns Hopkins University, over an allegedly code. See Cynthia Nguyen, An Ounce of Prevention is

defamatory statement Belzberg made regarding Nath in Worth a Pound of Cure?: Frivolous Litigation Diagnosis

Belzberg's capacity as a Johns Hopkins employee. After a Under Texas Government Code Chapters 9 and 10, and

battle over whether the trial court possessed personal Texas Rule of Civil Procedure 13, 41 S. Tex. L. Rev.

jurisdiction over Belzberg and Johns Hopkins, Nath 1061, 1083–84 (2000) (theorizing "it would be

nonsuited them. difficult to conceive of a scenario in which Chapter 9

would be applicable, " and noting that "there are only a

[3] The trial court dismissed all the claims in Nath's fifth handful of cases that even cite Chapter 9, and these date

and sixth amended petitions, even though the sixth from before the 1999 amendment to Section 9.012").

amended petition was Nath's only live pleading at the

time of the hearing. [7] Section 10.001 of the Civil Practice and Remedies

Code is worded similarly to Federal Rule of Civil

[4] At a hearing on a motion to compel in July 2009 Procedure 11(b). See Low, 221 S.W.3d at 615.

where Nath sought production of information regarding

the patients Shenaq had seen, the court responded: [8] See also Chrysler Corp. v. Blackmon , 841 S.W.2d

844, 849 (Tex. 1992) (citing TransAmerican to note that

I can't do that. You can't do that. The State Medical "[a] permissible sanction should, therefore, be no more

Board could do that. Hospital Board, someone else. severe than required to satisfy legitimate purposes. This

Somebody that's not here can do that. . . . means that a court must consider relatively less stringent

sanctions first to determine whether lesser sanctions will

You should be before some other board that has a

fully promote compliance, deterrence, and discourage

different authority than me. It shouldn't be used as a tool

further abuse").

in your litigation. . . .

[9] Although imposed pursuant to the federal groundless

I'm wondering why you're asking me to uncover

pleadings rule, see supra note 7, federal pleadings

[Shenaq's alleged health issues and patients allegedly at

sanctions may also provide a useful barometer to gauge

risk] instead of the State Medical Board. That's my big

the size of typical awards. See generally Maryann Jones,

issue with your approach. . . .

"Stop, Think, & Investigate": Should California Adopt

You're coming to me asking me to blow open this cover. Federal Rule 11?, 22 Sw. U. L. Rev. 337, 354 (1993)

When there is an agency out there that is well situated to (noting that "[w]hile there are reported cases of awards

deal with all of the [privilege] issues that you are raising. exceeding $100, 000, a recent comprehensive survey of

... Rule 11 sanctions in the Fifth, Seventh, and Ninth

Circuits shows that the median sanction imposed

At another hearing on a motion to compel in January pursuant to Rule 11 [at that time was] $2, 500").

2010, the court stated:

[10] See Tex. Civ. Prac. & Rem. Code § 10.001

I think—I answered that by saying Dr. Shenaq's (providing that signing a pleading or motion certifies that

condition is not in this suit. . . . "the pleading or motion is not being presented for any

improper purpose, . . . each claim, defense, or other legal

I think I was very clear about it last time. If I wasn't, I contention in the pleading or motion is warranted by

want to be clear now. . . . existing law . . . [and] each allegation or other factual

contention in the pleading or motion has evidentiary

I said it's not relevant to this lawsuit. . . . support or, for a specifically identified allegation or

factual contention, is likely to have evidentiary support

It's irrelevant to your lawsuit so it's not your job to do it. after a reasonable opportunity for further investigation or

Your doctor has an obligation to report it to his medical discovery"); see also Low, 221 S.W.3d at 615

board and they have a job to do. We don't. (recognizing that Chapter 10 requires analysis of each

claim against each defendant).

[5] Nath was defending a suit the Fifth Circuit ultimately

determined to be groundless. See Petrello v. Prucka, 484 [11] Austin v. United States, 509 U.S. 602, 622 (1993).

Fed.Appx. 939, 942–43 (5th Cir. 2012).

[12] For example, the fourth amended petition claimed:

[6] Chapter 9 of the Texas Civil Practice and Remedies

Code also addresses frivolous pleadings and claims, but Defendants were further motivated to discredit Dr. Nath,

its application is limited to proceedings in which neither damage his reputation, and remove him from their

Rule 13 nor Chapter 10 applies. See Tex. Civ. Prac. & facilities because Dr. Nath had discovered that Dr.

Rem. Code § 9.012(h); see also Low, 221 S.W.3d at 614 Shenaq had become partially or completely blind in one

(noting "Chapter 9 of the Texas Civil Practice and eye after suffering a detached retina in 2003. . . . On

information and belief, Defendants sought to protect their 772 (Tex. 1995).

own interests when they failed to inform Dr. Shenaq's

patients about Dr. Shenaq's compromised medical [26] For example, Chapter 10 specifies that anyone

condition. . . . Drs. Grossman and Brunicardi, along with signing a pleading certifies that each allegation "has

Baylor and [the Hospital], knew that Dr. Nath was evidentiary support or . . . is likely to have evidentiary

concerned about, and was knowledgeable of, Dr. support after a reasonable opportunity for further

Shenaq's condition and were fearful that Dr. Nath would investigation or discovery." Tex. Civ. Prac. & Rem. Code

make Dr. Shenaq's condition public. § 10.001(3). Likewise, the trial court's sanctions order in

Low indicated that the factual contentions "did not, on

[13] For example, the sixth amended petition alleged January 31, 2002 [when the petition was filed], and do

"that many patients were operated on or treated by Dr. not now, have evidentiary support; nor were they on

Shenaq at Baylor and [the Hospital] after Dr. Shenaq had January 31, 2002, likely to have evidentiary support after

become partially or completely blind in one eye after a reasonable opportunity for further investigation." 221

suffering a detached retina in November 2003 . . . ." S.W.3d at 617.

[14] While bad faith must be coupled with groundless [27] This analysis need not detain us here. Nath engaged

pleadings to support sanctions under Rule 13, in questionable discovery conduct surrounding the

Tex.R.Civ.P. 13, an improper purpose alone is a original setting for the summary judgment motions. But

sufficient predicate for sanctions under Chapter 10, Tex. even if this conduct was sanctionable as discovery abuse,

Civ. Prac. & Rem. Code § 10.001; see Low, 221 S.W.3d it occurred during a time when Nath's fourth, fifth, and

at 617 (discussing the disjunctive nature of Chapter 10's sixth amended petitions were on file—which we

bases for sanctions). have found to be sanctionable pleadings. Thus, we need

not assess whether such conduct was sanctionable for a

[15] An attorney owes a client a duty to inform the client second reason. And in any event, the Hospital and Baylor

of matters material to the representation, provided such did not move for discovery sanctions.

matters are within the scope of representation. See, e.g. ,

Joe v. Two Thirty Nine Joint Venture , 145 S.W.3d 150, [28] See Nationwide Bi-Weekly Admin., Inc. v. Belo

160 (Tex. 2004). Corp., 512 F.3d 137, 146–47 (5th Cir. 2007);

Williamson v. New Times, Inc., 980 S.W.2d 706,

[16] Tex. Disciplinary R. of Prof'l Conduct pmbl. ¶ 1. 710–11 (Tex. App.—Fort Worth 1998, no

pet.); Martinez v. Hardy, 864 S.W.2d 767, 776 (Tex.

[17] Id. at ¶ 2. App.—Houston [14th Dist.] 1993, no writ); Gulf

Atl. Life Ins. Co. v. Hurlbut, 696 S.W.2d 83,

[18] Id. at ¶ 4.

97–98 (Tex. App.—Dallas 1985), rev'd on

[19] Id. at ¶ 1. other grounds, 749 S.W.2d 762 (Tex. 1987).

[20] See Tex. Civ. Prac. & Rem. Code § 10.002 [29] The list of nonexclusive factors we enumerated was:

(providing that court may sanction a party or attorney

a. the good faith or bad faith of the offender;

under Chapter 10 "on its own initiative"); Tex.R.Civ.P.

13 (providing that court may sanction a party or attorney b. the degree of willfulness, vindictiveness, negligence,

under Rule 13 "upon its own initiative"). or frivolousness involved in the offense;

[21] Tex. Civ. Prac. & Rem. Code § 16.002(a). c. the knowledge, experience, and expertise of the

offender;

[22] "[A] defamatory statement is one that tends to injure

a person's reputation." Hancock v. Variyam, 400 S.W.3d d. any prior history of sanctionable conduct on the part of

59, 62 (Tex. 2013). the offender;

[23] Cf. Dolenz v. Boundy, 197 S.W.3d 416, e. the reasonableness and necessity of the out-of-pocket

421–22 (Tex. App.—Dallas 2006, pet. expenses incurred by the offended person as a result of

denied) (affirming pleadings sanctions of $250 against a the misconduct;

party when the party was a lawyer proceeding pro se and

presumably aware that the claims were time-barred). f. the nature and extent of prejudice, apart from

out-of-pocket expenses, suffered by the offended person

[24] For example, on or about June 2, 2004, Nath learned as a result of the misconduct;

his appointment at Baylor was not renewed because of

his billing practices and minimal academic contributions. g. the relative culpability of client and counsel, and the

Nath's affidavit also indicates he learned of seven other impact on their privileged relationship of an inquiry into

allegedly defamatory statements in 2004. that area;

[25] See also Able Supply Co. v. Moye, 898 S.W.2d 766,

h. the risk of chilling the specific type of litigation

involved;

i. the impact of the sanction on the offender, including the

offender's ability to pay a monetary sanction;

j. the impact of the sanction on the offended party,

including the offended person's need for compensation;

k. the relative magnitude of sanction necessary to achieve

the goal or goals of the sanction;

l. burdens on the court system attributable to the

misconduct, including consumption of judicial time and

incurrence of juror fees and other court costs;

n. the degree to which the offended person's own

behavior caused the expenses for which recovery is

sought.

Low, 221 S.W.3d at 620 n.5 (quoting American Bar

Association, Standards and Guidelines for Practice Under

Rule 11 of the Federal Rules of Civil Procedure,

reprinted in 121 F.R.D. 101, 104 (1988) (omission in

original)).

[30] We are confident in the trial court's ability to resolve

this discrete issue on remand either on the existing record

or, at most, after a hearing examining briefing

accompanied by affidavits regarding the degree to which

the Hospital and Baylor caused their attorney's fees.

[1] Only the judge hearing the recusal motion may assess

these sanctions. Tex.R.Civ.P. 18a(h).

---------

Page 913 On July 3, 1988, the district court issued a docket

control order pursuant to Rule 166

811 S.W.2d 913 (Tex. 1991)

Page 915

TRANSAMERICAN NATURAL GAS

CORPORATION, Relator, of the Texas Rules of Civil Procedure, which set a

discovery cutoff date of April 3, 1989. The order allowed

v. discovery to be conducted beyond that date only upon

agreement of the parties.

Hon. William R. POWELL, Judge of the 80th District

Court of On March 7, 1989, Toma noticed the deposition of

TransAmerican's president, K. Craig Shephard, to take

Harris County, Texas, Respondent. place March 16. Two days later TransAmerican's

counsel, who at that time was one of the attorneys in its

No. C-9294.

legal department, telephoned Toma's counsel to inform

him that Shephard could not be available on March 16

Supreme Court of Texas.

because of a previously scheduled deposition in another

June 19, 1991 case. When counsel could not agree on another date for

Shephard's deposition, TransAmerican filed a motion for

Page 914 protection to quash the deposition notice and postpone

the deposition. The motion stated that it would be

James Kronzer, Don Henderson, Robert V. Holland, submitted to the trial court for ruling on March 17. [1]

Jr., John C. Nabors, Karen Zuckerman, Bill Jones, However, the trial court did not rule on the motion on that

Kenneth E. McKay and Joe H. Reynolds, Houston, for date.

relator.

Beginning April 3, the deadline set by the district

Michael C. Feehan, Beverly Arleen Sandifer, G. court for completion of discovery, the parties' smoldering

Byron Sims, Daniel J. Kasprzak, Jonathan C.S. Cox, Ann discovery problem started to flare. On that date, counsel

Ryan Robertson and Donald F. Hawbaker, Houston, for for TransAmerican and Toma agreed that Shephard

respondent. would be deposed after April 10 on a date to be agreed

upon. Despite this understanding, counsel again failed to

OPINION agree upon a date, and on April 19 Toma noticed

Shephard's deposition for May 2 without

HECHT, Justice.

TransAmerican's consent. On April 20, upon receipt of

this second deposition notice, TransAmerican's counsel

In this original mandamus proceeding,

wrote a letter to Toma's counsel informing him that

TransAmerican Natural Gas Corporation seeks to compel

Shephard would not be available May 2 because, as

the Hon. William R. Powell, Judge of the 80th District

before, he already had a deposition in another matter

Court, to set aside his orders imposing sanctions for

scheduled for that day. Toma's counsel replied by letter

discovery abuse. The district court struck

that he would not agree to reschedule the deposition. On

TransAmerican's pleadings, dismissed its action against

April 27, TransAmerican reset the date for submission of

Toma Steel Supply, Inc., and granted Toma an

its motion for protection to the trial court for ruling to

interlocutory default judgment on its counterclaim against

May 12. By this time, of course, the motion was moot,

TransAmerican, reserving for trial only the amount of

and it is not apparent why TransAmerican continued to

damages due Toma. We conditionally grant the writ of

seek a ruling. TransAmerican did not move the trial court

mandamus.

to postpone the May 2 deposition.

I

Also on April 27, Shephard's other deposition

The underlying case is a complex, multi-party action scheduled for May 2 was cancelled, leaving him available

arising out of Toma's sale of allegedly defective pipe to be deposed by Toma. However, TransAmerican's

casing to TransAmerican. TransAmerican withheld counsel did not advise Toma's counsel that Shephard's

payment for the casing, apparently some $2.3 million, schedule had changed so that he could be deposed on

and sued Toma in April 1987 for damages allegedly May 2 after all, nor did Shephard appear on May 2 as

caused by its use. Toma counterclaimed for $52 million noticed. TransAmerican ascribes its failure to produce

damages resulting from TransAmerican's refusal to pay Shephard for deposition to miscommunication concerning

for the casing. Numerous other parties also joined in the his schedule changes between attorneys in its legal

litigation. 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 (5) An order striking out pleadings or parts thereof,

March 14 motion for protective order, even though it ... or dismissing with or without prejudice the action or

acknowledged that that motion was moot. Toma included proceedings or any part thereof, or rendering a judgment

in its response, however, a motion for sanctions against by default against the disobedient party....

TransAmerican based on Shephard's failure to appear at

the May 2 deposition. In return, TransAmerican filed its At the time of the district court's rulings, paragraph 3

own sanctions motion on May 11, urging that Toma's of Rule 215 stated in part:

motion for sanctions was itself an abuse of the discovery

process. Toma's and TransAmerican's motions for If the court finds a party is abusing the discovery

sanctions both stated that they would be submitted to the process in seeking, making or resisting discovery ..., then

court for ruling on May 12, the date set for submission of the court in which the action is pending may impose any

TransAmerican's original motion for protection. sanction authorized by paragraphs (1), (2), (3), (4), (5),

and (8) of paragraph 2b of this rule. Such order of

On May 12, without hearing oral argument, [2] the sanction shall be subject to review on appeal from the

district court signed an order final judgment. [4]

Page 916 Page 917

granting Toma's motion for sanctions and striking Both paragraphs leave the choice of sanctions to the

TransAmerican's pleadings in their entirety. sound discretion of the trial court. Bodnow Corp. v. City

TransAmerican moved for reconsideration, which the of Hondo, 721 S.W.2d 839, 840 (Tex.1986). However,

district court denied after hearing argument of counsel paragraph 2(b) explicitly requires that any sanctions

but refusing to hear any evidence. Based upon his May imposed be "just". By referring to paragraph 2(b),

12 order striking TransAmerican's pleadings, the district paragraph 3 incorporates the same requirement. Thus,

court issued an order on October 6 dismissing whether the district court imposed sanctions under

TransAmerican's action with prejudice, rendering an paragraph 2(b) or paragraph 3, we consider whether those

interlocutory default judgment against TransAmerican sanctions were just. [5] See Bodnow, 721 S.W.2d at 840.

and in favor of Toma on its counterclaim, and setting the

case for trial solely on the issue of the damages to be In our view, whether an imposition of sanctions is

awarded Toma. just is measured by two standards. First, a direct

relationship must exist between the offensive conduct and

TransAmerican sought mandamus relief from the the sanction imposed. This means that a just sanction

court of appeals to compel the district court to set aside must be directed against the abuse and toward remedying

his May 12 and October 6 orders. A divided court of the prejudice caused the innocent party. It also means that

appeals denied TransAmerican leave to file its petition the sanction should be visited upon the offender. The trial

for writ of mandamus in an unpublished per curiam court must at least attempt to determine whether the

opinion. [3] TransAmerican then moved for leave to file offensive conduct is attributable to counsel only, or to the

its petition in this Court. We granted the motion in order party only, or to both. This we recognize will not be an

to review the propriety of the discovery sanctions easy matter in many instances. On the one hand, a lawyer

imposed by the district court. cannot shield his client from sanctions; a party must bear

some responsibility for its counsel's discovery abuses

II when it is or should be aware of counsel's conduct and

the violation of discovery rules. On the other hand, a

The sanctions imposed by the district court are party should not be punished for counsel's conduct in

among those authorized for various discovery abuses which it is not implicated apart from having entrusted to

under Rule 215 of the Texas Rules of Civil Procedure. counsel its legal representation. The point is, the

The district court did not specify what provision of Rule sanctions the trial court imposes must relate directly to

215 it relied upon. The portions of the rule applicable to the abuse found.

the circumstances here are paragraphs 2(b)(5) and 3.

Paragraph 2(b)(5) provides in part: Second, just sanctions must not be excessive. The

punishment should fit the crime. A sanction imposed for

If a party or an officer ... of a party ... fails to comply discovery abuse should be no more severe than necessary

with proper discovery requests or to obey an order to to satisfy its legitimate purposes. It follows that courts

provide or permit discovery, ... the court in which the must consider the availability of less stringent sanctions

action is pending may, after notice and hearing, make and whether such lesser sanctions would fully promote

such orders in regard to the failure as are just, and among compliance.

others the following:

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 Shephard's deposition for a specific date and punished

severe sanctions is limited, not only by these standards, any failure to comply with that order by contempt or

but by constitutional due process. The sanctions the another sanction. He also could have taxed the costs of

district court imposed against TransAmerican are the the deposition against TransAmerican and awarded Toma

most devastating attorney fees. The range of sanctions available to the

district court under Rule 215 is quite broad. The district

Page 918 court dismissed TransAmerican's claims against Toma

and rendered default judgment for Toma on its

a trial court can assess against a party. When a trial court counterclaim solely because, as the record before us

strikes a party's pleadings and dismisses its action or establishes, TransAmerican's president failed to present

renders a default judgment against it for abuse of the himself for his deposition. [8] Nothing in the

discovery process, the court adjudicates the party's claims

without regard to their merits but based instead upon the Page 919

parties' conduct of discovery. "[T]here are constitutional

limitations upon the power of courts, even in aid of their record before us even approaches justification for so

own valid processes, to dismiss an action without severe a sanction. [9]

affording a party the opportunity for a hearing on the

merits of his cause." Societe Internationale v. Rogers, We recognize that we affirmed a similar sanction in

357 U.S. 197, 209-10, 78 S.Ct. 1087, 1094, 2 L.Ed.2d Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238,

1255 (1958), citing Hammond Packing Co. v. Arkansas, 241-42 (Tex.1985), cert. denied, 476 U.S. 1159, 106

212 U.S. 322, 350-51, 29 S.Ct. 370, 379-80, 53 L.Ed. 530 S.Ct. 2279, 90 L.Ed.2d 721 (1986). In that case the trial

(1909), and Hovey v. Elliott, 167 U.S. 409, 17 S.Ct. 841, court struck defendant's answer and rendered a default

42 L.Ed. 215 (1897); accord Insurance Corp. of Ireland, judgment against it based upon the failure of defendant

Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, and his employees to appear for their depositions on three

705-06, 102 S.Ct. 2099, 2105-06, 72 L.Ed.2d 492 (1982). separate occasions without explanation. Even assuming

Discovery sanctions cannot be used to adjudicate the that Downer was correctly decided, the instant case does

merits of a party's claims or defenses unless a party's not show the same pattern of abuse present in Downer.

hindrance of the discovery process justifies a Furthermore, Downer 's approval of the sanction of

presumption that its claims or defenses lack merit. default judgment was specifically based upon the facts of

Insurance Corp. of Ireland, 456 U.S. 694, 705-06, 102 that case, and the holding in that case is limited to those

S.Ct. 2099, 2105-06; Rogers, 357 U.S. at 209-10, 78 facts. Rendition of default judgment as a discovery

S.Ct. at 1094; Hammond Packing, 212 U.S. at 350-51, 29 sanction ought to be the exception rather than the rule.

S.Ct. at 379-80. However, if a party refuses to produce

material evidence, despite the imposition of lesser There are cases, of course, when striking pleadings,

sanctions, the court may presume that an asserted claim dismissal, rendition of default and other such extreme

or defense lacks merit and dispose of it. Insurance Corp. sanctions are not only just but necessary. See National

of Ireland, 456 U.S. at 705-06, 102 S.Ct. at 2105-06. Hockey League, 427 U.S. at 642, 96 S.Ct. at 2780. In this

Although punishment and deterrence are legitimate case, however, the record before us establishes that the

purposes for sanctions, National Hockey League v. severe sanctions the district court imposed against

Metropolitan Hockey Club, Inc., 427 U.S. 639, 96 S.Ct. TransAmerican were manifestly unjust in violation of

2778, 49 L.Ed.2d 747 (1976) (per curiam); Bodnow Corp. Rule 215.

v. City of Hondo, 721 S.W.2d at 840 they do not justify

III

trial by sanctions, Hammond Packing, 212 U.S. at

350-51, 29 S.Ct. at 379-80; Hovey, 167 U.S. at 413-14, We next consider whether TransAmerican has an

17 S.Ct. at 843. Sanctions which are so severe as to adequate remedy by appeal. If it does, then the writ of

preclude presentation of the merits of the case should not mandamus must be denied. State v. Walker, 679 S.W.2d

be assessed absent a party's flagrant bad faith or counsel's 484, 485 (Tex.1984). Rule 215, paragraph 3 states that

callous disregard for the responsibilities of discovery orders imposing discovery sanctions "shall be subject to

under the rules. See National Hockey League, 427 U.S. at review on appeal from the final judgment." Today we

642-643, 96 S.Ct. at 2780-81. [7] have held in Braden v. Downey, 811 S.W.2d 922 (1991),

that sanctions should not be imposed in such a way that

In the present case, it is not clear whether

effective appellate review is thwarted. Whenever a trial

TransAmerican or its counsel or both should be faulted

court imposes sanctions which have the effect of

for Shephard's failure to attend his deposition. Moreover,

adjudicating a dispute, whether by striking pleadings,

there is nothing in the record to indicate that the district

dismissing an action or rendering a default judgment, but

court considered imposition of lesser sanctions or that

which do not result in rendition of an appealable

such sanctions would not have been effective. If

judgment, then the eventual remedy by appeal is

anything, the record strongly suggests that lesser

inadequate. Specifically, in this case TransAmerican does

sanctions should have been utilized and perhaps would

not have an adequate remedy by appeal because it must

have been effective. The district court could have ordered

suffer a trial limited to the damages claimed by Toma. gamesmanship. Thus I write separately to offer additional

The entire conduct of the litigation is skewed by the guidance to the bench and bar.

removal of the merits of TransAmerican's position from

consideration and the risk that the trial court's sanctions In assessing sanctions under Rule 215 of the Texas

will not be set aside on appeal. Resolution of matters in Rules of Civil Procedure, the punishment must fit the

dispute between the parties will be influenced, if not crime. Furthermore, a sanction should be a function of

dictated, by the trial court's determination of the conduct both the facts presented and the purpose of the rule the

of the parties during discovery. Some award of damages court is enforcing. G. JOSEPH, SANCTIONS: THE

on Toma's counterclaim is likely, leaving TransAmerican FEDERAL LAW OF LITIGATION ABUSE § 16 (1989).

with an appeal, not on whether it should have been liable If this is not clear from the record, the trial court is more

for those damages, but on whether it should have been apt to be second guessed by the appellate courts.

sanctioned for discovery abuse. This is not an effective

appeal. The Litigation Section of the American Bar

Association promulgated the following standards and

Page 920 guidelines to be considered when determining whether to

assess sanctions under Federal Rule 11:

We therefore hold that when a trial court imposes

discovery sanctions which have the effect of precluding a a. the good faith or bad faith of the offender;

decision on the merits of a party's claims--such as by

striking pleadings, dismissing an action, or rendering b. the degree of willfulness, vindictiveness,

default judgment--a party's remedy by eventual appeal is negligence, or frivolousness involved in the offense;

inadequate, unless the sanctions are imposed

c. the knowledge, experience, and expertise of the

simultaneously with the rendition of a final, appealable

offender;

judgment. If such an order of sanctions is not

immediately appealable, the party may seek review of the d. any prior history of sanctionable conduct on the

order by petition for writ of mandamus. Although not part of the offender;

every such case will warrant issuance of the

extraordinary writ, this case does. TransAmerican's e. the reasonableness and necessity of the

remedy by appeal from a final judgment eventually to be out-of-pocket expenses incurred by the offended person

rendered in Toma's favor is inadequate. as a result of the misconduct;

*** f. the nature and extent of prejudice, apart from

out-of-pocket expenses, suffered by the offended person

Accordingly, we hold that TransAmerican is entitled as a result of the misconduct;

to the mandamus relief it seeks. We are confident that

Judge Powell will vacate his orders of May 12 and g. the relative culpability of client and counsel, and

October 6, after which he may conduct further the impact on their privileged relationship of an inquiry

proceedings consistent with this opinion. Our writ of into that area;

mandamus will issue only in the event he fails promptly

to comply. h. the risk of chilling the specific type of litigation

involved;

Concurring opinions by GONZALEZ and MAUZY,

JJ. i. the impact of the sanction on the offender,

including the offender's ability to pay a monetary

GONZALEZ, Justice concurring. sanction;

I concur with the court's opinion and judgment. The j. the impact of the sanction on the offended party,

sanction in this case was clearly out of proportion to the including the offended person's need for compensation;

offense committed by relator and the opinion

appropriately disposes of the present controversy. Page 921

However, neither our rules nor the court have set

guidelines for imposing sanctions. They envision a large k. the relative magnitude of sanction necessary to

degree of discretion vested in the trial court and achieve the goal or goals of the sanction;

innovation should not be discouraged in attempting to

fashion an appropriate sanction. However, trial judges l. burdens on the court system attributable to the

should not be trigger happy. They should first issue misconduct, including consumption of judicial time and

orders compelling discovery. In all but the most incurrence of juror fees and other court costs;

egregious circumstances, other lesser sanctions should be

m. the degree to which the offended person

tried first before imposing the ultimate sanction of the

attempted to mitigate any prejudice suffered by him or

"death penalty" (dismissal of pleadings). Cases should be

won or lost on their merits, not on discovery or sanctions

her; client when selecting the appropriate sanction. See, e.g.,

Westmoreland v. CBS, Inc., 770 F.2d 1168, 1178-79

n. the degree to which the offended person's own (D.C.Cir.1985).

behavior caused the expenses for which recovery is

sought.... [1] The foregoing guidelines are simply suggestions to

guide a trial court in its struggle to make the punishment

American Bar Association, Standards and Guidelines fit the crime.

for Practice Under Rule 11 of the Federal Rules of Civil

Procedure, reprinted in 121 F.R.D. 101 (1988). MAUZY, Justice, concurring.

I recognize that Federal Rule 11 is not comparable to I concur in the Court's judgment, but write separately

Rule 215 of Texas Rules of Civil Procedure and that to outline the guidelines which I feel are necessary to

Federal Rule 11 does not specify the types of sanctions explain the parameters of our decision today. Whether or

that may be imposed. However, we do not have to not a sanction is appropriate must be determined by the

re-invent the wheel. In my opinion, the ABA guidelines particular facts of the individual case. In order to

developed for determining when to assess sanctions determine the appropriate sanctions in each case, the trial

under Federal Rule 11 are instructive whenever sanctions court should engage in a three-part inquiry. First, the trial

are imposed or denied under Texas Rule 215. court must resolve the question of whether the offending

conduct actually constitutes an abuse of the discovery

As the court notes, the range of sanctions available to process. Second, the court must determine who is actually

a trial court under Rule 215 is quite broad. Some of these responsible for the offensive conduct and the extent of

sanctions include: their culpability. Third, the court must determine what

sanctions would be appropriate under the circumstances.

(1) A reprimand of the offender; [2] The trial court should impose sanctions only upon those

who actually abuse the discovery process and only in a

(2) Mandatory continuing legal education;

manner consistent with the goals of deterring such

(3) A fine; [3] conduct and correcting the resulting injustice. Courts

must strike a careful balance in imposing sanctions. On

(4) An award of reasonable expenses, including one hand, the trial court should make clear that abuse of

reasonable attorney's fees, incurred as a result of the the discovery process is reprehensible and completely

misconduct; contrary to the orderly administration of justice. On the

other hand, the trial court must avoid rulings that would

(5) Reference of the matter to the appropriate serve to chill vigorous advocacy. In making its

attorney disciplinary or grievance authority; [4] determination as to what sanctions would be appropriate

in a particular case, the court should also consider the

(6) An order precluding the introduction of certain offending behavior in terms of the duty owed the court

evidence; system. Attorneys, as officers of the court, should be held

to a higher standard than others. Parties, however, should

(7) An order precluding the litigation of certain only be sanctioned for conduct in which they are actually

issues; implicated. For example, a party which, by virtue of

contract, incapacity or incompetency, or the very nature

(8) An order precluding the litigation of certain

of the lawsuit, has only limited control of his attorney and

claims or defenses;

the course of litigation, should not be sanctioned for

actions over which it had no control. Courts should strive

(9) Dismissal of the action or entry of a

to curb abuses of the judicial process by litigants and

Page 922 their attorneys, and should impose sanctions upon those

who abuse the process in order to deter such misconduct.

default judgment. [5] However, trial judges have an obligation, when imposing

sanctions, to ensure that the punishment must fit the

ABA Standards and Guidelines, 121 F.R.D. at 124. crime and is imposed only upon the actual offender or

offenders.

Sanctions are tools to be used by a court to right a

wrong committed by a litigant. Any given sanction ---------

should be designed to accomplish that end. Sanctions can

be compensatory, punitive or deterrent in nature. See G. Notes:

JOSEPH, SANCTIONS: THE FEDERAL LAW OF

LITIGATION ABUSE § 16 (1989). The court should [1] The local rules governing civil cases in Harris County

assess the type of sanction most likely to prevent a provide: "Motions shall state a date of submission which

recurrence of the offending conduct. The court should shall be at least 10 days from filing, except on leave of

also consider the relative culpability of the counsel and court. The motion will be submitted to the court for

ruling on that date or later." Rule 3.3.2, Local Rules of "appropriate" and "just" are equivalent standards.

the Civil Trial Division of the Harris County District

Courts (1987). The March 17 submission date stated in [5] TransAmerican contends that Toma's notice to take

TransAmerican's motion was only three days from the Shephard's deposition on May 2 was not a "proper"

date of filing of the motion and the day after the discovery request under Rule 215, paragraph 2(b)

deposition was scheduled. because it issued after the discovery cutoff date set by

Judge Powell. Toma responds that its request was proper

[2] Rule 3.3.4 of the Local Rules of the Civil Trial because TransAmerican agreed that Shephard could be

Division of the Harris County District Courts (1987) deposed after the cutoff, as permitted by the district

allows any party to request oral argument on a motion if court's scheduling order. TransAmerican answers even if

the party "views it as necessary." Neither TransAmerican there were a binding agreement to depose Shephard after

nor Toma appears to have requested oral argument on the cutoff, no date was ever agreed to.

any of their motions before May 12.

TransAmerican also contends that the hearing required by

[3] Because of its bre

This text is long and has been trimmed here. Open the source document for the complete record.