TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-00-00691-CV
Holly West; Marc G. Rosenthal; and Rosenthal & Watson, Appellants
v.
Sandra Joseph, Appellee
NO. 98-06495, HONORABLE MARY PEARL WILLIAMS, JUDGE PRESIDING
BACKGROUND
In June 1998, Holly West filed suit against appellee Sandra Joseph in Travis County district court to recover for injuries resulting from an automobile accident between the two. The case was set for trial on April 24, 2000.
Approximately one month before trial, West's attorney, Marc Rosenthal, deposed and questioned Joseph about her responses to a request for admissions concerning the use of her cellular phone before, during, and immediately after the automobile collision. During the deposition, a disagreement arose over whether Joseph could see the document from which Rosenthal was questioning her about her responses. Rosenthal refused to allow Joseph to see the document and instead insisted on reading it to her "verbatim." Joseph's attorney, Matthew Beatty, indicated his intent to get his copy of the document from his files; Rosenthal, however, refused to consent to a break and indicated that he would end the deposition if Beatty left the room. Beatty eventually removed Joseph from the deposition.
Rosenthal subsequently served Joseph with a second notice to continue her deposition on April 10, and filed a motion to compel and for sanctions relating to the first deposition; Joseph filed a motion to quash the deposition notice. The district court denied Rosenthal's motion for sanctions and partially granted Joseph's motion to quash. The court allowed the deposition to go forward with the limitation that Rosenthal could examine Joseph for no longer than thirty minutes and only on the topic of her use of her cellular phone at or near the time of the accident. Thirty minutes before the scheduled deposition on April 10, Rosenthal faxed a letter to Beatty stating that he "would not resume the deposition" of Joseph that day. Rosenthal did not call to notify defense counsel, and the letter did not reach defense counsel until after the time the deposition was set to begin.
On March 31, in the period between the two deposition dates, Rosenthal filed a loss of consortium claim against Joseph, arising out of the same automobile collision, in a Travis County county court at law on behalf of West's husband, Daniel West. Joseph filed a motion to consolidate Mr. West's case with Ms. West's district court case. The county court at law held a hearing on Joseph's motion to consolidate. Rosenthal opposed consolidation, serving Joseph's counsel with Mr. West's first amended original petition reducing the requested damages to $499.99, just one cent below the minimal jurisdictional limits of the district court. However, because this amount was also below the county court at law's jurisdictional minimum of $500, the court dismissed Mr. West's suit for lack of subject matter jurisdiction and sanctioned Rosenthal, finding that "the actions of [Rosenthal] herein are the sort that cry out for sanctions," that Rosenthal's actions had "caused an unnecessary multiplicity of lawsuits from an apparently simple, routine car wreck case," and that his actions "in unreasonably attempting to impede the transfer of and consolidation of claims [had] caused a waste of the resources of the courts and of Defendant's time and money."
Following the county court's dismissal order, Rosenthal filed a new but identical lawsuit on behalf of Mr. West, again in the county court at law. In response, Joseph filed, in the county court at law, a motion to transfer Mr. West's suit to district court, and, in district court, a motion for continuance, asking the district court to continue the April 24 trial setting to allow time to consolidate the county court at law and district court proceedings. The district court denied Joseph's motion, and the April 24 setting remained in place. The county court at law, however, granted the motion to transfer Mr. West's case to district court; the district court consented to the transfer but indicated that it would not agree to the consolidation of Mr. West's and Ms. West's cases because Ms. West's case was set for trial the following Monday. Unable to obtain consolidation, Joseph withdrew her motion to transfer Mr. West's suit to district court.
Rosenthal allegedly contacted Beatty by telephone the day before trial, which was Easter Sunday, stated that he had been "unreasonable" in his attempts to avoid consolidation, and agreed to try both cases on the merits the next day. However, with less than twenty-four hours before trial, Beatty was unable to reach his client to obtain consent to the consolidation and trial of both cases on April 24.
The morning of April 24, the district court held a pretrial hearing. At the end of the hearing, the district judge instructed the parties to return to the courtroom by 1:45 p.m. for jury selection. That afternoon, Joseph was served with two new lawsuits Rosenthal had filed in Travis County district court within the previous hour. Rosenthal then served Joseph's counsel with a nonsuit without prejudice of the district court and county court at law cases.
Joseph subsequently filed a motion for sanctions for "frivolous and unethical conduct of Plaintiff's attorney," requesting that the court impose sanctions under either sections 10.001 through 10.006 of the Texas Civil Practice and Remedies Code, see Tex. Civ. Prac. & Rem. Code Ann. §§ 10.001-.006 (West Supp. 2001), or under the court's inherent power to sanction. The matter was set for hearing on May 22; Rosenthal responded by filing a motion to quash the hearing on the basis that it had "been illegally scheduled by one of Defendant's attorneys of record (Matthew Beatty)." The district court denied Rosenthal's motion to quash and proceeded to hear evidence relating to Joseph's motion for sanctions.
The district court found that "Marc G. Rosenthal and the firm of Rosenthal & Watson have engaged in conduct which justifies the imposition of sanctions pursuant to [the] Court's inherent power to discipline attorneys for improper and bad faith conduct." The court ordered Rosenthal and Rosenthal & Watson to pay Joseph sanctions in the amount of $14,751.08, payable to Herman & Howry, L.L.P., Beatty's law firm, "for the payment of the fees and expenses incurred in defense of the incident and allegations alleged by Plaintiff." West, Rosenthal, and Rosenthal & Watson (collectively "appellants") appeal the trial court's order of sanctions.
DISCUSSION
The decision to impose a sanction is left to the discretion of the trial court and will be set aside only upon a showing of a clear abuse of discretion. Koslow's v. Mackie, 796 S.W.2d 700, 704 (Tex. 1990). A trial court abuses its discretion when it acts in an unreasonable and arbitrary manner, or without reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). When reviewing a trial court's decision under the abuse of discretion standard, we are required to view the evidence in the light most favorable to the trial court's action and to indulge every legal presumption in favor of the judgment. Onwuteaka v. Gill, 908 S.W.2d 276, 280 (Tex. App.-Houston [1st Dist.] 1995, no writ). By two issues, appellants argue that the district court abused its discretion by (1) imposing sanctions based on conduct that does not support the imposition of sanctions under the court's inherent power to sanction, and (2) awarding sanctions in the amount of $14,751.08 and ordering payment to the law firm that represented Joseph.
The trial court in this case imposed sanctions pursuant to its "inherent power to discipline attorneys for improper or bad faith conduct." Even in the absence of an applicable rule or statute, a court has the inherent authority to sanction parties for bad faith abuses if it finds that to do so will "aid in the exercise of its jurisdiction, in the administration of justice, and in the preservation of its independence and integrity." In re Bennett, 960 S.W.2d 35, 40 (Tex. 1997) (citing Eichelberger v. Eichelberger, 582 S.W.2d 395, 398-99 (Tex. 1979)). This inherent power to sanction exists to the extent necessary to deter, alleviate, and counteract bad faith abuse of the judicial process. Onwuteaka, 908 S.W.2d at 280.
The trial court, in its order imposing sanctions, found that Rosenthal engaged in a course of conduct that was calculated solely to harass Joseph and needlessly increase the cost of litigation, and that such conduct had wasted judicial resources. These findings were based on the factual allegations set forth in Joseph's motion for sanctions, which were adjudged "proven true" by the trial court. The order states, "Without reciting each factual allegation set forth in Defendant's Motion for Sanctions, Mr. Rosenthal's unacceptable course of conduct includes but is not limited to, the filing of multiple lawsuits, admittedly unreasonable opposition to Defendant's efforts to consolidate the multiple lawsuits, and improper conduct during the discovery process." The order then lists, by example, specific instances illustrating "Mr. Rosenthal's tactics to needlessly burden the parties and to increase the cost of litigation."
Appellants isolate specific instances of conduct enumerated in the district court order and argue that each act alone cannot support the imposition of sanctions. For example, the order states, "The Court finds that Mr. Rosenthal filed his nonsuit for purposes of securing a different District Court Judge and, hopefully, different pretrial rulings. This conduct is essentially forum shopping and improper." Appellants argue, however, that "West had the option, and the absolute right, to nonsuit her case under Rule 162" and that "the filing of a nonsuit-even to avoid unfavorable rulings-is not improper conduct and will not support the imposition of sanctions as a matter of law."
By their first issue, appellants argue that the district court abused its discretion because the conduct on which the sanctions order is based does not support the imposition of sanctions under the court's inherent power. Appellants' attempt to isolate each instance of conduct and their argument that each one was appropriate and therefore not sanctionable are unpersuasive. The district court's order assessed sanctions for a "course of conduct," not an individual instance of conduct. We acknowledge that while certain isolated instances of conduct may not be sanctionable independently, several independent acts combined, which together create a course of conduct to circumvent the judicial process, are properly sanctionable under a court's inherent power.
In support of the proposition that a court has the inherent power to sanction an improper course of conduct, Joseph persuasively cites In re Bennett. In the Bennett case, plaintiffs' counsel filed seventeen separate lawsuits and, upon finally receiving assignment to the particular district court desired, filed notices of nonsuit in all sixteen previously filed suits. In re Bennett, 960 S.W2d at 36-37. The Bennett court acknowledged that "[g]enerally, plaintiffs have the right under Tex. R. Civ. P. 162 to take a nonsuit at any time," but based on the attorneys' conduct and admission that the filing process used was designed to get the clients' claims before a particular judge, the court found that counsel engaged in a deliberate circumvention of the random assignment of cases and that the trial court therefore did not abuse its discretion in imposing sanctions. Id. at 38. In reviewing the facts of the case, the supreme court looked at both the overall course of conduct as well as the intent of counsel:
This type of conduct, if tolerated, breeds disrespect for and threatens the integrity of our judicial system. . . . The lawyers sanctioned in this case cannot deny that they were fully aware of the purposes of the random assignment system. They intentionally attempted to circumvent those purposes.
Id. at 40 (emphasis added).
Here, our review of Rosenthal's overall course of conduct, as well as the intent that can be inferred from a review of such conduct, leads us to conclude that the district court did not abuse its discretion in imposing sanctions. The record contains sufficient evidence supporting the district court's findings that Rosenthal engaged in a course of conduct calculated solely to harass Joseph and needlessly increase the cost of litigation, and that such conduct wasted judicial resources. Rosenthal filed multiple lawsuits and admitted to unreasonably objecting to the consolidation of those lawsuits. Rosenthal further engaged in improper conduct during the discovery process by engaging in unreasonable conduct during the deposition, by filing a frivolous motion for sanctions stemming from Joseph's deposition, by seeking permission for the deposition to continue, and by then declining to depose Joseph and failing to properly notify Joseph's counsel that the deposition would not be held. After filing a nonsuit the day of trial, Rosenthal stated that the reason for the nonsuit was that he did not agree with the court's pretrial rulings; such admission supports the court's finding that Rosenthal engaged in improper forum shopping by filing his nonsuit for the purposes of securing a different judge and different pretrial rulings. This conduct, like that at issue in Bennett, breeds disrespect for and threatens the integrity of our judicial system. Id. Sanctioning Rosenthal for such behavior was well within the district court's authority to counteract bad faith abuse of the judicial process and preserve the court's independence and integrity. We overrule appellants' first issue.
By their second issue, appellants argue that the district court abused its discretion because (1) the sanction imposed is excessive and therefore unjust, and (2) the district court improperly ordered the draft for payment of sanctions to be made payable to the law firm that represented Joseph.
We measure whether an imposition of sanctions is just by two standards. Transamerican Natural Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex. 1991). First, a direct relationship must exist between the offensive conduct and the sanction imposed. Id. This means that a just sanction must be directed against the abuse and toward remedying the prejudice caused the innocent party. Id. Sanctions may also be imposed to secure compliance, deter future violations, and punish violators. Bodnow Corp. v. City of Hondo, 721 S.W.2d 839, 840 (Tex. 1986). Second, just sanctions must not be excessive. Transamerican Natural Gas Corp., 811 S.W.2d at 917. "The punishment should fit the crime." Id.
Here, the court imposed sanctions in the amount of $14,751.08, "representing the reasonable and necessary attorneys fees and expenses incurred by Defendant in defense of multiple claims alleged" and further stated that "the court awards this sum as a reasonable and measured penalty for the conduct at issue as an amount necessary to deter future similar conduct."
We cannot say that the sanction imposed by the district court is excessive or violates the guidelines elucidated in TransAmerican. See id. The sanction imposed bears a direct relation to the offensive conduct at issue here--Rosenthal's efforts to increase the cost of litigation and harass Joseph. The purpose of the sanction in this case was not only to reimburse Joseph for the costs of fees and expenses incurred in the litigation up to the point of nonsuit, but also "to deter future similar conduct." Because the sanction had a punitive purpose, the amount of the award was within the discretion of the district court. In light of the fact that a lesser sanction imposed by the county court at law apparently did not deter Rosenthal from engaging in further improper conduct, we cannot say the district court clearly abused its discretion by awarding $14,751.08 in sanctions.
Finally, appellants contend that the district court improperly ordered them to make the draft for payment of sanctions payable to the law firm representing Joseph instead of to Joseph herself. This argument also lacks merit. "Where a party or his attorney has been sanctioned for abuse of the discovery rules, and ordered to make payment, such payment may be ordered made to the moving party or that party's attorney." Ex parte Conway, 843 S.W.2d 765, 767 (Tex. App.-Houston [14th Dist.] 1992, orig. proceeding) (emphasis added). We accordingly overrule appellants' second issue.
CONCLUSION
Having overruled both of appellants' issues on appeal, we affirm the district court's order imposing sanctions.
Marilyn Aboussie, Chief Justice
Before Chief Justice Aboussie, Justices Yeakel and Patterson
Affirmed
Filed: April 26, 2001
Do Not Publish
nthal engaged in a course of conduct calculated solely to harass Joseph and needlessly increase the cost of litigation, and that such conduct wasted judicial resources. Rosenthal filed multiple lawsuits and admitted to unreasonably objecting to the consolidation of those lawsuits. Rosenthal further engaged in improper conduct dur