In re Le

335 S.W.3d 808

In re Michele LE, Relator.

Nos. 14–11–00132–CV

14–11–00156–CV.

Court of Appeals of Texas, Houston (14th Dist.).

March 3, 2011.

Trang Quoc Tran, Thomas L. Woodall, Houston, for Appellant in No. 14–09–00092–CV.Andrew Hideki Iwata, Thomas L. Woodall, Houston, for Appellant in No. 14–11–00156–CV.Charles Alfred Sturn, Jerome O. Fjeld, James Martin Juranek Jr., Houston, for Appellee.Panel consists of Chief Justice HEDGES and Justices FROST and CHRISTOPHER.

MAJORITY OPINION

KEM THOMPSON FROST, Justice.

Relator Michele Le has filed two related petitions for writ of mandamus in this court. See Tex. Gov't Code § 22.221; see also Tex.R.App. P. 52. In the first, filed on February 22, 2011, and docketed under cause number 14–11–00132–CV, relator complains that respondent, the Honorable Kyle Carter, presiding judge of the 125th District Court of Harris County, abused his discretion in ordering “death penalty” sanctions in the underlying case styled Luong Le, Individually and as President and Treasurer of Lindsay Realty Services, LLC v. Nhu Thi Le, a/k/a Michele Le, Panda Village Management, LLC and Lindsay Realty Services, LLC. In the second, filed on February 28, 2011, and docketed under cause number 14–11–00156–CV, relator complains that the respondent abused his discretion by making monetary sanctions due and payable before rendition of a final judgment. We grant relator's motion to consolidate these two proceedings. Relator also filed a motion to stay the trial scheduled to commence during the two-week period beginning March 7, 2011. See Tex.R.App. P. 52.10(a). In her motion, relator also seeks to stay the sanctions order and any future contempt hearings.

Background

Relator and her brother, Luong Le, are principals of Lindsay Realty Services, LLC, which was formed to purchase and manage over one hundred condominium units at a complex in Houston, Texas. In July of 2008, real party in interest Luong Le, individually and as president and treasurer of Lindsay Realty Services, LLC (hereinafter, Plaintiff), filed suit against relator Michele Le, Lindsay Realty, and Panda Village Management LLC, asserting, among other claims, that relator committed fraud and breach of fiduciary duty related to the management of the condominium units.¹

Discovery

A few months later, in September 2008, Plaintiff noticed relator's deposition for October 10, 2008, and served a subpoena duces tecum. Relator filed a motion to quash the deposition, which the trial court denied on October 8, 2008. The trial court ordered relator's deposition to be taken on November 11, 2008, and ordered relator to comply with the duces tecum, with the exception of request numbers 20 and 21. In the order, the trial court admonished relator that failure to comply would result in appropriate sanctions. Relator appeared for her deposition and produced eleven boxes of documents in response to the duces tecum. But relator did not provide the Lindsay Realty financial records on QuickBooks, as requested. Apparently, the deposition was then adjourned until these records were produced.

Plaintiff then served a second request for production on relator.² In January 2010, Plaintiff filed a second motion to compel, and on March 3, 2010, the trial court granted the motion. The trial court included an order to produce the previously requested QuickBooks disks, and imposed a $500 sanction against relator for discovery abuse. Relator then provided QuickBooks on disks, but the disks were password protected. When Plaintiff obtained the password and his financial expert was able to review the disks, the expert concluded that they were in an altered format and contained redactions. The expert opined that the missing data would aid Plaintiff in the investigation and litigation of his claims.

Plaintiff has provided this court with a copy of a third request for production served on relator in April of 2010. These requests included requests for emails between relator and five other individuals, and Plaintiff asserts the emails have not been produced. Relator has not addressed these requests in her mandamus petitions.

When relator failed to respond to Plaintiff's request for production, Plaintiff incurred the expense of procuring the requested documents by depositions on written questions. Relator moved to quash the depositions on written questions and, on May 17, 2010, the trial court denied relator's motion. The trial court ordered the depositions to proceed. The trial court also ordered relator to identify other bank accounts, and Plaintiff asserts that relator has not done so.

Plaintiff, on October 7, 2010, filed his third motion to compel compliance with the trial court's discovery orders.³ In this motion, Plaintiff requested both monetary sanctions and “death penalty” sanctions. A few months later, on December 3, 2010, Plaintiff supplemented his motion, detailing the alleged discovery abuses. Plaintiff asserted that “death penalty” sanctions were warranted because of relator's discovery abuses, failure to pay the $500 sanctions ordered on March 3, 2010, failure to provide account numbers ordered on May 17, 2010, and failure to supplement discovery after her objections were overruled. Plaintiff provided an affidavit asserting that relator's discovery abuse had prejudiced Plaintiff by “causing a delay in discovery and by failing to provide discoverable documents and information.” Relator filed a supplemental response to Plaintiff's subpoena duces tecum on December 3, 2010, in which she asserted that she had produced the responsive documents in her possession in most instances and would provide additional documents before the sanctions hearing.⁴

“Death Penalty” Sanctions

The trial court conducted a hearing on December 6, 2010.⁵ At the hearing, Plaintiff argued that because of relator's delays, there is not enough time to complete necessary discovery before the March 7, 2011, trial setting. After the hearing, relator filed a document seeking to demonstrate her compliance with the court's orders. Plaintiff filed a post-hearing supplement detailing some of the documents that relator had not produced.⁶ Relator responded and asserted that she did not have possession of the documents that Plaintiff alleged she failed to produce. The trial court, on January 21, 2011, signed the order that is the subject of relator's first mandamus petition. In that order the trial court recited its findings, including the following:

1. The trial court issued an order on October 8, 2008, for relator to appear for the continuation of her deposition and produce documents requested in the notice of deposition duces tecum (with two exceptions) on or before November 11, 2008, and admonished relator that appropriate sanctions would be imposed for failure to comply;

2. The trial court issued an order on March 3, 2010, sanctioning relator $500 for discovery abuse and ordering her to appear for the continuation of her deposition on or before April 1, 2010;

3. Relator failed to comply with the March 3, 2010, order;

4. Relator failed to comply with the trial court's May 17, 2010, order for production of title company and bank records, forcing Plaintiff to seek the information directly from these nonparties by depositions on written questions;

5. Relator's attorneys were served on October 29, 2010, with a notice and subpoena duces tecum for relator to appear for her previously ordered deposition on December 6, 2010; and 6. Relator unilaterally cancelled the deposition on November 17, 2010.

The trial court ordered relator's pleadings stricken and barred relator from presenting evidence at trial. The trial court further ordered relator to appear for her deposition at a date convenient to Plaintiff and to bear reasonable costs and attorney's fees, not to exceed $8,500 for the deposition. The trial court sanctioned relator $8,000 in attorney's fees, $4,000 for the costs of examining the accounting records on QuickBooks, and $11,392.95 for the costs of obtaining discovery by depositions on written questions. The trial court further ordered that relator will be sanctioned $500 per day for each day of noncompliance with the order. Even though the order was not signed until January 21, 2011, the monetary sanctions were ordered to be paid by December 21, 2010.

In the sanctions order the trial court also set forth findings that relator's actions had shown “flagrant bad faith and callous disregard for the discovery process.” See TransAmerican Nat. Gas Corp. v. Powell, 811 S.W.2d 913, 918 (Tex.1991) (holding that “death penalty” sanctions should not be assessed absent a party's flagrant bad faith conduct or counsel's callous disregard of the rules). The order contains findings that relator's discovery abuses justify the presumption that her claims and defenses lack merit, that lesser sanctions have been tested, the conduct warranting sanctions is attributable to relator, and monetary sanctions alone would be ineffective. See id. at 916 (holding that where a party has refused to produce material evidence despite the imposition of lesser sanctions, the court may presume that asserted claims or defenses lack merit and strike the party's pleadings).

Relator filed a motion on February 11, 2011, asking the trial court to reconsider its sanctions order. No hearing was set on the motion. Relator then filed a petition for writ of mandamus in this court and requested a stay of the upcoming trial.

Requests for Mandamus Relief

In her first mandamus petition, relator raises two issues asserting that the trial court abused its discretion by striking her pleadings and prohibiting her from presenting evidence at the trial, and that she has no adequate remedy by appeal. Relator did not challenge the monetary sanctions in her first mandamus petition. This court requested a response to the motion for stay. Plaintiff filed the response on February 28, 2011, and on that same day, relator filed a second petition for writ of...