“DEATH PENALTY” SANCTIONS IMPOSED FOR DISCOVERY ABUSE

Imagine Automotive Group v. Boardwalk Motor Cars, Ltd.
Dallas Court of Appeals, No. 05-11-01119-CV (May 7, 2014)
Justices FitzGerald, Francis (Opinion), and Fillmore
In an appeal from what the trial court characterized as “the worst case that I have dealt with with regard to the noncompliance with discovery,” the Dallas Court of Appeals affirmed “death penalty” sanctions against defendants, including the striking of all pleadings, an instruction on liability, and the award of $180,000 in attorney’s fees.

The Boardwalk plaintiffs had sued Imagine and other defendants, all involved in the auto sales industry, for commercial bribery (paying off Boardwalk employees to get sweetheart deals on cars) and under the Texas Theft Liability Act, among other things. The Court’s lengthy opinion chronicles a litany of failures by the defendants to produce requested documents, even in the face of orders to compel, and provides a detailed, careful analysis of the standards and processes for applying “death penalty” sanctions in such a case. The Court rejected defendants’ contention that certain documents held by affiliated entities were not within their own “possession, custody, or control.” Defendants argued that the trial court had not actually imposed certain “lesser sanctions” before imposing the death penalty. But the Court concluded that as long as lesser sanctions had been duly “considered and rejected,” a trial court “need not test the effectiveness of each available lesser sanction by actually imposing the lesser sanction...before issuing the death penalty.” The Court also affirmed the decision of the trial court, reached after an evidentiary hearing, to impose sanctions only on the defendants themselves, and not on their counsel. Finally, the Court rejected defendants’ suggestion that instructing the jury that defendants were “liable” on the various claims constituted an improper comment on the weight of the evidence. Where, as here, all defensive pleadings had been struck, such an instruction was entirely appropriate and necessary.

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