Associated Air Center LP v. Tary Network, LTD
05-13-00685-CV
| Tex. App. | Mar 4, 2015Background
- Tary Network Ltd. and Citadella International Group contracted with Associated Air Center (AAC) and DAE for future completion slots on two luxury jets; each appellee paid a $2 million deposit (total $4 million). No definitive completion agreements were ever executed and appellees sued for fraud, breach, conversion, unjust enrichment, and related claims.
- Appellants (AAC and DAE) asserted affirmative defenses and served objections and responses to discovery requests seeking documents and testimony supporting those defenses. Appellants largely objected to broad "all documents" requests and limited deposition testimony on the defenses.
- Appellees filed no-evidence summary-judgment motions on appellants’ affirmative defenses and moved to strike appellants’ summary-judgment evidence under Tex. R. Civ. P. 215, arguing appellants had withheld discovery and attempted an "eleventh-hour" ambush.
- The associate judge (in a non-evidentiary hearing) granted appellees’ motion to strike and ordered that appellants could not oppose the no-evidence motions; the order relied on rules 215.3 and 215.2(b)(4)-(5) and stated lesser sanctions were considered but would not promote compliance.
- Appellants appealed de novo to the trial court, which affirmed. Later written orders (after the sanction) compelled additional deposition time and ordered production of documents (with a July 16 compliance date). The case proceeded to trial where, excluded from presenting evidence on their affirmative defenses, appellants lost and a judgment of nearly $38 million was entered.
- The court of appeals reversed and remanded, holding the record does not show the trial court considered or explained why lesser sanctions would be ineffective before imposing a case-dispositive ("death penalty") sanction.
Issues
| Issue | Appellees' Argument | Appellants' Argument | Held |
|---|---|---|---|
| Whether the trial court permissibly struck appellants’ affirmative-defense evidence and barred them from opposing no-evidence motions under Tex. R. Civ. P. 215 | Appellees argued appellants repeatedly thwarted discovery and thus the sanction was warranted to prevent ambush and enforce discovery rules | Appellants argued sanction punished their lawyer’s conduct, was excessive, and the court failed to consider lesser sanctions | Reversed: death-penalty sanction was an abuse of discretion because the record lacks a reasoned explanation that lesser sanctions would be ineffective |
| Whether the sanction constituted a "death-penalty" sanction | Appellees contended it was not a death penalty because answers/pleadings were not formally struck | Appellants contended exclusion of evidence and jury instructions on defenses was tantamount to striking pleadings | Held to be a death-penalty sanction because it precluded presentation of the merits of affirmative defenses |
| Whether the record justified presuming appellants’ defenses lacked merit (so severe sanction permissible) | Appellees argued appellants’ noncompliance justified the presumption and that written orders showed noncompliance by the time of appeal | Appellants argued subsequent written orders gave time to comply and depositions/production were later ordered, showing lesser sanctions could work | Court held record did not show egregious, exceptional conduct or repeated violation of orders; no basis to presume defenses lacked merit |
| Proper remedy when death-penalty sanction imposed without required analysis | Appellees implicitly urged affirmance or consideration of merits of no-evidence motions | Appellants sought reversal and new trial; alternatively sought merits review if sanction reversed | Court reversed and remanded for further proceedings (declined to render judgment), noting sanctions affected case development and both sides would have presented more evidence at trial |
Key Cases Cited
- Am. Flood Research, Inc. v. Jones, 192 S.W.3d 581 (Tex. 2006) (standard of abuse-of-discretion review for discovery sanctions)
- TransAmerican Natural Gas Corp. v. Powell, 811 S.W.2d 913 (Tex. 1991) (sanction must bear direct relationship to misconduct; severe sanctions require presumption that claims/defenses lack merit)
- Cire v. Cummings, 134 S.W.3d 835 (Tex. 2004) (trial court must consider lesser sanctions and explain reasons before imposing death-penalty sanctions)
- GTE Commc’ns v. Tanner, 856 S.W.2d 725 (Tex. 1993) (orders merely asserting lesser sanctions would be ineffective are insufficient without explanation)
- Spohn Hosp. v. Mayer, 104 S.W.3d 878 (Tex. 2003) (record should contain explanation of appropriateness of sanctions; death-penalty available only in exceptional cases)
- Imagine Auto. Grp. v. Boardwalk Motor Cars, Ltd., 430 S.W.3d 620 (Tex. App.—Dallas 2014) (consider entire record and circumstances in sanction review)
- Davenport v. Scheble, 201 S.W.3d 188 (Tex. App.—Dallas 2006) (any sanction that adjudicates a claim and precludes presentation of the merits is a death-penalty sanction)
- Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80 (Tex. 1992) (when no-evidence point sustained after trial, appellate court may render judgment on that point)