Sanctions Case Law (Tex.App.- Houston 2007-2008)

Sanctions terms: Discovery sanctions | Motion for Rule 11 sanctions | statutory sanctions | Tex. R. Civ.
P. 11 | sanctions against party or attorney or both | sanctionable conduct | misconduct | invalid or
improper objections | refusal or failure to comply with discovery requests | produce documents | failing to
appear for deposition | proportionality | lesser sanctions | attorney's fees as a sanction | death penalty
sanctions | dismissal | spoliation | conceal evidence | destruction of evidence | spoliation | groundless
claims, defenses | frivolous suit sanctions | sanctions on appeal | Rule 45 sanctions | Tex. R. App. P. 45 |
| contempt of court | motion for protection | motion to compel production, answers to interrogatories,
response to requests for disclosure | deposition | discovery order on motion to compel | in camera
inspection of confidential documents | confidentiality | assertion of privilege | confidential records |

Approximately $30,400.00 v. State of Texas (Tex.App.- Houston [14th Dist.] Oct. 7, 2008)(per curiam)
(civil forfeiture, sanctions reversed)
REVERSED AND REMANDED: Per Curiam
Before Justices Frost, Seymore and Guzman
14-07-00342-CV Approximately $30,400.00 v. The State of Texas
Appeal from 333rd District Court of Harris County
Trial Court Judge: J oseph J. "Tad" Halbach

Thompson v. Peak (Tex.App.- Houston [1st Dist.] Aug. 26, 2008)(Fowler)
(homestead, liens, sanctions appeal mooted by compliance with sanctions order)
DISMISSED AS MOOT: Opinion by Justice Fowler
Before Justices Fowler, Frost and Seymore
14-07-00333-CV        Jack W. Thompson v. David Ricardo and Kara K. Peak Appeal from 164th District
Court of Harris County
Trial court judge: Hon. Martha Hill Jamison
Dissenting Opinion by Justice Frost

Appellate panel splits on sanctions issue - Justice Evelyn Keyes dissents
Scott Bader, Inc. v. Sandstone Products, Inc. (Tex.App.- Houston [1st Dist.] Feb. 28, 2008)(Higley)
(products liability, sanctions)
AFFIRM TC JUDGMENT IN PART, REVERSE TC JUDGMENT IN PART, AND REMAND CASE TO TC FOR
FURTHER PROCEEDINGS: Opinion by Justice Higley
Before Justices Nuchia, Keyes and Higley
01-05-00940-CV Scott Bader, Inc., Amy C. Wright, Kern & Wooley, L.L.P., and National Pigments &
Chemicals, Inc. v. Sandstone Products, Inc.
Appeal from 127th District Court of Harris County (Judge Sharolyn Wood)
Dissenting Opinion by Justice Keyes in Scott Bader, Inc. v. Sandstone Products, Inc. (sanctions)

Sanctions against out-of-state debt collector affirmed

Walker v. Travelers Indemnity Co. (Tex.App. - Houston [14th Dist.] Jan. 15, 2008)(Hedges)
(appellate sanctions denied)
AFFIRMED: Opinion by Chief Justice Hedges
Before Chief Justice Hedges, Justice Anderson, Senior Justice Murphy
14-07-00238-CV Bari Walker v. Travelers Indemnity Company A/K/A Travelers Insurance
Appeal from 113th District Court of Harris County (name of judge not shown on appellate docket sheet)

Thottumkal v. McDougal No. 14-06-00364-CV (Tex.App.- Houston [14th Dist.] Jan. 15, 2008)(Hedges)
(frivolous suit sanctions in favor of defendant attorney affirmed)
AFFIRMED AS MODIFIED: Opinion by Chief Justice Hedges, Concurring Opinion by Justice Edelman
Before Chief Justice Hedges, Justices Fowler and Edelman
Jose Thottumkal and Saramma Thottumkal v. Larry McDougal
Appeal from 268th District Court of Fort Bend County (Judge Brady G. Elliott)
Concurring Opinion by Justice Edelman

Midland Funding NCC-2 Corp. v. Azubogu (Tex.App.- Houston [1st Dist.] Dec. 13, 2007)(Radack)
DWOP is without prejudice, sanctions complaint not preserved for appellate review)
AFFIRM TC JUDGMENT: Opinion by Chief Justice Radack
Before Chief Justice Radack, Justices Alcala and Bland
01-06-00801-CV Midland Funding NCC-2 Corp. v. Josiah Azubogu
Appeal from 165th District Court of Harris County (Hon. Elizabeth Ray)
Appellant did not raise these complaints in its motion for new trial and cannot complain on appeal of such
error, if any. ... We find appellant waived his objection to the trial court’s sanction because he does not
cite to any place in the record nor have we identified anything in the record where he preserved his
argument. Midland has waived any error regarding the award of sanctions and cannot now complain on
appeal.

Parker v. Walt on (Tex.App.- Houston [14th Dist.] Aug. 28, 2007)(Yates)
divorce, lis pendens, sanctions reversed)
REVERSED AND RENDERED: Opinion by Justice Brock Yates
Before Justices Brock Yates, Edelman and Seymore
14-06-00095-CV Mary Ann Parker v. Sheryl King Walton
Appeal from County Court No. 3 of Galveston County (Hon. Roy M. Quintanilla)

Berger v. Howard R. King & Hill, Angel & King, L.L.P (Tex.App.- Houston [1st Dist.] Jun. 21, 2007)(Bland)
(restricted appeal, malpractice, sanctions)
AFFIRM TC JUDGMENT: Opinion by Justice Bland
Before Justices Nuchia, Hanks and Bland
01-06-00871-CV        Larry Berger v. Howard R. King & Hill, Angel & King, L.L.P., and Sam Lee, II, et al--
Appeal from 23rd District Court of Brazoria County (Hon. Ben Hardin)

Appellate Sanctions Request Denied

Pelican State Physical Therapy v. Bratton (Tex.App.- [1st Dist.] Aug. 30, 2007)(Taft)
(personal jurisdiction, special appearance, appellate sanctions denied, findings of facts)

Appellate Sanctions

Bratton asks us to sanction Pelican State under Rule of Appellate Procedure 45 for its pursuing a
frivolous appeal. See Tex. R. App. P. 45. Under rule 45, we may award just damages if we objectively
determine, after considering the record, briefs, or other papers filed in the Court, that an appeal is
frivolous. Smith v. Brown, 51 S.W.3d 376, 381 (Tex. App.--Houston [1st Dist.] 2001, pet. denied). We
examine the record from the viewpoint of the appellant and decide whether it had reasonable grounds to
believe that the case could be reversed. Id.

Pelican State was able to show that Bratton did have some contacts with USPT's Houston offices. We
thus conclude that Pelican State had a reasonable ground to believe that the judgment might be
reversed and that its appeal is not frivolous.

We overrule Bratton's motion for rule 45 sanctions.

=======

Parker v. Walt on (Tex.App.- Houston [14th Dist.] Aug. 28, 2007)(Yates)(divorce case, lis pendens,
sanctions)

O P I N I O N

In five issues, appellant Mary Ann Parker challenges the trial court's order imposing sanctions against her
for recording a lis pendens on property awarded to appellee Sheryl King Walton in a divorce proceeding.
We reverse the trial court's sanctions order and render judgment that Walton take nothing.

I. Factual and Procedural Background

On July 1, 2003, Walton filed for divorce from her husband, Ronnie Joe Walton ("Ronnie Joe"). Ronnie
Joe's mother, Mary Ann Parker, was subsequently joined in the divorce proceeding to litigate claims by
Walton regarding two properties at issue in the divorce, including property in Walton's name located at 84
Harbor Lane in Kemah, Texas.[1] Parker counter-claimed based upon her alleged ownership interest in
the Harbor Lane property and attempted to impose a constructive trust. During the course of the
litigation, Walton sought to refinance the mortgage on the Harbor Lane property to obtain a lower interest
rate. Walton sought authorization from the trial court to refinance the property, and, at a hearing on July
27, 2005, the court orally granted her such authorization. The following week, on August 3, Parker's
attorneys recorded a lis pendens on the Harbor Lane property, which Walton claims precluded her from
refinancing. At the ensuing divorce trial on December 6-9, the trial court awarded Walton the Harbor
Lane property as her separate property. The court did not submit Parker's constructive trust claim to the
jury.

Thereafter, on December 15, Walton filed a motion for sanctions against Parker, Parker's attorneys,
Ronnie Joe, and Ronnie Joe's attorneys under Texas Rule of Civil Procedure 13, generally alleging that
they filed groundless claims in bad faith and/or to harass her.[2] On December 19, Parker responded,
contending that Walton failed to meet her burden to show Parker's claims were groundless or brought in
bad faith or for the purpose of harassment and complaining that the motion was too vague to provide
proper notice. At the hearing on December 21, Walton, through her testimony and her attorney's
arguments, principally alleged that Parker recorded the lis pendens to prevent her from refinancing the
property and to undermine the court's order authorizing refinancing. Walton testified that her inability to
refinance and obtain a lower interest rate caused her to incur significant costs in additional interest and
other charges. Parker's attorney, Toni Sharretts, responded that, although she was aware Walton might
attempt to refinance the property, she recorded the lis pendens only to protect her client's interests and
not to prevent Walton from refinancing. She explained that she was unaware of the hearing or the court's
order when she recorded the lis pendens, as she never received a copy of the motion or other notice,
and thus she could not have recorded the lis pendens to undermine the court's order. According to
Sharretts, she first learned of the court's order when Walton's attorney contacted her demanding a
release of the lis pendens. Incredulous that the hearing took place or that the court gave such an order,
Sharretts requested a copy of documentation reflecting the court's order, which Walton failed to provide.
Walton's attorney, on the other hand, informed the trial court he properly served all parties in the case
with the motion and noted that Ronnie Joe appeared at the motion hearing to contest the refinancing.
Walton's attorney maintained, and Sharretts admitted, that he told her the lis pendens precluded
refinancing when he requested that she release it, but she still refused. Although our record does not
contain any written documentation of the court's order, the trial judge stated that he "remember[ed] the
motion" and "recall[ed] permitting [Walton] to refinance."

At the close of the hearing, the trial court stated, "All right. I'm going to grant your motion, and I'm going
to award the sanctions at . . . $3,500 in the attorney's fees, and I'm going to award 6,750 in the difference
in the interest rates . . . ." After the court's pronouncement, Walton's attorney stated that he would
prepare a "separate order on that and submit it to opposing counsel."[3] The docket sheet entry from the
day of the hearing accordingly reads, "Mot for sanctions granted per order to be filed by Petitioner on or
before 1/6/06." However, Walton's attorney did not file, and the court did not sign and enter, a written
judgment signifying the sanctions order on or before January 6, 2006. According to Walton, this was an
"inadvertent mistake," and, on June 22, 2006, Walton's attorney filed a motion to enter judgment nunc
pro tunc on the sanctions order. Parker opposed the motion, arguing that a judgment nunc pro tunc
operates only to correct a clerical error in a written judgment, and, because no written order existed, a
judgment nunc pro tunc was improper. The trial court granted Walton's motion and entered the judgment
nunc pro tunc on the sanctions order on July 13, 2006, awarding sanctions against "Mary Ann Parker" for
"sanctionable conduct."[4]

Parker now appeals, claiming the trial court abused its discretion in imposing sanctions against her for
recording the lis pendens against the Harbor Lane property.

II. Standard of Review

We review the trial court's imposition of Rule 13 sanctions for an abuse of discretion. See
Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007). We may reverse the trial court's ruling only if the trial
court acted without reference to any guiding rules and principles, such that its ruling was arbitrary or
unreasonable. Id. To determine if the sanctions were appropriate or just, the appellate court must
ensure there is a direct nexus between the improper conduct and the sanction imposed. Id.

III. Analysis

We first address the second sub-point under Parker's fifth issue, in which she contends that Walton failed
to overcome the presumption that Parker recorded the lis pendens on the Harbor Lane property in good
faith to put third parties on notice of the pending litigation concerning the property. Walton counters that
the trial court sanctioned Parker not only for recording a lis pendens but also for filing the groundless
constructive trust claim against the property - which Walton characterizes as her "homestead" - that
formed the basis of the lis pendens. Texas Rule of Civil Procedure 13 authorizes imposition of sanctions
against an attorney, a represented party, or both, who file pleadings that are (1) groundless and brought
in bad faith or (2) groundless and brought to harass. See Tex. R. Civ. P. 13; City of Houston v.
Chambers, 899 S.W.2d 306, 309 (Tex. App.- Houston [14th Dist.] 1995, no writ). When determining
whether Rule 13 sanctions are proper, the trial court must examine the facts available to the litigant and
the circumstances existing when the litigant filed the pleading. See State v. PR Invs. & Specialty
Retailers, Inc., 180 S.W.3d 654, 670 (Tex. App. - Houston [14th Dist.] 2005, pet. granted); Neely v.
Comm'n for Lawyer Discipline, 976 S.W.2d 824, 828 (Tex. App. - Houston [1st Dist.] 1998, no pet.). Rule
13 requires sanctions based on the acts or omissions of the represented party or counsel and not merely
on the legal merit of the pleading. See PR Invs., 180 S.W.3d at 670; Neely, 976 S.W.2d at 828. The trial
court must provide notice and hold an evidentiary hearing "to make the necessary factual determinations
about the motives and credibility of the person signing the groundless petition." Aldine Indep. Sch. Dist.
v. Baty, 946 S.W.2d 851, 852 (Tex. App. - Houston [14th Dist.] 1997, no writ). "Groundless" means no
basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal
of existing law. Tex. R. Civ. P. 13. Bad faith is not simply bad judgment or negligence; rather, it is the
conscious doing of a wrong for dishonest, discriminatory, or malicious purposes. See PR Invs., 180 S.W.
3d at 670. Improper motive is an essential element of bad faith. Elkins v. Stotts-Brown, 103 S.W.3d 664,
669 (Tex. App.- Dallas 2003, no pet.). Harassment means that the pleading was intended to annoy,
alarm, and abuse another person. See PR Invs., 180 S.W.3d at 670. Courts must presume that papers
are filed in good faith, and the party moving for sanctions bears the burden of overcoming this
presumption. Id.

Walton maintains that Parker's constructive trust claim was groundless and brought in bad faith and to
harass because the trial court refused submission of this claim to the jury at trial, which signaled that the
court found no evidence to support it. She further asserts that Parker recorded the lis pendens in bad
faith and to harass because she did so only a few days after the court authorized refinancing of the
property over Ronnie Joe's objection, and the lis pendens effectively prevented her from refinancing.
Walton notes that, on the day of the sanctions hearing, the trial court "had the entire record of the case
before [it]," which shows that both the constructive trust claim and lis pendens were "clearly malicious."
Walton adds that Parker's failure to request findings of fact and conclusions of law constitutes an
additional basis for affirming the court's sanctions order.

We agree with Parker that Walton failed to overcome the presumption that Parker filed her constructive
trust claim regarding the Harbor Lane property - and, by extension, the lis pendens - in good faith.[5] At
the sanctions hearing, Walton focused exclusively on Parker=s recording of the lis pendens and failed to
adduce any evidence showing Parker's claim, on which the lis pendens was based, was groundless and
brought in bad faith or to harass. As to groundlessness, the only statement from the hearing that we
construe as relevant to this issue is Walton's attorney's statement to the trial court, "It's difficult for me to
understand why they took an interest in [the Harbor Lane property because it] is owned by my clients."

The record is otherwise devoid of evidence showing that Parker's underlying claim lacked a basis in law
or fact and was not warranted by a good faith argument for the extension, modification, or reversal of
existing law. The record does not contain the pleadings filed in the divorce proceeding or a transcript of
the trial record. Further, although the final divorce decree indicates the Harbor Lane property was in
Walton's name and that the constructive trust claim was not in fact submitted to the jury, the decree does
not specify that Parker's claim was groundless. Nor did the court or the parties so specify during the
charge conference[6] or in the judgment nunc pro tunc imposing the sanctions, which does not set forth
with particularity the acts or omissions on which the sanctions are based.[7] Moreover, we reject Walton's
summary conclusion that Parker's claim was groundless simply because the trial court refused to submit it
to the jury. Walton does not cite, and we do not find, any authority holding that the court's refusal to
submit a claim to the jury in itself establishes that the claim was groundless. See generally GTE
Commc'ns Sys. Corp. v. Tanner, 856 S.W.2d 725, 731 (Tex. 1993) (noting that Rule 13 does not permit
sanctions for every pleading or motion requesting relief that is denied).

Similarly, Walton failed to adduce any evidence at the hearing indicating Parker filed the constructive
trust claim in bad faith or to harass. The testimony at the hearing focused largely on Parker's attorneys'
purpose for recording the lis pendens and whether they had notice of the trial court's order authorizing
financing. Such evidence does not adequately explain the facts and circumstances existing at the time
Parker filed the constructive trust or the motives, intent, and credibility of Parker or her attorneys in so
filing. See Karlock v. Schattman, 894 S.W.2d 517, 523 (Tex. App.- Fort Worth 1995, no writ) (noting that
without hearing evidence on circumstances surrounding filing of pleading signer's credibility and motives,
trial court has no evidence to determine that pleading was filed in bad faith or to harass). Again, Walton
simply points to the timing of the lis pendens as directly subsequent to the trial court=s order authorizing
refinancing and the court's refusal to submit the constructive trust claim to the jury as conclusive
evidence that Parker filed the claim in bad faith and to harass. Therefore, even absent findings of fact
and conclusions of law, we conclude Walton failed to overcome the presumption that Parker=s
constructive trust claim on the Harbor Lane property was filed in good faith by failing to present any
evidence that the claim was groundless and filed in bad faith or to harass. See, e.g., PR Invs., 180 S.W.
3d at 671-72 (holding trial court erred in imposing sanctions under Rule 13 where there was no evidence
at hearing that petitions were groundless and brought in bad faith or for purpose of harassment); Elkins,
103 S.W.3d at 668-69 (holding trial court abused its discretion in imposing sanctions against attorney for
filing motion for sanctions because no evidence of attorney's motive in filing motion was presented at
hearing and thus there was no evidence of bad faith or harassment); see also $19,070.00 v. State, 869 S.
W.2d 608, 611B12 (Tex. App. - Houston [14th Dist.] 1994, no writ) ("When there are no findings of fact in
an appeal from a trial to the court, the reviewing court must affirm the judgment if it can be upheld on any
legal theory that finds support in the evidence." (emphasis added)). We accordingly hold that the trial
court abused its discretion in imposing sanctions on Parker.

We sustain issue five, and, because we find this issue dispositive, we need not address Parker's
additional issues. We thus reverse the trial court's award of sanctions and render judgment that Walton
take nothing.

/s/      Leslie B. Yates

Justice

Judgment rendered and Opinion filed August 28, 2007.

Panel consists of Justices Yates, Edelman, and Seymore.

--------------------------------------------------------------------------------

[1] Although Parker maintains that Walton joined her in the divorce proceeding, we cannot verify the accuracy of this
assertion because the record fails to contain the pleadings filed in the proceeding. However, because Walton does not
challenge this factual assertion, we will accept it as true. See Tex. R. App. P. 38.1(f); Choice v. Gibbs, 222 S.W.3d 832,
836 n.6 (Tex. App.- Houston [14th Dist.] 2007, no pet.).

[2] Parker contends that Walton did not in fact file a new motion for sanctions after trial on December 15 but simply set a
hearing on a motion for sanctions Walton previously filed on December 5 that the trial court struck as untimely on
December 6. Thus, Parker concludes there was no live motion for sanctions pending before the court on which it could
have rendered judgment. The record contains conflicting documentation to this end; however, because it will not affect the
outcome of our decision, we need not address this issue.

[3] The trial court also granted Walton's requests to enter the final judgment and decree of divorce and to release the lis
pendens.

[4] In issue one, Parker claims the trial court=s July 13 order of sanctions was void and requests us to reverse and render
a judgment denying Walton sanctions on this ground. Specifically, Parker claims the trial court's oral pronouncement at
the hearing was insufficient to render an order granting sanctions because it contemplated a future reduction of the order
to writing by January 6, which did not occur. Thus, Parker concludes, the trial court's entry of the July 13 written order after
the court's plenary power had expired was void. Upon our review of the trial court's oral pronouncement and the
surrounding context, we conclude the court in fact orally rendered an order granting Walton's prejudgment motion for
sanctions, and, thus, the trial court properly entered such order subsequently via nunc pro tunc. See generally Hannon v.
Henson, 15 S.W.2d 579, 583 (Tex. Comm'n App. 1929) (holding that where evidence shows judgment has been actually
rendered but not properly entered on record, trial court has power to order entry of such judgment nunc pro tunc); Ex parte
Cole, 778 S.W.2d 599, 600 (Tex. App.- Houston [14th Dist.] 1989, no writ) (noting that order is valid when orally
pronounced in open court and that formal entry of orally rendered order constitutes only ministerial act). We overrule issue
one.

[5] Because we find that Walton failed to meet her burden to justify sanctions with respect to the constructive trust claim
that gave rise to the lis pendens, we need not determine whether the lis pendens was by itself sanctionable under Rule
13 or otherwise. See generally Sharif-Munir-Davidson Dev. Corp. v. Bell, 788 S.W.2d 427, 428-29 (Tex. App.- Dallas 1990,
writ denied) (noting that party had "statutory right to advise one and all by lis pendens of the lawsuit he filed" with respect to
real estate in dispute and declining to allow imposition of sanctions against party "for exercising his right to file suit and
notice of lis pendens").

[6] We note that our record contains only an excerpt of the transcript from the charge conference.

[7] Parker also complains that the judgment nunc pro tunc imposing sanctions fails to comply with Rule 13. See Tex. R.
Civ. P. 13 ("No sanctions under this rule may be imposed except for good cause, the particulars of which must be stated
in the sanction order."); PR Invs., 180 S.W.3d at 672 (noting that trial court has duty to set forth expressly and with
particularity acts or omissions on which it based Rule 13 sanctions). However, because Parker failed to raise this
objection to the trial court, she waived this complaint. See Appleton v. Appleton, 76 S.W.3d 78, 87 (Tex. App.- Houston
[14th Dist.] 2002, no pet.) (holding that party waived complaint that sanctions order lacked particularized findings of good
cause because party failed to object on this ground in trial court).