Opinion issued=20
February 28, 2008
In=20
The
Court of=20
Appeals
For The
First =
District of=20
Texas
NO.=20
=
01=E2=80=9305=E2=80=9300940=E2=80=93CV
SCOTT =
BADER, INC.,=20
AMY C. WRIGHT, KERN & WOOLEY, L.L.P., AND NATIONAL PIGMENTS =
&=20
CHEMICALS, INC., Appellants
V.
SANDSTONE=20
PRODUCTS, INC., Appellee
On =
Appeal from the=20
127th District Court
Harris =
County,=20
Texas
Trial =
Court Cause=20
No. 2000=E2=80=9327864A
* *=20
*
NO.=20
=
01=E2=80=9306=E2=80=9300593=E2=80=93CV
SCOTT =
BADER, INC.=20
AND NATIONAL PIGMENTS & CHEMICALS, INC.,=20
Appellants
V.
SANDSTONE=20
PRODUCTS, INC., Appellee
On =
Appeal from the=20
127th District Court
Harris =
County,=20
Texas
Trial =
Court Cause=20
No. 2000=E2=80=9327864
O P I =
N I O=20
N
<=
/SPAN>These two appeals =
arise from=20
a product liability suit brought by appellee, Sandstone =
Products,=20
Inc. (=E2=80=9CSandstone=E2=80=9D), against appellants, Scott =
Bader, Inc. (=E2=80=9CScott Bader=E2=80=9D)=20
and National Pigments & Chemicals, Inc. ![3DFootnote](3D"")
In appellate cause number =
01=E2=80=9305=E2=80=9300940=E2=80=93CV, Scott=20
Bader and its trial counsel, Amy C. Wright, and Wright=E2=80=99s =
law firm, Kern=20
& Wooley, L.L.P., appeal sanctions assessed against them. The =
trial=20
court awarded sanctions against Scott Bader for abusing the =
discovery=20
process and against Wright and her firm for violating an in limine =
order=20
during trial. Scott Bader contends that it did not abuse the =
discovery=20
process and that the sanctions were not otherwise =
=E2=80=9Cjust.=E2=80=9D Wright and her=20
firm challenge the sanctions award against them by asserting that =
the=20
sanctions were excessive.
<=
/SPAN>In=20
appellate cause number 01=E2=80=9306=E2=80=9300593=E2=80=93CV, =
Scott Bader and National Pigments=20
challenge the trial court=E2=80=99s judgment rendered against them =
in favor of=20
Sandstone. Presenting four issues and numerous sub-issues, Scott =
Bader=20
contends that (1) the testimony of Sandstone=E2=80=99s causation =
expert was=20
unreliable and constituted no evidence of causation, (2) the =
evidence was=20
legally insufficient to support the damages awarded by the jury, =
(3) the=20
trial court erred when it included a =E2=80=9Cbinding =
instruction=E2=80=9D in the jury=20
charge that Scott Bader had breached its contract and breached its =
warranty with Sandstone, and (4) alternatively, the trial =
court=E2=80=99s judgment=20
should be modified because it awarded prejudgment interest on =
future=20
damages.
<=
/SPAN>In=20
appellate cause number 01=E2=80=9305=E2=80=9300940=E2=80=93CV, we =
affirm, in part, and reverse and=20
remand, in part. In appellate cause number =
01=E2=80=9306=E2=80=9300593=E2=80=93CV, we reverse the=20
judgment and remand.
Factual and=20
Procedural Background
<=
/SPAN>Scott=20
Bader is a United States company and a wholly-owned subsidiary of =
a=20
British company. Scott Bader sells a resin, known as Texigel, =
which is=20
used as a component ingredient in roof coatings. Although its =
British=20
parent company manufactures the resins it sells, Scott Bader does =
not=20
manufacture Texigel, rather, it contracts with =
=E2=80=9Ctoll=E2=80=9D or sub-manufacturers=20
to make the product. Goodrich Corporation =
(=E2=80=9CGoodrich=E2=80=9D) was Scott Bader=E2=80=99s=20
toll manufacturer until 1999. At that point, Para-Chem Southern, =
Inc.=20
(=E2=80=9CPara-Chem=E2=80=9D) began to manufacturer Texigel for =
Scott Bader.=20
<=
/SPAN>Sandstone=20
manufactures and sells roof sealant coatings. From 1994 until =
2002,=20
Sandstone purchased Texigel from Scott Bader to use in =
manufacturing its=20
roof coating.
Texigel was the component ingredient in=20
Sandstone=E2=80=99s roof coating that caused the roof coating to =
=E2=80=9Cbind=E2=80=9D or adhere=20
to roofs. Scott Bader provided a formula to Sandstone instructing =
it how=20
to mix Texigel with nine other ingredients to make =
Sandstone=E2=80=99s roof=20
coating.
<=
/SPAN>In=20
1999, Sandstone began receiving customer complaints that its roof =
coating=20
was failing. Specifically, Sandstone=E2=80=99s roof coating was =
swelling with=20
water and not adhering to the roofs to which it had been applied.=20
Sandstone contacted Scott Bader about the problems. Initially, =
Scott Bader=20
attributed the problems to improper application of the roof =
coating. As=20
more complaints arose, Scott Bader worked with Sandstone to modify =
the=20
formula used to make Sandstone=E2=80=99s roof coating. The =
modified formulas=20
continued to include varying amounts of Texigel. Despite the=20
modifications, Sandstone=E2=80=99s roof coating continued to fail. =
Sandstone=20
worked with its customers by supplying new roof coating materials =
and, in=20
some instances, labor. However, the roof coatings continued to=20
fail.
<=
/SPAN>During=20
the same time frame, Sandstone sought to meet an industry standard =
for=20
roof coatings. The State of Florida required roof coatings to meet =
this=20
standard. As a result, Sandstone could not sell its product in =
Florida=20
until its coating passed the industry-standard test (referred to =
as the=20
=E2=80=9CDade County Test=E2=80=9D). Sandstone submitted its roof =
coating for testing on=20
three separate occasions, but its product never passed the test. =
On each=20
occasion, Sandstone=E2=80=99s product failed the Dade County =
Test=E2=80=99s =E2=80=9Cwater swell=E2=80=9D=20
requirements.
<=
/SPAN>Sandstone=20
ultimately attributed the failure of its roof coating to Texigel. =
Scott=20
Bader denied that claim, contending that Sandstone was mixing the =
roof=20
coating improperly. Sandstone sued Scott Bader asserting claims =
for breach=20
of contract, breach of warranty, violations of the Texas Deceptive =
Trade=20
Practices Act (=E2=80=9CDTPA=E2=80=9D), fraud, and negligent =
misrepresentation. Sandstone=20
also sued NPCI, Para-Chem, and Goodrich.
<=
/SPAN>During=20
the course of the litigation, Sandstone alleged that Scott Bader =
had made=20
a number of misrepresentations:
=E2=80=A2 Scott=20
Bader misrepresented that Texigel was water resistant and could be =
used as=20
an adhesive in roof coatings. It is undisputed that Texigel is a =
styrene=20
acrylic resin not a pure acrylic resin. Styrene acrylic contains =
the=20
compound acrylamide, a water absorbent material, not a =
water=20
resistant material. As such, Sandstone contended that =
Texigel was=20
unsuitable for use in commercial roof sealant coatings, such as =
those=20
manufactured by Sandstone.
=E2=80=A2 Scott=20
Bader misrepresented that it manufactured Texigel, when in fact it =
was=20
manufactured by toll manufactures Goodrich and=20
Para-Chem.
=E2=80=A2 Scott=20
Bader misrepresented that Texigel could be used to pass the Dade =
County=20
Test. Sandstone contended that an acrylamide resin could never =
pass the=20
test; rather, only pure acrylic resins can meet the=20
standard.
=E2=80=A2 Scott=20
Bader misrepresented that Texigel contained the same ingredients =
as the=20
resin manufactured by Scott Bader=E2=80=99s British parent =
company, when, in fact,=20
the resin manufactured by Scott Bader=E2=80=99s parent company =
contained pure=20
acrylic, while Texigel was made from acrylamide.
=E2=80=A2 Scott=20
Bader misrepresented that Sandstone was the only customer to =
complain=20
about roofing problems associated with Scott Bader=E2=80=99s =
products. Sandstone=20
contended that Scott Bader had received other customer=20
complaints.
<=
/SPAN>Sandstone=20
also alleged that Scott Bader was aware that Texigel deviated from =
its=20
product specifications; that is, it was aware that Goodrich, its =
toll=20
manufacturer, had at some point deviated from the resin formula of =
Scott=20
Bader=E2=80=99s parent company and had started using styrene =
acrylic instead of=20
pure acrylic to make Texigel. Sandstone alleged that Scott Bader =
was also=20
aware that quality control issues persisted with Texigel, even =
after Scott=20
Bader contracted with a new toll manufacturer, Para-Chem. =
Sandstone=20
asserted that, despite Scott Bader=E2=80=99s awareness of these =
problems and its=20
awareness of Sandstone=E2=80=99s customer complaints, Scott Bader =
never disclosed=20
this information to Sandstone.
<=
/SPAN>During=20
the course of the litigation, a discovery dispute arose between =
the=20
parties. Sandstone filed two separate motions to compel production =
of=20
information and documentation regarding product specification and =
testing,=20
other customer complaints received by Scott Bader, and the =
identity of the=20
current or former Scott Bader employee most knowledgeable =
regarding=20
product development and formulation issues.
<=
/SPAN>In=20
its response to Sandstone=E2=80=99s second motion to compel, Scott =
Bader=20
represented that it had produced all testing documents and that it =
had no=20
customer complaints, other than those of Sandstone. Scott Bader =
also=20
represented that it had never been involved in the mixing or =
formulation=20
of Texigel, rather it was a supplier and seller of the product. =
Scott=20
Bader=E2=80=99s counsel also informed Sandstone that the person =
with the most=20
knowledge regarding product formulation was not a Scott Bader =
employee but=20
was a person who resided in the United Kingdom. Scott Bader did =
not reveal=20
the identity of the person.
<=
/SPAN>From=20
May 2004 until March 2005, Scott Bader produced approximately 200 =
pages of=20
documents to Sandstone in response to Sandstone=E2=80=99s =
discovery requests. On=20
March 1, 2005, Scott Bader produced 8,000 pages of documents to =
Sandstone.=20
Before the production of these documents, Scott Bader had filed =
two=20
no-evidence motions for summary judgment against Sandstone. Also =
at this=20
point, Sandstone had already taken numerous =
depositions.
<=
/SPAN>On=20
August 15, 2005, which was shortly before trial, Sandstone filed =
its=20
=E2=80=9CTrial Brief in Support of Sanction, Spoliation =
Instruction, and/or=20
Continuance.=E2=80=9D The principal basis for the motion was a =
document produced=20
for the first time by Scott Bader on March 1, 2005 as part of the=20
8,000-page document production. The document was a memorandum =
authored by=20
Scott Bader employee, David Boothe. The Boothe memorandum was the =
first=20
page of a 17-page document that had previously been produced sans =
the=20
memorandum.
<=
/SPAN>The=20
Boothe memorandum was written on November 9, 2000 and identifies =
concerns=20
associated with Scott Bader=E2=80=99s transition from toll =
manufacturer Goodrich=20
to toll manufacturer Para-Chem. The Boothe memorandum stated that =
Texigel=20
was manufactured by Goodrich until August of 1999 and that Scott =
Bader=20
=E2=80=9Cchanged to Para-Chem at that time to start a closer =
relationship with the=20
[Para-Chem] folks and to increase our margins=E2=80=9D on Texigel. =
The Boothe=20
memorandum revealed that, at the time of the transition, Scott =
Bader was=20
without a president and that Terry Strickland (an employee of =
Scott=20
Bader=E2=80=99s British parent company) was the =E2=80=9Cmain =
lead=E2=80=9D on the transition from=20
Goodrich to Para-Chem. The Boothe memorandum stated that =
=E2=80=9Cour singular=20
pursuit should be to handle viscosity drift and stability =
issue.=E2=80=9D The=20
memorandum acknowledges that the =E2=80=9CUSA formulation=E2=80=9D =
for Texigel differs=20
from the =E2=80=9CUK version=E2=80=9D because the =E2=80=9CUS =
version contains acrylamide, where=20
the UK version does not.=E2=80=9D
<=
/SPAN>The=20
memorandum notes that the =E2=80=9CUK people=E2=80=9D handled the =
transfer from Goodrich=20
to Para-Chem and continues,
There was no control material sent at =
the time.=20
The lab material was made and reviewed in the UK and approvals =
were sent=20
from the UK. Once we changed to [Para-Chem], we never went back to =
[Goodrich]. It is now Nov. 2000 and we are reviewing the scale up=20
performed at [Para-Chem] because we believe we have a slightly =
different=20
product due to viscosity drifts and also extra tackiness (as =
reported from=20
our customers).
<=
/SPAN>Sandstone=20
contended that the Boothe memorandum was a =E2=80=9Csmoking =
gun=E2=80=9D document because=20
it refuted many of the previous representations made by Scott =
Bader during=20
the discovery process. Specifically, Sandstone asserted that the =
Boothe=20
memorandum refuted the following earlier representations made by =
Scott=20
Bader during discovery:
=E2=80=A2 No=20
personnel from Scott Bader=E2=80=99s parent company in the United =
Kingdom were=20
involved in the control of Scott Bader;
=E2=80=A2 Scott=20
Bader had no corporate representatives knowledgeable about the =
formulation=20
and testing of Texigel;
=E2=80=A2 No=20
changes had been made to Texigel since 1995, other than changing =
toll=20
manufacturers; and
=E2=80=A2 Scott=20
Bader had no other customer complaints regarding Texigel, aside =
from those=20
of Sandstone.
<=
/SPAN>In=20
addition, Scott Bader produced documents revealing that, at one =
point,=20
Strickland had been Scott Bader=E2=80=99s director. Sandstone =
contended that this=20
was relevant because it further highlighted the importance of =
Strickland=E2=80=99s=20
role in the production of Texigel. Sandstone alleged that Scott =
Bader=20
should have identified Strickland as the corporate representative =
with the=20
most knowledge of formulation and testing for deposition=20
purposes.
<=
/SPAN>Scott=20
Bader also produced customer invoices from which the customer =
names and=20
addresses had been redacted by hand. Sandstone asserted that Scott =
Bader=20
had redacted the information to prevent Sandstone from identifying =
other=20
customers that may have experienced similar problems with Texigel, =
as=20
referenced in the Boothe memorandum. Sandstone also pointed out =
that it=20
had discovered that another Scott Bader customer, Sealoflex, had=20
complained to Scott Bader about a roofing issue. Scott Bader did =
not=20
produce the documents related to the Sealoflex complaint; rather,=20
Sandstone had obtained the documents by subpoena directly from =
Sealoflex.=20
=
=
The=20
trial court granted Sandstone=E2=80=99s request for sanctions =
following a hearing.=20
In its sanctions order signed on August 22, 2005, the trial made =
the=20
following findings of fact:
a.The Court finds that Defendant SCOTT =
BADER has=20
knowingly and in flagrant bad faith engaged in discovery abuse, =
including=20
the following:
(i)withholding critical responsive =
documents until=20
the production of more than 8,000 pages of documents on March 1, =
2005,=20
after the depositions in the lawsuit had already taken place of =
witnesses=20
set in this order [the trial court later identified the =
depositions of=20
eight witnesses].
(ii)producing documents in a manner =
calculated to=20
conceal information (through removing the key first page of a =
document and=20
marking out information in other documents), with conflicting and=20
inadequate explanations for the same that lack credibility;=20
(iii)presenting deposition witnesses =
with such=20
critical documents and information concealed or not produced;=20
(iv)failing to name Terry Strickland as =
a witness=20
with knowledge of relevant facts, or to produce responsive =
documents,=20
related to Strickland=E2=80=99s role as director of Defendant =
SCOTT BADER, his=20
role as the =E2=80=9Cmain lead=E2=80=9D in Defendant SCOTT =
BADER=E2=80=99s transition from using=20
Co-Defendant Goodrich[=E2=80=99s] services to those of =
Co-Defendant Para-Chem, his=20
direct supervision over specific issues regarding the formulation =
and=20
testing of Defendant=E2=80=99s product, and his direct involvement =
in specific=20
issues related to customer reports of problems.
(v)failing to produce as a corporate=20
representative a witness with knowledge as requested; and=20
(vi)filing two no-evidence motions for =
summary=20
judgment motions on December 10, 2004 and February 23, 2005, =
respectively,=20
when Defendant SCOTT BADER and its counsel knew that the =
production of=20
documents and witnesses was deficient.
b.In particular, [the] Court finds that =
Defendant=20
SCOTT BADER=E2=80=99s actions were calculated to conceal evidence =
that would=20
indicate
(i)that SCOTT BADER=E2=80=99s product =
did not meet its=20
stated specifications; and
(ii)that the stated specifications were=20
modified.
c.The Court further finds that Defendant =
SCOTT=20
BADER=E2=80=99s actions and representations to the Court =
throughout the pretrial=20
discovery indicate a pattern or history of bad faith discovery =
abuse,=20
demonstrate callous disregard for the responsibilities of =
discovery under=20
the rules, and significantly interfere with the integrity and core =
judicial functions of this Court and its =
rulings;
d.For all of the reasons of [sic] above, =
the Court=20
finds that Defendant SCOTT BADER prejudiced Plaintiff =
SANDSTONE=E2=80=99s ability=20
to present its case.
<=
/SPAN>The=20
trial court=E2=80=99s sanctions order further provides, =
The sanctions order below is directly =
related to=20
the offensive conduct, and is appropriate and necessary because a =
lesser=20
sanction will not promote compliance. The Court has considered the =
possibility of all lesser available options. Under these =
circumstances,=20
however, there is no lesser sanctions available to address and =
deter=20
Defendant SCOTT BADER=E2=80=99s conduct while preserving =
SANDSTONE=E2=80=99s=20
rights.
<=
/SPAN>The=20
trial court awarded the following sanctions to=20
Sandstone:
Plaintiff has requested and shall be =
entitled to=20
the following jury instruction, which shall be treated as a =
partial=20
default judgment limiting issues in dispute as Defendant Scott =
Bader, Inc.=20
and its indemnified co-defendant=E2=80=99s pleadings [are] struck =
to this=20
extent:
=E2=80=9CYou are to presume (1) that the =
product that was=20
shipped between mid-1999 and 2001 did not meet the specifications =
Scott=20
Bader provided to Sandstone, and (2) that the specifications that =
Scott=20
Bader provided to Sandstone for the product during mid-1999 and =
2001 were=20
modified.=E2=80=9D
Defendant SCOTT BADER and the party it =
indemnifies=20
[NPCI] shall not be permitted to rebut the factual presumptions =
above and=20
any affirmative defenses addressed to this issue shall be=20
stricken.
<=
/SPAN>The=20
trial court also ruled that Scott Bader could not use Terry =
Strickland as=20
a witness at trial and ordered that Scott Bader =E2=80=9Cmay not =
use the=20
deposition testimony of any witness from a deposition unless SCOTT =
BADER=20
first demonstrates to the Court that such deposition was taken =
after full=20
production of documents.=E2=80=9D The trial court then identified =
eight witnesses=20
that were deposed before Scott Bader=E2=80=99s =E2=80=9Cproduction =
of critical documents=20
on March 1, 2005.=E2=80=9D
<=
/SPAN>The=20
trial court further ordered that Scott Bader pay $68,000 in =
sanctions for=20
attorney=E2=80=99s fees and expenses incurred by Sandstone =
attributable to Scott=20
Bader=E2=80=99s discovery abuse. The trial court also set aside =
earlier rulings on=20
summary judgments and struck motions for summary judgment filed =
after=20
March 1, 2005. Lastly, the court granted Goodrich=E2=80=99s and =
Para-Chem=E2=80=99s=20
request that Sandstone=E2=80=99s claims against them be tried=20
separately.
<=
/SPAN>Shortly=20
after the court signed the sanctions order, the case proceeded to =
trial=20
against Scott Bader. On August 30, 2005, the third day of trial, =
Scott=20
Bader=E2=80=99s lead trial counsel, Amy Wright, violated an in =
limine order when=20
she =E2=80=9Cintentionally injected liability insurance of =
[Sandstone] into the=20
evidence presented in front of the jury.=E2=80=9D For this =
conduct, the trial=20
granted Sandstone=E2=80=99s request for mistrial and sanctioned =
Wright and her law=20
firm, Kern & Wooley, $79,012.40, representing =
Sandstone=E2=80=99s =E2=80=9Creasonable=20
and necessary fees and expenses=E2=80=9D from voir dire through =
the hearing on the=20
motion for sanctions.
<=
/SPAN>The trial court =
signed an=20
order severing this order and the earlier sanctions order for =
discovery=20
abuse from the remainder of the case. The trial court also signed =
a final=20
judgment in the severed cause incorporating the sanction orders, =
thereby=20
making the sanction orders final and appealable. =
&=
nbsp; &n=
bsp; &nb=
sp; THE SANCTIONS APPEAL =
<=
/SPAN>In=20
their third issue, appellants challenge the sanctions awarded =
against=20
them. Scott Bader challenges the sanctions for discovery abuse. =
Wright and=20
her law firm challenge the sanctions for Wright=E2=80=99s =
violation of the in=20
limine order.
A. Discovery=20
Abuse Sanctions
<=
/SPAN>1. Standard=20
of Review and Governing=20
Principles
<=
/SPAN>We review a trial =
court=E2=80=99s=20
ruling on a motion for sanctions under an abuse of discretion =
standard.=20
Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). A trial =
court=20
abuses its discretion when its ruling is arbitrary and =
unreasonable=20
without reference to any guiding rules and principles. Id. =
at=20
838=E2=80=9339. In conducting our review, we are not =
limited to a review of=20
the =E2=80=9Csufficiency of the evidence=E2=80=9D to support the =
trial court=E2=80=99s findings;=20
rather, we make an independent inquiry of the entire record to =
determine=20
if the court abused its discretion by imposing the sanction. =
Daniel v.=20
Kelley Oil Corp., 981 S.W.2d 230, 234 (Tex. =
App.=E2=80=94Houston [1st Dist.]=20
1998, pet. denied) (op. on reh=E2=80=99g).
<=
/SPAN>Rule=20
of Civil Procedure 215.2 allows a trial court to enter =
=E2=80=9Cjust=E2=80=9D sanctions=20
for a party=E2=80=99s failure to comply with a discovery order or =
request. Tex. R. Civ. P. 215.2. =
The Supreme=20
Court of Texas in TransAmerican Natural Gas Corp. v. Powell =
developed a two-part test for courts to apply when determining =
whether a=20
sanction is =E2=80=9Cjust.=E2=80=9D 811 S.W.2d 913, 917 (Tex. =
1991). First, there must be=20
a direct nexus among the offensive conduct, the offender, and the =
sanction=20
imposed. Spohn Hosp. v. Mayer, 104 S.W.3d 878, 882 (Tex. =
2003)=20
(citing TransAmerican, 811 S.W.2d at 917). A just =
sanction=20
must be directed against the abuse and toward remedying the =
prejudice=20
caused to the innocent party, and the sanction should be visited =
upon the=20
offender. Id.
<=
/SPAN>Second,=20
just sanctions must not be excessive. TransAmerican, =
811=20
S.W.2d at 917. That is, a sanction imposed for discovery abuse =
should be=20
no more severe than necessary to satisfy its legitimate purposes, =
which=20
includes securing compliance with discovery rules, deterring other =
litigants from similar misconduct, and punishing violators. =
Id.;=20
see Spohn Hosp., 104 S.W.3d at 882; Chrysler =
Corp. v.=20
Blackmon, 841 S.W.2d 844, 849 (Tex. 1992). For this reason, =
the=20
supreme court requires courts to consider less stringent sanctions =
and=20
whether such lesser sanctions would fully promote compliance.=20
TransAmerican, 811 S.W.2d at 917; see Cire, =
134=20
S.W.3d at 839; Spohn Hosp, 104 S.W.3d at 882. =
<=
/SPAN>2. Scott=20
Bader=E2=80=99s Abuse of the Discovery =
Process
<=
/SPAN>Scott=20
Bader first contends that the discovery abuse sanctions are =
=E2=80=9Cunjust=E2=80=9D=20
because it did not abuse the discovery process. See In re =
Supportkids,=20
Inc., 124 S.W.3d 804, 807 (Tex. App.=E2=80=94Houston [1st =
Dist.] 2003, orig.=20
proceeding) (recognizing that determination of whether direct =
relationship=20
exists between offensive conduct and sanctions imposed =
=E2=80=9Cnecessarily=20
requires determining whether the underlying conduct actually =
constitutes=20
an abuse of the discovery process=E2=80=9D). As discussed, the =
trial court listed=20
in its findings of fact six bases to sanction Scott Bader for =
discovery=20
abuse. On appeal, Scott Bader attacks the trial court=E2=80=99s =
findings that it=20
abused the discovery process by failing to identify Terry =
Strickland, by=20
altering invoices to conceal customer information, and by failing =
to=20
produce timely the Boothe memorandum.
<=
/SPAN>Scott=20
Bader contends that Terry Strickland=E2=80=99s identity was =
disclosed at various=20
points throughout the discovery process. Scott Bader also contends =
that=20
Strickland was only the director of Scott Bader for a short period =
in=20
1998. Sandstone does not dispute either contention. Rather, the =
basis of=20
the discovery sanction was that discovery was propounded to which =
Scott=20
Bader should have disclosed, not only Strickland=E2=80=99s name, =
but also the=20
various key roles Strickland played with regard to managing Scott =
Bader=20
and his knowledge of the testing and formulation of Texigel. Scott =
Bader=20
points out that, when it was requested to disclose the identity of =
persons=20
with knowledge regarding such matters as testing and formulation =
of=20
Texigel or with knowledge of changes made to Texigel since 1999, =
Scott=20
Bader responded that none of its U.S. employees had such =
knowledge. Though=20
such response was technically correct, it could also be viewed as=20
misleading. Strickland was a director of Scott Bader at a time =
critical to=20
the lawsuit and was a person with knowledge regarding matters =
central to=20
Sandstone=E2=80=99s claims in this suit. Accordingly, we cannot =
say the trial=20
court abused its discretion by imposing sanctions for Scott =
Bader=E2=80=99s=20
failure to disclose Strickland=E2=80=99s identity in conjunction =
with the roles he=20
played and the knowledge he possessed.
<=
/SPAN>Scott=20
Bader also challenges the trial court=E2=80=99s finding that Scott =
Bader produced=20
customer invoices in a manner calculated to conceal customer =
information=20
from Sandstone; that is, that Scott Bader redacted customer =
information=20
from the invoices produced to Sandstone to hide the identity of =
other=20
customers, which may have had product complaints similar to those =
of=20
Sandstone.
<=
/SPAN>In=20
response to the sanctions motions, Scott Bader offered the =
affidavit of=20
its president, Nick Padfield, to explain that the invoices had =
been=20
redacted as part of the ordinary course of Scott Bader=E2=80=99s =
business, not to=20
conceal information from Sandstone. According to Padfield, the =
customer=20
and pricing information had been marked out because the invoices =
are=20
stored in a warehouse in which Scott Bader=E2=80=99s competitors =
also store=20
documents. Padfield stated that the information had been redacted =
to=20
protect competitive pricing information for its product. The trial =
court=20
ultimately found this explanation to be =
=E2=80=9Cinadequate=E2=80=9D and lacking=20
=E2=80=9Ccredibility.=E2=80=9D As we have previously recognized, =
the trial court is=20
entitled to judge the credibility of the witnesses and the weight =
of their=20
testimony in the context of a sanctions hearing. Daniel, =
981 S.W.2d=20
at 232. A finding that the documents had been altered to conceal =
customer=20
information from Sandstone is also supported, as noted by the =
trial court,=20
by the fact that, while customer information had been marked out =
on some=20
of the invoices, other invoices did not have redacted customer=20
information.
<=
/SPAN>Based=20
on the record, we cannot conclude that the trial court abused its=20
discretion by finding that Scott Bader abused the discovery =
process by=20
producing invoices in a manner calculated to conceal customer=20
information.
<=
/SPAN>Scott=20
Bader further contends that no discovery abuse arose from its =
failure to=20
produce the Boothe memorandum until five months before trial. It =
is=20
uncontested that the Boothe memorandum was produced for the first =
time as=20
part of the 8,000-page document production on March 1, 2005 and is =
the=20
first page of a 17-page document.
<=
/SPAN>The=20
record also reveals that the document was produced by Scott Bader, =
without the Boothe memorandum, on July 15, 2004. The second =
page of=20
the document had a handwritten number =E2=80=9C1=E2=80=9D on the =
top, right corner to make=20
the second page appear as if it were the first page of the =
document,=20
rather than the second. The deletion of the document was never =
pointed out=20
to Sandstone, rather, the 17-page document was ultimately produced =
with=20
the Boothe memorandum toward the end of an 8,000-page document =
production.=20
The record further reveals that at least eight witnesses, =
including the=20
memorandum=E2=80=99s author, David Boothe, were deposed before =
Sandstone had=20
received the memorandum. Therefore, based on the record, we cannot =
conclude that the trial court abused its discretion by finding =
that Scott=20
Bader=E2=80=99s manner of producing the Boothe memorandum was =
sanctionable=20
conduct.
<=
/SPAN>As=20
mentioned, the trial court awarded sanctions based not only on =
these three=20
incidents of discovery abuse, but also on the other sanctionable =
conduct=20
listed in the sanctions order. We recognize that, in assessing =
sanctions,=20
the trial court is entitled to consider the entire course of the=20
litigation. Broesche v. Jacobson, 218 S.W.3d 267, (Tex.=20
App.=E2=80=94Houston [14th Dist.] 2007, pet. denied). Based on the =
entire record=20
and the instances of misconduct we have discussed, we conclude the =
trial=20
court did not abuse its discretion by finding that Scott Bader had =
engaged=20
in sanctionable conduct during the discovery process. =
<=
/SPAN>Next,=20
we determine whether the trial court abused its discretion by =
assessing=20
the sanctions challenged by Scott Bader.
<=
/SPAN>3. Partial=20
Default Judgment Limiting Issues in =
Dispute
<=
/SPAN>As=20
mentioned, the trial court ordered that the jury be instructed =
that Scott=20
Bader=E2=80=99s product did not meet specifications and that =
product=20
specifications provided by Scott Bader to Sandstone had been =
modified,=20
which was treated as a partial default judgment against Scott =
Bader.=20
Concomitantly, the trial court prohibited Scott Bader from =
rebutting =E2=80=9Cthe=20
factual presumptions above=E2=80=9D and struck Scott =
Bader=E2=80=99s affirmative defenses=20
=E2=80=9Caddressed to this issue.=E2=80=9D Scott Bader contends =
that the trial court=20
abused its discretion by imposing these sanctions without =
considering the=20
imposition of lesser sanctions. We agree.
<=
/SPAN>Because=20
a sanction imposed for discovery abuse should be no more severe =
than=20
necessary to satisfy its legitimate purposes, courts must first =
consider=20
the availability of less stringent sanctions and whether such =
lesser=20
sanctions would fully promote compliance. See =
TransAmerican,=20
811 S.W.2d at 917. To this end, the record must reflect that the =
court=20
considered the availability of lesser sanctions. Otis Elevator =
Co. v.=20
Parmelee, 850 S.W.2d 179, 181 (Tex. 1993); Chrysler Corp. =
v.=20
Blackmon, 841 S.W.2d 844, 852=E2=80=9353 (Tex. 1992). In this =
respect, the=20
Cire court explained, =E2=80=9CThe trial court must analyze =
the available=20
sanctions and offer a reasoned explanation as to the =
appropriateness of=20
the sanction imposed.=E2=80=9D 134 S.W.3d =
at 842;=20
see also GTE Commc=E2=80=99n Sys. Corp. v. Tanner, 856 =
S.W.2d 725, 729=20
(Tex. 1993).
<=
/SPAN>Here,=20
the trial court stated in the sanctions order that the imposed =
sanctions=20
were =E2=80=9Cappropriate and necessary because a lesser sanction =
will not promote=20
compliance.=E2=80=9D It continued, =E2=80=9CThe Court has =
considered the possibility of=20
all lesser available options. Under these circumstances, however, =
there is=20
no lesser sanctions available to address and deter Defendant SCOTT =
BADER=E2=80=99s=20
conduct while preserving SANDSTONE=E2=80=99s rights.=E2=80=9D =
<=
/SPAN>Like=20
other courts before us, =E2=80=9C[w]e give no deference to such =
unsupported=20
conclusions=E2=80=9D regarding the trial court=E2=80=99s =
consideration of lesser=20
sanctions.
GTE, 856 S.W.2d at 729; accord =
In re=20
Adkins, 70 S.W.3d 384, 391 (Tex. App.=E2=80=94Fort Worth, =
2002, orig.=20
proceeding); cf. Cire, 134 S.W.3d at 842 =
(=E2=80=9CThe discussion in=20
the trial court=E2=80=99s order goes beyond simply stating that =
lesser sanctions=20
would not be effective; the order contains an extensive, reasoned=20
explanation of the appropriateness of the sanction imposed, =
demonstrating=20
that the trial court considered the availability of less stringent =
sanctions as we have required.=E2=80=9D). Beyond this general =
statement and=20
description of the offensive conduct, the trial court in this case =
offered=20
no reasoned explanation of the appropriateness of the sanctions =
imposed.=20
See Citibank v. Hanke, No. 03-04-00641-CV, 2006 WL 952538 =
at *3=20
(Tex. App.=E2=80=94Austin Apr. 14, 2006, no pet.) (mem. op.) =
(reversing sanctions=20
award, court noted that, although sanctions order referred to =
certain=20
behavior by Citibank to support sanctions, no reasoned explanation =
of=20
appropriateness of sanctions, based on that behavior, was provided =
in=20
order). The record does not otherwise reveal that the trial court=20
considered lesser sanctions or indicate why lesser sanctions would =
not=20
deter Scott Bader =E2=80=9Cwhile preserving the rights of=20
Sandstone.=E2=80=9D
<=
/SPAN>The=20
trial court did not comply with the second prong of the =
TransAmerican=20
test by insuring that the partial default judgment sanctions =
assessed=20
against Scott Bader were not excessive. The guiding rules with =
respect to=20
discovery-abuse sanctions required the trial court to consider the =
availability of lesser sanctions. See GTE, 856 S.W.2d at =
729;=20
TransAmerican, 811 S.W.2d at 917. Based on the record before =
us, we=20
hold that the trial court abused its discretion (1) by ordering =
that the=20
jury be instructed that Scott Bader=E2=80=99s product did not meet =
specifications=20
and that product specifications provided by Scott Bader to =
Sandstone had=20
been modified, (2) by prohibiting Scott Bader from rebutting these =
presumptions, and (3) by striking Scott Bader=E2=80=99s =
affirmative defenses=20
=E2=80=9Caddressed to this issue,=E2=80=9D without first =
considering lesser=20
sanctions.
See Supportkids, 124 S.W.3d at=20
808.
<=
/SPAN>4. Use=20
of Deposition Testimony At Trial
<=
/SPAN>Scott=20
Bader also challenges the trial court=E2=80=99s sanction =
prohibiting it from using=20
at trial the deposition testimony of eight witnesses, whose =
depositions=20
were taken after the March 1, 2005 document production, unless =
Scott Bader=20
first demonstrated that =E2=80=9Csuch deposition was taken after =
full production=20
of documents.=E2=80=9D As with the sanctions discussed above, the =
record does not=20
show that the trial court first considered whether lesser =
sanctions were=20
available, and if so, whether such lesser sanction would promote=20
compliance.
Accordingly, we hold that the trial =
abused its=20
discretion by prohibiting Scott Bader=E2=80=99s use of the eight =
depositions=20
without considering lesser sanctions. See In re Patton, 47 =
S.W.3d=20
825, 828 (Tex. App.=E2=80=94Fort Worth 2001, orig. proceeding) =
(concluding that=20
trial court abused its discretion by excluding trial exhibits when =
no=20
lesser sanctions considered); cf. Adams v. Allstate =
County=20
Mut. Ins. Co., 199 S.W.3d 509, =
513=E2=80=93514=20
(Tex. App.=E2=80=94Houston [1st Dist.] 2006, pet. denied) (holding =
no abuse of=20
discretion shown for striking affidavit when trial court had =
previously=20
implemented less stringent measure to no=20
avail).
<=
/SPAN>5. Attorney=E2=
=80=99s=20
Fees as Sanctions
<=
/SPAN>The=20
trial court awarded $68,000 in sanctions for attorney=E2=80=99s =
fees and expenses=20
=E2=80=9Cattributable to Scott Bader=E2=80=99s discovery =
abuse.=E2=80=9D Scott Bader states in its=20
brief that, to the extent that it was properly found to have =
abused the=20
discovery process, it =E2=80=9Cdoes not quarrel with assessment of =
attorney=E2=80=99s fees=20
related to preparing and arguing a meritorious motion for =
sanctions, or to=20
undertaking additional discovery made necessary by improperly =
withheld=20
documents.=E2=80=9D Instead, Scott Bader complains that the =
sanctions are not=20
shown to be directly related to the sanctionable conduct because =
the=20
sanctions are unsupported in the record by competent evidence.=20
<=
/SPAN>In=20
support of its request for attorney=E2=80=99s fees as sanctions, =
Sandstone=E2=80=99s=20
submitted the affidavit of one its attorneys, Allison B. Waters, =
who=20
stated,
To date, our total fees [are] at least=20
$411,066.55. Costs, which include travel expenses for numerous =
depositions=20
(in Colorado, Ohio, Pennsylvania and Florida), are at least =
$36,151.84. Of=20
these amounts, I believe [Sandstone] has incurred fees and =
expenses=20
totaling $68,000, which are associated with Scott Bader=E2=80=99s =
discovery abuse,=20
as outlined in Sandstone=E2=80=99s trial brief on spoliation, =
which was presented=20
to the Court on August 15, 2005.
<=
/SPAN>In=20
the trial court, Scott Bader objected that the affidavit was =
=E2=80=9Cconclusory,=20
not supported by any evidence and does not establish that any of =
the=20
expenses or fees were reasonable or necessary.=E2=80=9D On appeal, =
Scott Bader=20
contends that =E2=80=9C[a] conclusory statement regarding the =
amount of attorney=E2=80=99s=20
fees incurred is insufficient to support an award of fees when =
there is no=20
indication of what the fees were and no basis to establish whether =
they=20
were reasonable.=E2=80=9D Scott Bader asserts that =
=E2=80=9CSandstone=E2=80=99s evidence of fees=20
does not establish that the fees incurred were reasonable and =
necessary or=20
summarize the hours worked and rate charged.=E2=80=9D =
<=
/SPAN>In=20
cases in which the judgment is not one for earned =
attorney=E2=80=99s fees, but=20
rather a judgment imposing attorney=E2=80=99s fees as sanctions, =
it is not invalid=20
because a party fails to prove attorney=E2=80=99s fees. Condit =
v. Gonzales,=20
No. 13-04-426-CV, 2006 WL 2788251, at *12 (Tex. =
App.=E2=80=94Corpus Christi Sept.=20
28, 2006, no pet.) (mem. op.) (citing Glass v. Glass, 826 =
S.W.2d=20
683, 688 (Tex. App.=E2=80=94Texarkana 1992, writ denied)). =
=E2=80=9CWhen attorney=E2=80=99s fees=20
are assessed as sanctions, no proof of necessity or reasonableness =
is=20
required.=E2=80=9D Miller v. Armogida, 877 S.W.2d 361, 365 =
(Tex.=20
App.=E2=80=94Houston [1st Dist.] =
1994, writ=20
denied); see Brantley v. Etter, 677 S.W.2d 503, 504 (Tex. =
1984).=20
Therefore, by focusing on the lack of evidentiary value of =
Waters=E2=80=99s=20
affidavit to prove the reasonableness and necessity =
attorney=E2=80=99s fees=20
actually earned by Sandstone=E2=80=99s attorneys, Sandstone has =
not demonstrated=20
that the trial court abused its discretion when it awarded $68,000 =
in=20
attorney=E2=80=99s fees as sanctions. See Allied Assoc. =
v. INA County=20
Mut. Ins., 803 S.W.2d 799, 799 (Tex. App.=E2=80=94Houston =
[14th Dist.] 1991,=20
no writ).
<=
/SPAN>Moreover,=20
the record indicates that much of Sandstone=E2=80=99s attorney =
time was affected=20
by the sanctionable conduct. At least eight depositions were taken =
by=20
Sandstone in locations across the United States without the =
benefit of the=20
Boothe memorandum. In addition, the record reflects that =
Sandstone=E2=80=99s=20
counsel prepared two motions to compel discovery and engaged in=20
communications with Scott Bader=E2=80=99s counsel over a =
substantial period in an=20
attempt to obtain discoverable information. Though the filings =
from the=20
summary judgment proceedings are not contained in the record, it =
can=20
reasonably be surmised that Sandstone=E2=80=99s counsel spent time =
addressing the=20
no-evidence motions for summary judgment that were ultimately =
stricken in=20
the sanctions order. The record further shows that =
Sandstone=E2=80=99s counsel=20
prepared several filings in conjunction with the motion for =
sanctions and=20
attended hearings on the sanctions request.
<=
/SPAN>Accordingly,=20
we conclude that Scott Bader has not shown that the trial court =
abused its=20
discretion by awarding $68,000 in attorney=E2=80=99s fees and =
expenses as=20
sanctions.
B. Sanctions=20
for Violating the In Limine Order
<=
/SPAN>Wright=20
and her law firm (collectively =E2=80=9CWright=E2=80=9D) also =
appeal the trial court=E2=80=99s=20
sanction for Wright=E2=80=99s violation of an in limine order, =
resulting in a=20
mistrial. As mentioned, the trial court assessed monetary =
sanctions in the=20
amount of $79,012.40 against Wright and her law firm for =
=E2=80=9Creasonable and=20
necessary=E2=80=9D attorney=E2=80=99s fees and expenses incurred =
by Sandstone from voir=20
dire through the hearing on the motion for sanctions related to =
the first=20
trial.
<=
/SPAN>Wright=20
and her firm contend on appeal that Sandstone did not properly =
establish=20
these fees. The fees awarded represent the legal fees incurred by=20
Sandstone for one week=E2=80=99s worth of trial preparation and =
for attending=20
trial. Wright and her firm contend that Sandstone should not =
receive the=20
fees for the one week of trial preparation because the second =
trial=20
commenced almost immediately after the mistrial. Wright and her =
firm also=20
point out that, at the sanctions hearing, Sandstone presented one =
lump sum=20
bill and did not present an itemized bill, an affidavit, or sworn=20
testimony to support the award.
<=
/SPAN>The=20
record shows that Wright never raised the challenges in the trial =
court=20
that are now raised on appeal regarding the sanctions. To preserve =
a=20
complaint for appellate review, a party must have presented a =
request,=20
objection, or motion to the trial court stating specific grounds =
for the=20
ruling desired. See Tex. R.=20
App. P. 33.1(a)(1). We have previously applied the rule to =
a=20
party=E2=80=99s failure to raise objections to sanctions in the =
trial court.=20
See Valdez v. Valdez, 930 S.W.2d 725, 728 (Tex. =
App.=E2=80=94Houston [1st=20
Dist.] 1996, no writ) (holding appellant waived objection to =
sanctions=20
raised for first time on appeal). By failing to raise the =
complaints now=20
presented, Wright never gave the trial court the opportunity to =
correct=20
the alleged error. We hold that Wright has waived the challenges =
presented=20
on appeal to the sanctions assessed for violating the in limine =
order.=20
See id.
C. Conclusion=20
Regarding Sanctions Appeal
<=
/SPAN>To=20
summarize, we hold that the trial court abused its discretion by =
ordering=20
that (1) the jury be instructed that Scott Bader=E2=80=99s product =
did not meet=20
specifications and that product specifications provided by Scott =
Bader to=20
Sandstone had been modified, which instructions the trial court =
ordered be=20
treated as a partial default judgment limiting issues in dispute; =
(2)=20
certain of Scott Bader=E2=80=99s affirmative defenses be stricken; =
and (3) Scott=20
Bader be prohibited from using at trial the testimony of eight =
identified=20
witnesses.
We hold that the trial court did not =
abuse its=20
discretion by assessing monetary sanctions against Scott Bader in =
the=20
amount of $68,000 for discovery abuse and by assessing monetary =
sanctions=20
against Wright and her firm in the amount of $79,012.40 for =
violating an=20
in limine order.
<=
/SPAN>Accordingly,=20
Scott Bader=E2=80=99s third issue is sustained, in part, and =
overruled in=20
part.
Appeal =
of Judgment=20
Rendered Following Jury Trial
<=
/SPAN>Next,=20
in appellate cause number 01=E2=80=9306=E2=80=9300593=E2=80=93CV, =
we determine the propriety of=20
the money judgment rendered in Sandstone=E2=80=99s favor against =
Scott Bader,=20
following the jury trial. In its third issue, Scott Bader contends =
that=20
the judgment should be reversed and remanded because the sanctions =
rendered by the trial court resulted in an erroneous jury charge.=20
A. Background=20
Relevant to Claimed Charge Error
<=
/SPAN>As=20
discussed, a mistrial was declared based on the misconduct of =
Scott Bader=20
during trial. The second trial began shortly after the mistrial. =
On=20
September 15, 2005, in the midst of trial, the trial court signed =
a=20
=E2=80=9CSupplemental Order On Sanctions,=E2=80=9D which provided, =
in relevant part, as=20
follows:
Issues have arisen during trial =
requiring=20
application of the August Sanctions order. It is =
ORDERED that the breach of warranty is =
established=20
with damages from Defendants=E2=80=99 breach to be submitted to =
the jury; and=20
Defendant may bring forward evidence that does not rely on any =
stricken=20
deposition to establish causation for failures other than an =
affirmative=20
defense of Plaintiff=E2=80=99s conduct.
ORDERED that Defendant=E2=80=99s =
affirmative defenses and=20
its general denial were stricken to the extent that the =
Court=E2=80=99s prior=20
order to preclude litigation of issues rebutting the established =
issues.=20
Defendants are not entitled to raise quality control issues about=20
Sandstone to negate evidence that the product was out of =
specification=20
before reaching Sandstone. . . .
<=
/SPAN>When=20
the case was presented to the jury, the court gave the following=20
instructions:
BINDING INSTRUCTIONS
The following instructions are binding =
on the=20
jury.
You are given these binding instructions =
by the=20
Court for all purposes in this Charge and to govern your =
deliberations and=20
answers to the Jury Questions.
The Jury is instructed =
that:
(1)The specifications that Scott Bader =
provided to=20
Sandstone for the product during mid-1999 and 2001 were=20
modified.
(2)The product that was shipped between =
mid-1999=20
and 2001 did not meet the specifications Scott Bader provided to=20
Sandstone.
These instructions are also binding =
instructions.=20
You are further instructed that:
Modification of=20
Specifications
Such modification of the specifications =
is a=20
breach of the sales contract between Scott Bader and Sandstone.=20
Such modification is a breach of the =
warranty from=20
Scott Bader to Sandstone.
Failure=20
to Meet Specifications
Such failure to meet specifications is a =
breach of=20
the sales contract between Scott Bader and Sandstone. =
Such modification [sic] is a breach of =
the=20
warranty from Scott Bader to Sandstone.
<=
/SPAN>The=20
first jury question following the binding instructions asked the =
jury,=20
=E2=80=9CWhat sum of money, if any, if paid now in cash, would =
fairly and=20
reasonably compensate Sandstone Products, Inc. for its damages, if =
any,=20
that resulted from modification of specifications and failure to =
meet=20
specifications as instructed?=E2=80=9D In response to this =
question, the jury=20
awarded Scott Bader a total of $3,375,000 in actual damages.=20
<=
/SPAN>The=20
next four questions pertained to Sandstone=E2=80=99s DTPA claim. =
The jury found=20
that Scott Bader had engaged in a =E2=80=9Cfalse, misleading, or =
deceptive=20
practice=E2=80=9D and in unconscionable actions and that such =
actions were a=20
producing cause of damages to Sandstone. The jury also found that =
Scott=20
Bader=E2=80=99s modification of specifications and failure to meet =
specifications=20
was a producing cause of damages to Sandstone. The jury further =
found that=20
Scott Bader=E2=80=99s DTPA violations were committed knowingly. In =
addition to the=20
actual damages awarded in the first jury question, the jury =
awarded=20
$950,000, $225,000, and $25,000 for each of Scott Bader=E2=80=99s =
knowing=20
violations of the DTPA.
<=
/SPAN>The=20
jury further found that Scott Bader had committed fraud and =
negligent=20
misrepresentation. With regard to these claims, the jury awarded =
Sandstone=20
$300,000 for the reasonable and necessary cost of the repair or=20
replacement of the failed roof coatings and $30,000 for =
Sandstone=E2=80=99s past=20
lost profits. Lastly, the jury awarded Sandstone $486,000 for =
attorney=E2=80=99s=20
fees.
<=
/SPAN>The=20
trial court rendered judgment awarding Sandstone the actual =
damages found=20
by the jury in Question Number 1, totaling $3,375,000, the =
$950,000 in=20
additional damages awarded for Scott Bader=E2=80=99s knowing DTPA =
violation, and=20
$486,000 for attorney=E2=80=99s fees. The trial court also awarded =
$903,667 in=20
pre-judgement interest.
<=
/SPAN>In=20
its third issue, Scott Bader contends that the trial court erred =
by=20
including the =E2=80=9CBinding Instructions=E2=80=9D in the jury. =
B. Standard=20
of Review
<=
/SPAN>We=20
review the trial court=E2=80=99s submission of jury instructions =
for an abuse of=20
discretion. See Plainsman Trading Co. v. Crews, 898 S.W.2d =
786, 791=20
(Tex. 1995). When an incorrect jury instruction was given, we =
reverse only=20
if the instruction =E2=80=9C=E2=80=98was reasonably calculated to =
and probably did cause=20
the rendition of an improper judgment.=E2=80=99=E2=80=9D Bed, =
Bath & Beyond, Inc.=20
v. Urista, 211 S.W.3d 753, 757 (Tex. 2006) (quoting =
Reinhart v.=20
Young, 906 S.W.2d 471, 473 (Tex. 1995)); see Tex. R. App. 44.1(a)(1). =
We=20
examine the entire record to evaluate whether the instruction =
probably=20
caused the rendition of an improper verdict. Urista, 211 =
S.W.3d at=20
757.
C. Propriety=20
of Binding Instructions
<=
/SPAN>In=20
its third issue, Scott Bader contends that the Binding =
Instructions were=20
improper. Given our holding in appellate cause number =
01=E2=80=9305=E2=80=9300940=E2=80=93CV that=20
the trial court abused its discretion by ordering, in its August =
22=20
sanctions order, that the jury be instructed that Scott =
Bader=E2=80=99s product=20
did not meet specifications and that the product specifications =
provided=20
by Scott Bader to Sandstone had been modified, we conclude that =
the=20
Binding Instructions given to the jury were improper. =
<=
/SPAN>Sandstone=20
contends that the Binding Instructions were proper because they =
were not=20
based on the August 22 sanctions order but rather on the September =
15=20
Supplemental Order On Sanctions or, alternatively, resulted from a =
directed verdict granted at the charge conference. Sandstone also =
asserts=20
that Scott Bader waived its objection to the Binding Instructions. =
We=20
disagree with all three of Sandstone=E2=80=99s contentions. =
<=
/SPAN>We=20
are cognizant that the Binding Instructions not only instructed =
the jury=20
that Scott Bader=E2=80=99s product did not meet specifications and =
that the=20
product specifications provided by Scott Bader to Sandstone had =
been=20
modified, as provided in the August 22 sanctions order, but also=20
instructed the jury that Scott Bader=E2=80=99s modification of =
specifications and=20
failure to meet specifications each constituted breach of contract =
and=20
breach of warranty. Though these additional instructions expand on =
the=20
original instructional language found in the original August 22 =
sanctions=20
order, the record indicates that these additional instructions =
derived=20
from the original sanctions. On its face, the September 15 order =
indicates=20
that it served to supplement the August 22 sanctions order and to =
clarify=20
how the August 22 sanctions should be applied. In other words, the =
September 15 sanctions order was not an independent sanctions =
order, but=20
was a supplemental order dependent on the August 22 sanctions. =
Moreover,=20
the Binding Instructions instructed the jury that Scott =
Bader=E2=80=99s conduct=20
constituted both breach of contract and breach of warranty while =
the=20
September 15 Supplemental Order On Sanctions ordered only that =
=E2=80=9Cthe breach=20
of warranty [claim] is established=E2=80=9D and did not address =
the breach of=20
contract claim.
<=
/SPAN>At=20
the charge conference, Scott Bader objected to the Binding =
Instructions.=20
In so doing, Scott Bader renewed its objection to the sanctions =
order by=20
stating that it =E2=80=9Cdid not commit sanctions abuse=E2=80=9D =
and, if it did, that the=20
abuse could have been remedied by lesser sanctions. Scott Bader =
also=20
objected on the grounds that the Binding Instructions were an =
=E2=80=9Cexpansion=20
of the [original] sanctions order.=E2=80=9D Specifically, Scott =
Bader objected to=20
the language in the Binding Instructions which instructed the jury =
that=20
Scott Bader=E2=80=99s modification of specifications and its =
failure to meet=20
specifications constituted breach of contract and breach of =
warranty.=20
Scott Bader asserted that such instruction impermissibly expanded =
on the=20
language of the original sanctions order. Thus, Scott Bader =
preserved its=20
challenge to the Binding Instructions.
<=
/SPAN>Sandstone=20
also contends that the Binding Instructions were not derived from =
August=20
22 sanctions order but were based on a request by Sandstone for a =
directed=20
verdict at the charge conference based only on the evidence at =
trial. Such=20
contention is not supported by the record.
<=
/SPAN>When=20
Scott Bader objected on the ground that the Binding Instructions=20
improperly expanded on the August 22 sanctions language, the trial =
court=20
stated that =E2=80=9CI=E2=80=99ve instructed the verdict with =
regard to that.=E2=80=9D Only after=20
that comment by the trial court did Sandstone move for directed =
verdict.=20
In requesting the directed verdict, Sandstone stated that it =
requested a=20
directed verdict based on the evidence that was presented =
and on=20
the sanctions order. At which point, the trial court stated that =
it=20
believed it had previously granted a directed verdict on the =
issues set=20
out in the Binding Instructions. Thus, it is apparent from the =
record that=20
the Binding Instructions do not arise from a directed verdict =
based on the=20
evidence, rather the Binding Instructions were based on the =
previously=20
ordered sanctions.
<=
/SPAN>Because=20
they were derived from the improper August 22 sanctions, we =
conclude that=20
the trial court abused its discretion when it included the Binding =
Instructions in the charge. Next, we determine whether the Binding =
Instructions were harmful.
D. Harm=20
<=
/SPAN>As=20
mentioned, the trial court=E2=80=99s judgment awards Sandstone =
$3,375,000 in=20
actual damages. This amount corresponds to the total amount of =
actual=20
damages awarded by the jury in response to Question 1, which =
immediately=20
followed the Binding Instructions. Question 1 was an unpredicated =
damages=20
question, which read, =E2=80=9CWhat sum of money, if any, if paid =
now in cash,=20
would fairly and reasonably compensate Sandstone Products, Inc. =
for its=20
damages, if any, that resulted from modification of specifications =
and=20
failure to meet specifications as instructed?=E2=80=9D=20
=
=
Immediately=20
following Question 1 was a series of questions related to =
Sandstone=E2=80=99s DTPA=20
claim. The jury made a positive liability finding against Scott =
Bader=20
regarding Sandstone=E2=80=99s DTPA claim. From the face of the =
charge, it cannot=20
be determined whether the jury awarded the $3,375,000 in actual =
damages=20
based on the trial court=E2=80=99s instructed liability findings =
for Sandstone=E2=80=99s=20
breach of contract or breach of warranty claims, or whether the =
award was=20
based on the jury=E2=80=99s DTPA liability finding. It is =
apparent, however, that=20
the damages finding was shaped by the improper Binding=20
Instructions.
<=
/SPAN>In=20
reaching its damages finding in Question 1, the jury was limited =
to=20
considering only those damages that =E2=80=9Cresulted from =
modification of=20
specifications and failure to meet specifications as =
instructed.=E2=80=9D=20
(Emphasis added.) As a result, even if the award was based on the =
DTPA=20
liability finding, the only DTPA violations for which damages =
could be=20
awarded in Question 1 were those arising =E2=80=9Cfrom [Scott =
Bader=E2=80=99s]=20
modification of specifications and failure to meet specifications =
as=20
instructed.=E2=80=9D Thus, regardless of which liability theory =
the jury=20
positively found to support the damages award in response to =
Question 1,=20
we hold that the Binding Instructions probably caused the =
rendition of an=20
improper judgment.
See Tex. R. App.=20
44.1(a).
<=
/SPAN>We=20
sustain Scott Bader=E2=80=99s third issue.
E. Disposition=20
of Appeal
<=
/SPAN>In=20
issue one, Scott Bader challenges the admissibility of =
Sandstone=E2=80=99s=20
causation expert, asserting that the expert opinion was unreliable =
and=20
thus inadmissible. Scott Bader further alleges that, because the =
expert=E2=80=99s=20
opinion was the only evidence of causation, =E2=80=9Cthere is no =
evidence to=20
support Sandstone=E2=80=99s causation theory.=E2=80=9D In issue =
two, Sandstone contends=20
that the evidence was legally insufficient to support the damages =
awarded=20
by the jury in response to Question 1.
<=
/SPAN>We=20
recognize that the legal sufficiency challenges raised by Scott =
Bader in=20
both issues, if successful, result in rendition. Holt Atherton =
Indus.,=20
Inc. v. Heine, 835 S.W.2d 80, 86 (Tex. 1992) (recognizing =
that, as=20
general rule, =E2=80=9Cwhen we sustain a no evidence point of =
error after a trial=20
on the merits, we render judgment on that point.=E2=80=9D). We do =
not separately=20
address issues one and=20
two, however. Even if sustained, resolution of issues one and two =
would=20
not result in greater relief for Scott Bader, in this case, than =
that=20
afforded by our resolution of the charge error addressed above =
with=20
respect to Scott Bader=E2=80=99s third issue. That is, we would =
still remand=20
instead of reverse and render if we sustained either issue one or =
two=20
because the trial court=E2=80=99s sanctions prevented this case =
from being=20
properly developed and presented at trial.
=
Appellate courts =
have broad=20
discretion to remand for a new trial in the interest of justice. =
See=20
Tex. R. App. =
P. 43.3(b).=20
In this case, regardless of whether Sandstone presented legally=20
insufficient evidence to support the amount of actual damages =
awarded by=20
the trial court, or presented insufficient evidence of =
causation,=20
we conclude =
that=20
justice would be best served by =
remanding=20
the case. We=20
may remand for new trial when damages were improperly calculated =
by the=20
plaintiff, and the interest of justice requires that the plaintiff =
be=20
given an opportunity to show the proper measure of his damages. =
Walters=20
v. Northcutt, No. 12-03-00247-CV, 2005 WL 341694 =
at*10=E2=80=9311 (Tex.=20
App.=E2=80=94Tyler Feb. 10, 2005, no pet.) (mem. op.); Varel =
Mfg. Co. v.=20
Acetylene Oxygen Co., 990 S.W.2d 486, 500 (Tex. =
App.=E2=80=94Corpus Christi=20
1999, no pet.); Williams v. Gaines, 943 S.W.2d 185, =
193=E2=80=9394 (Tex.=20
App.=E2=80=94Amarillo 1997, writ denied); A.B.F. Freight =
Sys., Inc. v.=20
Austrian Imp. Serv ., Inc., 798 S.W.2d 606, 616 (Tex. =
App.=E2=80=94Dallas=20
1990, writ denied). Remand is also =
appropriate=20
when a case, for any reason, has not been fully developed. =
United=20
States Fire Ins. Co. v. Carter, 473 S.W.2d 2, 3 (Tex. 1971);=20
Kondos v.=20
Lincoln Prop. Co., 110 S.W.3d 716, 724 (Tex. =
App.=E2=80=94Dallas 2003, no=20
pet.); Bayway Serv., Inc. v. Ameri-Build Constr., L.C., 106 =
S.W.3d=20
156, 161 (Tex. App.=E2=80=94Houston [1st Dist.] 2003, no pet.). =
=
Here,=20
the sanctions ordered by the trial court affected and shaped the=20
presentation and development of this case during trial, for both =
Sandstone=20
and Scott Bader. Had the sanctions not been levied, it seems =
indisputable=20
that both sides would have presented additional evidence during =
trial. In=20
light of our reversal today of the sanctions in appellate cause =
number=20
01-05-00940-CV, we conclude that this case is properly remanded =
for=20
further proceedings on the issues of liability and damages. =
See=20
Tex. R. App. P. =
44.1(a)(1).=20
Conclusion
<=
/SPAN>In=20
appellate cause no. 01-05-00940-CV, we affirm the trial =
court=E2=80=99s judgment=20
as to the monetary sanctions. We reverse the portion of the =
judgment, as=20
discussed above, ordering that (1) the jury be instructed that =
Scott=20
Bader=E2=80=99s product did not meet specifications and that =
product=20
specifications provided by Scott Bader to Sandstone had been =
modified,=20
which instructions the trial court ordered be treated as a partial =
default=20
judgment limiting the issues in dispute; (2) certain of Scott =
Bader=E2=80=99s=20
affirmative defenses be stricken; and (3) Scott Bader be =
prohibited from=20
using at trial the testimony of eight identified witnesses, and =
remand the=20
case for further proceedings.
<=
/SPAN>In=20
appellate cause no. 01-06-00593-CV, we reverse the judgment of the =
trial=20
court and remand for further proceedings.
&=
nbsp; &n=
bsp; &nb=
sp; &nbs=
p; =
; =
Laura=20
Carter Higley
&=
nbsp; &n=
bsp; &nb=
sp; &nbs=
p; =
; =
Justice
Panel consists of Justices Nuchia, =
Keyes, and=20
Higley.
Justice Keyes,=20
=
dissenting.
|