





Pelt                                                                
















IN THE
TENTH COURT OF APPEALS
 

No. 10-91-149-CV

        JOHN HENRY PELT, INDIVIDUALLY AND AS
        PARTNER OF AZTEC GENERAL AGENCY, 
        A TEXAS GENERAL PARTNERSHIP, ET AL,
                                                                                       Relators
        v.

        HONORABLE DERWOOD JOHNSON, JUDGE,
        74TH DISTRICT COURT, MCLENNAN COUNTY,
        TEXAS,
                                                                                       Respondent
 

 Original Proceeding

                                                                                                                
                                                                     
O P I N I O N
                                                                                                     

          Relators seek a writ of mandamus requiring the Honorable Derwood Johnson, presiding
judge of the 74th District Court, McLennan County, to vacate an order striking the Relators'
pleadings.  Following the guidelines for appellate review of "death-penalty" discovery sanctions
enunciated by the Supreme Court in Transamerican Natural Gas Corp. v. Powell, we hold that
the trial court's imposition of the ultimate sanction under these circumstances was not
"appropriate."  See Transamerican Natural Gas Corp. v. Powell, 811 S.W.2d 913, 917-18 (Tex.
1991).  We will conditionally issue the writ of mandamus. 
FACTUAL AND PROCEDURAL BACKGROUND
          In October 1988, OLS Electric, Inc. secured a contract which required a performance and
payment bond.  Relator John Pelt d/b/a Aztec General Agency placed the bond with the Great
Plains Insurance Company after requiring O. L. Sharp and wife, Carol Sharp, and OLS (the
plaintiffs) to sign an indemnity agreement and to provide $35,000 in security.  They delivered to
Pelt a $35,000 "irrevocable" letter of credit issued by MBank, Waco.  In March 1989, Pelt
became concerned about the financial stability of MBank and, ostensibly to protect the Sharps'
interest, decided to unilaterally draw down the letter of credit.  He did so over the plaintiffs'
protests, even though OLS was performing its obligations under the construction contract, Great
Plains had not incurred any losses attributable to OLS or the Sharps, and no liability had been
asserted against Great Plains.  The Sharps continued to do business with Pelt, and he provided
them with two additional performance and payment bonds on other contracts.
          The Sharps and OLS filed suit against Relators in January 1990, alleging breach of the
contract, conversion, DTPA violations, and other causes of action, all based upon a premature
drawing on the letter of credit.  The Relators counterclaimed.  A discovery dispute resulted in the
entry of a sanction order striking Relators' pleadings.  Relators then sought a writ of mandamus
in this court.
DISCOVERY EVENTS
          The dispute arose out of the following events, evidenced primarily by letters between the
attorneys representing the parties:
Pelt was served on October 11, 1990, with a notice of deposition with subpoena
duces tecum requiring him to produce 15 categories of documents, including account
statements, canceled checks, and deposit slips from April 3, 1989, to the date of the notice,
for the account in which the $35,000 drawn on the letter of credit was deposited.
Relators filed a motion for protective order on October 16, specifically objecting
to various items of the subpoena duces tecum, including an objection on relevancy grounds
to producing the account statements, canceled checks, and deposit slips.
Pelt's deposition was taken on October 22.
On November 8, plaintiffs filed a motion for sanctions, seeking the documents and
attorney's fees.
Following a November 20 hearing on Relators' motion for a protective order and
plaintiffs' motion for sanctions, Respondent signed an order on December 6 compelling
Pelt to produce all the documents within 10 days.  The court further ordered Pelt to pay
the cost of an additional deposition to follow production of the documents and found that
good cause existed to require Pelt to pay the plaintiffs' attorney a fee of $250 as the
reasonable and necessary cost of preparing and prosecuting the motion.
On January 23, 1991, plaintiffs advised Relators that the ordered documents had
not been delivered and that a motion to strike Relators' pleadings would be filed if the
documents were not furnished by January 28.
On February 7, Pelt produced all documents ordered, other than the canceled
checks and deposit slips, and paid the attorney's fee.  The documents were accompanied
by a letter of apology from Relators' attorney advising that ". . . the delay . . . was my
fault and not the fault of our client."
On April 18, approximately two weeks prior to the date trial was scheduled,
plaintiffs advised Relators by letter that the response to the discovery order was still
incomplete because it did not include the canceled checks and deposit slips.  The letter
stated that plaintiffs were aware that Pelt might not have the items in his possession but
noted, "he certainly has the right to request these documents from the bank."  The letter
further asserted that a motion to strike Relators' pleadings would be filed if the documents
were not delivered within ten days.
On April 25, plaintiffs agreed to move the trial setting to August 5 to allow time
to complete the depositions of Relators.  Plaintiffs stated that they understood that
"[Relators were] gathering from [the] bank the documents made the subject of [the] April
18 letter" and asked for agreeable dates on which to take the depositions.
On May 7, plaintiffs advised Relators that if the documents were not delivered
before May 14, a motion to strike Relators' pleadings would be filed.
On May 10, Relators advised plaintiffs that Pelt had not kept the canceled checks
and deposit slips, that the bank's archive copies were maintained in another state, that they
had obtained approval from an officer of the bank for plaintiffs to inspect the canceled
checks and deposit slips and obtain copies of those they desired, and that the bank's
"research and copy" charges would total between $3,000 and $5,000, depending on the
number of copies required.  The letter contained an authorization for plaintiffs to obtain
any document regarding the bank account.
On May 15, the plaintiffs acknowledged the authorization, but advised Relators that
they would not pay the charges and that the burden remained on them to produce the
canceled checks and deposit slips under the court's order.
Plaintiffs filed another motion for sanctions on June 24, seeking to have Relators'
pleadings stricken and to recover attorney's fees. 
The deposition of Nancy Mitchell, an officer of Pelt's bank, was taken on July 11,
1991.
On July 26, Relators responded with a motion for protection, stating that the
canceled checks and deposit slips had been routinely discarded, that arrangements had been
made with the bank for plaintiffs to obtain copies, and that the cost of obtaining the copies
should be borne by the plaintiffs.
On July 12, Judge James F. Clawson, Jr., a visiting judge, held a hearing on the
motion for sanctions and on July 18 signed a sanction order striking all of Relators'
pleadings and ordering that trial proceed on the issue of damages only.
Relators asked for permission to file a petition for writ of mandamus in this court,
which we granted.  On August 15, we abated the petition to allow Relators time to present
a motion to vacate the death-penalty sanction to Respondent.  See Jampole v. Touchy, 673
S.W.2d 569, 572 (Tex. 1984).
On September 16, Respondent denied Relators' motion to vacate the sanction and
reaffirmed the July 18 order striking the pleadings.
MANDAMUS AS A REMEDY
          Relators complain that the trial court erroneously struck their pleadings.  Although
mandamus is not a proper remedy in an ordinary case to obtain relief from sanctions, it is a proper
vehicle for review of pretrial sanctions which have the effect of precluding a decision on the merits
of a party's claim (the "death penalty").  Transamerican, 811 S.W.2d at 919-20; Street v. Second
Court of Appeals, 715 S.W.2d 638, 639-40 (Tex. 1986).  In such instances, an appeal is an
inadequate remedy.  Transamerican, 811 S.W.2d at 918.
"DEATH-PENALTY" SANCTIONS
          amendment to rule 215
          Rule 215(5) was amended on September 1, 1990, to allow the court to impose any
"appropriate" sanction authorized by paragraphs 2(b)(1), (2), (3), (4), (5), or (8) after notice and
a hearing.  Tex. R. Civ. P. 215.  In the context of Rule 215, "appropriate" and "just" are
equivalent standards. Transamerican, 811 S.W.2d at 916 n.4.  In reviewing a death-penalty
sanction, we must find a direct relationship between the offensive conduct and the sanction
imposed—the sanction must be directed against the abuse and toward remedying the prejudice
caused the innocent party in order to be "just."   See id. at 917.  "Just sanctions must not be
excessive."  Id.  "The punishment must fit the crime."  Id.  "A sanction imposed for discovery
abuse should be no more severe than necessary to satisfy its legitimate purposes."
 Id.  "[C]ourts
must consider the availability of less stringent sanctions and whether lesser sanctions would
promote compliance."  Id.  Sanctions which are so severe as to preclude presentation of the merits
of the case should not be assessed absent a party's flagrant bad faith or counsel's callous disregard
for the responsibilities of discovery under the rules.  Id. at 918; National Hockey League v.
Metropolitan Hockey Club, Inc., 427 U.S. 639, 640, 96 S.Ct. 2778, 2780, 49 L.Ed.2d 747
(1976).
          standard of review
          The Supreme Court in Transamerican stated that these standards set the bounds of
permissible sanctions under Rule 215 within which the court is to exercise sound discretion.
 See
Transamerican, 811 S.W.2d at 917; Tex. R. Civ. P. 215.  Our role is to determine if the court
acted without reference to any guiding rules and principles.  See Hanley v. Hanley, 813 S.W.2d
511, 517-18 (Tex. App.—Dallas 1991, no writ).  Stated another way, we must determine if the
act was arbitrary or unreasonable.  Id.  That we might have decided a matter within the trial
judge's discretion in a different manner does not demonstrate that an abuse of discretion has
occurred.  Id.
          The ultimate sanction should be applied only "when [the offending party] is guilty of actual
bad faith in discovery abuses and great harm comes to [the other party] as a result."  Hogan v.
Beckel, 783 S.W.2d 307, 309 (Tex. App.—San Antonio 1990, writ denied) (emphasis added). 
Several factors are relevant to an inquiry concerning appropriateness of a sanction:
1. the extent of the party's personal responsibility;
2. the prejudice to the adversary caused by the failure to . . . respond to discovery;
3. any history of dilatoriness;
4. whether the conduct of the party or the attorney was willful or in bad faith;
5. the effectiveness of sanctions other than dismissal, which entails an analysis of
alternative sanctions; and
6. the meritoriousness of the claim or defense.
See Poulis v. State Farm Fire and Casualty Co., 747 F.2d 863, 868-70 (3rd Cir. 1984); see also
Wanderer v. Johnston, 910 F.2d 652, 656 (9th Cir. 1990); Hanley, 813 S.W.2d at 517-18; Tex.
R. Civ. P. 215.  These "factors should be weighed by the district courts in order to assure that the
`extreme' sanction of dismissal or default is reserved for the instances in which it is justly
merited."
 Poulis, 747 F.2d at 870; Hanley, 813 S.W.2d at 518.  The trial courts should resolve
doubts in favor of reaching a decision on the merits.  Scarborough v. Eubanks, 747 F.2d 871, 878
(3rd Cir. 1984); Hanley, 813 S.W.2d at 518.
REVIEW OF THIS SANCTION
          We will review the events which led to the imposition of the ultimate sanction under the
criteria of Poulis.  See Poulis, 747 F.2d at 868-70; Hanley, 813 S.W.2d at 518-21.
          extent of party's personal responsibility
          Rule 215 allows sanctions against the "disobedient party," the "attorney advising him," or
both.  E.g., McFarland v. Szakalum, 809 S.W.2d 760, 763 (Tex. App.—Houston [14th Dist.]
1991, writ denied); Tex. R. Civ. P. 215.  Where the discovery abuse results from conduct of the
attorney, the sanction may be directed at him.  Id.  Thus, in selecting an appropriate sanction, the
relative culpability of the party and his attorney must be evaluated.  Hanley, 813 S.W.2d at 518-19.  The record reveals that Relators relied on the advice of their attorney.  When he was asked
during his deposition about documents which he was to supply, Pelt in each instance relied on the
advice of his attorney and the pending motion for a protective order.  It was the attorney's
responsibility to obtain a hearing on the motion for protection prior to Pelt's deposition, if Relators
were relying on the motion.  In the February 7 letter to plaintiff's attorney, Relators' attorney
accepted responsibility for delay in providing documents.  After the last motion for sanctions was
filed and prior to the hearing on the motion, Relators took the deposition of a bank officer in
Dallas to establish the procedure for obtaining copies of the canceled checks and deposit slips. 
Evidence at the hearing indicated that the date and the manner of taking the deposition, with
plaintiffs' counsel appearing by telephone, were agreed to between the attorneys and that the date
was changed once to accommodate the plaintiffs' attorney.  At the July hearing, Relators' attorney
attempted to present the nature of the dispute as being who should pay the costs of obtaining the
copies from the bank.  
          prejudice to the adversary
          If true prejudice has resulted to a party by another party's failure to cooperate during
discovery, that factor should be given substantial weight in the evaluation of the ultimate sanction
against the other party.  Scarborough, 747 F.2d at 876; Hanley, 813 S.W.2d at 519.  Prejudice
can result from such conditions as the manufacture of evidence, destruction of evidence,
irretrievable loss of evidence, the inevitable dimming of witnesses' memories, incurring excessive
burdens and costs, and other situations in which the party cannot be restored to the same status
by an appropriate sanction.  Id; see also City of Dallas v. Cox, 793 S.W.2d 701, 724-25 (Tex.
App.—Dallas 1990, no writ).  Although the plaintiffs were forced to take the initial deposition
without any of the documents they had subpoenaed, Pelt was ordered to pay the costs of another
deposition.  They were forced to file two motions to compel compliance with discovery requests,
but they obtained attorney's fees on the first motion and did not seek attorney's fees on the second. 
The trial date was postponed, but prejudice to plaintiffs has not been shown to have resulted from
the delay.
          history of dilatoriness
          Courts faced with crowded dockets and limited resources cannot excuse repeated acts of
discovery abuse.  Hogan, 783 S.W.2d at 309.   The record does not reveal that Pelt was trying
to thwart plaintiffs' efforts to discover the canceled checks and deposit slips.  See id. at 310.  This
is not a case where discovery was never answered.  See Hanley, 813 S.W.2d at 520.  The record
shows that Pelt ultimately complied with each discovery request to the extent that the documents
requested were in his possession.  He testified without contradiction that he had more than one
hundred bank accounts and that he customarily threw away his checks and deposit slips.  He kept
only the account statements, which he furnished to plaintiffs.  His attorney filed motions seeking
protection, although the attorney did not obtain a hearing before the first deposition.  His attorney
caused a deposition of the bank officer to be taken to establish the cost of obtaining the copies
from the bank.
           whether the conduct was willful or in bad faith
          The ultimate sanction should not be imposed in the absence of actual bad faith and great
harm to the other party.  Hogan, 783 S.W.2d at 309 (emphasis added).  Because the record
supports the proposition that the primary delay in this case was due to the conduct of Relators'
attorney, we will evaluate his conduct for willfulness or bad faith.  He failed to obtain a hearing
on his first motion for protection and failed to call the court's attention to the fact that Pelt did not
have the checks and deposit slips, relying only on an objection that they were not relevant and
would not lead to discoverable evidence.  As stated, he accepted responsibility for a portion of the
delay.  He did not file the second motion for protection until after plaintiffs filed their motion to
impose the death penalty.  The court, however, made no finding that either Relators' conduct or
that of their attorney was willful or in bad faith.  Although we do not approve of Relators'
attorney's failure to promptly obtain hearings on motions which he filed or his delay in advising
the court of the true nature of the discovery dispute over the canceled checks and deposit slips, we
cannot say that he willfully delayed the discovery process or acted in bad faith.  Thus, neither
willfulness nor bad faith can be attributed to Relators.
          alternative sanctions
          The death penalty should be a sanction of last, not first, resort.  Hanley, 813 S.W.2d at
520.  At the July hearing, plaintiffs argued that Relators had not complied with the December 6
order to produce all the documents and that the cost to Relators of locating and copying documents
in the hands of a third party was immaterial because of that order.  The court, accepting plaintiffs'
position, failed to focus on the true nature of the dispute over the canceled checks and deposit
slips—who should pay the bank's research and copying charges to make the copies available.  The
court appears from the record to have accepted as true Pelt's testimony that he regularly discarded
his canceled checks and deposit slips.  Based on this premise, the court could have entered an
order that Pelt pay the bank's charges or, to preserve the question of who should pay the charges
until after trial, it could have ordered either party to pay the bank's charges while reserving the
right to require reimbursement by the other party when the outcome of the case was known.  The
record reveals that the court did not consider alternative, lesser sanctions available to it before
imposing the "death penalty" and denying the Relators the right to present their claims and
defenses at a trial on the merits.
          meritoriousness of relators' claim or defense
          A claim or defense is meritorious if the allegations of the pleadings, if true, would support
a recovery on the claim or establish a legal or factual defense to the claims of the other party. See
id.  Here, Relators asserted both counterclaims and defenses.  Relators contend that Pelt had the
right to draw on the letter of credit at any time.  If true, the foundation of the plaintiffs' case
would be undermined.  The record does not shed appreciable light on the meritorious nature of
either the  counterclaims or the defenses advanced by Relators.  The court made no finding about
the merits of Relators' claims and defenses.
          summary
          Relators do not appear to bear appreciable personal responsibility for the discovery dispute. 
While plaintiffs did suffer inconvenience and delay, they did not assert and the court did not find
true prejudice to their position on the merits of their claims or the counterclaims asserted against
them.  Clearly, both attorneys were responsible for the court's failure to focus on the true nature
of the dispute.  A lesser sanction—such as an order requiring Pelt to pay the bank's
charges—would have resulted in the plaintiffs' obtaining all the requested items.  The court did
not consider any of the alternative sanctions available to it.  Relators' claims and defenses are the
type which could defeat plaintiffs' claims.
CONCLUSION
          We conclude that Relators were not guilty of the type of flagrant bad faith which justifies
the death-penalty sanction.  See Transamerican, 811 S.W.2d at 918; Hanley, 813 S.W.2d at 521. 
In short, we do not believe that the sanction was appropriate—the punishment did not fit the crime. 
See Transamerican, 811 S.W.2d at 917.  Thus, we hold that Respondent abused his discretion in
failing to vacate the order dated July 18, 1991, by which Relators' pleadings were stricken.  Id.
          Accordingly, we hold that Relators are entitled to the mandamus relief they seek. We are
confident that Judge Johnson will vacate the orders dated July 18 and September 16.  Our writ of
mandamus will issue only in the event he fails to promptly comply.
 

                                                                                 BILL VANCE
                                                                                 Justice

Before Chief Justice Thomas,
          Justice Cummings, and
          Justice Vance
Writ of mandamus conditionally issued (Justice Cummings dissenting)
Opinion delivered and filed October 30, 1991
Publish
