Summary
vacating sanctions order despite evidence of bad faith because no evidence existed that the "bad faith conduct interfered with the legitimate exercise of the trial court's core functions."
Summary of this case from Brewer v. Lennox Hearth Prods., LLCOpinion
No. 01-10-00367-CV
Opinion issued April 14, 2011.
On Appeal from the 164th District Court Harris County, Texas, Trial Court Case No. 0772091.
Panel consists of Chief Justice RADACK and Justices ALCALA and BLAND.
MEMORANDUM OPINION
In this personal injury lawsuit, Diana Harmouch appeals the trial court's order imposing $6,793.00 in sanctions against her pursuant to its inherent power and dismissing her case with prejudice when she failed to pay the sanctions. Harmouch contends the trial court erred in imposing sanctions and dismissing her case because the trial court failed to identify the bad faith conduct that warranted the sanctions. We agree. We therefore reverse and remand the trial court's judgment.
Background
In November 2007, Harmouch filed a personal injury lawsuit against Michael A. Rassner, D.D.S., P.C. d/b/a Woodlake Dental, Michael A. Rassner, D.D.S., and Prescilla Medina (collectively, "Woodlake"). In January 2009, Harmouch's first attorney moved to withdraw from the case, asserting that he no longer had time to represent Harmouch. The trial court granted the motion. Harmouch's second attorney then moved for a continuance to avoid a March 2009 trial setting. The trial court did not rule on the motion, but reset the trial date to November 2009. In October 2009, the attorney again moved for a continuance, which the trial court denied. The trial court reset the trial date to December 10, 2009 to allow the parties to mediate their dispute.
On December 10, 2009, after the parties' unsuccessful mediation, the trial court conducted a pretrial hearing. Harmouch's attorney moved for a continuance because he had immigration proceedings in cases for two other clients during the following week and had not focused his attention on Harmouch's case. At the pretrial hearing, the attorney said that he had studied the case, but did not think he was as prepared as he should be for his client. The trial court denied the motion, but accommodated the attorney's scheduling conflicts and swore in the jury panel. On December 14, 2009, when the parties arrived for jury selection, Harmouch's attorney moved to withdraw from the case, asserting that he was unable to communicate with Harmouch in a manner consistent with good attorney-client relations. He said that Harmouch refused to follow any advice he had given her, and he no longer believed in her cause. He was convinced that he could not fairly represent her because he questioned the justness and fairness of her case. At the hearing, Harmouch stated that her attorney was unprepared to try the case. Woodlake opposed the motion to withdraw, stating that it had closed its dentist office, and it was ready to try the case. The trial court granted the motion to withdraw and released the jury panel.
Woodlake moved for sanctions and reimbursement of costs caused by Harmouch's continuance of the case and termination of her attorney. In its motion, Woodlake claimed that Harmouch was uncooperative with her attorney, and her lack of cooperation led to the attorney's withdrawal. Woodlake offered an affidavit from its attorney, showing the expenses it incurred in his preparation for the December 14th trial. It also attached an affidavit from Dr. Rassner, showing the expenses he incurred in closing his dentist office to appear for the trial. In response, Harmouch claimed that her former attorney notified her about his intention to withdraw on the morning he filed the motion. She asserted that the trial court should direct any sanctions against him. In reply, Woodlake asserted that Harmouch took an untenable position on her case, lashed out against everyone involved, and made allegations with no factual basis. According to Woodlake, Harmouch contacted the two Houston Police Officers who had investigated the incident underlying her personal injury suit in an attempt to get them to change the reports they filed. Woodlake attached excerpts from the two officers' reports. In the reports, the officers state that Harmouch approached them about changing their reports because she believed the reports were not fair to her and did not reflect what truly occurred. Woodlake contended that Harmouch's conduct created a conflict for her attorney and forced him to withdrawal.
Without holding a hearing, the trial court granted the motion for sanctions and required Harmouch to pay $6,793.00 in damages by January 28, 2010. The trial court ruled that it would dismiss her case with prejudice if she did not make the payment. Harmouch failed to pay the damages. In February 2010, Woodlake filed a motion to dismiss the case for Harmouch's failure to comply with the sanctions order. Harmouch responded to the motion, contending that the Texas Rules of Civil Procedure did not authorize sanctions for any of her conduct. See TEX. R. CIV. P. 13 215.1-215.6. Woodlake replied that the trial court had the inherent power to impose sanctions for Harmouch's bad faith conduct. See Chambers v. Nasco, Inc., 501 U.S. 32, 47-48 (1991). The trial court dismissed the case with prejudice and issued judgment for Woodlake.
Discussion
Standard of Review
We review a trial court's imposition of sanctions for an abuse of discretion. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007). A trial court abuses its discretion in imposing sanctions when it acts "without reference to any guiding rules and principles, such that its ruling was arbitrary or unreasonable." Id. We presume that pleadings are filed in good faith, and the party seeking sanctions bears the burden of overcoming this presumption. Id. In reviewing the sanctions order, we review the entire record to determine whether the trial court abused its discretion. Am. Flood Research, Inc. v. Jones, 192 S.W.3d 581, 583 (Tex. 2006) (per curiam).
Trial Court's Inherent Power to Sanction
If a sanction order refers to a specific rule, either by citing the rule, tracking its language, or both, we determine whether the sanction is appropriate under that particular rule. Finlay v. Olive, 77 S.W.3d 520, 524 (Tex. App.-Houston [1st Dist.] 2002, no pet.). In this case, the trial court's sanction order does not specify the rule used to sanction Harmouch, nor does it track the language of any rule. Woodlake urged the trial court to sanction Harmouch under its inherent power. The alleged sanctionable conduct does not involve discovery proceedings or the content of a pleading. The trial court's inherent power thus appears to be the source of authority for its sanction. See Houtex Ready Mix Concrete Materials v. Eagle Constr. Envtl. Servs, L.P., 226 S.W.3d 514, 524 (Tex. App.-Houston [1st Dist.] 2006, no pet.); see also Kings Park Apts, Ltd. v. Nat'l Union Fire Ins. Co., 101 S.W.3d 525, 541 (Tex. App.-Houston [1st Dist.] 2003, pet. denied).
A trial court has the inherent power to sanction a party for an abuse of the judicial process even when the party's conduct is not covered by a specific rule or statute. In re Bennett, 960 S.W.2d 35, 40 (Tex. 1997) (per curiam); Houtex, 226 S.W.3d at 524 (citing Island Entm't, Inc. v. Castaneda, 882 S.W.2d 2, 5 (Tex. App.-Houston [1st Dist.] 1994, writ denied)). This inherent power allows trial courts to impose sanctions to the extent necessary to deter, alleviate, and counteract "bad faith abuse" of the judicial process, i.e., when a party significantly interferes with the court's legitimate exercise of its core functions. Houtex, 226 S.W.3d at 524.
Bad faith is more than bad judgment or negligence. Elkins v. Stotts-Brown, 103 S.W.3d 664, 669 (Tex. App.-Dallas 2003, no pet.); Campos v. Ysleta Gen. Hosp., Inc., 879 S.W.2d 67, 71 (Tex. App.-El Paso 1994, writ denied). To show bad faith, the moving party must present evidence of conscious wrongdoing for a dishonest, discriminatory, or malicious purpose. Mattly v. Spiegel, Inc., 19 S.W.3d 890, 896 (Tex. App.-Houston [14th Dist.] 2000, no pet.). In Houtex, we upheld the trial court's decision to impose sanctions against the plaintiff's attorney based on its inherent authority. 226 S.W.3d at 524-25. The attorney there failed to notify opposing counsel that he would be absent from a hearing even though the attorney knew days in advance he would be unavailable. Id. at 524. As a result, his opposing counsel needlessly traveled 720 miles roundtrip to attend the hearing. Id. We held that evidence existed that the attorney acted in bad faith in his failure to notify opposing counsel of his absence. Id.; cf. Onwuteaka v. Gill, 908 S.W.2d 276, 280-81 (Tex. App.-Houston [1st Dist.] 1995, no pet.) (reversing sanction award because record contained no evidence attorney acted in bad faith when he was late to trial, although his conduct may have been negligent); McWhorter v. Sheller, 993 S.W.2d 781, 789 (Tex. App.-Houston [14th Dist.] 1999, pet. denied) (reversing sanction award because record contained no evidence attorney acted in bad faith when she recorded phone call between trial court, opposing counsel and herself so that she would draft order in accordance with instructions given by trial court during call); Island Entm't, Inc., 882 S.W.2d at 5 (reversing sanction award because record contained no evidence party acted in bad faith when party breached settlement agreement after mediation).
The core functions of trial courts include hearing evidence, deciding issues of fact raised by the pleadings, deciding questions of law, entering final judgments, and enforcing judgments. Island Entm't, Inc., 882 S.W.2d at 5; compare Phillips Akers, P.C. v. Cornwell, 927 S.W.2d 276, 280 (Tex. App.-Houston [1st Dist.] 1996, no writ) (overturning trial court's imposition of sanctions under its inherent power to sanction absent evidence that party "acted in a manner such as to interfere with the administration of justice or detract from the trial court's dignity and integrity.") with King's Park Apts., 101 S.W.3d at 541 (upholding sanctions against party based on allegation that party instructed a paralegal to steal documents from chambers of special trial judge); Lawrence v. Kohl, 853 S.W.2d 697, 699-700 (Tex. App.-Houston [1st Dist.] 1993, no writ) (upholding sanctions based on party's failure to correct order that party knew to be erroneous).
Nevertheless, trial courts should rely on rules and statutes when possible because "[t]he amorphous nature of this power, and its potency, demands sparing use." Kutch v. Del Mar Coll., 831 S.W.2d 506, 510 (Tex. App.-Corpus Christi 1992, no writ), accord Crowe v. Smith, 151 S.W.3d 217, 243 (5th Cir. 1998). When a trial court imposes sanctions under its inherent power, it should make specific findings to support its conclusion that the conduct complained of significantly interfered with its legitimate exercise of its core functions. Houtex, 226 S.W.3d at 524.
Analysis
Here, the trial court made no findings to support its conclusion that Harmouch's bad faith conduct significantly interfered with the trial court's legitimate exercise of its core functions. We nonetheless review the entire record to determine whether the trial court abused its discretion. Am. Flood Research, 192 S.W.3d at 583. The trial court did not conduct a hearing, so we rely solely on the affidavits Woodlake proffered, the clerk's record, and the reporter's record from the hearing on the attorney's withdrawal.
Woodlake claimed Harmouch did not cooperate with her attorney. According to Woodlake, Harmouch took an untenable position on her case, made allegations with no factual basis, and attempted to persuade two police officers to change their reports on the incident underlying the lawsuit. Woodlake contends that these actions created the conflict which forced her attorney to withdraw. Woodlake offered the police reports from the officers. Additionally, at the hearing on his motion to withdraw, Harmouch's attorney stated that he was unable to communicate with Harmouch in manner consistent with good attorney-client relations and convinced that he could not fairly represent her. But no evidence exists that she caused the attorney's withdrawal in a bad faith effort to disrupt or interfere with the court's docket. See Mattly, 19 S.W.3d at 896. According to the officers' reports, Harmouch asked them to change their reports relating to her personal injury claims because she believed they did not reflect what occurred; she did not ask the officers to lie. Although this action may show bad judgment on Harmouch's part, it occurred well before the hearing on the motion to withdraw. No evidence exists that Harmouch took any dishonest or malicious act to interfere with the trial setting. See Onwuteaka, 908 S.W.2d at 280-81; McWhorter, 993 S.W.2d at 789; Island Entm't, Inc., 882 S.W.2d at 5. In fact, she learned of her attorney's decision to withdraw only that morning and still appeared for trial.
Also, "a party should not be punished for counsel's conduct in which it is not implicated apart from having entrusted to counsel its legal representation." See TransAm. Natural Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex. 1991). Harmouch claimed that her attorney withdrew because he was unprepared for trial, and not because she was uncooperative. The record supports her claim. On the day trial was set and four days before his withdrawal, Harmouch's attorney moved for a continuance. He told the court that he sought the continuance because he had not been able to devote his attention to Harmouch's case due to his other pending cases. He stated that he was not as prepared as he should be for his client.
We hold that no evidence exists that Harmouch's bad faith conduct interfered with the legitimate exercise of the trial court's core functions. She did not deprive the trial court the power to hear any evidence, to decide any issues of fact or questions of law, to enter a final judgment, or to enforce a judgment. See Island Entm't, Inc., 882 S.W.2d at 5. Accordingly, we hold that the trial court abused its discretion in imposing sanctions against Harmouch based on its inherent authority. Because the trial court dismissed Harmouch's case because of her failure to pay the sanctions, we also hold that the trial court erred in dismissing her case.
Conclusion
We reverse and remand the judgment of the trial court.