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Hicks v. Central Oklahoma United Methodist Retirement Facility, Inc.

Court of Appeals of Oklahoma, Division I

September 21, 2016

WILLIAM HICKS, individually, and as Guardian ad Litem for VIRGINIA HICKS, an incapacitated person, Plaintiff/Appellee,

          Mandate Issued: 05/11/2017


          Melissa S. Hedrick, Oklahoma City, Oklahoma, and Kirk Olson, Oklahoma City, Oklahoma, and Joe E. White, Jr., Charles C. Weddle, III, White & Weddle, P.C., Oklahoma City, Oklahoma, for Plaintiff/Appellee,

          Charles D. Neal, Stacie L. Hixon, Clark W. Crapster, Gary C. Crapster, Steidley & Neal, P.L.L.C., Tulsa, Oklahoma, and Graydon Dean Luthey, Jr., Gable Gotwals, Tulsa, Oklahoma, for Defendant/Appellant.

          Bay Mitchell, Judge

         ¶1 Defendant/Appellant Central Oklahoma United Methodist Retirement Facility, Inc. d/b/a Epworth Villa Health Services ("Epworth Villa" or "Defendant") appeals several of the trial court's rulings in this personal injury suit brought by Plaintiff/Appellee William Hicks ("Mr. Hicks" or "Plaintiff") in his personal capacity and as guardian ad litem for his wife, Virginia Hicks ("Mrs. Hicks"). Mr. and Mrs. Hicks were residents at Epworth Villa's Oklahoma City facility when Mrs. Hicks suffered a broken wrist while under the care of Epworth Villa in its specialized, memory care unit. Mr. Hicks filed suit against Epworth Villa for breach of contract, negligence, and intentional infliction of emotional distress ("IIED") seeking both actual and punitive damages. On appeal Epworth Villa argues the trial court erred when it entered default judgment on Plaintiff's breach of contract and negligence claims as a sanction for failure to comply with discovery orders. Epworth Villa also argues the trial court erred by ordering additional sanctions in the form of default judgment on Plaintiff's claim for punitive damages and by eliminating Epworth Villa's right to jury trial on the IIED claim. Further, Epworth Villa asserts the trial court erred in allowing the IIED claim to be tried and that the actual and punitive damages awarded by the court were excessive and not supported by the evidence. Additionally, Epworth Villa objects to the trial court's award of attorney fees and costs to Mr. Hicks, which was appealed separately from the underlying judgment and consolidated with this appeal by order of the Supreme Court.


         ¶2 We first address the trial court's entry of default judgment on Plaintiff's negligence and breach of contract claims as a discovery sanction. Title 12 O.S. §3237 Failure to Make or Cooperate in Discovery - Sanctions, provides, in part:

2. SANCTION BY COURT IN WHICH ACTION IS PENDING. If a party or an officer, director or managing agent of a party or a person designated under paragraph 6 of subsection C of Section 3230 or subsection A of Section 3231 of this title to testify on behalf of a party fails to obey an order to provide or permit discovery, including an order made under subsection A of this section or Section 3235 of this title, or if a party fails to obey an order entered under subsection F of Section 3226 of this title, the court in which the action is pending may make such orders in regard to the failure as are just. Such orders may include the following:
c. An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceedings or any part thereof, or rendering a judgment by default against the disobedient party, ....

         ¶3 When a trial court sanctions a party for disobeying discovery orders by default judgment, that sanction is reviewed by this court for an abuse of discretion. Payne v. DeWitt, 1999 OK 93, ¶9, 995 P.2d 1088. "To reverse for abuse of discretion, we must determine the trial court made a clearly erroneous conclusion and judgment, against reason and evidence. Although we examine and weigh any proof in the record, we abide the presumption that the lower court decision on the sanction question is legally correct and cannot be disturbed unless it is contrary to the weight of the evidence or to a governing principle of law." Garnett v. Government Employees Insurance Co., 2008 OK 43, ¶14, 186 P.3d 935 (examining sanctions imposed pursuant to 12 O.S. §2011) (footnotes omitted). See also Lee v. Max Intern., LLC, 638 F.3d 1318, 1320 (10th Cir. 2011). [1] When imposing the sanction of default judgment, the trial court should make a fact-specific inquiry considering the following factors: "(1) the quantum of prejudice noncompliance has caused the adversary (or moving) party, (2) the extent of interference with the judicial process, (3) culpability of the litigant, (4) whether the court warned the party in advance that noncompliance could lead to dismissal or default judgment, and (5) the efficacy of lesser sanctions." Payne, 1999 OK 94, ¶¶8-9. The penalty of default judgment "should be applied only when a party's failure to comply with a discovery order is occasioned by fault, willfulness, or bad faith." Id. at ¶9. "Where aggravating factors outweigh the court's strong predisposition to resolve cases on the merits, dismissal is an appropriate sanction." Agrawal v. Duke Energy Field Servs., LP, 2013 OK CIV APP 61, ¶31, 307 P.3d 371.

         ¶4 Mr. Hicks filed suit October 28, 2011. On April 13, 2012 Mr. Hicks served his first set of discovery requests on Epworth Villa, including interrogatories, requests for production of documents, and requests for admissions. Mr. Hicks filed a Motion to Compel June 19, 2013 requesting the trial court order Epworth Villa to produce documents requested pursuant to the Discovery Code, 12 O.S. §§ 3224, et seq. In the Motion to Compel, Mr. Hicks represented to the trial court that, despite at least one formal discovery conference, several email and phone conversations between the parties, and the parties' agreement about what would be produced, Epworth Villa had not produced the requested documents. Epworth Villa denied that an agreement had been reached about what documents would be produced, but following a hearing held July 26, 2013, the trial court sustained Mr. Hicks' Motion to Compel, in part, ordering Epworth Villa to produce certain documents by August 30, 2013 and to provide a privilege log if necessary. [2] A written order memorializing the trial court's ruling was filed September 25, 2013. Although there was some disagreement between the parties about the scope of Mr. Hicks' requests and whether some of the documents actually existed, it was largely undisputed the documents requested by Mr. Hicks were discoverable.

         ¶5 On October 18, 2013, having not received any documents, Mr. Hicks filed a Motion to Enforce the trial court's order compelling discovery. The trial court then held five subsequent hearings on December 16, 2013; December 30, 2013; January 2, 2014; January 17, 2014; and January 30, 2014 regarding Epworth Villa's production of documents. At each of these hearings Epworth Villa denied that it had certain documents within its control or possession, represented to the trial court that it was unaware of the existence of additional responsive documents, and had produced all documents responsive to Mr. Hicks' requests. Despite these representations, Epworth Villa later produced additional responsive documents when faced with the imposition of sanctions or as a result of deposition testimony from its current and former employees revealing the existence of such documents. Mr. Hicks filed his Motion for Sanctions February 25, 2014 and requested that the trial court enter judgment as to liability on all of his claims (i.e. negligence, breach of contract, and IIED). [3] Following the April 18, 2014 hearing, the trial court sanctioned Epworth Villa by entering default judgment on Mr. Hicks' negligence and breach of contract claims relying on 12 O.S. §3237, Payne v. DeWitt, 1999 OK 93, 995 P.2d 1088, and Hotels, Inc. v. Kamper Corp., 1998 OK CIV APP 93, 964 P.2d 933.

         ¶6 As described by the trial court in its written order filed May 12, 2014 entering default judgment on the negligence and breach of contract claims and as confirmed by review of the appellate record, examples of the most egregious conduct include: [4]

Despite being requested in Mr. Hicks' first discovery requests, Epworth Villa failed to produce until January 3, 2014 additional complaints and investigations of physical abuse, emotional abuse, neglect, and/or bedsores contained within two banker's boxes, consisting of thousands of pages of incident reports, which were tabbed, labeled, and separated within 3-ring binders or folders and categorized by incident year. This production occurred only after the trial court threatened the sanction of allowing certain reports into evidence at trial if the documents were not produced by 5:00 p.m. on January 3, 2014. The documents were originally requested in April 2012.
Epworth Villa did not produce, until April 3, 2014, documents pertaining to employee training which included 2, 916 pages of documents despite such documents being requested in the first discovery requests in April 2012. On April 14, 2014 Epworth Villa then produced additional training materials including videos and an additional 416 pages of documents. This production came after Mr. Hicks' counsel had deposed Epworth Villa's designated witnesses with regard to training practices and 4 days before the hearing on the Motion for Sanctions held April 18, 2014.
Epworth Villa produced additional documents specifically related to the care of Mrs. Hicks the night before the April 18, 2014 sanctions hearing, including a privilege log listing 900 pages of additional documents within its possession and control. All documents related to Mrs. Hicks' care were first requested in April 2012.

         At the time these documents were produced, trial in the matter was scheduled for May 19, 2014.

         ¶7 In its ruling, the trial court made findings as to each of the five factors set forth in Payne. As to the "quantum of prejudice" the noncompliance caused the moving party, the trial court stated the delayed discovery prevented Plaintiff from preparing for trial, necessitating trial delays, which were especially problematic considering the failing health and advanced age of Mr. and Mrs. Hicks, both of whom were in their nineties. Mrs. Hicks also suffered from advanced Alzheimer's disease. Epworth Villa argued that two earlier trial delays were obtained by agreement of the parties, but Mr. Hicks' counsel made a specific argument at the April 18 sanctions motion hearing that he was now faced with the choice of reviewing all these late-produced documents or preparing for trial, thus substantiating the trial court's findings. Mr. Hicks' counsel also emphasized that another trial delay was not a possibility because of the failing health of Mr. Hicks, who was set to testify at trial. Additionally, the trial court noted Plaintiff was prejudiced by having to focus more on obtaining discovery than on preparing its case for trial. The trial court also found that the trial delays and multiple discovery hearings required by Epworth Villa's conduct interfered with the judicial process. The trial court made a specific finding of Epworth Villa's culpability, stating, "[Epworth Villa's] culpability is clearly established through its conduct, which indicates [it] unmistakably engaged in a pattern of discovery abuses, to include failing to provide truthful information regarding discovery, non-production of documents, and/or production of documents only in the face of serious sanctions and/or as a result of testimony from [its] employees...." The trial court had previously warned Epworth Villa of sanctions, including the possibility of default judgment, and had already imposed a lesser sanction in the form of ordering Epworth Villa to cover the cost for Plaintiff to redepose one of Epworth Villa's employees where documents had been produced after the deposition. Despite this earlier sanction and continued threat of sanctions, Epworth Villa continued in its practice of delaying and obstructing Plaintiff's right to discovery.

         ¶8 When reviewing the record before us through the lens of the abuse-of-discretion standard, we cannot say the trial court erred. The trial court and Plaintiff were required to go through a protracted, complicated process to ensure the production of documents which should have been produced by Epworth Villa in a timely and orderly fashion. See Lee v. Max Intern., LLC, 638 F.3d 1318 (10th Cir. 2011) (upholding the trial court's dismissal of plaintiff's case when plaintiff disobeyed two orders compelling production of discovery materials in its possession, custody, or control). [5] Despite numerous hearings on the matter, the threat of sanctions, and the imposition of a lesser sanction, Epworth Villa continued to delay and obstruct the production of these documents without reason. See, id. at 1320-21 ("[T]hree strikes is more than enough to allow the [trial] court to call a litigant out. [A] party's thrice repeated failure to produce materials that have always been and remain within its control is strong evidence of willfulness and bad faith.").

         ¶9 On appeal, Epworth Villa argues that not all of the factors set forth in Payne were satisfied to a sufficient degree to support the imposition of this "death penalty" sanction and that lesser sanctions, such as monetary sanctions, ameliorating evidentiary rulings, or jury instructions, should have been imposed instead. We reject these propositions of error. At the outset we see no requirement that the Payne factors meet some certain quantum of proof so long as the trial court considers each of the factors and evidence of fault, willfulness, or bad faith is present. Payne, 1999 OK 94, ¶9; Erenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir. 1992) (relied on by the Oklahoma Supreme Court in Payne to establish the factors to be considered by the trial court when imposing discovery sanctions). [6] Importantly, the trial court evaluated, on the record, Epworth Villa's conduct as to each of the five Payne factors and concluded each factor weighed in favor of default judgment. See ¶7, supra. The trial court seemed especially concerned about the late production of documents after Epworth Villa had repeatedly said on the record that no such documents existed, such as the Hicks Investigation File, and its refusal to change its conduct or discovery practices after having sanctions threatened and actually imposed. Epworth Villa's repeated failure to cooperate in discovery constitutes "strong evidence of willfulness and bad faith... to warrant... default judgment." Lee, 638 F.3d at 1321. See also Payne, 1999 OK 94, ¶10 (entry of default judgment warranted where defendant refused to appear at multiple noticed depositions and court-ordered depositions over a five-month period). The record supports the trial court's factual conclusions regarding Epworth Villa's conduct and its decision to enter default judgment on the breach of contract and negligence claims.

         ¶10 Next, we turn to the additional sanctions entered by the trial court where it entered judgment against Epworth Villa as to liability for Category I punitive damages and removed Epworth Villa's right to jury trial on the remaining claims (IIED and damages). [7] Here, a review of the facts leading up to these sanctions is necessary before determining under what authority the trial court entered these sanctions.

Sanctions entered May 16, 2014 - Default judgment on Category I punitive damages

         ¶11 Following the entry of default judgment on the breach of contract and negligence claims, Epworth Villa fired its counsel, obtained new counsel, (collectively referred to herein as "new counsel") and filed a Motion to Vacate the Default Judgment on May 6, 2014. [8] In its Motion to Vacate, as supplemented by affidavits from Epworth Villa employees and oral argument and testimony at the hearing held May 12, 2014, Epworth Villa argued its prior counsel failed to provide it with any update or status of the litigation and also failed to provide it notice of the trial court's repeated threat of sanctions, including default judgment. [9] To support these assertions, Epworth Villa brought to the hearing redacted copies of all written communications, including emails, between it and its prior counsel which dealt with discovery and sanctions issues from the start of the case through April 18, 2014. Epworth Villa redacted any references to case strategy. Epworth Villa intended for the trial court to review the communications in camera and decide which, if any, of the communications Plaintiff's counsel should have access to present a response to the Motion to Vacate. Following a break in the hearing where the trial court reviewed the documents in camera, the trial court ordered Epworth Villa to produce the redacted documents to Plaintiff. Epworth Villa had represented to the trial court and Plaintiff's counsel that the documents constituted all of the communications related to discovery and sanctions issues between it and its prior law firm.

         ¶12 Following the production of the communications and as the hearing continued, Epworth Villa's Chief Operating Officer Lauren Cantu testified she was the primary point of contact for prior counsel and that such communication was mostly handled through oral communication. Ms. Cantu stated she was responsible for getting prior counsel in contact with the employees who were best able to respond to the various categories of Plaintiff's discovery requests. Ms. Cantu testified she did not maintain a file for the litigation and had never seen such a file but assumed it was maintained by Epworth Villa's Chief Financial Officer Tina Ballard. Ms. Cantu also testified prior counsel did not make her aware of any discovery issues that had been ongoing since at least the first hearing on Plaintiff's Motion to Compel was held July 26, 2013. When asked about email exchanges with prior counsel where he wrote "serious sanctions" were a possibility and that he "couldn't save [them], " Ms. Cantu stated she did not understand those to mean that default judgment was a possibility. Ms. Cantu also stated prior counsel did not inform her of Plaintiff's Motion for Sanctions where Plaintiff requested that the trial court enter default judgment as to liability on all claims. She testified that the first time she was aware of the possibility of default judgment was when she attended the April 18, 2014 hearing where default judgment was entered on Plaintiff's negligence and breach of contract claims.

         ¶13 However, cross-examination revealed Ms. Cantu had signed verifications authenticating several of Epworth Villa's supplemental discovery responses, thus indicating she was aware of the discovery issues. Additionally, Ms. Cantu was shown an email where Plaintiff's counsel was inadvertently blind copied. Ms. Cantu received this email, which was sent by staff at Conner and Winters the day before the April 18 sanctions hearing, and transmitted additional supplemental discovery responses. This evidence and testimony placed additional doubt on Ms. Cantu's earlier testimony that she was not kept aware of the discovery and sanctions issues. Notably, this email was available to Plaintiff only because counsel had been blind copied and had never been produced by Epworth Villa. Epworth Villa was unable to explain how a forensic computer search of its computer systems did not reveal this document such that it could be properly produced to Plaintiff or why the email was not among those reviewed by the trial court and ultimately produced to Plaintiff at the hearing.

         ¶14 Epworth Villa's Chief Executive Officer John Harned also testified at the May 12 hearing. He stated that, although he was present at the April 18, 2014 hearing, he was in attendance only because his prior counsel told him it was advisable for him to be there but that he was not informed why his presence was requested. He was also unaware that he had the ability to testify at the hearing. Mr. Harned asserted that, at no point prior to the April 18 hearing, did he understand that default judgment was a possibility or even what default judgment meant. Mr. Harned further claimed that the first time he became aware of the possibility of default judgment and the implications for the litigation of this case came after the trial court entered default judgment and his prior counsel explained to him what it meant following the April 18 hearing. At the close of the hearing, the trial court announced it would take Epworth Villa's Motion to Vacate under advisement and provide a ruling shortly.

         ¶15 On May 13, 2014, the day after the hearing on Epworth Villa's Motion to Vacate, Epworth Villa's new counsel provided an email to the trial court which was sent from Conner and Winters on March 13, 2014 to Ms. Cantu, Ms. Morgan, Director of Nursing, and and an additional Epworth Villa employee, Lisa Pever. Attached to the March 13, 2014 email was a memo providing annotations to an earlier memo, which had as its subject line "Analysis of Allegations in Motions for Sanctions; Updated following meeting with L. Pever and A. Morgan." Following receipt of this email and in consideration of the evidence presented at the May 12, 2014 hearing, the trial court denied Epworth Villa's Motion to Vacate and informed the parties it would consider any renewed sanctions requests by Plaintiff at the May 16, 2014 pre-trial conference.

         ¶16 At the May 16, 2014 hearing, Plaintiff renewed its request for an instruction to the jury that Epworth Villa had violated court orders regarding the production of documents and that such direct disobedience could be considered in the jury's determination of punitive damages. [10] Plaintiff then made an oral motion for the trial court to enter default judgment as to liability on Category I punitive damages because of the false testimony of Epworth Villa's employees at the May 12, 2014 hearing and the subsequent production of documents showing the falsity of the testimony when such documents were produced after the assurances of Epworth Villa's counsel that all communications between Epworth Villa and its prior counsel had already been produced. Plaintiff also stated its intention to seek additional sanctions should more documents be produced in such a fashion.

         ¶17 An attorney representing Conner and Winters in Epworth Villa's professional malpractice claim against it, Andrew Bowman, provided additional evidence that the memo and email produced May 13, 2014 had been in the possession of Epworth Villa's current counsel since at least April 29, 2014 but was still not produced. Clearly frustrated with the conduct of Epworth Villa and its counsel in the presentation of the Motion to Vacate and the subsequent document production, the trial court entered default judgment as to Category I punitive damages against Epworth Villa. The trial court also ordered the jury to be instructed as requested by Plaintiff.

         ¶18 Additionally, because Mr. Bowman's evidence showed there may have been yet more documents on the issue of Epworth Villa's knowledge of the discovery and sanctions issues which were available to Epworth Villa's counsel but not produced, the trial court ordered Epworth Villa to produce to the trial court for in camera review all communications between it and Conner and Winters which had not yet been produced along with all communications between Mr. Bowman's firm and Steven Holden, Epworth Villa's current counsel (the "May 16, 2014 production order"). The May 16, 2014 production order was for all communications between those parties and was ...

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