Tuesday, June 9, 2009
C.A.: Denial of Terminating Sanctions Was Abuse of Discretion
Panel Says ‘Egregious’ Failure to Turn Over Documents in ‘Lemon Law’ Case Requires Ultimate Penalty
By KENNETH OFGANG, Staff Writer
The Fourth District Court of Appeal yesterday ordered that judgment be entered in favor of a customer in order to sanction the U.S. distributor of Bentley automobiles for persistent failure to comply with discovery orders in a “lemon law” case.
Orange Superior Court Judge William M. Monroe’s denial of terminating sanctions in the case was an abuse of discretion, Justice Richard Fybel wrote for the court.
Overturning a denial of terminating sanctions is “extraordinary,” Fybel said, acknowledging that the court was aware of no precedent for doing so. But it is appropriate, he said, because Bentley Motors, Inc. “engaged in repeated and egregious violations of the discovery laws that not only impaired plaintiff’s rights, but threatened the integrity of the judicial process.”
The ruling opens up the likelihood of a substantially larger award to August B. Doppes, who has been doing battle with Bentley since discovering an odor in the interior of his then-new 2001 Arnage.
Doppes won reimbursement of more than $214,000 and attorney fees of around $344,000 after jurors found in his favor on claims that Bentley had violated the Song-Beverly Consumer Warranty Act and breached express and implied warranties. But he missed out on treble damages and possible punitive damages because the same jury rejected his fraud claim and found that the Song-Beverly “lemon law” violation was unintentional.
Doppes bought the car from Newport Auto Center but brought it back for repair after he noticed the odor, which he described as “obnoxious.” After several repair attempts, which kept the car out of service for 171 days, he demanded a replacement or restitution under the Song-Beverly law.
Failing to obtain satisfaction, he complained to the Better Business Bureau. After a Bentley employee testified that he knew of only three cars with odor problems and that Bentley addressed the problem by placing foam blocks in the body cavities of the cars to obstruct cold air flow, the hearing officer found for Bentley.
That testimony, Fybel noted, proved to be false. At the time of the BBB hearing, the justice said, the witness knew of at least 11 odor complaints and also knew that problem was caused by corrosion protection wax, not cold airflow.
Doppes sued Bentley after the BBB hearing. In late 2004, his counsel served Bentley with discovery, including requests for various documents related to similar customer complaints, notifications to dealers, warranty repairs based on similar problems, and vehicle tests.
Documents were not produced as requested, and an order compelling production was entered July 20, 2005, setting Aug. 9 as the deadline for compliance.
What followed, Fybel said, was a series of missed deadlines, erroneous claims that all required documents had been produced, and further discovery orders, as well as the appointment of retired Court of Appeal Justice John Zebrowski of this district as a discovery referee.
Zebrowski found that Bentley “failed to timely produce relevant and properly demanded, but potentially damaging, documents;” that the company had taken “a repeated, and legally erroneous, position” that it was independent of Bentley Motors Ltd., the United Kingdom company that manufactures the cars, and was thus not required to produce documents in the manufacturer’s possession; that documents produced in March 2006 showed that the defendant “had long been aware of an odor problem” in many of its cars; and that there was “good reason to believe” the defendant was withholding documents it had been ordered to produce or was less than diligent in searching for them.
Monroe ruled that the referee’s findings constituted a basis for evidence and issue sanctions, but offered Bentley a further opportunity to comply, setting a June 6, 2006 deadline by which to produce all documents or provide a detailed and sworn explanation of the efforts undertaken to do so. He also set a further hearing before Zebrowski on all outstanding discovery issues.
The referee later concluded that Bentley remained non-compliant, but that a “more moderate course” than terminating sanctions should be taken. He recommended that the judge issue a set of jury instructions explaining the defendant’s conduct, establishing certain facts, and allowing the jury to draw certain inferences negative to Bentley from its failure to complete discovery.
Monroe adopted the recommendations and denied the plaintiff’s motion for terminating sanctions. Trial began in late August 2006, during which the plaintiff’s lawyers again moved for terminating sanctions, based on newly discovered evidence that Bentley had deleted e-mails that it was obligated to preserve under previous orders, and was still withholding documents, including customer complaint files.
The judge found that Bentley failed to produce documents as required and gave an additional instruction, informing jurors that Bentley failed to produce between 30 to 40 files on customer complaints, despite being ordered to do so. Jurors were to decide for themselves “how relevant and probative is this information in assisting you” in deciding the case.
Judgment was entered for the plaintiff in March 2007. Doppes was awarded $214,300, contingent on return of the automobile, plus attorney fees and costs and prejudgment interest.
Fybel, writing yesterday for the Court of Appeal, said the mid-trial disclosures proved that “Bentley’s conduct was worse than originally known” While the trial judge was within his discretion in adopting the “moderate course” proposed by Zebrowski before the trial, the justice said, it became clear during the trial that “Bentley had flagrantly engaged in such further discovery abuses so as to compel the trial court to impose the next level of sanctions—terminating sanctions.”
The jurist conceded the apparently unprecedented nature of the court’s action.
“The lack of analogous case authority does not mean reversing the denial of terminating sanctions is unwarranted—only that it might be unprecedented in published opinions,” he wrote. “In this case, the trial court had to impose terminating sanctions once it was learned during trial that Bentley still had failed to comply with discovery orders and directives and Bentley’s misuse of the discovery process was even worse than previously known. “
Fybel went on to say that the trial judge abused his discretion by excluding the proceedings before the discovery referee from the fee award. The court directed that $57,000 be added to the amount granted by the trial judge, bringing the total to more than $400,000.
In a separate opinion, the panel upheld the award of prejudgment interest, rejecting Bentley’s contention that prejudgment interest is not available in a case involving restitution under the Song-Beverly Act.
Attorneys on appeal were Steven Brower and Robert M. Dato of Buchalter Nemer and Jeffrey S. Benice of the Law Offices of Jeffrey S. Benice for the plaintiff and Jonathon Kaplan, David A. Goldsmith and Yitz E. Weiss of Kaplan Lee for the defendant.
The cases, both styled Doppes v. Bentley Motors, Inc., are reported at 09 S.O.S. 3232 and 09 S.O.S. 3235.
Copyright 2009, Metropolitan News Company