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Click here for the full text of this decision FACTS:Bonnie and Vernon Johnson were partners in a law practice and in marriage. Vernon managed the finances for the Johnsons’ business and household. The Johnsons established a trust for their daughter Chelsea and asked their mutual friend Charles Chesnutt to serve as trustee. The trust contained an exculpatory clause relieving the trustee from liability for exercising his discretion unless his actions involved fraud or bad faith. Chesnutt delegated to Vernon the authority to make investment decisions for the trust. Bonnie was aware of this delegation of authority. Bonnie and Vernon were subsequently engaged in a contentious divorce. After the divorce, Bonnie discovered that the value of the trust had declined and hired an attorney to evaluate whether she had a cause of action against Chesnutt. The attorney advised Bonnie that the decreased value of the trust resulted from a fall in the market and declined to file suit. Bonnie hired another attorney to file suit against Chesnutt. The suit, brought by Bonnie as next friend for Chelsea, alleged that Chesnutt breached his fiduciary duty but did not specifically allege fraud or bad faith. Moreover, Bonnie’s petition included the trust instrument, but the petition made no reference to the exculpatory clause. Bonnie reviewed and approved the petition before it was filed. On July 28, 2003, the parties entered into an agreed level three scheduling order that established deadlines for the designation of experts and the close of discovery and set the case for trial on Feb. 21, 2005. On July 29, 2003, the trial court issued a mediation order that required the parties to file any objections to mediation within 10 days of the issuance of the order. The record reflects that Bonnie actively monitored the suit. Over a period of approximately two years, Bonnie hired and fired three attorneys. Despite the number of attorneys who worked on the file, the request for initial disclosures that Chesnutt served at the inception of the suit was never answered. Complete substantive answers to interrogatories were not provided. Bonnie failed to designate an expert witness or take Chesnutt’s deposition before the close of discovery. On Dec. 1, 2004, Chesnutt filed a motion to compel and for sanctions. Chesnutt requested that Bonnie be compelled to answer the interrogatories and request for disclosures. In the alternative, Chesnutt requested that the court sanction Bonnie by excluding evidence of the amount and method of calculation of any alleged damages and the factual basis for her claims. On Dec. 16, 2004, Chesnutt filed a motion for summary judgment which alleged, inter alia, that Johnson acknowledged in her deposition testimony that she had no claim for fraud or bad faith. The motion was set for hearing on Feb. 15, 2005. Bonnie did not respond to the motion. Bonnie retained her fourth lawyer approximately one month before the Feb. 22, 2005, trial. The new lawyer entered an appearance on Jan. 7, 2005, the day of the hearing on Chesnutts’ motion to compel. In an effort to avoid the consequences likely to result from the failure to timely designate an expert witness, Bonnie’s new attorney moved for a continuance and requested an extension of the discovery deadlines. The trial court denied the motion. The trial court ordered the parties to mediation by Jan. 27, 2005. The court reserved its ruling on the motion for sanctions. The parties scheduled a mediation to occur on Jan. 25, 2005. On Jan. 20, 2005, Bonnie nonsuited the case by filing a Notice of Dismissal. On Jan. 24, 2005, the day before the mediation was to occur, Bonnie filed an objection to mediation. The objection to mediation was not set for hearing, and the court did not rule on the motion before the mediation was scheduled to begin. Chesnutt and his counsel appeared for the mediation at the appointed time, but Johnson and her counsel did not appear. The court subsequently held a hearing on Bonnie’s objection to the mediation. During the hearing, Bonnie’s counsel advised the court that they would file the suit again as soon as Chelsea reached the age of 18. Chelsea was 17 years old at the time. On Jan. 31, 2005, Chesnutt filed a document styled Motion for Contempt and Amended Motion for Sanctions. The amended motion complained that Bonnie had taken a nonsuit rather than face the adverse consequences of a third motion to compel, a ruling on the summary judgment or the upcoming trial. The amended motion also noted that Bonnie’s objection to mediation was not timely under the court’s policy. Chesnutt further complained about Bonnie’s failure to comply with the court’s mediation order. Chesnutt requested that the court sanction Bonnie by dismissing the case with prejudice and reimbursing Chesnutt for his defense costs. On Feb. 1, 2005, the court entered a show cause order directing Bonnie and her counsel to appear and respond to Chesnutt’s amended motion. After a two day evidentiary hearing at which Bonnie appeared and testified, the trial court made detailed findings of fact and conclusions of law and ordered a “death penalty” sanction and award of attorneys’ fees against Bonnie under Rules 215.3 and 13 of the Texas Rules of Civil Procedure, and Chapter 10 of the Texas Civil Practice & Remedies Code. On July 19, 2005, the trial court signed a judgment dismissing Bonnie’s claims with prejudice and awarding Chesnutt his attorneys’ fees and costs. Bonnie appealed. HOLDING:Affirmed. Bonnie argued that her nonsuit rendered the request for sanctions moot. According to Bonnie, once the nonsuit was filed, sanctions no longer served the purpose of assuring a fair trial. Although the nonsuit may have obviated any fair trial concerns, the court did not agree that Rule 215 sanctions were no longer appropriate. Rule 162, the court stated, expressly provides that a nonsuit does not affect the trial court’s authority to act on a motion for sanctions pending at the time of dismissal. Sanctions, the court stated, serve a variety of purposes, including the compensation of a party for past prejudice or punishment and deterrence of bad faith conduct. After a careful review of the record, including the trial court’s detailed findings of fact and conclusions of law, the court could not conclude that the sanctions served no purpose. For example, the court noted that the “trial court found that Bonnie abused the discovery process and demonstrated flagrant bad faith and callous disregard for the discovery rules.” Moreover, the court noted that the trial court found that Bonnie nonsuited the case to avoid a hearing on a third motion to compel. The court concluded that based on the record, the trial court’s determination that there was good cause for sanctions was neither arbitrary nor unreasonable. Although the choice of sanctions, the court stated, is left to the discretion of the trial judge, the sanctions imposed must be just. A sanction must meet two requirements before it can be considered just. First, there must be a direct relationship between the offensive conduct and the sanction imposed. Second, the sanction imposed must not be excessive. Before imposing a death penalty sanction, the court stated that a trial judge must first consider the availability of lesser sanctions, and whether a lesser sanction would be adequate to secure compliance. Case determinative sanctions are also limited by due process concerns. Such sanctions should only be imposed in exceptional cases where they are clearly justified and it is fully apparent that no lesser sanction would promote compliance with the rules. An exceptional case exists when a party’s hindrance of the discovery process justifies a presumption that her claims lack merit. The court noted that the trial court found that Bonnie’s hindrance of the discovery process was so persistent and so successful as to warrant the presumption that her claims had no merit; otherwise, the court stated, Bonnie would have fully responded to discovery rather than face case-determinative sanctions. The court also noted that the trial court found that there was no evidence of any factual basis for the suit. Finally, the court found the sanctions to be just in that there was a direct relationship between the offensive conduct and the sanction imposed. OPINION:Richter, J.; Morris, Whittington and Richter, J.J.

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