Randall Crowder, Appellant v. MD TEXO GP LLC TEXO LP (2023)

DISSENTING OPINION

Because the trial court's February 2021 order on contempt and sanctions was not an abuse of discretion when it struck Crowder's defenses, I respectfully dissent.¹

The discovery requests at issue are relevant beyond exemplary damages.

The majority asserts that the discovery requests at issue encompass nothing beyond information about Crowder's net worth. See, e.g., ante at (“discovery requests regarding [Crowder's] net worth”). But as Sanger argues, the discovery involved the merits of Sanger's affirmative claims as well.

The February 2021 order under review says that it is addressing the “refus[al] of Defendant[ ] Crowder ․ to comply” with the court's August 2020 order granting a July 2020 motion to compel. The August 2020 order compelled Crowder “to completely respond to Plaintiffs' discovery requests specified in Plaintiffs' Motion dated July 17, 2020” and to “produce all responsive documents.” The July 2020 motion to compel specified as its basis several discovery requests, including Requests for Production 44, 47, and 52, which involved not only Crowder's assets but also communications relating to his interests in other entities, including the Nove entities. These requests get at the merits of Sanger's affirmative claims for relief, including breach of fiduciary duty and breach of contract, because they could reveal not only how much in compensation but also when Crowder began receiving compensation for work for the Nove entities. If he received such compensation for Nove work while he owed allegedly conflicting duties to the TEXO entities, then that could be some evidence to support Sanger's claims for relief.

Sanger made exactly these arguments when seeking what became the August 2020 order compelling discovery responses and later when seeking what became the February 2021 order. During the hearing on the motion to compel, Sanger discussed the relationship between Crowder's compensation from Phunware, which is a venture for which Crowder, Sanger says, used the Nove entities to solicit investments, and his conflicting duties to the TEXO entities:

They gave us false statements. They admitted that these were relevant for exemplary damages. They gave it to us to avoid a hearing. Now they won't provide backup even though these are false and public records reveal that․ These statements don't show net worth because they don't list all the assets and they don't list all the liabilities. Mr. Crowder is an executive.

He took a full-time job instead of doing what he was required to do in the settlement agreement [regarding work for the TEXO entities]. But that job is with a company, Phunware[;] the company has been in a lot of trouble.

Then during the hearing on the motion that led to the February 2021 order, Sanger repeated this refrain—Crowder had allegedly breached his TEXO-related duties by his work for the Nove entities and Phunware, meaning that communications about his other compensation would help show his alleged breaches of contractual or fiduciary duties:

You ordered that he produce all items that relate to or refer to Phunware. Not only did he get stock as an employee[,] but also he set up a new investment vehicle. He set up a new investment vehicle through a company he owns called Nove. And he got limited partners, investors[;] we beli[e]ve they are the same investors.

Some of them overlap with our investors and therefore get to the Breach of Contract we saw[,] paragraph—paragraph eight that you saw earlier. But he got investors to come in and pooled their money to buy Phunware[,] and they took the benefits of that. We know that from publicly filed information. Yet none of that shows up in any of the responses Crowder gave us. Nor does it show up at all on his net worth statement. No text, no electronic communication, he absolutely refuses. He said I will take the sanction rather than give the names of the limited partners[,] which he could do. We believe that they are probably the same names as our investors[;] that's why he doesn't want to give it to us․

So this is Mr. Crowder explaining he is the sole founder of Nove Ventures, one of the vehicles he is using to invest in Phunware. In paragraph eight he is not suppose[d] to use any of the same LPs. We plead that in the Breach of Contract including paragraph eight.

Therefore, in both the trial court and this Court, Sanger has maintained that the discovery requests that ultimately led to the February 2021 order are relevant beyond exemplary damages.

The majority does not recognize this: “The court struck Crowder's defenses to the merits of the causes of action ․ as punishment for Crowder's failure to respond to inquiries about his net worth that related to Sanger's claim for exemplary damages.” Ante at (emphasis added). The majority explains its conclusion that striking Crowder's defenses was disconnected from the merits of the suit because the discovery abuse being punished related only to exemplary damages. See ante at ___. Not so, as Sanger's arguments show.

The majority fails to credit the full record and all the findings that it supports.

Additionally, the majority fails to credit the full record of Crowder's discovery abuse, including all the findings that the record supports. A “trial court, when contemplating imposition of sanctions, is not limited to a consideration of the specific violation for which sanctions are finally imposed; instead, the court may review the party's conduct during the entire history of the litigation.” Dumais v. Haggas, No. 03-19-00165-CV, 2019 WL 4942057, at *2 (Tex. App.—Austin Oct. 2, 2019, no pet.) (mem. op.) (citing Buck v. Estate of Buck, 291 S.W.3d 46, 55 (Tex. App.—Corpus Christi–Edinburg 2009, no pet.)). Crowder's discovery abuse “during the entire history of the litigation” concerned not only discovery relevant to exemplary damages but nearly all stages of discovery. The February 2021 order struck defenses based in part on Crowder's “repeated disobedience ․ despite ample notice and despite the series of orders against” him. That repeated disobedience included Ventures LLC's contempt for restricting Sanger's access to information while Crowder controlled that entity, monetary sanctions against Crowder for resisting an order compelling Ventures LLC to make information available to Sanger, Crowder's admission that he moved files while a court-ordered forensic expert was in the waiting room waiting to inspect the files, a series of orders culminating in an order for Crowder to show cause “for his failure to update discovery responses and produce documents,” and Crowder's counsel's stated willingness to “take our lumps” via sanction rather than producing material ordered to be produced.

The majority's response is that the trial court “did not make such findings” about Crowder's discovery abuse throughout the litigation and beyond merely the issue of exemplary damages. See ante at ___. But, as explained below, the standard of review applicable to the February 2021 order is that any findings necessary to support it are implied in the final judgment and supportable by any legal theory applicable to the record and by any evidence in the record that can reasonably support the necessary implied findings.

Crowder seeks review of the February 2021 order in an appeal of the final judgment into which the order merged and not via mandamus. Generally speaking, unless an appellant has followed the applicable rule or rules from among Rules of Civil Procedure 296 through 299a, a final judgment on issues decided by the trial court brings with it all findings that are necessary to support it, including “deemed,” “inferred,” or “implied” findings. See generally Tex. R. Civ. P. 296–99a. After the court here signed its final judgment, Crowder properly requested findings of fact and conclusions of law—including specifically requesting findings and conclusions needed to support the February 2021 order—and then properly filed a notice of past due findings and conclusions. See Tex. R. Civ. P. 296–97. The trial court then filed its findings and conclusions, which discussed some of the sanctions that had been imposed on Crowder during the suit, but according to the majority and to Crowder, the findings and conclusions lack needed findings tying Crowder's discovery abuse to the striking of his defenses. But those necessary findings are to be inferred here because after the court filed its findings and conclusions, Crowder did not request additional or amended findings and conclusions, see Tex. R. Civ. P. 298, related to the February 2021 order.² He requested additional or amended findings only on other topics, like Sanger's claims for conspiracy, aiding and abetting, and tortious interference.

The effect of Crowder's failure to request additional or amended findings under Rule 298 about the February 2021 order is that any finding necessary to support that order must be implied by the court's judgment.³ “Where the appellant fails to make such a request timely in accordance with Rule 298, that failure is a waiver of any error on the part of the court to make complete findings and a waiver of the right to complain of the trial court's failure to make certain findings deemed necessary by the appellant.” Lettieri v. Lettieri, 654 S.W.2d 554, 556 (Tex. App.—Fort Worth 1983, writ dism'd)⁴ ; accord Guerrero v. Salinas, No. 01-21-00563-CV, 2023 WL 2483542, at *5 (Tex. App.—Houston [1st Dist.] Mar. 14, 2023, no pet.) (mem. op.); see also Wilkinson v. Wilkinson, No. 03-97-00611-CV, 1999 WL 314783, at *1 n.2 (Tex. App.—Austin May 20, 1999, no pet.) (op., not designated for publication) (“At Jarrell's request, the trial court filed findings of fact and conclusions of law. Jarrell asserts ․ certain findings cannot be implied in support of the judgment because he timely requested additional findings that the court refused to make. Because Jarrell's request for additional findings did not specify the additional findings he desired, we reject Jarrell's argument. In determining whether legally sufficient evidence supports the reimbursement award, we presume that the evidence supports not only the express findings the court made, but also any omitted findings that support the award.” (emphasis added) (internal citation omitted) (citing Tex. R. Civ. P. 298)); Davis v. Travis Cnty. Child Welfare Unit, 564 S.W.2d 415, 416 (Tex. App.—Austin 1978, no writ) (“Should a party deem the initial findings or conclusions of the court incomplete, incorrect, or overly general, he may request the court to make specified further, additional, or amended findings. Examination of the transcript shows that appellants did not request the court to make further, additional, or amended findings, the absence of which is now the subject of complaint on appeal. Whatever complaint appellants may have had with respect to the over-generality of the court's findings, was waived by their failure to request further findings.” (internal citations omitted) (citing Tex. R. Civ. P. 298)).

A parallel example of applying this principle comes from Hamilton v. Hamilton. See generally No. 02-19-00211-CV, 2020 WL 6498528 (Tex. App.—Fort Worth Nov. 5, 2020, no pet.) (mem. op.). In that divorce suit, the husband and wife had contested asset-characterization and asset-value issues, and the trial court found against the husband. See id. at *1. The husband requested findings of fact and conclusions of law, and the ones that the court filed addressed asset-characterization but not asset-valuation. Id. The husband did not request additional or amended findings on asset-valuation, so he therefore could not “complain about the absence of asset-value findings” on appeal, where he was “attack[ing] the absence of certain findings that the trial court did not put in its original findings and that [he] never asked for in a supplemental request.” See id. at *1–2. Just like the Hamilton husband, Crowder cannot here complain about the lack of findings that “[s]triking Crowder's defenses on the merits for his failures to produce information relevant to exemplary damages was ․ directed against the abuse,” that the sanction was “directed toward remedying the prejudice caused to the innocent party,” that there was “a relationship between the failure to produce net-worth information relevant to exemplary damages and the striking of pleadings of Crowder's defenses to the merits of Sanger's claims,” or that “Crowder's noncompliance with discovery requests relating to net worth give[s] rise to a presumption that his defenses lack merit.” See ante at ___–___. But the majority gives Crowder that very relief.⁵

The core finding necessary to support the sanction of striking defenses purportedly missing here ⁶ is that Crowder's discovery abuse justified a presumption that his struck defenses lacked merit. See Cire v. Cummings, 134 S.W.3d 835, 839–41 (Tex. 2004). That finding must be inferred in the judgment, as I have explained, and the finding is supported by the record. We may reverse a sanction “only if ‘the order is based on an erroneous view of the law or a clearly erroneous assessment of the evidence.’ ” Pool v. Diana, No. 03-08-00363-CV, 2010 WL 1170234, at *10 (Tex. App.—Austin Mar. 24, 2010, pet. denied) (mem. op.) (quoting Loeffler v. Lytle Indep. Sch. Dist., 211 S.W.3d 331, 347–48 (Tex. App.—San Antonio 2006, pet. denied)). And we uphold a judgment that includes sanctions “on any applicable theory that finds support in the record.” Barnes v. Sulak, No. 03-01-00159-CV, 2002 WL 1804912, at *11 (Tex. App.—Austin Aug. 8, 2002, pet. denied) (op., not designated for publication) (citing Seaman v. Seaman, 425 S.W.2d 339, 341 (Tex. 1968)).

Crowder's discovery abuse throughout the suit—not just while hiding his net worth closer to trial—supports the reasonable inference that his defenses to Sanger's claims lacked merit. The trial court could have reasonably inferred that Crowder knew that he needed to obstruct orderly discovery throughout the suit because he knew that he was liable on Sanger's claims. More specifically, because the discovery requests that led to the February 2021 order addressed the merits of Sanger's affirmative claims, Crowder's resistance to those requests gives rise to the reasonable inference that he knew that he was liable on those claims. This inference would have supported a sanction awarding Sanger affirmative judgment on his claims, so it makes sense that the lesser sanction of striking Crowder's defenses to those claims also is reasonably supportable.⁷ Having reviewed the whole record, as the trial court was permitted to do; having credited the necessary implied findings, as we must; and having concluded that the trial court did not err on the law and did not clearly err on the facts, I would hold that the sanction striking Crowder's defenses was not an abuse of discretion. I thus respectfully dissent from that part of the majority's opinion and judgment.

FOOTNOTES

1.   I would overrule Crowder's first appellate issue, which means that much of my analysis of Crowder's remaining appellate issues would be postured differently from the majority's.

2.   Although Crowder had specifically mentioned the February 2021 order in his original request for findings and conclusions, he omitted any mention of that order in his request for additional or amended findings and conclusions.

3.   The doctrines of implied findings generally apply to both sanctions orders, see, e.g., Ogle v. Hector, No. 03-16-00716-CV, 2017 WL 3379107, at *5 (Tex. App.—Austin Aug. 2, 2017, pet. denied) (mem. op.); Jackson v. Jackson, No. 01-05-00194-CV, 2006 WL 3438703, at *2, 9 (Tex. App.—Houston [1st Dist.] Nov. 30, 2006, no pet.) (mem. op.), and contempt orders, see, e.g., Ex parte Helms, 259 S.W.2d 184, 187 (Tex. 1953).

4.   We endorsed this very principle from Lettieri when we cited it in our nonprecedential opinion of Dean v. Gouverne, No. 03-00-00144-CV, 2001 WL 43006, at *5 (Tex. App.—Austin Jan. 19, 2001, pet. denied) (op., not designated for publication). It has been endorsed also by the First and Fourteenth Courts of Appeals. See In re J.L.B., No. 01-98-00920-CV, 1999 WL 462017, at *3, 6 (Tex. App.—Houston [1st Dist.] July 1, 1999, no pet.) (op., not designated for publication); Cities Servs. Co. v. Ellison, 698 S.W.2d 387, 390 (Tex. App.—Houston [14th Dist.] 1985, writ ref'd n.r.e.).

5.   We have cited Hamilton for these very principles. See Regost v. Regost, No. 03-21-00328-CV, 2022 WL 4349323, at *7 n.4 (Tex. App.—Austin Sept. 20, 2022, no pet.) (mem. op.). More specifically, the panel of justices that decided Regost is the same panel deciding this appeal.

6.   I do not understand the majority to be saying that any of the other elements necessary to support a sanction striking defenses was not proven here. Cf. Cire v. Cummings, 134 S.W.3d 835, 838–43 (Tex. 2004) (discussing elements). I believe that under all other elements, the sanction striking defenses is supported by the record. For example, if the record supported a reasonable inference that Crowder's discovery abuse showed that his defenses lack merit, then I take it that the majority would agree with me that the record also supports that the sanction was directed against the abuse, that the sanction was directed toward remedying the prejudice caused to the innocent party, and that there existed the necessary relationship between the sanction and the abuse.

7.   In this scenario, Crowder still was permitted to defend against the claims in a trial.

Chari L. Kelly, Justice