GOOD FAITH IN PLEADINGS AND IMPOSITION OF SANCTIONS UNDER CHAPTER 10 OF THE CPRC AND/OR RULE 13 OF THE TRCP
Chapter 10 of the Civil Practices and Remedies Code provides that the signing of a pleading or motion constitutes a certificate by the signatory that, to the best of the signatory's knowledge, "each allegation or other factual contention in the pleading or motion has evidentiary support or, for a specifically identified allegation or factual contention, is likely to have evidentiary support after a reasonable opportunity for further investigation or discovery." Low v. Henry, 221 S.W.3d 609, 614-15 (Tex. 2007) (citing TEX. CIV. PRAC. & REM. CODE ANN. § 10.001(3) (West 2002)). Each allegation and factual contention in a pleading or motion must have, or be likely to have, evidentiary support after a reasonable investigation. Id. at 615. A trial court may impose sanctions against a party if the court finds that the party has failed to comply with this requirement. Nolte, 348 S.W.3d at 269 (citing TEX. CIV. PRAC. & REM. CODE ANN. § 10.004(a) (West 2002)).
Rule 13 of the Rules of Civil Procedure allows a court to impose sanctions on a party, counsel, or both for pleadings, motions, or other papers signed and filed that are groundless and brought in bad faith or for the purpose of harassment. Loeffler v. Lytle Indep. Sch. Dist., 211 S.W.3d 331, 348 (Tex. App.-San Antonio 2006, pet. denied). The rule defines "groundless" as having no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law. TEX. R. CIV. PROC. 13. Groundlessness turns on the legal merits of a claim. Dike v. Peltier Chevrolet, Inc., 343 S.W.3d 179, 184 (Tex. App.-Texarkana 2011, no pet.). A claim without evidentiary support is groundless for purposes of Rule 13, as it has no basis in fact or law. Nath v. Texas Children's Hosp., 375 S.W.3d 403, 427 (Tex. App.-Houston [14th Dist.] 2012, pet. filed). To determine if a pleading was groundless, the trial court uses an objective standard: did the party and counsel make a reasonable inquiry into the legal and factual basis of the claim? Loeffler, 211 S.W.3d at 348; see Robson, 267 S.W.3d at 405. The court will look to the facts available to the litigant and the circumstances at the time the suit was filed. Robson, 267 S.W.3d at 405. There must have been a reasonable inquiry, which means the amount of examination that is reasonable under the circumstances. Robson, 267 S.W.3d at 406 (citing Monroe v. Grider, 884 S.W.2d 811, 817 (Tex. App.-Dallas 1994, writ denied)).
In deciding whether a pleading was filed in bad faith or for the purpose of harassment, the trial court must consider the acts or omissions of the represented party or counsel, not merely the legal merit of a pleading or motion. New York Underwriters Ins. Co. v. State Farm Mut. Auto. Ins. Co., 856 S.W.2d 194, 205 (Tex. App.-Dallas 1993, no writ.); see Davila v. World Car Five Star, 75 S.W.3d 537, 544 (Tex. App.-San Antonio 2002, no pet.). The party moving for sanctions must prove the pleading party's subjective state of mind. Thielemann v. Kethan, 371 S.W.3d 286, 294 (Tex. App.-Houston [1st Dist.] 2012, pet. denied) (citing Mattly v. Spiegel, Inc., 19 S.W.3d 890, 896 (Tex. App.-Houston [14th Dist.] 2002, no pet.)). Bad faith does not exist when a party merely exercises bad judgment or is negligent; rather bad faith is the conscious doing of a wrong for dishonest, discriminatory, or malicious purposes. Thielemann, 371 S.W.3d at 294. A party acts in bad faith if he has been put on notice that his claim may be groundless and he does not make reasonable inquiry before pursuing the claim further. See Robson, 267 S.W.3d at 407; Monroe, 884 S.W.2d at 818 (concluding public policy supports lesser standard for bad faith under Rule 13 than under DTPA). A court may therefore find bad faith where a party asserts a claim with knowledge that the evidence fails to support the claim. Nath, 375 S.W.3d at 427. "Harass" is used in a variety of legal contexts to describe words, gestures, and actions that tend to annoy, alarm, and verbally abuse another person. Thielemann, 371 S.W.3d at 294 (citing Elkins v. Stotts-Brown, 103 S.W.3d 664, 669 (Tex. App.-Dallas 2003, no pet.)).
Courts must presume that pleadings are filed in good faith, and the burden is on the party moving for sanctions to overcome that presumption. GTE Commc'n Sys. Corp. v. Tanner, 856 S.W.2d 725, 731 (Tex. 1993). Under some circumstances, the trial court may be able to make such a determination by taking judicial notice of items in the case file. Texas-Ohio Gas, Inc. v. Mecom, 28 S.W.3d 129, 139 (Tex. App.-Texarkana 2000, no pet.). Circumstantial evidence will suffice to allow a trial court to infer bad faith and improper motive. Dike, 343 S.W.3d at 194. A party cannot avoid Rule 13 sanctions by claiming he was not actually aware of the facts making his claim groundless when he had not made reasonable inquiry, nor by claiming he was not acting with malicious or discriminatory purpose in bringing the claim. Robson, 267 S.W.3d at 407.
The imposition of sanctions is within the sound discretion of the trial court, and we set aside the order only upon a clear showing of abuse of discretion. Low, 221 S.W.3d at 614; see Tanner, 856 S.W.2d at 730. The determination whether the court's imposition of sanctions constitutes an abuse of discretion requires an examination of the entire record. Loeffler, 211 S.W.3d at 347. A trial court abuses its discretion in imposing sanctions only if it bases the order on an erroneous view of the law or on a clearly erroneous assessment of the evidence. Id. at 347-48. An appellate court, therefore, will view the conflicting evidence in the light most favorable to the trial court's ruling and will draw all reasonable inferences in favor of the trial court's judgment. Id. at 348.
SOURCE: SAN ANTONIO COURT OF APPEALS – 04-11-00444-CV – 3/20/2013