Rule 13 Sanctions Order requires findings of bad conduct to hold up on appeal

$5,000 IN SANCTIONS WITHOUT EXPLANATION IN TRIAL COURT'S ORDER REVERSED BY DALLAS COURT OF APPEALS 

After notice and a hearing, rule 13 authorizes sanctions against a party who files a pleading that is both groundless and brought in either bad faith or harassment.[3] TEX. R. CIV. P. 13. No sanctions under rule 13 may be imposed except for good cause, the particulars of which must be stated in the sanction order. Id. We review a trial court's imposition of sanctions under rule 13 for an abuse of discretion. Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004); Arnold v. Life Partners, Inc., No. 05-12-00092-CV, 2013 WL 4553379, at *3 (Tex. App.-Dallas Aug. 28, 2013, pet. filed).

Here, regarding sanctions, the trial court's judgment states only that it orders attorney's fees of $5,000 as sanctions. The court did not make the required particularized findings of good cause to support sanctions under rule 13. Failure to comply with this clear directive is an abuse of discretion. King v. First Nat'l Bank of Baird, 161 S.W.3d 661, 663 (Tex. App.-Eastland 2005, no pet.); Tex.-Ohio Gas, Inc. v. Mecom, 28 S.W.3d 129, 135 (Tex. App.-Texarkana 2000, no pet.). Thus, to the extent it ordered sanctions under rule 13, the trial court abused its discretion.

• Footnote [3]: Rule 13 expressly provides that a general denial does not constitute a violation of the rule. TEX. R. CIV. P. 13.

COURT'S INHERENT POWER TO SANCTION AS ALTERNATIVE TO RULE 11 

Brandon argues that the sanctions can be upheld under the trial court's inherent power to impose sanctions.

A trial court has inherent power to sanction to the extent necessary to deter, alleviate, and counteract bad faith abuse of the judicial process, such as any significant interference with the court's administration of its core functions, including hearing evidence, deciding issues of fact raised by the pleadings, deciding questions of law, rendering final judgment, and enforcing its judgments. Cherry Petersen Landry Albert, 2014 WL 7076496, at *9.

When using its inherent power to sanction, the court must make findings, based on evidence, that the conduct complained of significantly interfered with the court's legitimate exercise of its core functions. Union Carbide Corp. v. Martin, 349 S.W.3d 137, 147 (Tex. App.-Dallas 2011, no pet.). The court made no such findings in this case, and thus the sanction order cannot be upheld under the court's inherent power to sanction. See id. at 148.

We sustain Gerardo's second issue.

SOURCE: FIFTH COURT OF APPEALS IN DALLAS - 05-13-01219-CV - 10/20/2014

Presumption of good faith in pleadings and sanctions for groundless suit and harrassment by litigation

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.[2] 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 

Standard for Imposition of Sanctions (TRCP 13) - Presumption of good faith pleading

SANCTIONS  UNDER RULE 13 

When are sanctions proper for filing of a dubious pleading?

A trial court may impose sanctions if a pleading is groundless and brought in bad faith or for the purpose of harassment. Tex. R. Civ. P. 13. A pleading is groundless if it has “no basis in law or fact” and is “not warranted by good faith argument for the extension, modification, or reversal of existing law.” Id.

Courts must presume that a lawsuit has been filed in good faith, and a party moving for sanctions must overcome this presumption. Daves v. Daniels, 319 S.W.3d 938, 941 (Tex. App.—Austin 2010, pet. denied); Appleton v. Appleton, 76 S.W.3d 78, 86 (Tex. App.—Houston [14th Dist.] 2002, no pet.). In determining whether to award sanctions, a trial court must examine the facts and circumstances in existence at the time a pleading was filed to determine whether sanctions are proper. Appleton, 76 S.W.3d at 86.

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. Elkins v. Stotts-Brown, 103 S.W.3d 664, 669 (Tex. App.—Dallas 2003, no pet.). To “harass” means to annoy, alarm, and verbally abuse another person. Id.

SOURCE: Houston Court of Appeals - 01-10-00586-CV - 8/11/11

Civil Death Penalty Sanctions in Texas [striking of pleadings & dismissal for bad litigation conduct]

   
Texas is famous (or infamous, depending on viewpoint) for the use of the death penalty. But the term is also used in civil litigation -- to refer to sanctions that essentially terminate a lawsuit or -- as in the case from which the snippets below are taken -- strike a counterclaim. That's also why there is "death-penalty case law" from the Texas Supreme Court, even though that court does not hear appeals in criminal cases, much less capital cases.    

DEATH PENALTY SANCTIONS: When are they proper; when not?

Standard of Review on Appeal

A trial court’s sanctions order under Texas Rule of Civil Procedure 215.2(b) is reviewed for abuse of discretion. Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). The test for an abuse of discretion is not whether, in the opinion of the reviewing court, the facts present an appropriate case for the trial court’s action, but whether the court acted without reference to any guiding rules or legal principles. Cire, 134 S.W.3d at 838; K-Mart Corp. v. Honeycutt, 24 S.W.3d 357, 360 (Tex. 2000). The trial court’s discretion in imposing sanctions is limited by the standards set out in the applicable Rules of Civil Procedure and TransAmerican Natural Gas Corp. v. Powell, 811 S.W. 2d 913 (Tex. 1991).

Basis for imposition of discovery sanctions

Rule 215.2 of the Texas Rules of Civil Procedure authorizes a trial court to sanction a party for failure to comply with a discovery order or request. Tex.R.Civ.P. 215.2. A list of possible sanctions is found in Rule 215.2(b). Pertinent to this case, an order striking pleadings is one of the sanctions available to the court. Tex.R.Civ.P. 215.2(b)(5). The Texas Supreme Court defines “death penalty sanctions” as “sanctions that terminate a party’s right to present the merits of its claims.” State v. Bristol Hotel Asset Co., 65 S.W.3d 638, 647 (Tex. 2001). Such sanctions include striking a party’s pleadings, dismissing its action, or rendering a default judgment against a party for abusing the discovery process. Id. Death penalty sanctions must be reserved for circumstances in which a party has so abused the rules of procedure, despite imposition of lesser sanctions, that the party’s position can be presumed to lack merit and it would be unjust to permit the party to present the substance of that position before the court. TransAmerican, 811 S.W.2d at 918.

The proportionality criterion   

A trial court may not impose sanctions that are more severe than necessary to satisfy legitimate purposes. Cire, 134 S.W.3d at 839. Further, Rule 215.2(b) explicitly requires that any sanction under this rule be “just.” Tex.R.Civ.P. 215.2(b). The Supreme Court’s decision in TransAmerican set out a two-part test for determining whether a particular sanction is just. Spohn Hospital v. Mayer, 104 S.W.3d 878, 882 (Tex. 2003); TransAmerican, 811 S.W.2d at 917.

First, there must be a direct relationship between the offensive conduct and the sanction imposed. TransAmerican, 811 S.W.2d at 917. A just sanction must be directed against the abuse and toward remedying the prejudice caused to the innocent party, and the sanction should be visited upon the offender. Spohn Hospital, 104 S.W.3d at 882; TransAmerican, 811 S.W.2d at 917. The trial court should make some attempt to determine whether fault for discovery abuse lies with the party, its counsel, or both. Spohn Hospital, 104 S.W.3d at 882; TransAmerican, 811 S.W.2d at 917.

Second, just sanctions must not be excessive. Spohn Hospital, 104 S.W.3d at 882; TransAmerican, 811 S.W.2d at 917. In assessing the second standard, the sanction should be no more severe than necessary to satisfy its legitimate purposes, which include securing compliance with discovery rules, deterring other litigants from similar misconduct, and punishing violators. Spohn Hospital, 104 S.W.3d at 882; TransAmerican, 811 S.W.2d at 917. The court must consider less stringent sanctions and whether such lesser sanctions will fully promote compliance, deterrence, and discourage further abuse. Spohn Hospital, 104 S.W.3d at 882; TransAmerican, 811 S.W.2d at 917. Death penalty sanctions may be imposed in exceptional cases where they are clearly justified and it is apparent that no lesser sanctions would promote compliance with the rules. Spohn Hospital, 104 S.W.3d at 882.

Discovery sanctions that are so severe as to inhibit presentation of the merits of the case should be reserved to address a party’s flagrant bad faith or counsel’s callous disregard for the responsibilities of discovery under the rules. Spohn Hospital, 104 S.W.3d at 883.

SOURCE: El Paso Court of Appeals - 08-09-00239-CV - 7/29/11

CPRC Chapter 10 Sanctions: When can they be imposed?

Sanctions Under Chapter 10 of the Texas Civil Practice and Remedies Code Tex. Civ. Prac. & Rem. Code Ann. § 10.001. The trial court found that the petition was signed for an improper purpose and that its implicit assertion that the lawsuit was timely filed under the applicable statutes of limitations was frivolous because it was not warranted by existing law, had no basis in fact, or was unlikely to have any basis in fact. Although Rule 13 requires a party to have filed a groundless pleading brought in bad faith or a groundless pleading for harassment, sanctions under Chapter 10 can be awarded if the suit was filed for an improper purpose, even if the suit was not frivolous. Save Our Springs Alliance, Inc., 198 S.W.3d at 321. Compare Tex. R. Civ. P. 13 with Tex. Civ. Prac. & Rem. Code Ann. § 10.001. We construe the phrase “improper purpose” as the equivalent of “bad faith” under Rule 13. See Tex. R. Civ. P. 13; Save Our Springs Alliance, Inc., 198 S.W.3d at 321. For the reasons stated earlier in this opinion, there is no evidence of an improper purpose. Under Section 10.001, the signer of a pleading certifies that each claim and allegation is based on the signatory’s best knowledge, information, and belief, formed after reasonable inquiry. Low, 221 S.W.3d at 615. Each allegation and factual contention in a pleading must have, or be likely to have, evidentiary support after a reasonable investigation. Id. In Low, the Texas Supreme Court found sanctions were justified when the petition claimed physicians prescribed the drug Propulsid to White. White’s attorney was in possession of White’s medical records before he filed the lawsuit; those records did not indicate that the physicians prescribed or administered the drug to White. Id. at 616. Further, both physicians filed affidavits swearing that they did not in any way provide Propulsid to White. Id. at 617. The evidence, therefore, supported the trial court’s conclusion that the allegations against the physicians were without evidentiary support. Chapter 10 provides that: The signing of a pleading or motion as required by the Texas Rules of Civil Procedure constitutes a certificate by the signatory that to the signatory’s best knowledge, information, and belief, formed after reasonable inquiry: (1) the pleading or motion is not being presented for any improper purpose, including to harass or to cause unnecessary delay or needless increase in the cost of litigation; (2) each claim, defense, or other legal contention in the pleading or motion is warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; (3) 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; and (4) each denial in the pleading or motion of a factual contention is warranted on the evidence or, for a specifically identified denial, is reasonably based on a lack of information or belief. SOURCE: Texarkana Court of Appeals - 06-10-00080-CV - 4/1/11

Sanctions Claim under Rule 13 and CPRC

  
CLAIM FOR FRIVOLOUS SUIT SANCTIONS UNDER RULE 13 AND CPRC

SANCTIONS UNDER TRCP 13 

Rule 13 authorizes the imposition of sanctions against an attorney, a represented party, or both, who filed a pleading that is either: (1) groundless and brought in bad faith; or (2) groundless and brought to harass. Tex. R. Civ. P. 13; see also Rudisell v. Paquette, 89 S.W.3d 233, 236 (Tex. App.—Corpus Christi 2002, no pet.). 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. P. 13.

Sanctions may only be imposed for good cause under Rule 13, the particulars of which must be stated in the order. Tex. R. Civ. P. 13; Rudisell, 89 S.W.3d at 237. To impose sanctions under Rule 13 of the Texas Rules of Civil Procedure, the proponent of sanctions must establish that the suit was groundless and brought (1) in bad faith or (2) for purposes of harassment. Tex. R. Civ. P. 13.

A pleading is groundless when it has no basis in law or in fact. Tex. R. Civ. P. 13. The burden is on the party moving for sanctions to overcome the presumption that the pleading was filed in good faith. GTE Commc’ns Sys. Corp. v. Tanner, 856 S.W.2d 725, 731 (Tex. 1993). A groundless pleading is not sanctionable unless it is also brought in bad faith or for the purpose of harassment. Id. Bad faith does not exist when a party exercises bad judgment or negligence. Rather, bad faith means “the conscious doing of a wrong for dishonest, discriminatory, or malicious purposes.” Campos, 879 S.W.2d at 71; Mattly v. Spiegel, Inc., 19 S.W.3d 890, 896 (Tex. App.—Houston [14th Dist.] 2000, no pet.). In deciding whether a pleading was filed in bad faith or for the purpose of harassment, the trial court must measure a litigant’s conduct at the time the relevant pleading was signed. Texas-Ohio Gas, Inc. v. Mecom, 28 S.W.3d 129, 139 (Tex. App.—Texarkana 2000, no pet.). Rule 13 generally requires that the trial court hold an evidentiary hearing to make a determination about the motives and credibility of the person signing the petition. R.M. Dudley Constr. Co. v. Dawson, 258 S.W.3d 694 (Tex. App.—Waco 2008, pet. denied); see, e.g., Low, 221 S.W.3d at 613, 617 (referring to trial court’s evidentiary hearing on motion for Chapter 10 sanctions).

Rule 13 requires sanctions based on the acts or omissions of the represented party or counsel, and not merely on the legal merit of the pleading. Parker v. Walton, 233 S.W.3d 535, 539 (Tex. App.—Houston [14th Dist.] 2007, no pet.). This is true because improper motive is an essential element of bad faith. Elkins, 103 S.W.3d at 669; Alejandro v. Bell, 84 S.W.3d 383, 393 (Tex. App.––Corpus Christi 2002, no writ) (no evidence presented at sanctions hearing from which the trial court could determine lawsuit filed in bad faith).

SANCTIONS UNDER CHAPTER 10 OF THE CPRC 

Similarly, to award sanctions under Chapter 10, it must be shown that: (1) the pleading or motion was brought for an improper purpose; (2) there were no grounds for the legal arguments advanced; or (3) the factual allegations or denials lacked evidentiary support. See Tex. Civ. Prac. & Rem. Code Ann. § 10.001 (Vernon 2002); Low, 221 S.W.3d at 614; Armstrong v. Collin County Bail Bond Bd., 233 S.W.3d 57, 62 (Tex. App.—Dallas 2007, no pet.).

Chapter 10 specifies that one of the aims for imposition of sanctions for the filing of frivolous or groundless pleadings is to “deter repetition of the conduct or comparable conduct by others similarly situated.” Tex. Civ. Prac. & Rem. Code Ann. § 10.004(b) (Vernon 2002). We construe the phrase “improper purpose” as the equivalent of “bad faith” under Rule 13. See Tex. R. Civ. P. 13; cf. Save Our Springs Alliance, Inc. v. Lazy Nine Mun. Util. Dist. ex rel. Bd. of Directors, 198 S.W.3d 300, 321 (Tex. App.—Texarkana 2006, pet. denied) (“nonfrivolous” requirement is same as “good faith” requirement); Elwell v. Mayfield, No. 10-04-00322-CV, 2005 WL 1907126, at *5 (Tex. App.—Waco Aug. 10, 2005, pet. denied) (mem. op.) (same). An order imposing a sanction under Chapter 10 “shall describe . . . the conduct the court has determined violated Section 10.001 and explain the basis for the sanction imposed.” Tex. Civ. Prac. & Rem. Code Ann. § 10.005 (Vernon 2002).

In determining whether sanctions are appropriate, the trial court must examine the facts available to the litigant and the circumstances existing when the litigant filed the pleading. Robson v. Gilbreath, 267 S.W.3d 401, 405 (Tex. App.—Austin 2008, pet. denied); Alejandro v. Robstown Indep. Sch. Dist., 131 S.W.3d 663, 669 (Tex. App.—Corpus Christi 2004, no pet.). Courts should presume parties and their counsel file all papers in good faith, and the party seeking sanctions must overcome that presumption. See Tex. R. Civ. P. 13; GTE Commc’ns Sys. Corp. v. Tanner, 856 S.W.2d 725, 731 (Tex. 1993). The party seeking sanctions has the burden of showing its right to relief. Tanner, 856 S.W.2d at 731; Elkins v. Stotts-Brown, 103 S.W.3d 664, 668 (Tex. App.—Dallas 2003, no pet.).

SOURCE: Texarkana Court of Appeals - 06-10-00080-CV - 4/1/11

CPRC CHAPTER 10 SANCTIONS 

Chapter 10 provides that: The signing of a pleading or motion as required by the Texas Rules of Civil Procedure constitutes a certificate by the signatory that to the signatory’s best knowledge, information, and belief, formed after reasonable inquiry: (1) the pleading or motion is not being presented for any improper purpose, including to harass or to cause unnecessary delay or needless increase in the cost of litigation; (2) each claim, defense, or other legal contention in the pleading or motion is warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; (3) 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; and (4) each denial in the pleading or motion of a factual contention is warranted on the evidence or, for a specifically identified denial, is reasonably based on a lack of information or belief. 

SOURCE: Texarkana Court of Appeals - 06-10-00080-CV - 4/1/11