Opinion
No. C0-01-1423.
Filed April 2, 2002.
Appeal from the District Court, Hennepin County, File No. CT011176.
Albert Kallys, (pro se appellant)
John J. McDonald Jr. and Melissa Dosick Riethof, (for respondent TCF National Bank NA)
Mark W. Lee and Cynthia F. Gilbertson, (for respondent Airlines Reporting Corporation)
Considered and decided by Lansing, Presiding Judge, Randall, Judge, and Klaphake, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Albert Kallys sued TCF National Bank NA and a TCF employee for conduct relating to the issuance of an irrevocable standby letter of credit. The district court dismissed Kallys's claims after he failed to fully answer interrogatories, produce documents, appear for a deposition, and adhere to the discovery order issued to compel his compliance. We affirm the dismissal of the claims against the bank and its employee as a permissible exercise of the district court's discretionary power to supervise discovery. We also affirm the denial of Kallys's motion to remove the judge because the motion is factually unsupported.
FACTS
Airlines Reporting Corporation (ARC) is a nonprofit corporation that serves as a national clearinghouse for airline tickets. Markal Marketing Concepts, Inc., is a Minnesota corporation wholly owned by Albert Kallys, doing business as Markal Travel Associates, a travel agency. On September 19, 2000, ARC notified Markal that its current letter of credit would expire on November 19, 2000, and that Markal must provide a new letter of credit to maintain its accreditation. Six days later, Albert Kallys met with a representative of TCF to obtain a replacement letter of credit.
TCF issued a letter of credit, but it was initially rejected by ARC because it failed to comply with format requirements. On November 17, 2000, Kallys obtained an acceptable letter of credit from Wells Fargo. About the same time, ARC notified TCF that its letter of credit was accepted. In December, ARC notified Markal that checks written against its account had been dishonored, demanded payment for the amounts of the dishonored checks, and threatened to rescind Markal's accreditation unless payment was received. In January 2001, Kallys requested that ARC return or cancel the Wells Fargo letter of credit and also asked TCF to cancel its letter of credit. TCF informed Kallys that ARC must agree to the release. ARC terminated its agreement with Markal for nonpayment on January 19, 2001, and drew on the letter of credit issued by TCF for unpaid amounts of $2,057.73.
Kallys sued TCF on January 29, 2001, alleging breach of contract for failure to comply with ARC's format requirements and negligence for failure to timely execute the letter of credit. TCF counterclaimed against Kallys and brought a third-party complaint against Markal for the amount paid to ARC under the letter of credit. Markal served a fourth-party complaint on ARC, alleging breach of contract, promissory estoppel, equitable estoppel, quantum meruit, negligence, unjust enrichment, intentional interference with contract rights, and intentional infliction of emotional distress.
On February 26, 2001, Kallys served interrogatories, requests for production of documents, and requests for admissions. TCF responded in March, and in May served Kallys with interrogatories, requests for production, and notice of taking the deposition of Kallys on June 26, 2001 and a representative of Markal knowledgeable about the substance of the lawsuit on June 27, 2001. On the morning of Kallys's scheduled deposition, Kallys faxed a letter to counsel for TCF, dated the previous day, canceling both depositions. Kallys did not respond to TCF's discovery requests until after the 30-day response period had expired. In his response he objected to almost every interrogatory and request for production as irrelevant, overbroad, and burdensome, and refused to answer most of the interrogatories.
TCF moved the court for an order compelling complete and full responses to discovery, compelling Kallys and an authorized Markal representative to appear for depositions, and imposing $1000 in costs. Kallys moved to stay all discovery and requested a protective order preventing TCF from refusing to respond to Kallys's discovery requests, from asserting a confidential information privilege, and from inquiring into Kallys's personal, medical, and financial background. Kallys also asked the court to order that he not be required to appear for his noticed depositions until TCF complied with unspecified discovery requests. Finally, Kallys requested that his deposition be limited to one day and the number of interrogatories be limited to 50.
At the hearing on TCF's motion to compel, Kallys admitted that he had not provided any documents in response to TCF's requests for production. The district court issued an order compelling Kallys and Markal to comply with all discovery requests, to appear for depositions, and to pay $500 costs and attorneys' fees to TCF. The order stated that if Kallys or Markal failed to comply with any part of the order within the specified time, their claims would be dismissed with prejudice. The court also granted ARC's motion to dismiss Markal's fourth-party complaint against it for failure to be represented by an attorney in district court.
Following the hearing, Kallys filed an affidavit of prejudice with the chief judge of the Fourth Judicial District, requesting that the assigned district court judge be removed. The chief judge denied Kallys's motion.
After the time for compliance had passed, counsel for TCF filed an affidavit with the district court stating that Kallys had failed to pay the $500 costs and attorneys' fees. The district court entered judgment dismissing Kallys's complaint against TCF and its employee.
Kallys appealed the dismissal and the denial of his removal motion. He also appealed the dismissal of Markal's fourth-party claim against ARC. On November 20, 2001, this court granted ARC's special-term motion to dismiss, for lack of standing, that part of Kallys's appeal challenging the dismissal of Markal's fourth-party claim. The two remaining issues were submitted for resolution.
DECISION I
The district court has the responsibility to manage discovery and ensure fair and orderly procedures that promote judicial efficiency. Firoved v. General Motors Corp., 277 Minn. 278, 284, 152 N.W.2d 364, 369 (1967). To achieve these goals, the court may issue orders compelling discovery and imposing sanctions. Minn.R.Civ.P. 37.01-.02. Sanctions may include dismissal of all or part of a claim if a party willfully and persistently fails to comply with a discovery order without justification or excuse. Minn.R.Civ.P. 37.02(b)(3); Breza v. Schmitz, 311 Minn. 236, 237, 248 N.W.2d 921, 922 (1976). Although pro se litigants are given some leeway by the court system, all litigants, whether represented or pro se, are required to follow the rules of civil procedure. Davis v. Danielson, 558 N.W.2d 286, 287 (Minn.App. 1997), review denied (Minn. March 18, 1997).
In determining whether a district court has abused its discretion in imposing discovery sanctions, appellate courts have relied on the following factors: (1) whether the court set a specific date for discovery; (2) whether the court warned the party about the possible sanction; (3) whether the failure to cooperate with discovery was an isolated event or part of a pattern; and (4) whether the failure to comply was willful or without justification. See Breza, 311 Minn. at 237, 248 N.W.2d at 922 (willful or without justification); Beal v. Reinertson, 298 Minn. 542, 544, 215 N.W.2d 57, 58 (1974) (specific date for discovery); Sudheimer v. Sudheimer, 372 N.W.2d 792, 795 (Minn.App. 1985) (warning about possible sanctions); Williams v. Grand Lodge of Freemasonry AF AM, 355 N.W.2d 477, 480 (Minn.App. 1984) (isolated event or part of a pattern), review denied (Minn. Dec. 20, 1984).
Kallys does not dispute that he was specifically told the dates by which he was required to comply with the order compelling discovery and that failure to comply would result in dismissal. The order plainly states the dates and the consequences for failure to adhere to the order; indeed Kallys cites, as one of his objections to the district court's conduct, that the court expressly warned him that dismissal would result from failure to comply with the order.
Kallys does not specifically address whether his failure to cooperate was isolated or recurring or whether it was with or without justification. Instead, Kallys provides a list of objections to the court's rulings at the hearing on the motion to compel. Because these objections relate to justification and raise defenses to non-cooperation, we address Kallys's contentions that the district court erred in denying his request for a protective order, denying a stay of discovery, ordering him to appear for depositions, expediting its own scheduling orders, and ordering him to pay $500 in attorneys' fees and costs.
Kallys sought a protective order exempting him from having to answer interrogatories that asked questions as fundamental as his educational background, place of birth, list of witnesses, involvement in other litigation, and the nature of his damages. He requested exemption from providing medical authorizations, employment records, and tax records; and requested that discovery be stayed until after the scheduled summary judgment motion. Kallys's argument that the information sought was irrelevant, overbroad, vague, unduly burdensome, premature, and not reasonably calculated to lead to the discovery of admissible information has no basis. See Minn.R.Civ.P. 26.02(a) ("Parties may obtain discovery regarding any matter, not privileged, which is relevant" even though the information is not admissible at trial "if the information sought appears reasonably calculated to lead to the discovery of admissible evidence."); id., 26.03 (requiring party seeking protective order to show good cause). Because the connection between TCF's conduct and Kallys's alleged damages is not set forth in the pleadings, information on the nature and amount of damages is critical to presenting a reasoned defense. As part of his unsubstantiated damages claim, Kallys included medical and therapeutic expenses, but refused to provide medical information or authorizations. Kallys's argument that discovery should be stayed until after the scheduled summary judgment motions would prevent TCF from complying with the timeline for dispositive motions and subvert the essential purpose of discovery.
Kallys has provided no support for his argument that his deposition in his individual capacity and as a representative for Markal should be limited to one day. See Minn.R.Civ.P. 30.04 (permitting trial court to order time limit on an oral deposition). His stated reason for canceling the scheduled depositions was that he was scheduled one day and Markal on the following day, and he found this scheduling oppressive and confusing. The scheduling resulted from his two capacities, and Kallys has provided no particular reason that he would be unavailable. He told the judge that he unexpectedly had to provide care for his children on the morning of the first scheduled deposition, and thus he was unable to attend. But his notice of cancellation, dated the day before the deposition, made no reference to the need to provide childcare on either day.
Kallys's argument that the district court abused its discretion by deviating from its scheduling order is similarly without foundation. The court issued a structured and prospectively effective scheduling order, reasonably based on information supplied by the parties. To meet that schedule, the court held a hearing three days after TCF's motion to compel was hand-delivered to Kallys and two days after Kallys's motion for a protective order was served. Although hearings on non-dispositive motions are generally scheduled 14 days after the motion, a court may modify the time limits to fit the circumstances. Minn.R.Gen.Pract. 115.04-07. To take into account a planned absence later in the month, the court expedited the hearing to avoid unnecessary protraction of the proceedings. Kallys has demonstrated no prejudice resulting from this preparatory measure that assured timely and orderly management of the case.
Kallys argues that the district court erred by ordering him to pay attorneys' fees and costs. TCF's counsel requested $1000 in attorneys' fees and costs for bringing the motion to compel. The district court ordered Kallys to pay half that amount because he had failed to give reasonable notice or a cogent explanation for canceling his depositions and had provided no valid basis to object to the discovery requests. See Minnesota Council of Dog Clubs v. City of Minneapolis, 540 N.W.2d 903, 904 (Minn.App. 1995), review denied (Minn. Jan. 25, 1996) (noting that appellate court reviews award of attorneys' fees and costs under an abuse-of-discretion standard); Minn.R.Civ.P. 37.01(d)(1) (allowing court to require nonmoving party to pay moving party's expenses in bringing the motion).
Access to the courts should not be denied because of limited financial ability. Kallys contends that he is economically disadvantaged, but the record contains little information on his financial circumstances. The record does not demonstrate an absence of resources; TCF returned a $20,000 certificate of deposit to Kallys within four months of the order, and Kallys notified TCF that he was traveling outside the country from February until May 2001. The court could have imposed the more stringent sanction of striking claims, but offered Kallys the lesser penalty of $500 attorneys' fees and costs. To allow repeated noncompliance with discovery without some penalty provides inadequate protection to the adjudicative process.
In its order, the district court set a specific deadline for payment of the attorneys' fees and costs and warned Kallys that failure to pay by the specified date would result in dismissal with prejudice. Kallys stated at the hearing that he would not pay the fees, and he did not pay them. Kallys's refusal to pay is consistent with his failure to adequately respond to the interrogatories, his failure to appear for depositions, and his repeated actions to delay and prevent discovery. The record also indicates that Kallys subsequently failed to comply with the remainder of the discovery order even though the counterclaim and third-party complaint had not been dismissed or resolved.
Kallys has invested a considerable amount of time and energy in this multiple-party litigation. As the court observed, the file is sizable, and Kallys has drafted extensive documents involving complex claims. Because the discovery sanction results in a dismissal of Kallys's claims, we have carefully reviewed the entire record. We conclude that Kallys has persistently and without justification failed to provide information necessary for TCF and its employee to defend against his claims and has also failed to demonstrate that he has a valid claim or a triable issue. Although dismissal is undeniably a severe sanction, Kallys has not complied with his fundamental responsibilities as a litigant, and we affirm the district court's dismissal of his claims against TCF and its employee.
II
After the district court issued its discovery order, Kallys brought a motion to remove the judge from hearing the case. The chief judge denied the motion.
In an ongoing proceeding, a judge may not be removed except on an affirmative showing of prejudice. Minn.R.Civ.P. 63.03. Kallys alleges that the judge was biased and used intimidation, threats, and coercion in dismissing Kallys's and Markal's lawsuits. We have carefully reviewed the transcript, orders, and all other parts of the record. We find nothing in the record to support these allegations. Furthermore, the allegations rely primarily on the substance of the district court's rulings. Adverse rulings are not a basis for imputing bias to a judge. Olson v. Olson, 392 N.W.2d 338, 341 (Minn.App. 1986). The record reflects that the district court carefully balanced the need for pretrial discovery, the positions of the litigants, the court's responsibility to assure prompt and effective adjudicative procedures, and the reasonable allocation of judicial resources.