Opinion
NO. 01-16-00192-CV
03-27-2018
EAST AFRICAN DRILLING LTD. A/K/A EAST AFRICA DRILLING LTD., Appellant v. OEJP, LLC, Appellee ART FM SPC AND ASSURED RISK TRANSFER LLC, Appellants v. OEJP, LLC, Appellee
On Appeal from the 215th District Court Harris County, Texas
Trial Court Case No. 2015-58376
MEMORANDUM OPINION
Appellant, East African Drilling Ltd., also known as East Africa Drilling Ltd. ("East African Drilling"), challenges the trial court's judgment in favor of appellee, OEJP, LLC ("OEJP"), the assignee of several plaintiffs and intervenors in their suit against East African Drilling for breach of contract, fraud, negligent misrepresentation, quantum meruit/unjust enrichment, money had and received, and "[e]nforcement of [a] [c]onstitutional [l]ien," "[m]ineral [p]roperty [l]ien," and mechanic's lien. In three issues, East African Drilling contends that the trial court erred in imposing "death penalty" sanctions against it.
Although appellants, ART FM SPC and Assured Risk Transfer LLC ("Assured Risk Transfer"), also filed a notice of appeal in this case, they did not file an appellants' brief. In a letter to the Court, they explained that they "intend[ed] to appear . . . as amici curiae only, in support of" East African Drilling, and "d[id] not . . . intend to file a brief as a party." See TEX. R. APP. P. 11, 38.6(a), 38.8(a). They requested that this Court consider their amici curiae brief, submitted on November 30, 2016, "when considering the merits of th[is] appeal" and "dismiss their severable part of the appeal." See TEX. R. APP. P. 11, 42.1(a). Having considered ART FM SPC and Assured Risk Transfer's amici curiae brief and provided notice of our intention to dismiss their appeal, we now dismiss their direct appeal. See TEX. R. APP. P. 11, 38.8(a), 42.1(a); see also TEX. R. APP. P. 42.3(b); see generally Christus Health Gulf Coast v. Aetna, Inc., 237 S.W.3d 338, 341 n.7 (Tex. 2007) (considering amicus curiae brief); In re Hous. Progressive Radiology Assocs., PLLC, 474 S.W.3d 435, 442 n.4 (Tex. App.—Houston [1st Dist.] 2015, no pet.) (same).
OEJP, the assignee of Gary Holley, Mike Heidt, Jeremy Counahan, Carl (Eric) Dowden, Herb Cattee, Art Regehr, Alejandro Banda, Gary Campbell, Jason Crouch, Aaron Medina, Nick Medina (collectively, "plaintiffs"), Oklahoma Rig Fabricators, LLC ("Oklahoma Rig Fabricators"), and 66 Oilfield Services, LLC ("66 Oilfield Services") (collectively, "intervenors"), filed an unopposed motion to substitute itself as a party to this appeal in their stead. We previously granted OEJP's motion.
Plaintiffs and intervenors also sought a writ of sequestration, a writ of attachment, injunctive relief, and attorney's fees against East African Drilling.
We affirm.
Background
In their amended petition, plaintiffs alleged that they had entered into a contract with East African Drilling under which it "agreed to pay [them] wages for their work in the 'rig up' and modifications of an LCI 2000 HP Drilling Rig" (the "rig") owned by East African Drilling. However, East African Drilling did not make the required payments under the parties' contract, and plaintiffs brought suit against it for breach of contract, fraud, negligent misrepresentation, quantum meruit/unjust enrichment, money had and received, and "[e]nforcement of [a] [c]onstitutional [l]ien."
In its plea in intervention, 66 Oilfield Services alleged that East African Drilling had entered into a contract with Landrun Energy Services, LLC ("Landrun Energy") "to purchase certain equipment and goods to use on the 'rig up' and refurbishment of the [r]ig." East African Drilling then provided Landrun Energy with the "specific requirements and specifications" for the necessary equipment and goods along with a mandatory shipment date.
66 Oilfield Services is the assignee of Landrun Energy.
Once Landrun Energy procured the requested equipment and goods, East African Drilling then inspected and accepted them. It, however, refused to pay for the equipment and goods, and it "delay[ed] the[ir] shipment date." 66 Oilfield Services, as the assignee of Landrun Energy, brought suit against East African Drilling for breach of contract, money had and received, and "[e]nforcement of [a] [c]onstitutional [l]ien," "[m]ineral [p]roperty [l]ien," and mechanic's lien.
In its plea in intervention, Oklahoma Rig Fabricators alleged that as part of the "refurbishment" of the rig, East African Drilling had agreed to pay it $535,000 for "a specially assembled and manufactured mud pump." After Oklahoma Rig Fabricators purchased and assembled the necessary "goods and equipment" for the mud pump, East African Drilling "inspected" and "approved it." East African Drilling, however, did not pay Oklahoma Rig Fabricators the full amount due for the mud pump, and Oklahoma Rig Fabricators brought suit against it for breach of contract, money had and received, and "[e]nforcement of [a] [c]onstitutional [l]ien," "[m]ineral [p]roperty [l]ien," and mechanic's lien.
East African Drilling answered plaintiffs' petition and the pleas in intervention, generally denying the allegations, asserting certain affirmative defenses, and asserting that plaintiffs' and intervenors' breach-of-contract claims were meritless, their constitutional-lien claims were invalid, and it had not committed fraud, made any misrepresentations, been unjustly enriched, or held any money belonging to another party.
During the course of the litigation, plaintiffs and intervenors sought to depose Leo Budd ("Budd"), a purported "owner and director" of East African Drilling. On October 22, 2015, plaintiffs served East African Drilling with a notice of intention to take Budd's oral deposition, which East African Drilling moved to quash. Plaintiffs responded to East African Drilling's motion to quash, moving to compel Budd's oral deposition. On January 14, 2016, after a hearing, the trial court granted plaintiffs' motion to compel, ordering East African Drilling to "produce . . . Budd for deposition, in person, in Harris County, Texas, within seven days."
Following the trial court's January 14, 2016 order, East African Drilling agreed to produce Budd for his deposition on February 9, 2016 in Harris County. However, East African Drilling also filed a motion to reconsider the trial court's order compelling Budd's oral deposition, and it subsequently informed plaintiffs that it would not produce Budd in Harris County, as required by the trial court. Rather, it would make Budd available to be deposed on February 9, 2016 in Montgomery County, Texas.
On January 26, 2016, plaintiffs and intervenors filed their second motion for sanctions, requesting that the trial court assess death penalty sanctions against East African Drilling and asserting that it had intentionally not complied with a proper discovery request and the trial court's January 14, 2016 order. In their motion, plaintiffs and intervenors noted that the trial court had previously stricken East African Drilling's "verified denial of agency" and East African Drilling continued to neglect "its discovery obligations as well as the [trial] [c]ourt's [o]rder[, which] warrant[ed] additional sanctions."
Previously, on October 21, 2015, plaintiffs and intervenors filed their first motion for sanctions against East African Drilling, asserting that it had filed a "verified agency defense," which was groundless, "knowingly filed" without a "basis in law or fact," and made in bad faith for the purposes of harassment and delay. The trial court granted plaintiffs and intervenors' first motion for sanctions, struck East African Drilling's "verified denial of agency," and ordered it to pay associated costs and attorney's fees.
See TEX. R. CIV. P. 215.2(b) (allowing imposition of sanctions for failure to comply with order or discovery request).
East African Drilling initially filed a "[r]esponse in [o]pposition" to plaintiffs and intervenors' second motion for sanctions. However, before the hearing on the motion for sanctions, East African Drilling filed a motion to withdraw its response, styled: "Defendant East African Drilling['s] . . . Motion to Withdraw Previously Filed Motion to Reconsider/Modify and Response to Plaintiffs and Intervenor[s'] Second Motion for Additional Sanctions." In its filing, East African Drilling affirmatively withdrew both its "[r]esponse in [o]pposition" to plaintiffs and intervenors' request for sanctions and its previously filed motion to reconsider the trial court's January 14, 2016 order. It also informed the trial court that it would not be producing Budd for his oral deposition on February 9, 2016 or at any time.
At the hearing on the motion for sanctions, East African Drilling orally informed the trial court that it had withdrawn its "[r]esponse in [o]pposition" and its motion to reconsider the trial court's January 14, 2016 order. It also informed the trial court that it would not be producing Budd for his oral deposition. Further, East African Drilling did not oppose plaintiffs and intervenors' second motion for sanctions, made no argument against the motion at the hearing, and did not raise any objection to the imposition of death penalty sanctions against it.
The trial court granted plaintiffs and intervenors' second motion for sanctions and entered a final judgment. The trial court found:
[East African Drilling] intentionally violated the [trial] [c]ourt's January 14, 2016 [o]rder . . . requiring [it] to produce . . . Budd for deposition, in person, in Harris County, Texas no later than January 22, 2016. Specifically, [East African Drilling] and Budd refused to be available for deposition in Harris County, Texas by January 22, 2016. Rather, [East African Drilling] and Budd, after tendering a deposition date not in compliance with the [court's] [o]rder, filed [a] [m]otion to [r]econsider [the trial court's January 14, 2016 order] . . . for the purpose of delay and without conferencing with opposing [c]ounsel. The record demonstrates that [East African Drilling] has . . . filed papers with the [c]ourt admitting that Budd will not appear for deposition.The trial court further found that East African Drilling had "violat[ed]" its January 14, 2016 order and East African Drilling's violation of the order and its conduct had prejudiced plaintiffs and intervenors. The trial court further stated that it had,
considered [East African Drilling]'s conduct in th[e] case, including (i) [its] false verification of its affirmative defense of agency; (ii) [its] intentional refusal to produce Budd in violation of the [trial court's January 14, 2016] [o]rder; . . . (iii) [its] filing of the [m]otion to [r]econsider after violating the [o]rder; and (iv) [its] filing confirming that Budd w[ould] not appear for [his] deposition.And because "no other, lesser relief would fully promote compliance," East African Drilling's "conduct justifie[d] the presumption that its defenses lack[ed] merit."
Accordingly, the trial court ordered that East African Drilling's pleadings be "stricken in their entirety." And,
[h]aving stricken the pleadings of . . . East African Drilling . . . and considered the pleadings and papers on file, the sworn testimony and evidence from the Preliminary Injunction hearings . . . , and all other matters properly before it, the [trial] [c]ourt ENTER[ED] . . . Final Judgment against [East African Drilling] in favor of [p]laintiffs[] . . . and [intervenors].In doing so, the trial court granted "a constitutional lien against the [r]ig to secure the award[] under [its] Final Judgment" and ordered that plaintiffs recover $463,332.46 in damages plus attorney's fees on their breach-of-contract claim, 66 Oilfield Services recover $2,546,473.12 in damages plus attorney's fees on its breach-of-contract claim, and Oklahoma Rig Fabricators recover $435,000.00 in damages plus attorney's fees on its breach-of-contract claim.
Standard of Review
A "death penalty" sanction is any sanction that adjudicates a claim and precludes the presentation of the merits of the case. Braden v. Downey, 811 S.W.2d 922, 929 (Tex. 1991); Caron v. Smaby, No. 01-15-00528-CV, 2017 WL 2471101, at *8 (Tex. App.—Houston [1st Dist.] June 8, 2017, no pet.); Williams v. Akzo Nobel Chems., Inc., 999 S.W.2d 836, 843 (Tex. App.—Tyler 1999, no pet.). We review a trial court's decision to impose sanctions for an abuse of discretion. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007); Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner "without reference to guiding rules and principles." Garcia v. Martinez, 988 S.W.2d 219, 222 (Tex. 1999); see also Cire, 134 S.W.3d at 838-39. When reviewing matters committed to the trial court's discretion, we may not substitute our own judgment for that of the trial court. Bowie Mem'l Hosp. v. Wright, 79 S.W.3d 48, 52 (Tex. 2002). A trial court does not abuse its discretion merely because it decides a discretionary matter differently than an appellate court would in a similar circumstance. Gray v. CHCA Bayshore L.P., 189 S.W.3d 855, 858 (Tex. App.—Houston [1st Dist.] 2006, no pet.). If some evidence supports a trial court's decision to impose sanctions, we will not hold that it abused its discretion. Nath v. Tex. Children's Hosp., 446 S.W.3d 355, 361 (Tex. 2014). We review the entire record to determine whether the imposition of sanctions constitutes an abuse of discretion. Caron, 2017 WL 2471101, at *8; Tex. Integrated Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 384 (Tex. App.—Dallas 2009, pet. denied).
Sanctions
In its first, second, and third issues, East African Drilling argues that the trial court erred in imposing death penalty sanctions against it because "[d]eath [p]enalty [s]anction[s] [are] an [e]xtraordinary [m]easure"; it "did not engage in sanctionable misconduct"; it "attempted in good faith to arrange for . . . Budd's deposition"; "[t]here [was] no direct relationship between [the] purportedly offensive conduct and [the] sanctions" assessed; the trial court imposed death penalty sanctions "without evaluating whether it was punishing the appropriate offender"; the sanctions imposed were "excessive" and "offended constitutional due process"; "[l]esser [s]anctions [w]ere [a]vailable"; "[t]he [t]rial [c]ourt [h]ad [n]o [a]uthority to [c]ompel . . . Budd to [a]ppear for [a] [d]eposition in Harris County" or to require that his oral deposition occur within seven days of the trial court's order; the trial court's January 14, 2016 order "[o]ffended [i]nternational [c]omity" and "[s]kirted [p]rocedural [r]ules" by requiring East African Drilling to produce a foreign witness that "it did not control"; the trial court improperly "based its sanctions order in part on East African Drilling's filing of [its] motion to reconsider the order compelling . . . Budd's . . . deposition"; the trial court "wrongly cited [East African Drilling's] agency defense as misconduct in its death penalty sanctions order"; and the trial court's awards of attorney's fees, as part of its sanctions order, were "[u]njustified." In response, OEJP argues that East African Drilling did not preserve its complaints for appellate review because it did not raise them in the trial court.
In order to preserve a complaint for appellate review, the complaining party must make a timely and sufficiently specific objection in the trial court, which must then rule on the objection. See TEX. R. APP. P. 33.1(a); Grace Interest, LLC v. Wallis State Bank, 431 S.W.3d 110, 122 (Tex. App.—Houston [14th Dist.] 2013, pet. denied); see also Pirtle v. Gregory, 629 S.W.2d 919, 920 (Tex. 1982) ("The reason for the requirement that a litigant preserve a trial predicate for complaint on appeal is that one should not be permitted to waive, consent to, or neglect to complain about an error at trial and then surprise his opponent on appeal by stating his complaint for the first time.").
Where a party fails to complain about a sanction imposed against it and it affirmatively represents to the trial court orally and in writing that it is withdrawing its opposition to a request for sanctions, that party waives any complaint about the trial court's action. See TEX. R. APP. P. 33.1(a); Wilner v. Quijano, No. 01-11-00322-CV, 2012 WL 5311147, at *3-4 (Tex. App.—Houston [1st Dist.] Oct. 25, 2012, no pet.) (mem. op.) ("Because [party] did not complain to the trial court about its sua sponte decision to impose sanctions upon him, the trial court had no opportunity to correct the alleged error when it was in a position to do so[,] . . . [and party] failed to preserve his complaint for appellate review." (internal citations omitted)); Valdez v. Valdez, 930 S.W.2d 725, 728 (Tex. App.—Houston [1st Dist.] 1996, no writ) (complaint not preserved where party did not respond to sanctions assessed against him by trial court and raised issue for first time on appeal); see also Howell v. Tex. Workers' Comp. Comm'n, 143 S.W.3d 416, 450 (Tex. App.—Austin 2004, pet. denied); Sterling v. Alexander, 99 S.W.3d 793, 797 (Tex. App.—Houston [14th Dist.] 2003, pet. denied); Werley v. Cannon, 344 S.W.3d 527, 535 (Tex. App.—El Paso 2011, no pet).
East African Drilling argues that it preserved its complaints about the imposition of death penalty sanctions against it because it filed a "[r]esponse in [o]pposition" to plaintiffs and intervenors' second motion for sanctions, "the trial court [noted that it] expressly considered [the response in opposition] in its order granting death penalty sanctions," and its withdrawal of its "[r]esponse in [o]pposition" was not "effectuated."
Prior to the trial court's hearing and ruling on plaintiffs and intervenors' second motion for sanctions, East African Drilling withdrew its "[r]esponse in [o]pposition" to the sanctions motion and informed the trial court that it would not be producing Budd for his oral deposition on February 9, 2016 or at any time. See In re P.M.G., 405 S.W.3d 406, 414 (Tex. App.—Texarkana 2013, no pet.) (withdrawal of motion constitutes withdrawal of challenge to alleged error); Double Diamond, Inc. v. Saturn, 339 S.W.3d 337, 349 (Tex. App.—Dallas 2011, pet. denied) (complaining party did not preserve complaint for appellate review where it withdrew request for trial court to consider); Austin v. Weems, 337 S.W.3d 415, 425 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (party does not preserve error where it withdraws its objections); Sinegaure v. Bally Total Fitness Corp., No. 01-05-01070-CV, 2008 WL 5263235, at *6 (Tex. App.—Houston [1st Dist.] Dec. 18, 2008, no pet.) (mem. op.) ("The failure to maintain an objection waives any appellate challenge as to matters raised by the objection."); Chapman v. S. Hosps., Inc., 624 S.W.2d 320, 322 (Tex. App.—Tyler 1981, no writ) (complaint not preserved where complaining party initially objected, but later withdrew his objection); see also Kelly v. Cunningham, 848 S.W.2d 370, 371 (Tex. App.—Houston [1st Dist.] 1993, no pet.) ("A party [may not] lead a trial court into error and then complain about it on appeal.").
East African Drilling also withdrew its motion to reconsider the trial court's January 14, 2016 order that it "produce . . . Budd for deposition, in person, in Harris County, Texas, within seven days."
At the hearing on plaintiffs and intervenors' second motion for sanctions, East African Drilling also orally informed the trial court that it had withdrawn its "[r]esponse in [o]pposition" to the sanctions motion and it would not be producing Budd for his oral deposition. See In re P.M.G., 405 S.W.3d at 414; Double Diamond, 339 S.W.3d at 349; Austin, 337 S.W.3d at 425; Sinegaure, 2008 WL 5263235, at *6; Chapman, 624 S.W.2d at 322; see also Kelly, 848 S.W.2d at 371. And East African Drilling expressed no opposition to plaintiffs and intervenors' second motion for sanctions, did not present any argument against the motion at the hearing, and did not raise any objection to the imposition of death penalty sanctions against it. See TEX. R. APP. P. 33.1(a); Grace Interest, 431 S.W.3d at 122; see also Bay Area Healthcare Grp., Ltd. v. McShane, 239 S.W.3d 231, 235 (Tex. 2007) ("Error is waived if the complaining party allows the evidence to be introduced without objection."); Bonacci v. Bonacci, 420 S.W.3d 294, 299-300 (Tex. App.—El Paso, 2013, pet. denied) (where complaining party "never filed an objection with the trial court . . . and never pressed the trial court to rule on any objection," he did not preserve complaint for appellate review); see also Kelly, 848 S.W.2d at 371.
Although East African Drilling asserts that the trial court "expressly considered" its "[r]esponse in [o]pposition" when imposing death penalty sanctions against it, the trial court's order merely states that it "considered" plaintiffs and intervenors' second motion for sanctions and "responsive pleadings" "if any." Simply put, a plain reading of the trial court's order does not reflect that it considered East African Drilling's "[r]esponse in [o]pposition" when imposing sanctions against it.
Notably, the trial court did not need to approve East African Drilling's withdrawal of its "[r]esponse in [o]pposition" for the withdrawal to become effective. See Rogers v. Clinton, 794 S.W.2d 9, 11 (Tex. 1990) (party's right to withdraw motion exists at any time before it is heard; party "must have the right to control his own defense"); In re Dilley Indep. Sch. Dist., 23 S.W.3d 189, 191 (Tex. App.—San Antonio 2000) ("[W]ithdrawal of a motion . . . does not have to be approved or granted by the trial court; the withdrawal is effective immediately."), abrogated in part by In re Schmitz, 285 S.W.3d 451 (Tex. 2009). Instead, the withdrawal of East African Drilling's "[r]esponse in [o]pposition," which occurred prior to the trial court's ruling on plaintiffs and intervenors' second motion for sanctions, was effective immediately. See Rogers, 794 S.W.2d at 11; In re Dilley Indep. Sch. Dist., 23 S.W.3d at 191; see also Galbraith v. Williams Cos., No. 01-15-01084-CV, 2017 WL 2872306, at *7 (Tex. App.—Houston [1st Dist.] July 6, 2017, pet. denied) (mem. op.) (party's withdrawal of motion effective immediately, causing trial court to immediately lose its plenary power).
In sum, East African Drilling withdrew its "[r]esponse in [o]pposition" to plaintiffs and intervenors' second motion for sanctions, and, thus, it did not complain in the trial court about the death penalty sanctions imposed against it. Accordingly, we hold that East African Drilling has not preserved for appellate review its complaints about the trial court's imposition of sanctions. See TEX. R. APP. P. 33.1(a); Wilner, 2012 WL 5311147, at *3-4; Valdez, 930 S.W.2d at 728; see also Howell, 143 S.W.3d at 450; Sterling, 99 S.W.3d at 797; Werley, 344 S.W.3d at 535.
East African Drilling does not assert, and the record does not reflect, that it ever asked the trial court to reconsider the imposition of death penalty sanctions against it. See Wilner v. Quijano, No. 01-11-00322-CV, 2012 WL 5311147, at *3-4 (Tex. App.—Houston [1st Dist.] Oct. 25, 2012, no pet.) (mem. op.) ("W]hen a[] [party] fails to complain of the sanction imposed [or] fails to ask the trial court to reconsider its actions in imposing the sanction, [that party] waives any complaint about the trial court's actions."); Howell v. Tex. Workers' Comp. Comm'n, 143 S.W.3d 416, 450 (Tex. App.—Austin 2004, pet. denied); Sterling v. Alexander, 99 S.W.3d 793, 797 (Tex. App.—Houston [14th Dist.] 2003, pet. denied).
Conclusion
We affirm the judgment of the trial court. We dismiss ART FM SPC and Assured Risk Transfer's direct appeal.
Terry Jennings
Justice Panel consists of Justices Jennings, Bland, and Brown.