Opinion
04-23-00847-CV
02-14-2024
IN RE BCL ST. ANTHONY JV, LP, BCL St. Anthony JV GP, LP, BCL St. Anthony JV GP II, LLC, BCL St.Anthony MT, LP, BCL St. Anthony MT GP, LLC, BCL St. Anthony ML, LP, BCL St. Anthony ML GP, LLC, BC Lynd Hospitality, LLC, Navarro Restaurant Partners, LLC,Brandon Raney, and Clyde Johnson
This proceeding arises out of Cause No. 2021-CI-24345, styled Andrew Goodman v. BC Lynd Hospitality, LLC, BCL St. Anthony JV, L.P., BCL St. Anthony JV GP, L.P., BCL St. Anthony JV GP II, LLC, BCL St. Anthony ML, L.P., BCL St. Anthony ML GP, LLC, BCL St. Anthony MT, L.P., BCL St. Anthony MT GP, LLC, Navarro Restaurant Partners, LLC, and Brandon Raney and Clyde Johnson, Individually, pending in the 131st Judicial District Court, Bexar County, Texas, the Honorable Norma Gonzales presiding.
Sitting: Irene Rios, Justice Beth Watkins, Justice Lori I. Valenzuela, Justice
MEMORANDUM OPINION
Beth Watkins, Justice
PETITION FOR WRIT OF MANDAMUS CONDITIONALLY GRANTED IN PART AND DENIED IN PART
Relators BCL St. Anthony JV, LP, BCL St. Anthony JV GP, LP, BCL St. Anthony JV GP II, LLC, BCL St. Anthony MT, LP, BCL St. Anthony MT GP, LLC, BCL St. Anthony ML, LP, BCL St. Anthony ML GP, LLC, BC Lynd Hospitality, LLC, Navarro Restaurant Partners, LLC, Brandon Raney, and Clyde Johnson filed a petition for writ of mandamus challenging the trial court's September 1, 2023 order compelling them to produce documents responsive to discovery requests made by real party in interest Andrew Goodman. For the following reasons, we conditionally grant the petition for writ of mandamus as to the portions of the trial court's order that compel Relators to produce emails and text messages responsive to Goodman's Requests for Production 119, 120, 123, and 125. We deny the remainder of the petition. We also lift our September 26, 2023 stay of the trial court's September 1, 2023 Order on Special Master Recommendations.
Background
Relator Navarro Restaurant Partners, LLC was formed to operate a restaurant called Rebelle and a bar called Haunt in the St. Anthony Hotel. Goodman, who owns 10% of Navarro, and relator BCL St. Anthony JV, LP (BCL JV), which owns 90% of Navarro and is its sole manager, entered into a Company Agreement to govern Navarro's affairs. For the first five years of their existence, Goodman managed the day-to-day operations of Rebelle and Haunt pursuant to a written employment agreement with Navarro.
BCL JV is owned and controlled by relators BCL St. Anthony JV GP, LP; BCL St. Anthony JV GP II, LLC; Raney; and Johnson. Goodman refers to these entities and individuals as "the Controlling Entities" and "the Controlling Managers." The St. Anthony Hotel is owned and operated by relators BCL St. Anthony MT, LP (who the parties refer to as the Master Tenant); BCL St. Anthony MT GP, LLC; BCL St. Anthony ML, LP (who the parties refer to as the Master Landlord); and BCL St. Anthony ML GP, LLC. Goodman refers to these entities as "the Hotel Entities." In addition to owning 90% of Navarro, BCL JV is "[t]he major partner of" the Master Landlord. Raney and Johnson are partial owners of the Master Landlord and the Master Tenant and are involved in their day-to-day management. Raney is also a partial owner of and is primarily responsible for the management of relator BC Lynd Hospitality, LLC, which is the accounting group and bookkeeper for all the entities involved in this dispute.
While Rebelle and Haunt are physically located in the St. Anthony Hotel, they are not part of the hotel; Navarro, the Controlling Entities, and the Hotel Entities are separate legal entities with their own bank accounts. However, until 2021, when a customer at Rebelle or Haunt paid her bill with a credit card, the funds from that transaction were deposited into the Master Tenant's bank account. Relators assert that this arrangement was required by Starwood Hotels, the brand with which the St. Anthony Hotel was affiliated at that time. Relators also contend that all funds owed to Navarro-minus a 3% credit card processing fee-were eventually transferred from the Master Tenant's bank account to Navarro's. Goodman disagrees. He alleges that Relators improperly used money owed to Navarro for the benefit of other entities, including the Hotel Entities.
Goodman's live petition alleges Relators were engaged in a joint enterprise and were each other's alter egos. We express no view on the merits of these allegations.
In 2021, Goodman sued Navarro, the Controlling Entities, and the Controlling Managers for several tort and contract-based causes of action. Goodman later added the Hotel Entities and BC Lynd as defendants. Extensive discovery disputes ensued, and the trial court appointed a special master, which held several hearings on Goodman's motions to compel discovery and Relators' objections to that discovery. For the purpose of this mandamus proceeding, the relevant motions to compel and objections revolve around three categories of information: text messages, emails, and the Master Tenant's bank statements.
On June 14, 2023, the special master signed a written ruling recommending that the trial court grant Goodman's motions to compel "as to all bank statements requested by [Goodman]" and "all emails requested by [Goodman]." With regard to Goodman's email requests, the special master's ruling recited that Relators had "agreed to supplement within two weeks and would conduct a further review of Goodman[']s email strings."
On August 4, 2023, the special master signed a second written ruling. The August 4 ruling recommended that the trial court overrule the following objections Relators had asserted to Goodman's discovery requests:
• Request for Production No. 3: Produce all documents showing or discussing deposits into or withdrawals from all bank accounts that have received or otherwise held revenues earned by Navarro since its inception.
• Request for Production No. 4: Produce all statements for bank accounts ending in 5358 that have received or otherwise held revenues earned by Navarro since its inception.
• Request for Production No. 5: Produce all item image statements for bank accounts ending in 5358 that have received or otherwise held revenues earned by Navarro since its inception.
• Request for Production No. 6: Produce all documents showing or discussing deposits into or withdrawals from bank accounts ending in 5358 that have received or otherwise held revenues earned by Navarro since its inception.
• Request for Production No. 7: Produce all bank statements for accounts ending in 5323 that have received or otherwise held revenues earned by Navarro since its inception.
• Request for Production No. 8: Produce all item image statements for accounts ending in 5323 that have received or otherwise held revenues earned by Navarro since its inception.
• Request for Production No. 9: Produce all documents showing or discussing deposits into or withdrawals from all bank accounts ending in 5323 that have received or otherwise held revenues earned by Navarro since its inception.
• Request for Production No. 119: Produce all text messages between Brandon Raney and the managers and/or employees of Navarro.
• Request for Production No. 120: Produce all text messages between Brandon Raney and the managers and Clyde Johnson related to Navarro and/or the operations of Navarro.
The special master again recommended that the trial court grant Goodman's motions to compel "as to all bank statements requested by [Goodman]" and "all emails requested by [Goodman]." Like the June 14 ruling, the August 4 ruling noted that Relators had "agreed to supplement within two weeks and would conduct a further review of Goodman's email strings."
On September 1, 2023, the trial court signed an order confirming the special master's recommendations. The trial court overruled Relators' objections to Goodman's Requests for Production 3, 4, 5, 6, 7, 8, 9, 119, and 120; ordered the Master Tenant "to produce all bank statements belonging to [the Master Tenant] (including imaged items) referenced in the bank statements of [Navarro] (e.g. accounts ending in 5358 and 5323)"; and ordered all Relators to "complete a diligent search for all responsive emails and supplement their production to [Goodman] within two weeks from the date of this Order." On September 18, 2023, Relators filed this original proceeding.
In addition to filing their petition for writ of mandamus in this court, Relators also filed a motion for temporary relief requesting that we stay the special master's recommendations. We granted that relief and invited a response to the mandamus petition from Goodman and the Respondent. Goodman filed a response and, after Relators filed a reply, Goodman filed a sur-reply. Relators also filed part of the mandamus record under seal for this court's in camera review.
Analysis
Standard of Review and Applicable Law
Mandamus is an extraordinary remedy that will issue only to correct a clear abuse of discretion when the relator has no adequate remedy by appeal. In re Sw. Bell Tel. Co., L.P., 235 S.W.3d 619, 623 (Tex. 2007) (orig. proceeding). A trial court abuses its discretion if its ruling "is so arbitrary and unreasonable as to amount to a clear and prejudicial error of law." In re K&L Auto Crushers, LLC, 627 S.W.3d 239, 247 (Tex. 2021) (orig. proceeding) (internal quotation marks omitted). To be entitled to mandamus relief, the relator must establish that the trial court could have only reasonably reached one conclusion. Id.; In re Progressive Cnty. Mut. Ins. Co., 622 S.W.3d 91, 93 (Tex. App.-San Antonio 2020, orig. proceeding).
In determining whether a relator has an adequate remedy by appeal, we balance the benefits of mandamus review against the detriments. In re Essex Ins. Co., 450 S.W.3d 524, 528 (Tex. 2014) (orig. proceeding) (per curiam). A relator has no adequate remedy by appeal when the denial of mandamus relief would result in an "irreversible waste of judicial and public resources[.]" In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136-37 (Tex. 2004) (quoting In re Masonite Corp., 997 S.W.2d 194, 198 (Tex. 1999) (orig. proceeding)). "If an appellate court cannot remedy a trial court's discovery error, then an adequate appellate remedy does not exist." In re Dana Corp., 138 S.W.3d 298, 301 (Tex. 2004) (orig. proceeding) (per curiam).
A trial court has broad discretion in making discovery rulings. In re K&L Auto Crushers, 627 S.W.3d at 247; In re Nat'l Lloyds Ins. Co., 449 S.W.3d 486, 488 (Tex. 2014) (orig. proceeding) (per curiam); see also Tex. R. Civ. P. 192.3, 192.4, 192.6. Generally, a party may obtain discovery on "any unprivileged information that is relevant to the subject of the action, even if it would be inadmissible at trial, as long as the information sought is 'reasonably calculated to lead to the discovery of admissible evidence.'" In re CSX Corp., 124 S.W.3d 149, 152 (Tex. 2003) (orig. proceeding) (per curiam) (quoting Tex.R.Civ.P. 192.3(a)); see also Tex. R. Evid. 401 ("Evidence is relevant if: (a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action."). A trial court may limit discovery if it determines: "(a) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; or (b) the burden or expense of the proposed discovery outweighs its likely benefit" in light of factors such as "the needs of the case, the amount in controversy . . . and the importance of the proposed discovery in resolving the issues." Tex.R.Civ.P. 192.4.
"A discovery order that compels production beyond the rules of procedure is an abuse of discretion for which mandamus is the proper remedy." In re C&J Energy Servs., Inc., No. 13-20-00503-CV, 2021 WL 1748090, at *4 (Tex. App.-Corpus Christi-Edinburg May 4, 2021, orig. proceeding) (mem. op.). "The party resisting discovery has the burden of establishing an abuse of discretion and an inadequate appellate remedy." In re Sun Coast Res., Inc., 562 S.W.3d 138, 146 (Tex. App.-Houston [14th Dist.] 2019, orig. proceeding).
Application
Relators argue the trial court abused its discretion by accepting the special master's recommendations regarding Goodman's requests for text messages, emails, and the Master Tenant's bank statements because those recommendations were wrong as a matter of law.
Text Messages
It is well-established that "only relevant evidence is discoverable[.]" In re Nat'l Lloyds Ins. Co., 532 S.W.3d 794, 808 (Tex. 2017) (orig. proceeding). If a discovery request is overbroad, it seeks irrelevant-and thus undiscoverable-information. See In re UPS Ground Freight, Inc., 646 S.W.3d 828, 832 (Tex. 2022) (orig. proceeding) (per curiam). A discovery request is overbroad if it is not reasonably "tailored with regard to time, place, or subject matter[.]" In re Nat'l Lloyds Ins. Co., 507 S.W.3d 219, 226 (Tex. 2016) (orig. proceeding) (per curiam); In re Xeller, 6 S.W.3d 618, 626 (Tex. App.-Houston [14th Dist.] 1999, orig. proceeding).
Here, Goodman's Request for Production 119 asked Relators to "[p]roduce all text messages between Brandon Raney and/or employees of Navarro." Because this request was not limited by time, place, or subject matter, it was overbroad. See In re Nat'l Lloyds Ins. Co., 507 S.W.3d at 226; In re United Fire Lloyds, 578 S.W.3d 572, 580 (Tex. App.-Tyler 2019, orig. proceeding). Accordingly, the trial court abused its discretion by overruling Relators' objection to Request for Production 119 and by compelling them to produce text messages responsive to that request. See In re Nat'l Lloyds Ins. Co., 507 S.W.3d at 226; In re Xeller, 6 S.W.3d at 626-27.
Goodman's Request for Production 120 asked Relators to "[p]roduce all text messages between Brandon Raney and the managers and Clyde Johnson relating to Navarro and/or the operations of Navarro." While this request was nominally limited by subject matter-"Navarro and/or the operations of Navarro"-Relators pointed out below that it would require them to produce text messages that were irrelevant to Goodman's claims, such as those involving restaurant reservations or employee scheduling. See In re Allstate Cnty. Mut. Ins. Co., 227 S.W.3d 667, 668-69 (Tex. 2007) (orig. proceeding) (per curiam) (granting mandamus relief where requested discovery "ha[d] no relation or relevance to the scope of the parties' dispute"). Because this request "could have been more narrowly tailored to avoid including tenuous information and still obtain the necessary, pertinent information," it was overbroad. In re CSX Corp., 124 S.W.3d at 153. The trial court therefore abused its discretion by overruling Relators' objection to Request for Production 120 and by compelling them to produce text messages responsive to that request. See id.
To be entitled to mandamus relief on Requests for Production 119 and 120, Relators must also establish that they have no adequate remedy by appeal. See, e.g., In re Deere & Co., 299 S.W.3d 819, 820 (Tex. 2009) (orig. proceeding) (per curiam). The Texas Supreme Court has held that a party lacks an adequate appellate remedy where the requested discovery "lack[s] reasonable limitations as to time and subject matter." In re CSX Corp., 124 S.W.3d at 153. Because Requests for Production 119 and 120 were not reasonably limited as to subject matter, Relators lack an adequate remedy on appeal. See id.
For these reasons, we conditionally grant Relators' petition for writ of mandamus as to the portions of the trial court's order that: (1) overruled Relators' objections to Requests for Production 119 and 120; and (2) compelled them to produce text messages responsive to those requests.
Emails
We construe Relators' petition as asserting two challenges to the trial court's ruling regarding Goodman's requests for emails. Relators first argue the trial court abused its discretion by compelling them to "conduct and complete a diligent search for all responsive emails and supplement their production to [Goodman]." They also argue that to the extent this ruling overruled their objections to Goodman's Requests for Production 110, 123, and 125, it was a further abuse of discretion. We will consider Relators' challenge to the implicit ruling on Requests for Production 110, 123, and 125 first.
Relators' petition contends they "objected to a number of other requests for email communications on the grounds that the requested items are patently irrelevant or duplicative." However, the only objections specifically identified in the petition are those Relators asserted to Requests for Production 110, 123, and 125. Because Relators bear the burden to show they are entitled to mandamus relief, we consider only Relators' objections to Requests for Production 110, 123, and 125. See Walker v. Packer, 827 S.W.2d 833, 837 (Tex. 1992); In re Z.L.T., 124 S.W.3d 163, 166 (Tex. 2003).
A. Relators' objections to specific requests for production
1. Requests for Production 123 and 125
Requests for Production 123 and 125 asked Relators to "[p]roduce all documents showing correspondence between the Owners/Managers and Stefan Bowers admonishing him for posting profane and/or inappropriate images on the internet" and to "[p]roduce all documents showing correspondence between the Owners/Managers and Stefan Bowers showing or discussing work related injuries to the staff of Navarro." Relators contend that to the extent the trial court overruled these objections by ordering them to search for and produce additional responsive emails, it abused its discretion.
"[A] discovery request must show a reasonable expectation of obtaining information that will aid the dispute's resolution[.]" In re Mason, No. 12-23-00138-CV, 2023 WL 4680849, at *3 (Tex. App.-Tyler July 21, 2023, orig. proceeding) (mem. op.). As Relators noted both below and in their mandamus petition, Stefan Bowers is not a party to this lawsuit, and none of the claims in Goodman's live petition are related to workplace injuries or "profane and/or inappropriate images" posted to the internet. As a result, we see nothing in the record to support a conclusion that emails touching on those issues are potentially relevant to the subject matter of this case. See id.; see also In re Sun Coast Res., Inc., 562 S.W.3d at 146; Tex. R. Evid. 401. Because "discovery requests must be reasonably tailored to include only matters relevant to the case," the trial court abused its discretion by compelling Relators to produce emails that are responsive to Requests for Production 123 and 125. See In re Alford Chevrolet-Geo, 997 S.W.2d 173, 180 (Tex. 1999) (orig. proceeding). Additionally, because an order requiring production of "patently irrelevant" documents "imposes a burden on the producing party far out of proportion to any benefit that may obtain to the requesting party," Relators lack an adequate appellate remedy. In re CSX Corp., 124 S.W.3d at 153 (internal quotation marks omitted).
2. Request for Production 110
Request for Production 110 asked Relators to "[p]roduce all documents showing your correspondence with Chip Young regarding the profitability and/or occupancy of the St. Anthony Hotel." Relators objected that this request was "overbroad" and "not reasonably tailored to lead to the discovery only of relevant information" because Goodman has no ownership interest in the hotel and his claims do not implicate its profitability. Goodman responded that the hotel's profitability, or lack thereof, is relevant to several of his claims.
"Courts measure the scope of discovery by the live pleadings regarding the pending claims." In re Methodist Primary Care Grp., No. 14-17-00299-CV, 2017 WL 3480292, at *2 (Tex. App.-Houston [14th Dist.] Aug. 14, 2017, orig. proceeding) (per curiam). In his live petition, Goodman alleged that "the Hotel Entities were not profitable and had exhausted their available cash" and "the Controlling Entities and/or Controlling Managers used Navarro's deposits to fund the Hotel Entities' operations." Goodman further alleged that the Controlling Entities and Controlling Managers breached a fiduciary duty to him by, inter alia, using Navarro's assets for the benefit of other defendants, including the Hotel Entities; placing the Hotel Entities' economic interest over Goodman's; and engaging in self-dealing for the benefit of the Hotel Entities. Because Goodman alleged that Relators used Navarro's money to fund the Hotel Entities' operations, the trial court did not abuse its broad discretion by concluding that information about the hotel's profitability and occupancy "appear[ed] reasonably calculated to lead to the discovery of admissible evidence" relevant to these allegations. See Tex. R. Civ. P. 192.3(a); Tex. R. Evid. 104; In re Nat'l Lloyds Ins. Co., 532 S.W.3d at 808.
Relators also objected to Request for Production 110 on the basis that it was unduly burdensome. Tex.R.Civ.P. 192.4(b). However, they did not present any evidence to "prove the work necessary to comply with discovery." In re United Fire Lloyds, 578 S.W.3d at 580-81. Accordingly, they did not establish their right to mandamus relief on this issue. See In re Alford Chevrolet-Geo, 997 S.W.2d at 181; In re Allstate Fire & Cas. Ins. Co., 617 S.W.3d 635, 646 (Tex. App.-Houston [14th Dist.] 2021, orig. proceeding) (denying mandamus relief where relator "did not develop a record" establishing that discovery was unduly burdensome).
For these reasons, Relators have not established that the trial court committed a clear abuse of discretion by overruling their objection to Request for Production 110. We therefore deny Relators' petition as to that request.
B. Relators' general obligation to search for additional responsive emails
Relators also argue the trial court abused its discretion by generally ordering them to search for additional responsive emails and produce any such emails. As support for this argument, they contend that Goodman's trial court filings "never identified any allegedly 'missing emails'" and "failed to describe any categories of unproduced email." However, they have not presented a record sufficient to support this assertion. See, e.g., Walker, 827 S.W.2d at 837. The mandamus record contains several of Goodman's motions to compel, and as Relators note, most of those motions did not explicitly identify any responsive emails that Relators failed to produce. However, the mandamus record also contains three copies of an April 13, 2023 reply that Goodman filed in support of one of his motions to compel. In all three copies of that document, a roughly ten-page section entitled "Missing Email" is redacted almost in its entirety. Because we have no way of knowing whether the redacted information supports the trial court's ruling, the mandamus record is not sufficient for us to evaluate Relators' complaint on this point. See id.; In re Le, 335 S.W.3d 808, 813-14 (Tex. App.-Houston [14th Dist.] 2011, orig. proceeding) ("[T]his court cannot and will not find an abuse of discretion on an incomplete record.").
Additionally, we disagree with Relators' implication that the mandamus record is devoid of "evidence that would support a finding that responsive emails exist but remain unproduced." Cf. In re Sun Coast Res., Inc., 562 S.W.3d at 155-56 (trial court abused its discretion by ordering production of additional emails where there was no evidence any responsive emails existed or had been withheld). During the hearings before the special master, Goodman showed Relators and the special master emails that he knew existed-because he was a party to those emails-but were not produced by Relators in response to his discovery requests. Based on this record, we cannot say the trial court clearly abused its discretion by concluding that additional responsive emails may exist and Relators had a duty to search for and produce them. See In re Le, 335 S.W.3d at 813 ("In determining whether the trial court clearly abused its discretion, we may not substitute our judgment for that of the trial court.").
Finally, Relators cite In re Weekley Homes, L.P. for the proposition that Goodman's "unsupported allegations" of missing emails are not sufficient to "justify intrusive discovery orders." In Weekley Homes, the Texas Supreme Court held that the real party in interest's "mere skepticism" and "bare allegations" of missing emails did not support a "highly intrusive" trial court order compelling the relators to give third-party forensic experts "'complete access to all data stored on [the relators' employees' work and home] computers'" to search for the emails. In re Weekley Homes, L.P., 295 S.W.3d 309, 318-21 (Tex. 2009). Here, in contrast, the trial court's ruling did not require Relators to allow Goodman or a third party to search their computers or email accounts. Cf. id. Instead, the order required Relators themselves to search their email accounts and produce any responsive emails they find. We note, moreover, that the special master's June 14, 2023 and August 4, 2023 rulings recited that Relators agreed to do just that. We decline to hold that the trial court abused its discretion by requiring Relators to comply with the representations they made to the special master.
C. Conclusion regarding emails
To the extent the trial court's order overrules Relators' objections to Requests for Production 123 and 125 and compels Relators to produce emails responsive to those requests, we conditionally grant the petition for writ of mandamus as to those requests. We deny the petition as to Request for Production 110 and Relators' more general obligation to search for and produce additional responsive emails.
Bank Statements
Finally, Relators argue the trial court abused its discretion by ordering them to produce the Master Tenant's bank statements. Relators argue the trial court should have sustained their objections to Goodman's request for those bank statements because: (1) the bank statements' only relevance was to a Texas Theft Liability Act claim that Goodman abandoned; (2) the statements do not contain the information Goodman claims to need and the necessary information is available from other sources; and (3) the burden of producing the statements outweighs any potential benefit.
A. Relevance to Goodman's claims
Relators argue the Master Tenant's bank statements are not relevant to this lawsuit because Goodman abandoned his assertion that Relators violated the Texas Theft Liability Act by causing Navarro's assets to be deposited into the Master Tenant's bank account. Goodman responds that the statements are "highly relevant" to his live causes of action alleging "breach of the Company Agreement, breach of fiduciary duty, and fraud, which all involve the commingling of Navarro's assets into [the Master Tenant's] bank account."
In determining whether information meets the relevancy threshold for discovery purposes, "[t]he phrase 'relevant to the subject matter' is to be broadly construed." In re Nat'l Lloyds, 449 S.W.3d at 488. Here, it is undisputed that for the first several years Rebelle and Haunt were in operation, Navarro's credit card revenues were deposited into the Master Tenant's bank accounts and commingled with money that belonged to the Master Tenant and other entities. Goodman's live, non-Theft Liability Act claims allege that by engaging in this practice, the Controlling Entities and Controlling Managers breached the Company Agreement and their fiduciary duty to Goodman by, inter alia, "wasting and commingling Navarro's assets"; "transferring funds and assets to other Defendants without justification"; using Navarro's assets for the benefit of other defendants, including the Hotel Entities; placing the Hotel Entities' economic interest over Goodman's; and engaging in self-dealing for the benefit of the Hotel Entities. Goodman's live fraud claim alleges that Relators withheld Navarro's profits from Goodman, provided him with false financial statements, and concealed their intent to use Navarro's assets for the benefit of the Hotel Entities. Goodman further alleges that this conduct "resulted in a direct benefit to [Relators] while diminishing Navarro's assets, cash reserves, and overall value[.]"
In short, Goodman asserts multiple causes of action that arise out of the undisputed commingling of Navarro's money and other Relators' money in the Master Tenant's bank accounts. The trial court did not act arbitrarily, unreasonably, or without reference to guiding rules or principles by concluding that statements for the commingled bank accounts were relevant to and "reasonably calculated to lead to the discovery of admissible evidence" on those claims. See id.; Tex.R.Civ.P. 192.3(a).
B. Necessity to Goodman's claims
Relators next argue that the Master Tenant's bank statements "do not contain the information Goodman claimed to need." They contend Goodman can obtain the information he needs to prove his claims by comparing Navarro's own bank statements to the point-of-sale (POS) records showing the total sales at Rebelle and Haunt.
The special master heard expert testimony on this issue. During a May 26, 2023 hearing, Goodman's forensic accounting expert, Leo Munoz, testified that Goodman hired him to perform a "sources and uses of funds analysis" to trace the flow of money between Navarro and the St. Anthony Hotel. When asked if he could complete that work based on the information he had, he answered, "Not at this time without the hotel bank accounts, no." He explained:
I want to have these source documents that are involved in the entire cash management system. . . . I'm looking for third-party corroboration that gives me the opportunity to review that flow of funds and to verify, independently and objectively verify, that the funds, the cash that was earned at the restaurant level, then filtered into the hotel account, eventually came back to the restaurant at some point in time.
Munoz added that "as a former auditor," he considered the request for the Master Tenant's bank statements to be reasonable and necessary "because they were in the mix of that money trail for the first five and a half years [of Navarro's existence]" and the statements would allow him to "look at the entire processes, all the steps going through in following that trail of money back to the restaurant." He testified that he typically asks for bank statements "in these types of reconciliation [tasks]" because "bank statements are a key source of third-party documentation that I request to corroborate and triangulate transactions between data sources, and that's the case here."
During the hearing, Relators cross-examined Munoz about purportedly conflicting statements he had made during his deposition. For example, Relators noted that during his deposition, Munoz seemed to indicate he could complete the necessary corroboration if he had a full set of POS records. But during the hearing before the special master, Munoz testified that the POS records were not a substitute for the Master Tenant's bank statements:
[Y]ou take corroborate to mean that I could get comfortable behind these numbers because I'm able to look at a POS system. That's contextually not correct. . . . I would like to have all the data available in this cash trail to complete my assignment and to be comfortable and provide an opinion.
Munoz also described a hypothetical scenario in which the Master Tenant's bank statements would allow him to see whether "the hotel has used the restaurant's money for their own operation," and he noted that the POS reports would not be helpful in determining whether any money owed to Navarro was transferred to another defendant. Finally, he told the special master, "Without the [Master Tenant's] bank statement[s], I don't have insight to what I may need or may not need." This is consistent with deposition testimony from BC Lynd's vice president of finance, Enrique Vasquez, who agreed that accounting for commingled money "makes life more challenging."
"A trial court does not abuse its discretion if the court bases its decision on conflicting evidence and some evidence supports the trial court's decision." In re Liberty Ins. Corp., No. 04-08-00464-CV, 2008 WL 3925942, at *1 (Tex. App.-San Antonio Aug. 27, 2008, orig. proceeding) (mem. op.). Additionally, we "may not resolve disputed fact issues in a mandamus proceeding." Id. Here, Relators argued that the production of the Master Tenant's bank statements would be unreasonably cumulative or duplicative because Goodman could obtain the information he needed from other sources. See Tex. R. Civ. P. 192.4(a). But Goodman disagreed, and he presented expert testimony that supported his position. On this record, we cannot say the trial court could reasonably have reached only one decision. See id.; In re K&L Auto Crushers, LLC, 627 S.W.3d at 247; In re FloaTEC, LLC, No. 14-13-00699-CV, 2013 WL 4779661, at *1 (Tex. App.- Houston [14th Dist.] Aug. 30, 2013, orig. proceeding) (per curiam) (mem. op.). Relators therefore have not established that the trial court clearly abused its discretion on this point.
C. Burden of production
Relators also argue that the burden of producing the Master Tenant's bank statements outweighs any potential benefit because the statements contain "sensitive and confidential information about its transactions." Tex.R.Civ.P. 192.4(b). As support for this assertion, Relators presented a sample bank statement to the special master, the trial court, and this court for in camera review. After reviewing the in camera submission, we do not believe either the special master or the trial court acted arbitrarily or unreasonably by finding that it did not contain information so sensitive that it must be protected from discovery. Cf. In re Vaughn, No. 13-18-00541-CV, 2019 WL 962381, at *2, *6-7 (Tex. App.-Corpus Christi-Edinburg Feb. 27, 2019, orig. proceeding) (mem. op.) (holding trial court did not abuse its discretion by ordering production of "confidential and privileged business records" that included IOLTA bank statements). The only authority Relators cite to the contrary-a 1996 Texas Supreme Court opinion describing church tithing records as "highly sensitive and personal"-does not mandate a conclusion that the Master Tenant's bank statements are entitled to protection under these circumstances. See Tilton v. Marshall, 925 S.W.3d 672, 682-83 (Tex. 1996) (concluding trial court abused its discretion by ordering production of tithing records because the records were "highly sensitive and personal" and because resolution of other issues rendered those records "not even potentially relevant to the only remaining issue in [the] case").
For these reasons, we deny Relators' petition for writ of mandamus to the extent that it challenges the trial court's ruling regarding the Master Tenant's bank statements.
Conclusion
We conditionally grant Relators' petition for writ of mandamus as to the portions of the trial court's order that: (1) overrule Relators' objections to Requests for Production 119 and 120 and compel them to produce text messages responsive to those requests; and (2) overrule Relators' objections to Requests for Production 123 and 125 and compel them to produce emails responsive to those requests. We deny the remainder of Relators' petition.
We direct the trial court to, no later than fifteen days from the date of this opinion, vacate the portions of its September 1, 2023 Order on Special Master Recommendations that we have found to constitute an abuse of discretion. We are confident the trial court will comply, and the writ of mandamus will issue only in the event we are informed it does not.