Manosh v. First Mountain Vermont, L.P.

Manosh v. First Mountain Vermont, L.P.  (2003-426); 177 Vt. 616; 869 A.2d 79

2004 VT 122

[Filed 14-Dec-2004]

                                 ENTRY ORDER

                                 2004 VT 122

                      SUPREME COURT DOCKET NO. 2003-426

                             NOVEMBER TERM, 2004

  Howard A. Manosh               }     APPEALED FROM:
                                 }
                                 }
       v.                        }     Lamoille Superior Court
                                 }     
  First Mountain Vermont, L.P.   }
                                 }     DOCKET NO. 181-8-02 Lecv

                                       Trial Judge:  Edward J. Cashman

       In the above-entitled cause, the Clerk will enter:

       ¶  1.     Defendant First Mountain Vermont, L.P. (FMV) appeals from a
  default judgment entered by the Lamoille Superior Court to sanction FMV for
  not complying with an order compelling discovery.  While FMV's failure to
  respond to proper discovery requests may warrant a severe sanction, we
  reverse and remand because it is impossible for this Court to ascertain the
  trial court's reasons for imposing the ultimate sanction of a default
  judgment, or whether the trial court considered less drastic alternatives. 

       ¶  2.     In August 2002, plaintiff Howard A. Manosh filed the present
  action, seeking a declaratory judgment as to the ownership of certain
  development rights on real property located in Morrisville, Vermont. 
  Plaintiff contends that through a series of transactions involving him,
  FMV, and the Grand Union Company, FMV became the owner of the real
  property, and plaintiff retained the rights to develop it.  The underlying
  transactions are not at issue in this appeal because the court entered
  judgment for plaintiff before the parties had completed discovery.

       ¶  3.     Plaintiff began discovery in early October 2002 by serving
  defendant with a series of interrogatories and requests to produce. 
  Defendant did not respond to the requests within the thirty-day time limit
  provided by V.R.C.P. 33 and 34, and plaintiff's counsel inquired about the
  failure to respond by letters dated November 18 and December 2, 2002.  In
  the December letter, plaintiff's counsel advised defendant's counsel that
  plaintiff would move to compel responses and seek sanctions if defendant
  did not answer plaintiff's interrogatories and document requests by
  December 10, 2002.  Plaintiff asserts that his counsel was informed by
  defendant's attorney on December 19, 2002 that defendant would provide
  answers to discovery by January 10, 2003.

       ¶  4.     Defendant failed to provide any discovery responses by
  January 10, 2003.  On January 31, 2003, plaintiff moved to compel and
  requested sanctions, including striking defendant's answer and entering a
  default judgment for plaintiff, under V.R.C.P. 37.  Defendant did not
  respond to plaintiff's motion to compel.  The court granted the motion by
  entry order dated February 18, 2003.  The entry order also explained that a
  status conference would be scheduled.  Meanwhile, on February 12, 2003,
  defense counsel filed a certificate of service with the court indicating
  that defendant had sent its discovery responses to plaintiff's attorney on
  February 10, 2003, by regular mail.  

        
       ¶  5.     At the status conference on March 26, 2003, it was
  determined that defendant still owed plaintiff a response to document
  request number twelve.  FMV had neither produced any responsive information
  nor objected or otherwise responded to that particular request.  FMV's
  counsel indicated, however, that he felt the request was too broad and that
  he would file a written motion for protection if he had to.  After some
  discussion with counsel for both sides, the court narrowed the scope of the
  request, and ordered defendant to respond to it by April 15, 2003.  The
  date passed with no response from defendant as ordered.  

       ¶  6.     At the next status conference on May 27, 2003, the court
  inquired about the progress the parties had made in the case.  Plaintiff
  complained that defendant still had not complied with the court's orders
  compelling discovery, including not responding to document request twelve. 
  Defense counsel said little during the hearing, but explained that he had
  not received a response to the request from his client despite having asked
  FMV to provide one.  The court took a short recess, and when the hearing
  resumed, it ordered defendant's answer stricken and entered a default
  judgment for plaintiff.  The court issued a judgment reflecting that
  decision on June 5, 2003.  FMV then moved, without requesting a hearing, to
  reinstate its answer and to set aside the default judgment.  By entry
  orders dated August 22, 2003, the court denied those motions without
  further explanation, and this appeal followed.

       ¶  7.     As a preliminary matter, we reject Manosh's argument that
  the judgment striking the answer and entering the default is not properly
  before us.  See V.R.A.P. 3(a) ("An appeal from a judgement preserves for
  review any claim of error in the record . . . ."); see also Town of Lyndon
  v. Burnett's Contracting Co., 138 Vt. 102, 108, 413 A.2d 1204, 1207 (1980)
  (holding that a party's failure in its notice of appeal to mention an
  interlocutory order dismissing a counterclaim did not preclude the Court
  from considering an appeal of the dismissal).  As explained below, we
  reverse and remand, because the trial court's rulings at present do not
  reveal a sufficient basis for imposing a default judgment as a discovery
  sanction.

       ¶  8.     FMV argues that the court abused its discretion by striking
  its answer and entering judgment by default without sufficiently explaining
  the rationale for its decision as required by our decision in John v.
  Medical Center Hospital of Vermont, Inc., 136 Vt. 517, 394 A.2d 1134
  (1978).  In John, we reversed and remanded the superior court's dismissal
  of plaintiff's complaint as a sanction for not complying with a discovery
  order.  136 Vt. at 519, 394 A.2d  at 1135.  Although we noted that the facts
  of the case might have justified the court's decision, we were unable to
  determine whether the trial court abused its discretion by dismissing the
  complaint because the trial court did not explain its reasons for the
  dismissal.  Id.  Specifically, we held that "where the ultimate sanction of
  dismissal is invoked" under Rule 37(b)(2), the trial court must
  sufficiently explain its conclusions "that there has been bad faith or
  deliberate and willful disregard for the court's orders, and further, that
  the party seeking the sanction has been prejudiced thereby."  Id. (emphasis
  added).  

        
       ¶  9.     We reaffirmed the holding of John in the context of an order
  striking defendants' answers and entering a default judgment against them
  in C.C. Miller Corp. v. Ag Asset, Inc., 151 Vt. 604, 563 A.2d 626 (1989). 
  There, defendants failed to respond to plaintiff's discovery requests over
  a period of approximately two years, despite two court hearings at which
  the trial court extended defendants' time to respond.  151 Vt. at 605-06,
  563 A.2d  at 626-27.  The trial court defaulted defendants after they failed
  to respond to the outstanding discovery requests, missing the second
  extended deadline ordered by the court.  Id. at 606, 563 A.2d  at 627. 
  Rejecting plaintiff's argument that the difference between a dismissal of a
  complaint and a default judgment rendered John inapplicable, we remanded
  the case because "the transcript does not show that the trial court found
  defendants' noncompliance to have been willful or in bad faith, nor does it
  indicate whether any less drastic sanctions . . . were weighed for any of
  the defendants."  Id. at 607, 563 A.2d  at 627.  

       ¶  10.     In the instant case, the trial court's orders (1) striking
  FMV's answer and entering  a default judgment, and (2) denying FMV's
  motions to set aside the default and reinstate its answer suffer from the
  same deficiencies as the orders at issue in John and C.C. Miller.  Although
  the June 5, 2003 order striking the answer and defaulting FMV recited
  certain relevant facts and thus arguably provided a basis for the sanction,
  the trial court did not find that FMV's failure to comply was willful, and
  did not touch upon whether FMV's failure to comply prejudiced Manosh (FN1), 
  or whether a less drastic sanction was considered.  We recognize that this
  case may warrant imposition of a drastic sanction, and that the decision to
  impose sanctions under V.R.C.P. 37(b)(2) lies well within the trial court's
  discretion. Nonetheless, we reverse and remand "[b]ecause it is impossible
  for this Court to ascertain the basis upon which this ultimate sanction was
  imposed."  C.C. Miller, 151 Vt. at 606, 563 A.2d  at 627.  Further, we note
  that Manosh sought a declaratory judgment as to the contested development
  rights.  Thus, any final order of the trial court should provide a
  declaration of the relevant development rights of the parties.(FN2)
  
       Reversed and remanded.


  BY THE COURT:


  _______________________________________
  Denise R. Johnson, Associate Justice

  _______________________________________
  Marilyn S. Skoglund, Associate Justice
  
  _______________________________________
  Paul L. Reiber, Associate Justice

  _______________________________________
  Matthew I. Katz, Superior Judge
  Specially Assigned

  _______________________________________
  Ernest W. Gibson III, Associate Justice (Ret.),
  Specially Assigned


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                                  Footnotes

FN1.  The need for the trial court to explain the prejudice here is
  underscored by the fact that this case apparently centers around the
  interpretation of lease provisions, a question of law, while the discovery
  dispute concerns appraisals which appear neither relevant nor likely to
  lead to the discovery of admissible evidence on this question.

FN2.  At oral argument and by letter dated November 29, 2004, counsel for
  appellee suggested that FMV may no longer own the subject property.  If
  mootness is an issue, it should be raised in the trial court.