Civil Practice – Sanction for Discovery Abuse – Grounds for Sanctions

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In discovery, time does eventually run out on bad behavior.

We affirmed the court of appeals decision.

Innovative Waste Management (IWM) brought an action against Dunhill Products, Crest Energy Partners, Henry Wuertz, and Edward Girardeau asserting claims for, among other things, breach of contract, fraud, and misappropriation of trade secrets. After three motions to compel, two sanctions from the circuit court, and seven years of time and money spent on discovery, the circuit court found Petitioners in contempt for violating prior discovery orders and sanctioned them by striking their answer and counterclaims. Petitioners appealed to the court of appeals, which affirmed in an unpublished opinion. We granted certiorari to decide whether the court of appeals erred in finding (1) that the Petitioners waived review of the trial court’s interlocutory discovery orders under Davis v. Parkview Apartments, 409 S.C. 266, 762 S.E.2d 535 (2014); and (2) that the circuit court did not abuse its discretion by striking Petitioners’ answer and counterclaims under Rule 37(b)(2)(C), SCRCP. We agreed with IWM that, in discovery, time does eventually run out on bad behavior.

Appellants waived appellate review of all discovery orders prior to the October 1, 2019 order granting sanctions, and therefore, the October 1, 2019 order was the only order properly before us on appeal. Regardless, even if the June 18/August 1, 2019 orders were properly before us on appeal, the circuit court did not abuse its discretion or exceed its authority in ordering Appellants to execute authorizations for the release of their own banking and accounting records. Because IWM asked for punitive damages, Appellants’ financial documents through 2019 were relevant under Rule 26, SCRCP. Finally, due to the evolving discovery posture of the case, we found the June 18/August 1, 2019 orders did not improperly overrule another circuit court’s order in the same case.

As for the October 1, 2019 order, the circuit court was within its discretion to strike Appellants’ pleadings as a sanction for discovery abuse. Appellants asserted they were well within their rights to move for protective orders and a motion to quash and these should not be grounds for sanctions. We agreed. IWM’s interrogatories and their requests for documents were extensive, and it is reasonable Appellants would ask the court to tailor IWM’s discovery requests. However, Appellants’ use of motions for protective orders is not the reason Appellants were sanctioned. Rather, in finding Appellants “engaged in a deliberate pattern of discovery abuse,” the circuit court described the many times Appellants missed discovery response deadlines; failed to fully comply with motions to compel; represented to the court they would cooperate in discovery, but then failed to follow through; and failed to pay past monetary sanctions. The circuit court found not only was Appellants’ non-compliance with the June 18/August 1, 2019 orders willful, it was also likely a tactic “to delay a case on the eve of trial” in gross indifference to IWM’s rights. We found the record supports these findings, and the harsh sanction of dismissing Appellants’ pleadings was not unreasonable. Accordingly, we affirmed the October 1, 2019 order sanctioning Appellants and striking their pleadings.

Affirmed.

Innovative Waste Management Inc. v. Crest Energy Partners GP LLC (Lawyers’ Weekly No. 010-070-25, 9 pp.) (Letitia H. Verdin, J.) Appealed from Dorchester County Circuit Court (Maité Murphy, J.) David B. Marvel, of Charleston, for Petitioners; William M. Gruenloh and Joseph Matthew Krause, both of Gruenloh Law Firm, of Charleston; and Frederick John Jekel, of Leventis & Ransom, of Columbia, for Respondent. South Carolina Supreme Court