Case Title: Continental Ins. Co. v. First Wyoming Bank, N.A.--Jackson Hole,

Citation: 

Docket Number: 88-114

State: wyoming

Court: Wyoming Supreme Court

Date: 1989-03-31T00:00:00Z

Document:
Continental Ins. Co. v. First Wyoming Bank, N.A.--Jackson Hole,1989 WY 83771 P.2d 374Case Number: 88-114Decided: 03/31/1989Supreme Court of Wyoming
CONTINENTAL INSURANCE 
COMPANY, A FOREIGN CORPORATION, PETITIONER,

 
 
v.

 
 
FIRST WYOMING BANK, N.A. 
- JACKSON HOLE, AND FIRST WYOMING BANCORPORATION, 
RESPONDENTS.

 
 
Richard E. Day and 
Patrick J. Murphy, Williams, Porter, Day & Neville, P.C., Casper, and Todd 
S. Welch, Bailey, Pickering, Stock & Welch, Cheyenne, for petitioner.

 
 
Peter K. Michael and 
William M. McKellar, Lathrop, Rutledge & Boley, P.C., Cheyenne, for respondents.

 
 
Before CARDINE, C.J., THOMAS, URBIGKIT and MACY, 
JJ., and RAPER, J., Retired.

 
 
ORDER VACATING JUDGMENT 
AND DIRECTING REASSIGNMENT OF CASE

 
 

[¶1.]     This matter came on 
before this Court upon the Petition for Writ of Prohibition and/or Writ of 
Mandamus and/or Writ of Certiorari and/or Other Relief filed herein by the 
Petitioner, Continental Insurance Company, on April 28, 1988; the Brief of 
Continental in Support of Petition for Writ of Prohibition and/or Writ of 
Mandamus and/or Writ of Certiorari and/or Other Relief filed herein on behalf of 
Petitioner on April 28, 1988, together with an Affidavit in Support of Request 
for Disqualification and other documents; the Brief of Respondents in Opposition 
to Continental Insurance Company's Various Writs filed herein on behalf of 
Respondents, First Wyoming Bank, N.A. - Jackson Hole, and First Wyoming 
Bancorporation, on May 23, 1988; the Reply Brief of Petitioner Continental 
Insurance Company filed herein on June 10, 1988, and the arguments of counsel 
heard on October 11, 1988, and the Court, having examined the file and record of 
the Court and being fully advised in the premises, finds 
that:

 
 

[¶2.]     This case first came 
before this Court sub nomine, Continental Insurance Company v. Robert B. Ranck, 
Honorable Judge of the District Court of the Ninth Judicial District of Teton 
County, No. 88-32, in which we reviewed an order of the District Court that 
dismissed the Petitioner's complaint and in which we issued an order dated 
February 24, 1988, reversing the District Court order and remanding the cause to 
the District Court with directions that the District Court conduct a hearing 
with respect to the issues raised by the Petitioner. This Court's order directed 
the District Court to consider the questions of privilege with respect to 
documents sought to be produced in discovery, to conduct an in camera inspection 
of documents which the Petitioner claimed to be privileged, if appropriate, and 
to consider such other matters as might appropriately be raised by the 
Petitioner at such a hearing.

 
 

[¶3.]     In response to this 
Court's order of February 24, 1988, a hearing was conducted by the District 
Court on April 8, 1988. It was conducted pursuant to an Order for Hearing 
entered March 3, 1988 which directed "that each attorney having anything to do 
with this case shall personally appear and * * * that the president or chief 
executive officer of plaintiff company shall personally appear; the local 
president of the First Wyoming Bank shall appear, and the president or chief 
executive officer of First Wyoming Bancorporation shall appear; * * *." That 
Order for Hearing went on to state:

 
 
"IT IS FURTHER NOTED BY 
THIS COURT, that this Order is made notwithstanding this Court's opinion that 
the Supreme Court of the State of Wyoming has no authority to tell the District 
Courts how to run their business."

 
 

[¶4.]     At the hearing 
conducted on April 8, 1988, the District Court prefaced the proceedings with 
these remarks:

 
 
     Now, next, if you 
gentlemen are disappointed by being ordered here and have some grievance with 
the judicial system, I'm glad; and I invite you to write a letter to the Chief 
Justice of the Wyoming Supreme Court. * * * And inform Justice Brown that you 
would appreciate it if the Supreme Court would keep its nose out of district 
court business. You're here because the Supreme Court ordered me to do this. And 
I'm doing it. And I don't like it. And I don't like them sticking their nose in 
my business and I'm telling them so on this record right now, and I want them to 
keep their nose out of my business."

 
 

[¶5.]     In the course of the 
hearing, the District Court considered those matters suggested in the order 
entered by this Court in Continental Insurance Company v. Robert B. Ranck, 
Honorable Judge of the District Court of the Ninth Judicial District of Teton 
County, No. 88-32, as well as arguments of the parties relating to their 
respective motions for summary judgment which had been filed. The record does 
not demonstrate any in camera inspection of disputed discovery documents by the 
trial court although it does disclose a claim by the judge that he is completely 
familiar with the file. Pursuant to an Order Requesting Documents for In Camera 
Inspection, the documents were presented to this Court. Many of the documents 
are privileged or arguably privileged. Thomas v. Harrison, 634 P.2d 328 
(Wyo. 1981). 
Without being exhaustive, we note letters from counsel to the client 
encompassing legal advice; in-house correspondence of the client discussing 
advice furnished by the attorney; reports of summaries of deposition testimony; 
and evaluations of the client's position made by counsel. As we interpret Rule 
26, W.R.C.P., no necessity exists to object to the furnishing of privileged 
material, and there is no waiver of the claim of privilege because of an 
untimely response to discovery. The Judgment, entered by the District Court on 
May 13, 1988, could not have been made in the absence of disregard of these 
precepts and, under the circumstances, the judgment constitutes a gross 
miscarriage of justice. Our conclusion as to the privileged nature of these 
documents is diametrically opposite to that apparently reached by the district 
court, and we are unable to justify the result reached by the district court 
within the purview of its discretion.

 
 

[¶6.]     Our examination of the 
record persuades us that this case should be assigned to another judge for 
further proceedings. This conclusion is supported by the District Court's own 
comments at the conclusion of the hearing on April 8, 1988. Addressing 
Petitioner's representative and the chief executive officer of the respondent, 
First Wyoming Bancorporation, the District Court said:

 
 
"I would urge the two of 
you to get together with the lawyers while you're here and make an effort to 
take care of this case, because I can guarantee you much pain. Much pain. I'll 
leave that up to you.

 
 
"Now, I hope I've made 
myself understood. The next thing I want to make clear is I'm running this 
Court. The Supreme Court is not running this Court. No one else is running this 
Court. And I'm going to run it for 14 months and 22 days more, and I intend to 
take care of this case while I'm still on the bench. * * *

 
 
"Now, you can do what you 
want but you know my attitude, and if it hasn't been made clear I would be happy 
to answer any questions about it. But we're going to run cases according to the 
rules, we're going to do it on time, we're going to do it according to my 
docket, and when I set the hearings I think we'll just start having everybody 
here all the time. Now, that will now include the President of Continental 
Insurance Company. You're the plaintiff in this case and you want to have a case 
in my court I would like to see all of your people here."

 
 

[¶7.]     The judgment entered by 
the District Court on May 13, 1988, granted Respondent's motion for sanctions 
against Petitioner, entered judgment in favor of Respondent on Petitioner's 
complaint, and entered judgment in favor of Respondent on Respondent's 
counterclaim against Petitioner. The court order provided that a hearing on 
damages would be held at some unidentified future date.

 
 

[¶8.]     It is from that 
judgment that Petitioner sought extraordinary relief in this Court, and we 
granted a Petition for Writ of Certiorari to further review this matter on May 
17, 1988.

 
 

[¶9.]     We conclude that the 
District Court's judgment is erroneous and must be vacated. We find that the 
judgment entered by the District Court is a gross miscarriage of justice. 
Pursuant to the Writ of Certiorari granted in this case and pursuant to the 
general superintending control over courts vested in this Court by Wyo. Const. 
art. 5, § 2, it therefore is 

 
 

[¶10.]  ORDERED that the judgment entered by the 
District Court of the Ninth Judicial District of the State of Wyoming in and for 
Teton County in Continental Insurance Company, Plaintiff, v. First Wyoming Bank, 
N.A. - Jackson Hole, a Wyoming banking 
association; and First Wyoming Bancorporation, a Wyoming corporation, Civil No. 6917, be, and 
it hereby is, vacated in its entirety; and it further is

 
 

[¶11.]  ORDERED that the case is remanded to the 
District Court with direction that the case immediately be, and in no event, not 
later than ten (10) days after the date of this order, reassigned to another 
district judge for further proceedings consistent with this order, the order of 
the Court in Continental Insurance Company v. Robert B. Ranck, Honorable Judge 
of the District Court, Ninth Judicial District of Teton County, No. 88-32, and 
the governing rules of procedure and principles of procedure and principles of 
law; and it further is

 
 
ORDERED that counsel for 
First Wyoming Bank, N.A. - Jackson Hole, and First Wyoming Bancorporation, Mr. 
William M. McKellar, as a result of a mistake initiated by this Court, having 
perused improperly the documents submitted to this Court for in camera 
inspection, immediately shall deliver to this Court any notes, memoranda, or 
other instruments he may have prepared as a product of his examination of those 
documents submitted for in camera inspection; Mr. McKellar shall not disclose to 
anyone the contents of the documents he did peruse; he shall advise this Court 
in writing, within ten (10) days, of the names and addresses of any persons to 
whom he has disclosed any such information; he shall make no use whatsoever of 
any of the documents or information contained therein which ultimately are ruled 
to be privileged; he shall make no reference to any privileged document revealed 
as a result of his perusal of the documents submitted for in camera inspection, 
either in examination, cross-examination, trial, colloquy, or in any manner 
whatsoever, and his failure to faithfully comply with these prohibitions will 
result in such appropriate sanctions as this Court may 
order.

 
 

CARDINE, C.J., concurs in the 
order of the Court and files a separate opinion.

 
 

RAPER, J., Retired, dissents 
from the order of the Court and files a separate opinion.

 
 

CARDINE, Chief Justice, 
concurring.

 
 

[¶12.]  I find it necessary to concur in the 
order of the court to avoid misunderstanding. This court has not and will not 
undertake to "flex its muscles." This court will acknowledge and perform duties 
placed with the court by Article 5, §§ 2 and 3 of the Wyoming Constitution, 
which provide in part:

 
 
"The supreme court shall 
have general appellate jurisdiction, co-extensive with the state, in both civil 
and criminal causes, and shall have a general superintending control over all 
inferior courts * * *." Art. 5, § 2, Wyoming Constitution.

 
 
"The supreme court shall 
also have power to issue writs of mandamus, review, prohibition, habeas corpus, 
certiorari, and other writs necessary and proper to the complete exercise of its 
appellate and revisory jurisdiction." Art. 5, § 3, Wyoming 
Constitution.

 
 

[¶13.]  In this case the supreme court concluded 
that the injustice of an improperly entered default should not continue. 
Therefore, pursuant to a petition for writ of prohibition and/or writ of 
mandamus and/or writ of certiorari the court issued a lawful order directing 
further proceedings in the case. The district court refused to accept or comply 
with that order. Although other action by the supreme court might be 
appropriate, the most reasonable disposition now seems that another judge should 
be assigned to proceed with this case.

 
 

RAPER, Justice, Retired, 
dissenting.

 
 

[¶14.]  I dissent.

 
 

[¶15.]  The Order Vacating Judgment and Directing 
Reassignment of the Case does not fairly represent what occurred in the district 
court at the district court hearing on April 8, 1988, conducted as required by 
Order of this court entered February 24, 1988. The cited statements of the 
district judge do not demonstrate any bias against petitioner Continental but do 
show a strong bias against the Supreme Court of Wyoming. I know of no way shown 
by the circumstances of this case how a bias against this court can be 
transferred to, and be a bias against, Continental. The trial judge at one point 
during the hearing stated to Continental's counsel, "No. No need to apologize. 
I'm not mad at anybody but the Supreme Court."

 
 

[¶16.]  The trial judge allowed Continental's 
counsel to say everything and argue any point he desired during the hearing, 
other than what was in his briefs filed with the court, which the court pointed 
out he had read and understood. I would say that Judge Ranck had adequately 
responded to this court's order to hold a hearing on various 
questions.

 
 

[¶17.]  This court's current order also seems to 
find some bias of the trial judge against Continental in the requirement that 
plaintiff have its president present at all hearings. This requirement also went 
to the defendant banking organization. The court did not require more of one 
party than the other. I see that requirement as an effort by the trial court to 
dispose of the case by dispute resolution in a fashion other than trial. This is 
not an uncommon practice in trial courts and, according to some of the best 
judicial thinking, is encouraged or should be. It is necessary that there be 
present someone with authority to close litigation.

 
 

[¶18.]  I have no argument with the majority with 
respect to the right of this court to supervise district courts in proper cases. 
I do not consider this a proper case for the court's order as written. It seems 
to me that the majority has taken the wrong position in this matter and is 
flexing its muscles in a show of strength out of line with appropriate judicial 
behavior under the circumstances.

 
 

[¶19.]  I must also disagree with the majority's 
position that the district judge improperly dismissed plaintiff's complaint, 
entered judgment for defendant on its counterclaim, and ordered a further 
hearing on the question of damages. This action by the trial judge is authorized 
by W.R.C.P. 37(b)(2)(C) providing that if a party fails to provide discovery, 
the court may make

 
 
[a]n Order * * * 
dismissing the action or proceeding or any part thereof, or rendering a judgment 
by default against the disobedient party[.]

 
 

[¶20.]  While it is true that, by the provisions 
of W.R.C.P. 26(b)(1), "[p]arties may obtain discovery regarding any matter, not 
privileged," this does not excuse failure to respond.1 The record discloses, and the trial 
judge found in his judgment, that discovery was propounded by defendants upon 
Continental in June of 1987, and thus they were required to object or respond no 
later than July of 1987. W.R.C.P. 33 and 34. Several months passed and no 
objection or response of any kind was forthcoming. The trial court entered an 
order requiring responses to discovery by a particular date and the order 
contained a warning of the consequences of dismissal and default judgment upon 
failure to do so. The trial judge even extended that time. Rather than 
responding to discovery, Continental filed several motions of 
protest.

 
 

[¶21.]  The Wyoming Supreme Court has previously 
held such district court action in dismissal and default judgment an appropriate 
sanction for failure to file answers to interrogatories or excuse such failure. 
Farrell v. Hursh Agency, Inc., 713 P.2d 1174 (Wyo. 1986); Zweifel v. State ex rel. Brimmer, 517 P.2d 493 
(Wyo. 1974); Welsh v. Welsh, 469 P.2d 404 
(Wyo. 1970). 
It was not an abuse of discretion; the trial judge only did what he was 
authorized to do.

 
 

[¶22.]  The problem here is not that the 
plaintiff has been required to produce materials not available on discovery 
because privileged, but because plaintiff Continental made no response at all, 
nor did it timely object or imely seek a protective order. "A party may not 
defend against sanctions under Rule 37(d) by contending that the request was 
improper and objectionable. If he takes this view he is required to apply for a 
protective order under Rule 26(c)." Wright and Miller, Federal Practice and 
Procedure: Civil § 2291 at 810-11 (1970). Rule 26(c) does not specify a time for 
such a motion, but Wright and Miller, § 2035 at 262-63 (footnotes omitted) 
states that

 
 
undoubtedly the courts 
will consider the timeliness of a motion under the amended rule, and will, as in 
the past, look to all of the circumstances in determining whether the motion is 
timely. Ordinarily the order must be obtained before the date set for the 
discovery, and failure to move at that time will be held to preclude objection 
later, but it may be that this rule will not be applied if there was no 
opportunity to move for a protective order. A party may not remain completely 
silent even when he regards a notice to take his deposition or a set of 
interrogatories or requests to inspect as improper. If he desired not to appear 
or not to respond he must seek a protective order, but if there are extenuating 
circumstances that explain his failure, the court may take these into account in 
determining what sanctions to impose.

 
 
I find no extenuating 
circumstances to excuse Continental's failure to timely seek a protective 
order.2

 
 

[¶23.]  It is my view that the court is violating 
its own rule, as conceived by it, in requiring the district judge to step aside 
and assign another district judge to assume responsibility for the case. 
W.R.C.P. 40.1 clearly states that when a party seeks to disqualify a judge for 
cause, he must file a motion supported by adequate facts set out to show the 
existence of such grounds showing a bias or prejudice "against the party or his counsel." Any 
other party may file counter-affidavits. "The presiding judge shall rule on the motion and 
if he grants the same, shall immediately call in another district judge to 
try the action." W.R.C.P. 40.1(b)(2)(E) (emphasis added). W.R.C.P. 40.1(b)(3) 
provides that:

 
 
A ruling on a motion for 
a change of district judge shall not be an appealable order, but the ruling 
shall be entered on the docket and made a part of the record and may be assigned 
as error in an appeal of the case.

 
 
If the court is to 
willy-nilly disregard its own rules, then perhaps it should set aside all its 
rules. The district judge is entitled to make the initial decision here. 
Otherwise, it is imposing on the prerogative of the district trial judge granted 
by this court.

 
 

[¶24.]  I can find no just reason for this court 
to verbally castigate Judge Ranck and divest him of his court. I would have 
denied extraordinary relief and sent the matter back to the district court for 
trial on the issue of damages to a final judgment and let these matters be taken 
up on appeal. If not, the trial judge has become the victim and the real scamps 
will escape.

 
 
FOOTNOTES

 
 

1 When I use the term "respond," I 
regard it as meaning to object, seek a protective order or 
answer.

 
 

2 Wright & Miller, § 2291 at 331 
(1988 pocket part) adds that:

 
 
     Once a motion for 
sanctions under Rule 37(d) has been made, the delinquent party cannot avoid the 
sanctions by then making the response to discovery requests that should have 
been made earlier. Although the court may consider the belated response in 
determining what sanction, if any, to impose, the rule does not become 
inapplicable because a response is made in the interim between the filing of the 
motion for sanctions and the hearing on the motion.

 
 
Continental applied for a protective 
order after the Bank's motion for sanctions.