No. 01-15-00117-CV

IN THE FIRST COURT OF APPEALS, HOUSTON

League City,

Appellant and Cross-Appellee,

v.

Texas Windstorm Insurance Association,

Appellee and Cross-Appellant.

On Appeal from the 10th District Court at Galveston, Texas

(No. 12-CV-0053)

BRIEF OF CROSS-APPELLANT 

TEXAS WINDSTORM INSURANCE ASSOCIATION

Andrew T. McKinney IV 

State Bar No. 13716800 

LITCHFIELD CAVO LLP

One Riverway, Suite 1000 

Houston, Texas 77056 

Telephone: (713) 418-2000 

Facsimile: (713) 418-2001

James R. Old, Jr.

State Bar No. 15242500

JAY OLD & ASSOCIATES, PLLC

2615 Calder Avenue, Suite 720

Beaumont, Texas 77702

Telephone: (409) 241-7252

Facsimile: (409) 419-1733

Dale Wainwright

State Bar No. 00000049

dale.wainwright@bgllp.com

Yvonne Y. Ho

State Bar No. 24055673

Lindsay E. Hagans

State Bar No. 24087651

BRACEWELL & GIULIANI LLP

111 Congress Avenue, Suite 2300

Austin, Texas 78701

Telephone: (512) 472-7800

Facsimile: (800) 404-3970

ATTORNEYS FOR CROSS-APPELLANT TEXAS WINDSTORM INSURANCE ASSOCIATION

ORAL ARGUMENT REQUESTED

ACCEPTED

01-15-00117-CV

FIRST COURT OF APPEALS

HOUSTON, TEXAS

8/7/2015 3:37:57 PM

CHRISTOPHER PRINE

CLERK

 FILED IN 1st COURT OF APPEALS HOUSTON, TEXAS 8/7/2015 3:37:57 PM CHRISTOPHER A. PRINE Clerk
STATEMENT REGARDING ORAL ARGUMENT 

This was a long, complex pre-trial and trial that generated a large record. 

TWIA anticipates that oral argument will be necessary to clarify the many issues 

raised by both sides on appeal. In the event that this Court decides oral argument 

is necessary, TWIA respectfully requests that the Court include the issues raised 

herein in this cross-appeal and conditional appeal.
-iIDENTITIES OF PARTIES AND COUNSEL

Cross-Appellant (Defendant)

Texas Windstorm Insurance Association

Counsel for Cross-Appellant

Dale Wainwright

State Bar No. 00000049

dale.wainwright@bgllp.com

Lindsay E. Hagans

State Bar No. 24087651

lindsay.hagans@bgllp.com

BRACEWELL & GIULIANI LLP

111 Congress Avenue, Suite 2300

Austin, Texas 78701

Telephone: (512) 472-7800

Facsimile: (800) 404-3970

Yvonne Y. Ho

State Bar No. 24055673

yvonne.ho@bgllp.com

BRACEWELL & GIULIANI LLP

711 Louisiana Street, Suite 2300

Houston, Texas 77002

Telephone: (713) 223-2300

Facsimile: (800) 404-3970

Andrew T. McKinney IV 

State Bar No. 13716800 

mckinney@litchfieldcavo.com 

LITCHFIELD CAVO LLP

One Riverway, Suite 1000 

Houston, Texas 77056 

Telephone: (713) 418-2000 

Facsimile: (713) 418-2001

James R. Old, Jr.

State Bar No. 15242500

jay.old@jroldlaw.com

JAY OLD & ASSOCIATES, PLLC

2615 Calder Avenue, Suite 720

Beaumont, Texas 77702

Telephone: (409) 241-7252

Facsimile: (409) 419-1733

Trial Counsel for Cross-Appellant

David P. Salyer

State Bar No. 17549680

dpsalyer@mapalaw.com

MAPA LAW, PC

802 Rosenberg

Galveston, Texas 77553

Telephone: (409) 763-2481

Facsimile: (409) 762-1155 
-iiCross-Appellee (Plaintiff)

League City, Texas

Counsel for Cross-Appellee

Jennifer Bruch Hogan

HOGAN & HOGAN 

711 Louisiana, Suite 500

Houston, TX 77002

Telephone: (713) 222-8800

Facsimile: (713) 222-8810

Trial Counsel for Cross-Appellee

J. Steve Mostyn

THE MOSTYN LAW FIRM

3810 W. Alabama Street

Houston, Texas 77027

Facsimile: (713) 861-8084

Gregory F. Cox

Michael R. Ramsey

THE MOSTYN LAW FIRM

6280 Delaware Street

Beaumont, Texas 77706

Facsimile: (409) 832-2703

Randal Cashiola

RANDAL CASHIOLA LAW OFFICE

2090 Broadway Street

Beaumont, TX 77701

Telephone: (409) 813-1443
-iiiTABLE OF CONTENTS

Page

IDENTITIES OF PARTIES AND COUNSEL ........................................................ i

INDEX OF AUTHORITIES................................................................................... vi

STATEMENT REGARDING RECORD REFERENCES..................................... ix

STATEMENT OF THE CASE.................................................................................x

ISSUES PRESENTED............................................................................................ xi

INTRODUCTION ....................................................................................................1

STATEMENT OF FACTS .......................................................................................1

A. League City sued TWIA for allegedly unresolved insurance 

claims, which became the subject of a problematic appraisal. ............1

B. League City continually stonewalled on the specific bases for 

its lawsuit, impairing TWIA’s attempts to respond to discovery, 

yet at the same time League City asked the court to sanction 

TWIA for failing to provide discovery. ...............................................2

C. The pre-trial court sanctioned TWIA $15,000 to punish a minor 

delay, despite a total lack of prejudice or harm suffered by 

League City. .........................................................................................5

D. After the appraisal award was issued, TWIA amended its 

answer to assert defenses to the award.................................................7

E. League City’s attempt to seek discovery on TWIA’s appraisal 

defenses did not comply with discovery rules, and so a dispute 

ensued...................................................................................................9

F. The pre-trial court summarily overruled TWIA’s discovery 

objections and ordered TWIA to answer League City’s Third 

Interrogatories the next day................................................................11
-ivG. The pre-trial court struck TWIA’s defenses to the appraisal 

award because TWIA declined to waive its objections in 

answering League City’s Third Interrogatories. ................................12

H. TWIA prevailed at trial, and the trial court entered a takenothing judgment for TWIA. .............................................................13

SUMMARY OF THE ARGUMENT .....................................................................15

ARGUMENT..........................................................................................................17

I. A Trial Court’s Discovery Sanctions Order Is Reviewed For An 

Abuse Of Discretion. ....................................................................................17

II. The Pre-Trial Court Abused Its Discretion In Ordering A $15,000 

Sanction When League City Failed To Show Any Harm That Resulted 

From TWIA’s Actions..................................................................................18

A. League City never attempted to show any prejudice suffered by 

TWIA’s delay in serving supplemental responses, or quantify 

the alleged harm. ................................................................................18

B. Even if there was a basis for calculation in the record—which 

there is not—the $15,000 monetary sanction still would be 

excessive.............................................................................................22

C. TWIA was not dilatory in lodging meritorious objections to the 

discovery. ...........................................................................................23

III. The Pre-Trial Court Abused Its Discretion By Imposing DeathPenalty Sanctions On TWIA Without Meeting The Mandatory 

Requirements For Levying Such Sanctions. (Conditional CrossPoint) ............................................................................................................25

A. Texas law cabins a trial court’s discretion to order deathpenalty sanctions by imposing strict limitations on their use. ...........26

B. The pre-trial court abused its discretion by sanctioning TWIA 

for a minimal noncompliance that was substantially justified...........28

1. The record belies the pre-trial court’s finding that TWIA 

had waived its objections to the Third Interrogatories. ...........28
-v2. TWIA was substantially justified in answering them 

subject to its proper objections. ...............................................30

C. The requirements for death-penalty sanctions were not met. ............31

1. League City suffered no prejudice from TWIA’s 

continued assertion of objections while submitting 

amended and supplemental answers to the Third 

Interrogatories. .........................................................................32

2. The pre-trial court’s death-penalty sanction of striking 

TWIA’s affirmative defenses is excessive in light of 

TWIA’s conduct.......................................................................34

D. The sanction was harmful because ample evidence at trial 

supported TWIA’s appraisal defenses that were wrongfully 

stricken. ..............................................................................................35

PRAYER.................................................................................................................40

CERTIFICATE OF SERVICE ...............................................................................42

CERTIFICATE OF COMPLIANCE......................................................................42

APPENDIX.............................................................................................................43
-viINDEX OF AUTHORITIES

Page(s)

CASES

Am. Flood Research v. Jones,

192 S.W.3d 581 (Tex. 2006) (per curiam) .........................................................29

Bair v. Hagans,

838 S.W.2d 677 (Tex. App.—Houston [1st Dist.] 1992, writ 

denied).................................................................................................................34

Barnes v. W. Alliance Ins. Co.,

844 S.W.2d 264 (Tex. App.—Fort Worth 1992, writ dism’d)...........................37

Braden v. Downey,

811 S.W.2d 922 (Tex. 1991) ..............................................................................19

Braden v. S. Main Bank,

837 S.W.2d 733 (Tex. App.—Houston [14th Dist.] 1992, writ 

denied).................................................................................................................19

Butan Valley, N.V. v. Smith,

921 S.W.2d 822 (Tex. App.—Houston [14th Dist.] 1996, no writ)...................35

Christus Health Gulf Coast v. Carswell,

433 S.W.3d 585 (Tex. App.—Houston [1st Dist.] 2013, pet. 

granted) ...............................................................................................................21

Chrysler Corp. v. Blackmon,

841 S.W.2d 844 (Tex. 1992) ..................................................................18, 32, 34

Cire v. Cummings,

134 S.W.3d 835 (Tex. 2004) ..............................................................................17

Continental Ins. Co. v. Guerson,

93 S.W.2d 591 (Tex. Civ. App.—San Antonio 1936, writ dism’d).............36, 37

Downer v. Aquamarine Operators, Inc.,

701 S.W.2d 238 (Tex. 1985) ..............................................................................17
-viiFord Motor Co. v. Tyson,

943 S.W.2d 527 (Tex. App.—Dallas 1997, orig. proceeding).....................21, 22

IFC Credit Corp. v. Specialty Optical Sys., Inc.,

252 S.W.3d 761 (Tex. App.—Dallas 2008, pet. denied)....................................22

In re Bledsoe,

41 S.W.3d 807 (Tex. App.—Fort Worth 2001, orig. proceeding).....................27

In re Carnival Corp.,

193 S.W.3d 229 (Tex. App.—Houston [1st Dist.] 2006, orig. 

proceeding) .........................................................................................................27

In re M.J.M.,

406 S.W.3d 292 (Tex. App.—San Antonio 2013, orig. proceeding).................27

In re Noble Drilling (Jim Thompson), LLC,

449 S.W.3d 625 (Tex. App.—Houston [1st Dist.] 2014, orig. 

proceeding) ...................................................................................................27, 31

Jones v. Am. Flood Research, Inc.,

218 S.W.3d 929 (Tex. App.—Dallas 2007, no pet.) ..........................................22

Nat’l Med. Enters., Inc. v. Godbey,

924 S.W.2d 123 (Tex. 1996) ..............................................................................40

Paradigm Oil, Inc. v. Retamco Operating, Inc.,

372 S.W.3d 177 (Tex. 2012) ..............................................................................20

Penn. Fire Ins. Co. v. W.T. Wagoner Estate,

39 S.W.2d 593 (Tex. Comm’n App. 1931) ........................................................38

Sec. Ins. Co. v. Kelly,

196 S.W. 874 (Tex. Civ. App.—Amarillo 1917, writ ref’d)..............................38

Sells v. Drott,

330 S.W.3d 696 (Tex. App.—Tyler 2010, pet. denied).....................................30

Spohn Hosp. v. Mayer,

104 S.W.3d 878 (Tex. 2003) (per curiam) .........................................................17

State Farm Lloyds v. Johnson,

290 S.W.3d 886 (Tex. 2009) ..................................................................36, 38, 39
-viiiStromberger v. Turley Law Firm,

251 S.W.3d 225 (Tex. App.—Dallas 2008, no pet.) ..............................20, 21, 22

Tex. Integrated Conveyor Sys., Inc. v. Innovative Conveyor Concepts, 

Inc.,

300 S.W.3d 348 (Tex. App.—Dallas 2009, pet. denied)....................................23

TransAmerican Natural Gas. Corp. v. Powell,

811 S.W.2d 913 (Tex. 1991) .......................................................................passim

RULES

TEX. R. CIV. P. 215.2(b) ...........................................................................................17
-ixSTATEMENT REGARDING RECORD REFERENCES

There were several court reporters during the course of pre-trial and trial 

proceedings. Accordingly, when TWIA requested to supplement the reporter’s 

record, there were several filings, not all of which were separated into volumes. 

The transcripts of the 2014 hearings were separated in volumes and are cited 

accordingly. Example: 1SuppRR.123 is the first volume of the Supplemental 

Reporter’s Record containing all the 2014 hearings requested by TWIA, at page 

123. 

For those transcripts not in volumes (the 2013 hearings), TWIA will cite to 

the date of the hearing. Example: SuppRR.10-14Hrg.123 is the Supplemental 

Reporter’s Record transcript of the hearing on October 14, 2013, at page 123.

For Bill of Exception exhibits, the format is as follows. Example: 

54RR.DX.BOE.D/76-77 is Defendant TWIA’s Exhibit D offered in a bill of 

exceptions, included in volume 54 of the Reporter’s Record, at pages 76-77 of that 

exhibit.
-xSTATEMENT OF THE CASE

Nature of the Case: As appellant, Texas Windstorm Insurance Association 

(“TWIA”) appeals two discovery rulings, one by each of 

the pre-trial courts. The lawsuit concerns an alleged 

breach of contract by TWIA asserted by Plaintiff League 

City, after League City sustained damage caused by 

Hurricane Ike. (CR.167-81). After trial, the trial court 

entered a take-nothing judgment in favor of TWIA, and 

League City appealed. This cross-appeal addresses a 

monetary discovery sanction erroneously ordered by the 

first pre-trial court, (CR.160), and the second pre-trial 

court’s erroneous striking of three affirmative defenses 

challenging the validity of the appraisal award in this case, 

(CR.187-92). The take-nothing judgment should be 

affirmed, but TWIA appeals the monetary sanction and 

conditionally appeals the striking of its defenses.

Pre-trial Courts:

Trial Court:

First pre-trial court: Hon. Susan Criss, 212th Judicial 

District Court, Galveston County, Texas; 

Second pre-trial court: Hon. Lonnie Cox, 56th Judicial 

District Court, Galveston County, Texas. (See Standing 

Ike order, CR.166, assigning all pre-trial matters).

Hon. Kerry Neves, 10th Judicial District Court, Galveston 

County, Texas. 

Trial Court 

Disposition:

After a month-long trial, the jury returned its verdict, 

invalidating the appraisal award and finding that the 

appraisal award included non-covered losses; that League 

City had materially breached its contractual obligations to 

provide prompt written notice of its loss and to keep and 

provide to TWIA an accurate record of repair expenses; 

and that the appraisal award failed to substantially comply 

with insurance policy terms and conditions. (CR.289-

322). After considering TWIA’s post-verdict motions, 

(CR.350-548), the trial court ordered a take-nothing 

judgment against League City, (CR.678-79).
-xiISSUES PRESENTED

1. Whether the pre-trial court abused its discretion in ordering a 

$15,000 discovery sanction when:

a. League City failed to demonstrate any prejudice or harm 

from TWIA’s service of supplemental discovery a few 

days after they were due; 

b. The pre-trial court offered no basis for calculating the 

amount of the sanction; and

c. Judged against the short delay, the $15,000 sanction was 

demonstrably excessive.

2. Whether the pre-trial court abused its discretion and violated 

the Texas Rules of Civil Procedure by striking three of TWIA’s 

key affirmative defenses to the appraisal award, as a discovery 

sanction, when:

a. TWIA raised legitimate objections to a specific set of 

discovery requests regarding its appraisal defenses, but 

the pre-trial court refused to review TWIA’s objections 

and instead sanctioned TWIA for refusing to voluntarily 

waive them; and

b. The strict requirements for imposing death-penalty 

sanctions against TWIA on these appraisal defenses were 

not met, including because TWIA had already provided

substantial discovery on its appraisal defenses and further 

supplemented its discovery answers on the pre-trial 

court’s orders, and there was no indication that TWIA 

acted in flagrant bad faith or with callous disregard of the 

discovery process. (TWIA’s conditional cross-point)
INTRODUCTION

The trial court’s entry of a take-nothing judgment in TWIA’s favor is fully 

supported on many grounds, and will be explained in TWIA’s forthcoming Brief of 

Appellee. There are only two narrow discovery issues in this cross-appeal and 

conditional appeal: (1) a $15,000 monetary sanction for a short, non-prejudicial 

delay in serving discovery responses, and (2) an erroneous death-penalty sanction 

striking three of TWIA’s affirmative defenses regarding the invalidity of the 

appraisal award. It was an abuse of discretion to impose the excessive monetary 

sanction, for which there is absolutely no support in the record. TWIA also 

conditionally appeals the striking of its affirmative defenses in the unlikely event 

that this case is remanded to the trial court, because the death-penalty sanction 

violates the procedural and due process requirements that protect parties from 

precisely this sort of arbitrary penalty.

STATEMENT OF FACTS

A. League City sued TWIA for allegedly unresolved insurance claims, 

which became the subject of a problematic appraisal.

In 2008, Hurricane Ike caused damage to real property owned by League 

City. TWIA provided windstorm insurance coverage, subject to the terms, 

conditions, and exclusions in the insurance policy. (CR.462-519). Under the 

policy, TWIA paid more than $750,000 for covered repairs. (CR.398 (Jury 

Question No. 5); see also CR.61). Yet without any pre-suit notice of allegedly 
-2-

unresolved claims, League City sued TWIA on January 17, 2012, for breach of 

contract, punitive damages, statutory penalties, and other relief. (CR.7-18). 

Despite TWIA’s inquiry letter to League City requesting information of the items 

of loss it claimed were still owed, (CR.546-47), League City never responded. 

B. League City continually stonewalled on the specific bases for its 

lawsuit, impairing TWIA’s attempts to respond to discovery, yet at 

the same time League City asked the court to sanction TWIA for 

failing to provide discovery.

TWIA objected throughout the discovery period that it could not respond to 

discovery requests without information from League City specifying the claims it 

was contending were still unresolved. (See, e.g., SCR.128, 206, 454). Yet League 

City continually asked the pre-trial court to intervene in discovery disputes, usually 

accompanied by requests for sanctions. (See, e.g., SCR.109-22, 435-39).

In response to League City’s First Interrogatories, TWIA objected because 

all the interrogatories were vague, overbroad, and unduly burdensome since they 

concerned a policy covering over 140 separate structures, yet the interrogatories 

failed to specify which covered item League City was inquiring about. (SCR.128). 

TWIA also objected that many requests were seeking information that was not 

limited by duration, was privileged, or was not relevant to the claims at issue. 

(SCR.127-28, 134, 137, 144-45).

League City moved to compel TWIA to supplement its responses, moved to 

strike TWIA’s objections and claims of privilege, and moved for sanctions. 
-3-

(SCR.109-22). In response, TWIA argued that League City’s requests for 

discovery constituted an impermissible fishing expedition. (SCR.206-07). TWIA 

also pointed out that four of League City’s interrogatories requested all legal and 

factual bases for TWIA’s defenses or decisions, a violation of the discovery rules’ 

prohibition against forcing a party to marshal all of its evidence. (SCR.207-09). 

After being dragged into the discovery disputes, the pre-trial court1 finally

got League City to agree to “tell[ ] [TWIA] what building you’re complaining 

about.” (SuppRR.10-2Hrg.15). Yet, surprisingly, at the same October 2, 2013, 

hearing, the pre-trial court granted League City’s Motion to Compel, struck all of 

TWIA’s objections, and ordered TWIA to supplement its responses to League 

City’s discovery requests. (SCR.379).

Because the pre-trial court’s expansive October 2 order did not distinguish 

between producing privileged and non-privileged information and materials, 

TWIA moved to stay the order and asked the pre-trial court to reconsider the 

rulings and to inspect privileged materials in camera. (SCR.380-85). The pre-trial 

court granted TWIA’s motion for in camera inspection. (SCR.392). 

 

1 The Honorable Susan Criss of the 212th District Court was pre-trial judge 

for this and the other Hurricane Ike cases in district court in Galveston County 

until December 6, 2013, when she resigned from the bench and the Honorable 

Lonnie Cox of the 56th District Court became pre-trial judge for the Hurricane Ike 

cases. (CR.166).
-4-

On October 14, the pre-trial court then re-heard League City’s Motion to 

Compel, but with no prior notice that the motion would be re-argued. 

(SuppRR.10-14Hrg.37; SCR.524). The court went through TWIA’s objections 

line by line, overruling most, but granting in part some, and modifying some of the 

questions. (See generally SuppRR.10-14Hrg). League City’s counsel agreed to 

“make any modifications” to reflect TWIA’s privilege objections. (SuppRR.10-

14Hrg.21, 93). Also, in response to TWIA’s oft-repeated argument that TWIA 

“cannot state the basis for the denial of a claim [when] . . . [w]e don’t know the 

dollar amount or the nature of the damage” claimed by League City, the court 

agreed and granted in part TWIA’s objection and ordered League City to rephrase 

its question. (SuppRR.10-14Hrg.65-68). League City also stipulated to narrowing 

some of the discovery issues. (SuppRR.10-14Hrg.73-74).

After League City submitted a proposed order the following day, again 

asking the pre-trial court to order TWIA to supplement its discovery responses, 

TWIA sent a letter to the pre-trial court, objecting to the lack of notice for the prior 

day’s hearing and because the proposed order did not address any of the numerous

modifications that the court had made to League City’s discovery requests. 

(SCR.524). The pre-trial court did not sign an order.

The pre-trial court did not respond to any of TWIA’s concerns. At an 

October 22 hearing on TWIA’s Motion to Compel, League City interjected its own 
-5-

argument that TWIA had not supplemented its discovery as ordered by the court, 

and thus League City could not take the deposition of Paul Gauthier, an 

independent adjuster hired by TWIA to adjust League City’s claim. (SuppRR.10-

22Hrg.29, 32). TWIA pointed out that League City had not filed a motion to 

compel based on the court’s oral rulings from the October 14 hearing, for which 

there was no transcript yet:

That is not in any e-mail from opposing counsel to our side. It’s not 

in their Motion to Quash. There was no notice coming into this 

morning that the objection to taking Paul Gauthier on Thursday had to 

do with some discovery issue that he has with us on interrogatories 

and document requests. 

(SuppRR.10-22Hrg.35). Despite objection to the lack of notice on this issue once 

again, the pre-trial court ordered TWIA to supplement its answers and responses to 

League City’s discovery requests within three days and to delete its objections. 

(SuppRR.10-22Hrg.37-38; CR.52).

C. The pre-trial court sanctioned TWIA $15,000 to punish a minor 

delay, despite a total lack of prejudice or harm suffered by League 

City.

With the benefit of a transcript of the October 14 hearing, TWIA served 

supplemental answers and responses that removed the overruled objections and

noted the October 14 modifications, which no motion from League City or written 

order from the pre-trial court ever referenced. (SCR.485; 2RR.8).

However, because TWIA was a little more than a week late in serving its 
-6-

supplemental discovery, League City asked the pre-trial court to “sanction [TWIA] 

something so they understand that your order has some meaning.” (2RR.6). The 

court demanded TWIA explain why the discovery was late, and when told that it 

required client approval from personnel out of state, the court asked for specific 

names, to be given under oath by the afternoon. (2RR.8, 10-11, 13-15). When 

TWIA did not provide additional explanation for the delay in filing the 

supplemental discovery, the pre-trial court lambasted TWIA for being disrespectful 

and asked League City what it wanted the court to do. (2RR.17, 20, 24).

Despite initially complaining about League City’s delay in serving 

supplemental discovery responses, League City then switched focus and argued 

that it had learned during the deposition of Paul Gauthier that he had files that had 

not been produced before the deposition. (2RR.19). League City asked for a “per 

diem amount of $5,000, and that’s to capture all of the other things that might flow 

from the delays.” (2RR.22).

TWIA responded and pointed out that Gauthier is not an employee of Texas 

Windstorm and he was not within its control. “He doesn’t work for them. His 

files are not subject to their custody or control. He is not subject to Texas 

Windstorm’s custody or control.” (2RR.21). Regardless, the production of 

Gauthier’s files was not raised in League City’s original Motion to Compel, nor in 

its subsequent Motion to Enforce. (SCR.120-21; CR.94-104). Finally, TWIA 
-7-

pointed out there was no prejudice cited in the requests for sanctions, (see

SCR.120-21, 437-38), and League City never presented any evidence of prejudice 

or of incurred costs. (2RR.27-28).

Despite TWIA’s objections, the pre-trial court ordered TWIA to reproduce 

Paul Gauthier for deposition for an additional 6 hours and to pay $15,000 as a 

sanction “for violation of the Court’s order, which includes the amount of 

attorney’s fees and expenses League City incurred in preparing League City’s 

Motions and attending the hearing on the Motions.” (CR.160).

TWIA asked the court to reconsider the monetary sanction order, (SCR.508-

13), and set the reconsideration motion for hearing on several occasions, but the 

court never heard it or ruled on it. Thus, TWIA is forced to lodge this appeal, 

despite winning a take-nothing judgment in the underlying suit.

D. After the appraisal award was issued, TWIA amended its answer to 

assert defenses to the award.

In the meantime, in the absence of any response from League City to its 

letter asking why it has been sued when it had paid over $750,000 in policy 

benefits and had not been advised of any unpaid, covered damages, TWIA invoked 

the appraisal process under the insurance policy. (SCR.1022-25). Pursuant to the 

appraisal provision, each party appointed an appraiser, with TWIA appointing John 

Mullen and League City appointing Paul Tierce. (CR.40, SCR.1024). The pretrial court then appointed former Judge Don Burgess as the umpire. (CR.51). The 
-8-

appraisal process resulted in an award of over $3.4 million signed on October 24, 

2013, by Burgess and Tierce. (SCR.1030-34). Mullen did not join the award. 

(SCR.1030). 

TWIA’s review of the appraisal award detected numerous anomalies that 

invalidated the award. In discovery responses and pleadings, TWIA advised 

League City of facts underlying its affirmative defenses, including: 

• The appraisal process was flawed and biased, (SCR.962-63, 969, 

1392-93, 2071-72); 

• Umpire Burgess individually summoned at least one League City 

employee to discuss the hurricane loss during the appraisal process, 

but he refused to give testimony, (SCR.962);

• The pre-trial court made numerous errors of law when it appointed the 

umpire, (SCR.969, 1392, 2071-72);

• The award included amounts which neither appraiser assigned as 

covered damages, and on occasions exceeded the amounts submitted 

by the appraisers, (SCR.1256-57); 

• The appraisal award reflected amounts of loss for items never 

submitted to TWIA, (SCR.2072); and

• Items not presented at the time of the adjustment were included in the 

appraisal, (SCR.1234). 

Accordingly, with a reasonable basis in fact and law, TWIA filed a 

supplement to its amended answer, pleading three affirmative defenses that 

challenged the appraisal award:

1. The appraisal award was not an honest assessment of necessary 

repairs.
-9-

2. The appraisal award and the process leading up to it were inaccurate, 

unreliable and/or biased.

3. The appraisal award was the result of fraud, accident or mistake. 

(CR.182). 

E. League City’s attempt to seek discovery on TWIA’s appraisal 

defenses did not comply with discovery rules, and so a dispute 

ensued.

League City sought discovery on these appraisal defenses. Although it had 

already exhausted its limit of twenty-five interrogatories, (SCR.1009-12, 1019-20), 

League City nevertheless served in February 2014 a new set of twenty additional 

interrogatories (the “Third Interrogatories”) on TWIA. (SCR.989-95). TWIA 

responded to this new round of discovery on February 13, and asserted several 

objections, including that some of them sought privileged information and that all 

of them violated the limit on the number of interrogatories. (SCR.989-95). 

A few days later, on February 17, the pre-trial court, which had since 

transferred to Judge Cox after Judge Criss’s retirement, held a hearing on a number 

of discovery motions that dealt mostly with the timing and guidelines for 

depositions. (3SuppRR.3-5). Following a similar refrain, League City had not 

given prior notice on any issues concerning TWIA’s responses to the Third 

Interrogatories; indeed, League City had not even filed a motion complaining of 

TWIA’s responses at that time. Despite this, League City injected the issue into 

this hearing. (3SuppRR.33-34). 
-10-

Without any discussion of the responses TWIA had already given to this 

discovery, the pre-trial court asked TWIA when it could respond to the Third 

Interrogatories, and TWIA answered that it could do so within ten days. 

(3SuppRR.40). TWIA then expressed its confusion about the complaints about the 

interrogatories, explaining that it had already responded to them and that, before 

the hearing, League City had voiced no complaint about the answers. 

(3SuppRR.41). TWIA then assured the court that “we will do what we can,” but 

also made clear that the “the problem is we have already referred them to all the 

documents we have and we have answered two pages.” (3SuppRR.41). 

Following the February 17 hearing, League City’s counsel emailed asking 

TWIA to fully answer the Third Interrogatories. (SCR.880). Having provided 

numerous discovery responses by that point addressing the improprieties in and 

invalidity of the appraisal process and award, TWIA determined it had no further 

responses. (SCR.880). 

League City then filed a Motion to Compel Appraisal Discovery and Motion 

to Strike Objections, claiming that TWIA had defied the pre-trial court by failing 

to offer additional answers that were not subject to objections on the appraisal 

issues. (SCR.863-65). TWIA responded and again made clear its objections to the 

discovery. (SCR.952-56).
-11-

F. The pre-trial court summarily overruled TWIA’s discovery 

objections and ordered TWIA to answer League City’s Third 

Interrogatories the next day.

During a March 12 hearing on the motion, League City and the pre-trial 

court focused on TWIA’s isolated statement in the previous hearing that it would, 

in essence, respond to the interrogatories within ten days. (4SuppRR.4-5, 12). In 

response, TWIA made clear that it had not agreed to waive its objections to the 

interrogatories questions, but rather, in light of the tumultuous relationship 

between the parties on discovery matters, that it would “do what [it] can” to 

resolve the discovery dispute. (3SuppRR.41). TWIA further pointed out that it 

had already responded to the interrogatories by lodging its objections and 

answering some of them subject to those objections. (4SuppRR.10). The pre-trial 

court then attempted to grant the Motion to Compel without hearing TWIA’s 

objections to the interrogatories, but it eventually relented and allowed TWIA to 

explain a couple of objections, including that the interrogatories exceeded the limit 

and sought privileged material. (4SuppRR.5-10). Notwithstanding that, the court 

summarily overruled the objections and ordered TWIA to answer the 

interrogatories by 5 p.m. the next day. (4SuppRR.12; SCR.1036).2

 

 

2 The order actually says “by 4/13 [April 13, 2014],” but when considered 

along with the pre-trial court’s statements at the hearing, it is clear the date in the 

order was a mistake and the real deadline was March 13.
-12-

TWIA duly supplemented its discovery responses by the pre-trial court’s 

deadline, preserving its objections and offering even more expansive answers 

subject to those objections. (SCR.1230-35). Due to the short timeframe and the 

limited information TWIA possessed about the appraisal process (because of 

League City’s failure to provide long-delayed discovery), TWIA could not more 

fully answer each interrogatory. (SCR.1230-35). TWIA further supplemented its 

answers a few days later to reflect the contents of an expert report it received on 

March 14. (SCR.1287-90).

G. The pre-trial court struck TWIA’s defenses to the appraisal award 

because TWIA declined to waive its objections in answering League 

City’s Third Interrogatories.

League City was still not satisfied, however, and asked the court to strike 

TWIA’s defenses to the appraisal award as a sanction. (SCR.1085-88). TWIA 

responded by pointing out that it had twice supplemented its responses pursuant to 

the order. (SCR.1221-23). TWIA further discussed why such sanctions were not 

justified under the law. (SCR.1223-24). 

At a March 20 hearing on the sanctions motion, TWIA explained that it had 

complied with the pre-trial court’s order “to the extent of our ability.” 

(5SuppRR.12). TWIA also advised the pre-trial court, “[w]e have said repeatedly 

that until we take the fact witnesses and the appraisers’ depositions, we cannot 

further flesh out our answers.” (5SuppRR.12; see also 5SuppRR.35). TWIA 
-13-

further made clear that it would continue to supplement its answers as it conducted 

additional discovery into the appraisal issues. (5SuppRR.36). 

The pre-trial court held an additional hearing on the sanctions motion on 

April 10. (6SuppRR.5). The focus of the sanction portion of that hearing was a 

dispute over a recent deposition of TWIA’s corporate representative, Paul 

Strickland. (6SuppRR.8-16). Notably, as was often the case, that deposition was 

not the subject of any pending motion. Nevertheless, the pre-trial court verbally 

ordered that TWIA’s appraisal defenses be stricken as a sanction for TWIA not 

“participat[ing] appropriately in this discovery.” (6SuppRR.16). The pre-trial 

court signed an order striking the affirmative defenses on April 17 as a sanction for 

not complying with its March 12 order. (CR.187-95).

Importantly, between March 12 and April 17, TWIA repeatedly 

supplemented its discovery responses. It served three amended answers to the 

Third Interrogatories; a Third Supplemental Response to League City’s Request 

for Disclosure; and the expert reports of Mark Elliot and Tim Lozos. (SCR.968-

69, 1228-35, 1250-90, 1378-94, 2067-90). All these discovery responses provided 

information and further fleshed out TWIA’s position with regard to the appraisal 

award. 

H. TWIA prevailed at trial, and the trial court entered a take-nothing 

judgment for TWIA.

The case was returned to Judge Kerry Neves of the 10th District Court for 
-14-

trial.3

 The jury listened to three weeks of evidence accusing TWIA of failing to 

pay insurance coverage allegedly of some eight million dollars, and then it heard 

two days of testimony on behalf of TWIA. The jury found that League City 

breached its obligations under the policy, which in turn prejudiced TWIA in its 

ability to assist in the adjustment. Further, the jury found that that the appraisal 

award, League City’s only damages model, was invalid for failing to substantially 

comply with the policy terms and provisions. (See generally CR.286-326).

TWIA moved for Judgment Notwithstanding the Verdict, arguing, inter alia, 

that, (1) without the invalidated appraisal award, there was no damages evidence; 

and (2) that the jury’s findings in TWIA’s favor on its defenses merited a takenothing judgment. (CR.350-82). The trial court agreed and rendered a takenothing amended final judgment in TWIA’s favor. (CR.678-80).

League City also filed post-verdict motions, (CR.681-92), which the trial 

court denied on January 23, 2015, (CR.856-57). League City now appeals the final 

judgment, while TWIA cross-appeals a narrow sanctions issue and preserves its 

conditional cross-point for appeal regarding the erroneous striking of its 

affirmative defenses.

 

3 Under the Galveston County order on managing Hurricane Ike cases, pretrial matters were handled by the assigned pre-trial judge and the cases would be 

tried in the court in which it was originally filed. (CR.166).
-15-

SUMMARY OF THE ARGUMENT

The two sanctions at issue were an abuse of the trial court’s discretion to 

regulate discovery disputes. The excessive $15,000 sanction was to punish TWIA 

for being late in serving supplemental discovery responses, despite TWIA’s best 

efforts in complying with a panoply of oral and written rulings that did not provide 

guidance on the permissible parameters of discovery. 

Yet when TWIA complied with these orders and served its supplemental 

discovery—albeit a few days late—the pre-trial court railed against TWIA’s 

supposed disrespect and imposed a disproportionate sanction, despite no attempt by 

League City to demonstrate its resulting harm or prejudice. There is absolutely no 

evidence in this record to support the calculation of the amount of this arbitrary 

fine, nor is there any evidence that TWIA’s actions harmed League City. Either 

one of these grounds is sufficient to vacate the sanction, and considered together it 

is compelling that the pre-trial court erred in ordering the monetary sanction.

Later in the discovery process, the parties disputed the validity of the 

appraisal award. After TWIA amended its answer to assert defenses to the 

questionable award, League City served a host of interrogatories, in excess of its 

limit under the discovery rules. TWIA objected on that basis and because the 

questions sought privileged information, but the pre-trial court summarily 

overruled all of TWIA’s discovery objections and ordered TWIA to answer League 
-16-

City’s interrogatories within one day. TWIA did precisely that, but when its 

answers were unsatisfactory to the pre-trial court, it imposed death-penalty 

sanctions against TWIA, striking TWIA’s defenses to the appraisal award—

premised largely on a misunderstanding that TWIA had agreed to waive its 

objections, which the hearing transcript contradicts. Moreover, TWIA was 

substantially justified in answering the questions subject to those proper and 

legitimate objections. 

Further, the death-penalty sanctions the pre-trial court imposed were fatally 

defective because: (1) League City suffered no prejudice, since TWIA had served 

numerous discovery responses explaining its challenges to the award’s validity; 

and (2) the death-penalty sanctions were clearly excessive in light of TWIA’s 

minor noncompliance with the pre-trial court’s order.

Despite the pre-trial court’s rulings in error that hampered TWIA’s ability to 

present its case, TWIA prevailed at trial, and the trial court that presided over the 

month-long trial entered a take-nothing judgment for TWIA. TWIA now asks this 

Court to vacate the wrongfully levied monetary sanction, and, in the unlikely event 

that the case is remanded for a new trial, to reverse the pre-trial court’s erroneous 

striking of TWIA’s affirmative defenses.
-17-

ARGUMENT

I. A Trial Court’s Discovery Sanctions Order Is Reviewed For An Abuse 

Of Discretion.

A trial court’s ruling on a motion for sanctions is reviewed under an abuse of 

discretion standard. “The test for an abuse of discretion is not whether, in the 

opinion of the reviewing court, the facts present an appropriate case for the trial 

court’s action, but ‘whether the court acted without reference to any guiding rules 

and principles.’” Cire v. Cummings, 134 S.W.3d 835, 838-39 (Tex. 2004) (quoting 

Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985)). 

The trial court’s ruling should be reversed if it was arbitrary or unreasonable. Id. at 

839. 

While the choice of which discovery sanctions to impose lies within the 

discretion of the trial court, any sanction imposed still must be “just.” See Spohn 

Hosp. v. Mayer, 104 S.W.3d 878, 882 (Tex. 2003) (per curiam) (citing TEX. R.

CIV. P. 215.2(b); TransAmerican Natural Gas. Corp. v. Powell, 811 S.W.2d 913, 

917 (Tex. 1991)). For a sanction to be “just,” there must be (1) a direct nexus 

among the offensive conduct, the offender, and the sanction imposed, and (2) the 

sanction must not be excessive. TransAmerican, 811 S.W.2d at 917.

As to the first TransAmerican “direct nexus” requirement, a just sanction 

must be directed against the abuse and toward remedying the prejudice caused to 

the innocent party. Id. As to the second TransAmerican “not excessive” 
-18-

requirement, a discovery sanction should be no more severe than necessary to 

satisfy its legitimate purposes, which include securing compliance with discovery 

rules, deterring similar misconduct, and punishing violators. Id.; Chrysler Corp. v. 

Blackmon, 841 S.W.2d 844, 849 (Tex. 1992). The entire record must be reviewed 

to determine whether sanctions are warranted. See Blackmon, 841 S.W.2d at 852-

53. 

II. The Pre-Trial Court Abused Its Discretion In Ordering A $15,000 

Sanction When League City Failed To Show Any Harm That Resulted 

From TWIA’s Actions.

Describing the proper standard for considering sanctions, the Texas Supreme 

Court has held that “[t]he punishment should fit the crime.” TransAmerican, 811 

S.W.2d at 917. Here, however, not only did League City entirely fail to 

demonstrate or even suggest that it had suffered harm or prejudice from TWIA’s 

alleged discovery abuse, but the $15,000 monetary sanction was excessive when 

judged against TWIA’s delay of a few days, and there is no other evidence in the 

record that would support an imposition of the sanction. The punishment most 

certainly did not fit the crime, and it was an abuse of discretion for the pre-trial 

court to sanction TWIA to the tune of $15,000.

A. League City never attempted to show any prejudice suffered by 

TWIA’s delay in serving supplemental responses, or quantify the 

alleged harm.

The pre-trial court’s monetary sanction was targeted toward TWIA’s minor 
-19-

delay (8 business days) in serving supplemental discovery answers and producing 

requested documents in October 2013. (2RR.15-18, 24, 31). However, League 

City never attempted to show, nor did the pre-trial court ever explain, how the 

$15,000 sanction (nevermind the $30,000 sanction requested by League City, see

2RR.24) was a remedy for any prejudice suffered by League City.4

 All League 

City offered in justification was that “the motion sets forth a particular per diem 

amount of $5,000, and that’s to capture all of the other things that might flow from 

the delays.” (2RR.22). That is not sufficient evidence to support the court’s award 

of monetary sanction.

When a trial court assesses a monetary sanction, “there must be some 

evidence in the record linking the amount awarded to harm actually suffered by the 

party seeking sanctions.” Braden v. S. Main Bank, 837 S.W.2d 733, 741 (Tex. 

App.—Houston [14th Dist.] 1992, writ denied); see also Braden v. Downey, 811 

S.W.2d 922, 929 (Tex. 1991) (court must consider prejudice). If a monetary 

sanction “is not tied to any evidence in the record and the basis for calculating the 

amount is unknown, the sanction constitutes an impermissible arbitrary fine.” 

 

4 In fact, as TWIA pointed out to the pre-trial court, there was no harm—all 

of the claim-related documents responsive to League City’s requests were 

produced months before League City moved to compel. (2RR.25; SuppRR.10-

14Hrg.6 (“We produced it months ago . . . . [T]hey have our non-privileged 

production relative to this claim. They have had it, in many instances, over two 

years.”)).
-20-

Stromberger v. Turley Law Firm, 251 S.W.3d 225, 226-27 (Tex. App.—Dallas 

2008, no pet.); see also Paradigm Oil, Inc. v. Retamco Operating, Inc., 372 S.W.3d 

177, 187 (Tex. 2012) (“Sanctions for discovery abuse should not be dispensed as 

arbitrary monetary penalties unrelated to any harm.”). 

TWIA made clear to the pre-trial court that League City never cited any 

prejudice in its motions for sanctions, (see SCR.120-21, 437-38), nor submitted 

any evidence quantifying the harm. (2RR.27-28). Although League City baldly 

contended in the oral hearing that the $5,000 per day sanction would “capture all of 

the other things that might flow from the delays” and “would encompass probably 

the cost of having to go and re-depose [Gauthier],” (2RR.22, 24),5 there is no 

evidence in the record to support or substantiate these assertions. There is no 

testimony from League City’s attorneys as to their incurred fees and costs; there 

are no affidavits. There simply is no evidence substantiating the amount and 

nothing in the record showing any connection between the $15,000 awarded and 

any harm suffered by League City as a result of the delay in filing its supplemental 

discovery. 

 

5 Moreover, while League City argued that the cost to re-depose Gauthier 

included travel costs “to have to go [to Florida] if he won’t voluntarily come on a 

plane and come back for another deposition,” that argument was mooted when the 

court ordered TWIA to produce Gauthier (and his files) for an additional six hours 

of deposition. (CR.160; 2RR.31-32, 34).
-21-

Yet, despite the complete lack of any evidence of League City’s attorney’s 

fees and expenses, the court’s Sanction Order simply awarded half of the relief 

requested by League City for “violation of the Court’s order, which includes the 

amount of attorney’s fees and expenses League City incurred in preparing League 

City’s Motions, and attending the hearing on the Motions.” (CR.160; see also

2RR.24, 31). There is nothing in the record to indicate how the pre-trial court 

arrived at the amount of the sanction levied against TWIA. 

When the basis for calculating the amount is unknown, the sanction is an 

impermissible arbitrary fine. Stromberger, 251 S.W.3d at 226-27. Because there 

is no evidentiary support or basis for calculation for the amount of the sanction 

imposed, this Court has no means to determine whether the amount of the sanction 

is just, as it must be to be upheld on appeal. See Ford Motor Co. v. Tyson, 943 

S.W.2d 527, 536 (Tex. App.—Dallas 1997, orig. proceeding); Christus Health 

Gulf Coast v. Carswell, 433 S.W.3d 585, 616 (Tex. App.—Houston [1st Dist.] 

2013, pet. granted). On this record, the pre-trial court’s arbitrary sanction was an 

abuse of discretion, and should be vacated. 6

 

6 When no evidence supports the amount of the monetary sanction imposed, 

the proper action is to either vacate or render judgment that the party take nothing 

on that particular sanction award, not remand to the trial court for reconsideration. 

Carswell, 433 S.W.3d at 617.
-22-

B. Even if there was a basis for calculation in the record—which there 

is not—the $15,000 monetary sanction still would be excessive.

Even if League City had attempted to offer some basis for calculation, it is 

clear that the $15,000 monetary sanction is dramatically disproportionate to any 

supposed harm resulting from a few days’ delay in providing the supplemental 

responses, especially given the lack of harm or prejudice. The sanctionable 

conduct alone does not prescribe the amount of a monetary sanction. Stromberger, 

251 S.W.3d at 227. To review the decision of the amount of the monetary sanction 

imposed by examining only the conduct giving rise to the sanction would permit a 

“wavering standard of subjectivity” unrestrained by law or statute. Tyson, 943 

S.W.2d at 536. Here, TWIA’s delay, and (quickly rectified) violation of the pretrial court’s previous order, alone do not justify the amount of the sanction. The 

trial court’s failure to otherwise explain how it determined the monetary sanction 

cannot withstand appellate review. See IFC Credit Corp. v. Specialty Optical Sys., 

Inc., 252 S.W.3d 761, 773 (Tex. App.—Dallas 2008, pet. denied).

Moreover, the record does not show the trial court considered the 

availability of lesser sanctions and whether such lesser sanctions would fully 

promote compliance. See Jones v. Am. Flood Research, Inc., 218 S.W.3d 929, 932 

(Tex. App.—Dallas 2007, no pet.) (order for monetary sanction reversed where, 

among other considerations, record did not reflect trial court considered lesser 

sanctions and whether they would promote compliance). At most, the pre-trial 
-23-

court paid lip service to “lesser sanctions,” by asking TWIA’s counsel: “So then 

we can say that I’ve explored lesser sanctions and there are none?” (2RR.29). 

When TWIA’s counsel suggested a lesser sanction in the form of actual costs, the 

court simply responded, “Anything else?”, (2RR.30), and then imposed the 

$15,000 sanction without explanation. (2RR.31). This was an abuse of discretion. 

See Tex. Integrated Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300 

S.W.3d 348, 385 (Tex. App.—Dallas 2009, pet. denied). For this reason, the 

monetary sanction should be vacated.

* * * * *

The lack of any prejudice or harm, coupled with the clearly excessive 

amount of the sanction and absence of constitutionally required notice, violate the 

TransAmerican principles and demonstrates the pre-trial court’s abuse of discretion 

in sanctioning TWIA $15,000 for the few days’ delay in serving supplemental 

discovery. This Court should vacate the monetary sanction. 

C. TWIA was not dilatory in lodging meritorious objections to the 

discovery.

Although the pre-trial court sanctioned TWIA on the narrow grounds of a 

week’s delay in serving supplemental discovery, the court indicated that its 

motivation was far broader. After warning that it would sanction TWIA if it did 

not produce specific, sworn information explaining its delay, the court stated:
-24-

You have done everything you can to run the clock on this to make 

sure that you didn’t have to [supplement discovery] . . . . I could have 

given you a month to come up with those answers, and the answer 

would not have been one bit different than it is at this moment.

(2RR.17-18).

However, the alleged discovery abuse implied by the pre-trial court could 

not form the basis of a sanction award. From the first time TWIA responded to 

League City’s interrogatories and requests for production, the court rubberstamped all of League City’s motions to compel and overruled virtually all of 

TWIA’s legitimate objections to League City’s improper requests, most pertinently 

that because League City had not explained what damage was the basis of its suit, 

TWIA could not respond any further to League City’s allegations. (SuppRR.10-

14Hrg.65, 94-95).

Yet League City continuously moved to compel TWIA to drop all of its 

objections and supplement its discovery responses. Despite TWIA’s well-founded 

objections (including privilege), and without even considering them at an initial 

hearing on League City’s Motion to Compel, the pre-trial court struck all of 

TWIA’s objections and ordered TWIA to supplement its answers and responses to 

League City’s discovery requests. (SCR.379). Though the pre-trial court later 

modified that blanket ruling at an oral hearing, (see generally SuppRR.10-14Hrg.), 

no written, signed order ever reflected the changes and limitations to League City’s 

requested discovery. TWIA never had a clear direction from the court as to the 
-25-

scope of permissible discovery. Further, there were multiple occasions when the 

pre-trial court held a hearing on discovery issues without notice,

7 depriving TWIA 

of the opportunity to present the court with evidence regarding its objections to the 

impermissible discovery requests. TWIA complied with the patchwork array of 

oral and written orders, and duly supplemented its discovery even despite the 

violations of its fundamental due process rights. 

As TWIA’s counsel told the court, “[i]t wasn’t intentional and it wasn’t out 

of disrespect. We did the very best we could.” (2RR.27). Though TWIA 

regrettably was late in serving the supplemental discovery, it did serve its answers 

and responses, without the overruled objections, but with notations reflecting the 

other modifications the court had made, including narrowing the scope of 

permissible requests. Thus, there is no evidence in the record to suggest that 

TWIA should be faulted for discovery abuse, even were this Court to look beyond 

the pre-trial court’s stated basis—TWIA’s delay—for the $15,000 sanction.

III. The Pre-Trial Court Abused Its Discretion By Imposing Death-Penalty 

Sanctions On TWIA Without Meeting The Mandatory Requirements 

For Levying Such Sanctions. (Conditional Cross-Point)

In the remote event that this case is retried, this Court should reverse the pre-

 

7 League City’s Motion to Compel was heard on two occasions, the first 

with a single day’s notice of hearing, (see SCR.204), and the second with no notice 

of hearing whatsoever. (SuppRR.10-14Hrg.37).
-26-

trial court’s April 17, 2014, order imposing death-penalty sanctions that prevented 

TWIA from asserting important defenses to the appraisal award. Although the jury 

saw through myriad other flaws in the appraisal award, TWIA should have been 

permitted to pursue other, equally meritorious defenses that were improperly 

stricken.

The April 17 sanctions order was based on an unsupportable finding that 

TWIA waived its legitimate discovery objections at an earlier hearing, a mistake 

belied by the hearing transcript. And TWIA was substantially justified in 

maintaining its discovery objections while complying with the court’s order, the 

sanction was an abuse of discretion.

Moreover, TWIA’s conduct comes nowhere close to justifying the severe, 

death-penalty sanction that the pre-trial court imposed, given League City’s failure 

to demonstrate prejudice and in light of TWIA’s substantial compliance with the 

pre-trial court’s discovery order. Further, TWIA’s appraisal defenses were 

meritorious, as evidenced by the record. If a new trial is warranted, this Court 

should reverse the April 17, 2014, sanctions order and permit TWIA to raise all 

these defenses on retrial.

A. Texas law cabins a trial court’s discretion to order death-penalty 

sanctions by imposing strict limitations on their use. 

Texas law permits a trial court to impose death-penalty sanctions in only the 

most extreme of circumstances. The same TransAmerican “direct nexus” and “not 
-27-

excessive” requirements discussed above also control here. See supra at 17-18. 

Specifically as to death-penalty sanctions, “[i]n all but the most exceptional cases, 

the trial court must actually test the lesser sanctions before” imposing a sanction 

that precludes a decision on the merits. In re Carnival Corp., 193 S.W.3d 229, 

236-37 (Tex. App.—Houston [1st Dist.] 2006, orig. proceeding); see also In re 

M.J.M., 406 S.W.3d 292, 298 (Tex. App.—San Antonio 2013, orig. proceeding). 

And because death-penalty sanctions raise due process concerns, such sanctions 

are inappropriate “unless a party’s hindrance of the discovery process justifies a 

presumption that its claims or defense lack merit.” TransAmerican, 811 S.W.2d at 

918. 

Orders striking affirmative defenses “function[ ] as a death penalty 

sanction.” See In re Noble Drilling (Jim Thompson), LLC, 449 S.W.3d 625, 631 

(Tex. App.—Houston [1st Dist.] 2014, orig. proceeding). Striking a party’s 

affirmative defense is “tantamount to striking his pleadings” and necessarily casedeterminative. In re Bledsoe, 41 S.W.3d 807, 813 (Tex. App.—Fort Worth 2001, 

orig. proceeding). Thus, a trial court abuses its discretion if its order striking 

affirmative defenses cannot successfully navigate the gauntlet of safeguards that 

apply to death-penalty sanctions.
-28-

B. The pre-trial court abused its discretion by sanctioning TWIA for a 

minimal noncompliance that was substantially justified.

1. The record belies the pre-trial court’s finding that TWIA had 

waived its objections to the Third Interrogatories.

The pre-trial court incorrectly premised its decision to impose death-penalty 

sanctions on TWIA’s supposed voluntary waiver of objections to the Third 

Interrogatories, when the record is clear that TWIA never agreed to waive its 

objections. The pre-trial court’s faulty characterization of statements by TWIA’s 

counsel provides no basis for sanctions. 

The pre-trial court stated the reason for its order at the third and final hearing 

on this matter on April 10, 2014: “I just don’t think that TWIA has participated 

appropriately in this discovery, so I am striking the three affirmative defenses.” 

(6SuppRR.16). The court had previously made it clear that “the problem” he had 

with the discovery was with “TWIA [sic] objections” and the perceived failure of 

its counsel “to do what they say they are going to do.” (4SuppRR.12). So, the 

court stated, “I am overruling your objections and I’m sticking with what I said.” 

(4SuppRR.12). 

In fact, the court expressly stated that it believed TWIA had agreed to waive 

its objections. At the March 20 hearing, when TWIA sought reconsideration of the 

order striking TWIA’s objections, the court initially stated, “you waive all of that 

stuff when you stand up here in Court and say, ‘We can get those interrogatories in 
-29-

ten days.’ You waive it.” (5SuppRR.36). The court took the matter under 

advisement and then stood on its order striking TWIA’s objections to the Third 

Interrogatories. (5SuppRR.41; CR.187-95). But TWIA had never agreed to waive 

them in the first place.

The “agreed waiver” interpretation hinges—not on missing a deadline or 

failing to assert written objections—but rather on an inaccurate reading of 

statements at the first hearing in this matter on February 17, which this Court 

should independently review. See Am. Flood Research v. Jones, 192 S.W.3d 581, 

583 (Tex. 2006) (per curiam). 

At the February 17 hearing, when League City complained about the 

interrogatory responses and the pre-trial court asked TWIA what the “solution is 

going to be,” TWIA’s counsel confirmed “we can work with them to try to work 

that [complaints to TWIA’s response] out” in the ten-day period. (3SuppRR.40-

41) (emphasis added). He reiterated, “[W]e will do what we can” within the tenday period. (3SuppRR.41). The record is plain that TWIA did not agree to waive 

any discovery objections, including its privilege objections.

Even if there were some disagreement about what the exchange at the 

February 17 hearing meant, two things should be clear: First, TWIA’s counsel did 

not agree to waive TWIA’s objections to the Third Interrogatories. Nothing in the 

transcript of the hearing indicates he did, and doing so would make no sense. It is 
-30-

ironic that TWIA’s undertaking to work through discovery issues, or even further 

respond to discovery questions, was used as a way to punish TWIA by striking its 

legitimate objections to discovery. Second, miscommunications or 

misunderstandings occur during hearings but, as a matter of law, they do not 

constitute the type of egregious conduct necessary to impose sanctions. In fact, 

there was no order signed clarifying or documenting any supposed February 17 

agreement by TWIA to waive any objections, nor any of the trial court’s 

instructions at that hearing. There is no basis for concluding that TWIA’s conduct 

was sanctionable.

2. TWIA was substantially justified in answering the 

interrogatories subject to its proper objections.

Regardless, it was improper for the pre-trial court to impose any sanctions 

on TWIA—much less death-penalty sanctions—because TWIA was substantially 

justified in answering the Third Interrogatories on March 13 (as ordered on March 

12), subject to its legitimate objections. A threshold question before any sanctions 

can be imposed is whether the party was “substantially justified” in failing to 

comply. See Sells v. Drott, 330 S.W.3d 696, 708 (Tex. App.—Tyler 2010, pet. 

denied) (reversing monetary sanctions when failure to comply was “substantially 

justified”). If a party can demonstrate substantial justification for its failure to 

comply, then the trial court’s sanctions will be reversed as an abuse of discretion. 

See id. 
-31-

Here, TWIA properly maintained its objections to the Third Interrogatories, 

including that League City had far surpassed the maximum permitted number of 

interrogatories, never filed a motion to enlarge that number, and never obtained a 

ruling expanding that number under the Texas Rules of Civil Procedure. This is a 

substantial justification for TWIA’s minimal noncompliance. Moreover, any 

perceived failure to fully comply with the trial court’s March 12 order was 

substantially justified because the order was invalid on a number of grounds: 

(1) TWIA’s privilege objections were not properly reviewed, despite TWIA’s 

request; (2) the record does not show that the trial court considered TWIA’s 

objections individually; (3) the limit of twenty-five interrogatories was never 

expanded, nor was this objection ruled on; and (4) ordering interrogatory responses 

in a single day undermined TWIA’s due process rights. The sanctions order 

should be reversed.

C. The requirements for death-penalty sanctions were not met.

Striking TWIA’s appraisal defenses was also an abuse of discretion because 

the pre-trial court did not ensure that the TransAmerican requirements for deathpenalty sanctions were met before imposing the sanction. See TransAmerican, 811 

S.W.2d at 917-18; Noble Drilling, 449 S.W.3d at 631 (applying the 

TransAmerican standard to sanction striking affirmative defenses). Neither of the 

two mandatory requirements were met here.
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1. League City suffered no prejudice from TWIA’s continued 

assertion of objections while submitting amended and 

supplemental answers to the Third Interrogatories.

The order striking TWIA’s appraisal defenses fails at the first step of the 

two-part test for imposing death-penalty sanctions. As noted above, this first part 

of the test requires that the record demonstrate that the sanctionable conduct 

caused prejudice to the opposing party. See TransAmerican, 811 S.W.2d at 917-

18; Blackmon, 841 S.W.2d at 849-50. No such prejudice occurred here. In fact, 

the record demonstrates the opposite—that League City was provided with 

substantial discovery from TWIA concerning appraisal issues, including 

inaccuracies, fraud or mistake, and a failure to honestly assess the covered loss in 

the appraisal award. (SCR.960-66, 1250-86, 2069-90). 

Nearly a month before the pre-trial court signed the April 17 sanctions order, 

TWIA had provided six single-spaced pages of facts and information about 

TWIA’s position on the appraisal procedure, the absence of repair receipts, the 

lack of independence and partiality of League City’s designated appraiser, the 

irregularity in Umpire Burgess talking to a League City employee during the 

appraisal process, and the claims for coverage of items of damages that were not 

covered by the Policy, among other things. (SCR.2069-90). For example, TWIA 

described at length the defects relating to the award, including improper items and 

excessive damages amounts: 
-33-

[I]t appears the panel . . . found damages that were far and away 

above the known cost of repair for items where those costs are known 

to TWIA, includes items that were never submitted by the insured for 

storm-related damages and for which no claim for payment had been 

made. The award appears to include items for which neither appraiser 

had requested damages, or amounts which neither appraiser submitted 

and in which on some occasions exceed the amounts submitted. 

(SCR.2072). League City thus had ample information about TWIA’s complaints 

with the appraisal award.

In regards to TWIA’s answers to the interrogatories, League City generally 

complained that TWIA answered them subject to objections, but at the March 20 

hearing, League City only specifically took issue with TWIA’s answer to 

interrogatory number twelve, which asked TWIA to state its basis for claiming that 

the appraisal award was the result of fraud. (5SuppRR.5-6). To that and a few 

other interrogatories, TWIA properly answered that it “d[id] not know the answer 

to this question” because it had not yet taken the necessary depositions to obtain 

those facts. (SCR.1233 [Interrogatory 12]; see also SCR.1231 [Interrogatory 4], 

1233-34 [Interrogatory 15]). TWIA additionally indicated that after it had

obtained the relevant facts, “it might be possible to give an informed answer to this 

question.” (SCR.1233 [Interrogatory 12]). That is not even a failure to answer, 

but rather a preliminary answer and a promise to supplement. 

For all of these reasons, TWIA’s minimal noncompliance, if any, did not 

prejudice League City, and accordingly the trial court’s order imposing death-
-34-

penalty sanctions was an abuse of discretion.

2. The pre-trial court’s death-penalty sanction of striking TWIA’s 

affirmative defenses is excessive in light of TWIA’s conduct.

The pre-trial court’s sanctions also fail the second prong of the 

TransAmerican test because they were excessive for two separate reasons.

First, the court never considered lesser sanctions before sanctioning TWIA 

for failing to answer the Third Interrogatories without asserting its objections as 

ordered. A supposed failure to comply with a single court order is insufficient as a 

matter of law to indicate that lesser sanctions would not be effective. See Bair v. 

Hagans, 838 S.W.2d 677, 681 (Tex. App.—Houston [1st Dist.] 1992, writ denied) 

(failure to comply with one court order compelling production of documents and 

answers to interrogatories did not amount to “a pattern of discovery abuse”). 

Because there is no indication of the record of why lesser sanctions would have 

been ineffective, and the pre-trial court offered no reason of its own, it was an 

abuse of discretion to impose death-penalty sanctions without first testing lesser 

sanctions. 

Additionally, the death-penalty sanctions are excessive when conduct does 

not “justif[y] a presumption that its claims or defense lack merit.” TransAmerican, 

811 S.W.2d at 918; Blackmon, 841 S.W.2d at 850. The type of conduct TWIA 

engaged in here failed to justify that presumption. TWIA substantively 

supplemented its responses to the vast majority of League City’s Third 
-35-

Interrogatories, in accordance with the pre-trial court’s order. (See generally 

SCR.1230-35). This type of substantial compliance does not support a 

presumption that TWIA’s defenses lack merit and does not warrant death-penalty 

sanctions. See Butan Valley, N.V. v. Smith, 921 S.W.2d 822, 832 (Tex. App.—

Houston [14th Dist.] 1996, no writ) (death-penalty sanction unwarranted when 

party’s actions “do not reflect a total refusal” to comply). 

To the contrary, the record demonstrates that TWIA had a firm basis for its 

appraisal defenses. As detailed above, TWIA had produced substantial discovery 

on its affirmative defenses to the appraisal award. See supra at 13, 32-33. This 

good-faith participation in discovery on these defenses, and the actual substance of 

what was produced, demonstrates that TWIA had a legitimate legal and factual 

basis for its affirmative defenses and rules out any presumption to the contrary. 

D. The sanction was harmful because ample evidence at trial supported 

TWIA’s appraisal defenses that were wrongfully stricken.

The court that presided over the ensuing trial acknowledged at bench 

discussions that it was clear the appraisal process was fatally flawed and, thus, that 

the striking of TWIA’s valid defenses meant “this thing is screwed up big time.” 

(10RR.13; see also 10RR.54 (agreeing “[t]his is ridiculous how we’re having to 

handle this”); 19RR.125 (“I’ve seen the dang award. It’s ridiculous.”)). But 

because that court felt bound by the prior pre-trial order, (10RR.60, 113), even 

though it “would certainly not have ruled” that way, (10RR.22), the trial court was 
-36-

compelled to exclude evidence of the stricken defenses—evidence that confirms 

the strength of TWIA’s stricken defenses.

First, there was ample evidence that the appraisal award was not an honest 

assessment of necessary repairs, or was otherwise inaccurate, unreliable, or biased. 

(10RR.14, 31; see also 10RR.17-18 (excluding TWIA’s expert Lozos on this 

issue); 11RR.110-39, 146, 145-46, 147-60 (excluding relevant testimony from 

TWIA’s expert, Paul Strickland, and exhibits showing Tierce lacked 

documentation for losses he included in appraisal); 55RR.DX.BOE.2–4; 

56RR.DX.BOE.5–12; 57RR.DX.BOE.13–19; 58RR.DX.BOE.20–42 (excluded 

exhibits)). An appraisal that does not reflect an “honest attempt to exercise any 

judgment” is not enforceable. Continental Ins. Co. v. Guerson, 93 S.W.2d 591, 

597 (Tex. Civ. App.—San Antonio 1936, writ dism’d) (internal quotation omitted); 

see also State Farm Lloyds v. Johnson, 290 S.W.3d 886, 895 (Tex. 2009) 

(acknowledging this defense). 

TWIA had evidence showing that League City’s appraiser, Paul Tierce, did 

not honestly exercise any judgment, but instead “just thr[e]w out these numbers” in 

the appraisal with no substantiation whatsoever, which even the trial court agreed 

further constitutes “overwhelming” evidence of bias. (11RR.143; see also 

10RR.31 (“I mean, it’s clear as a bell that Tierce is absolutely biased.”)). For 

instance, Tierce never asked for any receipts, photographs, or any other 
-37-

documentation showing why previous repairs were made or how much the repairs 

actually cost. (54RR.DX.BOE.D/76-77, 99-100, 104-06, 109, 173-74, 184-87, 

190, 194, 201-03, 206-07, 209, 215, 217-19 (Tierce’s deposition)). Tierce also 

refused to provide receipts or other documentation supporting the losses he 

claimed to assess when TWIA’s appointed appraiser, John Mullen, asked for them. 

(54RR.DX.BOE.D/270-74, 277; 55RR.DX.BOE.2–3). Tierce did not account for 

pre-storm condition or age of the appraised structures, (54RR.DX.BOE.D/101-02, 

207), nor did he have a written description of those properties. 

(54RR.DX.BOE.D/140). The utter lack of documentation is particularly 

suggestive of fraud or impropriety—another of TWIA’s defenses—given that 

thirty of the assessed structures were never even mentioned when League City’s 

claim was originally adjusted in 2008. (See 11RR.116-18 (bill of exceptions, 

TWIA’s expert Paul Strickland); 8RR.229-31 (Strickland’s trial testimony); 

54RR.DX.BOE.D/190-91, 204-05)); Barnes v. W. Alliance Ins. Co., 844 S.W.2d 

264, 270-71 (Tex. App.—Fort Worth 1992, writ dism’d) (upholding fraud finding 

as basis for invalidating appraisal award). 

All this evidence supports the conclusion that League City’s retained 

appraiser acted improperly by doing none of the work required of an appraiser and 

then inflating the amounts included in his appraisal. See, e.g., Continental Ins., 93 

S.W.2d at 596 (appraisal award was invalid when the appraisers “made no effort to 
-38-

secure the information or facts upon which they could base and should have 

exercised their judgment as to value”). These extreme irregularities in the 

appraisal process, coupled with the gross errors in the award itself, also 

substantiate TWIA’s additional defenses that Tierce was biased or mistaken—even 

intentionally so. See e.g., Sec. Ins. Co. v. Kelly, 196 S.W. 874, 876-77 (Tex. Civ. 

App.—Amarillo 1917, writ ref’d); see also Penn. Fire Ins. Co. v. W.T. Wagoner 

Estate, 39 S.W.2d 593, 595 (Tex. Comm’n App. 1931) (a grossly erroneous award 

“may also be considered in determining the bias and prejudice of the appraisers”). 

Tierce’s flawed approach to the appraisal process was only compounded by 

Burgess’s abdication of his role as umpire. (See generally 21RR.123-31). Umpire 

Burgess admitted that he had never even seen the policy underlying this dispute 

and had no idea what the policy did or did not cover. (21RR.124-25). Nor did 

Burgess ever ask for, or look at, any receipts. (21RR.128). And despite the Texas 

Supreme Court’s indication in Johnson that “appraisers must always consider 

causation, at least as an initial matter,” 290 S.W.3d at 893 (emphasis added),

Burgess admitted that he failed to determine whether the alleged losses were 

windstorm-related, testifying that he usually does not “get into coverage or 

causation” when doing an appraisal. (21RR.127; see also 21RR.129). Instead, 

Umpire Burgess took the astonishing approach of simply adopting the estimate that 

covered the largest scope of repairs from League City’s appraiser, except in those 
-39-

few instances where it was “obvious” that the repairs were unrelated to windstorm. 

(21RR.128-31). 

Obviously, to the extent an appraisal panel purports to consider and 

determine causation or coverage issues, the panel’s competence and reliability in 

making those determinations could also be the subject of later challenges to the 

award. See Johnson, 290 S.W.3d at 895 (“If an appraisal is not an honest 

assessment of necessary repairs, that can be proved at trial and the award set 

aside.”). Where, as here, the appraiser for one side and the umpire testified that 

they used an arguably defective process for deciding coverage issues, there is at 

least some evidence to support TWIA’s defenses of bias, accident, mistake, or even 

fraud in the appraisal process. Tierce’s and Burgess’s approaches to the appraisal 

reflect a fundamental lack of understanding of what the appraisal process requires 

(if not outright wrongdoing), see supra 36-38, which evidences that both were 

incompetent to serve as appraiser and umpire, respectively, in violation of the 

policy requirements. (27RR.PX1/Policy084). 

TWIA also proffered evidence showing that Umpire Burgess lacked the 

contractually required independence because of an ongoing conflict of interest. At 

the time he was appointed in March 2013 and for months thereafter, the law firm 

that employed Burgess as counsel was actively representing a party in a suit 

against TWIA for Hurricane Ike damage, which destroys his independence to serve 
-40-

as umpire in this case. (See 54RR.DX.BOE.C/6; 54RR.DX.BOE.E–F); accord 

Nat’l Med. Enters., Inc. v. Godbey, 924 S.W.2d 123, 131 (Tex. 1996). Further, 

Umpire Burgess had been approached by plaintiff’s counsel before his 

appointment and discussed being appointed umpire as a way to earn additional 

income. (54RR.DX.BOE.C/12-14).

In sum, the record contained substantial evidence that supported TWIA’s 

defenses that it was forced to forgo because of the improper death-penalty 

sanction. This Court should reverse the April 17, 2014, sanctions order and permit 

TWIA to raise these defenses in the event that this case is retried.

PRAYER

For these reasons, Cross-Appellant Texas Windstorm Insurance Association 

prays that this Court vacate the pre-trial court’s impermissible $15,000 sanction. 

TWIA also prays that, in the event the case is remanded for a new trial, TWIA will 

be permitted to assert the affirmative defenses that the pre-trial court erroneously 

struck. TWIA also prays for such further relief to which it may be entitled.
-41-

Respectfully submitted,

BRACEWELL & GIULIANI LLP

Andrew T. McKinney IV 

State Bar No. 13716800 

LITCHFIELD CAVO LLP

One Riverway, Suite 1000 

Houston, Texas 77056 

Telephone: (713) 418-2000 

Facsimile: (713) 418-2001

James R. Old, Jr.

State Bar No. 15242500

JAY OLD & ASSOCIATES, PLLC

2615 Calder Avenue, Suite 720

Beaumont, Texas 77702

Telephone: (409) 241-7252

Facsimile: (409) 419-1733

By: /s/ Dale Wainwright 

Dale Wainwright

State Bar No. 00000049

dale.wainwright@bgllp.com

Yvonne Y. Ho

State Bar No. 24055673

yvonne.ho@bgllp.com

Lindsay E. Hagans

State Bar No. 24087651

lindsay.hagans@bgllp.com

BRACEWELL & GIULIANI LLP

111 Congress Avenue, Suite 2300

Austin, Texas 78701

Telephone: (512) 472-7800

Facsimile: (800) 404-3970

Attorneys For Cross-Appellant 

Texas Windstorm Insurance Association
-42-

CERTIFICATE OF SERVICE

I certify that a copy of the Brief of Cross-Appellant was served on counsel 

of record by EFile as follows on the 7th day of August 2015, addressed as follows:

Jennifer Bruch Hogan

HOGAN & HOGAN 

711 Louisiana, Suite 500

Houston, TX 77002

Telephone: (713) 222-8800

Facsimile: (713) 222-8810

Gregory F. Cox

Michael R. Ramsey

THE MOSTYN LAW FIRM

6280 Delaware Street

Beaumont, Texas 77706

Facsimile: (409) 832-2703

Attorneys For Appellant and Cross-Appellee League City

/s/ Dale Wainwright

Dale Wainwright

CERTIFICATE OF COMPLIANCE

This brief complies with the length limitations of TEX. R. APP. P. 9.4(i)(2) 

because this brief consists of 9,067 words, excluding the parts of the brief 

exempted by TEX. R. APP. P. 9.4(i)(1).

/s/ Dale Wainwright

Dale Wainwright
-43-

APPENDIX

Pre-trial court order issuing monetary sanction Tab A

Pre-trial court order striking defenses Tab B

Trial court’s amended final judgment Tab C
TAB A
160
TAB B
187
188
189
190
191
192
193
194
195
TAB C
678
679