Title: Gulf Homes, Inc. v. Beron
Citation: 141 Ariz. 624, 688 P.2d 632
Docket Number: 17437-PR
State: Arizona
Issuer: Arizona Supreme Court
Date: September 12, 1984

141 Ariz. 624 (1984) 688 P.2d 632 GULF HOMES, INC., Plaintiff/Appellant/Cross-Appellee, v. Wilfred G. BERON and Kathryn Beron, husband and wife, Defendants/Appellees/Cross-Appellants. No. 17437-PR. Supreme Court of Arizona, In Banc. September 12, 1984. Reconsideration Denied October 23, 1984. *625 Stephen C. Birringer, Scottsdale, for plaintiff/appellant/cross-appellee. Southern Arizona Legal Aid, Inc., Tucson by Charles R. Pyle, for defendants/appellees/cross-appellants. CAMERON, Justice. Wilfred and Kathryn Beron brought this petition for review of a memorandum decision of the Court of Appeals, which held that the trial court erred in entering a default judgment against the plaintiff, Gulf Homes, Inc. We have jurisdiction pursuant to Ariz. Const. Art. 6, § 5(3) and A.R.S. § 12-120.24. We must answer two questions: The facts follow. Gulf Homes, Inc., sold the Berons a mobile home on 15 March 1976. The Berons defaulted on the monthly payments and Gulf, in 1979, sued them alleging default. The Berons counterclaimed alleging violations of the Truth in Lending Act, 15 U.S.C. § 1601, et seq., the Arizona Retail Installment Sales Transactions Act, A.R.S. § 44-6001, et seq., breach of duty of good faith, breach of warranty, unconscionability, and breach of warranty of title. After several attempts by the Berons to take the deposition of the president of Gulf Homes, Max Morgan, Gulf moved for a protective order. The trial court denied the motion and ordered the deposition for 12 May 1981. Morgan appeared but, as the Court of Appeals noted, was "totally unresponsive despite the fact that he had been previously advised by appellees of the substance and nature of the questions to be asked." *626 As a result of Morgan's conduct, the Berons moved for sanctions pursuant to Rule 37(b), supra. The trial court found Morgan's conduct "was tantamount to a refusal to appear and answer questions." The court then ordered Gulf's reply to the Berons' counterclaims stricken and entered a default against Gulf on those counterclaims. A hearing on damages was held and a judgment rendered therefrom. Gulf appealed to the Court of Appeals from that judgment. The Court of Appeals reversed the trial court in a memorandum decision and we granted Berons' petition for review. FAILURE TO ANSWER Although Morgan did appear as ordered by the court, he was hardly a willing witness. His testimony reads in part: The trial court found "that the conduct of the deponent, Max T. Morgan, President and Manager of Gulf Homes, Inc., was tantamount to a refusal to appear and answer questions." We agree. Our rules provide: Rule 37(a), Arizona Rules of Civil Procedure, 16 A.R.S. We believe subsection (3) applies to the facts of this case. After the Berons had been forced to obtain an order to compel Morgan to appear, Morgan appeared but refused to cooperate in answering the questions. Such conduct frustrates discovery, prolongs the trial process, and should not be condoned by the courts. Morgan's conduct was, we believe, tantamount to a refusal to appear and a failure to answer. The trial court was correct in so finding. DEFAULT JUDGMENT The Court of Appeals, relying on Hancock v. Arizona Central Credit Union, 24 Ariz. App. 167, 536 P.2d 1059 (1975), reversed the trial court's decision, holding that the proper remedy for failure to answer questions at a deposition is an order compelling an answer under Rule 37(a)(2). The court held that Rule 37(b) only applies if a deponent fails to answer a question after being ordered to answer that specific question by the trial court. It noted that the order from the trial court only ordered Morgan to appear at the deposition, and because Morgan did appear a default judgment was improper. We do not agree. When it is obvious that a deponent has no intention of answering legitimate questions asked at a deposition, it should be no excuse that the deponent is physically present. Once the trial court finds that the conduct is the same as if he did not attend at all, Rule 37(d) provides that sanctions may be imposed. This rule states: Rule 37(d), Arizona Rules of Civil Procedure, 16 A.R.S. Paragraphs (A), (B), and (C) of subsection b(2) of this rule allow a wide range of sanctions for failure to obey an order in discovery, and subsection (C) specifically allows a dismissal of the action or default judgment to be entered. In Hancock, supra, the Arizona case relied upon by the Court of Appeals, the defendant failed to appear for depositions several times. The trial court finally ordered the defendant to appear, but he refused to give more than his name and address. The Court of Appeals held that because the defendant had not been ordered to answer the questions, the trial court should not have granted the plaintiffs' motion to strike the defendant's pleadings. The court held the proper procedure would be for the plaintiffs to obtain an order compelling defendant to answer, and if he then refused the sanction would be appropriate. The Court of Appeals in Hancock stated: Hancock, supra, at 169, 536 P.2d at 1061 (citations omitted, emphasis in original). In Hancock, the court relied on three cases to support its holding, Independent Productions Corp. v. Loew's Inc., 283 F.2d 730 (2nd Cir.1960); SEC v. American Beryllium &amp; Oil Corp., 303 F. Supp. 912 (S.D.N.Y. 1969); and Westport National Bank v. Wood, 31 Conn. Sup. 266, 328 A.2d 724 (1974). In each of the cases, the deponent appeared but refused to answer questions, based on Fifth Amendment grounds against self-incrimination. That is not the case here. The Hancock court, however, also cited cases in which the sanction of dismissal was approved. In Brady v. Hearst Corp., 281 F. Supp. 637 (D.Mass. 1968), the plaintiff, an attorney, refused to appear at a deposition. The defendants moved to dismiss, but the court "exercised its discretion in her [plaintiff's] favor" and ordered a new deposition. At that deposition, the plaintiff refused to answer questions. The district court, after deciding that all the grounds under which the plaintiff refused to answer were improper, used the failure to answer as a ground for dismissal. (The court also dismissed the three allegations for other reasons.) Id. at 641-42. In Doanbuy Lease and Co. v. Melcher, 83 N.M. 82, 488 P.2d 339 (1971), the plaintiff's president, an attorney, was deposed but gave evasive answers. After the defendant moved for sanctions, the court ordered another deposition but the president claimed he could not remember anything at that deposition. The court granted dismissal. We think the facts of Brady and Doanbuy are more similar to the facts in this case than the facts of the cases cited by the Hancock Court in support of its decision. There was no claim of Fifth Amendment privilege in the instant case. Morgan was ordered to appear after failing to appear several times and after the trial court failed to grant Gulf's motion for a protective order. He was informed of the subject matter of the deposition. He did appear, but was unresponsive. The trial court then found his actions were tantamount to failure to appear and entered a default judgment on the petitioners' counterclaims. The United States Supreme Court has stated: National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 642-43, 96 S. Ct. 2778, 2780-81, 49 L. Ed. 2d 747, 751 (1976). The questions asked were material to the claims of the petitioners. Morgan was advised of the subject matter of the questioning before the deposition, and had an opportunity to prepare for the questions. He admitted he would review the matter before trial. By failing to cooperate, Morgan injected a factor of delay into the discovery process and exacerbated the costs inherent in the litigation. This was flagrant bad faith, and showed a knowing and callous disregard of the court's order to appear for the taking of his deposition. Morgan's conduct violates the spirit, if not the letter, of Rule 1, Arizona Rules of Civil Procedure, 16 A.R.S. We hold that the trial court in this case did not abuse its discretion in granting the petitioners' motion for default judgment. The decision of the Court of Appeals is vacated and the holding of the trial court is affirmed. To the extent this opinion is inconsistent with the holding of Hancock, Hancock is overruled. HOLOHAN, C.J., GORDON, V.C.J., and HAYS and FELDMAN, JJ., concur.