Opinion ID: 2403811
Heading Depth: 1
Heading Rank: 2

Heading: Substantive Findings

Text: Breezevale challenges the substantive findings of the trial court on three grounds. We conclude that each claim lacks merit.
Breezevale first asserts that the evidentiary record before the trial court did not support its finding by clear and convincing evidence that the documents were known forgeries, which formed the basis of the court's order of sanctions against Breezevale. Although GDC initially filed its request for sanctions against Breezevale as a counterclaim, the trial court's (as well as our own) treatment of the issue is more appropriately viewed as a motion for sanctions based upon abuse of the judicial process. See Breezevale I, 759 A.2d at 639 n. 18. The trial court has inherent power to sanction parties for intentionally abusing the litigation process. Id. We made clear in Breezevale I that, given this inherent power, sanctions may properly be imposed against a party found to have forged documents in an apparent attempt to bolster a portion of its case and then steadfastly lied about it while litigating another case.... Id. at 639. Accordingly, sanctions may properly lie against Breezevale so long as there is sufficient evidence that Breezevale knew the documents at issue were forgeries, yet continued to assert that they were genuine. The trial court so found, and its findings of fact can be reversed only if they are plainly wrong or without evidence to support them. Jemison v. Nat'l Baptist Convention, USA, Inc., 720 A.2d 275, 281 (D.C.1998). There was ample evidence supporting the court's finding that documents were forged with the knowledge and participation of Breezevale executives. First, there was the testimony of Rebecca Paul, the Breezevale employee who initially revealed that the documents were forged. Ms. Paul testified that she was directed by Breezevale executives in February 1991 to manufacture spreadsheets and offer letters and to back date them to November and December 1987. Ms. Paul described in some detail how she and Abou Jaoude, a Breezevale executive, worked together to forge documents over the course of three days in February 1991. The court credited Ms. Paul's testimony, pointing out that she had no discernable motive to lie. Breezevale asserted that Ms. Paul made up her testimony in an effort to sabotage the company. The court found Breezevale's position implausible, however, since it would require an otherwise loyal employee of ten years to sacrifice her job, implicating herself in serious misconduct and committing perjury in the process, for no plausible reason. We agree, and defer to the trial court's positive assessment of Ms. Paul's credibility. In addition to Ms. Paul's testimony, there were several other notable pieces of evidence which support a finding of forgery. The documents at issue were purportedly hand-delivered between Beirut and Iraq in 1987. However, considering that Breezevale's normal course of transmitting offer letters in 1987 was to send them via Telex communications, there appears no logical explanation for why hand-delivery was opted for on this occasion. Several former Breezevale employees testified that all Breezevale-Iraq business was handled through the London office. Although one Breezevale executive, Jaoude, testified to the contrary, the trial court discredited his testimony as self-serving and incredible. The court concluded that it would defy common sense and good business practice to hand deliver offer letters from Beirut when instant and far more reliable communication was available via London, and this conclusion finds support in the record. Moreover, the trial court found it especially puzzling that Jaoude never signed any Firestone-related documents sent to Iraq before or after 1987, despite his testimony that he was responsible for that business beginning in 1985. Jaoude was also the only witness who testified to having actually seen the disputed documents in 1987. Although all records pertaining to Breezevale's Iraq business were maintained in London, these particular documents, purportedly prepared in 1987, did not find their way to the London office until February 1991. The court found it telling that neither the secretary who allegedly typed the documents, nor the employee who allegedly delivered them to Baghdad, were called to testify; nor was the pre-1991 typewriter on which some of the documents were claimed to have been typed, introduced into evidence. The court also based its finding on a detailed examination of the documents themselves, which were admitted into evidence. A document dated February 25, 1987 was computer generated, even though by Jaoude's own testimony, Breezevale did not yet own computers at that point. Although Breezevale claimed that Ms. Paul fabricated this particular document on her own initiative, this explanation was belied by Jaoude's handwritten notations on the document. A computer evidence expert testified that both this document and a similar one with Jaoude's handwriting on it were produced on Ms. Paul's computer with a last access date of February 21, 1991, thus corroborating Ms. Paul's testimony that the documents were created at that time. Other evidence of forgery includes the fact that two documents (each with Jaoude's signature) were typed on a letterhead which did not exist in 1987. [4] Although Jaoude denied having signed these documents, the court credited the testimony of a handwriting expert who concluded with no reservation whatsoever that it was indeed Jaoude's signature on the documents. In short, the court found that the evidence lead to the inescapable conclusion that the documents at issue were forged, and this conclusion is supported by substantial evidence in the record. Breezevale argues that even if there was clear and convincing evidence of forgery, there was insufficient evidence to show that the top two Breezevale executives, Habib Bou Habib and Charles Awit, participated in or were aware of such forgery. [5] Breezevale contends that so long as these executives believed that the documents were genuine, it could not constitute bad faith for Breezevale to have maintained as such at trial. We note at the outset that the crucial determination supporting the court's finding of bad faith litigation is the knowledge of Breezevale executives at the time they instituted the malpractice action against GDC, rather than at the time the forgery occurred. Regardless of whether Breezevale executives knew of the forgery prior to Ms. Paul's revelation, once Ms. Paul's allegations came to light, Breezevale was on notice of potential forgery. Cf. Clay Properties, Inc. v. Washington Post Co., 604 A.2d 890, 896 (D.C.1992) (en banc) (discussing circumstances where a person of ordinary prudence is required to make inquiry or investigate further). Once these serious allegations were made, it became incumbent upon Breezevale to conduct a thorough investigation. At the very least, Breezevale executives would be expected to gain reasonable assurance that the documents were genuine prior to initiating a law suit in which they would make such a representation. [6] As the preceding discussion illustrates, there was substantial evidence showing that the documents were in fact forgeries; indeed, the evidence was clear and convincing. Inquiry would have indicated what both a jury and a trial court found evident  that the documents were forgeries, and it is not unreasonable to infer that such an inquiry was in fact made or deliberately avoided. Under the circumstances, all three Breezevale executives must be deemed to have known that the documents were forged by the time they initiated the malpractice claim against GDC. In any event, there was clear evidence to support a finding that each of the three top Breezevale executives participated in the forgery scheme. Ms. Paul's testimony, which was credited by the trial court, not only implicated Jaoude in the forgery, but Habib and Awit as well. She testified that when she informed Habib that there were no Iraq offers in 1987, he responded to her that we better think about making sure there [are]. Soon afterwards, Jaoude directed her to start forging spreadsheets and offer letters. Ms. Paul also testified that she observed several conversations between Jaoude and Awit during which they discussed the logistics of the forgery scheme. As the date of her deposition approached, Ms. Paul personally notified Habib on four different occasions that she was afraid of having to testify falsely under oath regarding the documents. According to Ms. Paul, Habib responded that she should not be nervous and that she could probably outsmart them. Clearly, if Ms. Paul's testimony is credited, it serves as compelling evidence that the top Breezevale executives were complicit in the forgery scheme. The trial court, which observed Ms. Paul's testimony and also had heard testimony from the top three executives, credited this testimony, and its finding that the forgery was done with the knowledge of Awit and approval of Habib, is therefore not plainly wrong or without evidence to support it. Jemison, 720 A.2d at 281.
Breezevale next argues that even if the evidentiary record as it stood before the trial court was sufficient, Breezevale was entitled to an additional hearing to present further evidence on the precise issue. A trial court's determination whether or not to conduct an evidentiary hearing is reviewed for abuse of discretion. See Peddlers Square, Inc. v. Scheuermann, 766 A.2d 551, 559 (D.C.2001) (finding no abuse of discretion where trial court denied a hearing on a motion for sanctions). We are satisfied that Breezevale was afforded a full opportunity to present its case both as to whether the documents were in fact forged and whether the top executives knew them to be so, and that it was not an abuse of discretion for the trial court to deny Breezevale's request. Breezevale asserts that due process principles mandate it be afforded the requested hearing. Breezevale's position is not supported by our case law. Although a party is entitled at least to a meaningful opportunity to argue, either in open court or on paper, against the imposition of any [] sanctions against him ... a full evidentiary hearing may not be necessary. Brady v. Fireman's Fund Ins. Cos., 484 A.2d 566, 569 (D.C.1984). Thus, it was not error to deny Breezevale's request for a hearing, so long as Breezevale had sufficient opportunity to contest the underlying facts and to address the issue of sanctions. Unquestionably, Breezevale had notice very early on that it was potentially subject to sanctions. GDC first raised its counterclaim alleging bad faith litigation in its answer to Breezevale's complaint. Breezevale's first opportunity to contest these claims occurred when it filed a Motion To Dismiss The Bad Faith Litigation Counterclaim. The trial judge denied this motion in an order dated January 11, 1996 stating that [t]here is no question that sanctions and attorneys' fees are appropriately imposed for improper trial tactics and bad faith litigation.... (quoting Zanville v. Garza, 561 A.2d 1000, 1002 (D.C.1989)). Thus, it was apparent that the bad faith litigation claim would be a part of the case, and Breezevale had every reason to contest it during the ensuing seven-week trial. [7] Breezevale contends that while it may have had an opportunity at trial to argue that the documents were not forgeries, it did not have any incentive to argue that the top Breezevale executives had a good faith belief that the documents were genuine. This position is puzzling. From the very beginning it was evident that the case involved questions not only whether the documents were forged, but also whether they were forged with the knowledge and participation of Breezevale executives. Indeed, the jury instructions required the jury to determine whether forgeries occurred and if so, that one or more Breezevale executives participated in such forgeries. All three top executives in fact testified at length at trial. Evidence of its executives' good faith belief that the documents were genuine would tend to show not only that they did not participate in the forgery scheme, but cast doubt on the forgery issue itself by impeaching Ms. Paul's veracity. The proposition that there was no incentive at trial for Breezevale to argue that the top executives believed the documents to be genuine is dubious to say the least. [8] Nor was Breezevale's opportunity to argue against the imposition of sanctions limited to the trial. At the conclusion of trial, Breezevale filed an 85-page brief titled Plaintiff's Memorandum Of Points And Authorities In Opposition To Defendants' Motion For Dismissal And Other Sanctions. On remand, after issuance of this court's decisions in Breezevale I and Breezevale II, GDC filed a Second Renewed Motion For Sanctions. Breezevale responded by filing a 48-page Memorandum Of Points And Authorities In Opposition To Defendants' Second Renewed Motion For Sanctions. Included with this filing were sworn affidavits from top Breezevale executives describing the bases for their good faith belief that the documents were genuine. Thus, when the trial court issued sanctions against Breezevale, it had evidence of the good faith belief of the top executives before it, but was clearly unpersuaded. In short, Breezevale had multiple opportunities over the course of proceedings which spanned more than seven years to present the trial court with evidence of the top executives' good faith belief and to argue the issue of sanctions. Furthermore, the sanctions were imposed by a judge who had participated in every aspect of the proceedings. See Peddlers Square, Inc., 766 A.2d at 559. The decision whether to grant an evidentiary hearing is squarely within the trial court's discretion, see id., and given the judge's extensive experience with the parties in this case, including hearing trial testimony by all the relevant parties, we conclude that it was not an abuse of discretion to deny Breezevale's request for a further evidentiary hearing on an issue that had been extensively litigated and thoroughly briefed.
Finally, Breezevale, rather remarkably, makes the strained assertion that the jury itself found that the documents were not forged, and therefore the trial court is barred by the Seventh Amendment from revisiting the issue. Breezevale argues that the Seventh Amendment demands that, if there is a view of the case which makes the jury's answers consistent, the court must adopt that view. Breezevale points to the jury's responses to questions # 3 and # 4, which indicate that although it believed forgeries occurred with the participation of one or more Breezevale executives, Breezevale's forgery of documents did not play a substantial part in damaging its lawsuit against Firestone. [9] According to Breezevale, the consistent view of the jury's answer is that the documents found to have been forged were not the offer letters and spreadsheets related to the lawsuit against Firestone, but rather other documents brought by Ms. Paul to her deposition, and that the Breezevale executive the jury found to have participated in the forgery was not either of Jaoude, Habib or Awit, but rather Ms. Paul herself. Breezevale's reading of the jury's verdict simply does not withstand scrutiny against the backdrop of the actual litigation. The questions the jury was instructed to answer directly followed from the most intensely litigated issue of the case: whether the offer letters and spreadsheets were forged. It would strain reason to conclude that the jury interpreted question # 3 to relate to documents other than those at the heart of the malpractice claim. Likewise, there is nothing to suggest that the jury believed that Ms. Paul, whose testimony was that she was following the instructions of her superiors, was the Breezevale executive referred to in the question. To the contrary, the only logical interpretation of the jury's answer to question # 3 is that the offer letters and spreadsheets were forged (by Ms. Paul), and done so with the participation of at least one Breezevale executive (Jaoude). Breezevale rests its argument on the court's instruction to the jury that in answering question # 4, the jury would necessarily have to decide if [Ms.] Paul told the truth or lied when she testified that offer letters and spreadsheets dated 1987, were prepared in February 1991, with the knowledge and participation of one or more Breezevale executives. According to Breezevale, since the jury found that the outcome in fact would have been different, it must necessarily have also found that Ms. Paul lied. Breezevale neglects to consider the very next sentence of the court's instruction, however, in which it goes on to explain that the answer to this question [whether Ms. Paul lied] is a factor you should consider as you determine whether Breezevale would have obtained more than the $100,000 settlement it ultimately reached with Firestone. Thus, the plausible reading of the jury's verdict is that although Ms. Paul told the truth about the forging of the offer letters and spreadsheets, Breezevale still had a strong enough claim that had her deposition been postponed, it could have successfully maintained its lawsuit against Firestone. See Breezevale I, 759 A.2d at 634 (This jury knew of Breezevale's fraud and concluded that Breezevale nonetheless would have prevailed at trial. We do not think this conclusion was without any support.). The trial court was also cognizant of this likelihood: [t]he irony is that Breezevale had a strong case for legal malpractice against GDC, regardless of how the forgery issue played out.... Postponing Ms. Paul's deposition would at least have bought time for GDC and Breezevale to consider their options and develop a strategy for dealing with the problem. Accordingly, we conclude that the trial court's finding was not inconsistent with the jury's findings; rather, the findings were wholly consistent.