Opinion ID: 1272032
Heading Depth: 1
Heading Rank: 4

Heading: history of the proceedings in the trial court

Text: In Section III A, infra, of this opinion we will discuss in detail the chronology of the proceedings in the court below in the context of analyzing GAC's efforts to comply with the court's discovery orders. At this point, however, it is necessary to provide a brief outline of those proceedings in order to facilitate an understanding of the overall posture of the case and the various issues on appeal. On December 31, 1975, United filed this action in Sante Fe District Court. On the same day, United served lengthy interrogatories on GAC. This set of interrogatories will be referred to as the First Set of Interrogatories. The interrogatories called for detailed information concerning the uranium and fuel fabrication businesses of Gulf, Scallop and GAC. Many of the interrogatories specifically asked for information from the partnership and the partners. Neither the complaint nor the interrogatories specifically mentioned the international uranium cartel. On April 5, 1976, GAC filed the first of two sets of answers to the First Set of Interrogatories. The answers provided no information on the cartel and virtually no information on the separate uranium business activities of Gulf and Scallop. The trial court eventually found these answers to have been wholly inadequate and evasive. During the summer of 1976, extensive discovery efforts were conducted by United. GAC produced its business records, but it did not produce documents which were in the separate possession of Gulf or Scallop. On September 23, 1976, the Canadian Government promulgated the Canadian Uranium Information Security Regulations, which prohibited the release of cartel information from Canada. [6] One week later, United pointed out for the first time that GAC had failed to produce documents from Gulf and Scallop. GAC then contended that it was not obligated to produce records which were in the separate possession of the partners. See Section II A, infra. The trial court rejected this argument on November 30, 1976. The court held that both the partnership and the partners were subject to its discovery orders, and it warned that sanctions would be imposed if either the partnership or the partners failed to comply with those orders. United then moved to compel production of partner documents and supplemental answers to the First Set of Interrogatories. GAC continued to assert that partner documents were not discoverable, and the court again rejected this argument at three different hearings in January 1977. It ordered GAC to provide supplemental answers and to produce partner documents by April 15, 1977. In February 1977, United moved to compel production of cartel-related documents Gulf had produced in other litigation. GAC resisted production of these documents, once again rearguing the question of partner discovery. GAC also suggested for the first time that United's counsel, who had represented Gulf until November 1976 on its operations at Mt. Taylor, might have to be disqualified in this case. See Section IV, infra. On March 1, 1977, for the first time GAC specifically asserted that the Uranium Information Security Regulations were a bar to the discovery of cartel information. At a hearing on March 7, the court reiterated its previous rulings that Gulf was subject to its discovery orders, granted United's motion to produce the cartel records, and again warned that sanctions, including a default judgment, would be imposed if good faith discovery efforts were not made. GAC then formally moved to disqualify United's counsel. The court denied this motion. In March 1977, I&M, which had been joined as a party in January 1977, filed claims against GAC, specifically asserting Gulf's cartel activities as a basis for the relief it sought. GAC's supplemental answers were filed on April 15. They made no mention of the cartel. In August 1977, United filed its Second Set of Interrogatories. This set was specifically addressed to the activities of the cartel. GAC filed objections to these interrogatories. The objections made no mention of the Uranium Information Security Regulations or any other Canadian secrecy laws. The court overruled most of the objections. GAC then filed answers to these interrogatories, which included the assertion that Canadian laws barred production of cartel documents. United moved to compel further answers to the interrogatories and the production of cartel documents and to have sanctions imposed. The trial court granted the request for further answers. The court found that GAC had not acted in good faith regarding the production of cartel documents up to that time. It ordered GAC to produce cartel records to the extent lawful, and to the extent that it was unlawful, to seek a waiver of Canadian nondisclosure laws. The court again warned that sanctions would be imposed if its order was not complied with. GAC unsuccessfully sought permission from the Canadian Government to produce cartel documents located in Canada. GAC then submitted its second set of answers, which did not identify any cartel documents located in Canada or contain information from such documents. Five days after the trial began, United again moved to compel the production of cartel documents and for sanctions for GAC's alleged discovery failures. At a hearing on November 8, 1977, the trial judge accused GAC of stonewalling information. The following day, GAC moved to disqualify the judge. The motion was denied. See Section V, infra. The trial court, after a hearing, found that GAC had deliberately housed cartel documents in Canada in an attempt to court legal impediments to their production. It also found that GAC had violated its prior order to identify cartel documents, and it again ordered such identification. In December 1977, United and I&M filed objections to GAC's second set of answers to the Second Set of Interrogatories and moved to compel further answers. The trial court granted this request. On February 1, 1978, GAC filed its third set of answers. Thereafter, United filed its fourth motion for a default judgment, in which I&M joined. The trial court granted the motion, and entered the sanctions order and default judgment which is the subject of this appeal. The trial court found all issues of liability against GAC and in favor of I&M and United. The court found that GAC had acted in bad faith throughout the discovery process, and had willfully, intentionally and in bad faith covered up highly relevant information concerning the cartel and Gulf's role therein. The court said that GAC's answers to the First Set of Interrogatories were wholly inadequate and evasive, and that its series of answers to the Second Set of Interrogatories amounted to a willful, intentional, deliberate and bad faith failure and refusal to answer. See Section III, infra. A lengthy trial on the question of damages was conducted following entry of the sanctions order and default judgment. See Section VI, infra. On May 16, 1978, the court entered a final judgment against GAC.