Opinion ID: 1205488
Heading Depth: 3
Heading Rank: 4

Heading: Default and Sanctions

Text: Finally, by order, the circuit court sanctioned Penn for acting in contravention of a circuit court order that denied Penn the opportunity to conduct further discovery. The date of trial was initially set for February 5, 1990. Accordingly, discovery was to conclude on January 5, 1990, thirty days prior to the assigned trial date. RCCH Rule 12(r). [14] The trial was subsequently continued to a later date. On March 29, 1990, Penn filed a motion for leave to conduct discovery. On May 9, 1990, the circuit court denied Penn's motion. The date for trial was repeatedly continued. On August 6, 1991, Penn subpoenaed Best Place's former accountant, Larry Anderson, to appear at trial on the new scheduled date of August 8, 1991. Unbeknownst to Best Place, Anderson contacted Penn's counsel and informed counsel that he wanted to comply with the subpoena but that he would be on the mainland during the scheduled trial date. According to Anderson's affidavit, Penn's counsel told Anderson to deliver Best Place's financial records to Penn's counsel's office and that Penn's counsel would review the records to see if anything was relevant. [Anderson] complied with [Penn's counsel's] request and delivered three (3) storage boxes of records to him shortly thereafter. The trial did not take place and was again continued to a later date. Approximately one to two months later, Anderson contacted Penn's attorney and requested the return of the records. The records were then returned to Anderson. At no time did Penn's attorney advise Anderson to contact Best Place's counsel or the circuit court. Likewise, Penn's attorney did not contact Best Place's counsel to inform him that records had been submitted by Anderson. The date of trial was again continued until February 10, 1992. On February 7, 1992, Penn delivered to Best Place's counsel copies of over nine-hundred pages of records that were copied from Anderson's records and were marked for identification as exhibits. On the assigned day of trial, February 10, 1992, Best Place filed a motion for default and other sanctions against Penn for violating the circuit court's May 9, 1990 order that denied Penn the opportunity to conduct further discovery. On the same day, arguments on the motion were presented in circuit court. On March 12, 1992, by order, the circuit court denied Best Place's motion for default, but granted Best Place's motion for sanctions and excluded from the record all evidence of [Best Place's] financial condition, including but not limited to the records of Mr. Anderson and all testimony concerning those records or influenced by those records[.] The circuit court also required Penn to pay Best Place the sum of $250.00 as sanctions. On appeal, Penn argues that it was erroneously sanctioned by the circuit court for reviewing Anderson's documents regarding Best Place's financial condition. Penn contends that reviewing the documents was not discovery, but, rather, it constituted a preview of a witness' records, and, therefore, did not violate the May 9, 1990 court order that denied Penn the opportunity to conduct further discovery. We disagree. It is the inherent power of the court to sanction and punish attorneys for violating court orders. The circuit court is given broad discretion in granting such sanctions. See e.g., Wong, 66 Haw. at 394, 665 P.2d at 161. The May 9, 1990 circuit court order clearly informed Penn that it was to refrain from conducting further discovery. Penn contends that previewing Anderson's documents of Best Place's financial condition was not discovery. However, HRCP Rule 26(a) provides in relevant part that parties [] obtain discovery by ... production of documents... for inspection and other purposes. Clearly, Penn conducted discovery by telling Anderson to turn over the documents so that they could be inspected. Thus, Penn clearly disobeyed the May 9, 1990 court order. Additionally, Penn's failure to notify Best Place of Anderson's surrender of the records prior to the Friday before the scheduled Monday trial exacerbated the prejudicial effect on Best Place that resulted from Penn's violation of the court's order. Penn further contends that the sanctions were too severe. Penn argues that, if sanctions were warranted, they should be limited to either a monetary fine or an exclusion of the Anderson records, rather than the exclusion of all financial records of Best Place. A review of the record indicates that Penn violated the May 9, 1990 court order by conducting discovery after the court ordered Penn to refrain from doing so. Then, Penn failed to inform Best Place that it conducted discovery. Finally, Penn withheld the documents from Best Place for over five months and finally submitted them to Best Place on the Friday before the scheduled Monday trial. Based on the egregious nature of the disobedience, we hold that the sanctions levied against Penn were warranted. If the circuit court had limited its sanctions by levying only a monetary penalty or by excluding only the Anderson documents Penn had obtained in contravention of the court order, there would have been little effect on Penn. Limiting the sanctions in this case would have left counsel for Penn in the same position had he not violated the court order at the onset. Accordingly, we hold the circuit court did not abuse its discretion in sanctioning Penn and excluding from the record all evidence of Best Place's financial condition.