Court Opinion

ID: 4048865
Source: CourtListenerOpinion
Date Created: 2016-09-29 00:47:29.830275+00
Date Added: 2024-06-11T13:24:46.208158
License: Public Domain

CONDITIONALLY GRANT; and Opinion Filed February 17, 2015.

                                         S
                                Court of Appeals
                                                In The

                         Fifth District of Texas at Dallas
                                      No. 05-15-00023-CV

                         IN RE VERP INVESTMENT, LLC, Relator

                 Original Proceeding from the 134th Judicial District Court
                                   Dallas County, Texas
                            Trial Court Cause No. DC-14-03874

                                          OPINION
                           Before Justices Lang, Fillmore, and Brown
                                   Opinion by Justice Brown
       In this mandamus proceeding relator, VERP Investment LLC, seeks relief from the trial

court’s order compelling VERP to turn over its computer hard drive to a third-party forensic

examiner for mirror imaging of the accounting software and supporting data related to invoices

prepared for certain leases to which VERP and real party in interest, Lan Hung Nguyen, are

parties. We conditionally grant the petition.

                              FACTUAL AND PROCEDURAL BACKGROUND

       VERP is the landlord with respect to three commercial properties leased by Nguyen. In

December 2013, VERP changed the locks on the properties because Nguyen had purportedly

failed to pay rent for a period of ten months. Nguyen filed suit for wrongful lockout, breach of

contract, conversion, money had and received, tortious interference with contract, breach of

fiduciary duty, accounting, common law fraud, real estate fraud, and civil conspiracy and sought

a temporary injunction “to restrain defendants from preventing [Nguyen] from access to [his]
[personal property] and use of the [leased premises].” Nguyen contended that he had received no

invoices for the majority of the time he leased the premises and no accounting of various sums

he alleges VERP received from others for after-hours use of the premises that Nguyen maintains

were to be applied to the balance owed under the leases. In conjunction with his suit, Nguyen

sought, among other things, an accounting of these sums he believes VERP incorrectly failed to

apply to the balance owed on the leases.

           Nguyen served requests for production of documents. At issue in this petition for writ of

mandamus is the second request for production of documents in which Nguyen requested “the

electronic information related to the generation of invoices . . . including the electronic

information related to the accounting/software program used by the company for its accounting

purposes,” “all electronic data related to the generation of such invoices,” “the accounting

software/program utilized to generate the invoices,” “all electronic data files related to such

invoices,” and “a forensic copy of the computer hard drive from the computer(s) used to generate

the invoices.”           VERP objected to each request on a variety of bases including on the grounds

that the request was burdensome and that the information requested could be obtained “through

more appropriate means.” VERP produced no responsive documents at the time it objected to

the request for production, although by the time it filed its motion for reconsideration it asserted

it had produced “more than 400” documents.

           Nguyen moved to compel. Nguyen did not attempt to defend the propriety of his requests

for production but rather argued only “[p]ursuant to Rule 215, defendant’s refusal to comply

with plaintiff’s discovery requests is grounds for this Court to enter an Order compelling

defendant VERP to respond as required.” The trial court held two non-evidentiary hearings, 1 one

     1
       The trial court’s order states it was based on “the moving papers,” argument of counsel, and evidence, which established good cause for
the order. Based on this recitation, we denied a previous petition for writ of mandamus filed by VERP because VERP had failed to provide the
reporter’s records from the hearings and, in the absence of the reporter’s record, we must presume the evidence supports the trial court’s order. In

                                                                       –2–
on Nguyen’s motion to compel and one on VERP’s motion for rehearing after the court initially

granted the motion. The trial court ordered VERP to permit a forensic examiner agreed to by the

parties “to make a ‘mirror image’ of the accounting software. . . and its supporting data on the

Defendant’s computer hard drive, the computer hard drive, and all electronic data (including the

accounting) on invoices prepared for [the leased properties] between June 1, 2013 and January

31, 2014. . . .” The court’s order required the parties to confer and attempt to reach agreement

on search terms prior to production of the computer by VERP to the forensic examiner. It

required the forensic examiner to produce a report upon the completion of his review “setting

forth his/her findings and conclusions.”                            The order prohibited the forensic examiner from

disclosing “the substance of any of the files or documents identified” by the review, but rather

required the examiner to provide “a description of such files in the form of a log that should

include file or documents, name, date of creation, date of last access, author and recipient.” 2

                                        APPROPRIATENESS OF MANDAMUS REVIEW

           Mandamus is an extraordinary remedy that is available only in limited circumstances.

CSR Ltd. v. Link, 925 S.W.2d 591, 596 (Tex. 1996) (orig. proceeding) (citing Walker v. Packer,

827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding)). Mandamus relief is available when the

trial court abuses its discretion and there is no adequate remedy by appeal. In re Deere & Co.

299 S.W.3d 819, 820 (Tex. 2009) (orig. proceeding) (per curiam).

re VERP Inv., LLC, No. 05-14-01403-CV, 2014 WL 7476501, at *1 (Tex. App.—Dallas Dec. 31, 2014, orig. proceeding) (mem. op.) (“Here, the
failure to provide a transcript of the evidence presented at the hearings or a statement no testimony was adduced at the hearings is fatal to VERP's
complaint the trial court improperly ordered direct access to VERP's computer hard drive.”).
      Contrary to the recitation in the trial court’s order, VERP’s current petition for writ of mandamus demonstrates that there was no evidence
of any kind before the trial court – either in the form of testimony adduced at either of the hearings, evidence introduced at the hearings or
properly authenticated, admissible evidence attached as exhibits to the pleadings filed in connection with the discovery dispute. In this petition
for writ of mandamus, VERP has stated, as required in the absence of a reporter’s record, that no testimony was adduced at either hearing. VERP
has nonetheless included the reporter’s record from the hearing on the motion for reconsideration in the mandamus record. That reporter’s record
includes only argument. VERP has not included the reporter’s record from the hearing on the motion to compel in the mandamus record.
Because no evidence was adduced at either hearing, a reporter’s record for either hearing is not a necessary component of the mandamus record
for this new mandamus. TEX. R. APP. P. 52.7(a)(2) (requiring relator to file with the petition in an original proceeding “a properly authenticated
transcript of any relevant testimony from any underlying proceeding, including any exhibits offered in evidence, or a statement that no testimony
was adduced in connection with the matter complained.”).
     2
         The court’s order further specified that “[f]iles or documents that do not relate to the documents, ESI [electronically stored information],
files or data or information described [in the order] should not be identified in the report.”

                                                                       –3–
       What constitutes an adequate remedy by appeal has no comprehensive definition. See In

re Ford Motor Co., 165 S.W.3d 315, 317 (Tex. 2005) (orig. proceeding) (per curiam) (citing In

re Prudential, 148 S.W.3d 124, 136 (Tex. 2004) (orig. proceeding)). Determining whether a

party has an adequate remedy by appeal requires a “careful balance of jurisprudential

considerations” that “implicate both public and private interests.”       See id. (quoting In re

Prudential, 148 S.W.3d at 136). “When the benefits [of mandamus review] outweigh the

detriments, appellate courts must consider whether the appellate remedy is adequate.”           Id.

(quoting In re Prudential, 148 S.W.3d at 136). An appeal is inadequate when the parties are in

danger of permanently losing substantial rights. In re Van Waters & Rogers, Inc., 145 S.W.3d
203, 211 (Tex. 2004) (orig. proceeding) (per curiam). “Such a danger arises when the appellate

court would not be able to cure the error, when the party’s ability to present a viable claim or

defense is vitiated, or when the error cannot be made part of the appellate record.” Id. “If an

appellate court cannot remedy a trial court’s discovery error, then an adequate appellate remedy

does not exist.” In re Dana Corp., 138 S.W.3d 298, 301 (Tex. 2004) (orig. proceeding). For this

reason an order compelling discovery that is “well outside the proper bounds” is reviewable by

mandamus.     See In re Weekley Homes, L.P., 295 S.W.3d 309, 322 (Tex. 2009) (orig.

proceeding); In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding).

Failure of the trial court to observe the electronic discovery procedures explicated in the supreme

court’s seminal In re Weekley Homes decision is an abuse of discretion. In re Jordan, 364
S.W.3d 425, 426 (Tex. App.—Dallas 2012, orig. proceeding). Thus, an appellate court may

grant mandamus when a trial court improperly allows direct access to an opponent’s electronic

storage devices and thereby permits excessively broad discovery.

                                               –4–
                                     STANDARD OF REVIEW

       “[T]he ultimate purpose of discovery is to seek the truth, so that disputes may be decided

by what the facts reveal, not by what facts are concealed.” In re Colonial Pipeline Co., 968
S.W.2d 938, 941 (Tex. 1998) (orig. proceeding) (per curiam) (quoting Jampole v. Touchy, 673
S.W.2d 569, 573 (Tex. 1984) (orig. proceeding)). The scope of discovery largely rests within the

discretion of the trial court. Ginsberg v. Fifth Court of Appeals, 686 S.W.2d 105, 108 (Tex.

1985) (orig. proceeding). For that reason, in considering whether a trial court has clearly abused

its discretion with regard to a discovery order, the reviewing court may not substitute its

judgment for the judgment of the trial court. See Walker, 827 S.W.2d at 839–40. “Even if the

reviewing court would have decided the issue differently, it cannot disturb the trial court's

decision unless it is shown to be arbitrary and unreasonable.” Id. at 840. When a trial judge

exercising an otherwise discretionary authority has only one course to follow and one way to

decide, however, the discretion vested in the court is for all practical purposes destroyed. In re

Goodyear Tire & Rubber Co., 437 S.W.3d 923, 927–28 (Tex. App.—Dallas 2014, orig.

proceeding) (citing Jones v. Strayhorn, 321 S.W.2d 290, 295 (Tex. 1959)).             Thus, when

challenging matters ordinarily committed to the broad discretion of the trial court, a relator in a

mandamus proceeding must establish that the trial court could reasonably have reached only one

decision. Walker, 827 S.W.2d at 839–40.

             PROCEDURES FOR OBTAINING DISCOVERY IN ELECTRONIC FORMAT

       Rule 196.4 of the Texas Rules of Civil Procedure addresses the procedures that must be

followed in seeking the discovery of data or information in electronic or magnetic format. The

Texas Supreme Court provided a comprehensive analysis of those procedures in its opinion in In

re Weekley Homes, L.P., so we do not review all the procedures in detail here. Instead, we turn

directly to the question of whether Nguyen is entitled to forensic imaging of relator’s computer.

                                               –5–
       Nguyen first argues that VERP is not entitled to the procedural protections afforded by

the rules of civil procedure and the supreme court’s decision in In re Weekley Homes because

VERP waived these protections by failing to articulate appropriately specific objections to the

request for production of electronic data and failing to support its objections at the hearing on

Nguyen’s motion to compel. We disagree.

       In its objections to the requests for production, VERP objected to each request on the

ground that the request was burdensome and that the information requested could be obtained

“through more appropriate means.” In its response to Nguyen’s motion to compel, VERP

elaborated that Nguyen had failed to demonstrate that VERP was “withholding, concealing, or

destroying discoverable electronic information,” had failed to show that VERP had not

adequately produced the requested data and a search of VERP’s computer hard drive might

recover such material, had failed to show that retrieval of the data sought was feasible, had failed

to show a relationship between the hard drive and the claim, and had failed to show the expense

of the discovery exceeded its benefit. VERP further argued the discovery was obtainable from a

more convenient, less burdensome or expensive source other than VERP’s hard drive and that

the information sought was not reasonably obtainable because VERP would have to take

extraordinary steps to retrieve and produce it. VERP finally pointed out Nguyen had failed to

provide any evidence with respect to the familiarity of Nguyen’s expert with the characteristics

of the device involved and the likelihood that the proposed search methodology would yield the

information sought. VERP’s objections in the trial court were sufficient to put both Nguyen and

the trial court on notice that it challenged any attempt to image its hard drive based on the

principles articulated in In re Weekley Homes.

       An order requiring direct access to an electronic device is burdensome because it is

intrusive. As the supreme court has noted, “[p]roviding access to information by ordering

                                                 –6–
examination of a party’s electronic storage device is particularly intrusive and should be

generally discouraged, just as permitting open access to a party’s file cabinets for general perusal

would be.” In re Weekley Homes, L.P., 295 S.W.3d at 317. 3 The evidentiary requirements

imposed by In re Weekley Homes on a party requesting direct access to an opponent’s electronic

device rest on the principle that if a court determines production of electronic data is warranted,

as the trial court determined in this case, the least intrusive means of providing relevant,

responsive information should be employed. Id. at 322. A party from whom discovery is sought

is entitled to protection from an unreasonable invasion of personal, constitutional, or property

rights. In re M., No. 09-12-00179-CV, 2012 WL 1808236, at *2 (Tex. App.—Beaumont May

17, 2012, orig. proceeding) (mem. op.). For that reason, courts considering requests for direct

access to electronic devices must “guard against undue intrusiveness.” Weekley Homes, 295
S.W.3d at 316; see also In re M., 2012 WL 1808236, at *2. While direct “access [to a party’s

electronic storage device] might be justified in some circumstances,” the rules are “not meant to

create a routine right of direct access.” Weekley Homes, 295 S.W.3d at 316 (quoting FED. R.

CIV. P. 34 advisory committee’s note to the 2006 amendments.). 4 Thus, the evidentiary showing

of default in compliance with discovery obligations required by In re Weekley Homes before

direct access to an electronic device is permitted is a “threshold matter.” Id. at 317.

     3
       Nguyen attempts to distinguish In re Weekley Homes as a case involving employees’ personal computers. In re Weekley Homes was not a
case involving personal computers but rather involved the hard drives on the individual computers the employees used in the course of their
business for Weekley. In re Weekley Homes, 295 S.W.3d at 313 (explaining trial court’s order arose in response to requesting party’s “Motion
for Limited Access to [Weekley's] Computers”). We find the attempted distinction unpersuasive.
     4
        Nguyen cites In re Honza, 242 S.W.3d 578 (Tex. App.—Waco 2008, orig. proceeding [mand. denied]) as a case on point in which the trial
court properly ordered direct access to an electronic device. In In re Honza, a central issue in the case was when a real estate contract had been
modified during the course of the parties’ negotiations. Id. at 580 & n.3. An early draft differed from the version ultimately executed and the
plaintiffs sought to show that a diary entry reflecting work on the contract established the date of modification. Id. One of the defendants
testified the diary entry related to a different transaction and the plaintiffs sought to use the metadata associated with the two versions of the
documents to refute that claim. Id. Thus, there was reason to believe the metadata the trial court ordered the forensic expert to search for would
yield information illuminating when the document was modified. In contrast, in this case although Nguyen’s motion to compel is predicated on
the belief the invoices for the property were falsified, there was no evidence in the trial court, not even the interested testimony of Nguyen, which
might lend credence to such a belief. Moreover, the trial court’s order in In re Honza was extremely narrow, allowing a search only for the two
documents at issue and ordering that any responsive documents found be delivered to the producing party for a determination of responsiveness
to the request. Id at 582–83. In addition, the record in the trial court included “extensive testimony” concerning the expert’s experience and
qualifications for conducting the forensic examination ordered. Id. at 583 n.8. See also In re Weekley Homes, 295 S.W.3d at 321 (distinguishing
Honza because “in Honza there was extensive testimony from [the forensic] expert about his experience and qualifications before access to the
Honzas' computers was ordered”).

                                                                       –7–
           Here Nguyen did not meet the burden of going forward with evidence. The procedural

protections identified in In re Weekley Homes require that “the requesting party must show that

the responding party has somehow defaulted in its obligation to search its records and produce

the requested data,” and that “the responding party’s production ‘has been inadequate and that a

search of the opponent’s [electronic storage device] could recover . . . relevant materials.’” Id.

(citing numerous federal cases). In re Weekley Homes makes clear the required showing is an

evidentiary showing. Mere skepticism or bare allegations that the responding party has failed to

comply with its discovery duties are not sufficient to warrant an order requiring direct access to

an opposing party’s electronic device. Id. at 318 (citing numerous federal cases). While the

mandamus record suggests that Nguyen may have been concerned that the invoices for rent were

falsified in that they were created after the date shown on the invoice, the mandamus record

reveals no evidentiary basis for such a suspicion. 5

           Even in cases in which the responding party has been shown to have defaulted on its

discovery obligations, direct access to electronic storage devices is not automatic. In re Pinnacle

Eng’g, Inc., 405 S.W.3d 835, 844 (Tex. App.—Houston [1st Dist.] 2013, orig. proceeding).

Once a court has determined that the nature of the case requires direct access to an electronic

storage device, if it is not possible for the trial court to describe search protocols with sufficient

precision to capture only relevant, non-privileged information, the trial court may order the

forensic examination to be performed by an independent third-party forensic analyst. In re

Clark, 345 S.W.3d 209, 213 (Tex. App.—Beaumont 2011, orig. proceeding). Only a qualified

expert should be afforded such access and only when there is some indication that retrieval of the

     5
        At the hearing on the motion for reconsideration the trial judge stated, Nguyen’s “whole deal is he thinks there has been counterfeiting,
dummying up, falsifying, whatever you want to call it, backdating, creating-when-they-didn't-exist invoices and he thinks there will be evidence
of that on the hard drive.” This statement may have been prompted by the claim in Nguyen’s response to the motion for reconsideration,
“Nguyen needs a copy of the hard drive to determine if the invoices were first produced in 2014 and without the hard drive that information
cannot be shown.” The mandamus record is devoid of any evidence, even interested testimony, supporting this assertion. There is also no
evidence showing why, for instance, an order requiring VERP to produce the metadata associated with the invoices would be insufficient to
provide the needed information.

                                                                     –8–
data sought is feasible.               In re Weekley Homes, 295 S.W.3d at 318 (internal citations and

quotations omitted). “The expert’s qualifications are of critical importance when access to

another party’s computer hard drives or similar data storage is sought.” In re Honza, 242 S.W.3d
578, 583 n.8 (Tex. App.—Waco 2008, orig. proceeding [mand. denied]). Evidence must be

presented to show the expert is qualified to perform the search given the particularities of the

specific storage devices at issue and that the search methodology would likely allow retrieval of

relevant information. In re Weekley Homes, 295 S.W.3d at 321. Absent some evidence that the

expert is familiar with the particularities of the storage device to be searched, that the expert is

qualified to search those devices, and that the proposed methodology for searching the devices is

reasonably likely to yield the information sought, an order allowing direct access is not proper.

Id.; In re Jordan, 364 S.W.3d at 426. A party objecting to direct access to its electronic devices

need not directly challenge the qualifications of the forensic expert who will be allowed access to

the electronic device. See In re Weekley Homes, 295 S.W.3d at 321. Rather, the evidentiary

record before the trial court must reflect the experts assigned the task of retrieving the

information sought are familiar with the particularities of the electronic device and are qualified

to search the device and that the proposed methodology is reasonably likely to yield the

information sought.

          Here, although VERP had no objection to the qualifications 6 of the forensic consultant

chosen to mirror image its hard drive, VERP’s response to the motion to compel objected that

Nguyen had failed to show that retrieval of the information he sought was feasible. The trial

court ordered a:

          [B]it-level review of the computer and all files, both complete and fragmented
          . . . including, but not limited to, files found in allocated space, deleted space,

     6
      Attached to Nguyen’s response to VERP’s motion for reconsideration was an unauthenticated curriculum vitae of the proposed expert that
was not introduced in evidence at the motion for rehearing.

                                                                   –9–
       unallocated space, slack space and system files (including registry files), to
       determine whether any of the documents, files, data or information described [in
       the order] are or were contained on the computer.

Nguyen did not put on any evidence demonstrating that the kind of information he sought could

be retrieved by the examination ultimately ordered by the trial court and the record is devoid of

any attempt by Nguyen to explain this search methodology except for his counsel’s explanation

that the search would attempt to exclude communications with counsel:

       My understanding of how it works is they’re going to say what’s your attorney’s
       name, the real estate? What’s his present attorney’s name, what’s the name of
       your firm, who’s in it, and they’re going to scan everything and look for -- to see
       when those invoices were dated and were they backdated and then they’re going
       to limit it to those terms that don’t involve like [VERP’s counsel] -- those e-mails
       sent to him. But if it’s an e-mail between the Defendants, we’re going to uncover
       that if it relates to the invoices during that time period.

The evidentiary record in the trial court thus did not support its order. Cf. In re Jordan, 364
S.W.3d at 426.

                                              CONCLUSION

       We conclude the trial court abused its discretion in failing to afford VERP the procedural

protections afforded by the Texas Rules of Civil Procedure and In re Weekley Homes. We

conditionally grant the petition for writ of mandamus. A writ will issue only in the event the trial

court fails to vacate its October 27, 2014 “Order Granting Plaintiff’s Motion to Compel.”

                                                    /Ada Brown/
                                                    ADA BROWN
                                                    JUSTICE

150023F.P05

                                               –10–