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In re Grecon, Inc.

Court of Appeals of Texas, Fourteenth District

January 12, 2018

IN RE GRECON, INC., Relator

         ORIGINAL PROCEEDING WRIT OF MANDAMUS 129th District Court Harris County, Texas Trial Court Cause No. 2016-26100

          Panel consists of Chief Justice Frost and Justices Boyce and Jewell. (Frost, C. J, concurring) (Boyce, J., joining section I of the majority opinion).

          MAJORITY OPINION

          Kevin Jewell Justice

         The issue presented in this original proceeding is whether settlement agreements between the plaintiff and settling defendants are relevant and discoverable before trial. After real party in interest Ralph Figgs refused to produce the settlement agreements, relator GreCon, Inc. moved to compel Figgs to produce them. The trial court denied the motion. GreCon asks this court to grant mandamus relief compelling the Honorable Michael Gomez, presiding judge of the 129th District Court of Harris County, to vacate the order denying GreCon's motion to compel and to sign an order compelling Figgs to supplement his disclosure responses and produce the settlement agreements.[1] We conditionally grant this mandamus relief, though the grounds for conditionally granting relief divide the panel. Justices Boyce and Jewell conclude that mandamus should conditionally issue for the reasons stated in section I, whereas Chief Justice Frost and Justice Jewell conclude mandamus should conditionally issue for the reasons stated in section II.

         Background

         Figgs suffered injuries during a fire at a plywood manufacturing plant owned by Georgia Pacific South. Seeking recovery for his injuries, Figgs sued GreCon, asserting claims for negligence, gross negligence, strict liability, and breach of express and implied warranties in connection with the sale, installation, and maintenance of the detection, prevention, and suppression systems, which Figgs claims failed to prevent, warn, or eliminate hazards that caused the explosion. Figgs also sued a number of other defendants.

         Figgs settled with defendants Georgia Pacific LLC, Georgia Pacific Building Products, LLC, Georgia Pacific Wood Products LLC, Georgia Pacific Wood Products South LLC, Georgia Pacific Equity Holdings LLC, International Paper Company, and Mid-South Engineering, Inc. (collectively the "Settling Parties"). Under Rule of Civil Procedure 194.2, GreCon requested disclosure from Figgs of "any settlement agreements described in Rule 192.3(g)." Tex.R.Civ.P. 194.2(h). Rule 192.3(g) provides that "[a] party may obtain discovery of the existence and contents of any relevant portions of a settlement agreement." Tex.R.Civ.P. 192.3(g). When Figgs refused to produce any of his settlement agreements with one or more of the Settling Parties (collectively the "Settlement Agreements"), GreCon filed its motion to compel Figgs to supplement his response to the request for disclosure under Rule 194.2(h) and to produce copies of all the Settlement Agreements.

         The trial court held a hearing on June 12, 2017, and a few months later denied GreCon's motion to compel the Settlement Agreements, stating the following:

After having conducted an in camera review of the proffered settlement agreements, and after considering the motions, responses, and arguments of counsel, the Court is of the opinion that the motions should be DENIED, at this time.
IT IS THEREFORE, ORDERED AND ADJUDGED that Defendant GreCon's (and all other Defendants') Motions to Compel Settlement Agreements are hereby DENIED, at this time.

         The trial further stated in a footnote in the order that "Defendants may be entitled to the settlement agreements at trial and may re-urge the same at that time."

         In this mandamus proceeding, GreCon asserts that the Settlement Agreements are relevant because GreCon needs them to: (1) prove up its entitlement to settlement credits; (2) evaluate any potential witness bias; and (3) evaluate GreCon's potential exposure before trial. GreCon asks this court to grant mandamus relief compelling the respondent to vacate his order denying GreCon's motion to compel and to sign an order compelling Figgs to supplement his disclosure responses and produce the Settlement Agreements.[2]

         Mandamus Standard of Review

         Generally, to be entitled to mandamus relief, a relator must demonstrate (1) the trial court clearly abused its discretion; and (2) the relator has no adequate remedy by appeal. In re Nat'l Lloyds Ins. Co., 507 S.W.3d 219, 226 (Tex. 2016) (orig. proceeding) (per curiam). A trial court clearly abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law or if it clearly fails to analyze the law correctly or apply the law correctly to the facts. In re H.E.B. Grocery Co., L.P., 492 S.W.3d 300, 302-03 (Tex. 2016) (orig. proceeding) (per curiam); In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding) (per curiam). The relator may not have an adequate remedy by appeal when the trial court has not allowed discovery because such discovery cannot be made part of the appellate record, and because the reviewing court is not able to evaluate the effect of the trial court's error on the record before it. Walker v. Packer, 827 S.W.2d 833, 843-44 (Tex. 1992) (orig. proceeding).

         Abuse of Discretion

         I. Relevance and the Burden of Proof

         We first consider the relevant burden of proof in the context of requests for disclosure, an issue the parties disputed in the trial court and dispute in our court.

         Added to the discovery rules in 1999, Rule 194, entitled "Request for Disclosure, " provides the mechanism for requesting the disclosure of certain information in litigation:

A party may obtain disclosure from another party of the information or material listed in Rule 194.2 by serving the other party-no later than 30 days before the end of any applicable discovery period-the following request: "Pursuant to Rule 194, you are requested to disclose, within 30 days of service of this request, the information or material described in Rule [state rule, e.g., 194.2, or 194.2(a), (c), and (f), or l94.2(d)-(g)]."

Tex. R. Civ. P. 194.1. Among the information or material for which a party may request disclosure is "any settlement agreements described in Rule 192.3(g)." Tex. R Civ. P. 194.2(h).

         Rule 192.3 addresses the scope of discovery. See Tex. R. Civ. P. 192.3. Specifically, Rule 192.3(g) provides that "[a] party may obtain discovery of the existence and contents of any relevant portions of a settlement agreement." Tex.R.Civ.P. 192.3(g).

         As to the response to the request for disclosure, Rule 194.3 provides that "[t]he responding party must serve a written response on the requesting party within 30 days after service of the request[.]" Tex.R.Civ.P. 194.3.[3] Under Rule 194.4, the responding party "ordinarily must" serve documents and other tangible items with the response, and "must produce the documents at the time and place stated, unless otherwise agreed by the parties ordered by the court[.]" Tex.R.Civ.P. 194.4. No objection is permitted to a request for disclosure. Tex.R.Civ.P. 194.5; see also In re Univar USA, Inc., 311 S.W.3d 175, 180 (Tex. App.-Beaumont 2010, orig. proceeding).

Comment 1 to Rule 194 explains the purpose of the disclosure rule:
1. Disclosure is designed to afford parties basic discovery of specific categories of information, not automatically in every case, but upon request, without preparation of a lengthy inquiry, and without objection or assertion of work product. In those extremely rare cases when information ordinarily discoverable should be protected, such as when revealing a person's residence might result in harm to the person, a party may move for protection. A party may assert any applicable privileges other than work product using the procedures of Rule 193.3 applicable ...

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