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Star Electricity, Inc. v. Northpark Office Tower, LP

Court of Appeals of Texas, First District

May 14, 2019

STAR ELECTRICITY, INC. D/B/A STARTEX POWER F/K/A STAR ELECTRICITY, L.L.C. D/B/A STARTEX POWER, Appellant
v.
NORTHPARK OFFICE TOWER, LP, NORTHPARK OFFICE TOWER GP, LLC, JETALL COMPANIES INC., 1415 NLW, LLC, MOHAMMED A. CHOUDHRI A/K/A ALI CHOUDHRI A/K/A ALI JETALL, THE ESTATE OF NAEEM CHOUDHRI, SHAHNAZ CHOUDHRI A/K/A SHAHNAZ AKHTER, A.I.G.W.T., INC., 5700 THOUSAND OAKS, LLC, 411 NORTH BELT, LLC, AND INNER BELT HOLDINGS, LLC, Appellees

          On Appeal from the 129th District Court Harris County, Texas Trial Court Case No. 2010-71330

          Panel consists of Chief Justice Radack and Justices Goodman and Countiss.

          MEMORANDUM OPINION

          Sherry Radack Chief Justice

         This is a suit by an electric company against its customer for breach of contract and against the customer and its associated entities for fraudulent transfer, tortious interference with a contract, dishonor of a check, fraud, and conspiracy. Appellant, Star Electricity, Inc., doing business as StarTex Power, formerly known as Star Electricity, L.L.C. ("Star"), challenges the trial court's summary judgments in favor of appellees, Northpark Office Tower, LP, Northpark Office Tower GP, LLC (collectively, "Northpark"); Jetall Companies Inc. ("Jetall"); 1415 NLW, LLC ("NLW"); Mohammed A. Choudhri, also known as Ali Choudhri and Ali Jetall ("Choudhri"); The Estate of Naeem Choudhri ("Naeem"); Shahnaz Choudhri, also known as Shahnaz Akhter ("Shahnaz"); A.I.G.W.T., Inc. ("A.I.G.W.T."); 5700 Thousand Oaks, LLC ("Thousand Oaks"); 411 North Belt, LLC ("North Belt"); and Inner Belt Holdings, LLC ("Inner Belt").

         Star presents four issues. In its first and second issues, Star contends that the trial court erred by imposing a death-penalty sanction, i.e., striking the testimony of its sole expert on damages, and granting appellees' motion for no-evidence summary judgment on the damages element of Star's breach-of-contract claim. In its fourth issue, Star contends that the trial court erred in granting appellees' motion, and denying Star's motion, for summary judgment on Star's claims brought under the Texas Uniform Fraudulent Transfer Act ("TUFTA").[1] In its third issue, Star contends that the trial court erred in granting summary judgment dismissing its remaining claims as barred by the doctrine of res judicata.

         We affirm in part and reverse and remand in part.

         Background

         Star provides retail electricity services to commercial and residential users throughout Texas. As a service provider, Star does not generate or transmit electricity itself, rather, it purchases electricity from a supplier and sells it to the end user. When a customer executes a contract for electricity services, Star purchases sufficient power from its supplier to service the life of the customer's contract. Star then delivers the electricity to the customer through distribution lines operated by transmission and distribution service providers.

         Star asserts that, in September 2008, it entered into an Electric Service Agreement ("ESA") with Northpark. Pursuant to the ESA, Star agreed to provide Northpark with electricity services at its office building located at 1415 North Loop West, Houston, (the "Property") for a term of 60 months, beginning on October 15, 2008. Northpark agreed to purchase electricity at a rate of 8.97 cents per kilowatt hour and to pay Star monthly. Northpark also agreed that, should it terminate or default on the ESA prior to the end of the agreed term, it would pay Star an Early Termination Fee ("ETF"), as follows:

In the event that Customer terminates this ESA or Customer defaults . . . then an [ETF] will be assessed. The [ETF] shall be equal to any mark to market costs. For purposes of this Agreement, the mark to market costs shall be calculated as the higher of: a) the difference between the cost of Energy procured by [Star] in order to satisfy the Customer's requirements under this ESA for the Customer's Service Location(s) . . . and the final net liquidated value of said Energy at the time of termination by Customer multiplied by the total amount of Energy procured for the Customer's Service Location(s) . . . for the remainder of the original Term of the ESA, as reasonably determined by [Star] and b) zero dollars and no cents ($0.00).

         Subsequently, to fulfill its commitment under the ESA to provide electricity to Northpark, Star executed a Power Purchase and Sale Agreement ("Supplier Agreement") with its supplier, Luminant Energy Company LLC ("Luminant"). Under the Supplier Agreement, Star purchased the volume of electricity required to service the Property for the life of the 60-month ESA. Thereafter, Star began providing electricity to the Property and submitting monthly invoices to Northpark.

         Two years later, in July 2010, Northpark began falling behind on its monthly payments to Star for electricity services at the Property. By October 14, 2010, Northpark's outstanding balance for electricity services totaled $82, 548.39. On October 18, 2010, Choudhri, as the principal of Northpark and an officer of Jetall, [2]sent an email to Star, in which he repudiated the ESA on the ground that Star had "never signed" it. Choudri asserted that the parties had been "operating on a month to month" basis and that he was "[t]hereby revok[ing] the agreement." Star responded that if Northpark did not retract its repudiation, it would sue to recover Northpark's outstanding balance for electricity services and for an early termination fee of $410, 986.00, based on the remaining 11, 265 megawatts of electricity that Star had contractually agreed to purchase from Luminant. Choudhri, on behalf of Northpark, then sent Star a letter terminating the ESA.

         On October 27, 2010, Star sued Northpark for breach of the ESA, alleging that Northpark had defaulted on its terms by failing to pay for electricity services as agreed. Star sought damages in the amount of $493, 534.39, consisting of $82, 548.39 in unpaid services and an ETF in the amount of $410, 986.00. Star also asserted liability against Choudhri and Jetall under veil-piercing theories. Star sought to enjoin Northpark from taking any action that would impair its ability to pay the judgment sought.

         Star asserts that, on the same day that it filed its suit, Choudhri executed a deed transferring the Property, which was Northpark's sole asset, to NLW, another entity that Choudhri created. The transfer left Northpark depleted of assets adequate to satisfy the judgment Star sought. The following day, NLW, through Choudhri, encumbered the Property by obtaining a $6, 500, 000 loan against it. NLW then paid a portion of the proceeds to AIGWT, an entity owned by Choudhri and his parents, Shahnaz and Naeem. Star asserts that proceeds further flowed to other entities that Choudhri had created, Thousand Oaks and North Belt. Accordingly, Star brought fraudulent transfer claims against all appellees. Star alleged that, in violation of TUFTA, each had fraudulently transferred assets without receiving reasonably equivalent value in exchange and with the actual intent to hinder, defraud, and delay Star, as a creditor, from recovering on its claims.

         Star also brought claims against Northpark and Choudhri for dishonor of a check[3]; against Choudhri, Jetall, Shahnaz, and Naeem for tortious interference with a contract; and against all appellees for fraud and conspiracy. Star asserted that the corporate forms of Northpark, Jetall, NLW, AIGWT, Thousand Oaks, North Belt, and Inner Belt should be disregarded because Choudhri, Shahnaz, and Naeem had organized and operated them as conduits to perpetrate fraud.

         Mediation

         On May 24, 2011, the parties attended mediation before mediator, Alan Levin, and entered into a "Confidential Binding Settlement Agreement" ("Settlement Agreement"). The parties agreed that, to guarantee that Star, were it to prevail on its breach-of-contract claim against Northpark, could recover on its judgment, appellees would pledge collateral having an aggregate value in excess of $1, 050, 000. In partial satisfaction, Choudhri presented an 8.733-acre tract of land located on West Fuqua Street, Houston, ("Fuqua Tract"), which he asserted had a value of $800, 000. In exchange, Star agreed to non-suit its other claims without prejudice against all appellees. The Settlement Agreement states, in relevant part, as follows:

1. Land in Exhibit 1 [Fuqua Tract] placed as collateral to a[n] $800, 000 payment by [illegible] party to indemnify the payment if [Star] get[s] to final judgment after appeals are exhausted. [Star] may at its expense get another appraisal and A. Levin will be non-appealable mediator to decide that this tract and any additional tracts are more than [$1, 050, 000].
3. [Star] dismisses all parties but [Northpark] . . . without prejudice.
6. If one or more disputes should arise with regard to the interpretation and/or performance of this agreement or any of its provisions, or the drafting or execution of further settlement documents, the parties agree to attempt to resolve any such dispute first by telephone conference with Alan F. Levin, mediator herein, who facilitated this settlement. If the parties cannot resolve their differences by telephone conference, then each agrees to schedule one day of mediation with Alan F. Levin, mediator herein, within thirty (30) days after the unsuccessful telephone conference to attempt to resolve the disputes. The parties shall equally share the costs of such mediation. If any party refuses to mediate, then that party hereby forfeits all right to recover attorney's fees and/or costs in any subsequent litigation brought to construe or enforce this agreement. Conversely, if the subsequent mediation is unsuccessful, then the prevailing party or parties in the subsequent litigation shall be entitled to recover, as allowed by law or contract, reasonable attorneys' fees and expenses, including the cost of the unsuccessful mediation. Alan F. Levin has the final decision on any ambiguity in the settlement agreement.

         Star noted that all appellees, except Inner Belt, executed the Settlement Agreement by and through Choudhri.

         After Star's independent appraiser concluded that the value of the Fuqua Tract was lower than appellees had represented, Levin "ordered," in Arbitrator's Order No. 2 ("Order No. 2"), that appellees pledge additional collateral, as follows:

I. [Appellees] are to produce, on or before December 31, 2011, one of the following additional collateral options:
a. Real property having a current "As-Is" appraisal value of not less than [$464, 176.00]; or
b. Cash or a bond in an amount not less than [$214, 176.00].
II. [Counsel for Star] is to promptly contact the Arbitrator, following the November 14, 2011 hearing before the Court on this matter, to provide an update of [Star's] positions regarding the following issues:
a. Return to mediation;
b. Whether the Settlement Agreement has been breached with regard to the alleged tardy provision of additional collateral and whether [Star] chooses to waive or pursue same; and
c. Dismissal by [Star] of [all appellees except Northpark] without prejudice.

         It is so Ordered.

         On November 14, 2011, the trial court ordered that the parties return to "mediation with Alan F. Levin." After mediation, Levin issued a third order, in which he concluded, as pertinent here, that whether appellees had breached the Settlement Agreement by not timely pledging additional collateral as agreed was not within the scope of his authority. Star then non-suited without prejudice its claims against appellees, except its claim against Northpark for breach of the ESA.

         On January 5, 2012, after appellees still had not presented additional collateral as agreed, however, Star reasserted its claims against appellees. Star also added a claim for breach of the Settlement Agreement, alleging that appellees had not timely complied as agreed, had not actually pledged any property, and that Choudhri had, since execution of the Settlement Agreement, transferred the Fuqua Tract to Inner Belt without placing equivalent value in escrow.

         Eight months later, Levin concluded, in Arbitrator's Confidential, Non-Appealable Order No. 6 ("Order No 6"), that appellees had complied with both Order No. 2 and the Settlement Agreement, as follows:

On the afternoon of Monday, August 6, 2012, . . . [appellees] hand delivered a check in the amount of [$43, 796.00] to the Arbitrator in his law offices. . . . Based upon the foregoing, the Arbitrator FINDS that [appellees] have now fully complied with the collateral portion of [Order No. 2]. The tardy completion of such compliance is excused.
The Arbitrator also FINDS that [appellees] have now fully complied with the portion of the [Settlement Agreement] requiring that . . . ($800, 000.00) [sic] be placed as collateral "to indemnify the payment if the Plaintiffs get to final judgment after appeals are exhausted.
It is, therefore, ORDERED that [appellees] have complied with both [Order No. 2] and the [Settlement Agreement] to the extent set forth above. . . .
Based upon the foregoing, the Arbitrator, sitting also as the Mediator, sees no reason to declare an impasse in the mediation portion of the pending case and therefore, in light of the collateral requirement now having been fulfilled, invites the parties to consider the efficacy of further mediation toward amicable resolution of the entire pending dispute.

         Summary Judgments

         Appellees moved for a traditional summary judgment on Star's fraudulent transfer claims, asserting that Star's claims were extinguished by the statute of repose. The trial court granted summary judgment in favor of appellees, dismissing Star's claims for fraudulent transfer. Star moved for summary judgment on the merits of its fraudulent transfer claims against NLW and Choudhri. The trial court did not rule on these claims.

         Appellees then moved for a traditional summary judgment on Star's claim for breach of the Settlement Agreement, asserting that such claim was barred by res judicata. Appellees asserted that Levin was acting as an arbitrator, not a mediator, and had adjudicated Star's claim for breach of the Settlement Agreement in Order No. 6, which constituted a binding arbitration order. Star argued, in its response, that the parties did not enter into an arbitration agreement, that Levin was authorized to act as a mediator, not as an arbitrator, and that his authority under the terms of the Settlement Agreement was limited to resolving ambiguities in the agreement and determining the value of the properties that appellees were to pledge as collateral. The trial court granted summary judgment in favor of appellees, "confirm[ed] the Arbitrator's Orders No. 1-6," and "dismiss[ed]" Star's remaining "causes of action" against appellees, [4] "except for the claims of breach of the [ESA] against [Northpark]."

         Star moved for a summary judgment on the liability portion of its claim against Northpark for breach of the ESA. Star asserted that the evidence established that there existed a valid contract between Star and Northpark, that Star performed by providing electricity to the Property, and that Northpark breached the ESA by failing to pay for electricity as agreed and by terminating the ESA before the expiration of the agreed term. The trial court granted summary judgment in favor of Star on the liability portion of its claim, leaving only the damages portion at issue.

         On May 1, 2015, Star designated Madden as its expert on damages and filed his expert report. Northpark moved to compel the depositions of Madden and of Robert Verhage, Star's Director of Credit and Collections at the time of the breach. Star moved to compel the depositions of representatives of NLW and Inner Belt, with respect to its other claims.

         On July 5, 2016, the trial court issued an order compelling Verhage, Madden, NLW, and Inner Belt[5] to appear for deposition within 21 days. The parties conferred and determined that the depositions could not be completed within 21 days because of scheduling conflicts. On July 20, 2016, the parties entered into a Rule 11 Agreement, in which they agreed that Star would produce Verhage for deposition on July 29, 2016; that NLW would produce its representative for deposition on August 1; that Star would produce Madden for deposition on August 16, 2016; and that Inner Belt would produce its representative for deposition on August 17, 2016.

         On July 29, 2016, appellees deposed Verhage. On August 1, 2016, NLW presented Bradley Parker as its corporate representative for deposition. Star complained that Parker was not a competent representative of NLW because, during his deposition, he admitted that he was not an employee, owner, or contractor of NLW, and he demonstrated a lack of knowledge of any relevant information. Further, after NLW asserted frivolous objections to entire categories of questions, Star terminated the deposition. On August 12, 2016, Star filed a motion to compel a proper corporate representative of NLW and set the motion for a hearing. Star also filed a motion for protection, requesting that the trial court prohibit any further depositions until NLW complied. On September 12, 2016, the trial court denied Star's motions. Thereafter, however, the parties never completed the depositions.

         On October 10, 2016, Northpark filed a motion for no-evidence and traditional summary judgments on damages, which the other appellees joined.[6] With respect to Star's claim for damages based on outstanding charges for electricity services, appellees asserted that there was no evidence of the amount due under the ESA because Star's "records continually produced inconsistent numbers" and Verhage's deposition testimony was inconsistent. Appellees further asserted that because Madden had failed to appear for his deposition, his expert report should be excluded, and thus there was no evidence to support Star's claim for liquidated damages, i.e., the ETF. Appellees also moved for a traditional summary judgment on their affirmative defense of accord and satisfaction, asserting that they had tendered two checks, in the amounts of $22, 247.02 and $84, 423.04, to Star for payment of the outstanding amount owed on Northpark's account for electricity services, which Star had not returned.

         Star, in its response, requested a continuance to complete the depositions and asserted that genuine issues of material fact precluded summary judgment. Star argued that its monthly invoices constituted evidence of its damages for unpaid electricity services, and Verhage's testimony, even if inconsistent, constituted some evidence of damages. In addition, Madden's expert report constituted evidence of its liquidated damages. With respect to appellees' motion for summary judgment on their affirmative defense of accord and satisfaction, Star asserted that it had rejected appellees' checks because they had failed to tender payment for the full amount due under the ESA, including the ETF. Star attached to its response a copy of the ESA, its "Supplier Agreement" with Luminant, its monthly invoices to Northpark for electricity services, its Amended Responses to Appellees' Requests for Disclosure, Verhage's affidavit and an excerpt of his deposition testimony, and Madden's expert report on damages. As discussed below, appellees objected, on various grounds, to the ESA, Supplier Agreement, Star's invoices, Verhage's affidavit, and Madden's expert report.

         At the summary-judgment hearing on October 31, 2016, appellees argued that Madden's expert testimony should be excluded because he did not appear for his deposition and that, without his testimony, Star lacked any evidence of liquidated damages. Star argued that Madden had not yet appeared because appellees had acted in bad faith by producing a corporate representative for NLW with no relevant knowledge and who had refused to answer questions. The trial court did not rule on these matters at the hearing.

         On November 7, 2016, with trial set for February 13, 2017, Star emailed appellees about completing the depositions of Madden, NLW, and Inner Belt. In a January 2, 2017 letter to the trial court, Star stated that, at a December 1, 2016 status conference, the trial court had ordered Star to produce Madden for deposition if the mediation that the parties were scheduled to attend on January 7, 2017 were unsuccessful. Star explained that the mediator had canceled due to illness and that the mediation had been tentatively rescheduled for January 9. Star asked the trial court to advise regarding its order to produce Madden for deposition. Throughout the rest of January 2017, as discussed below, Star wrote letters to the trial court regarding the status of mediation, noted that Star had attempted unsuccessfully to confer with appellees regarding scheduling mediation sooner with another mediator, asked the trial court to advise regarding its order to produce Madden for deposition, and requested an emergency hearing. Star noted that it had offered to produce Madden for deposition on January 11 and 25, but appellees had declined.

         On February 21, 2017, the trial court issued an order sustaining appellees' objections to Star's summary judgment evidence and excluding Madden's testimony "for failing to appear for his deposition without good cause consistent with [the] July 5, 2016 order of the court compelling his appearance and the Rule 11 agreement, dated July 20, 2016." In its order, the trial court also granted appellees' motion for traditional and no-evidence summary judgment on the damages issue and held that Star take nothing on its remaining claim against Northpark for breach of the ESA. On April 13, 2017, appellees non-suited their remaining claims, making the trial court's judgment final.

         Exclusion of Damages Expert

         In its first issue, with respect to the damages element of its claim against Northpark for breach of the ESA, Star argues that the trial court erred by excluding the testimony of its sole expert on damages, Madden, after he did not appear for his deposition. Star asserts that the trial court's order constitutes a death penalty sanction because it precluded Star from presenting evidence of its liquidated damages and resulted in the trial court granting appellees' motion for no-evidence summary judgment on damages. Star asserts that the trial court erred by not first considering lesser sanctions, noting that neither Star nor its counsel "had ever been sanctioned by the trial court in the seven-year history of the case."

         Standard of Review and Principles of Law

         We review a trial court's imposition of sanctions for an abuse of discretion. Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). A trial court abuses its discretion if it acts without reference to any guiding rules and principles or if, under all the circumstances of the particular case, the trial court's action was arbitrary or unreasonable. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985).

         A trial court may impose sanctions against a party for failing to comply with proper discovery requests, failing to obey discovery orders, or otherwise abusing the discovery process. Tex.R.Civ.P. 215.3; In re Ford Motor Co., 988 S.W.2d 714, 718 (Tex. 1998); TransAmerican Nat. Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex. 1991); In re Carnival Corp., 193 S.W.3d 229, 234 (Tex. App.-Houston [1st Dist.] 2006, orig. proceeding). Sanctions may include, as here, prohibiting a party from introducing evidence to support certain claims or defenses. Tex.R.Civ.P. 215.2(b)(4). Courts have described such sanctions as "death penalty" or "case determinative" sanctions because they have the effect of adjudicating claims, not on their merits, but based on the failure of a party or his attorney to comply with discovery requirements or court orders. See Braden v. Downey, 811 S.W.2d 922, 929 (Tex. 1991) (citing Tex.R.Civ.P. 215.2(b)); TransAmerican, 811 S.W.2d at 917-18. Sanctions that are so severe as to preclude presentation of the merits of a case should not be assessed absent a party's flagrant bad faith or counsel's callous disregard for the responsibilities of discovery under the rules. TransAmerican, 811 S.W.2d at 917-18. Discovery sanctions cannot be used to adjudicate the merits of a party's claims or defenses unless the party's hindrance of the discovery process justifies a presumption that its claims or defenses lack merit. Id. at 918. If a party refuses to produce material evidence, despite the imposition of lesser sanctions, the court may presume that an asserted claim or defense lacks merit and dispose of it. Id.; see Braden, 811 S.W.2d at 929 (holding severe sanctions may be necessary to prevent abusive party from thwarting administration of justice by concealing merits of case). However, because such sanctions inhibit or terminate the presentation of the merits of a party's claim, they are further limited by constitutional due process. TransAmerican, 811 S.W.2d at 918.

         A trial court may not impose sanctions that are more severe than necessary to satisfy legitimate purposes, which include assuring compliance with discovery and deterring "those who might be tempted to abuse discovery." Cire, 134 S.W.3d at 839. Any sanction imposed must be "just." Tex.R.Civ.P. 215.2(b). In evaluating whether sanctions are just, we consider (1) whether a direct relationship exists between the offensive conduct and the sanction imposed and (2) whether the sanction ordered is excessive to punish the improper conduct. TransAmerican, 811 S.W.2d at 917; see also Spohn Hosp. v. Mayer, 104 S.W.3d 878, 882 (Tex. 2003).

         Under the first TransAmerican prong, there is a direct relationship between the offensive conduct and the sanction imposed if the sanction is directed against the abuse and toward remedying the prejudice caused to the party harmed by the conduct. 811 S.W.2d at 917; see also Spohn Hosp., 104 S.W.3d at 882. The sanction "should be visited upon the offender," that is, "[t]he trial court must at least attempt to determine whether the offensive conduct is attributable to counsel only, to the party only, or to both." TransAmerican, 811 S.W.2d at 917. The Texas Supreme Court has explained this requirement as follows:

This we recognize will not be an easy matter in many instances. On the one hand, a lawyer cannot shield his client from sanctions; a party must bear some responsibility for its counsel's discovery abuses when it is or should be aware of counsel's conduct and the violation of discovery rules. On the other hand, a party should not be punished for counsel's conduct in which it is not implicated apart from having entrusted to counsel its legal representation. The point is, the sanctions the trial court imposes must relate directly to the abuse found.

Id.

         Under the second TransAmerican prong, the sanction imposed must not be excessive and should be no more severe than necessary to satisfy its legitimate purposes. Id.; see also Spohn, 104 S.W.3d at 882. The record must reflect that the trial court considered the availability of appropriate lesser sanctions and must contain an explanation of the appropriateness of the sanctions imposed. In re Carnival Corp., 193 S.W.3d at 237; see Spohn Hosp., 104 S.W.3d at 882 (stating that trial court "must consider the availability of less stringent sanctions and whether such lesser sanctions would fully promote compliance"). In all but the most exceptional cases, the trial court must actually test the lesser sanction. Cire, 134 S.W.3d at 841. Only the most egregious circumstances, such as the destruction of evidence, justifies the conclusion that no lesser sanctions would fully promote compliance with the discovery rules. Id. at 841-42.

         A. Direct Relationship

         Thus, under the first TransAmerican prong, the record must establish a nexus between the misconduct, the offender, and the sanction. 811 S.W.2d at 917. It must demonstrate that the sanction was directed against the abuse, imposed on the offender, and aimed at remedying the harm caused the innocent party. Id.

         Here, the trial court states, in its order granting appellees' motion for summary judgment on damages, that it "exclude[d] the testimony of [Madden] for failing to appear for his deposition without good cause consistent with [the] July 5, 2016 order of the court compelling his appearance and the Rule 11 agreement, dated July 20, 2016." The trial court does not, in its order, discuss whether Star or its counsel was responsible for not producing Madden for deposition. See Spohn Hosp., 104 S.W.3d at 882-83.

         The record reflects that appellees first sought to depose Madden in 2011. In 2011 or 2012, after Madden went on medical leave or disability, Star de-designated him as its expert on damages. In 2015, Star re-designated Madden as its expert on damages and filed his expert report.

         On July 5, 2016, the trial court issued an order compelling Verhage, Madden, NLW, and Inner Belt to appear for depositions within 21 days. The parties conferred and determined that the depositions could not be completed within 21 days because of scheduling conflicts. On July 20, 2016, the parties entered into a Rule 11 Agreement, in which they agreed that Star would produce Verhage for deposition on July 29, 2016; that NLW would produce its representative for deposition on August 1; that Star would produce Madden for deposition on August 16, 2016; and that Inner Belt would produce its representative for deposition on August 17, 2016.

         At the hearing on appellees' motion to exclude Madden's testimony and for summary judgment on the damages issue, Star argued that, after it produced Verhage for deposition, as agreed, appellees breached the Rule 11 Agreement by presenting Parker, who was not a competent corporate representative of NLW because he admitted that he was not an employee, owner, or contractor of NLW and he demonstrated a lack of knowledge of any relevant information. Star also complained that, during Parker's deposition, NLW asserted frivolous objections to entire categories of questions. Thus, Star terminated the deposition and refused to produce Madden until appellees honored the agreement. Star filed a motion to compel NLW to present a proper corporate representative and filed a motion for protection, requesting that the trial court prohibit any further depositions until NLW complied. However, the trial court denied Star's motions. When the trial court noted that Star had not made its production of Madden contingent on appellees honoring the Rule 11 Agreement, Star responded that the remedy for such was a breach-of-contract claim by appellees, not a death penalty sanction by the trial court.

         After the trial court denied Star's motion for protection on September 12, 2016, Star did not immediately produce Madden for deposition. On November 7, 2016, with trial set for February 13, 2017, Star emailed appellees about completing the depositions of Madden, NLW, and Inner Belt.

         In a January 2, 2017 letter to the trial court, Star stated that, at a December 1, 2016 status conference, the trial court had ordered Star to produce Madden for deposition if the parties' mediation on January 7, 2017 was unsuccessful. Star explained that the mediator had canceled due to illness and that the mediation had been rescheduled for January 9. Star again asked the trial court to advise regarding its order to produce Madden for deposition. On January 6, 2017, Star notified the trial court that the mediator was still ill, that the mediation had been rescheduled for January 23, and that Star had attempted unsuccessfully to confer with appellees regarding scheduling mediation sooner with another mediator. Star asked the trial court to advise regarding its order to produce Madden for deposition by January 7. On January 12, 2017, Star requested an emergency hearing in the trial court regarding its order to produce Madden for deposition. Star asserted that it had offered to produce Madden for deposition on January 11, however, appellees had declined to proceed with deposing Madden. On January 24, 2017, Star notified the trial court that mediation had been completed but was unsuccessful. Star noted that it had again offered Madden for deposition on January 25 and that appellees had declined. Appellees, in a letter to the trial court, re-urged their motion for summary judgment and asserted that Madden's expert report should be excluded.

         On February 21, 2017, the trial court excluded Madden's testimony for failing to appear for deposition and granted appellees' motion for no-evidence summary judgment on the damages element of Star's breach-of-contract claim, based on the ESA. Thus, the sanction imposed terminated the presentation of the merits of Star's claim. As in TransAmerican, however, it is not clear whether Star or its counsel was, or should have been, faulted for Madden's failure to appear for his deposition. 811 S.W.2d at 917-18 (holding that record must contain evidence that sanctions were "visited on the offender"); see, e.g., Gunn v. Fuqua, 397 S.W.3d 358, 374 (Tex. App.-Dallas 2013, pet. denied) (noting that trial court made no finding that party was personally responsible for failure of counsel to fully comply with discovery rules or orders in case). The record does not show that the trial court attempted to determine whether the offensive conduct was attributable to counsel only, to Star only, or to both. See Spohn Hosp., 104 S.W.3d at 882-83; TransAmerican, 811 S.W.2d at 917-18.

         We conclude that, although striking the testimony of Star's sole expert witness on damages is related to his failure to appear for his deposition, generally directed at the abuse, and aimed at remedying the harm, the record does not establish that it was imposed on the offender. See id.

         B. Excessive Sanctions

         Again, the second prong of the TransAmerican analysis "mandates that the trial court consider less stringent measures before settling on severe sanctions." Spohn Hosp., 104 S.W.3d at 883. Thus, "the record should contain some explanation of the appropriateness of the sanctions imposed." Id. In all but the most exceptional cases, the trial court must actually test the lesser sanction. Cire, 134 S.W.3d at 841.

         In TransAmerican, the trial court imposed merits-preclusive sanctions against the plaintiff after its president failed to present himself for his deposition. 811 S.W.2d at 915-16. The supreme court concluded that "[n]othing in the record before [it] even approache[d] justification for so severe a sanction." Id. at 918-19. There, with 30 days remaining in the discovery period, the parties were repeatedly unable to agree upon a date for the president's deposition. See id. at 915. The plaintiff ascribed its failure to produce its president to miscommunications concerning schedule changes. Id. The defendant alleged that his failure to appear was purposeful and part of the plaintiff's intentional obstruction of the discovery process. Id. After each sought sanctions against the other, the trial court signed an order striking the plaintiff's pleadings. See id. at 915-16.

         The supreme court concluded in TransAmerican that nothing in the record indicated that the trial court had considered the imposition of lesser sanctions or that such sanctions would not have been effective. Id. at 918. If anything, the court concluded, the record "strongly suggest[ed] that lesser sanctions should have been utilized and probably would have been effective." Id. The court noted that the trial court could have ordered the president's deposition for a specific date and punished any failure to comply with that order by contempt or another sanction. Id. Further, the trial court could have taxed the costs of the deposition and assessed attorney's fees against the plaintiff. Id. ("The range of sanctions available to the district court under Rule 215 is quite broad.").

         Here, the trial court's order excluded the testimony of Star's sole expert witness on damages "for failing to appear for his deposition without good cause consistent with [the] July 5, 2016 order of the court compelling his appearance and the Rule 11 agreement, dated July 20, 2016." However, the July 5, 2016 order requires both parties to produce witnesses for deposition and does not expressly address or impose any sanctions. Although the parties had a Rule 11 Agreement, each was required to produce witnesses for deposition, neither complied, and Star explained that appellees breached the agreement prior to the agreed date of Madden's deposition. Generally, the remedy for a breach of a Rule 11 agreement is a breach-of-contract claim filed by a party. See In re Build by Owner, LLC, No. 01-11-00513-CV, 2011 WL 4612790, at *7 (Tex. App.-Houston [1st Dist.] Oct. 6, ...


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