No Sanctions for Policyholder Discovery Abuses

An insurer brought a claim for sanctions in dismissing a property owner’s lawsuit over coverage for damage from Hurricane Ike over discovery abuses. The insurer sought what is commonly known in Texas as “death-penalty” sanctions over the discovery abuses.

The lower court had granted the sanctions, but this court found that the trial court had imposed excessive sanctions when it dismissed the plaintiff’s pleadings against the insurer and claims adjuster. This court determined that, while the purported discovery sanctions may be sanction-able, the conduct at issue did not warrant sanctions here as it did not amount to “exceptional misconduct.”

The plaintiff had sued the insurer and claims adjuster in 2010, alleging that the insurer wrongfully denied claims for coverage to an office building due to Hurricane Ike. The plaintiff’s initial discovery responses were insufficient and the court granted the insurer’s motion to compel adequate responses. At a subsequent deposition, years later, the plaintiff produced a number of additional documents that she would not hand over at the deposition. The insurer filed a motion to compel the plaintiff to comply with the prior order to compel, and sought sanctions.

The trial court granted the motion for sanctions, and the plaintiff appealed. This court, found that, since the plaintiff had not destroyed or tampered with evidence, and merely failed to turn it over, there was no justification for sanctions.

Hoa Doa v. Maryland Casualty Company and Craig Raus, Court of Appeals, Ninth District of Texas at Beaumont, May 14, 2015.