STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
08 CVS 3757
TELSOUTH SOLUTIONS, INC.,
VOYSS LIQUIDATION COMPANY, LLC and CCP HOLDINGS, LLC,
Before the Court are the following motions: (1) Defendant CCP Holdings, LLC’s Motion to Compel Discovery Responses (the “Motion to Compel”); and (2) Defendant CCP Holdings, LLC’s Motion for Extension of Time for the Fact Discovery Period (the “Motion for an Extension of Time”).1
After considering the Court file, the Motions, and the arguments of counsel presented on 22 May 2009, the Court GRANTS the Motion to Compel and DENIES the Motion for an Extension of Time. As a sanction for Plaintiff’s failure to timely respond to Defendant’s discovery requests and to otherwise abide by the Court’s deadlines, the Court shall DISMISS Plaintiff’s Amended Complaint with prejudice.
Plaintiff filed its Complaint in this case on 19 February 2008 asserting claims for breach of contract, violations of the North Carolina Unfair and Deceptive Trade Practices Act, and for an accounting. On 30 April 2008, Plaintiff filed an Amended Complaint.
On 29 May 2008, Defendant CCP Holdings, Inc. (“CCP”) answered the Amended Complaint and filed Counterclaims and a Motion to Dismiss. The next day, CCP designated the case as mandatory complex business, and it was subsequently assigned to me.
On 24 July 2008, the Court advised the parties that they had failed to timely submit a Case Management Report as required by Rule 17 of the Business Court Rules. The Court extended the lapsed deadline but warned both parties that failure to comply with the Court’s deadlines would be punishable by contempt.
On 5 August 2008, CCP moved for entry of default for Plaintiff’s failure to respond to its Counterclaims. On 6 August 2008, Plaintiff moved for leave to set aside entry of default and be allowed to serve its response to CCP’s Counterclaims out of time, with counsel stating that Plaintiff’s failure to timely respond was the result of a “calendaring” error in counsel’s office. On 29 September 2008, the Court set aside entry of default against Plaintiff as to the Counterclaims.
The next day, the Court entered a case management order (the “CMO”) in this case which, among other things, required the parties to: (1) select a mediator on or before 31 October 2008; (2) file, on or before 31 October 2008, a certification that their counsel had provided them with a good faith estimate of the costs to be incurred in litigating the case to trial (the “certifications”); and (3) complete fact discovery on or before 15 April 2009.
On 13 November 2008, the Court directed the parties to appear on 20 November 2008 to explain why they had failed to comply with the deadlines in the CMO for selecting a mediator and filing the certifications.
The parties failed to appear for the 20 November hearing. As a result, the Court directed the parties and their counsel to appear and show cause why they should not be held in criminal contempt. The Court held a hearing on that issue and, on or about 5 December 2008, entered an order finding CCP in criminal contempt and imposing a fine of $500.00. The Court continued the criminal contempt proceedings as to Plaintiff and its counsel, as well as CCP’s counsel.
On 7 and 8 January 2009, CCP served its First Set of Interrogatories and First Request for Production of Documents (the “Discovery Requests”). Plaintiff failed to object, serve responses, or move for an extension of time in which to respond to the Discovery Requests.2
On 12 February 2009, CCP’s counsel wrote to Plaintiff’s counsel, advising him that Plaintiff had failed to provide the requested discovery. (CCP’s Mot. Compel, Ex. 2.) CCP’s counsel requested that Plaintiff serve its responses within ten (10) days and that it also provide deposition dates. (CCP’s Mot. Compel, Ex. 2.) On or about 23 February 2009, Plaintiff’s counsel responded via e-mail stating, “I haven’t forgotten you regarding discovery and depositions. Like you, I’ve been traveling and swamped. My goal is to get something to you this week.” (CCP’s Mot. Compel, Ex. 3.)
On 24 February 2009, CCP’s counsel reminded Plaintiff’s counsel via e-mail that the discovery deadline was fast approaching and further advised, “I don’t have the time to wait until you find the time to provide responses.” (CCP’s Mot. Compel, Ex. 3.) CCP’s counsel suggested that, under the circumstances, “a general extension of time for the discovery period is necessary.” (CCP’s Mot. Compel, Ex. 3.) In an e-mail dated 26 February 2009, Plaintiff’s counsel consented to the filing of a joint motion for that purpose. (CCP’s Mot. Compel, Ex. 3.) Counsel thereafter participated in a telephone conference on 27 February 2009 to address the discovery issues. (Rule 18.6 & 18.7 Certificate, Apr. 1, 2009.)
Following counsel’s e-mail exchange and telephone conference in late February 2009, CCP made at least one additional request to Plaintiff that it respond to the outstanding Discovery Requests. Plaintiff failed to respond.
On 1 April 2009, CCP filed the Motion to Compel. On 16 April 2009, more than two (2) months after they were due, Plaintiff served its responses to the Discovery Requests. Plaintiff’s responses included objections to nine (9) of the twenty-three (23) interrogatories served and additional objections to nine (9) of the twenty-three (23) requests for production of documents.
At the hearing on CCP’s Motion to Compel, Plaintiff’s counsel stated that his client’s inability to respond to the discovery requests was the result of factors beyond his client’s control, but counsel presented no evidence to explain the circumstances that prevented Plaintiff’s timely compliance with the Court’s rules.
Rule 37(d) of the North Carolina Rules of Civil Procedure provides in pertinent part:
If a party . . . fails . . . (ii) to serve answers or objections to interrogatories submitted under Rule 33, after proper service of the interrogatories, or (iii) to serve a written response to a request for inspection submitted under Rule 34, after proper service of the request, the court in which the action is pending on motion may make such orders in regard to the failure as are just, and among others it may take any action authorized under subdivisions a, b, and c of subsection (b)(2) of this rule. In lieu of any order or in addition thereto, the court shall require the party failing to act to pay the reasonable expenses, including attorney’s fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust.
N. C. R. Civ. P. 37(d) (2007).
The orders that the Court may enter under Rule 37(b)(2) include “[a]n order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof, or rendering a judgment by default against the disobedient party.” N.C. R. Civ. P. 37(b)(2)c (2007).
“‘The choice of sanctions under Rule 37 lies within the court’s discretion and will not be overturned on appeal absent a showing of abuse of that discretion.’” Vick v. Davis, 77 N.C. App. 359, 361, 335 S.E.2d 197, 199 (1985) (quoting Routh v. Weaver, 67 N.C. App. 426, 429, 313 S.E.2d 793, 795 (1984)). The Court may impose drastic sanctions for discovery violations, including dismissal of claims with prejudice when it is “just” to do so. See Fulton v. E. Carolina Trucks, Inc., 88 N.C. App. 274, 275–76, 362 S.E.2d 868, 869–70 (1987); N.C. R. Civ. P. 37(d). Moreover, “[a]n order directing compliance with discovery requests . . . is not a prerequisite to the entry of sanctions for failure to respond to discovery requests.” Cheek v. Poole, 121 N.C. App. 370, 373, 465 S.E.2d 561, 563 (1996) (citing N.C. Gen. Stat. § 1A-1, Rule 37(d); First Citizens Bank v. Powell, 58 N.C. App. 229, 230, 292 S.E.2d 731, 731 (1982), aff’d, 307 N.C. 467, 298 S.E.2d 386 (1983)).
In this case, after considering lesser sanctions, the Court concludes that dismissal of Plaintiff’s Amended Complaint with prejudice is appropriate. In arriving at its decision, the Court has considered Plaintiff’s repeated failures to comply with other Court-imposed deadlines in this case, including the deadlines to (1) file a Case Management Report, (2) respond to CCP’s counterclaims, (3) select a mediator, and (4) provide a good faith estimate of litigation costs. Plaintiff also failed to appear at a hearing to address these issues, which necessitated the issuance of a Show Cause Order.
In those earlier instances, the Court took no action against Plaintiff (and in fact, set aside entry of default as to the Counterclaims), while warning Plaintiff that it would not tolerate further violations of the Court’s rules. Rather than heeding the Court’s admonition, however, Plaintiff again ignored its obligations regarding this case, this time by failing to respond to the Discovery Requests until well after the time allowed by the applicable rules.3
At the hearing on the Motion to Compel, Plaintiff’s counsel stated that his client’s failure to respond was not willful but was instead caused by circumstances beyond its control. It is true that “if a party is unable to answer discovery requests because of circumstances beyond its control, an answer cannot be compelled.” Atl. Veneer Corp. v. Robbins, 133 N.C. App. 594, 598, 516 S.E.2d 169, 172 (1999) (citing Benfield v. Benfield, 89 N.C. App. 415, 366 S.E.2d 500 (1988); Laing v. Liberty Loan Co., 46 N.C. App. 67, 264 S.E.2d 381, disc. review denied, 300 N.C. 557, 270 S.E.2d 109 (1980)). In this case, however, Plaintiff presented no evidence that it was unable to seasonably respond to the Discovery Requests or that it otherwise attempted in good faith to meet its discovery obligations.
Rather, Plaintiff has demonstrated (time and again) an unwillingness to give proper attention to litigation that it initiated. In light of Plaintiff’s most recent transgression, and because the fact discovery deadline has now expired, the Court concludes, in its discretion and after considering lesser sanctions, that the appropriate sanction is dismissal of Plaintiff’s Amended Complaint with prejudice.
Pursuant to Rule 37, Plaintiff shall also reimburse CCP for its attorney fees and expenses in pursuing the Motion to Compel. See N.C. R. Civ. P. 37(d). If the parties are unable to agree on the amount of the sanction, CCP shall, within twenty (20) days of the entry of this Order, file an affidavit of its fees and expenses. Plaintiff shall file any response to the affidavit within ten (10) days of service. CCP shall file any reply within five (5) days of service of the response. Thereafter, the Court will enter an Order setting the award of fees and expenses.
The Motion to Compel is GRANTED and sanctions are entered as set forth above. The Motion for Extension of Time is DENIED.
IT IS SO ORDERED this, the 11th day of June, 2009.
/s/ Albert Diaz
Special Superior Court Judge