Lakewood Engineering & Manufacturing Co. v. Quinn

DAVIS, Judge. In this appeal from a judgment entered on a jury verdict in the Circuit Court for Kent County, the trial court granted the appellees’ Motion for Sanctions and subsequently entered a judgment of default for failure to comply with a discovery order. The trial court thereafter vacated the jury’s verdict and ordered a new trial before a second jury, after which the court denied the appellant’s motion for judgment. Appellant presents the following questions for our review: 1.

Whether the trial court erred in vacating the jury’s verdict and ordering a new trial. 2. Whether the trial court erred in granting the appellees’ Motion for Sanctions and entering a default judgment as to liability against the appellant. ³⁷⁸ 3. Whether the trial court erred in denying the appellant’s motion for judgment during the second trial as to the issue of damages. For the reasons set forth herein, we shall reverse.

Facts On August 18, 1987, James and Linda Quinn (appellees) purchased a model P223 electric fan which was manufactured by the Lakewood Engineering and Manufacturing Co., Inc. (appellant). Approximately six weeks later, on September 26, 1987, a fire occurred in the appellees’ home which was attributed to a defect in the fan. The appellees filed suit against the appellant to recover for smoke, fire, and water damage to their property. Trial was held before a jury.

At trial the appellees presented evidence as to the amount of their property damage. Through the testimony of William Pearson, an independent adjuster working for the appellees’ insurer, Penn Mutual Insurance Company (insurer), evidence was adduced that the appellees suffered both smoke and water damage to their property in the amount of $24,309.89. Pearson further testified that the actual property damage was $8,000 higher, but that the figure was lowered to meet policy limits. Insurer paid the appellees the sum of $24,309.89 under a homeowner’s policy in effect at the time of the fire, which claim is subrogated to that portion of the appellees’ damages.

Numerous post-conflagration photographs of the appellees’ home were also introduced into evidence as proof of damages. The appellant also introduced the testimony of volunteer fire fighter, Walter R. Strong, who stated that he observed some smoke and fire damage in the appellees’ bedroom. On cross-examination of Strong, the appellee introduced into evidence a Maryland Fire Incident Report which indicated that fire, smoke, and water damage was limited to the area of the origin of the fire and estimated damage to the appellees’ home to range from $1,000 to $9,999. ³⁷⁹ At the conclusion of all the evidence, the jury returned a verdict in favor of the appellees, James and Linda Quinn, in the amount of $2,500 and in favor of appellee, Penn Mutual Insurance Company, in the amount of $1,250. Judgment was entered on the jury’s verdict on April 10, 1990.

Following entry of judgment, the appellees filed a Motion for New Trial stating that the jury’s damage award was inadequate. At the conclusion of a motion’s hearing, the trial court granted the appellees’ motion and ordered that a new trial as to all issues be set in for April 1, 1991. On October 19, 1990, the appellees served the appellant with a Request for Production of Documents which specifically requested: (1) information concerning a July 10, 1990 fire in Georgia (hereinafter the Prestridge fire) and (2) “any other fire, property damage, personal injury and/or death caused, or alleged to have been caused by any fan or other electrical appliance manufactured, in whole or part, by the appellant or any subsidiary thereof.” The appellant filed its response and objections to the appellees’ request. As to the appellees’ first request, the appellant responded that it would supply copies of documents “to the extent that such are relevant or pertinent or otherwise within the scope of discovery.” As to the appellees’ second request, the appellant objected on the grounds that the request was “vague and ambiguous and overly broad and oppressive.” The appellees subsequently filed a Motion to Compel Discovery.

A hearing was held on February 12, 1991, at the conclusion of which the trial court granted the appellees’ motion and ordered the appellant to produce “all responsive documents pertaining to fires within 16 days from the date of this order \i.e., by February 28, 1991].” Though the appellant produced some of the documents, the majority of the subject documents were kept in the appellant’s Chicago offices, and therefore the appellant presented counsel for the appellees with the following options: (1) travel to Chicago to inspect the records, or (2) ³⁸⁰ copies would be supplied to the appellees if they agreed to bear the cost of copying and shipping. As neither alternative was acceptable to the appellees, counsel for the appellees granted to the appellant an extension, until March 7, 1991, to produce the requested documents. On March 5, 1991, the appellant contacted the appellees and proposed that appellant’s counsel agree to produce a random sampling by years at the preference of the appellees. The appellees rejected the proposal and filed a Motion for Sanctions, which the trial court granted by entering a default as to liability against the appellant.

At the commencement of the second trial, also held before a jury, the appellant made a motion to reconsider and vacate the entry of default. Concluding that it was “unreasonable” for the appellant to require counsel for the appellees to travel to Chicago to inspect the documents, the court denied the appellant’s motion. Though the order of the court authorized a retrial of all issues, the second trial proceeded solely on the issue of damages. As evidence of their damages, the appellees introduced an inventory of personal property which was destroyed in the fire.

The inventory included: quantity and description of each item, place and date of purchase, and the appellees’ opinion as to the replacement cost of each item. The items listed totalled $11,484.00. 1 At both the close of the appellees’ case and the close of all the evidence, the appellant moved for judgment arguing that the appellees had failed to prove sufficiently the fair market value of the destroyed items. The court denied the appellant’s motion and submitted the case to the jury. Following deliberation, the jury returned an award of $8,000 for the appellees and $24,209.89 for the insurer. 2 ³⁸¹ Discussion Judgment Notwithstanding Verdict/New Trial The appellant first asks us to review whether the trial court erred in vacating the verdict of the jury and ordering a new trial at the conclusion of the first trial.

The appellant alleges that the trial court erroneously granted the Motion for New Trial despite the existence of evidence which adequately supported the jury’s verdict. More specifically, the appellant argues that the trial court did not assume the truth of all credible evidence (i.e. the Maryland Fire Incident Report and the testimony of Fireman Walter Strong as to the relatively limited area of actual damage), in a light most favorable to the party against whom the motion is made (i.e. the appellant). In reviewing a trial court’s grant of a judgment notwithstanding verdict (j.n.o.v.), the appellant has correctly noted that we are required to assume the truth of all credible evidence and all inferences of fact reasonably deducible from it tending to sustain appellant’s contentions. If, in doing so, we find any legally relevant and competent evidence, however slight, from which the jury could rationally have found that test satisfied, we must reverse the judgments NOV.

Franklin v. Gupta, 81 Md.App. 345, 354 , 567 A.2d 524 (1990) (citations omitted). Where the record convinces the trial court that there were sound bases, both in law and in reason, for the trial judge’s determinations, the granting of the j.n.o.v. will not be held to be arbitrary. B & K Rentals & Sales Co. v. Universal Leaf Tobacco Co., 73 Md.App. 530 , 535 A.2d 492 (1988), rev’d on other grounds, 319 Md. 127 , 571 A.2d 1213 (1990). In the present case, the appellees presented damage estimates amounting to over $24,000.

This evidence was presented by one whose interests are diametrically opposed to those of the appellees, the adjuster for the appellees’ insurer. As the court remarked, it is the nature of an insurer to pay as little as possible on any given claim. In ³⁸² this instance the insured actually advocated and paid the appellees $24,000 in damages. In light of the adversarial relationship that generally exists between an insurer and a claimant-insured, an inference may properly be drawn that the amount of damage to which the insurer concedes is, at the very least, the lower boundary of the damage actually suffered.

For the jury to return a verdict of $2,500 on a claim that the insurer (whose interest and point of view conflicts with the insured) concedes is worth almost ten times that amount, does indeed shock one’s sense of justice and basic fairness. 3 We therefore hold that the trial court did not err in vacating the jury’s verdict. In this State, the law is settled that the decision to grant a new trial is within the sound discretion of the trial court and cannot be disturbed, except under “extraordinary circumstances.” Franklin, 81 Md.App. at 362 , 567 A.2d 524 (citations omitted). A clear abuse of discretion must necessarily be found to overturn a grant of a Motion for New Trial. Kirkpatrick v. Zimmerman, 257 Md. 215, 217 , 262 A.2d 531 (1970); Batson v. Shiflett, 86 Md.App. 340 , 586 A.2d 792 (1991).

As we have found that the trial court in the instant case did not err in vacating the jury’s verdict at the first trial, we hold, accordingly, that the trial court did not abuse its discretion in granting a new trial. The Ultimate Sanction The appellant next argues that the trial court abused its discretion in entering a default judgment as to liability ³⁸³ against the appellant for failure to produce documents. Maryland Rule 2-432 provides: (a) Immediate Sanctions for Certain Failures of Discovery. — A discovering party may move for sanctions under Rule 2-433(a), without first obtaining an order compelling discovery under section (b) of this Rule, if a party or any officer, director, or managing agent of any party or a person designated under Rule 2-412(d) to testify on behalf of a party, fails to ... file a response ... to a request for production of documents or inspection under Rule 2-422, after proper service. As there is no issue as to improper service presented herein, Rule 2-432 clearly applies under these facts.

Case law is plenteous prescribing when it is proper to impose “the ultimate sanction” (a default judgment as to some issue in the case) for a failure to comply with discovery. Historically, the rule has been that entry of a default judgment is only properly entered when the failure is willful or contumacious. Lynch v. R.E. Tull & Sons, Inc., 251 Md. 260 , 247 A.2d 286 (1968), citing Peck v. Toronto, 246 Md. 268 , 228 A.2d 252 , cert. denied, 389 U.S. 868 , 88 S.Ct. 139 , 19 L.Ed.2d 142 (1967); Miller v. Talbott, 239 Md. 382 , 211 A.2d 741 (1965); Smith v. Potomac Electric, 236 Md. 51, 62 , 202 A.2d 604 (1964). More recently, bearing in mind that the decision to impose sanctions is within the sound discretion of the trial court, this Court and the Court of Appeals have ruled that the power of the trial court to impose sanctions is not limited by the requirement that they find willful or contumacious behavior.

Billman v. State of Maryland Deposit Insurance Fund Corporation, et al., 86 Md.App. 1 , 585 A.2d 238 (1991); Berkson v. Berryman, 63 Md.App. 134 , 492 A.2d 338 (1985); Rubin v. Gray, et al., 35 Md.App. 399 , 370 A.2d 600 (1977); Lynch v. R.E. Tull & Sons, Inc., supra. We have previously held that the trial court did not abuse its discretion in imposing the ultimate sanction even ³⁸⁴ when other less stringent alternatives were available. 4 Berkson, supra. Judge Robert M. Bell, writing for this Court, observed, “The decision whether to grant a motion for default judgment for failure to comply with discovery is within the sound discretion of the trial judge and will not be disturbed on appeal in the absence of an abuse of discretion.” State Farm Mutual Automobile Insurance Company v. Schlossberg, 82 Md.App. 45, 62 , 570 A.2d 328 (1990), quoting Berkson, 63 Md.App. at 142 , 492 A.2d 338 . In Lone v. Montgomery County, Maryland, 85 Md. App. 477, 486-87 , 584 A.2d 142 (1991), we discussed discovery violations: Lone admits that his answers to the interrogatories were untimely, as they were not filed until February 2, 1990, but blames the clerk’s office, arguing that he never received notice of the court’s disposition of the Motion to Dismiss____ We hold that the trial judge did not abuse his discretion when he imposed the “ultimate sanction” upon Lone.

As he is allowed to do, he assigned little weight to the appellant’s unsupported explanation for the failure to file timely. Absent any proof of mistake on the part of the clerk’s office, a likely explanation for the appellant’s lapse is dilatory conduct, which may properly result in sanctions.