Insurance Lawsuits – Cooperation

Insurance lawsuits, as all lawsuits, require the parties involved to cooperate with each other in the discovery process and to abide by the Rules of Procedure. The results of failure to do so are illustrated in the 2018, Dallas Court of Appeals opinion styled, Farbod Ayati-Ghaffari v. Farmers Insurance Exchange.

The issue in this appeal is whether the trial court abused its discretion in imposing death penalty sanctions against Ayati for his abuse of the discovery process.

This opinion makes a long list of the abuses of occurred over the course of this lawsuit including Orders made by the Court that were not followed and numerous chances given by the Court to correct wrongs being committed by Ayati.

Sanctions of discovery abuse are reviewed for an abuse of discretion. The discovery rules promote a full disclosure of evidence to resolve the case by trial or settlement. Sanctions for discovery abuse are authorized by Texas Rule of Civil Procedure 215.2. If a trial court finds a party is abusing the discovery process in seeking, making, or resisting discovery, then the trial court may, after notice and hearing, impose any appropriate sanction authorize by Rule 215.2. Among the sanctions available under Rule 215.2 are orders “striking pleadings or parts thereof” and “dismissing with or without prejudice the actions or proceedings or any part thereof.” These sanction, that adjudicate a claim and preclude presentation of the merits of the case, are often referred to as “death penalty sanctions.”

Discovery sanctions serve three purposes: (1) to secure the parties’ compliance with the discovery rules; (2) to deter other litigants from violating the discovery rules; and (3) to punish parties who violate the discovery rules. Although the choice of sanctions is left to the sound discretion of the trial judge, the sanctions imposed must be just. When determining whether a trial court’s imposition of sanctions was just, an appellate court considers the following two standards: (1) whether there is a direct relationship between the abusive conduct and the sanction imposed; and (2) whether the sanction is excessive.

This Court then reviewed the extensive history of abuse that had been committed by Ayati during the course of litigation and the numerous chances the trial court had allowed Ayati to comply with the trial court’s orders. This Court ultimately concluded that, in light of Ayati’s improper conduct, the “death penalty sanctions” were justified and not excessive. The trial court’s dismissal of the case was sustained.