In Re Bruce L. Jamison v. the State of Texas

In The

Court of Appeals

Ninth District of Texas at Beaumont

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NO. 09-21-00223-CV
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IN RE BRUCE L. JAMISON

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Original Proceeding
284th District Court of Montgomery County, Texas
Trial Cause No. 20-09-10625-CV
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MEMORANDUM OPINION

On July 23, 2021, the trial court imposed pre-trial discovery sanctions against

the attorney for the plaintiff in a commercial dispute case styled Trial Court Cause

Number 20-09-10625-CV, Southern Luxury Motorcars, LLC d/b/a Crave Luxury

Auto v. Karl Stomberg, et al. In a petition for a writ of mandamus, Relator Bruce L.

Jamison contends the trial court abused its discretion: (1) by finding that Jamison

violated prior discovery orders and imposing sanctions without considering the

merits of the plaintiff’s motion to dismiss the Real Parties’ counterclaim pursuant to

the Texas Citizens Participation Act (“TCPA”); (2) by imposing sanctions against

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Jamison for violating June 23, 2021 discovery orders without evidence of bad faith;

and (3) by imposing extraordinarily excessive sanctions that were wholly

disproportionate in light of the circumstances.

On July 29, 2021, we stayed all enforcement of the challenged order and

requested a response from Real Parties in Interest Karl Stomberg and Kristin

Stomberg. The Stombergs filed their response but before the Court issued an

opinion, we abated this original proceeding due to a bankruptcy stay that affected

Trial Court Case Number 20-09-10625-CV. On July 11, 2024, we reinstated this

original proceeding and granted leave for the parties to file supplemental briefs.

Neither Jamison nor the Stombergs filed a supplemental brief. We conditionally

grant mandamus relief.

Background

Jamison’s client, Andrew Powers, applied to the trial court for an order of

involuntary windup of Southern Luxury Motorcars, LLC d/b/a Crave Luxury Auto

(“SLM”). See Tex. Bus. Org. Code Ann. § 11.314(1)-(2). In addition to the windup

application, Powers asserted claims against the Stombergs for fraud, theft,

conversion, fraudulent transfer, and other wrongful acts. Powers amended his

petition to sue in his individual capacity and derivatively on behalf of SLM. Powers

added related claims against the Stombergs’ business associates and their adult

children.

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In February 2021, the Stombergs, individually and on behalf of SLM, together

with a third-party plaintiff, 54 Dyer, L.P., filed a counterclaim and third-party

petition against Powers, Powers’ father Dwight, and a business entity of Powers’,

Crave Luxury Investments, LLC and its d/b/a, Crave Luxury. The pleading asserted

counterclaims against Powers for theft and embezzlement, conversion, fraudulent

transfer, fraud, breach of fiduciary duty, misappropriation of trade secrets,

racketeering, tortious interference with contracts and prospective and continuing

business relations, unfair competition and misappropriation by passing off, federal

communications acts violations, and conspiracy.

On June 8, 2021, the Stombergs filed a motion to compel discovery. On June

23, 2021, the trial court granted in part the motion to compel against Powers

individually and derivatively on behalf of SLM and ordered him to respond to 45

separate interrogatories and requests for production, as modified by the trial court’s

order, by July 16, 2021.

On June 24, 2021, the Stombergs filed a supplemental counterclaim in their

own behalf and on behalf of SLM. The Stombergs alleged that on June 23, 2021,

Powers sent an email addressed to all current and potential motor vehicle customers

and wholesalers, in which Powers warned the reader to be aware of fraudulent and

unlawful practices of Karl Stomberg, that Karl Stomberg had stolen funds and

defrauded at least one of SLM’s consignment customers, and advised all motor

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vehicle vendors, auction houses, wholesalers, and distributors to be aware of Karl

Stomberg’s fraudulent and unlawful business practices. The Stombergs alleged the

statements were false and defamatory per se, that Powers published disparaging

words about the economic interests of Stomberg and SLM with malice and without

privilege, and that Powers willfully and intentionally interfered with the contracts

and business relations between SLM and its customers.

On July 16, 2021, Powers filed a motion pursuant to the TCPA to dismiss the

Stombergs’ supplemental counterclaim, including their claims against Powers for

defamation, business disparagement and tortious interference.

On July 19, 2021, the Stombergs filed an emergency motion to compel

discovery and for sanctions for Powers’ refusal to comply with the trial court’s June

23, 2021, order compelling discovery. In this motion, the Stombergs complained that

Jamison’s co-counsel relied on Powers’ TCPA motion to excuse Powers’ non-

compliance with the discovery order’s July 16, 2021, compliance deadline. The

Stombergs asserted that the attorney who signed Powers’ TCPA motion failed to

comply with Texas Rule of Civil Procedure 13, as his co-counsel’s email to the

Stombergs’ lawyer revealed that the motion had been filed only to release them from

complying with the discovery order before a scheduled mediation. The Stombergs

argued the TCPA motion was filed for the improper purposes of avoiding

compliance with the discovery order, there was no basis advanced for the effect

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Powers gave to the TCPA motion, and there was no evidentiary support for the

TCPA motion. The Stombergs urged the trial court to use its inherent power to

impose sanctions for conduct that significantly interfered with core judicial

functions. The Stombergs asked the trial court to order Powers and Jamison’s law

firm to each pay SLM sanctions in the amount of $25,000, order Powers to produce

the documents previously ordered or face dismissal of all of Powers’ claims with

prejudice, and order that Powers pay SLM $2,500 in reasonable attorney’s fees for

the exchange of emails with Powers’ counsel and the preparation of the motion for

sanctions.

On July 22, 2021, in a supplement to their motion to compel, the Stombergs

stated they were also seeking sanctions under Texas Rule of Civil Procedure 215.2

for abuse of the discovery process. The Stombergs asked the trial court to order that

discovery on claims other than the defamation claim is not suspended by the TCPA

Motion to Dismiss, order Powers to produce the documents by July 24, 2021, order

Powers and Jamison’s law firm to each pay SLM $3,325 as one-half of the

reasonable attorney’s fees for preparing the motions, and hold Powers and Jamison’s

law firm in contempt of court and direct them to pay a $500 fine.

In response, Powers and Jamison’s law firm argued that by operation of

section 27.003(c), Powers’ TCPA motion suspended discovery in the entire case,

subject to discovery limited to the TCPA motion to dismiss as allowed by the trial

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court upon a showing of good cause. Powers argued the TCPA provides the

exclusive remedy for frivolous motions to dismiss and that the court cannot deviate

from the mandatory statutory process for adjudicating TCPA motions. Powers

argued imposing sanctions under Rule 215 would violate due process because the

Stombergs added their request for Rule 215 sanctions less than three days before the

hearing, in violation of Rule 21(b). Powers filed a separate objection to proceeding

with the Stombergs’ motion for sanctions without first adjudicating his TCPA

motion to dismiss the Stombergs’ counterclaims and their motion for sanctions.

Powers also objected that the Stombergs failed to provide the required specificity as

to the exact wrongful acts supposedly committed by Powers and by Jamison’s law

firm.

On July 23, 2021, the trial court conducted a hearing on the Stombergs’

motion to compel discovery and for sanctions for non-compliance with the trial

court’s discovery order of June 23, 2021. The trial court noted that the TCPA motion

to dismiss was not before the court for purposes of the hearing. Over Powers’

objection, the trial court proceeded with the Stombergs’ motion to impose sanctions

on Powers and his attorneys for filing a frivolous TCPA motion to dismiss without

first considering the TCPA motion to dismiss on its merits.

No witnesses testified at the hearing and no documents were introduced into

evidence, but the lawyers presented arguments on whether section 27.003(c)

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operated to suspend all discovery in the case or only new discovery on the

Stombergs’ newly added counterclaim. The Stombergs argued that the suspension

of “all discovery in the legal action” required by section 27.003(c) applied only to

discovery addressing the Stombergs’ defamation-related claims and did not suspend

the discovery the trial court had already ordered. Powers argued the “legal action”

referred to in section 27.003(c) referred to the entire case, not just the defamation

claim, and that the reference to the suspension of “all discovery” included discovery

that had been previously ordered but not yet produced.

At the trial court’s direction, Jamison and his associate each read into the

record an email an associate of Jamison’s law firm sent to the Stombergs’ lawyer. In

the email, the associate asserted that all discovery had been “stayed” due to the filing

of the TCPA motion to dismiss and that a “threat” to file a motion for sanctions “is

nothing more than pure harassment[,]” demanded a response providing “any legal

authority which you claim overrides the statutory automatic stay of all discovery and

would authorize your threatened motion[]” and warned that Powers would respond

to a motion for sanctions with a motion for sanctions.

The Order

On July 23, 2021, the trial court considered the Stombergs’ Emergency

Amended Motion to Compel and for Sanctions for Plaintiffs’ Refusal to Comply

with Court Order Granting Motion to Compel and entered a Sanctions Order and

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Show Cause Order against Jamison. The trial court found sufficient cause to

conclude that Jamison violated the trial court’s June 23, 2021, Order on Stomberg

Defendants’ Motion to Compel and the trial court’s June 23, 2021 Supplement to

Order on Stomberg Defendants’ Motion to Compel. The trial court concluded that

Jamison acted in bad faith in violation of Texas Rule of Civil Procedure 13 and

Chapter 10 of the Civil Practice and Remedies Code. The trial court sanctioned

Jamison in the amount of $25,000, to be paid to the Stombergs’ counsel by no later

than July 30, 2021. The trial court provided laddered reductions of the fine imposed

by the sanctions order if Jamison was in full compliance with the discovery orders

by certain dates. Additionally, the trial court found there was cause to believe that

Jamison violated the trial court’s June 23, 2021 orders compelling discovery and

ordered Jamison to appear in court on July 30, 2021, to show cause why he should

not be adjudged in criminal contempt of court on 45 counts of violating the orders

compelling discovery. The trial court’s order neither ruled on the merits of Powers’

TCPA Motion to Dismiss nor imposed sanctions for discovery abuse pursuant to

Texas Rule of Civil Procedure 215 or under its inherent power.

Mandamus Proceeding

On July 28, 2021, Jamison filed a petition for a writ of mandamus and a

motion for temporary relief. The following day, we stayed all enforcement of the

trial court’s July 23, 2021 order imposing sanctions and show cause order. See Tex.

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R. App. P. 52.10(b). In his mandamus petition, Jamison argues the trial court abused

its discretion by finding that Jamison violated the trial court’s prior discovery orders

and imposing sanctions on Jamison without considering the merits of Powers’ TCPA

motions to dismiss. Jamison argues the trial court could not determine whether the

TCPA motion to dismiss was “groundless” without considering the grounds asserted

in the motion. Jamison argues that the recital in the sanctions order that Jamison

acted in “bad faith” could not be based upon Jamison’s signature on Powers’ TCPA

motion to dismiss because the trial court did not mention the TCPA motion to

dismiss in its sanctions order.

To be entitled to mandamus relief, a relator must show that the trial court

clearly abused its discretion, and that the relator has no adequate remedy by appeal.

In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig.

proceeding); Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex. 1992) (orig.

proceeding). A trial court abuses its discretion when it acts in an unreasonable and

arbitrary manner or without reference to guiding rules and principles. In re Colonial

Pipeline Co., 968 S.W.2d 938, 941 (Tex. 1998) (orig. proceeding). A relator lacks

an adequate remedy on appeal when the benefits of mandamus outweigh its

detriments. Prudential, 148 S.W.3d at 136.

We limit our review of the sanctions order to the specific rule cited in the

order. Metzger v. Sebek, 892 S.W.2d 20, 51 (Tex. App.—Houston [1st Dist.] 1994,

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writ denied). In its order, the trial court found “Jamison acted in bad faith in violation

of Texas Rule of Civil Procedure 13 and Chapter 10 of the Civil Practice and

Remedies [C]ode.” See Tex. Civ. Prac. & Rem. Code Ann. §§ 10.001-.006; Tex. R.

Civ. P. 13.

When imposing sanctions under chapter 10, the trial court “shall describe in

an order imposing a sanction under this chapter the conduct the court has determined

violated Section 10.001.” Tex. Civ. Prac. & Rem. Code Ann. § 10.005. Likewise,

under Rule 13, “No sanctions under this rule may be imposed except for good cause,

the particulars of which must be stated in the sanction order.” Tex. R. Civ. P. 13.

The trial court’s order omits a finding that the TCPA motion to dismiss was

groundless. The omission was not inadvertent, as the trial court overruled Powers’

objections and stated on the record, “The TCPA motion is not before me. The

question of its misuse, however, is.” The trial court’s sanctions order finds there is

sufficient cause to conclude that Jamison violated the trial court’s discovery orders,

but the trial court does not find that Jamison filed Powers’ TCPA motion to dismiss

in bad faith or for an improper purpose. The trial court’s sanctions order fails to link

Jamison’s “bad faith” to a specific petition or motion that Jamison signed, as

required by Rule 13 and section 10.001.

The Stombergs argue the trial court could impose sanctions under Rule 13 and

section 10.001 without considering the merits of the TCPA motion to dismiss

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because Jamison’s assertions that a TCPA motion to dismiss stays all discovery in

the entire case and stays enforcement of a pending court order are groundless. For

purposes of Rule 13, “‘[g]roundless’ . . . means no basis in law or fact and not

warranted by good faith argument for the extension, modification, or reversal of

existing law.” Id. The Stombergs cite Montelongo v. Abrea for the proposition that

“legal action” in section 27.003(c) refers solely to the defamation claim they asserted

in their amended pleading. See 622 S.W.3d 290, 298–300 (Tex. 2021).

In Montelongo, the Supreme Court held that the term “legal action” in section

27.003(b) referred to claims first brought in a pleading brought within 60 days of the

filing of the TCPA motion to dismiss because applying that subsection to all claims

brought in the amended pleading would leave the time limitation in subsection

27.003(b) meaningless. Id. at 298–99. The purpose of subsection 27.003(c) is to

suspend discovery until the trial court decides whether a claim brought under

subsection 27.003(b) must be dismissed to protect a constitutionally protected right.

Generally, discovery proceeds through the entire case without being

compartmentalized by separate claims. See generally Tex. R. Civ. P. 190-215.

Suspending all discovery in the entire case until the trial court orders specific

discovery related to the TCPA motion to dismiss or rules on the motion to dismiss

will not render any provision in section 27.003(c) meaningless.

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For purposes of Rule 13, “‘[g]roundless’ . . . means no basis in law or fact and

not warranted by good faith argument for the extension, modification, or reversal of

existing law.” Id. Given the lack of precedent directly on point, the argument

Jamison presented in his defense of the motion for sanctions is at least warranted by

a good faith argument for the extension of existing law. See Tex. R. Civ. P. 13.

To impose sanctions pursuant to Rule 13, the trial court had to find both that

the lawyer signed the motion in bad faith or for the purposes of harassment and that

the motion was groundless. Nath v. Tex. Children’s Hosp., 446 S.W.3d 355, 369

(Tex. 2014); see Tex. R. Civ. P. 13. The trial court abused its discretion by imposing

a sanction under Rule 13 without finding the motion was groundless. We conclude

the trial court abused its discretion by imposing sanctions on Jamison based on Rule

13.

We next consider whether the trial court properly imposed sanctions under

Chapter 10 of the Civil Practice and Remedies Code. The Stombergs argue that after

their attorney advised Jamison that a plain reading of the statute showed his assertion

was not a valid reading of subsection 27.003(c), Jamison demonstrated his bad faith

by insistently maintaining his position that all discovery in the entire case was

suspended until the trial court ruled on Powers’ motion to dismiss. The Stombergs

contend Jamison revealed his improper purpose by filing Powers’ TCPA motion to

dismiss fifteen minutes before the deadline for compliance under the trial court’s

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discovery order and through the “aggressive” tone of the email an associate of

Jamison’s law firm sent to the Stombergs’ lawyer to explain why Powers had not

produced the ordered discovery. According to the Stombergs, “The intent and effect

of Relators’ groundless assertion demonstrates bad faith.”

Section 10.001 of the Civil Practice and Remedies Code provides,

The signing of a pleading or motion as required by the Texas Rules of
Civil Procedure constitutes a certificate by the signatory that to the
signatory’s best knowledge, information, and belief, formed after
reasonable inquiry:

(1) the pleading or motion is not being presented for any
improper purpose, including to harass or to cause unnecessary
delay or needless increase in the cost of litigation;
(2) each claim, defense, or other legal contention in the pleading
or motion is warranted by existing law or by a nonfrivolous
argument for the extension, modification, or reversal of existing
law or the establishment of new law;
(3) each allegation or other factual contention in the pleading or
motion has evidentiary support or, for a specifically identified
allegation or factual contention, is likely to have evidentiary
support after a reasonable opportunity for further investigation or
discovery; and
(4) each denial in the pleading or motion of a factual contention
is warranted on the evidence or, for a specifically identified
denial, is reasonably based on a lack of information or belief.

Tex. Civ. Prac. & Rem. Code Ann. § 10.001.

Even if the motion is not frivolous, a trial court may impose sanctions under

subsection 10.001 if the motion was filed for an improper purpose. Nath, 446 S.W.3d

at 366, n.14. The phrase “improper purpose” in section 10.001(a) is equivalent to

“bad faith.” Save Our Springs Alliance, Inc. v. Lazy Nine Mun. Util. Dist., 198
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S.W.3d 300, 321 (Tex. App.—Texarkana 2006, pet. denied). Finding a motion was

presented for an improper purpose requires finding “the conscious doing of a wrong

for a dishonest, discriminatory, or malicious purpose.” Id. Generally, courts presume

pleadings and other papers are filed in good faith. Nath, 446 S.W.3d at 361. The

party seeking sanctions bears the burden of overcoming this presumption of good

faith. Id.

The Stombergs argue Jamison’s assertions that the TCPA motion to dismiss

stayed all discovery in the case and permitted ignoring the discovery order are

groundless and in bad faith. As we have noted above, the Stombergs relied upon

Montelongo to support their argument that only discovery on their defamation claim

was stayed by operation of subsection 27.003(c), but Montelongo clarified the

application of “legal action” under subsection 27.003(b). See 622 S.W.3d at 298–

300. Jamison could present a good faith argument that the two subsections had

different purposes and that under subsection 27.003(c) filing a TCPA motion to

dismiss an amended counterclaim should limit discovery in the same manner as

filing a TCPA motion to dismiss an original claim. See In re SPEX Group US LLC,

No. 05-18-00208-CV, 2018 WL 1312407, at *4 (Tex. App.—Dallas Mar. 14, 2018,

orig. proceeding) (mem. op.) (any discovery ordered while a TCPA motion to

dismiss is pending must be limited to information relevant to the motion to dismiss);

see also In re Quality Cleaning Plus, Inc., No. 05-22-01053-CV, 2022 WL

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16549069, at *3 (Tex. App.—Dallas Oct. 31, 2022, orig. proceeding) (mem. op.)

(expedited discovery ordered before relator filed a TCPA motion to dismiss is

suspended until the trial court rules on the motion to dismiss).

The Stombergs rely on circumstantial evidence to overcome the presumption

that Jamison acted in good faith when he signed Powers’ TCPA motion to dismiss.

They argue Jamison’s improper purpose is revealed from the fact that he filed the

motion fifteen minutes before Powers’ compliance deadline for the discovery order

and from the email his associate sent to the Stombergs’ lawyer shortly after the

motion was filed, and Jamison persisted in his assertion that all discovery was

suspended after the Stombergs’ lawyer pointed out the clear language of the statute.

Jamison filed Powers’ TCPA motion to dismiss twenty-two days after the

Stombergs sued Powers for defamation and two days after Powers amended his

petition. Since Jamison could present his construction of section 27.003(c) in good

faith, it would have been reasonable for Jamison to conclude that he would need to

file the motion before he exposed his client to the prejudicial effect of non-

compliance with the discovery order. Although acrimonious, the associate’s email

asserts the same construction of section 27.003(c) presented by Jamison in his

response to the Stombergs’ motion for sanctions. Under the circumstances present

in this case, the Stombergs failed to overcome the presumption that Jamison filed

the TCPA motion to dismiss in good faith. We conclude that the trial court abused

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its discretion by imposing sanctions under Chapter 10 of the Civil Practice and

Remedies Code. Having concluded that the trial court abused its discretion by

imposing sanctions, we do not consider whether the trial court abused its discretion

by imposing excessive sanctions.

Remedy

The Stombergs argue Jamison has an adequate remedy by appeal. Generally,

monetary sanctions are reviewable by mandamus if the imposition threatens a

party’s continuation of the litigation. Braden v. Downey, 811 S.W.2d 922, 929 (Tex.

1991) (orig. proceeding). The trial court’s sanctions order forces Jamison to choose

between protecting his client’s interest by presenting a nonfrivolous construction of

the statute and incarceration, which in turn threatens Powers’ ability to continue with

the litigation. We conclude Jamison lacks an adequate remedy by appeal.

Conclusion

We conclude that the trial court abused its discretion, and that Jamison lacks

an adequate remedy by appeal. We lift our stay order of July 29, 2021, and we

conditionally grant mandamus relief. We are confident that the trial court will vacate

the sanctions orders of June 23, 2021. The writ shall issue only in the event the trial

court fails to comply.

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PETITION CONDITIONALLY GRANTED.

PER CURIAM

Submitted on August 9, 2021
Opinion Delivered October 24, 2024

Before Golemon, C.J., Johnson and Wright, JJ.

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