in Re Tommy Manion and Tommy Manion of Texas, Inc. ( 2008 )

NO. 07-08-0318-CV
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL A
SEPTEMBER 11, 2008
______________________________
IN RE: TOMMY MANION AND TOMMY MANION OF TEXAS, INC., RELATORS
_________________________________
Before CAMPBELL and HANCOCK and PIRTLE, JJ.
ON PETITION FOR WRIT OF MANDAMUS
Relators, Tommy Manion and Tommy Manion of Texas, Inc., (collectively referred
to as Manion) have filed a petition for writ of mandamus alleging an abuse of discretion by
the trial court in the signing of a discovery order granting the motion of real parties-in-
interest, Bill Freeman, Bill Freeman, Inc., and Jill Freeman (collectively referred to as
Freeman) to compel Manion to produce certain financial documents. On Manion’s motion,
we temporarily stayed the trial court’s order requiring production. Subsequently, Freeman
filed an Emergency Motion for Stay of Underlying Proceedings. Having considered the
record, we deny mandamus relief, vacate our stay order, and declare Freeman’s
Emergency Motion for Stay of Underlying Proceedings moot.
Background
The underlying suit involves multiple claims and counterclaims stemming from the
alleged breach of a syndication agreement related to the care and breeding of an American
Quarter Horse stallion. Manion and Freeman have sued each other alleging breach of
contract and a variety of torts including breach of fiduciary duty. Manion also seeks a
declaration that the syndicate is not a partnership or other joint business arrangement.
On May 20, 2008, Freeman served a request for production of documents seeking
Manion’s personal financial information from January 1, 2000 to date. The request sought
documents related to Manion’s sale and purchase of breeding contracts, transfers of funds
between bank accounts, and payment of bills and expenses for certain horses. The types
of documents sought were contracts, agreements, checks, deposit slips, financial
materials, bank statements, bills, requests for payments of costs and expenses, payment
checks, drafts, deposit slips, and loan documents. On June 10, Freeman served a
subpoena duces tecum and notice of deposition requesting Manion’s financial records from
Security Bank of Whitesboro. The subpoena duces tecum sought account records, bank
statements, signature cards, canceled checks, loan files, and financial statements.
On June 27, Manion moved to quash the subpoena and sought a protective order.
Freeman subsequently filed a motion to compel production. In support of his motion to
compel, Freeman asserted the documents were relevant to a claim that Manion breached
his fiduciary duties as Stallion Manager and Co-Manager by purchasing syndicate-owned
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breeding contracts at below market prices and then marking up the contracts for resale,
selling his personal breeding contracts when he was obligated to sell syndicate-owned
contracts, breeding stallions without contracts, and improperly appropriating Freeman’s
customers.1 Manion responded that the documents were irrelevant and Freeman’s request
was overly broad as to scope and time, unduly burdensome, and would require the
production of private and confidential information. On July 17, the trial court held a hearing
on Freeman’s motion to compel production and granted Freeman’s motion ordering the
production of Manion’s financial records.
On July 31, Manion requested that we issue a writ of mandamus ordering the trial
court to vacate its order compelling production. On August 1, this Court granted Manion’s
motion for an emergency stay of the trial court’s discovery order. On September 5,
Freeman filed an emergency motion to stay the underlying action in the trial court.
Discussion
Mandamus relief is appropriate only if the trial court abused its discretion or violated
a legal duty, and there is no adequate remedy at law. In re Dana Corp., 138 S.W.3d 298,
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On August 13, 2008, Freeman filed his Fourth Amended Consolidated Counterclaim
asserting actions for Breach of Fiduciary Duty against Manion for, among other things,
selling his breeding rights at higher prices than those breeding rights allocated for the
syndicate’s use and using his position as Stallion Manager to solicit Freeman’s customers
and sell breeding rights to such customers thereby depriving Freeman of the opportunity to
sell his breeding rights to the customers. Freeman also amended his petition to allege
exemplary damages.
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301 (Tex. 2004) (orig. proceeding); In re Covenant Health System, 223 S.W.3d 423, 425
(Tex.App.–Amarillo 2006, orig. proceeding). A court abuses its discretion when it acts
unreasonably, arbitrarily, or without reference to guiding rules and principles. In re Brown,
190 S.W.3d 4, 6 (Tex.App.–Amarillo 2005, orig. proceeding). While factual matters are
committed to the trial court’s discretion, In re Shipman, 68 S.W.3d 815, 818-19
(Tex.App.–Amarillo 2001, orig. proceeding), our review of the trial court’s determination of
controlling legal principles is entitled to much less deference. Walker v. Packer, 827
S.W.2d 833, 840 (Tex. 1992). In our analysis, we “must focus on the record that was
before the court and whether the decision was not only arbitrary but also amounted ‘to a
clear and prejudicial error of law.’” Shipman, 68 S.W.3d at 819 (quoting In re Bristol-Myers
Squibb Co., 975 S.W.2d 601, 605 (Tex. 1998)).
The scope of discovery is largely within the trial court’s discretion, In re Colonial
Pipeline Co., 968 S.W.2d 938, 941 (Tex. 1998) (orig. proceeding), however, mandamus
is appropriate if we conclude that privileged documents have been improperly ordered
disclosed by the trial court. In re Christus Spohn Hosp. Kleberg, 222 S.W.3d 434, 436
(Tex. 2007). That said, the relator must establish that the facts and law permit the trial
court to make but one decision. In re Trinity Universal Ins. Co., 64 S.W.3d 463, 466
(Tex.App.–Amarillo 2001, orig. proceeding) (citing Johnson v. Fourth Court of Appeals, 700
S.W.2d 916, 917 (Tex. 1985)). “This determination is essential because mandamus will
not issue to control the action of a lower court in a matter involving discretion.” Johnson,
700 S.W.2d at 917.
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Manion offers no evidence as to why the production of his financial documents are
privileged or exempted from discovery. Instead, he points to the pleadings to support his
claims that production of his financial records violate his right to privacy and are
confidential, unrelated in time to the underlying litigation, and irrelevant to the claims in the
suit.
The general rule in financial records production cases is that the party attempting
to prevent or restrict discovery has the burden of pleading and proving the basis for the
desired limitation. In re Patel, 218 S.W.3d 911, 915 (Tex.App.–Corpus Christi 2007, orig.
proceeding) (citing Peeples v. Honorable Fourth Supreme Judicial Dist., 701 S.W.2d 635,
637 (Tex. 1985) (orig. proceeding)); Kern v. Gleason, 840 S.W.2d 730, 735-37
(Tex.App.–Amarillo 1992, orig. proceeding). Absent a privilege or specific exception, a
party is entitled to discover any relevant material. Id. at 736. There are no presumptions
of privilege. El Centro Del Barrio, Inc. v. Barlow, 894 S.W.2d 775, 778-79 (Tex.App.–San
Antonio 1994, no writ). Manion cites no authority in support of an asserted constitutional
right to privacy, and it has previously been determined there is no constitutionally protected
privacy right in one’s personal financial records. Martin v. Darnell, 960 S.W.2d 838, 844-45
(Tex.App.–Amarillo 1997, no writ); Miller v. O’Neill, 775 S.W.2d 56, 59 (Tex.App.–Houston
[1st Dist.] 1989, no writ) (“[T]he supreme court has allowed such discovery, despite the
inevitable intrusion.”). Moreover, counsel’s conclusory assertions alone fail to establish
that Manion’s financial documents may not be produced because they are confidential or
privileged. Kern, 840 S.W.2d at 734 (statements of counsel are not evidence).
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Accordingly, the record contains no evidence on which to exclude the documents from
discovery because they are confidential or privileged.
Manion also bears the burden of proving that Freeman’s requests were overbroad,
i.e. unrelated in time to the litigation. Miller, 775 S.W.2d at 59. Freeman’s amended
petition alleges, among other things, that Manion breached fiduciary duties by using his
position as Stallion Manager to undercut sales of the syndicate’s breeding contracts and
Freeman’s commercial relationship with his customers in order to increase Manion’s profit
from his breeding operations. Freeman also alleges Manion served as Stallion Manager
from 1983 until the present. Therefore, the record does not support a conclusion that the
trial court abused its discretion by ordering the discovery of Manion’s financial documents
from 2000 to the present.
Manion’s financial documents are also relevant to Freeman’s underlying action.
Freeman’s third amended petition alleges Manion misused his position as a Stallion
Manager for financial gain in violation of his fiduciary duties. Consequently, Manion’s
financial information for the period he served as Stallion Manager is relevant and
discoverable. See generally El Centro, 894 S.W.2d at 781-82. Once again, the record
fails to establish any basis on which to exclude these documents from discovery.2
2
Although Manion also contends that responding to Freeman’s discovery requests
will involve the expenditure of “significant financial and physical resources,” he offers no
evidence in support of this contention. On the other hand, Freeman offered evidence
indicating the Bank could timely produce Manion’s responsive bank records at a cost of
$650.00 and Freeman was willing to pay the costs.
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CONCLUSION
Having determined that the trial court did not abuse its discretion in ordering
discovery, we deny mandamus relief, vacate our stay order, and declare Freeman’s
Emergency Motion for Stay of Underlying Proceedings filed September 5, 2008, moot.
Patrick A. Pirtle
Justice
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