HAMMOUDEH, Dba CALIFORNIA AUTO MARKET v. JADA

FILED BY CLERK
IN THE COURT OF APPEALS OCT -9 2009
STATE OF ARIZONA
COURT OF APPEALS
DIVISION TWO DIVISION TWO
YOUSEF HAMMOUDEH, dba )
CALIFORNIA AUTO MARKET, )
) 2 CA-CV 2009-0043
Plaintiff/Counterdefendant/ ) DEPARTMENT B
Appellant, )
) OPINION
v. )
)
NAJAH SALEH JADA, )
)
Defendant/Counterplaintiff/ )
Appellee. )
)
APPEAL FROM THE SUPERIOR COURT OF SANTA CRUZ COUNTY
Cause No. CV-07-175
Honorable Kimberly A. Corsaro, Judge Pro Tempore
AFFIRMED
Law Office of Mark L. Williams
By Mark L. Williams Nogales
Attorneys for Plaintiff/
Counterdefendant/Appellant
Lerma & Associates, P.C.
By José M. Lerma Tucson
Attorneys for Defendant/
Counterplaintiff/Appellee
V Á S Q U E Z, Judge.
¶1 Yousef Hammoudeh appeals from the trial court’s entry of default judgment
in favor of defendant/appellee Najah Jada after the court struck his complaint and answer to
Jada’s counterclaim as a sanction pursuant to Rule 37, Ariz. R. Civ. P., for his failure to
comply with the court’s discovery orders. On appeal, Hammoudeh contends the court abused
its discretion by entering default judgment without first granting him an evidentiary hearing
on the issue of sanctions. We affirm for the reasons that follow.
Facts and Procedure
¶2 We view the facts in the light most favorable to upholding the trial court’s
ruling. Safeway Stores, Inc. v. Ramirez, 1 Ariz. App. 117, 118, 400 P.2d 125, 126 (1965).
In February 2005, Jada entered into an agreement with Hammoudeh to purchase a 1998
Mercedes-Benz for $14,500. The vehicle was in poor condition, however, and after two
years of negotiating with Hammoudeh, Jada agreed in February 2007 to return the 1998
Mercedes-Benz and purchase a 2003 model. The parties agreed Jada would receive a credit
for the value of the 1998 vehicle against the purchase price and the sale would be contingent
upon his approval of the 2003 vehicle’s condition. But when Jada inspected the 2003
Mercedes, he discovered its actual mileage was around 100,000 miles more than
Hammoudeh had represented, and it was in “extensive need of repairs.” He attempted to
return it, but Hammoudeh refused to refund Jada’s down payment or to return the 1998
Mercedes Jada had originally purchased or its purchase price. Jada therefore kept the 2003
Mercedes until Hammoudeh successfully repossessed it. Hammoudeh then filed a complaint
in superior court, alleging Jada had failed to make payments on the 2003 Mercedes or return
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it to Hammoudeh. Jada filed a counterclaim alleging common law fraud, conversion, and
racketeering.1
¶3 In July 2007, Jada served his first set of discovery requests on Hammoudeh,
who did not respond until November. Jada filed his initial disclosure statement pursuant to
Rule 26.1, Ariz. R. Civ. P., in November and served a second request for discovery in
December. Hammoudeh never filed a Rule 26.1 disclosure statement. In February 2008,
Jada filed a motion to compel discovery and for attorney fees because Hammoudeh had not
complied with the second discovery request. However, just before the start of the hearing
on Jada’s motion to compel, and more than two months after Jada had filed his second
discovery request, Hammoudeh provided Jada with his responses. The court awarded Jada
attorney fees for Hammoudeh’s untimely disclosure and granted Jada leave to notify the court
if the additional disclosure was inadequate.
¶4 On May 1, Jada filed notice with the trial court that Hammoudeh still had not
produced everything Jada had requested. Although Hammoudeh once again supplemented
his disclosure, it again was incomplete. In July, Jada moved to strike the complaint and
answer to the counterclaim. Hammoudeh did not file a response but, at the September 26
hearing on the motion, requested an evidentiary hearing for the first time. The court denied
Hammoudeh’s request, granted Jada’s motion to strike, and set the matter for a default
hearing on the issue of damages. Hammoudeh appeared only through counsel on the first day
of the hearing, and neither he nor his attorney appeared on the second day. After considering
1
Section 13-2314.04, A.R.S., authorizes a private cause of action for racketeering.
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the testimony and exhibits presented, the court entered default judgment in favor of Jada and
awarded him $22,617.42 in compensatory damages as well as his costs and attorney fees.
The court denied his requests for punitive damages on the fraud and conversion claims and
for treble damages on the racketeering claim.
Discussion
¶5 On appeal, Hammoudeh contends the trial court should have held an
evidentiary hearing before striking his pleadings and entering default judgment against him
to determine whether he personally, as opposed to his former counsel, was responsible for
his failure to comply with the court’s discovery orders.2 “In reviewing a dismissal for
discovery violations, we must uphold the trial court’s order unless the record reflects a clear
abuse of discretion.” Wayne Cook Enters., Inc. v. Fain Props. Ltd. P’ship, 196 Ariz. 146,
¶ 5, 993 P.2d 1110, 1111 (App. 1999). However, the court’s discretion to dismiss based on
a violation of the discovery rules “is more limited than when it employs lesser sanctions.”
Lenze v. Synthes, Ltd., 160 Ariz. 302, 305, 772 P.2d 1155, 1158 (App. 1989).
¶6 Rule 37(b)(2), Ariz. R. Civ. P., states that, if a party “fails to obey an order to
provide . . . discovery, . . . the court . . . may make such orders in regard to the failure as are
just,” including “striking out pleadings . . . or dismissing the action or proceeding . . . or
2
In his answering brief, Jada asks this court to strike Hammoudeh’s opening brief for
its failure to conform with our rules of civil appellate procedure. In particular, he notes the
brief was filed one day late. However, none of the errors cited are jurisdictional, and Jada
does not argue he was prejudiced by the apparently late filing of the opening brief.
Therefore, we will consider Hammoudeh’s opening brief in the exercise of our discretion.
See Harris v. Cochise Health Sys., 215 Ariz. 344, ¶ 19, 160 P.3d 223, 229 (App. 2007).
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rendering a judgment by default against the disobedient party.” Ariz. R. Civ. P. 37(b)(2)(C).
However, any sanctions imposed for a violation of the discovery rules “must be appropriate[]
and . . . preceded by due process.” Montgomery Ward & Co. v. Superior Court, 176 Ariz.
619, 622, 863 P.2d 911, 914 (App. 1993). “The sanction of dismissal is warranted . . . when
the court makes an express finding that a party, as opposed to his counsel, has obstructed
discovery . . . and that the court has considered and rejected lesser sanctions as a penalty.”
Wayne Cook, 196 Ariz. 146, ¶ 12, 993 P.2d at 1113 (citation omitted); see also Birds Int’l
Corp. v. Ariz. Maint. Co., 135 Ariz. 545, 547, 662 P.2d 1052, 1054 (App. 1983).
¶7 Although an evidentiary hearing may often be necessary to determine whether
responsibility for obstructing discovery lies with the party or with his counsel, such a hearing
is not required when the facts are apparent from the record. See Lenze, 160 Ariz. at 306, 772
P.2d at 1159 (hearing necessary where “record . . . does not reveal whether any facts were
raised before the trial court to indicate whether the failure to comply with the discovery order
was the fault of appellant’s . . . counsel as opposed to appellant”); Robinson v. Higuera, 157
Ariz. 622, 624, 760 P.2d 622, 624 (App. 1988); Birds Int’l, 135 Ariz. at 547, 662 P.2d at
1054. Hammoudeh suggests the record in this case does not reveal whether any such facts
were raised below. We disagree.
¶8 In his motion to strike, Jada cited numerous instances in which Hammoudeh
had personally attempted to mislead Jada and the court with his incomplete discovery
responses. For example, in response to Jada’s request for documentation related to the
“creation, establishment, and current status of the business owned by [Hammoudeh] and
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known as California Auto Market,” including its charter and incorporation documents,
Hammoudeh initially disclosed a copy of his business card under the names California Auto
Market and Nevada Auto Sales. Similarly, when asked to disclose the relevant occupational
licenses for his businesses, Hammoudeh produced licenses that were obtained after the
transactions at issue in this case had occurred. He further apparently produced his personal
automobile insurance policy rather than the insurance policy for the business and refused to
clarify the relationship among his businesses California Auto Market, Nevada Auto Sales,
and Diamond Word Enterprises, each of which was involved to some degree in vehicle sales.
¶9 Additionally, after being notified that his responses to Jada’s second request
for discovery were inadequate, Hammoudeh personally averred, under oath, that the
additional disclosure was “true and correct to the best of [his] knowledge and belief.” And,
at no time did Hammoudeh assert that he had attempted to provide the full discovery
requested but had been thwarted by his attorney. Indeed, between the time his former
counsel withdrew in July and the hearing in September, Hammoudeh made no attempt to
rectify his earlier failure to comply with Jada’s discovery requests or the trial court’s order.
Thus, it is apparent from the record, and undisputed, that Hammoudeh was personally aware
of, and responsible for, the inadequate discovery responses.
¶10 Furthermore, the trial court had already ordered Hammoudeh to comply with
discovery and imposed monetary sanctions, which he failed to pay. During oral argument
on the motion to strike, Jada’s counsel noted they had
been to court before . . . . We argued at length to this Court
about Mr. H[a]mmoudeh’s total irresponsibility and refusal to
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comply with the rules and to provide counsel with meaningful
discovery as repeatedly requested of the Court. We never
faulted Mr. Martin . . . . I know that Mr. Martin did what he
could do to get compliance.
After considering the record, the court agreed with Jada and concluded, “It seems that
[striking Hammoudeh’s pleadings] is the only way to get this gentleman to accept
responsibility for having filed a lawsuit which he refuses to cooperate in addressing.”
¶11 The record below thus demonstrates Hammoudeh had engaged in a pervasive
pattern of intentional discovery delay and subterfuge. And, given the trial court’s proximity
to these events and its prior attempt to obtain compliance with discovery through monetary
sanctions assessed directly against Hammoudeh, we cannot say the court abused its discretion
in concluding an evidentiary hearing was not necessary to determine fault, finding lesser
means unavailable to secure compliance with the discovery rules, and therefore striking
Hammoudeh’s pleadings. See Wayne Cook, 196 Ariz. 146, ¶ 5, 993 P.2d at 1111.
¶12 While this appeal was pending, Division One of this court decided Seidman v.
Seidman, 563 Ariz. Adv. Rep. 17 (Ct. App. Aug. 25, 2009). There the court stated, “Before
a court may enter a default judgment as a discovery sanction, due process requires that it hold
an evidentiary hearing to determine whether the fault of the discovery violation lies with the
party or with counsel.” Seidman, ¶ 19. However, in this case, Hammoudeh had a full
opportunity to present his case at the April 2008 hearing for monetary sanctions, and he
failed to respond to Jada’s motion to strike filed in May or request an evidentiary hearing
prior to the September hearing on that motion. And during the September hearing, although
Hammoudeh for the first time requested that he and his former counsel be permitted to
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testify, he made no specific offer of proof as to the substance of their testimony. Moreover,
his personal fault is readily apparent from the record, and the trial court made a specific
finding of his fault. Under these circumstances, we cannot say the court’s failure to take
additional evidence deprived him of due process. We accordingly find Seidman
distinguishable.
Disposition
¶13 For the reasons stated above, we affirm. In our discretion, we grant Jada’s
request pursuant to A.R.S. § 12-341.01(A) for an award of attorney fees on appeal, upon his
compliance with Rule 21, Ariz. R. Civ. App. P. See Orfaly v. Tucson Symphony Soc’y, 209
Ariz. 260, ¶ 28, 99 P.3d 1030, 1036 (App. 2004) (appellate court has discretion in awarding
fees).
____________________________________
GARYE L. VÁSQUEZ, Judge
CONCURRING:
____________________________________
PETER J. ECKERSTROM, Presiding Judge
____________________________________
J. WILLIAM BRAMMER, JR., Judge
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