LONG BAY MANAGEMENT COMPANY, INC. & another.[1]
vs.
HAESE, LLC & another.[2]
Appeals Court of Massachusetts.
By the Court (Trainor, Grainger & Maldonado, JJ.[17]).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
The defendants, Haese, LLC (sometimes referred to as the firm) and Glenn B. Haese (collectively Haese), appeal from an entry of judgment on December 5, 2013, pursuant to an order of default sanctions dated August 29, 2011, and an order assessing damages dated April 18, 2013.[3] Specifically, Haese argues that the judges who entered the orders abused their discretion in imposing default sanctions, in denying Haese's motion to stay and motion for reconsideration of the order for default sanctions, in proceeding with the damages assessment hearing despite the use of the incorrect appellation "Long Bay" in the pleadings, and in barring Haese from calling a certain expert witness at the damages assessment hearing.
Background.
This case appears before us with almost a decade of history. We restate those portions of the default judge's detailed and thorough recitation of the facts in the August 29, 2011, order as they pertain to the issues on appeal.
In 2000, the plaintiffs, Long Bay Management Company, Inc., and Long Bay Builders, Inc. (collectively Long Bay) retained Haese as litigation counsel in an ongoing dispute with the Massachusetts Housing Finance Agency and other parties. In 2005, Andrew Tine, then an associate attorney at Haese, LLC, noticed that billing and time entries for work he performed for Long Bay had been altered without his knowledge.[4] Tine informed Long Bay of the billing discrepancies and resigned from the firm. In 2006, Long Bay filed suit against Haese, essentially alleging overbilling. In turn, Haese filed numerous counterclaims and a third-party complaint against Tine, all of which were dismissed.[5]
Default sanctions.
The default judge found that throughout the proceedings, Haese repeatedly abused the discovery process in myriad ways. For example, Haese inappropriately subpoenaed individuals for deposition who were not "relevant to the subject matter involved in the pending action," seeking information not "reasonably calculated to lead to the discovery of admissible evidence."[6] Mass.R.Civ.P. 26(b)(1), 365 Mass. 772 (1974). Meanwhile, Haese repeatedly stymied Long Bay's efforts to gather discoverable information. He failed to respond to Long Bay's discovery requests, refused to follow court orders, and missed multiple hearing dates without excuse.
Long Bay's case relies on the records of the alterations made in the billing entries, referred to as "metadata" by the parties and the judges. After some resistance, Haese provided information on the billing software used by the firm.[7] The computer that stored the billing data was backed up every week and there had been no major malfunction since January 2000. However, Haese never produced the underlying metadata,[8] despite court orders, using delay tactics and claiming several excuses such as privilege, the inability to separate the metadata from other client files, and Long Bay's failure to timely respond to his request for admissions.[9]
In addition to the numerous discovery violations, the default judge determined that there was also strong evidence, albeit circumstantial, establishing spoliation. Haese was the only attorney with the authority to alter records, and there were no evident computer malfunctions that could have deleted the metadata. "The doctrine of spoliation permits the imposition of sanctions and remedies where a litigant or its expert negligently or intentionally loses or destroys evidence that the litigant (or expert) knows or reasonably should know might be relevant to a possible action." Scott v. Garfield, 454 Mass. 790, 798 (2009). The sanctions imposed should be the least severe necessary to remedy any prejudice to the nonspoliating party. Keene v. Brigham & Women's Hosp., Inc., 439 Mass. 223, 235 (2003).
"[W]hen confronted with a party who fails to obey an order to provide or permit discovery," a judge has authority to "render[ ] a judgment by default against the disobedient party." Id. at 233. Here, the record contains evidence supporting the default judge's findings that Haese repeatedly impeded Long Bay's discovery efforts on all fronts, including but not limited to the metadata.[10] Each finding independently and cumulatively supports the default judge's ruling, and she did not abuse her discretion in ordering the entry of default.[11]
Motion to stay and motion for reconsideration.
Haese argues on appeal that the default judge should have allowed both his motion to stay and motion for reconsideration because the appearance of his new counsel required more time to brief the court why spoliation did not occur.[12], [13] As stated, the August 29, 2011, order premised default sanctions not only on spoliation but also on Haese's egregious abuses of discovery and multiple violations of discovery orders. Haese did not specify any "changed circumstances" such as newly discovered evidence or new legal developments pertaining either to the evidence of spoliation or to his other discovery abuses that warranted a second consideration, and that could have been presented to the judge with the allowance of additional time. See Commonwealth v. Charles, 466 Mass. 63, 84 (2013), quoting from Audubon Hill S. Condominium Assn. v. Community Assn. Underwriters of Am., Inc., 82 Mass. App. Ct. 461, 470 (2012). The default judge was within her discretion to deny both motions.
Assessment of damages hearing.
Haese next argues that the damages judge erred in holding the assessment of damages hearing despite becoming aware that Long Bay had litigated the case under a name that was not the real party in interest.[14] The damages judge reviewed the docket and record in all of the actions where Haese represented Long Bay, and found that "Long Bay Builders, Inc. was a named party (often . . . as a d/b/a of Long Bay Management Co.)." In addition, Long Bay Builders, Inc., was named as the client in Haese's initial retention letter. The letter further "specified that Long Bay Builders, Inc. would be responsible" for payment of bills, and Haese followed suit by sending all bills "in which it represented any Long Bay entity to Long Bay Builders, Inc." The damages judge did not abuse his discretion in finding there was no issue of standing and in going forward with the damages assessment hearing.
Expert witness testimony.
Haese also argues that the default judge erred in preventing him from introducing expert testimony from Donald J. Coker[15] "as to the manner in which the [billing system] functions, the ability of any person to tamper with the [billing] system, as well as, what was available in the [billing] software to track changes being made to time entries" at the damages assessment hearing. Haese asserts that the allowance of such testimony "may have dissuaded the court from the opinion that . . . the defendants' spoliation . . . largely deprived the plaintiffs" of evidence in the case.
Rule 55(b)(2) of the Massachusetts Rules of Civil Procedure, as amended, 423 Mass. 1401 (1996), "is properly interpreted as requiring some factual findings concerning the basis of damages or other relief included within the default judgment." Jones v. Boykan, 464 Mass. 285, 293 (2013). The exclusion of any testimony is within the judge's discretion. See Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 477, 482 (1991).
The default judge ruled that the operation of the billing system "will not be an issue at the assessment hearing so Coker has no relevant testimony to offer." Clearly stated, spoliation was not an issue at the damages assessment hearing.[16] The default judge was fully within her discretion to deny Coker's testimony.
Appellate fees.
Long Bay may submit a petition for appellate attorney's fees to this court in the manner prescribed in Fabre v. Walton, 441 Mass. 9, 10-11 (2004), within twenty days of the issuance of the rescript. Haese may respond to the petition within twenty days of said filing.
Judgment affirmed.
[1] Long Bay Builders, Inc.
[2] Glenn B. Haese, founding partner of Haese, LLC, in his individual capacity.
[17] The panelists are listed in order of seniority.
[3] Haese also appears to be appealing the dismissal of a third party complaint in favor of Andrew Tine on September 19, 2008. See note 5, infra, regarding Haese's claims against Tine.
[4] Tine asserted that time entries attributed to his work were inflated, entries were entered for work Haese allegedly performed when Haese was overseas at a conference, and entries were dated with times when no work on the case was necessary. Haese had also sent electronic mail messages (e-mails) to Tine instructing him to increase the time billed to Long Bay.
[5] In his notice of appeal, Haese appealed the dismissal of the claims against Tine. All claims between Haese and Tine were resolved by a negotiated settlement and both parties stipulated to dismissal of the claims. As Haese advances no argument in his brief regarding Tine's dismissal, we decline to consider the question. Mass.R.A.P. 16(a)(4), as amended, 367 Mass. 921 (1975).
[6] Although various judges quashed some of the subpoenas, during one of the allowed depositions of Tine's friend, Haese asked inappropriate questions regarding personal relations, drinking habits, and even magazine subscriptions. Haese further sent a subpoena to that individual's employer asking for all of the individual's e-mails from 2004 to the date of the subpoena. The transcripts of other depositions suggest that Haese's purpose was to obtain personally damaging information instead of eliciting information "reasonably calculated to lead to discovery of admissible evidence." Mass.R.Civ.P. 26(b)(1).
[7] The software allowed attorneys to enter time directly; the entries could then be edited by Haese after logging in with his credentials.
[8] At one point, Haese provided a computer disc that purportedly contained the metadata. However, Long Bay's expert in computer forensics and electronic evidence recovery analyzed the disc and found that the information contained on the disc was not the 2000-2005 billing records, but rather had a creation date of July 23, 2009, and reflected only the finalized billing entries. Later, a specialist on the billing software stated that the software generates files that show the changes made to a given record and which user made the changes. Once the system reaches 10,000 files, the software program would prompt the user either to delete the file or print out the files, then delete them. The files do not delete automatically. Given the elapsed time, the specialist thought it was highly likely that the system had reached the maximum number of files and had prompted deletion. The judge concluded that the files should not have been unobtainable; either they did not reach the 10,000-file limit or Haese, who had a duty to preserve evidence, should have preserved the files. Fletcher v. Dorchester Mut. Ins. Co., 437 Mass. 544, 550 (2002).
[9] In fact, Long Bay did timely respond.
[10] The default judge based her decision to enter a default not only on the metadata, but also on "the continuing and repeated refusal of [Haese] to comply with discovery rules[, a]nd engaging instead in unnecessary motion practice, over a period of many years."
[11] The decision to hold an evidentiary hearing is, likewise, discretionary. See Cicchese v. Tape Time Corp., 28 Mass. App. Ct. 72, 75 (1989). The default judge stated that she reviewed all the docket entries and read every pleading before deciding to grant default sanctions.
[12] Haese asserted that new counsel was hired for the specific reason of demonstrating that no spoliation had occurred.
[13] Haese filed a motion to stay and a motion for reconsideration on September 2, 2011. The Superior Court docket indicates that on September 14, 2011, the default judge allowed the motion to stay and denied a motion for reconsideration. Thereafter, Haese's new attorney orally requested additional time to file a memorandum in support of the reconsideration motion on the spoliation issue. Assuming that Haese's reference on appeal is to the judge's denial of that request, there was no error.
[14] The plaintiffs had been litigating as "Long Bay Management Company, Inc.," and "Long Bay Builders, Inc.," instead of "Long Bay Management Company, a Massachusetts General Partnership d/b/a Long Bay Builders, Inc.," which Haese claims is the true party of interest in the case.
[15] Coker was listed in the joint pretrial memorandum as a certified consultant on the firm's billing software. The default judge reviewed a memorandum prepared by Coker prior to ordering default sanctions.
[16] The default judge correctly reasoned that she was within her authority to order default sanctions based only on Haese's discovery abuses and repeated frivolous motion practice.
Save trees - read court opinions online on Google Scholar.