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Delany v. Canning

January 7, 1997


Appeal from Superior Court of Spokane County. Docket No: 91-2-01738-1. Date filed: 10/14/93. Judge signing: Hon. Michael E. Donohue.

Authored by Philip J. Thompson. Concurring: Dennis J. Sweeney, Ray E. Munson.

The opinion of the court was delivered by: Thompson

THOMPSON, J. James Canning and Karen Stevenson appeal several orders and judgments in this action arising from a series of real estate development enterprises in which Mr. Canning was the primary player. *fn1 Their contentions on appeal involve the superior court's response to their admitted failure to provide adequate discovery. We affirm and award attorney fees for this frivolous appeal.

Beginning in 1978, Mr. Canning and Plaintiff Kevin Delany invested in several undeveloped parcels of land in Spokane County. Ms. Stevenson also invested in some of the properties, as did Plaintiff Bernard Krisher; Plaintiff-Intervenor Avelin P. Tacon III purchased a small interest in one of the properties. Mr. Canning managed the investments by arranging for development and paying real estate contract principal and interest, taxes and other expenses.

The parties did not enter into formal agreements regarding management of the enterprises or their individual ownership interests in the properties, many of which Mr. Canning retained in his own name. Mr. Delany, Mr. Krisher, and Mr. Tacon, all of whom lived outside the Spokane area, periodically sent money to Mr. Canning to satisfy the enterprises' obligations, and he periodically notified the others of amounts they should report on tax returns. Other than these periodic notices, Mr. Canning did not keep an organized accounting of the enterprises' finances. Mr. Canning admitted to the superior court, "The books consist of correspondence between the parties which give an accounting on an ongoing basis for every item that was taken in or taken out."

Mr. Canning's failure to maintain adequate records apparently was the catalyst for this lawsuit, quickly became the focus of the parties and the court, and ultimately led to the sad Conclusion we are asked to review here.

Mr. Delany and Mr. Krisher eventually retained Garman Lutz, an accountant, to attempt to reconstruct the books. In 1991, they initiated this lawsuit against Mr. Canning and Ms. Stevenson; their complaint requested an accounting, a decree quieting title in the property involved, and a judgment for amounts allegedly overpaid. Mr. Tacon, a Washington lawyer who represented himself, later joined the lawsuit as a plaintiff-intervenor, seeking relief solely against Mr. Canning. Mr. Canning, also a Washington lawyer, represented both himself and Ms. Stevenson.

Discovery proceeded haltingly. Mr. Canning issued hundreds of interrogatories, prompting an order by the superior court limiting him to 100 questions. Mr. Canning repeatedly failed to answer interrogatories submitted by the opposing parties. After several continued hearings on the opposing parties' motions to compel, Mr. Canning responded with notations in almost illegible handwriting. Mr. Canning concedes on appeal that he failed to respond "satisfactorily" or "sufficiently." Brief of Appellants, at 2, 4.

Faced with Mr. Canning's intransigence and at the request of Mr. Delany and Mr. Krisher, the court ordered an accounting based on the information available. The order, entered April 9, 1993, provided:

NOW, THEREFORE, IT IS ORDERED, that Plaintiffs' interrogatories be deemed answered in the light most favorable to the plaintiffs; that the Court will appoint an accountant from a list of six, a list of three to be supplied by the defendants and a list of three by plaintiffs which accountant shall be instructed to do an accounting to be submitted to the Court and that the costs of said accounting shall be paid for by defendants Canning and Stevenson. Both sides' lists of acceptable accountants included the name of Pete Inman, who apparently had been associated in the past with Mr. Lutz, the previous accountant. The court expressly asked if Mr. Inman was acceptable to Mr. Canning, who replied: "That's agreeable. As noted, it's a continuing protest, but it makes sense since Lutz was the guy who was doing the work earlier." The court named Mr. Inman to perform the accounting.

Meanwhile, Mr. Tacon repeatedly asked the court to sanction Mr. Canning for failing to respond to his interrogatories. The court denied Mr. Tacon's request that Mr. Canning's answer be stricken, but entered an order on April 20, 1993, requiring:

2. Defendant Canning shall pay terms to plaintiff-intervenor in the amount of $750 based upon a combination of his willful failure to timely respond and failure to appropriately respond to the discovery requests after having been given ample opportunity by the Court.

3. Defendants shall not be permitted to file any further documents with the Court or otherwise appear before the Court until the interrogatories and requests identified in [the] March 17, 1993 letter of Mr. Tacon are fully responded to except appearances required by issues involving response to these interrogatories and requests.

4. The supplemental answers shall be served no later than May 19, 1993. Mr. Canning did not object at the time to the order's reference in paragraph 3 to "defendants," which apparently barred Ms. Stevenson from further appearances, even though she had not failed to respond to Mr. Tacon's interrogatories. *fn2 However, Mr. Canning did raise this issue in a motion for discretionary review with this court, which denied review and pointedly suggested that Ms. Stevenson move the superior court to correct its error pursuant to CR 60(a).

Ms. Stevenson did not request a correction, although Mr. Tacon offered on the record to request amendment of the April 20 order. Mr. Canning, still representing both Ms. Stevenson and himself, attended a status conference several months after the order. He failed to attend two status conferences after that, despite a letter from the court expressly ordering him to attend, and noting that failure to attend would result in sanctions. In a responsive letter in which he acknowledged the court's requirement, Mr. Canning quoted the court's April 20 order and stated: "Under the circumstances, I am unable to appear in Court. ...

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