NME HOSPITALS, INC., d/b/a RHD MEMORIAL MEDICAL CENTER, Appellant v. JEROME MELVIN NAFTALIS, M.D., Appellee

SUPREME COURT CASES

Laws-info.com » Cases » Texas » 5th District Court of Appeals » 1993 » NME HOSPITALS, INC., d/b/a RHD MEMORIAL MEDICAL CENTER, Appellant v. JEROME MELVIN NAFTALIS, M.D., Appellee

State: Texas

Court: Texas Northern District Court

Docket No: 05-92-01830-CV

Case Date: 06/15/1993

Plaintiff: NME HOSPITALS, INC., d/b/a RHD MEMORIAL MEDICAL CENTER, Appellant

Defendant: JEROME MELVIN NAFTALIS, M.D., Appellee

Preview:NME HOSPITALS, INC., d/b/a RHD MEMORIAL MEDICAL CENTER, Appellant v. JEROME MELVIN NAFTALIS, M.D., Appellee
AFFIRMED in part and REVERSED and REMANDED in part. Filed June 15, 1993. S In The Court of Appeals Fifth District of Texas at Dallas ............................ No. 05-92-01830-CV ............................ NME HOSPITALS, INC., d/b/a RHD MEMORIAL MEDICAL CENTER, Appellant V. JEROME MELVIN NAFTALIS, M.D., Appellee .............................................................. On Appeal from the 160th District Court Dallas County, Texas Trial Court Cause No. 90-06251-H .............................................................. OPINION Before Justices Kinkeade, Burnett, and Morris Opinion By Justice Morris NME Hospitals, Inc., d/b/a RHD Memorial Medical Center (RHD), appeals a judgment entered after a jury verdict in favor of Jerome Melvin Naftalis, M.D. in this action for breach of contract, fraud, negligent misrepresentation, and deceptive trade practices. In ten points of error, RHD contends (1) Dr. Naftalis's claims were barred by the applicable statutes of limitations; (2) the trial court erred in permitting Dr. Naftalis to testify; (3) there was insufficient evidence to support the jury's findings on fraud, negligent misrepresentation, and damages; and (4) Dr. Naftalis was not entitled to recover damages for fraud. In three cross points of error, Dr. Naftalis contends the trial court erred in (1) granting partial summary judgment and failing to submit questions to the jury on his claim under the Deceptive Trade Practices-Consumer Protection Act (DTPA) and (2) refusing to award additional damages and attorney's fees under the DTPA. Concluding there is merit in one of RHD's points of error and one of Dr. Naftalis's cross points of error, we affirm the trial court's judgment in part and reverse it in part, and we remand this case to the trial court for further proceedings. FACTS On August 2, 1985, Dr. Naftalis entered into a written agreement with RHD (Agreement). Pursuant to the Agreement, Dr. Naftalis agreed to relocate his medical practice to the RHD campus and execute a six-year lease for office space on the RHD campus. In return, RHD agreed to rent office space to Dr. Naftalis at a certain rate, make improvements to the space, pay Dr. Naftalis's moving and other expenses, and pay Dr. Naftalis for consulting services. Dr. Naftalis executed two revisions to the Agreement on November 18, 1985, and November 22, 1985. On June 1, 1986, Dr. Naftalis executed a sublease agreement whereby he agreed to sublet space from RHD on its campus. The underlying lease between RHD and its landlord, Medical Development Management Corporation, obligated the landlord to provide heating, air conditioning, water, electricity, and janitorial services for the premises and use reasonable diligence to correct interruptions in these services. On May 25, 1990, Dr. Naftalis sued RHD alleging it made the following misrepresentations to induce him to enter into the Agreement and the sublease: 1. The entire facility, including the grounds, would be kept as a first-class facility, and any necessary repairs would
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be made promptly. 2. Dr. Naftalis would have two assigned parking spaces.

3. In the event Dr. Naftalis decided that the relocation was not satisfactory to him, RHD would "make him whole" by relocating him to another facility of equal station in an office of equal quality at no cost to him. 4. Key people in RHD's staff, Neil Sorrentino and Jeff Webster, would stay in their present positions for the foreseeable future. 5. Dr. Naftalis would be used as a consultant and have the opportunity for considerable input to and interaction with (i) the hospital district, (ii) the hospital's board of directors, and (iii) the corporate activities of RHD, which embraced many additional medical facilities. 6. RHD's primary motivation was to secure the benefits of Dr. Naftalis's reputation and ideas for improving the quality of RHD's facilities and services. Dr. Naftalis alleged these representations were first made between June 17, 1985, and August 2, 1985, and were reaffirmed both in November 1985 in connection with the revisions to the Agreement and in April or May 1986 shortly before he signed the sublease. In connection with the misrepresentations about the leased premises, Dr. Naftalis alleged the leased premises suffered from (1) continuing water leaks, stains, and damage; (2) inadequate drainage; (3) inadequate landscaping; (4) inadequate parking; and (5) inadequate janitorial services and supplies. Dr. Naftalis asserted these problems existed from the inception of the sublease. He claimed he made numerous written and oral requests to correct these conditions from the commencement of the sublease; but no action was taken, which made the premises unfit for use as a medical facility. In connection with the misrepresentations concerning his relationship with RHD, Dr. Naftalis alleged his relationship with RHD was not satisfactory because of (1) the problems with the leased premises, (2) the failure of Neil Sorrentino and Jeff Webster to remain with RHD, (3) the lack of patient referrals, (4) poor cooperation from RHD, (5) the absence of interaction between RHD and him as a consultant for and physician with RHD, and (6) his realization RHD recruited him merely for its own economic benefit. As a result, Dr. Naftalis demanded RHD relocate him from its campus to another office at RHD's expense, but RHD refused contending it was under no obligation to do so. Based upon these allegations, Dr. Naftalis asserted claims against RHD for breach of contract, fraud, and negligent misrepresentation. He also asserted a claim under the DTPA. RHD filed a motion for summary judgment. In its motion, RHD contended the representations complained of by Dr. Naftalis were not false. RHD also contended Dr. Naftalis's claims were barred by the applicable statutes of limitations and the statute of frauds. In response to RHD's motion, Dr. Naftalis submitted his affidavit. In his affidavit, Dr. Naftalis stated the representations alleged in his petition were made to him orally by RHD and were false, that he relied upon the representations in entering the Agreement and sublease, and that he did not know the representations were false until RHD refused to relocate him from the RHD campus just before he filed this lawsuit in May 1990. Dr. Naftalis admitted in his affidavit he knew of the poor condition of the premises "early on" and that Neil Sorrentino had left by 1987. He believed, however, it was reasonable to expect improvements to be made and promises to be honored until the date he asked to be relocated from the RHD campus. The trial court granted RHD's motion for summary judgment in part and dismissed Dr. Naftalis's DTPA claim. The trial court denied the motion for summary judgment with respect to the other claims asserted by Dr. Naftalis. The case proceeded to trial before a jury. At trial, Dr. Naftalis was called to testify. RHD objected to Dr. Naftalis testifying on the ground he was not identified in response to an interrogatory requesting the identities of persons with knowledge of relevant facts. The following exchange took place with regard to RHD's objection: [THE COURT]: All right, we have an issue of the designation or non-designation of Dr. Naftalis in response to the interrogatories that were sent by [RHD]. Ms. Lahr, do you want to briefly state your position on the record? [RHD'S COUNSEL]: Yes, your Honor. We object to Dr. Naftalis being called as a witness at this time. He was not designated as an individual with knowledge of relevant facts pursuant to an interrogatory request propounded by my
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client. The interrogatory request was not objected to. Pursuant to Rule 2155 [sic] of the Texas Rules of Civil Procedure, automatic exclusion is appropriate in light of that failure to designate him as a witness. [THE COURT]: Mr. Kuhn. [DR. NAFTALIS'S COUNSEL]: Your Honor, our response is that Plaintiff's answers to the second set of interrogatories taken as a whole adequately disclose and do not conceal Plaintiff as a person having knowledge of relevant facts. Furthermore, to the extent Interrogatory Number 1 would in fact be looked at in an exclusionary capacity without the rest of the answers, we would ask that the Court take judicial notice of the balance of the interrogatories, consider what we've marked as Exhibit A and offer only for purposes of this motion, which is the transcript of Dr. Naftalis's deposition. And further follow the exception from the two Houston Court of Civil Appeals [sic] cases that we cited to the Court which states that a party Plaintiff may testify even if not disclosed. That is not subject to the exclusionary rule. So we would ask Court [sic] to find good cause to the extent necessary. [THE COURT]: All right. Do you have something else to say? [RHD'S COUNSEL]: Yes. We would like to make the answers to interrogatories exhibits at this time. [THE COURT]: That's fine. Let everybody offer what they want to offer. Plaintiff's Exhibit A with respect to this particular hearing is admitted. And Defendant's Exhibit A, which will be the interrogatory responses, is also admitted. [RHD'S COUNSEL]: Thank you, your Honor. [THE COURT]: I think we're ready. Is everybody ready to get started? [RHD'S COUNSEL]: We need a ruling. [THE COURT]: Isn't overruling the objection sufficient? [RHD'S COUNSEL]: I didn't hear it. [DR. NAFTALIS'S COUNSEL]: And we ask the Court to find good cause to the extent required. [THE COURT]: Well, you're pushing me now. I've overruled the objection. I'm not going to find good cause, I simply overruled the objection. That's not commenting one way or the other what the basis for my ruling is. Dr. Naftalis then took the stand and testified. The jury found RHD liable for negligent misrepresentation regarding the repair and maintenance of the leased premises and negligent misrepresentation and fraud regarding the relocation of Dr. Naftalis from the RHD campus. The jury did not find RHD liable for the other alleged misrepresentations. The jury also found the misrepresentations regarding the repair and maintenance of the leased premises were made on November 15, 1985, and that the misrepresentation regarding the relocation from the RHD campus was made on July 25, 1985. The jury found Dr. Naftalis knew or should have known the misrepresentations were false on April 11, 1990. The jury awarded Dr. Naftalis $300,000 in damages. The trial court entered judgment on the jury's verdict. DISCUSSION In its fourth point of error, RHD contends the trial court erred in allowing Dr. Naftalis to testify. In support of this contention, RHD argues Dr. Naftalis was not identified in response to a proper interrogatory, that he did not establish good cause for the admission of his testimony, and that the trial court failed to find good cause for the admission of his
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testimony. RHD argues, therefore, that Dr. Naftalis's testimony should have been excluded pursuant to rule 215(5) of the Texas Rules of Civil Procedure. See Tex. R. Civ. P. 215(5). Rule 215(5) of the Texas Rules of Civil Procedure provides: A party who fails to respond to or supplement his response to a request for discovery shall not be entitled to present evidence which the party was under a duty to provide in a response or supplemental response or to offer the testimony of an expert witness or of any other person having knowledge of discoverable matter, unless the trial court finds that good cause sufficient to require admission exists. The burden of establishing good cause is upon the party offering the evidence and good cause must be shown in the record. Tex. R. Civ. P. 215(5). Once a litigant shows that its opponent did not identify a witness in response to a proper interrogatory, the exclusion of that witness's testimony is automatic. Sharp v. Broadway Nat'l Bank, 784 S.W.2d 669, 671 (Tex. 1990); Morrow v. H.E.B., Inc., 714 S.W.2d 297, 297 (Tex. 1986). To escape this automatic exclusion, the party who desires to call the unidentified witness must show good cause exists for the admission of the witness's testimony, and good cause must be shown in the record. Sharp, 784 S.W.2d at 671; Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 395 (Tex. 1989). Based upon the offering party's proof, the trial court in its discretion may find good cause exists for the admission of the testimony. See Alvarado v. Farah Mfg. Co., 830 S.W.2d 911, 914 (Tex. 1992). Unless the trial court makes a finding of good cause, however, it has no discretion to admit the testimony otherwise automatically excluded by rule 215(5). See id. Rule 215(5) does not require a trial court to make an express finding of good cause before allowing the testimony of a witness not identified in an answer to a proper interrogatory. Henry S. Miller Co. v. Bynum, 797 S.W.2d 51, 58 n.2 (Tex. App.--Houston [1st Dist.] 1990), aff'd, 836 S.W.2d 160 (Tex. 1992); see also Tri-State Motor Transit Co. v. Nicar, 765 S.W.2d 486, 491 (Tex. App.--Houston [14th Dist.] 1986, no writ). A trial court's ruling allowing an unidentified witness to testify normally implies a finding of good cause under rule 215(5). Bynum, 797 S.W.2d at 58. But in this case the trial court expressly refused to make a finding of good cause. We hold an express refusal by a trial court to make a finding of good cause eliminates the possibility the trial court made an implied finding of good cause. Because the trial court refused to find good cause in this case, it had no discretion to admit Dr. Naftalis's testimony, and the automatic exclusion remained in effect. See Tex. R. Civ. P. 215(5); cf. Bynum, 797 S.W.2d at 58. Although he did not identify himself in response to the interrogatory requesting the identities of persons with knowledge of relevant facts, Dr. Naftalis contends his interrogatory answers as a whole showed he was a person with knowledge of relevant facts. Because his interrogatory answers as a whole sufficiently identified him, Dr. Naftalis argues RHD did not meet its initial burden of showing he was not identified in response to an interrogatory. Given this, he argues the trial court was not required to find good cause to allow him to testify. We disagree. In support of his argument, Dr. Naftalis relies upon Bynum, 836 S.W.2d at 160; Smith v. Southwest Feed Yards, 835 S.W.2d 89 (Tex. 1992); Frazier v. Frontier State Bank, 837 S.W.2d 392 (Tex. App.--San Antonio 1992, no writ); Weng Enters., Inc. v. Embassy World Travel, Inc., 837 S.W.2d 217 (Tex. App.--Houston [1st Dist.] 1992, no writ); and National Union Fire Ins. Co. v. Wyar, 821 S.W.2d 291 (Tex. App.--Houston [1st Dist.] 1991, no writ). In each of these cases, a party who had not been identified in answer to a proper interrogatory attempted to testify on his own behalf. In considering whether the trial court abused its discretion in allowing or disallowing the unidentified party's testimony, the court in each case looked at the interrogatory answers as a whole to determine whether there had been a showing of good cause to allow the unidentified party to testify. See Bynum, 836 S.W.2d at 162; Smith, 835 S.W.2d at 90-91; Frazier, 837 S.W.2d at 394; Weng Enters., 837 S.W.2d at 221; Wyar, 821 S.W.2d at 293. These cases do not stand for the proposition that a party who fails to identify himself in response to a proper interrogatory may nevertheless be considered to have done so if his identity as a person with knowledge of relevant facts can be gleaned or pieced together from other answers. Such a rule would only encourage obfuscation in responding to discovery requests. These cases simply recognize that interrogatory answers taken as a whole are one factor to be considered in determining whether the trial court's finding relating to good cause to allow or disallow the testimony of an unidentified party is supported in the record. We conclude RHD met its initial burden of showing Dr. Naftalis was an unidentified witness. We need not consider whether Dr. Naftalis's interrogatory answers as a whole support the trial court's ruling to allow him to testify because the trial court refused to make any finding relating to good cause. Our consideration of Dr. Naftalis's other interrogatory answers would be triggered only if the trial court had made a finding as required by rule 215(5). Because the trial court expressly refused to make any finding relating to good cause yet permitted Dr. Naftalis to testify over the timely objection of RHD, the trial court erred. The trial court failed to follow rule 215(5) and, therefore, had no discretion about whether to allow Dr. Naftalis to testify. By permitting Dr. Naftalis to testify, the trial court admitted evidence that rule 215(5) automatically excluded. Much of the evidence adduced through Dr. Naftalis was not
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presented otherwise and was material to Dr. Naftalis's claims against RHD. The error in allowing him to testify, therefore, was harmful. See Tex. R. App. P. 81(b); Gee, 765 S.W.2d at 396. Because we sustain RHD's fourth point of error, we need not address its remaining points of error. We next address Dr. Naftalis's cross points of error. In his first cross point of error, Dr. Naftalis contends the trial court erred in granting partial summary judgment and in failing to submit a question to the jury on his DTPA claim. Dr. Naftalis argues there were fact issues with respect to his DTPA claim. In his second and third cross points of error, Dr. Naftalis contends the evidence in the case and the jury's findings support a judgment on his DTPA claim and that we should render judgment awarding him attorney's fees and $2000 additional damages pursuant to the DTPA. See Tex. Bus. & Com. Code Ann.

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