North Carolina Business Litigation Report

Business Court Dismisses Complaint Due To Discovery Violations

The Business Court today granted a Motion to Compel and delivered a harsh sanction to the Plaintiff: dismissal with prejudice of its Complaint.   The case is TelSouth Solutions, Inc. v. Voyss Liquidation Company, LLC.

Plaintiff's failure to timely respond to discovery, standing alone, might not have warranted dismissal, but It had been preceded by a string of failures to meet deadlines. 

Those began with a failure to file the Case Management Report per Rule 17, continued with a failure to respond to a counterclaim resulting in an entry of default, then a lack of compliance with the deadlines in the Case Management Order for mediator selection and cost estimates, and culminated in Plaintiff no-showing at a hearing regarding the missed deadlines. 

The failure to respond to discovery was then the straw that broke the camel's back. The due date came and went for responses to interrogatories and document requests.  Defendant's counsel followed up and asked for responses, but Plaintiff's counsel responded that he had "been traveling and [was] swamped."  The responses finally came about two months after they were due, and only after more prodding from Defendant's counsel. 

Judge Diaz observed that Rule 37 provides for a wide range of sanctions for a party who doesn't respond at all to interrogatories, including "[a]n order striking out pleadings . . . or dismissing the action or proceeding."  He said that "the Court may impose drastic sanctions for discovery violations, including dismissal of claims with prejudice when it is 'just' to do so," and that it wasn't necessary for there first to be an order directing compliance.

Plaintiff's counsel said at the Motion to Compel hearing that his inability to respond "was the result of factors beyond his client's control."  The Court held that it was true that "if a party is unable to answer discovery requests because of circumstances beyond its control, an answer cannot be compelled," but said that there was no evidence presented as to the reason that Plaintiff was unable to respond.

The Court held that "Plaintiff has demonstrated (time and again) an unwillingness to give proper attention to litigation that it initiated. In light of Plaintiff’s most recent transgression, and because the fact discovery deadline has now expired, the Court concludes, in its discretion and after considering lesser sanctions, that the appropriate sanction is dismissal of Plaintiff’s Amended Complaint with prejudice." 

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Mack Sperling
Brooks Pierce, LLP
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