In Eng v. Kolbe, a mother sued her daughter for abusing a power of attorney document. No. 03-15-00409-CV, 2017 Tex. App. LEXIS 2680 (Tex. App.—Austin March 30, 2017). The daughter was assisting her aging parents with their finances as her father suffered from dementia and her mother suffered from macular degeneration. Later the mother revoked the power of attorney, appointed her other daughter in that role, and then sued the defendant for breach of fiduciary duty, fraud, conversion, and conspiracy to commit fraud. The petition alleged:
Moon alleged in her petition that during the time England managed her finances, England withdrew funds from Moon’s accounts, sold stocks and other investments, retained proceeds for her own use, and transferred additional funds of Moon’s to her own bank accounts, all without permission. Moon also asserted that England engaged in real estate transactions with Moon’s funds. Some of those transactions alleged England used Moon’s funds to purchase properties titled in England’s name alone and transferred Moon’s interests in other properties to England via gift deeds.
The defendant did not turn over relevant documents and records and failed to honestly answer questions in her deposition regarding all of her various conduct and transactions. The trial court entered a sanctions order regarding some of this conduct, compelling her to respond to discovery, produce documents, and pay sanctions in the amount of $15,000 and attorney’s fees of $3,000.
The defendant still did not comply with her discovery obligations. Her conduct was finally discovered, and the plaintiff filed a second motion for sanctions. After a hearing, the trial court granted the motion for sanctions, struck all of the defendant’s pleadings, granted plaintiff a default judgment on all issues of liability, and denied the defendant’s request for a jury trial on damages. The trial court then held a damages trial in which it awarded plaintiff actual damages in the amount of $1,458,251; awarded punitive damages in the amount of $1,000,000; set aside and declared void the gift deeds for properties; and imposed a constructive trust on certain assets of the defendant, including her homestead, automobile, and bank accounts. The defendant appealed.
The court of appeals affirmed the sanctions order:
[T]he evidence shows that a direct relationship exists between the trial court’s striking England’s pleadings and England’s offensive conduct. The information about accounts and transactions withheld by England throughout the discovery period was the principal evidence that Moon needed to succeed in most of her claims against England because the existence of these banking and investment accounts went to the heart of the issues in the case. Further, the district court made a finding that it was England who had committed these bad acts and was the responsible party for the misrepresentations and withholding of evidence. Therefore, the punishment was properly directed at the perpetrator of the offensive conduct.
The trial court’s sanction of striking England’s pleadings and entering a default judgment on liability was also not excessive. The trial court made findings that England’s misconduct throughout the litigation had been egregious and that she repeatedly lied and changed her version of the events to suit her needs at the time. Specifically, England changed her testimony about her role in Moon’s finances from providing her limited assistance in bill paying to forming a “secret partnership” for the purchase of significant real-property assets. The district court had previously tested lesser sanctions against England after she had concealed bank accounts from Moon during discovery, but those sanctions did not stop England’s continued misconduct.
The court of appeals then determined that the trial court erred in denying the defendant a jury trial on the damages issue, reversed that aspect of the judgment, and remanded for a new trial.
