CAMP TAKAJO, INC. v. SIMPLEXGRINNELL, L.P.

Docket: Cum-07-567

SUPREME JUDICIAL COURT OF MAINE

2008 ME 153; 2008 Me. LEXIS 153

April 10, 2008, Argued
October 7, 2008, Decided

DISPOSITION: Judgment vacated and remanded to the Superior Court for
further
proceedings consistent with this opinion.

COUNSEL: For SimplexGrinnell, L.P.: Harold J. Friedman, Esq. (orally),
Jonathan
Dunitz, Esq., Friedman Gaythwaite Wolf & Leavitt, Portland, Maine.

For Camp Takajo, Inc.: James E. Belleau, Esq., Skelton, Taintor & Abbott,
Auburn, Maine.

Christopher Konzelmann, Esq. (orally), Edward M. Koch, Esq., White and
Williams,
LLP, Philadelphia, Pennsylvania.

JUDGES: Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, and GORMAN,
JJ.

OPINION BY: SAUFLEY

OPINION

SAUFLEY, C.J.

SimplexGrinnell, L.P. appeals from a judgment entered on a jury verdict in
the Superior Court (Cumberland County, Delahanty, J.) in favor of Camp
Takajo,
Inc., on the Camp's complaint for negligence, negligent misrepresentation,
and
breach of contract in connection with fire damage sustained by the Camp.
SimplexGrinnell contends that the court erred in excluding from trial,
pursuant
to M.R. Evid. 403, a portion of the contractual agreement between the
parties.
We agree and vacate the judgment.

I. BACKGROUND

Camp Takajo owns and operates a summer camp for boys located on Long Lake in
Naples. 1 In 1997, the Camp hired SimplexGrinnell, a Delaware limited
partnership, to install a fire alarm system in the Camp's dining hall. In the
event of a fire, the alarm system was supposed to emit an audible signal as
well
as transmit an alarm signal to the Naples Dispatch Center. Between 1999 and
2003, SimplexGrinnell also completed annual inspections of the Camp's fire
alarm
system pursuant to a five-page Life Safety Service Agreement executed between
the parties on March 1, 1999.

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -1 The
pertinent historical facts are drawn from the trial transcript and the
parties'
pleadings. Because we remand for a new trial, none of the facts are final for
adjudicative purposes.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

In December of 2003, the Camp suffered a fire that destroyed three of its
buildings. Some of the critical phone lines, designed to transmit the alarm
signal, had been turned off at the conclusion of the camp year, and as a
result,
the fire alarm system neither emitted the audible signal nor transmitted the
alarm signal to local authorities.

In December of 2004, the Camp filed a complaint against SimplexGrinnell
seeking damages for negligence, negligent misrepresentation, and breach of
contract. The parties proceeded with discovery. On February 11, 2005, the
Camp
requested production of various documents from SimplexGrinnell, including any
and all contractual provisions between the parties. The Life Safety Service
Agreement was a five-page document containing significant limitations on
SimplexGrinnell's liability. One of the contract's pages was a two-sided
document. In response to the Camp's discovery requests, however,
SimplexGrinnell
produced a four-page version of the Service Agreement that did not contain a
copy of the back side of the two-sided document, and consequently did not
contain any language purporting to limit SimplexGrinnell's liability.

On July 29, 2005, the Camp served on SimplexGrinnell a supplemental request
for the production of documents, seeking any further documentation of the
contract between the parties. In its October 25, 2005, response,
SimplexGrinnell
produced no further documents, and instead referred the Camp to the
documents it
had already produced. In December of 2005, the parties engaged in
unsuccessful
mediation.

One month later, in January of 2006, SimplexGrinnell realized that it had
not produced the second side of the two-sided document. It produced the
omitted
page to the Camp on January 13, 2006. The omitted page outlined the "Terms
and
Conditions" of the Service Agreement, and contained various exclusions on
SimplexGrinnell's liability that could apply to the Camp's claims. The
discovery
deadline was three weeks later, on February 6, 2006. The Camp undertook
several
more depositions of SimplexGrinnell's employees between the time that the
omitted page was produced and the close of discovery.

Following the close of discovery, SimplexGrinnell moved for summary judgment
as to all claims, based in large part on the liability exclusion provisions
contained in the omitted page of the Service Agreement. The Camp opposed
SimplexGrinnell's motion, filed its own motion for summary judgment, and
sought,
through a motion in limine, to exclude the omitted page from the summary
judgment record as a discovery sanction for its delayed disclosure pursuant
to
M.R. Civ. P. 37(d). The Camp did not allege, however, that the omitted page
of
the Service Agreement was not a part of its contract with SimplexGrinnell.

The court declined to apply discovery Rule 37(d) to strike the omitted page
from the summary judgment record. Noting that discovery did not close until
February 6, 2006, the court found: "Although [SimplexGrinnell] no doubt
produced
the document at an inconvenient time for the Camp, [SimplexGrinnell] simply
did
not fail to comply with the discovery request." The court also indicated that
the contractual provisions on the page at issue "would prevent the
plaintiff's
action."

The court nevertheless determined that it must exclude the omitted page from
the summary judgment record because the page was evidence that "may not be
admissible at trial." Both parties' motions for summary judgment were
denied.

In response to the court's previous reference to the possible
inadmissibility of the omitted page at trial, the Camp filed a second motion
in
limine asking the court to exclude the omitted page from admission at trial.
That motion was filed in January of 2007. In February of 2007, the court
entered
an order excluding the omitted page. The court noted again that the omitted
page
had been delivered before the end of the discovery period, and thus the court
did not exclude the omitted page as a discovery sanction. Rather, referring
to
the Camp's reliance on Rule 403, the court apparently relied on Rule 403 to
exclude the omitted page.

The court conducted a jury trial in February of 2007, during which the
omitted page was never presented to the jury. The jury found negligence on
the
part of SimplexGrinnell and awarded the Camp $ 2,700,000 in damages. The
court
denied SimplexGrinnell's subsequent motion to amend the judgment or for a new
trial, and SimplexGrinnell appealed.

II. DISCUSSION

SimplexGrinnell's primary contention is that the trial court, having
concluded that no discovery sanction was warranted, erred in relying on the
rules of evidence to exclude from admission at trial the omitted page of the
Service Agreement. We address herein the interplay between a potential
discovery
sanction based in part on a determination of prejudice to a party pursuant to
M.R. Civ. P. 37(b), and the exclusion of evidence based on a balancing of the
probative value of the evidence against the potential for unfair prejudice
pursuant to M.R. Evid. 403. Although both considerations require an analysis
of
"prejudice," and may therefore be confused to address the same concept, the
term
is used quite differently in the context of the two rules.

A. Prejudice Relating to Potential Discovery Sanctions

If, during the discovery phase of a civil matter, one party withholds
evidence, delays the designation of witnesses or experts, or otherwise fails
to
comply with discovery rules or orders, the opposing party may be unfairly
restricted, or "prejudiced," in its ability to prepare for trial. When a
party
has engaged in discovery conduct that prejudices the opposing party in this
fashion, the trial court has substantial latitude in fashioning a sanction
that
addresses that error or misconduct. See M.R. Civ. P. 37(b). Prejudice in this
context addresses the opposing party's ability to fairly respond to evidence
that has been, or will be, advanced by another party. The sanction for such
prejudice will be crafted to address the nature of the impediments to the
opposing party's ability to respond to the evidence, and may include
extension
of the discovery period, a continuance of a trial, monetary sanctions, or
other
remedies. In some instances, the sanction may include exclusion of the
withheld
or delayed items.

B. Prejudice Relating to the Nature of the Evidence Offered

In contrast, unfair prejudice in the context of an evidentiary ruling
pursuant to Rule 403 2 refers to "an undue tendency to move the tribunal to
decide on an improper basis, commonly, though not always, an emotional one."
State v. Hurd, 360 A.2d 525, 527 n.5 (Me. 1976) (quotation marks omitted).
The
term "prejudice," as used in Rule 403, "means more than simply damage to the
opponent's cause. A party's case is always damaged by evidence that the facts
are contrary to his contentions . . . ." Id. (quotation marks omitted).
Unfairly
prejudicial evidence is evidence that has the potential to cause
fact-finders to
make findings based on something other than the facts in the case. It has
been
described as evidence that "arouses the [fact-finder's] sympathy or
antipathy to
a party, provokes its instinct to punish, horrifies it, or evokes some other
human reaction." Field & Murray, Maine Evidence § 403.1 at 108 (6th ed.
2007).

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -2 Maine
Rule of Evidence 403 provides, in its entirety: "Although relevant, evidence
may
be excluded if its probative value is substantially outweighed by the danger
of
unfair prejudice, confusion of the issues, or misleading the jury, or by
considerations of undue delay, waste of time, or needless presentation of
cumulative evidence." In the matter before us, the court addressed only the
"unfair prejudice" prong of the balancing contemplated by Rule 403, and thus
we
do not address the other prongs of Rule 403.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

Thus it is the specific nature of the evidence that informs the trial court
when it balances the relevance against the potential unfair prejudice of that
evidence pursuant to Rule 403. In the application of discovery procedures,
specifically M.R. Civ. P. 37(b), however, it is the opposing party's
capacity to
respond to the evidence that creates the prejudice relevant to the court's
exercise of discretion in entertaining a motion for a discovery sanction.
These
distinctions are critical. Prejudice in the context of unfair surprise during
the course of discovery is simply not, standing alone, grounds for the
exclusion
of evidence pursuant to Rule 403. State v. Giovanini, 567 A.2d 1345, 1346
(Me.
1989); Pettitt v. Lizotte, 454 A.2d 329, 332 (Me. 1982). We turn then to the
matter before us.

C. Application of the Rules to the Matter Before Us

We review trial court decisions regarding both the Rule 403 balancing and
decisions regarding discovery sanctions pursuant to M.R. Civ. P. 37(b) for an
abuse of discretion. Anderson v. O'Rourke, 2008 ME 42, P14, 942 A.2d 680,
684;
Harris v. Soley, 2000 ME 150, PP9-11, 756 A.2d. 499, 504-05. We will afford
the
trial court considerable discretion in determining whether the danger of
unfair
prejudice substantially outweighs the value of relevant evidence pursuant to
M.R. Evid. 403. Anderson, 2008 ME 42, P14, 942 A.2d at 684. Thus, once the
evidence has been determined to be relevant, the court's admission or
exclusion
of that evidence at trial pursuant to the unfair prejudice prong of Rule 403
is
reviewed for an abuse of that discretion. Id. Similarly, we review a trial
court's determination regarding the need for and type of sanction related to
a
discovery violation for an abuse of discretion. Harris, 2000 ME 150, P9, 756
A.2d at 504.

The trial court here first considered SimplexGrinnell's delay in producing
the omitted page as a discovery issue pursuant to M.R. Civ. P. 37. It
concluded
that no discovery violation existed and that, to the extent there was delay
in
the production of the omitted page, no sanctions were warranted. These
conclusions are supported factually by the record, and fall well within the
court's discretion, to the extent that a discovery violation existed at all.

In this portion of the analysis, the timeline of events is informative.
After responding to the Camp's initial discovery requests in a timely but
incomplete manner, SimplexGrinnell produced the omitted page in January of
2006,
prior to the discovery deadline of February 6, 2006. The court found that the
omitted page was produced within the discovery deadline and that no bad faith
was at issue. The Camp did not seek additional time within which to review
the
omitted page and did not file its first motion to exclude it until March 20,
2006, six weeks after the discovery deadline and more than two months after
it
received the omitted page from SimplexGrinnell. Moreover, the Camp was able
to
depose several of SimplexGrinnell's employees after the omitted page was
produced and before discovery closed. The trial in this matter did not occur
until February of 2007, more than a year after SimplexGrinnell produced the
omitted page. The Camp thus had ample time to alter its trial strategy in
light
of the provisions detailed in the omitted page.

Considering these facts, we do not disturb the court's determination that
SimplexGrinnell committed no discovery violation warranting exclusion of the
omitted page from the record, and the court did not abuse its discretion
when it
declined to exclude the omitted page as a sanction for the delayed delivery
of
discovery.

Turning then to the treatment of the omitted page as an evidentiary issue,
there is no indication in the record that admission of the omitted page at
trial
would have encouraged a fact-finder to decide the matter on any improper
basis.
The page was highly relevant in that it detailed a portion of the very
agreement
between the parties upon which the Camp based its action against
SimplexGrinnell, and the Camp does not dispute that the omitted page was
relevant. Although the Camp argues that admission of the omitted page would
have
resulted in a "sea change in litigation strategy" and would have left the
Camp
"unable to meaningfully . . . address the evidence," these contentions of
prejudice do not address themselves to the unfair prejudice contemplated by
Rule
403 because the contentions are not related to the nature of the evidence,
but
rather indicate an assertion of unfair surprise as a matter of delayed
discovery.

The page was simply not, in the context of Rule 403, unfairly prejudicial;
it had no tendency to encourage the jury to decide the matter on any improper
basis. In short, the court improperly converted the problem of the late
delivery
of the omitted page from an issue of discovery to one of evidentiary
admissibility. Because the page was relevant and was not prejudicial
pursuant to
Rule 403, its probative value could not be outweighed by the nonexistent
prejudice. Thus, no exercise of discretion was called for, and the court
erred
as a matter of law when it excluded the page from admission at trial by
relying
on M.R. Evid. 403. Finally, the content of the omitted page was pivotal to
the
question of SimplexGrinnell's liability. The error cannot be considered
harmless.

We must therefore vacate the court's judgment in favor of the Camp and
remand the matter to the Superior Court to allow the admission and
consideration
of the omitted page in further proceedings. 3

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -3
Although
the court previously indicated that the admissibility of the contractual
provisions at issue would be dispositive of the Camp's claims, it did so in a
context in which it assumed that the page would not be admitted. We
therefore do
not determine whether judgment should be entered in favor of SimplexGrinnell,
and we leave the determination regarding the viability of the Camp's claims
to
further process in the trial court.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

The entry is:


Judgment vacated and remanded to the Superior Court for
further proceedings consistent with this opinion.