American Medical Security Group, Inc. v. Parker

The controlling issue in this granted petition for certiorari is whether a party may directly appeal an order that finds that the party has committed an act of wilful contempt in failing to comply with a prior discovery order and that dismisses the party’s answer and enters a default judgment as to liability as a sanction under OCGA § 9-11-37 (b) (2) (C). We conclude that such an order is not directly appealable as a contempt judgment under OCGA § 5-6-34 (a) (2) where, as in the present case, it does not impose a sanction that is available for criminal contempt and does not attempt to coerce compliance with the prior discovery order as in cases involving civil contempt. For these reasons, we affirm the Court of Appeals’ dismissal of the appellants’ appeal to that Court.

1. On October 3, 2006, the trial court entered an order finding that the appellants had failed to produce discovery documents as required by a prior discovery order for a period of over eighteen months; that the failure to produce was “wilful and flagrant”; and that the appellants were in wilful contempt of the prior discovery order. Under OCGA § 9-11-37 (b) (2) (C),1 the trial court entered the discovery sanction of striking the appellants’ answer and entering a default judgment as to liability. The appellants filed a notice of appeal from the October 3 order, but the appellees moved to dismiss the notice of appeal on the ground that the trial court had not issued a contempt order but only a discovery order that was not subject to direct appeal. On November 2, 2006, the trial court dismissed the appellants’ notice of appeal. The trial court reiterated that, in the October 3 order, it had found that the appellants had committed an act of contempt, but concluded that its prior order was, in substance, not a contempt case within the meaning of OCGA § 5-6-34 (a) (2) because it did not impose a contempt punishment. The court, instead, ruled that its October 3 order was an interlocutory discovery order and that, as such, the order was not directly appealable.2 3The *103appellants filed a timely notice of appeal to the Court of Appeals from the November 2 order.

The Court of Appeals subsequently dismissed the appeal by order. The Court implicitly concluded that the October 3, 2006, order was an interlocutory discovery order that was not directly appeal-able, and ruled that a trial court’s order that dismisses an unauthorized interlocutory appeal is itself an interlocutory order and that a party seeking to appeal the dismissal must comply with the interlocutory appeal procedures of OCGA § 5-6-34 (b). Because the appellants did not comply with those procedures, the Court of Appeals dismissed the appeal. We subsequently granted the appellants’ petition for certiorari to review the Court of Appeals’ ruling. For the reasons that follow, we affirm.

2. The appellate jurisdiction question of whether the Court of Appeals erred in dismissing the appellants’ appeal of the trial court’s November 2, 2006, order dismissing its appeal turns on whether the October 3, 2006, order was directly appealable. The reason is that a trial court’s order dismissing a properly filed direct appeal is itself subject to a direct appeal.3 Conversely, as recognized by Rolleston v. Cherry,4 a trial court’s order dismissing an improperly filed direct appeal should be considered an interlocutory order and is not subject to a direct appeal.5 Thus, in the present case, if the October 3, 2006, order was a final order of contempt and thus subject to a direct appeal under OCGA § 5-6-34 (a) (2),6 the November 2, 2006, order dismissing that appeal is subject to a direct appeal. Conversely, if the October 3 order was an interlocutory discovery order, the Court of Appeals did not err “in concluding that the trial court’s [November 2] dismissal of appellants’ original notice of appeal from the [October 3] . . . was itself an interlocutory order which was only appealable pursuant to OCGA § 5-6-34 (b).”

3. We now address whether the trial court’s October 3, 2006, order was a directly appealable order. The appellants contend that, under OCGA § 5-6-34 (a) (2), as construed in Hamilton Capital Group v. Equifax Credit Information Svcs.,7 they had a right to a direct appeal of the trial court’s October 3 order. More specifically,

_t_ *104the appellants contend that the trial court found that they had committed an act of contempt in violating a prior discovery order, that the court punished them by dismissing their answer and entering a default judgment as to liability, and that the order should thus be considered a contempt case within the meaning of OCGA § 5-6-34 (a) (2). We disagree.

4. We begin with the proposition that “the appealability of an order is determined, not by its form or the name given to it by the trial court, but rather by its substance and effect.”8 The issue here is whether the trial court’s order is an interlocutory discovery order imposing sanctions on the appellants or is a contempt judgment. If the former, the order falls under the general rule that orders imposing discovery sanctions under OCGA § 9-11-37, including orders that contain harsh sanctions such as the entry of a default judgment as to liability, are not directly appealable.9 On the other hand, if the trial court’s order is in substance a judgment of contempt, the order is directly appealable under OCGÁ § 5-6-34 (a) (2). A number of factors convince us that the trial court’s order was in substance an interlocutory sanctions order that is not directly appealable.

5. There are two kinds of contempt for violations of court orders, civil and criminal, and the sanction of dismissing an answer and entering a default judgment on liability does not fall within either category.10 “ ‘The distinction between criminal and civil contempt is that criminal contempt imposes unconditional punishment for prior acts of contumacy, whereas civil contempt imposes conditional punishment as a means of coercing future compliance with a prior court order.’ 11 As for criminal contempt, a superior court’s power to punish for it is limited by OCGA § 15-6-8 (5), which gives superior courts the authority to impose fines not exceeding $500 and impris*105onment not exceeding 20 days.12 Thus, in the present case, the sanction of dismissing the appellants’ answer and entering a default judgment cannot be considered a punishment for criminal contempt. Moreover, it does not constitute a punishment for civil contempt, as the order was unconditional and was not intended to coerce compliance with the prior discovery order.

The Supreme Court has stated that there are significant differences between civil contempt and a sanction order under Rule 37 of the Federal Rules of Civil Procedure.13 In Cunningham, the Court noted that “ ‘civil contempt is designed to force the contemnor to comply with an order of the court,’ ” whereas a sanction under Rule 37, in contrast, “lacks any prospective effect and is not designed to compel compliance.”14

Thus, contrary to the appellants’ assertion that there was a contempt punishment imposed on them, we conclude that the sanction imposed by the trial court does not constitute either criminal or civil contempt punishment. In a ruling consistent with our conclusion, the Illinois Supreme Court held that a trial court may not make a discovery order containing the sanction of a default judgment as to liability directly appealable by framing the order in contempt language.15

6. Furthermore, OCGA § 9-11-37 itself recognizes the foregoing difference between a punishment for contempt and a discovery sanction such as that imposed by the trial court in the present case.

OCGA § 9-11-37 (b) (2) provides that, if a party fails to comply with a prior order compelling discovery, a trial court may sanction the party by making “such orders in regard to the failure as are just” and may choose from, among other things, the list of five sanctions specified by OCGA § 9-11-37 (b) (2) (A)-(E). More specifically, the court may, as in this case, dismiss the party’s answer and enter a default judgment as to liability,16 or it may, instead of or in addition to the foregoing, treat the failure to comply with the motion to compel as a “contempt of court.”17 Because the General Assembly has specified that the sanction of dismissing an answer is a different punishment than the sanction of contempt, we decline to conclude, as urged by the appellants, that the sanction the trial court entered in this case was a punishment for contempt.

*1067. In addition, contrary to the appellants’ contention, the Court of Appeals’ decision in Hamilton18 does not support a ruling that the trial court imposed a contempt judgment on them from which they have a right of direct appeal.

First, Hamilton did not involve a discovery sanction. Instead, Hamilton Capitol Group failed to comply with a prior order of the trial court requiring Hamilton to pay Equifax for certain services. The trial court ruled that Hamilton was in contempt of the prior order, that Hamilton could purge itself of the contempt by paying Equifax $327,182.20 within ten days of the order, and that, if Hamilton failed to purge the contempt, the court would enter a judgment against it in the foregoing amount. Hamilton directly appealed the order, and Equifax moved to dismiss the appeal on the ground that the contempt order was interlocutory since it gave Hamilton the opportunity to purge the contempt before punishment was imposed. The Court of Appeals concluded that the order was an appealable order of contempt under OCGA § 5-6-34 (a) (2), reasoning, in part, that, since “the primary purpose of a civil contempt is to coerce compliance with an order of the court, it makes sense that once the trial court has entered an order coercing such compliance, a party may directly appeal that order.”19

We conclude, however, that the rationale of Hamilton is not applicable when, as in the present case, a trial court enters an order that finds that a party has engaged in an act of contempt for failing to comply with a prior discovery order but that does not impose any criminal or civil contempt punishment or attempt to coerce compliance with a prior order before punishment for contempt is imposed. In other words, such judgments do not constitute contempt cases within the meaning of OCGA § 5-6-34 (a) (2).

8. Finally, if we were to adopt the appellants’ position, we would defeat one of the purposes of OCGA § 9-11-37. In this vein, the Supreme Court has held that Federal Rule of Civil Procedure 37 (a) was “designed to protect courts and opposing parties from delaying or harassing tactics during the discovery process” and that to permit direct appeals from interlocutory discovery sanction orders would undermine that purpose.20

Immediate appeals of such orders would undermine trial judges’ discretion to structure a sanction in the most effective manner. They might choose not to sanction an attorney, despite abusive conduct, in order to avoid further *107delays in their proceedings. Not only would such an approach ignore the deference owed by appellate courts to trial judges charged with managing the discovery process, it also could forestall resolution of the case as each new sanction would give rise to a new appeal. The result might well be the very sorts of piecemeal appeals and concomitant delays that the final judgment rule was designed to prevent.21

To impose harsh discovery sanctions such as dismissing an answer and entering a default judgment on liability under OCGA § 9-11-37 (b) (2) (C), a trial court must find, after a hearing, that the party against whom the sanction is imposed wilfully failed to comply with a prior discovery order.22 Thus, in such cases, a trial court must find that the party against whom the sanction is entered has engaged in an act of contempt.23 This is true whether, as in the present case, the trial court labels the violation of the prior order an act of contempt or, as in other cases, simply finds that a party wilfully violated a prior discovery order.24

Thus, to adopt the appellants’ position would permit direct appeals of all interlocutory discovery orders that require a finding of wilfulness. This rule would significantly curtail a trial court’s discretion to address serious discovery abuses. A trial court might decide to completely forego any sanction that requires a finding of a wilful violation of a discovery order in order to avoid a significant delay in the trial that would be occasioned by a direct appeal by the disobedient party.

For the foregoing reasons, we conclude that the trial court’s October 3, 2006, order does not make this appeal a contempt case within the meaning of OCGA § 5-6-34 (a) (2), that it was thus not directly appealable, and that, accordingly, the Court of Appeals properly dismissed the appellants’ appeal.

Judgment affirmed.