Court Jurisdiction, Procedure and Review: Default Judgment; Discovery Sanctions

摘要

In 1984, Retamco Operating, Inc., (Retamco) decides to liquidate a number of oil and gas properties to pay off a $70 million line of credit it previously established with Security Pacific National Bank (SPNB). Pursuant to the 1984 Agreement, Retamco transfers 572 oil and gas leases to PNB Security Company (PNB), a subsidiary of SPNB, and retains certain reversionary interests in the properties, including the right to receive assignments of overriding royalty interests in certain subsequently drilled producing wells and the right to elect after-payout working interests when the revenue from certain subsequently drilled wells exceeds drilling and operating expenses. The 1984 Agreement also gives Retamco other specified rights and benefits and requires PNB to record a notice in all applicable counties identifying and describing Retamco's rights and benefits under the 1984 Agreement and to notify every purchaser or assignor of a lease covered under the 1984 Agreement of Retamco's rights and benefits. In 1993, PNB transfers sixty-two leases held by PNB to Paradigm Oil, Inc. In 1999, Retamco sues PNB and its transferees and assignees, including Paradigm, the operator of the oil and gas properties, and others for breach of contract and fraud. In 2003, after several motions for sanctions for discovery abuse are heard, the trial court imposes death penalty sanctions against Paradigm for what it calls "bad faith in the litigation process as a whole." The trial court also strikes Paradigm's pleadings and disallows evidence and argument opposing Retamco's liability and damages claims.