Fiduciary Litigation Practice Tip: Streamlining Discovery To Threshold Legal Issues

by Winstead PC

Litigation can unfortunately be a costly endeavor. This is as true with fiduciary litigation as with any other type of litigation. The parties have to exchange documents, take depositions, retain experts, conduct legal research on many issues, prepare dispositive motions and respond to same, prepare for trial, prepare lengthy jury instructions, etc. However, there are often certain threshold issues that, if determined early in a case, may streamline the disposition of the case. For example, there are a number of issues in fiduciary cases that may make the rest of the case moot: personal jurisdiction, forum issues, the statute of limitations, exculpatory and/or release clauses, whether fiduciary duties are owed, etc. When a case has a threshold issue, it would make sense to bifurcate discovery and allow the threshold issue to be resolved before the remainder of the case is fully litigated.

Of course, plaintiffs often fight these attempts. Plaintiffs see the cost of litigation as a leverage tool to pressure a more friendly settlement. They also do not want to limit their discovery as they may believe that egregious facts on liability or damages may impact the way a court will view a threshold issue. There may be some truth to those beliefs. However, for most cases, it really is better for all parties, and certainly the court system, to streamline the case and have an orderly and thoughtful schedule for its resolution.

So, what is a defendant to do when it wants to advocate for a streamlined scheduling order? What discretion does a trial court have to enter such an order?

Texas Rule of Civil Procedure 166 provides that a district court has discretion to determine what issues need to be decided and in what order. Tex. R. Civ. P. 166. The Rule states:

In an appropriate action, to assist in the disposition of the case without undue expense or burden to the parties, the court may in its discretion direct the attorneys for the parties and the parties or their duly authorized agents to appear before it for a conference to consider: … (c) A discovery schedule; … (e) Contested issues of fact and the simplification of the issues;… (g) The identification of legal matters to be ruled on or decided by the court; … (p) Such other matters as may aid in the disposition of the action. The court shall make an order which recites the action taken at the pretrial conference, the amendments allowed to the pleadings, the time within which same may be filed, and the agreements made by the parties as to any of the matters considered, and which limits the issues for trial to those not disposed of by admissions, agreements of counsel, or rulings of the court; and such order when issued shall control the subsequent course of the action, unless modified at the trial to prevent manifest injustice. The court in its discretion may establish by rule a pretrial calendar on which actions may be placed for consideration as above provided and may either confine the calendar to jury actions or extend it to all actions.

Tex. R. Civ. P. 166. The purpose of Rule 166 is to assist in the disposition of the case without undue expense or burden to the parties. Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d 303, 2003 Tex. App. LEXIS 314 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). Rule 166(g) expressly allows a trial court to use a pretrial conference to consider the identification of legal matters to be ruled on or decided by the court. Id.

Moreover, in Texas, a court has discretion to stay discovery on issues that may be mooted by a threshold issue. In discovery, a trial court is granted latitude in limiting or tailoring discovery. Tex. R. Civ. P. 192.4. Generally, a trial court should limit discovery methods to those which are more convenient, less burdensome, and less expensive, or when the burden or expense of the proposed discovery outweighs its likely benefit. In re Alford Chevrolet—Geo, 997 S.W.2d 173, 182-83 (Tex. 1999) (orig. proceeding). See also Tex. R. Civ. P. 192.4. Discovery requests themselves must be reasonably tailored to matters relevant to the case at issue. In re Xeller, 6 S.W.3d 618, 626 (Tex. App.—Houston [14th Dist.] 1999, orig. proceeding). Consequently, the trial court has broad discretion to limit discovery requests by time, place, and subject matter. Texaco, Inc. v. Sanderson, 898 S.W.2d 813, 815 (Tex. 1995). Specifically, the Texas Rules of Civil Procedure expressly allow a trial court to protect a party from inappropriate or untimely discovery requests:

To protect [a party filing a motion for protection] from undue burden, unnecessary expense, harassment, annoyance, or invasion of personal, constitutional, or property rights, the court may make any order in the interest of justice and may – among other things – order that: . . . (3) the discovery not be undertaken at the time or place specified.

Tex. R. Civ. P. 192.6(b). A court can stay discovery – put it on hold – if it is untimely. Id. For example, the Texas Supreme Court stated: “courts may limit discovery pending resolution of threshold issues like venue, jurisdiction, forum non conveniens, and official immunity.” In re Alford Chevrolet-Geo, 997 S.W.2d at 181. For example, one court has repeatedly stayed discovery pending the resolution of a special appearance motion. Lattin v. Barrett, No. 10-03-287-CV, 2004 Tex. App. LEXIS 177 (Tex. App.—Waco January 5, 2004, no pet.); Lacefield v. Electronic Fin. Group., 21 S.W.3d 799, 800 (Tex. App.—Waco 2000, no pet.) (stayed proceedings pending disposition of special appearance appeal).

A court has the power to stay discovery until it determines the outcome of threshold issues. See Nat’l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520-21 (Tex. 1995) (affirming summary judgment granted by trial court based on interpretation of unambiguous contract provision and rejecting the argument that summary judgment was inappropriate because it was decided before the plaintiff had the opportunity to conduct discovery); Davis v. Star-Telegram, No. 05-98-00088-CV, 2000 Tex. App. LEXIS 4526, at *16-17 (Tex. App.—Dallas July 7, 2000, pet. denied) (holding that the trial judge did not abuse his discretion in staying discovery pending a ruling on a motion for summary judgment). In fact, a court can stay the entire case pending a motion for summary judgment. See In re Messervey, No. 04-00-00700-CV, 2001 Tex. App. LEXIS 430, 2001 WL 55642, at *3 (Tex. App.—San Antonio July 24, 2001, orig. proceeding) (not designated for publication) (“[The court] has the authority to stay the case temporarily while he considers the motion for summary judgment and determines whether the discovery sought by Messervey is relevant and necessary for Messervey to contest the issues raised by Northbrook.”); Ho v. Univ. of Tex. at Arlington, 984 S.W.2d 672, 693-94 (Tex. App.—Amarillo 1998, pet. denied) (no abuse of discretion for trial court to continue trial date sua sponte pending ruling on summary judgment). For example, a court of appeals affirmed a trial court’s refusal to allow discovery where an immunity issue was pending on summary judgment. Barnes v. Sulak, No. 03-01-00159-CV, 2002 Tex. App. LEXIS 5727, at *16-17 (Tex. App.—Austin 2002, pet. denied). See also Elgohary v. Lakes on Eldridge N. Cmty. Ass’n, No. 01-14-00216-CV, 2016 Tex. App. LEXIS 8876, at *21-22 (Tex. App.—Houston [1st Dist.] Aug. 16, 2016, no pet.); Doe v. Roman Catholic Archdiocese of Galveston-Houston ex rel. Dinardo, 362 S.W.3d 803, 809, 812 (Tex. App.—Houston [14th Dist.] 2012, no pet.).

Courts in the Fifth Circuit routinely stay discovery that will be mooted by dispositive motions. See, e.g., Whalen v. Carter, 554 F.2d 1087, 1098 (5th Cir. 1992); Montgomery v. United States, 933 F.2d 348, 350 (5th Cir. 1991); Williamson v., United States Department of Agriculture, 815 F.2d 368, 382 (5th Cir. 1987); Drake v. Nat’l Broadcasting Co., Inc., No. 3-04-CV-0652-R, 2004 U.S. Dist. Lexis 25090, at *3-5 (N.D. Tex. 2004) (granting a stay of discovery under federal law pending the outcome of a motion to dismiss and noting that such a stay is particularly appropriate when the disposition of a motion “might preclude the need for discovery altogether, thus saving time and expense”); Tschirn v. Kurzweg, No. 03-0369, 2003 U.S. Dist. LEXIS 8294 (E. D. La. May 8, 2003) (magistrate’s opinion); Leclerc v. Webb, No. 3-664, 2003 U.S. Dist. LEXIS 7569 (E. D. La. May 1, 2003). See also Young v. Burks, 849 F.2d 610 n.6 (6th Cir. 1988); Spencer Trask Software & Info. Servs., LLC v. RPost Int’l Ltd., 206 F.R.D. 367, 368 (S.D.N.Y. 2002); Veniard v. NB Holdings Corp., 2000 U.S. Dist. LEXIS 20518 (M.D. Fla. August 8, 2000), vacated in part on other grounds, 2001 U.S. Dist. LEXIS 22907 (August 27, 2001); Richmond v. W.L. Gore & Assocs., 881 F.Supp. 895 n.13 (S.D. N.Y. 1995); International Graphics, Div. of Moore v. United States, 3 Cl. Ct. 715, 717-18 (1983); Blair Holdings Corp. v. Rubinstein, 159 F.Supp. 14, 15 (S.D.N.Y. 1954).

For example, in Landry v. Air Line Pilots Ass’n Int’l, the Fifth Circuit affirmed a district court’s order limiting discovery pending the resolution of a summary judgment motion.  901 F.2d 404, 435-36 (5th Cir. 1990). The court stated:

“Upon motion by a party or by the person from whom discovery is sought, and for good cause shown,” a district court is authorized to “make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” F.R.Civ.P. 26(c). In their motions for protective orders, the defendants gave several reasons why this discovery was not needed prior to the resolution of the summary judgment motions which, if granted, would preclude the need for the discovery altogether.

. . . .

Discovery is not justified when cost and inconvenience will be its sole result.  On the record before it, the trial court had to reach the decision that it did reach.  The procedural posture of the case and the showings of the parties left it little choice. Whether the trial judge surmised that pilots would not be able to defeat the summary judgment motions or whether he, like us, saw sufficient disputed facts to preclude summary judgment is irrelevant. Under the circumstances, there was no abuse of discretion in the order staying discovery until the summary judgment motions were resolved.


Therefore, in state and federal court in Texas, a court has discretion to rule on whether threshold issues should be determined in a particular order and may stay discovery on other issues that may be mooted by the determination of threshold issues. That makes sense as every case should be reviewed for its particular needs and courts should enter orders to save parties from needless expense. Once again, as the Texas Supreme Court held, “a trial court should limit discovery methods to those which are more convenient, less burdensome, and less expensive, or when the burden or expense of the proposed discovery outweighs its likely benefit.” In re Alford Chevrolet—Geo, 997 S.W.2d at 182-83. Courts should exercise their discretion to do just that.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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