Discovery sanction that led to dismissal affirmed even though no finding of bad faith or prejudice, because the sanction was not technically a dismissal.

 State v. Howe Cleaners, Inc. et al. (2009-110) (06-Aug-2010) 2010 VT 70 ( BURGESS, J.)

The State appeals from the dismissal of its civil enforcement action to hold prior and past owners liable for its costs of responding to and cleaning up a hazardous waste contamination site. We affirm.

The State argues that the trial court erred in granting summary judgment to Banknorth based on a litigation-ending discovery sanction against the State by not considering a lesser penalty. Imposition of sanctions under this Rule 37 “is necessarily a matter of judicial discretion” that is “not subject to appellate review unless it is clearly shown that such discretion has been abused or withheld.” John v. Med. Ctr. Hosp. of Vt., 136 Vt. 517, 519, 394 A.2d 1134, 1135 (1978); accord State v. Lee, 2007 VT 7, ¶ 15, 181 Vt. 605, 924 A.2d 81 (mem.)

Notwithstanding this broad discretion, however, we have held “that where the ultimate sanction of dismissal is invoked, it is necessary that the trial court indicate by findings of fact that there has been bad faith or deliberate and willful disregard for the court’s orders, and further, that the party seeking the sanction has been prejudiced thereby.” John, 136 Vt. at 519, 394 A.2d at 1135; accord Rathe Salvage, Inc. v. R. Brown & Sons, Inc., 2008 VT 99, ¶ 12, 184 Vt. 355, 965 A.2d 460 Accordingly, we have reversed trial court orders dismissing cases or entering default judgments as discovery sanctions when the orders did not set forth findings indicating the existence of bad faith on the part of the recalcitrant party and prejudice to the other side. See John, 136 Vt. at 519, 394 A.2d at 1135;see also In re Houston, 2006 VT 59, ¶¶ 13-16, 180 Vt. 535, 904 A.2d 1174 (mem.) (reversing dismissal order as discovery sanction because order was not supported by findings demonstrating bad faith and prejudice); Manosh v. First Mountain Vt., L.P., 2004 VT 122, ¶¶ 1, 10, 177 Vt. 616, 869 A.2d 79 (mem.) (same).

We find the State’s reliance on John unavailing. However similar in its effect, no ultimate sanction was actually imposed here. Although the sanction order led to the adverse judgment against the State, there was no outright dismissal or default. This case is similar to Lee, where the trial court sanctioned the offending party for discovery violations by accepting facts and allegations in the complaint as established and precluding the offending party from presenting a defense. 2007 VT 7, ¶ 6. As here, the trial court later granted summary judgment to the other side, and the sanctioned party argued to this Court that “the superior court was required to make findings [of bad faith and prejudice] on the record prior to imposing such sanctions.” Id. ¶ 17. We acknowledged that such findings are necessary when the “trial court imposes the ultimate sanction of dismissal,” but concluded that “dismissal was not ordered.”

Rather than sanction the State by dismissing or defaulting its case, the court here tailored the sanction to fit the violation by precluding the State “from using at trial evidence that should have been provided in accordance with” the June 2006 order requiring the State’s representative(s) to be available for Banknorth’s noticed deposition. By its terms, the court’s order was the neutralizing evidentiary remedy contemplated by Rule 37(b)(2)(B) (authorizing trial court to prohibit disobedient party “from introducing designated matters in evidence”)—not a dismissal under Rule 37(b)(2)(C) (authorizing trial court to dismiss action). This sanction order required no special findings of bad faith, prejudice, or lack of enforcement alternatives.