Opinion ID: 6332848
Heading Depth: 3
Heading Rank: 3

Heading: Mr. Schwartz’s Disclaimer

Text: We now turn to Mr. Schwartz’s contention that he did not disclaim all interest in the Wells Fargo account. Mr. Schwartz filed a disclaimer of interest with the district court in which he “disclaim[ed] any and all personal rights, title, lien, claim or interest in Mesh Suture’s Wells Fargo bank account . . . which is the Res that is the subject matter of the above-captioned Interpleader action filed by Plaintiff, Wells Fargo.” Aplee. App. 20 Appellate Case: 21-1262 Document: 010110672787 Date Filed: 04/19/2022 Page: 21 (WFB) at 227 (italics added). Mr. Schwartz claims that the district court erroneously construed this as an unlimited disclaimer, when in reality it was only a partial disclaimer because it was limited to his personal rights and interests in the account. He argues that he “did not . . . disclaim his corporate fiduciary power as an officer, director, corporate counsel, and account signatory to administer and control the Account on the Company’s behalf.” Aplt. Br. at 24. The district court, however, relied on Mr. Schwartz’s answer to the interpleader complaint—not just the disclaimer he separately filed—in finding that he had disclaimed all interest in the account. The format for Mr. Schwartz’s answer was to quote a paragraph of the complaint and then provide a one-paragraph response. The relevant paragraphs are as follows: [Complaint ¶ 31:] Upon information and belief, the dispute between The Dumanians and Schwartz over control of Mesh Suture— and consequently over the Account and the Restrained Proceeds— continues to this day. ANSWER: Mr. Schwartz denies the allegations in Paragraph 31 of the Complaint as Mr. Schwartz has disclaimed interest in the Account which belongs to a single claimant, the Account Owner, Mesh Suture, Inc. (See Disclaimer of Interest, attached as Exhibit 1). ... [Complaint ¶ 38:] At this time there exist rival, adverse, and conflicting claims between the Claimant Defendants as to the Restrained Proceeds. ANSWER: Mr. Schwartz denies the allegations in Paragraph 38 of the Complaint; Mr. Schwartz has disclaimed interest in the Account which belongs to a single claimant, the Account Owner, Mesh Suture, Inc. (See Disclaimer of Interest, attached as Exhibit 1). Aplee. App. (WFB) at 239, 241. Later in his answer Mr. Schwartz reiterated that he had “disclaimed any interest in the Account,” so there was no “possibility for Wells 21 Appellate Case: 21-1262 Document: 010110672787 Date Filed: 04/19/2022 Page: 22 [Fargo] to face multiple liability over the Account.” Id. at 243–44. That same day, Mr. Schwartz filed a motion in opposition to Wells Fargo’s motion to interplead funds, arguing that as the result of his disclaimer, there were no longer two adverse claimants to the account and federal jurisdiction was absent. Less than three weeks later, Mr. Schwartz followed up on his answer and motion by filing a motion to dismiss for lack of subject-matter jurisdiction. In that motion he argued that because he had filed a disclaimer there were not the two or more adverse claimants necessary for statutory-interpleader jurisdiction. The common thread in Mr. Schwartz’s answer, his motion in opposition to Wells Fargo’s motion to interplead funds, and his motion to dismiss for lack of jurisdiction was the proposition that his disclaimer eliminated the existence of two or more adverse claimants to the Wells Fargo account. Thus, as recognized by the district court, even if the disclaimer did not eliminate the possibility that Mr. Schwartz was raising a claim based on an alleged fiduciary status with Mesh Suture, the assertions in those three pleadings that there was only one claimant to the account necessarily excluded the possibility that he was a claimant in any capacity. His argument in all three pleadings depended on his having no interest in the account— personal, fiduciary, or otherwise—so that there was only one remaining claimant to the account. Mr. Schwartz’s effort to defeat jurisdiction failed. His disclaimer ended up being irrelevant in the district court’s analysis that it had jurisdiction over the interpleader suit. See supra note 4. The magistrate judge, however, relied on the 22 Appellate Case: 21-1262 Document: 010110672787 Date Filed: 04/19/2022 Page: 23 disclaimer to recommend dismissing Mr. Schwartz from the case, reasoning that he lacked standing as he disclaimed any interest in the Wells Fargo Account. Only then did Mr. Schwartz file his amended disclaimer asserting that he had disclaimed only his personal interest in the account. But the amended disclaimer did not benefit Mr. Schwartz. In the same order in which it recognized that Mr. Schwartz’s disclaimer did not defeat its jurisdiction, the district court refused to allow him to renege on his full disclaimer, holding that he remained bound by his answer. The district court did not abuse its discretion in ruling that Mr. Schwartz’s statements in his pleadings were binding judicial admissions that he had no interest in the Wells Fargo account. The Supreme Court has adopted Wigmore’s definition of “a judicial admission or stipulation” as an “express waiver made by the party or his attorney conceding for the purposes of the trial the truth of some alleged fact.” Standard Fire Ins. Co. v. Knowles, 568 U.S. 588, 592 (2013) (quoting 9 John Henry Wigmore, Evidence in Trials at Common Law § 2588, at 821 (Chadbourn rev. 1981)). Judicial admissions include “formal concessions in the pleadings” and “are ‘not evidence at all but rather have the effect of withdrawing a fact from contention.’” Keller v. United States, 58 F.3d 1194, 1198 n.8 (7th Cir. 1995) (quoting Michael H. Graham, Federal Practice and Procedure § 6726 (interim ed.)); see Meyer v. Berkshire Life Ins. Co., 372 F.3d 261, 264–65 (4th Cir. 2004) (“Judicial admissions are not . . . limited to affirmative statements that a fact exists. They also include intentional and unambiguous waivers that release the opposing party from its burden to prove the facts necessary to establish the waived conclusion of law.”); 2 Robert P. 23 Appellate Case: 21-1262 Document: 010110672787 Date Filed: 04/19/2022 Page: 24 Mosteller et al., McCormick on Evidence § 254 (8th ed. 2020) (Judicial admissions are “formal concessions in the pleadings in the case or stipulations by a party or counsel that have the effect of withdrawing a fact from issue and dispensing wholly with the need for proof of the fact.”). Thus, the Fifth Circuit has found conclusive a party’s admission that it was waiving any physical-injury claims, so the admission “could not be contradicted by [an] affidavit” that alleged physical injury. Martinez v. Bally’s La., Inc., 244 F.3d 474, 477 (5th Cir. 2001). In a similar vein the Fourth Circuit has found that a party’s admission that it was a fiduciary under the Employee Retirement Income Security Act precluded it from disputing its fiduciary status. See Meyer, 372 F.3d at 263–67, 266 n.4. Mr. Schwartz argues that the district court abused its discretion by not “resolv[ing] any confusion between” his answer and his amended disclaimer to find that he had not disclaimed all his interest. Aplt. Br. at 24. To be sure, “the trial court has discretion to avoid the consequence of conclusiveness of an admission.” Wigmore, supra, § 2590, at 823; see also Atlas Glass & Mirror, Inc. v. Tri-N. Builders, Inc., 997 F.3d 367, 373 (1st Cir. 2021) (“[D]istrict courts do retain broad discretion to relieve parties from the consequences of judicial admissions in appropriate cases.” (internal quotation marks omitted)). But courts will not relieve a party from the conclusive effect of its judicial admission absent “a showing of exceptional circumstances.”9 Ferguson v. Neighborhood Hous. Servs., of Cleveland, 9 Although Mr. Schwartz's admission was not elicited by a request for admission, matters admitted in response to a request for admission under Federal 24 Appellate Case: 21-1262 Document: 010110672787 Date Filed: 04/19/2022 Page: 25 Inc., 780 F.2d 549, 550–51 (6th Cir. 1986) (party was held to an admission in its answer that it was an employer within the meaning of the Fair Labor Standards Act and was prevented from filing a second answer shortly before trial to withdraw the admission); see also Cadle Co. II, Inc. v. Gasbusters Prod. I Ltd. P’ship, 441 F. App’x 310, 313 (6th Cir. 2011) (“[A]dmissions made during a deposition, absent exceptional circumstances, have been held to be binding on the parties as a judicial admission.”). Two examples of grants of relief are illustrative. In one, the court found it appropriate to relieve a party from the consequences of its admission when intervening events changed the factual context. See Haggard v. Bank of the Ozarks, Inc., 547 F. App’x 616, 618–19 (5th Cir. 2013) (bank was granted relief from an admission in its answer that the unpaid principal on a promissory note was $1.6 million, when several years had passed and the evidence showed that the current balance was no more than $500,000, thereby triggering the guarantor’s obligation). In the other case, the district court permitted the plaintiff to withdraw admissions of several allegedly undisputed facts set forth in the defendant’s motion for summary Rule of Civil Procedure 36 are treated as “conclusively established unless the court, on motion, permits the admission to be withdrawn or amended.” Fed. R. Civ. P. 36(b). Thus, “[i]n form and substance a Rule 36 admission is comparable to an admission in the pleadings or a stipulation drafted by counsel for use at trial.” Id. advisory committee’s note to 1970 amendment. The standard for determining whether such an admission may be withdrawn is explicitly provided by Rule 36(b): “Subject to Rule 16(e) [which provides that “the order issued after a final pretrial conference” may be modified “only to prevent manifest injustice”], the court may permit withdrawal or amendment if it would promote the presentation of the merits of the action and if the court is not persuaded that it would prejudice the requesting party in maintaining or defending the action on the merits.” 25 Appellate Case: 21-1262 Document: 010110672787 Date Filed: 04/19/2022 Page: 26 judgment. See Ciacciarella v. Bronko, 613 F. Supp. 2d 262, 265–67 (D. Conn. 2009) (Kravitz, J.). Because the plaintiff had repeatedly and consistently asserted facts contrary to the admissions, the court believed the assertions of plaintiff’s counsel that the plaintiff had played no role in the admissions and that counsel had misinterpreted the statements of undisputed facts as merely alleging what a witness testified to, not to the truth of the matter asserted (an error that the court considered understandable). See id. at 266–67. The court said that when an admission “is the result of fraud or mistake, the admission may not necessarily be binding,” id. at 266 (internal quotation marks omitted), and it granted relief because the defendant would not be prejudiced, see id. at 267. Mr. Schwartz has not cited an exceptional circumstance that would warrant relief from his judicial admission, nor could he: in his answer and other pleadings Mr. Schwartz clearly and deliberately disclaimed any interest in the account, and he relied on his total disclaimer to argue that he was no longer a claimant and that the district court did not have statutory-interpleader jurisdiction. His admission was not the result of his being defrauded or reasonably mistaken. Nor was a reasonable factual admission undermined by later events. Under these circumstances the district court did not abuse its discretion in enforcing the admission in Mr. Schwartz’s answer to the interpleader complaint. See Miller v. Eby Realty Grp. LLC, 396 F.3d 1105, 1116 (10th Cir. 2005) (reviewing decision to enforce a judicial admission for abuse of discretion). 26 Appellate Case: 21-1262 Document: 010110672787 Date Filed: 04/19/2022 Page: 27