Court Opinion

ID: 3100536
Source: CourtListenerOpinion
Date Created: 2015-10-16 05:04:41.177149+00
Date Added: 2024-06-11T09:45:38.352090
License: Public Domain

Fourth Court of Appeals
                                     San Antonio, Texas
                                             OPINION
                                        No. 04-13-00420-CV

                       TIME WARNER, INC. and Time Warner Cable, LLC,
                                      Appellants

                                                   v.

                                        Dulio GONZALEZ,
                                              Appellee

                     From the 166th Judicial District Court, Bexar County, Texas
                                  Trial Court No. 2011-CI-06770
                          Honorable John D. Gabriel, Jr., Judge Presiding

Opinion by:       Catherine Stone, Chief Justice

Sitting:          Catherine Stone, Chief Justice
                  Marialyn Barnard, Justice
                  Luz Elena D. Chapa, Justice

Delivered and Filed: June 11, 2014

REVERSED AND REMANDED

           This appeal arises from a personal injury lawsuit brought by Dulio Gonzalez against Time

Warner, Inc. and Time Warner Cable, LLC (Time Warner). In two issues on appeal, Time Warner

contends the trial court erred in: (1) denying its request to withdraw deemed admissions; and (2)

awarding pre-judgment interest. We sustain Time Warner’s first issue, reverse the trial court’s

judgment, and remand the cause to the trial court for a new trial. Because our resolution of Time

Warner’s first issue is dispositive of this appeal, we do not address Time Warner’s second issue.

See TEX. R. APP. PROC. 47.1.
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                                                   BACKGROUND

         In the underlying lawsuit, Gonzalez alleged that he suffered injury when he tripped on an

exposed cable in his backyard that was negligently installed or maintained by Time Warner. In

Gonzalez’s original and amended petitions, Gonzalez included requests for admission related to

liability and damages. 1 Time Warner timely answered the lawsuit with an unverified denial,

asserting that Time Warner, Inc. and Time Warner Cable, LLC were not proper parties to the

lawsuit, but rather Time Warner Cable San Antonio, L.P. (Time Warner San Antonio) was the

only proper party.

         Time Warner San Antonio responded to the requests for admission originally sent to Time

Warner. In subsequent pleadings, Time Warner repeated that Time Warner San Antonio was the

proper defendant, not Time Warner; however, these pleadings were not verified. See TEX. R. CIV.

P. 93(2) (requiring that a pleading asserting “that the defendant is not liable in the capacity in

which he is sued” be verified by affidavit).

         After a jury was selected but before opening statements, Gonzalez first made a motion to

nonsuit Time Warner San Antonio. Then, for the first time, Gonzalez argued that his requests for

admission were deemed admitted because they were never answered by Time Warner. Although

Gonzalez acknowledged that Time Warner San Antonio responded to the requests, Gonzalez noted

that Time Warner San Antonio was not, and had never been, a party to the lawsuit. 2 Because the

deemed admissions established liability and the amount of damages, Gonzalez requested a

1
  Gonzalez requested that Time Warner admit that: (1) it “failed to maintain the premises at issue in a reasonable safe
condition;” (2) it “knew that the exposed cable at the premises at issue presented a dangerous condition;” (3) “in the
exercise of reasonable diligence, [Time Warner] should have discovered that there was an unreasonably dangerous
condition within the premises at issue prior to the incident;” (4) there “were complaints of dangerous conditions within
the premises at issue prior to the incident;” (5) its “negligence was the proximate cause of the occurrence in question;”
(6) Gonzalez “did not commit any act of negligence that caused this incident;” (7) Gonzalez was injured “as the result
of a dangerous condition created by [Time Warner];” and (8) as a result of that injury, Gonzalez “incurred $900,000
in damages.”
2
  We note that this argument appears to be inconsistent with Gonzalez’s motion to nonsuit Time Warner San Antonio.

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judgment against Time Warner for $900,000. In response to Gonzalez’s request, Time Warner

argued that Time Warner San Antonio was a party to the suit because in Time Warner’s answer

and subsequent pleadings, Time Warner stated that Time Warner San Antonio was the only proper

defendant. Time Warner also made a request to withdraw the deemed admissions. After the trial

court denied Time Warner’s request, the parties agreed to waive the jury and proceed to a bench

trial. The trial court entered a final judgment against Time Warner, awarding Gonzalez $900,000

in damages plus interest and costs.

                                      STANDARD OF REVIEW

       A request for admission is a “written request[] that the other party admit the truth of any

matter within the scope of discovery . . . .” TEX. R. CIV. P. 198.1. “If a response is not timely

served, the request is considered admitted without the necessity of a court order.” TEX. R. CIV. P.

198.2(c). An admitted matter is “conclusively established as to the party making the admission

unless the court permits the party to withdraw or amend the admission.” TEX. R. CIV. P. 198.3. A

trial court has discretion to permit a party to withdraw an admission if: (a) the party shows good

cause for the withdrawal; (b) the court finds that the other party will not be unduly prejudiced; and

(c) presentation of the lawsuit’s merits is served by the withdrawal. See id.; Cleveland v. Taylor,

397 S.W.3d 683, 694 (Tex. App.—Houston [1st Dist.] 2012, pet. denied).

       We review a trial court’s decision to permit or deny withdrawal of deemed admissions for

an abuse of discretion. Stelly v. Papania, 927 S.W.2d 620, 622 (Tex. 1996) (per curiam). “An

abuse of discretion occurs when a court acts without reference to guiding rules or principles, or

acts arbitrarily or unreasonably.” Id. Texas Rule of Civil Procedure 198.3 provides the “guiding

rules or principles” the trial court must follow when ruling on a request to withdraw deemed

admissions. See id. at 621. Additionally, when due process concerns are raised by deemed

admissions which act as a merits-preclusive sanction, the trial court must follow the guiding rules

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and principles established by Wheeler v. Green, 157 S.W.3d 439 (Tex. 2005) (per curiam). In re

Rozelle, 229 S.W.3d 757, 763 (Tex. App.—San Antonio 2007, orig. proceeding).

                                      DEEMED ADMISSIONS

   A. Good Cause

       “Good cause” can be shown when a party’s failure to answer “was accidental or the result

of a mistake, rather than intentional or the result of conscious indifference.” Stelly, 927 S.W.2d at

622. “Even a slight excuse will suffice, especially when delay or prejudice to the opposing party

will not result.” In re Kellogg-Brown & Root, Inc., 45 S.W.3d 772, 775 (Tex. App.—Tyler 2001,

orig. proceeding) (quoting Spiecker v. Petroff, 971 S.W.2d 536, 538 (Tex. App.—Dallas 1997, no

pet.)). Good cause also exists when due process concerns are implicated by deemed admissions

that act as a merits-preclusive discovery sanction, absent bad faith or callous disregard on the part

of the party requesting withdrawal. Marino v. King, 355 S.W.3d 629, 634 (Tex. 2011) (per

curiam).

   1. Merits-Preclusive Effect

       In Wheeler, the Texas Supreme Court first held that when deemed admissions are not used

as intended and “preclude presentation of the merits of a case, . . . due-process concerns arise.”
157 S.W.3d at 443 (citing TransAmerican Natural Gas Corp. v. Powell, 811 S.W.2d 913, 917–18

(Tex. 1991)). Requests for admission are intended to simplify trials by “addressing uncontroverted

matters or evidentiary ones like the authenticity or admissibility of documents . . . .” Id. They are

not intended to require a defendant to admit the validity of a plaintiff’s claims or concede his

defenses. Marino, 355 S.W.3d at 632. Nor are they intended to be used as “traps for the unwary.”

Stelly, 927 S.W.2d at 622; see also Marino, 355 S.W.3d at 632 (“requests for admission should be

used as ‘a tool, not a trapdoor’”) (quoting U.S. Fid. & Guar. Co. v. Goudeau, 272 S.W.3d 603,

610 (Tex. 2008)).

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          Gonzalez contends that the deemed admissions do not raise due process concerns because

Time Warner had the opportunity to enter evidence, but chose not to do so. The requests for

admission concerned Time Warner’s liability, its defense of contributory negligence, and the

amount of damages. The trial court indicated on the record that it would not allow Time Warner

to introduce evidence conflicting with the deemed admissions. 3 Because of the breadth of the

admissions, Time Warner was essentially precluded from offering any relevant evidence. In

addition to the deemed admissions, Gonzalez introduced the entire depositions of Gonzalez,

Gonzalez’s wife, and Gonzalez’s doctors.                When Time Warner re-urged the objections it

previously made to various parts of the depositions, the trial court immediately overruled all of the

objections, citing the existence of the deemed admissions. Based on this record, it is clear that the

trial court’s decision to render judgment in favor of Gonzalez was based solely on the deemed

admissions conclusively establishing the ultimate legal issues in the case. Accordingly, because

the requests for admission were not used as intended, and had a merits-preclusive effect, the

resulting due process concerns establish good cause for their withdrawal. See Marino, 355 S.W.3d

at 634.

    2. Flagrant Bad Faith or Callous Disregard

          Because the deemed admissions in this case were merits-preclusive, thereby raising due

process concerns, the trial court was required to allow their withdrawal unless the party requesting

withdrawal acted with “flagrant bad faith or callous disregard of the rules.” Wheeler, 157 S.W.3d

at 443. “Bad faith is not simply bad judgment or negligence, but the conscious doing of a wrong

3
  The trial court stated: “So I think procedurally I need to let [Gonzalez’s counsel] proceed. He’s got deemed
admissions. You filed general denials as to those two defendants, so I mean, I – I guess [Time Warner’s counsel] gets
to cross examine them. But I guess he just can’t offer any other evidence on his part, is what I am seeing.”

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for dishonest, discriminatory, or malicious purpose.” Armstrong v. Collin Cnty. Bail Bond Bd.,

233 S.W.3d 57, 63 (Tex. App.—Dallas 2007, no pet.).

       As a preliminary matter, the parties dispute who bore the burden to prove that Time Warner

acted with bad faith or callous disregard. Time Warner argues the burden rests with Gonzalez,

citing Marino. Conversely, Gonzalez contends that the burden was on Time Warner, as the party

requesting withdrawal, to prove that it did not act with bad faith or callous disregard.

       Ordinarily, the burden of showing good cause and no undue prejudice lies with the party

seeking withdrawal of deemed admissions. Boulet v. State, 189 S.W.3d 833, 836 (Tex. App.—

Houston [1st Dist.] 2006, no pet.). When the due process concerns recognized in Wheeler are

implicated, however, the Texas Supreme Court has stated that the burden lies with the summary

judgment movant. Marino, 355 S.W.3d at 634. Because the party moving for summary judgment

based on deemed admissions would logically be the party opposing withdrawal of those

admissions, we read Marino to place the burden on the party opposing withdrawal. This is

consistent with other forms of discovery sanctions, where the burden of proving bad faith rests

with the party seeking sanctions. GTE Commc’ns Sys. Corp. v. Tanner, 856 S.W.2d 725, 731

(Tex. 1993) (orig. proceeding); Dike v. Peltier Chevrolet, Inc., 343 S.W.3d 179, 184 (Tex. App.—

Texarkana 2011, no pet.). Accordingly, we hold that Gonzalez had the burden of proving that

Time Warner acted with bad faith or callous disregard.

       Time Warner contends that Gonzalez offered no evidence to establish that it acted with bad

faith or callous disregard. Time Warner concedes that it made a mistake by not substituting the

correct party as a defendant by a verified pleading, but argues this mistake does not rise to the level

of flagrant bad faith or callous disregard. Gonzalez, on the other hand, contends that Time Warner

acted in flagrant bad faith because it intentionally answered discovery on behalf of an entity that

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had not been sued and that Time Warner callously disregarded the rules of civil procedure when it

failed to take the proper procedural steps to verify its denial.

       The record contains no evidence establishing that Time Warner acted with bad faith or

callous disregard of the rules of procedure. At most, the record establishes that Time Warner was

negligent in failing to properly substitute the correct defendants as parties. Time Warner fully

participated in litigating the case for two years, including responding to discovery requests,

developing evidence, and participating in mediation. There is no evidence to suggest that Time

Warner knew of its mistake prior to the day of trial, when Gonzalez brought it to its attention.

Accordingly, we hold that Gonzalez failed to establish that Time Warner acted with flagrant bad

faith or callous disregard. See Smith v. Nguyen, 855 S.W.2d 263, 267 (Tex. App.—Houston [14th

Dist.] 1993, writ denied) (attorney’s mistaken belief concerning active parties to lawsuit resulting

in missed deadlines did not amount to callous disregard).

   B. Undue Prejudice

       Notwithstanding good cause for withdrawal, we must also consider whether the withdrawal

would have caused Gonzalez undue prejudice. See Wheeler, 157 S.W.3d at 444 (holding that

deemed admissions raised due process concerns but also considering undue prejudice); see also

Marino, 355 S.W.3d at 634 (same); but see Thomas v. Select Portfolio Servicing, Inc., 293 S.W.3d
316, 321 (Tex. App.—Beaumont 2009, pet. denied) (holding trial court abused its discretion by

not permitting withdrawal of deemed admissions implicating due process concerns but not

addressing undue prejudice). “Undue prejudice depends on whether withdrawing an admission or

filing a late response will delay trial or significantly hamper the opposing party’s ability to prepare

for it.” Wheeler, 157 S.W.3d at 443. Gonzalez contends that withdrawal of the deemed admissions

would have caused undue prejudice because he chose not to develop evidence in reliance on the

deemed admissions. Citing Morgan v. Timmers Chevrolet, Inc., 1 S.W.3d 803 (Tex. App.—

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Houston [1st Dist.] 1999, pet. denied), Gonzalez argues that he was entitled to rely on the deemed

admissions in this manner as the basis for his trial strategy.

       Time Warner responds that Gonzalez suffered no undue prejudice because his choice to

forego depositions and rely solely on the deemed admissions was a “situation of his own creation.”

Time Warner contends that Gonzalez was not unable to prepare for trial, he simply chose to not

prepare for trial based on his planned use of a discovery trap.

       In Morgan, the plaintiff brought a premises liability claim against his employer. 1 S.W.3d

at 804. The plaintiff served the defendant with thirty-four requests for admission, but the defendant

answered only eighteen. Id. at 805. When the plaintiff brought this error to the defendant’s

attention, the defendant responded again with a copy his previous response containing only

eighteen responses. Id. When the plaintiff attempted to admit the fifteen unanswered requests as

deemed admissions at trial, the defendant moved to withdraw them. Id. Although the plaintiff

explained that he chose not to take certain depositions based on the evidence established by the

deemed admissions, the trial court permitted the defendant to withdraw the deemed admissions.

Id. at 805–806.

       On appeal, the court of appeals reversed the trial court. The court of appeals did not decide

whether good cause existed for withdrawal, but noted the error was brought to the defendant’s

attention prior to trial, which weighed against a finding of good cause. Id. at 807. The court then

held that the plaintiff suffered undue prejudice because he relied on the deemed admissions in

deciding not to develop evidence to support the deemed facts. Id. The court held the plaintiff

“[was] entitled to rely on the guiding rules and principles set out in the Rules of Civil Procedure

regarding deemed admissions.” Id.

       As the Morgan case illustrates, “[u]ndue prejudice has generally been found in those

instances in which a party waited until the day of trial or after to request the withdrawal of deemed

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admissions.” Watson v. Dallas Indep. Sch. Dist., 135 S.W.3d 208, 215 (Tex. App.—Dallas 2004),

overruled on other grounds by, Univ. of Tex. Med. Branch at Galveston v. Barrett, 159 S.W.3d
631 (Tex. 2005) (per curium). In those instances, the party relies on the deemed admissions in

deciding not to take depositions or otherwise develop evidence to support the deemed facts.

Morgan, 1 S.W.3d at 807 n.5. If the trial court allows the deemed admissions to be withdrawn,

the party relying on them would need additional time to develop the evidence, and the delay in

trial would cause undue prejudice. Likewise, undue prejudice results because that party is denied

an opportunity to develop necessary evidence, hampering its ability to prepare for trial. See Reyes

v. Int’l Metals Supply Co., 666 S.W.2d 622, 625 (Tex. App.—Houston [1st Dist.] 1984, no writ.)

(defendant suffered undue prejudice where plaintiff requested withdrawal of deemed admissions

after trial was underway because defendant “had no reason to be prepared to offer proof” of the

facts deemed admitted).

       Morgan, however, significantly pre-dated Wheeler and did not address any merits-

preclusive due process concerns. Additionally, the court of appeals that decided Morgan has since

declined to apply its reasoning in holding that a party is not unduly prejudiced when deemed

admissions, which improperly “embrace controverted issues that go to the heart of [the] case,” are

withdrawn during trial. In re A.A., No. 01-13-00542-CV, 2013 WL 6569922, at*15 (Tex. App.—

Houston [1st Dist.] Dec. 12, 2013, no pet. h.) (mem. op.).

       We find the analysis in In re A.A. to be instructive. The primary purpose of requests for

admission is “to simplify trials by eliminating matters about which there is no real controversy,

but which may be difficult or expensive to prove.” Stelly, 927 S.W.2d at 622 (quoting Sanders v.

Harder, 148 Tex. 593, 227 S.W.2d 206, 208 (1950)); accord Marino, 355 S.W.3d at 632. Requests

for admission are useful when “addressing uncontroverted matters or evidentiary ones like the

authenticity or admissibility of documents.” Wheeler, 157 S.W.3d at 443. They were “never

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intended to be used as a demand upon a plaintiff or defendant to admit that he had no cause of

action or ground of defense.” Stelly, 927 S.W.2d at 622 (quoting Sanders, 227 S.W.2d at 208).

Therefore, requests for admission are improper and ineffective when used to establish controverted

issues that constitute the fundamental legal issues in a case. Cedyco Corp. v. Whitehead, 253
S.W.3d 877, 880 (Tex. App.—Beaumont 2008, pet. denied) (reversing summary judgment based

on deemed admission concerning which party was the “sole legal owner” of a judgment); see

Boulet, 189 S.W.3d at 838 (admission improper because it was a “fundamental issue[] to be tried,”

holding the rule regarding requests for admission does not “contemplate or authorize admissions

to questions involving points of law”); Lucas v. Clark, 347 S.W.3d 800, 804 (Tex. App.—Austin

2011, pet. denied) (request that opposing party admit that he suffered ten million dollars in

damages was improper, holding “overly broad, merit-preclusive requests for admission[] are

improper and may not result in deemed admissions”).

       When the party requesting admissions knew or should have known that the admissions

were improper in this regard, that party cannot be said to have relied on the admissions in deciding

not to otherwise develop evidence. While that party may be prejudiced by the withdrawal of the

admissions during the trial, that prejudice is not “undue.” See Marino, 355 S.W.3d at 632 (holding

that plaintiff’s request that defendant admit to the validity of plaintiff’s claims and concede the

defendant’s defenses, matters the plaintiff “knew to be in dispute,” were improper); see also Wells

v. Best Ins. Servs., Inc., No. 13-09-00236-CV, 2010 WL 4264792, at*5 (Tex. App.—Corpus

Christi Oct. 28, 2010, no pet.) (mem. op.) (finding no undue prejudice where the party propounding

the deemed admissions did not conduct discovery in reliance on deemed admissions because that

party was aware of the opposing party’s contradictory legal positions based on the pleadings); see

also Thompson v. Woodruff, 232 S.W.3d 316, 322 (Tex. App.—Beaumont 2007, no pet.) (finding

no undue prejudice and considering that the defendant propounding the deemed admissions “could

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not have been misled into thinking” that the plaintiff was admitting that the defendant was not

negligent when that proposition was clearly inconsistent with the plaintiff’s pleadings); see also

Employers Ins. of Wasau v. Halton, 792 S.W.2d 462, 467 (Tex. App.—Dallas 1990, writ denied)

(considering a party’s knowledge that issues were controverted in finding no undue prejudice).

       In this case, Gonzalez sought admissions that Time Warner’s negligence was the proximate

cause of Gonzalez’s injuries and that Gonzalez was not negligent—controverted legal issues that

completely established Gonzalez’s negligence claim and completely negated Time Warner’s

contributory negligence defense. Because these requests for admission were improper, Gonzalez

was not justified in relying on them in deciding not to develop evidence to support his claim.

Accordingly, we hold that Gonzalez was not “unduly” prejudiced by the withdrawal of the deemed

admissions.

   C. Presentation of the Merits

       Lastly, the trial court must consider whether the “presentation of the merits of the action

will be subserved by permitting the party to amend or withdraw the admission.” TEX. R. CIV. P.

198.3. Presentation of the merits is not served when “the case is decided on deemed (but perhaps

untrue) facts . . . .” Wheeler, 157 S.W.3d at 443 n.2. As discussed, the merits of this case were

never truly litigated because the case was decided on deemed admissions. There is no question

that presentation of the merits would have been served by the trial court’s withdrawal of the

deemed admissions. See In re Kellogg-Brown & Root, Inc., 45 S.W.3d at 777 (considering that

the admissions at issue would “vitiate any substantive defense” the party might have had in

concluding that presentation of the merits will be served). Accordingly, the trial court abused its

discretion when it denied Time Warner’s request to withdraw the deemed admissions.

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                                               WAIVER

       Gonzalez argues that Time Warner did not preserve error on the deemed admissions issue

because it failed to obtain a ruling from the trial court on its motion for leave to file late discovery

responses. Gonzalez points to no authority, however, requiring such a motion in order to preserve

a complaint that a trial court abused its discretion in denying a request to withdraw deemed

admissions. A request to withdraw deemed admissions is sufficient to “make the trial court aware

of the complaint.” TEX. R. APP. PROC. 33.1(a)(1)(A); see Wheeler, 157 S.W.3d at 442. On the

record, Time Warner’s counsel requested “that the Court undeem the admissions.” Later, during

the same proceeding, Time Warner’s counsel made reference to this objection. In response, the

trial court stated: “Based on where we are today I will overrule the objection.” Accordingly, we

hold that Time Warner preserved error on the deemed admissions issue.

                                             CONCLUSION

       In conclusion, we hold that the trial court abused its discretion when it denied Time

Warner’s request to withdraw the deemed admissions. The record contains evidence establishing

that Time Warner had good cause for the withdrawal because the deemed admissions acted as

merits-preclusive sanctions that raised due process concerns. Gonzalez would not have been

unduly prejudiced by relying on improper requests for admission, and presentation of the merits

would have been served by withdrawal of the admissions. The trial court’s judgment is reversed

and the cause is remanded for a new trial.

                                                    Catherine Stone, Chief Justice

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