Court Opinion

ID: 2648984
Source: CourtListenerOpinion
Date Created: 2014-01-13 21:18:32.58207+00
Date Added: 2024-06-11T12:55:17.985685
License: Public Domain

January 13 2014

                                          DA 13-0374

                IN THE SUPREME COURT OF THE STATE OF MONTANA
                                          2014 MT 7

GARY BATES,

              Plaintiff and Appellant,

         v.

SCOTT ANDERSON, MICHAEL BLIVEN,
and ANDERSON LAW OFFICE, PLLC,
and ANDERSON and BLIVEN, PLLC,

              Defendants and Appellees.

APPEAL FROM:            District Court of the Eleventh Judicial District,
                        In and For the County of Flathead, Cause No. DV 08-1498C
                        Honorable Heidi Ulbricht, Presiding Judge

COUNSEL OF RECORD:

                For Appellant:

                        Larry Jent; Williams & Jent, PLLP; Bozeman, Montana

                For Appellees:

                        J. Daniel Hoven, W. John Tietz; Browning, Kaleczyc, Berry &
                        Hoven, P.C.; Helena, Montana

                                                    Submitted on Briefs: November 20, 2013
                                                               Decided: January 13, 2014

Filed:

                        __________________________________________
                                          Clerk
Justice Patricia Cotter delivered the Opinion of the Court.

¶1       Gary Bates (Bates) appeals from the orders of the Eleventh Judicial District Court,

Flathead County, denying his motion to withdraw or amend his admissions and granting

the defendants’ motion for summary judgment. We reverse and remand.

¶2       A restatement of the dispositive issue on appeal is:

¶3       Did the District Court abuse its discretion in denying Bates’s motion to withdraw

or amend his deemed admissions under Rule 36(b), Montana Rules of Civil Procedure?

                   FACTUAL AND PROCEDURAL BACKGROUND

¶4       In September 1999, Bates, a Michigan resident, visited Montana for a hunting trip

organized by Koocanusa Outfitters. Koocanusa Outfitters was owned by Neven and

Debrah Zugg. On September 18, 1999, Bates was injured in a one-vehicle accident near

Libby, Montana. George Hogan, one of the Zuggs’ employees, was the driver of the

vehicle. Hogan was legally intoxicated at the time of the accident and ultimately pleaded

guilty to reckless driving.

¶5       On September 25, 1999, Bates entered into a fee agreement with the Anderson

Law Office, PLLC1 (Anderson Law Firm) to represent him for injuries arising out of the

accident. On May 5, 2000, upon advice of counsel, Bates entered into a settlement with

Hogan’s insurer and signed a release with the following provision:

                I release and forever discharge George Hogan [and] their [sic]
                principals, agents and representatives from any and all rights,
                claims, demands and damages of any kind, known or
                unknown, existing or arising in the future, resulting from or
                related to bodily injury arising from an accident that occurred

1
    Anderson Law Office, PLLC was later renamed Anderson & Bliven, PLLC.
                                               2
              on or about the 18 day of September, 1999, at or near Libby,
              MT.

¶6     On August 22, 2002, the Anderson Law Firm filed a complaint on behalf of Bates

against Neven Zugg, Debrah Zugg, Koocanusa Outfitters, and a number of the Zuggs’

other business entities and insurers (Zugg Defendants). On July 27, 2005, the Anderson

Law Firm filed a second amended complaint. The second amended complaint set forth

nine claims, including claims for negligence, vicarious liability, joint and several

liability/corporate veil, loss of consortium, breach of contract and bad faith, and a claim

under the Montana Dram Shop Act against the bar that had served Hogan. The bar was

owned by the Zuggs.

¶7     The Zugg Defendants filed a motion to dismiss five of the nine claims based on

the language of the release signed by Bates, and on December 22, 2005, the Nineteenth

Judicial Court, Lincoln County, entered an order dismissing the five claims. Bates’s

dram shop claim and claims for loss of consortium and joint and several

liability/corporate veil were not dismissed, and he ultimately settled these claims in 2011

after retaining other counsel.

¶8     On December 18, 2008, Bates commenced the present action by filing a complaint

against the Anderson Law Firm, Scott Anderson, and Michael Bliven (Anderson

Defendants). Bates alleged that the Anderson Defendants committed legal malpractice

when they advised Bates to sign the release, and that he was damaged in the loss of his

causes of action because of their breach of duty.

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¶9     On September 18, 2011, Bates settled his remaining claims with Elk Mountain

Outfitters/Elk Mountain Outfitters, LLC and alter egos Neven and Debrah Zugg, and with

Koocanusa Outfitters/Koocanusa Outfitters, LLC and Neven and Debrah Zugg in two

separate agreements. Each settlement provided for a partial judgment of $500,000 and

included a covenant not to execute against the Zuggs’ personal assets. The District Court

approved the settlements in December 2011. Because the Zuggs’ insurer, Colorado

Western Insurance Company, had been declared insolvent in 2005, the Montana

Insurance Guaranty Association stood in the shoes of Colorado Western. On February 3,

2012, Bates executed a release and settlement agreement with the Montana Insurance

Guaranty Association in consideration for the sum of $300,000.

¶10    On January 9, 2012, the Anderson Defendants served discovery requests on Bates.

The following were among the requests for admission: “Please admit that you have not

experienced any monetary damages as a result of the [c]ourt’s dismissing the vicarious

liability claims against the Zugg Defendants,” and “that the settlements you executed . . .

fully compensates [sic] you for all damages resulting from the automobile accident.”

¶11    One month later, Bates’s counsel requested an additional 30 days in which to

respond to the discovery requests. The Anderson Defendants agreed to the extension,

making the new deadline for responses March 9, 2012. On April 9, 2012, Bates’s

counsel requested an additional 30-day extension. The Anderson Defendants agreed to

the extension for the interrogatories and requests for production, but refused to grant an

extension for the requests for admission. Bates subsequently served verified discovery

responses on May 1, 2012. At no time did Bates seek leave from the District Court to

                                            4
extend the deadlines or give notice to the court of the parties’ agreements to extend the

statutory discovery deadlines. Bates conceded that his responses to the requests for

admission were not timely.

¶12   The Anderson Defendants moved for summary judgment on July 31, 2012, relying

in significant part on the argument that the requests for admission had not been timely

answered and were deemed admitted pursuant to M. R. Civ. P. 36 (Rule 36). Bates filed

a motion to withdraw or amend his admissions on August 21, 2012. The District Court

determined that the matters set forth in the requests for admission were automatically

deemed admitted and were conclusively established given Bates’s untimely response.

The court employed the two-prong test of Rule 36, and concluded that while granting

Bates’s motion would subserve the presentation of the merits of the case, it would

prejudice the Anderson Defendants. Thus, the court denied Bates’s motion. On the same

day, the court granted the Anderson Defendants’ motion for summary judgment. The

court concluded that there were no genuine issues of material fact because Bates provided

no evidence of uncompensated damages and because his failure to respond to the requests

for admission established that he had experienced no monetary damages and had been

fully compensated for all damages resulting from the automobile accident.

¶13   In June 2013, Bates filed his notice of appeal. On appeal, Bates alleges the

requests for admission were outside the proper scope of Rule 36. Alternatively, he

contends that the District Court incorrectly determined that the Anderson Defendants had

met their burden of proving prejudice because the prejudice inquiry should focus on

                                           5
whether the party will suffer prejudice in proving facts at trial. Bates also argues that

there was a factual dispute regarding whether he had been “fully compensated.”

¶14    The Anderson Defendants counter that the requests for admission were within the

permissible parameters of Rule 36. They argue the District Court did not abuse its

discretion in determining they would be prejudiced by Bates’s withdrawal of his

admissions, and that it was within the court’s discretion to deny Bates’s motion even if a

withdrawal would not have prejudiced the Anderson Defendants. They further argue that

the District Court correctly determined that Bates had no uncompensated damages.

¶15    In his reply brief, Bates argues that the cases the Anderson Defendants cite in their

brief were decided under the “old” Rule 36. Bates argues that a district court’s discretion

on motions to withdraw or amend admissions should not be unfettered.

                                   STANDARD OF REVIEW

¶16    We review a ruling on a pretrial discovery matter for an abuse of discretion.

Spooner Constr. & Tree Serv., Inc. v. Maner, 2000 MT 161, ¶ 24, 300 Mont. 268, 3 P.3d
641 (citation omitted).

¶17    We review a district court’s legal conclusions for correctness. Williams v. Bd. of

Co. Commrs., 2013 MT 243, ¶ 23, 371 Mont. 356, 308 P.3d 88.

                                      DISCUSSION

¶18    Did the District Court abuse its discretion in denying Bates’s motion to withdraw

or amend his deemed admissions under Rule 36(b), Montana Rules of Civil Procedure?

¶19    Rule 36(a)(1) provides that “[a] party may serve on any other party a written

request to admit” the truth of certain matters. If the receiving party fails to respond to the

                                              6
request within 30 days, or within such other time as the court may allow, the matter is

deemed admitted.       Rule 36(a)(3).     Once a matter is admitted, it “is conclusively

established unless the court, on motion, permits the admission to be withdrawn or

amended.” Rule 36(b). “[T]he 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.” Rule 36(b). This is the first time we have interpreted Montana’s new Rule 36,

which was enacted in 2011. Because the new Rule 36 is modeled on Rule 36 of the

Federal Rules of Civil Procedure,2 federal authority on the issue is instructive. See Muri

v. Frank, 2001 MT 29, ¶ 12, 304 Mont. 171, 18 P.3d 1022 (“Montana’s Rule 60(a) is

modeled on Rule 60(a) of the Federal Rules of Civil Procedure; thus, we look to

interpretation of the Federal Rules for guidance.”).

¶20    Bates first argues that these admissions improperly sought to eliminate the legal

element of damages. The Anderson Defendants counter that the requests for admission

were within the permissible parameters of the rule because an issue of fact relevant to a

party’s claim properly may be the subject of a request for admission, even if the request

for admission seeks to eliminate factual issues that go to the necessary elements of a

claim. We agree that the requests for admission were not objectionable.                 Rule 36

provides that a request may be made to admit any matters within the scope of discovery

2
  The only difference between Montana’s Rule 36 and the federal rule is that Montana Rule
36(a)(3) includes the following phrase: “unless the court shortens the time, a defendant shall not
be required to serve answers or objections before the expiration of 45 days after service of the
summons and complaint upon that defendant.”
                                                7
relating to statements or opinions of fact or of the application of law to fact. Fed. R. Civ.

P. 36(a) advisory comm. n. (1970 amendments) (requests for admissions of law related to

the facts of the case are proper); See W. Bay Builders, Inc. v. U.S., 80 Fed. Cl. 700, 703

(2008) (“[A] request for admission is ‘not objectionable even if [it] require[s] opinions or

conclusions of law, as long as the legal conclusions relate to the facts of the case.

Requests to admit pure conclusions of law unrelated to facts in the case are

objectionable.”) (citation omitted). No issue or fact is specially immune from a request

for admission. Hersch v. Commr., 63 T.C.M. 2763, 1992 Tax Ct. Memo LEXIS

256, 10 (1992) (“There is no basis in the rule for these comments [that Rule 36 of the

Federal Rules of Civil Procedure is not intended to be used to cover the entire case] and

no discernible reason for such a limitation . . . . It was precisely for the purpose of

forcing the parties to eliminate such [a central] issue unless there is some substantial

reason [for] supposing that it might be resolved in their favor that Rule 36 was adopted.”)

(citations omitted). Because we conclude the requests for admission were within the

proper scope of Rule 36, we next consider whether the District Court properly applied

Rule 36’s two-prong test.

¶21    With regard to the first Rule 36(b) factor, the District Court found that “[g]ranting

Plaintiff’s motion to amend or withdraw his admissions to deny the matters therein would

subserve the presentation of the merits of the case since the admissions clearly eliminate

the allegation of damages in the Complaint,” and that “[t]he first part of the two-part test

. . . favors permitting Bates to amend the admissions.” We agree. The admissions at

issue conceded core elements of Bates’s case, and allowing the admissions to be

                                             8
withdrawn would subserve the presentation of the merits of the action. Indeed, once the

admissions were deemed admitted, the District Court granted summary judgment in favor

of the Anderson Defendants, precluding adjudication on the merits of Bates’s claim.

¶22    The second Rule 36(b) factor obligates the party who obtained the admission to

prove that withdrawal of the admission would prejudice the party’s case. Hadley v. U.S.,

45 F.3d 1345, 1348 (9th Cir. 1995). The District Court concluded that the Anderson

Defendants would be prejudiced because they had relied on the admissions as the basis

for their motion for summary judgment.           However, mere inconvenience does not

constitute prejudice for the purpose of Rule 36. “The prejudice contemplated by Rule

36(b) is not simply that the party who obtained the admission now has to convince the

jury of its truth. Something more is required.” Raiser v. Utah Co., 409 F.3d 1243, 1246

(10th Cir. 2005) (quotation omitted). “The prejudice contemplated by Rule 36(b) . . .

relates to the difficulty a party may face in proving its case, e.g., caused by the

unavailability of key witnesses, because of the sudden need to obtain evidence with

respect to the questions previously deemed admitted.”         Raiser, 409 F.3d at 1246

(quotation omitted). “In particular, ‘preparing a summary judgment motion in reliance

upon an erroneous admission does not constitute prejudice.’” Raiser, 409 F.3d at 1246

(quotation omitted); FDIC v. Prusia, 18 F.3d 637, 640 (8th Cir. 1994); Conlon v. U.S.,

474 F.3d 616, 624 (9th Cir. 2007) (“We agree with the other courts that have addressed

the issue and conclude that reliance on a deemed admission in preparing a summary

judgment motion does not constitute prejudice.”) (internal citations omitted).

                                             9
¶23    Nothing in the record shows that the Anderson Defendants suffered prejudice

sufficient to bar amendment of Bates’s admissions. Though the responses were untimely

and “no litigant should ignore deadlines established by applicable rules, . . . more than a

failure to meet deadlines is required to deny a party relief from an admission.” Raiser,
409 F.3d at 1247. In this case, Bates provided the responses well before the close of

discovery, the District Court had not yet entered a scheduling order, and no trial date had

been set. But see 999 v. C.I.T. Corp., 776 F.2d 866, 869-70 (9th Cir. 1985) (The district

court did not abuse its discretion in finding prejudice when the moving party sought

withdrawal in the middle of trial and the other party had nearly rested its case.); Conlon,
474 F.3d at 624 (The district court did not clearly err in finding that withdrawal of the

deemed admissions would prejudice the government when trial was imminent and “the

government relied on the admissions for a total of two and a half months, through the

discovery and dispositive motion cut-off dates, with no indication that Conlon intended to

file a motion to withdraw his admissions.”).       Without more, any prejudice to the

Anderson Defendants occasioned by preparing their motion for summary judgment based

on the admissions was insufficient to foreclose withdrawal or amendment of the

admissions. The Anderson Defendants have failed to prove prejudice, and thus, the

second prong of the Rule 36 test was not met.

¶24    The Anderson Defendants argue that it was within the discretion of the District

Court to deny Bates’s motion to withdraw his admissions even if Bates did show that the

Anderson Defendants would not be prejudiced by the withdrawal. They argue that a

district court has the discretion to deny a request for leave to withdraw or amend an

                                            10
admission even when the two Rule 36(b) factors are met because the text of Rule 36 is

permissive. The District Court in Conlon addressed this argument, stating:

       Although the rule itself is permissive, the Advisory Committee clearly
       intended the two factors set forth in Rule 36(b) to be central to the analysis.
       Accordingly, a district court’s failure to consider these factors will
       constitute an abuse of discretion. See Gutting v. Falstaff Brewing Corp.,
       710 F.2d 1309, 1313 (8th Cir. 1983) (“[T]he district court erred in not
       considering the factors set out in [R]ule 36(b).”). However, in deciding
       whether to exercise its discretion when the moving party has met the two-
       pronged test of Rule 36(b), the district court may consider other factors,
       including whether the moving party can show good cause for the delay and
       whether the moving party appears to have a strong case on the merits.

Conlon, 474 F.3d at 625.

¶25    District courts have discretion in ruling on motions to withdraw or amend

admissions, but such discretion is not unfettered. See Perez v. Miami-Dade Co., 297 F.3d
1255, 1265 (11th Cir. 2002). Like other courts, “we read Rule 36(b) as granting a district

court discretion but then specifying exactly how that discretion is to be exercised.”

Perez, 297 F.3d at 1265; See Asea, Inc. v. S. Pac. Transp. Co., 669 F.2d 1242, 1248 (9th

Cir. 1981) (“A per se rule that the district court must permit withdrawal of an admission

which relates to an important or dispositive matter is inappropriate . . . . [However,] [i]n

a proper case, of course, such as when an admission has been made inadvertently, Rule

36(b) might well require the district court to permit withdrawal.”); Mid Valley Bank v. N.

Valley Bank, 764 F. Supp. 1377, 1391 (E.D. Cal. 1991) (“[A]lthough the motion is, as the

parties acknowledge, directed to the sound discretion of the court, . . . the discretion

should not be exercised in terms of the defaulting party’s excuses, but in terms of the

effect upon the litigation and prejudice to the resisting party.”); In re Durability Inc., 212

                                             11
F.3d 551, 556 (10th Cir. 2000) (“The court’s focus must be on the effect upon the

litigation and prejudice to the resisting party rather than . . . on the moving party’s

excuses for an erroneous admission.”) (internal citation and quotation marks omitted). In

this case, the District Court abused its discretion when it rejected the motion to withdraw

or amend the admissions premised solely upon an erroneous interpretation of the type of

prejudice contemplated by Rule 36(b).

¶26    Notwithstanding the result we reach here, we agree with the Conlon court that

some discretion is left to the district court even where the Rule 36(b) factors are met.

Had the court concluded that Bates’s dilatoriness caused undue delay in the pre-trial

proceedings and/or constituted an abuse of the judicial process, and denied his motion to

withdraw or amend his admissions on these grounds, we would be constrained to take

these considerations into account in determining whether the court’s action constituted an

abuse of discretion. However, because the court here erroneously relied on the Anderson

Defendants’ filing of the motion for summary judgment as the sole basis for its finding of

prejudice, we conclude that the court abused its discretion.

¶27    Based upon the foregoing, we conclude the District Court abused its discretion by

refusing to allow Bates to withdraw or amend his admissions. We therefore remand for

reconsideration of the Anderson Defendants’ motion for summary judgment following

the court’s revision of its order on Bates’s motion to withdraw or amend. We decline to

reach the other issues Bates raises on appeal, as resolution of these issues by the District

Court stemmed directly from its erroneous resolution of issue one.

                                            12
                                     CONCLUSION

¶28    For the foregoing reasons, we reverse and remand for further proceedings in

accordance with this opinion.

                                                 /S/ PATRICIA COTTER

We concur:

/S/ MIKE McGRATH
/S/ LAURIE McKINNON
/S/ BETH BAKER

Justice Jim Rice, dissenting.

¶29    The Court’s general analysis about Rule 36 is correct, but, ultimately, I believe the

facts require a different conclusion regarding prejudice, and would affirm. Bates first

missed the agreed-upon discovery deadline on March 9, 2012. Bates did not act promptly

regarding this violation, waiting until April 9 to request another extension from the

Defendants.    The Defendants agreed only to extend the deadline with regard to

interrogatories and requests for production, but refused with regard to the requests for

admission. Had Bates then promptly moved to withdraw his admissions, the Court’s

analysis would apply, and withdrawal would be favored. However, Bates did nothing.

He sought no relief from the District Court. Over three more months later, on July 31,

Defendants moved for summary judgment, citing the admissions—which by then had

been pending for almost five months without any action by Bates. Still, Bates did not act

promptly. Another three weeks passed before Bates moved to withdraw his admissions,

on August 21, 2012.

                                            13
¶30    In its order denying withdrawal of the admissions, the District Court first found

that “[a]t no time did Plaintiff’s counsel file a notice with the Court of the parties’

agreements to extend the statutory discovery limits or seek the Court’s leave to extend the

deadlines,” and noted that Plaintiff had conceded his responses were not timely. In its

conclusions of law, the District Court concluded that “[w]hen Defendants did not agree to

more time, Plaintiff was required by [M. R. Civ. P. 36(a)(3)] to seek an order from the

Court. Plaintiff did not do this and did not answer the requests for admission until two

months beyond the first extension agreed to by the Defendants, four months after first

being served with the requests.” It further reasoned that “Plaintiff never asked the Court

for leave to file a late response to the requests for admission and did not seek to withdraw

or amend his admissions until, five months after they had been deemed admitted,

Defendants moved for summary judgment. Defendants had a right to rely on the matters

in those requests being deemed conclusively established and did so. . . .” The court noted

that the Plaintiff’s “belated” actions forced the Defendants to defend against Plaintiff’s

motion to withdraw admissions at a time when, five months later, it was already litigating

summary judgment in reliance, to which they were entitled, upon the admissions.

¶31    I acknowledge Raiser’s holding that the mere filing of a summary judgment

motion by an opposing party in reliance on an erroneous admission does not constitute

the prejudice necessary to support denial of a motion to withdraw the admissions. See

Opinion, ¶ 22. However, in my view, more is at issue here. Bates’ initial failure to

answer the requests for admissions, followed by his continuing dilatoriness, shifted this

litigation to a new course—one based upon his admissions to key questions—for a

                                            14
lengthy period of time. Bates did not seek relief from the District Court when the

Defendants refused to agree to extend the deadline.          He waited and did not seek

withdrawal until over five months after missing the deadline, and then only after the

Defendants had moved for summary judgment. I would not conclude that withdrawal of

the admissions was required under these circumstances. Bates’ lack of diligence wasted

extensive time of the parties and the judiciary. It sidetracked the litigation for almost six

months. I believe this case is closer to Conlon, where the consequences of a two-and-a-

half-month delay in seeking withdrawal were significant enough to warrant denial.

¶32    I would conclude that the District Court did not abuse its discretion and affirm.

                                                  /S/ JIM RICE

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