CHAPTER 10 - 10-9 Expenses for Failure to Admit: The "Admit-or-Pay" Rule
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10-9 Expenses for Failure to Admit: The "Admit-or-Pay" Rule
A requesting party may invoke the "admit-or-pay" rule of Texas Rule 215.4(b) for an unjustified refusal to admit a request for admission. That is, a responding party who fails to admit a matter or the genuineness or authenticity of a document can be ordered to pay the requesting party's reasonable expenses, including attorneys' fees, incurred in proving the matter or document's authenticity. Texas Rule 215.4(b) provides, in full:
If a party fails to admit the genuineness of any document or the truth of any matter as requested under [Texas] Rule 198 and if the party requesting the admissions thereafter proves the genuineness of the document or the truth of the matter, he may apply to the court for an order requiring the other party to pay him the reasonable expenses incurred in making that proof, including reasonable attorney fees. The court shall make the order unless it finds that (1) the request was held objectionable pursuant to [Texas] Rule 193, or (2) the admission sought was of no substantial importance, or (3) the party failing to admit had a reasonable ground to believe that he might prevail on the matter, or (4) there was other good reason for the failure to admit.270
The obvious purpose of the "admit-or-pay" rule is to increase the parties' incentive to respond properly and in good faith to appropriate requests for admission because they can eliminate unnecessary proof at trial, streamline discovery and motion practice, and reduce pretrial expenses.271 Texas Rule 215.4(b), however, does not apply if the responding party fails to respond to a request for admission because such a failure results in the automatic sanction of the request being deemed admitted.272
The Texas Supreme Court has made clear that [Texas] Rule 215.4 generally does not apply to merits-preclusive requests for admission. As explained by the Court in Medina v. Zuniga, a case in which a trial court awarded expenses under the Rule when the defendant, after denying merits-preclusive requests for admissions in a negligence case arising out of an automobile accident, conceded liability for ordinary negligence at trial while contesting liability for gross negligence:273
The same due-process concerns that arise in the deemed-admission context also come up when a trial court sanctions a party under Rule 215.4 for denying merits-preclusive requests for admissions. The sanction here—requiring Medina to pay Zuniga's reasonable expenses and attorney's fees—is admittedly lighter than a merits-preclusive deemed admission. Medina was, after all, allowed to defend the lawsuit as he wanted, including his concession of ordinary negligence at trial. But he should have been able to do so without the prospect of Rule 215.4 sanctions waiting in the wings.
It is axiomatic that the plaintiff bears the burden to prove the defendant's negligence. It cannot follow that the defendant who puts the plaintiff to her burden should later face sanctions for not admitting what he was entitled to deny. Our rules do not, strictly speaking, prohibit merits-preclusive requests for admissions. But due process nevertheless limits the extent to which sanctions can attach to denials of those requests. Simply put, merits-preclusive requests for admissions that carry the threat of sanctions risk putting the responding party to an impossible choice: give up your case now or face sanctions later. Worse, the responding party typically will be put to this election long before any significant discovery has occurred, leaving him unable to make an informed decision on whether to concede or contest liability.
That is not how our system works. Just as a defendant may answer the claims against him with a general denial, he may also deny a merits-preclusive request for admission for which the other party bears the burden of proof. The very nature of the request provides the respondent "good reason" for failing to admit. Likewise, absent present knowledge that he will later concede he acted negligently, a defendant acting in good faith when responding to requests for admissions may maintain that his conduct was consistent with the ordinary standard of care. This is especially true at the outset of discovery. In this case, Medina decided at trial to concede negligence he had thus far denied. He was entitled to base this decision on how various aspects of the case had turned out—discovery, pre-trial rulings, jury selection, etc. And he was entitled to do so without fear he would be unduly punished for defending himself at the case's outset.274
Expenses under Texas Rule 215.4(b) may be awarded only if the requesting party proves the genuineness of the document or the truth of the matter asked about in the request for admission.275 Because the Rule uses the word "shall," an expense award is mandatory unless the court finds one of the Rule's four exceptions apply.276
The first exception—the request was held objectionable under Texas Rule 193—is self-evident. No adverse consequences can stem from an objection or privilege assertion to a request for admission that was either sustained by the trial court or not challenged by the requesting party.277 The responding party, however, cannot defend against an award of expenses on the basis that had it objected, the objection would have been sustained.278
The second exception—the admission sought was of no substantial importance—also is self-evident. A matter is of "substantial importance" when it is material to the action's resolution.279 Of course, this determination depends upon the action's facts. For example, if the requesting party was required by the controlling law to prove the matter to prevail on its claim or defense, the request relates to a matter of substantial importance.280 Conversely, if the matter was not essential to the requesting party's success, it was not of substantial importance.281 A matter concerning a party's or a key witness's credibility is one of substantial importance.282
The third exception—the responding party had a reasonable ground to believe it might prevail on the matter—is the one most commonly invoked. The test is not whether the responding party prevailed, but whether it had a reasonable belief that it might prevail.283 This exception preserves both the party's right to its day in court and the "American rule" that each party bears its own attorneys' fees.
As the word "reasonably" suggests, the test is objective, and a court should reject a responding party's at tempt to invoke the exception if there was too little evidence to permit a rational fact finder to resolve the matter in the responding party's favor. The exception has been invoked successfully in actions involving substantially conflicting evidence,284 complicated legal or factual issues,285 and cases in which the parties' credible experts disagreed.286 It also applies when summary judgment or a directed verdict on the matter has been denied.287 And, the Texas Supreme Court has made clear that a party has the right to deny merits-preclusive requests for admission without fear that sanctions under Texas Rule 215.4 will be imposed later.288
The final exception—there was other good reason for the failure to admit—is undefined and left to the trial court's discretion. Perhaps the best example is when the responding party did not have, and could not have obtained through reasonable inquiry, sufficient information to admit the request for admission.289 Such a party would not fall under the third exception because it would not know if it could prevail and thus could not have had a reasonable belief that it might prevail. Because such an "inability-to-admit-or-deny" response is expressly permitted by Texas Rule 198.2(b), it would be anomalous if a responding party were found liable for the requesting party's expenses if it so answered and the requesting party never challenged the answer's sufficiency.290
The good-reason exception also applies where the request was improper because it related to a pure question of law or otherwise is improper on its face.291
Although federal courts uniformly hold that a motion for expenses for failure to admit a request for admission is premature if it is made before the trial's completion or a summary judgment,292 it is unclear whether this is the rule in Texas. The lack of clarity stems from the Texas Supreme Court's decision in Meyer v. Cathey.293
In that case, the plaintiff, during his pretrial deposition and in answers to requests for admission, maintained that a resume previously given to the defendant was accu-rate.294 Thereafter, the defendant deposed several individuals whose testimony contradicted the resume's assertions.295 At trial, the plaintiff admitted not only that his resume contained many inaccuracies, but also that he lied when questioned about them during his deposition. Several weeks after the trial court rendered its final judgment, the defendant moved for sanctions under Texas Rule 215.3, which provides for sanctions for discovery abuse, and Texas Rule 215.4(b).296 The trial court granted the motion and awarded $25,978.73 as sanctions.297
On appeal, the Texas Supreme Court, without distinguishing between the two rules, held that the trial court abused its discretion in awarding the sanctions.
Under our decision Remington Arms Co. [v. Caldwell, 850 S.W.2d 167, 170 (Tex. 1993) (per curiam),] waiver bars a trial court from awarding post trial sanctions based on pretrial conduct of which a party "was aware" before trial; lack of "conclusive evidence" is not an excuse. Here, the [plaintiff] was clearly aware of [the defendant's] discovery misconduct before trial: he obtained pretrial deposition testimony that directly contradicted [the defendant's] deposition testimony and other discovery responses. Accordingly, by not objecting prior to trial, [the plaintiff] waived his sanctions claim.298
Significantly, the Court in Meyer failed...
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