Gutting v. Falstaff Brewing Corp.

• Decision Date: 29 June 1983
• Docket Number: No. 82-1778,82-1778
• Citation: 710 F.2d 1309
• Parties: Virginia M. GUTTING, Appellant, v. FALSTAFF BREWING CORPORATION, a Delaware corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1309

710 F.2d 1309

Virginia M. GUTTING, Appellant, v. FALSTAFF BREWING CORPORATION, a Delaware corporation, Appellee.

No. 82-1778.

United States Court of Appeals,

Eighth Circuit.

Submitted April 13, 1983.

Decided June 29, 1983.

David G. Dempsey, Shifrin, Treiman, Barken, Dempsey & Ulrich, St. Louis, Mo., for appellant.

Shepherd, Sandberg & Phoenix, P.C., Steven P. Sanders, St. Louis, Mo., for appellee Falstaff Brewing Corp.

Before LAY, Chief Judge, and McMILLIAN and JOHN R. GIBSON, Circuit Judges.

LAY, Chief Judge.

Virginia M. Gutting appeals from an order of the district court, the Honorable William L. Hungate presiding, entering summary judgment in favor of Falstaff Brewing Corporation and denying her motion for summary judgment. Gutting's primary argument on this appeal is based on the claim that the district court erred in denying her motion for leave to file answers out of time to Falstaff's request for admissions and in ordering the matters set forth in the request deemed admitted. Gutting further contends that regardless of the admissions Falstaff has violated certain provisions of the Employee Retirement Income Security Act of 1974 (ERISA), and the district court erred in denying her motion for summary judgment on the issue of liability. Because we conclude that the district court erred by not allowing Gutting to file late answers to the request for admissions, we reverse and remand. 541 F.Supp. 345 (D.C.1982). We do not reach Gutting's ERISA argument.

Virginia Gutting is the widow of Ferdinand (Ferd) J. Gutting, former member of the Board of Directors and President of Falstaff. In 1972 Falstaff established an insurance plan for certain key employees. Pursuant to this plan, in January 1973, Ferdinand Gutting entered into a written agreement with Falstaff entitled Employee's Death Benefit Agreement. The purpose of the agreement was to provide for Falstaff's payment of a death benefit to Virginia Gutting, Ferd Gutting's designated payee. Falstaff purchased three life insurance policies on Ferd Gutting's life to secure this obligation. The agreement provided that all benefits would be forfeited if (1) the life insurance policies were contested successfully by the insurance company; (2) the employee left Falstaff's employment voluntarily, subject to certain vesting provisions; or (3) the employee was discharged "for proper cause."

In early 1975, Paul Kalmanovitz purchased voting control of Falstaff and became Chairman of the Board. ¹ Subsequently, for reasons in dispute in this lawsuit, Ferd Gutting's employment with Falstaff was terminated and the Board of Directors voted to deny Ferd Gutting all benefits because his termination was for cause. Ferd Gutting died in December 1980. Falstaff has refused to pay the amounts due to Virginia Gutting pursuant to the terms of the Employee's Death Benefit Agreement and she brought suit to recover the proceeds. Throughout this litigation Falstaff has asserted as an affirmative defense that Ferd Gutting was terminated for cause and thus forfeited all benefits due his beneficiary under the agreement. Virginia Gutting claims the termination was not for "proper cause" as that term is defined in the agreement.

Procedural History.

Virginia Gutting filed a complaint on July 8, 1981, through her attorney James S. McClellan. On September 30, 1981, Falstaff filed a motion to disqualify McClellan because he formerly had been a member of Falstaff's Board of Directors and outside general counsel to Falstaff. Falstaff asserted that McClellan had material, firsthand knowledge of events relevant to Falstaff's defense and that McClellan would likely be called as a witness. While the motion to disqualify was pending, on October 13, 1981, Falstaff filed its request for admissions, first interrogatories, and request for production of documents. ² Thereafter, the district court held a conference at which McClellan indicated he would withdraw voluntarily. On December 4, 1981, McClellan formally withdrew.

On December 11, 1981, Harry B. Wilson entered his appearance on behalf of Gutting. On January 4, 7, and 8, 1982, Falstaff served notices of 15 depositions to begin on February 8 in Providence, Rhode Island, and to continue throughout February and early March around the country. On January 7 counsel for Falstaff, Steven P. Sanders, sent a letter to Harry Wilson concerning the failure to respond to the request for admissions and asking for the answers. Wilson and Sanders discussed the request over the telephone several days later and Sanders agreed to wait an indefinite period of time.

According to an affidavit filed by Wilson he began to prepare for the upcoming depositions and to draft responses to discovery requests on January 29, 1982. Wilson further swore that on January 30 he concluded his firm had a serious conflict of interest because some of the scheduled deponents were current clients of the firm. These clients had on-going litigation matters with Falstaff. ³ Wilson researched the nature of the conflict, discussed it with lead counsel in the case, and called Sanders on February 6, 1982, to inform him of the conflict of interest. On February 8 Wilson appeared before the district court and requested leave to withdraw. The motion evidently was pending throughout February and the scheduled depositions for February were postponed.

Falstaff alleges that on February 27, 1982, Wilson again telephoned Sanders to advise him that the depositions scheduled for the following week would have to be canceled. Sanders refused, in part due to a March 15 trial setting, and both parties appeared in court on March 1. Wilson sought a protective order asking the court to postpone the March 2 and 3 depositions because of his conflict of interest. The court indicated the depositions would not be delayed unless new counsel for Gutting entered an appearance. Later the same day, Gutting's third attorney, David G. Dempsey, entered his appearance and the depositions were postponed one day. The court granted Wilson leave to withdraw and continued the trial setting until June 7, 1982.

On April 9, 1982, Dempsey filed several motions on behalf of Gutting, including a motion for leave to file answers to the request for admissions out of time. On the same date, Falstaff filed a motion for summary judgment on the theory that all fact issues in the case had been admitted by Gutting's failure to make a timely response to the request. On April 21, the court denied Gutting's motion for leave to file the answers and delayed ruling on Falstaff's summary judgment motion. The case was still scheduled to proceed to trial on June 7, 1982, and Falstaff chose to proceed with 11 scheduled discovery depositions. On May 28, 1982, the district court granted Falstaff's summary judgment motion. The court ruled there was no genuine issue of material fact that the death benefits had been properly withheld under the terms of the agreement because the matter of Ferd Gutting's termination for cause had been deemed admitted. The court also ruled in Falstaff's favor on the ERISA issue, holding that the forfeiture provisions of the Death Benefit Agreement were not void. ⁴

Discussion.

1. Prejudice to Falstaff.

Falstaff's request for admissions was filed pursuant to rule 36(a) of the Federal Rules of Civil Procedure. Rule 36(a) provides in part that each matter requested is deemed admitted unless the responding party serves a written answer or objection within 30 days. The court may allow a shorter or longer time for response. Because the district court has the power to allow a longer time, courts and commentators view this to mean that the court, in its discretion, may permit the filing of an answer that would otherwise be untimely. See, e.g., Moosman v. Joseph P. Blitz, Inc., 358 F.2d 686, 688 (2d Cir.1966); Pleasant Hill Bank v. United States, 60 F.R.D. 1, 2-3 (W.D.Mo.1973); 8 C. Wright & A. Miller, Federal Practice and Procedure Sec. 2257, at 719-20 (1970). Therefore, the failure to respond in a timely fashion does not require the court automatically to deem all matters admitted. See Finman, The Request for Admissions in Federal Civil Procedure, 71 Yale L.J. 371, 432 (1962). But see Luick v. Graybar Electric Co., 473 F.2d 1360, 1362 (8th Cir.1973) (unanswered request render matters requested conclusively established). Similarly, the granting of a motion to file the answers out of time is limited by the court's discretion.

This court discussed the proper limits of a court's discretion for allowing late answers to a request for admissions in Warren v. International Brotherhood of Teamsters, 544 F.2d 334, 339-40 (8th Cir.1976). In Warren counsel for defendant misread the time limits in rule 36(a) and filed the answers 15 days late, one day after trial had begun. The district court first deemed the matters admitted, but allowed the defendants to introduce evidence. In a post-trial opinion the district court ruled that the matters would not be deemed admitted and that the introduction of evidence was proper. On appeal this court agreed with the district court that Pleasant Hill Bank v. United States, 60 F.R.D. at 3, set out the applicable law. The Pleasant Hill court determined that a late response was equivalent to a withdrawal of an admission. It then adopted the test announced in rule 36(b) for permitting withdrawal of admissions as the test to determine whether late answers should be allowed. Rule 36(b) states in pertinent part: "[T]he court may permit withdrawal or amendment when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice him in maintaining his action or defense on the merits."

Other courts have applied the same test. See, e.g., Herrin v. Blackman, 89 F.R.D. 622, 623-24 (W.D.Tenn.1981); St. Regis Paper Co. v. Upgrade Corp., 86 F.R.D. 355, 357 (W.D.Mich.1980) (granting def...