F. W. Means & Co. v. Carstens

• Decision Date: 25 November 1981
• Docket Number: No. 3-181A23,3-181A23
• Citation: 428 N.E.2d 251
• Parties: F. W. MEANS & COMPANY, Appellant (Plaintiff Below), v. Thomas W. CARSTENS, et al. Appellees (Defendants Below).
• Court: Indiana Appellate Court

Page 251

428 N.E.2d 251

F. W. MEANS & COMPANY, Appellant (Plaintiff Below), v. Thomas W. CARSTENS, et al. Appellees (Defendants Below).

No. 3-181A23.

Court of Appeals of Indiana, Third District.

Nov. 25, 1981.

Christopher Kirages, Dutton, Kappes & Overman, Indianapolis, Robert Parrish, Peters, Terrill, Parish & Larson, Fort Wayne, Sidney L. Rosenfeld, pro hac vice, Solomon, Rosenfeld, Elliott, Stiefel & Abrams, Ltd., Chicago, for appellant.

Edward L. Murphy, Jr., William P. Fagan, Richard P. Samek, Livingston, Dildine, Haynie & Yoder, Fort Wayne, for appellees.

STATON, Judge.

F. W. Means & Company (Means) instituted an action against its former employee, Thomas J. Carstens, and Carstens' new employer, Coverall Rental Service, Inc. (Coverall), based upon issues involving breach of a restrictive employment contract, inducement of that breach, and the misuse of Means' business confidential information. The trial court granted summary judgment in favor of the defendants and Means raises the following issues for our review: ¹

(1) Whether the responses to requests for admission established Means had suffered no actual damages;

(2) Whether Means was entitled to injunctive relief after the term of the restrictive employment contract had expired; and,

(3) Whether the trial court erred in denying Means leave to amend its complaint.

We reverse the summary judgment upon the first issue.

Means is in the business of supplying and cleaning uniforms, towels and linens for institutional, industrial and commercial customers. Coverall is in the same business and competes with Means in portions of Indiana. Carstens was an employee of Means for approximately twenty-eight years during which time he held several key management positions. In 1975, Carstens entered a new employment contract with Means. The contract provided that during his employment with Means, and for a period of two years thereafter, Carstens would not enter into competition with Means, nor divulge any of the confidential information of Means. ²

In 1978, Carstens quit his employment with Means and entered into employment with Coverall to fill a key management position. Means filed a complaint against Carstens and Coverall alleging breach of contract and inducement thereof. In addition to damages, Means sought an injunction to prevent Carstens' employment with Coverall for the two year period following his termination of employment with Means. More than two years after the complaint was filed, the trial court granted summary judgment in favor of the defendants:

"(T)he Court finds (1) That the contract between Plaintiff and Defendant, Carstens, contains a restrictive covenant for period of 2 years which period began upon his termination of employment on 3/12/78 and expired on 3/12/80; (2) That Plaintiff requested in its complaint a temporary injunction upon filing this case on 6/14/78; (3) That a temporary injunction hearing was set on 7/17/78; (4) That by consent of all parties the temporary injunction hearing was continued; (5) That Plaintiff has never requested a resetting or hearing on said temporary injunction; (6) That by the admissions of Plaintiff, Plaintiff has not sustained any actual damage; (7) That punitive damages are not recoverable in the absence of actual damages, therefore Defendants are entitled to judgment as matter of law. Defendants granted summary judgment that Plaintiff take nothing by its complaint against the Defendants. Plaintiff's motion for leave to amend complaint is hereby denied."

Thus, the trial court found Means not entitled to injunctive relief as a matter of law and that Means had "admitted" it was without actual damages. Thereafter, the trial court denied Means leave to amend its complaint.

I. Requests for Admission

The defendants filed requests for Means to "admit for the purpose of the pending litigation only the truth to the ... allegations." Each allegation, in essence, requested Means to admit it was "not aware of any facts which indicate ..." ³ that the defendants had wrongfully used the confidential information of Means. Means so admitted "qualified" by the further statements that it was without "information or knowledge" as to whether such alleged facts were true. ⁴ Upon motion the trial court ruled that these were not good faith answers and ordered the requests be deemed admitted without qualification. ⁵ The court then ruled these "admissions" established that Means had suffered no actual damages. That ruling was in error.

The fact that Means admitted it was not "aware" of a "fact" which might be essential to its cause of action at trial can not be equated with an admission that the "fact" did not exist. More compelling, the admission that Means was not "aware" of facts indicating defendants' wrongful acts can not be equated with an admission that Means had not suffered actual damages. The error here addressed arose, we believe, out of a lack of understanding of the function of two of the Ind. Rules of Procedure, Trial Rules 36 and 56.

The essential function of a TR. 36 request for admission is to establish a "fact." 3 Harvey, Indiana Practice-Rules of Procedure Annotated, 36.1 (1970); 4A Moore's Federal Practice, PP 36.01 et seq. (1981); 8 Wright & Miller, Federal Practice and Procedure, §§ 2251 et seq. (1970). Generally, the fact to be established is the genuineness of a document or the truth of the statement propounded in the request. The request for admission is not a mechanism and used to discover a "fact."

"Strictly speaking Rule 36 is not a discovery procedure at all, since it presupposes that the party proceeding under it knows the facts or has the document and merely wishes his opponent to concede their genuineness. If a party desires to discover what the facts are, he should resort to other discovery rules rather than Rule 36."

8 Wright & Miller, supra, at § 2253.

The essential characteristic of this "non-discovery" mechanism is that the request for admission is a "close-ended" inquiry. ⁶ That is, the request for admission requires by either admission or denial, an answer which is unambiguous, unequivocal and without the evasion often characteristic of answers to depositions and interrogatories. However, this "close-ended" characteristic places a burden upon the requesting party as well as the answering party.

It is true the answering party must admit or deny the statement of fact propounded in the request, ⁷ and if the answering party admits to the statement of fact, TR. 36(B) provides that: "Any matter admitted under this rule is conclusively established...." ⁸ See, Bolen v. Mid-Continent Refrigerator Co. (1980), Ind.App., 411 N.E.2d 1255. Therefore, once admitted, the TR. 36 "fact" is settled for all purposes of that cause of action. The need to prove such "fact" at trial is eliminated. 3 Harvey, supra, at 36.1; 4A Moore's, supra, at P 36.08; 8 Wright & Miller, supra, at §§ 2253, 2264. Thus, TR. 36 squarely places a burden upon the answering party to establish a "fact" for the requesting party's cause of action. ⁹ This burden is unfairly increased when the request for admission propounds a statement of fact which lacks clarity, is ambiguous, or which otherwise might mislead the answering party. ¹⁰

What may at times be overlooked is the burden upon the party requesting the admission which directly corresponds to the burden placed upon the answering party. The burden upon the requesting party is to artfully draft the statement of fact contained in the request for admission. That statement must be precise, unambiguous and in no way mislead the answering party. ¹¹ The drafting of the statement of fact is controlled exclusively by the requesting party. Therefore, fairness demands that any error arising out of inartful drafting be borne by the requesting party.

We believe the defendants did not fairly meet their burden in drafting the requests for admission. The complaint alleged the wrongful use by defendants of Means' confidential information. The defendants requested Means to admit it was not "aware" of facts indicating such wrongful use. Means did no more in its response than directly answer that request and admit a lack of knowledge of such information. This was no more than a candid admission that at a date nearly two years after it had filed its complaint Means was decidedly ill-prepared upon an essential issue to its pleaded cause of action.

The defendants did not request an admission that there was no wrongful use of the information nor that Means had suffered no actual damages. These requests and admissions established no such "facts." The "open-ended" requests propounded by the defendants would have been more properly pursued under the traditional discovery mechanisms of depositions and interrogatories.

We sympathize with the trial court in the present cause of action. That court was faced with protracted and burdensome pretrial proceedings. These proceedings included a plethora of motions with lengthy supporting and opposing briefs, with numerous hearing regarding claims, counter-claims, amended claims and counter-claims, discovery orders and protective orders to limit discovery, and summary judgments. Then, nearly two years after the complaint was filed which alleged wrongful use of confidential information, Means admitted it was "not aware of any fact indicating ..." such wrongful use. However sympathetic, ¹² this Court must keep ever present before it the proper role of the summary judgment proceedings under TR. 56.

The purpose underlying the summary judgment procedure is to terminate those causes of action which have no factual dispute and which may be determined as a matter of law. This procedure is an aid in eliminating undue burdens upon litigants and exposing spurious causes. However, the summary judgment procedure must be applied with extreme caution so that a party's right to the fair determination of a genuine issue is not jeopardized. Bassett v. Glock (1977)...