Morrison v. Comm'r of Internal Revenue , Docket No. 28476–81.

• Decision Date: 27 September 1983
• Docket Number: Docket No. 28476–81.
• Citation: 81 T.C. 644,81 T.C. No. 37
• Parties: ROGER B. MORRISON AND SUSAN T. MORRISON, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: U.S. Tax Court

81 T.C. 644

81 T.C. No. 37

ROGER B. MORRISON AND SUSAN T. MORRISON, Petitioners

v.COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 28476–81.

United States Tax Court

Filed September 27, 1983.

Held, petitioners' motion under Rule 90(c), Tax Court Rules of Practice and Procedure, to enlarge the time in which to answer respondent's request for admissions, will be denied as such and also as a motion under Rule 90(e) to withdraw or modify deemed admissions. Held, further, respondent's motion for summary judgment under Rule 121 will be granted. Joseph W. Weigel, for the petitioners.

James M. Klein, for the respondent.

OPINION

SHIELDS, Judge:

Respondent determined that there was a deficiency of $975 in the income tax due from the petitioners for 1978. The deficiency resulted from the respondent's disallowance of a miscellaneous deduction claimed by the petitioners in the amount of $13,089 allegedly paid by them for information, advice and/or forms to be used in establishing a so-called family trust.

On November 23, 1981, the petitioners who were then residents of Illinois filed a petition in this Court seeking a redetermination of the deficiency. The petitioners, however, failed to set forth in their petition a clear and concise assignment of the errors and a clear and concise statement of the facts upon which they rely as required by Rule 34(b).¹ In fact, in this respect, the petition is so broad and indefinite that it could apply to almost any deficiency notice.²

On January 25, 1982, respondent filed an answer to the petition and thereafter pursuant to Rule 91 the respondent attempted to informally confer with counsel for the petitioners in order to ascertain the specific issues involved and in order to develop and stipulate where possible the pertinent facts. Failing in this attempt the respondent then served a request for admissions upon counsel for the petitioners pursuant to Rule 90(a).

In his request for admissions, respondent erroneously referred to the source of the trust materials as being Educational Scientific Publisher. In order to correct this error, respondent served on counsel for petitioners a second request for admissions in which he changed all references to Educational Scientific Publisher in the first request to Family Estate Publishers. The first request was served on March 31, 1982 and the second request was served on May 10, 1982.

On August 2, 1982, the respondent filed a motion under Rule 121 for summary judgment based in large part upon facts deemed to be admitted under Rule 90(c) because petitioners had failed to answer the requests for admissions within the 30 days provided by Rule 90(c). Respondent's motion was calendared for hearing on September 20, 1982. At the hearing, counsel for petitioners appeared in opposition to respondent's motion and also filed at that time a motion for enlargement of the time within which he could file an attached answer to respondent's requests for admissions. Respondent objected to the motion for enlargement of time and thereafter counsel for each party filed a memorandum brief in support of his motion and in opposition to the motion of the other party. Respondent also filed an affidavit in support of his motion.

The issues for our consideration and the order in which they will be considered are as follows: (1) Should the 30-day period provided by Rule 90(c) for filing an answer to a request for admissions be enlarged after such period has expired so as to permit the petitioners' answer to be filed? (2) If the 30-day period is not enlarged, should the motion by petitioners be considered as a motion under Rule 90(e) to withdraw or modify the deemed admissions and, if so, is this a proper case in which to allow withdrawal or modification? (3) Under the circumstances, is the respondent entitled to summary judgment?

Motion for Enlargement of Time—Rule 90(c)

Petitioners contend that their motion to enlarge the time for filing an answer to the request for admissions can still be granted because under Rule 90(c) the answer can be filed within 30 days “or within such shorter or longer time as the Court may allow.” They also point to Rule 25(c) which states that “[u]nless precluded by statute, the Court in its discretion may make longer or shorter any period provided by these Rules.” From the quoted portions of Rules 90(c) and 25(c) petitioners argue that we have discretionary authority to enlarge the time for filing an answer to the requests for admissions even though the 30 days provided by Rule 90(c) has expired. Their view of Rule 90 as set forth in their brief is as follows:

[I]f a party fails to obey an order made by the Court with respect to Rule 90 the Court can make such orders as to the failure as are just including an order that the designated facts be taken as established, etc. Counsel's point is that the Rules with respect to sanctions for discovery generally contemplate first of all an application to the Court by the party making the discovery; then a Court order to comply; and only if the other party fails to comply with the Court order, sanctions including establishment of the designated facts. * * *

We have previously considered and rejected petitioners' argument. In Freedson v. Commissioner, 65 T.C. 333 (1975), affd. on another issue 565 F.2d 954 (5th Cir. 1978), we pointed out that Rule 90(c) was adapted from Rule 36(a) of the Federal Rules of Civil Procedure (Fed. R. Civ. P.) and that Rule 36(a) “has been interpreted to require affirmative action to avoid an admission. If no answer or objection is made within the time prescribed by the rule or the time fixed by the Court, the statements in the request are deemed admitted without the entry of any order by the Court.” We then concluded that “Rule 90 of the Rules of this Court contemplates that a party's failure to respond to a request will result automatically in the admission of the statements in the request without the necessity of a confirming order.” Freedson v. Commissioner, supra at 334–336.

From the foregoing it is apparent that each statement set forth in respondent's requests for admissions was deemed to be admitted upon the expiration of the 30 days provided by Rule 90(c). Since the 30-day period expired long before the petitioners' motion to enlarge the time was filed, the motion is untimely and will be denied.

Motion to Withdraw or Modify Admissions—Rule 90(e)

The petitioners, however, have correctly pointed out that under Rule 90(e) we may on motion permit the “withdrawal or modification of the admission.” Rule 90(e) was derived from and in content is almost identical to Rule 36(b), Fed. R. Civ. P. An untimely motion under Rule 36(a), Fed. R. Civ. P., to enlarge the time for filing an answer or an objection has been treated as a motion under Rule 36(b), Fed. R. Civ. P., to withdraw or modify a deemed admission. See Warren v. International Brotherhood of Teamsters, 544 F.2d 334 (8th Cir. 1976); United States v. Cannon, 363 F.Supp. 1045 (D. Del. 1973). We, therefore, shall consider petitioners' untimely motion for an enlargement of time under Rule 90(c) as a motion under Rule 90(e) to withdraw or modify the deemed admissions. Rule 1(a). We consider this to be the preferred method in treating a motion such as that filed herein.

Rule 90(e) provides that an admission may be withdrawn or modified (1) if the withdrawal or modification would subserve the presentation of the merits of the case, and (2) if the party obtaining the admission (the respondent in this case) “fails to satisfy the Court that the withdrawal or modification will prejudice him in prosecuting his case or defense on the merits.” With regard to the first criterion, it is apparent that the presentation of the merits in this case would be subserved by withdrawing the deemed admissions. This is true because there is only one issue and the deemed admissions deal specifically with the key facts in the case, such as whether petitioners paid certain amounts to Family Estate Publishers and for what purposes such amounts were paid. These facts would be subject to contest if the deemed admissions were withdrawn. Westmoreland v. Triumph Motorcycle Corp., 71 F.R.D. 192 (D. Conn. 1976); Pleasant Hill Bank v. United States, 60 F.R.D. 1 (W.D. Mo. 1973). In the absence of a withdrawal or modification there would be no factual dispute as pointed out hereinafter with respect to respondent's motion for summary judgment.

The question of whether respondent would be prejudiced by the withdrawal is more complicated. Our Rule 90, like Rule 36, Fed. R. Civ. P., contemplates that a party can depend on the admissions which he or she has secured because it provides a means to conclusively establish the facts covered by the requested admissions. The 1970 Advisory Committee's Notes to Rule 36(b), Fed. R. Civ. P., make this clear:

* * * Unless the party securing an admission can depend on its binding effect, he cannot safely avoid the expense of preparing to prove the very matters on which he has secured the admission, and the purpose of the rule is defeated.

As a result, in determining the matter of prejudice, we should not “lightly weigh the burdens of establishing admissions” on a party, such as the respondent in this case, who properly uses Rule 90 to advance litigation initiated by the opposing party. Weva Oil Corp. v. Belco Petroleum Corp., 68 F.R.D. 663 (N.D. W. Va. 1975). Neither should we find prejudice merely because the party obtaining the admissions is forced to pursue his case on the merits. See Warren v. International Brotherhood of Teamsters, supra. Contra Kirkland v. Cooper, 438 F.Supp. 808 (D. S.C. 1977).

A party will be prejudiced by the withdrawal of admissions if he has relied on them and will suffer delay, added expense, and additional effort because of the withdrawal. For example, in Weva Oil Corp. v. Belco Petroleum Corp., supra, the court refused to allow the late filing of answers to requested...