Riley v. Northern Commercial Co., Machinery Div., 5754

• Decision Date: 30 July 1982
• Docket Number: No. 5754,5754
• Citation: 648 P.2d 961
• Parties: John T. RILEY, d/b/a Shamrock Excavating, Appellant, v. NORTHERN COMMERCIAL COMPANY, MACHINERY DIVISION, Appellee.
• Court: Alaska Supreme Court

Page 961

648 P.2d 961

John T. RILEY, d/b/a Shamrock Excavating, Appellant, v. NORTHERN COMMERCIAL COMPANY, MACHINERY DIVISION, Appellee.

No. 5754.

Supreme Court of Alaska.

July 30, 1982.

James H. McCollum and W. Richard Fossey, Bankston & McCollum, Anchorage, for appellant.

Phillip Eide, Ely, Guess & Rudd, Anchorage, for appellee.

Before BURKE, C. J., RABINOWITZ, CONNOR, MATTHEWS and COMPTON, JJ.

OPINION

COMPTON, Justice.

Northern Commercial Company (NC) filed suit on November 3, 1978 against John T. Riley d/b/a Shamrock Excavating (Riley) to collect amounts due on a promissory note. Riley denied owing the full indebtedness, and in addition, filed a counterclaim to recover amounts owed on an unrelated transaction. Following Riley's failure to file a timely response to certain requests for admissions, the superior court granted NC's motion for summary judgment on the promissory note claim. Subsequently, the superior court also granted NC's motion for summary judgment on the contractual counterclaim. On appeal, Riley's principal argument is that each claim presents triable issues of fact. We also address application of Civil Rule 36 and the award of prejudgment interest.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Promissory Note Claim

On December 12, 1975, Riley executed a promissory note for $51,209.20 in favor of NC. The note liquidated Riley's existing account with NC for services and supplies previously rendered. Ninety-five invoices, none of which are signed by Riley, provided full consideration for the note.

Riley defaulted after making one payment on the note. This litigation ensued. Riley submits that in executing the note he did not intend to acknowledge all amounts claimed owed by NC.

When deposed by NC, Riley was unable to specify which of the ninety-five invoices were, in his view, invalid. Pursuant to Civil Rule 36, NC then propounded certain requests for admissions regarding the ninety-five invoices. In substance, NC sought to identify which of the invoices were not disputed.

Riley's responses to the requests were due near the end of August. In a letter to NC's counsel, Riley's counsel stated that the responses would be furnished during the Labor Day week. The parties agreed to extend this deadline, first to September 21, and then to September 28. Riley, however, did not respond.

NC filed a motion for partial summary judgment on October 30, 1979, asserting that upon Riley's failure to respond to the requests, such requests were deemed admitted.

Riley served his responses on November 19, 1979, almost two months after a deadline already extended by the parties. In his response, Riley stated that he was without sufficient information to verify any of the ninety-five invoices. ¹

B. Riley's Counterclaim

Riley initially performed excavation and backfilling services for NC pursuant to an oral agreement. That contract provided for a lump sum payment. Riley performed additional work not contemplated by the oral agreement. For part of this work, Riley obtained extra payment at the rate of $2.40 per ton of gravel fill supplied.

The parties subsequently negotiated a contract for Riley to perform more extensive excavation and backfilling work. Riley submits that the written contract followed an understanding to "work it on the same principles." The contract, prepared by NC's agent who served as consulting engineers on the project, the consulting firm of Mark G. Reese, stated that payment would be at a rate of $3.33 per cubic yard of filled gravel. Riley signed the contract on April 17, 1975, purportedly under the mistaken impression that Reese had calculated the rate of payment in the second contract (in terms of filled yardage) to be the equivalent of the payment employed in the first contract (in terms of tons). Riley cites in this regard a letter from Reese which states that "we herewith authorize an extension of previous contract for you to proceed with subject excavation and backfill." Riley asserts that NC was aware of his misunderstanding at the time the contract was formed.

After obtaining his first progress payment, Riley realized that the rates of payment were in fact not equivalent. Riley then notified NC's store manager, Gary Ratzlaff, of the mistake. There is some ambiguity whether Ratzlaff referred Riley to Mark Reese, or whether Ratzlaff himself pursued the matter with Reese. ² Under either version, Riley claims that Reese ultimately agreed to correct the matter. Reese is now deceased. Riley completed performance of the contract in July 1975, and accepted final payment for the excavation work at the rate specified in the contract. His failure to pursue this claim immediately, he asserts, is attributable to the parties' long business relationship.

II. PROMISSORY NOTE CLAIM

A. Deemed Admissions

Riley argues that the superior court erred in deeming NC's requests for admissions admitted. ³ We thus address whether it was an abuse of discretion for the superior court to fail to allow Riley to submit late responses to NC's requests for admissions. See Palzer v. Serv-U-Meat Co., 419 P.2d 201, 204 n.13 (Alaska 1966); cf. Miracle v. Thompson, 581 P.2d 666, 669 (Alaska 1978) (abuse of discretion standard in review of Rule 60(b) motion).

At issue is the vexatious problem of how to treat untimely answers to requests for admissions. NC submits that it properly utilized the appropriate procedure to streamline the pending litigation, and that if Civil Rule 36 is to serve any value in expediting litigation, Riley should not be allowed to submit cursory responses almost two months after an already extended due date. Riley, on the other hand, argues that it is inequitable to deny him an adjudication on the merits where the delay in responding is attributable to counsel's negligence. ⁴

Civil Rule 36 provides that a party may serve any other party with written requests "for the admission ... of the truth of any matters...." The rule further provides that where the responding party does not submit a response within the time constraints of the Rule, the matter is deemed admitted. The submission of an untimely response is thus the equivalent of an attempt to withdraw an express admission. Rule 36 provides that in its discretion a court may allow the respondent to withdraw an admission "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." ⁵

In Palzer v. Serv-U-Meat Co., 419 P.2d 201 (Alaska 1966), we addressed a similar claim for relief from the effect of a deemed admission. ⁶ That case involved a suit against sureties for the payment of goods received by a third party. Palzer failed to respond to requests for admissions within the ten day time period prescribed by Rule 36. The trial court, concluding that the requests for admissions were deemed admitted pursuant to the terms of Rule 36, granted summary judgment. Palzer sought relief from judgment. We stated that "circumstances may exist where strict adherence to the requirements of the rules will not advance the rules' objectives." 419 P.2d at 206, quoting Sanuita v. Hedberg, 404 P.2d 647, 651 (Alaska 1965); see also Alaska R.Civ.P. 94. We concluded that on the particular facts presented, "the trial court's adherence to the technical aspects of Civ.R. 36 has resulted in the denial of substantial justice to appellants." 419 P.2d at 206. Accordingly, we held that the failure of the trial court to grant relief from judgment was an abuse of discretion.

Palzer is quite readily distinguishable from the present controversy. A prime consideration in Palzer was that the requesting party apparently extended the time period, so that the proffered responses were at most several days late. ⁷ In contrast, Riley's response was almost two months late, despite the fact that the deadline had previously been extended for one month by the parties. Another consideration important to the Palzer court was that the trial court and the requesting party had other available sources of information, such as the principal's affidavit, which in substance constituted denials to the request. 419 P.2d at 207. ⁸ NC has not had the benefit of any comparable information. Indeed, it is noteworthy that when Riley did respond, his responses were quite perfunctory. ⁹ Riley responded that he was without sufficient information to either confirm or deny the veracity of any of the invoices. Riley's failure to acknowledge any of the indebtedness is particularly questionable given the parties long and active business relationship. Many of the invoices concerned service work which NC allegedly performed on Riley's equipment. It is reasonable to assume that the requisite information to confirm or deny such invoices would be accessible upon reasonable inquiry. ¹⁰

We conclude that the trial court did not abuse its discretion in the present case. Civil Rule 36 is intended to expedite litigation through the elimination of uncontested issues. To be sure, Rule 36 does not compel the automatic rejection of late responses. As the result in Palzer demonstrates, such a rigid rule would result in the unjustified suppression of the merits. In the same vein, however, too liberal sufferance of a litigant's procrastination is equally undesirable, since such a policy would undermine the purposes of the rule. The superior court must therefore exercise its discretion to balance the desirability of expediting litigation with the need to promote presentation of the merits. Upon our review of the record, we cannot say that the court abused its discretion in failing to afford Riley the opportunity to file late responses.

B. Summary Judgment

Riley next argues that genuine issues of material fact remained in dispute even after the requests for admissions were deemed admitted. Riley thus submits that it was improper for the...