Taylor Made Homes, Inc. and Michael B. Taylor v. John Gianotti and Wife, Debbie Gianotti ( 2001 )

No. 04-00-00818-CV TAYLOR MADE HOMES, INC. and Michael B. Taylor,

Appellants

v.

John GIANOTTI and Debbie Gianotti,

Appellees

From the 218th Judicial District Court, Wilson County, Texas

Trial Court No. 98-11-0405-CVW

Honorable Stella Saxon, ⁽¹⁾ Judge Presiding

Opinion by: Paul W. Green, Justice

Sitting: Phil Hardberger, Chief Justice Paul W. Green, Justice
Sarah B. Duncan, Justice

Delivered and Filed: November 21, 2001

REVERSED AND REMANDED

The trial court entered summary judgment in favor of John and Debbie Gianotti on their claims against Michael B. Taylor and his company, Taylor Made Homes, Inc. (Taylor). Taylor appeals to this Court, claiming the trial court erred in denying his motion to strike deemed admissions and in entering summary judgment against him. Holding the trial court abused its discretion in refusing to strike the deemed admissions, we reverse the summary judgment and remand to the trial court for further proceedings.

Background

Taylor entered a contract with his sister and brother-in-law ("the Gianottis") providing Taylor would build the Gianottis a house at a greatly reduced rate. On the scheduled completion date, the Gianottis' house was not complete, and the unfinished structure had many alleged construction defects, along with two mechanics liens on the property resulting from Taylor's alleged failure to pay subcontractors. After extending the deadline for five more months, the house remained unfinished, and the interim lender threatened to post the property for foreclosure. The Gianottis filed suit against Taylor for breach of contract and warranty, requesting a temporary injunction to prevent the foreclosure sale.

After the Gianottis served Taylor with requests for production, the parties entered a Rule 11 agreement, extending Taylor's response deadline. Jonathon Hull, Taylor's attorney, then filed a motion to withdraw. Before the court heard Hull's motion to withdraw, Taylor failed to respond to the production requests by the extended deadline. The Gianottis filed a motion to compel and, on the same day, served Taylor with requests for admissions. The requests for admissions were sent to Hull's office. Ten days later, the trial court granted Hull's motion to withdraw and again extended Taylor's deadline to respond to the request for production.

On August 12, 1999, after Taylor failed to timely respond, the requests for admissions became deemed admitted by Taylor by operation of law. In September 1999, Hull reentered the case. For the next two months, no mention was made of the deemed admissions, and the parties continued to correspond regarding an upcoming mediation in November 1999. Before the mediation, Hull discovered the failure to respond to the requests for admissions. He notified opposing counsel and filed a motion to strike in December 1999. At the hearing on the motion to strike, Hull testified, claiming the failure to respond was a mistake, pointing to Taylor's earlier efforts to respond to the Gianottis' other discovery requests; however, the trial court denied the motion. Six months later, the Gianottis filed a motion for summary judgment, which was granted by the trial court, finding Taylor liable to the Gianottis in the amount of $50,180.00. The trial court denied Taylor's motion for new trial, and Taylor appeals, challenging the trial court's refusal to withdraw the deemed admissions and entry of summary judgment.

Deemed Admissions

In his first point of error, Taylor challenges the trial court's denial of his motion to strike. We reverse a trial court's refusal to withdraw deemed admissions only upon an abuse of discretion. Stelly v. Papania, 927 S.W.2d 620, 622 (Tex. 1996). A trial court may permit a party to withdraw deemed admissions: (1) if the moving party shows good cause for its failure to timely respond; (2) the nonmoving party relying on the deemed admissions will not be unduly prejudiced by the withdrawal; and (3) the presentation of the merits would be furthered by the withdrawal. Tex. R. Civ. P. 198.3.

•   Good Cause

Regarding Taylor's burden to show good cause, "[e]ven a slight excuse will suffice, especially when delay or prejudice to the opposing party will not result." Spiecker v. Petroff, 971 S.W.2d 536, 538 (Tex. App.- Dallas 1997, no writ). Generally, a showing that the failure to respond was accidental or the result of mistake, rather than the result of conscious indifference, satisfies the first factor. Wal-Mart Stores, Inc. v. Deggs, 968 S.W.2d 354, 356 (Tex. 1998) (good cause shown when Wal-Mart did not receive requests directed to employee and immediately moved to withdraw the deemed admissions upon learning that employee had failed to respond).

On appeal, Taylor argues the failure to respond was accidental. At the hearing, Hull testified, attributing the error to a mix-up occurring in the midst of Hull's withdrawal immediately before the admissions' due date. ⁽²⁾ Hull also testified Taylor's pattern of behavior with the other discovery responses, such as requesting extensions to respond to requests for production, demonstrates Taylor did not consciously disregard the admissions request. Further, Hull testified he notified opposing counsel and filed a motion to strike immediately upon discovering the error.

• Prejudice & Presentation of the Merits

The second and third factors focus on whether withdrawing the deemed admissions would unduly prejudice the nonmoving party and further presentation of the merits. In this case, the evidence shows the deemed admissions had been in effect for three months before the motion to strike was filed. There is no evidence the Gianottis relied upon the deemed admissions to their detriment during that time, but rather, the evidence shows a lack of reliance. Taylor introduced correspondences between the parties discussing the mediation efforts. This correspondence, which took place after the admissions' deadline, makes no mention of the deemed admissions or the Gianottis' reliance on them to effect settlement of the case. Further, the Gianottis did not seek summary judgment until six months after Taylor filed his motion to strike. Taylor also offered to pay reasonable attorney's fees and expenses incurred as a result of the deemed admissions.

The primary purpose of Rule 198 is:

to simplify trials by eliminating matters about which there is no real controversy, but which may be difficult or expensive to prove. It was never intended to be used as a demand upon a plaintiff or defendant to admit that he had no cause of action or ground of defense.

Stelly, 927 S.W.2d at 622. Although Taylor consistently denied liability and counterclaimed for payments allegedly owed by the Gianottis, once the deemed admissions took effect, Taylor was precluded from introducing evidence to controvert the allegations he had disputed since the lawsuit's initiation. ⁽³⁾ We do not condone a party's failure to timely respond to discovery requests, even if by accident or mistake; however, the "discovery rules were not designed as traps for the unwary, nor should we construe them to prevent a litigant from presenting the truth." Id.

We hold the trial court abused its discretion in refusing to allow withdrawal of the deemed admissions. Taylor satisfied the good cause requirement by presenting evidence of his withdrawal in the midst of the admissions' deadline and referring to Taylor's previous efforts to respond to discovery requests. Further, the evidence demonstrated the Gianottis would not be unduly prejudiced and presentation of the merits would be served by withdrawal of the deemed admissions. We sustain Taylor's first point of error. See In re Kellogg-Brown & Root, Inc., 45 S.W.3d 772, 777 (Tex. App. - Tyler 2001, orig. proceeding) (granting mandamus relief to party whose request to strike deemed admissions was denied because deemed admissions "eliminated its ability to present any viable defense at trial and acted as a death penalty sanction").

Summary Judgment

Having sustained Taylor's first point of error, we consider Taylor's third and sixth points of error, claiming the trial court erred in entering summary judgment. Plaintiffs moving for summary judgment must establish each element of their claim as a matter of law. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1987). When a defendant raises a counterclaim, the plaintiff-movant must not only prove the elements of his cause of action conclusively, but also must disprove at least one element of the defendant's counterclaim. Taylor v. GWR Operating Co., 820 S.W.2d 908, 910 (Tex. App. - Houston [1st Dist.] 1991, writ denied). In this case, absent the deemed admissions, the evidence presented by the Gianottis does not demonstrate they are entitled to judgment on their claims as matter of law or that Taylor cannot prevail on his counterclaim as a matter of law. We sustain Taylor's third and sixth points of error and reverse the trial court's grant of summary judgment. ⁽⁴⁾

  Conclusion

Because we hold the trial court abused its discretion in refusing to allow withdrawal of the deemed admissions, we sustain Taylor's first point of error. Absent the deemed admissions, the remaining summary judgment evidence does not demonstrate the Gianottis are entitled to judgment as a matter of law. We reverse the summary judgment and remand to the trial court for further proceedings.

PAUL W. GREEN

JUSTICE

DO NOT PUBLISH

1.

Appellants challenge the summary judgment order, entered by the Honorable Stella Saxon, and the order denying the motion to strike the deemed admissions, entered by the Honorable Olin Strauss.

2.

The Gianottis' objection that Hull could not testify regarding Taylor's intent to responding to the requests after Hull's withdrawal was sustained by the trial court.

3. See Marshall v. Vise, 767 S.W.2d 699, 700 (Tex.1989) (holding an admission once admitted, deemed or otherwise, is a judicial admission, and a party may not then introduce testimony to controvert it).

4.

Because we reverse and remand based on Taylor's first, third, and sixth issues, we need not reach the remaining points of error.