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Ralls v. Funk

Court of Appeals of Texas, Twelfth District, Tyler

October 31, 2019

ERIC C. RALLS, APPELLANT
v.
BRIAN FUNK, APPELLEE

          Appeal from the 7th District Court of Smith County, Texas (Tr.Ct.No. 17-1625-A)

          Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

          MEMORANDUM OPINION

          BRIAN HOYLE JUSTICE

         Eric Ralls appeals from an adverse summary judgment rendered against him in Appellee Brian Funk's breach of contract suit. In a single issue, Ralls asserts the trial court erred in denying his motion to quash deemed admissions, the summary judgment is improper, and the attorney's fees awarded are unreasonable. We affirm.

         Background

         On January 1, 2014, Funk agreed to loan $65, 000 to Ralls, memorialized by a promissory note. On that same date, the parties entered into a consultant agreement by which Ralls agreed to pay Funk $47, 840 for certain services he was to provide. Ralls failed to pay the amounts due under the note or the agreement, and Funk sued to recover the sums owed.

         The court rendered partial summary judgment in favor of Funk on the cause of action to recover on the promissory note on April 10, 2018 and severed that cause from the breach of contract cause. Funk served his first request for admissions on Ralls on September 19, 2018, to be answered within thirty days. Funk filed a motion for summary judgment in the breach of contract case on October 23, 2018, relying on his unsworn declaration[1] and Ralls's deemed admissions to prove his case.

         On November 8, 2018, Ralls served responses to Funk's request for admissions via facsimile wherein Ralls denied that Funk performed any consulting services for him. On November 19, 2018, Ralls filed a motion to quash deemed admissions and, in the alternative, undeem the responses. He claimed to have mistakenly believed that discovery had been abated and argued that the request for admissions impermissibly addressed controverted issues making up the fundamental legal issues of the case. He specifically argued that Funk provided no evidence of his performance of the contract other than the deemed admission. On the same day, Ralls filed his response to the motion for summary judgment. The response is supported by numerous exhibits including Ralls's response to Funk's request for admissions. Ralls also argued that Funk's self-serving declaration that he performed is not proof.

         Funk filed objections to Ralls's summary judgment evidence. The trial court granted Funk's objections to the evidence and granted his motion for summary judgment. The court ordered Ralls to pay the principal amount of $41, 340, plus interest and attorney's fees. The court also denied Ralls's motion to quash the deemed admissions. This appeal ensued.

         Deemed Admissions

         In his sole issue, Ralls attacks the summary judgment by way of his assertion that the trial court abused its discretion in failing to quash, and erred by relying on, deemed admissions. Ralls asserts that good cause exists to allow withdrawal of the deemed admissions because he mistakenly believed that discovery was abated pending mediation. He also argues that use of the deemed admissions violates due process because one of the admissions is merits-preclusive, and its use is a prohibited attempt to get him to admit that Funk has a valid cause of action and he has no ground of defense. He further contends that Funk did not meet his burden to show that Ralls's failure to answer the admissions resulted from flagrant bad faith or callous disregard of the rules.

         Standard of Review and Applicable Law

         Once an action is filed, a party may serve written requests for admissions that can encompass any matter within the scope of discovery. Tex.R.Civ.P. 198.1. If the opposing party does not serve its responses to the admissions requests within thirty days, the matters in the requests are deemed admitted against the party without the necessity of a court order. Id. 198.2(c). Any matter admitted or deemed admitted is conclusively established unless the court, on motion, permits withdrawal or amendment of the admission. Id. 198.3; Marshall v. Vise, 767 S.W.2d 699, 700 (Tex. 1989).

         We review the denial of a request to withdraw deemed admissions for an abuse of discretion. Stelly v. Papania 927 S.W.2d 620, 622 (Tex. 1996) (per curiam). Withdrawal of deemed admissions is permitted upon a showing of good cause for failure to timely respond and a finding by the trial court that (1) the party relying upon the deemed admissions will not be unduly prejudiced, and (2) presentation of the merits of the action will be served by the withdrawal. Tex.R.Civ.P. 198.3; Marino v. King, 355 S.W.3d 629, 633 (Tex. 2011) (per curiam). The party seeking withdrawal of the deemed admissions has the burden to establish good cause. Boulet v. State, 189 S.W.3d 833, 836 (Tex. App.-Houston [1st Dist.] 2006, no pet.). Good cause is established by showing the failure involved was an accident or mistake, not intentional or the result of conscious indifference. Wheeler v. Green, 157 S.W.3d 439, 442 (Tex. 2005) (per curiam).

         A different standard applies when the deemed admissions are merits preclusive. See id. at 443-444. When requests for admissions are used as intended, addressing uncontroverted matters or evidentiary ones like authenticity or admissibility of documents, deeming admissions by default is unlikely to compromise presentation of the merits. Id. at 443. Requests for admissions were never intended to require a defendant to admit the validity of a plaintiff's claims or concede his defenses. Marino, 355 S.W.3d at 632. When a party uses deemed admissions to try to preclude presentation of the merits, where the requestor essentially seeks an admission of liability, the deemed admission can amount to a death-penalty sanction. Medina v. Zuniga, No. 17-0498, 2019 WL 1868012, at *3 (Tex. April 26, 2019). In that instance, constitutional due process concerns arise. Marino, 355 S.W.3d at 632.

         When requests for admissions are merits preclusive, the trial court is required to allow their withdrawal unless the party requesting withdrawal acted with flagrant bad faith or callous disregard for the rules in failing to timely respond to requests for admissions. Wheeler, 157 S.W.3d at 443. Ordinarily, the burden of showing good cause lies with the party seeking withdrawal of deemed admissions. See Boulet, 189 S.W.3d at 836. But when the requests for admission are merits preclusive, the party opposing the withdrawal of the admissions has ...


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