MICHAEL A.P. v. SOLSRUD No. 92-1730.
178 Wis.2d 137 (1993)
502 N.W.2d 918
MICHAEL A.P., an Incompetent by his Guardian ad Litem Carl L. Ricciardi and his Co-Guardians James Pahls and Jacqueline Pahls, Plaintiffs, v. Glenn A. SOLSRUD, d/b/a Glenn A. Solsrud Enterprises and Glenn A. Solsrud, Inc., ABC Insurance Company, a Fictitious Insurance Company, DEF Insurance Company, a Fictitious Insurance Company, GHI Insurance Company, a Fictitious Insurance Company, General Casualty Company of Wisconsin, a Domestic Insurance Company, and JKL Insurance Company, a Fictitious Insurance Company, Defendants, The GOODYEAR TIRE & RUBBER COMPANY, a Foreign Corporation, Defendant-Respondent, Glenn A. SOLSRUD, Third Party Plaintiff-Appellant, v. GENERAL CASUALTY COMPANY OF WISCONSIN and Patrick Meacham, d/b/a Patrick Meacham Construction Co., Third Party Defendants, The GOODYEAR TIRE & RUBBER COMPANY, Third Party Plaintiff-Respondent, STANLEY CONSTRUCTION, INC., Third Party Defendant.
Court of Appeals of Wisconsin.
Decided June 29, 1993.
For the third party plaintiff-appellant the cause was submitted on the briefs of Thomas Terwilliger of Terwilliger, Wakeen, Piehler & Conway, S.C. of Wausau.
For the defendant-respondent the cause was submitted on the brief of
Paul G. Kent and John Koeppl of DeWitt, Porter, Huggett, Schumacher & Morgan, S.C. of Madison.
Before Cane, P.J., LaRocque and Myse, JJ.
Glenn Solsrud appeals a $78,131.88 judgment in favor of The Goodyear Tire & Rubber Company awarded pursuant to sec. 804.12, Stats., to compensate Goodyear for legal costs incurred in successfully litigating and proving certain issues that had been the subject of requests for admissions served upon Solsrud.
The cause of action underlying this appeal was a personal injury action arising out of injuries Michael Pahls received while he was putting air in the left front tire of a forklift owned by Solsrud, d/b/a GASE and GASI. The tire and its components were manufactured and distributed by Goodyear. The accident occurred during the construction of Island Place, owned by Solsrud. Pahls and the other plaintiffs filed a complaint against Solsrud, GASE, GASI and various insurers, contending that their negligence caused Pahls' injuries.
Goodyear was joined as a defendant approximately one year after the action was filed, and asserted a cross-claim against Solsrud for contribution. At the time Goodyear was joined as a party, the record contained contradictory information concerning the amount of control Solsrud had over the Island Place project. Discovery of the extent and capacity of Solsrud's actual involvement in the project and whether Solsrud furnished the forklift for purposes of determining liability and insurance coverage was vital to Goodyear's contribution cross-claim. In an attempt to clarify these issues, Goodyear served Solsrud with a request for admissions.
Solsrud categorically denied the following requests: GASE is a trade name used by Solsrud; in August 1988, Solsrud did business as a sole proprietorship under the name of GASE; Solsrud was the general contractor for the Island Place project; Solsrud entered
Solsrud continued to vacillate and obfuscate the issues concerning his control over the Island Place project throughout the trial. However, all of the matters Solsrud denied in response to Goodyear's request for admissions were either proven or admitted by Solsrud on adverse or cross-examination. Prior to trial, Solsrud failed to modify or supplement his responses to Goodyear's request for admissions.
Goodyear subsequently moved under sec. 804.12(3), Stats., for the assessment against Solsrud of its costs incurred in proving the allegations that Solsrud denied. After a hearing on the motion, the trial court granted Goodyear's motions, based on its findings that: (1) All of the matters Solsrud denied were proven at trial; (2) Solsrud failed to comply with sec. 804.11, Stats., in that his unqualified denials amounted to deceit by omission; (3) by failing to modify, withdraw, explain or supplement denials Solsrud violated sec. 804.11(1)(b); (4) Solsrud's denials were made in bad
INTERPRETATION OF SEC. 804.12(3), STATS.
Solsrud asserts for various reasons that the trial court erred by imposing sanctions under sec. 804.12(3), Stats. That section provides:
Before addressing Solsrud's assertions more fully, we must interpret the statute's language and determine whether it applies to this case. Interpretation and application of statutory language is a question of law that we review independently of the trial court. Brandt v. LIRC, 160 Wis.2d 353, 361, 466 N.W.2d 673, 676 (Ct. App. 1991). The word "shall" is presumed to be mandatory unless a different construction is necessary to carry out the legislature's clear intent. In re C.A.K., 154 Wis.2d 612, 621, 453 N.W.2d 897, 901 (1990). We conclude that in sec. 804.12(3), Stats., the word "shall," used in reference to the court ordering reasonable expenses and attorney's fees, is mandatory, not directory, for the following reasons.
First, we note that the legislature, in enacting sec. 804.12, Stats., authorizing the imposition of sanctions for various discovery violations, differentiated between the sanctions by making some discretionary with the trial court through the use of the word "may"
Second, because the language of sec. 804.12(3), Stats., is almost identical to the language in FED. R. CIV. P. 37(c), federal caselaw construing that section is instructive. The sixth circuit ruled in Bradshaw v. Thompson, 454 F.2d 75, 81 (6th Cir. 1972), that "[Rule 37(c)] requires the Court to award expenses including reasonable attorney's fees to a party whose request for the admission of the truth of any matter under Rule 36 is denied and who thereafter proves the truth of the matter, unless any one of the four conditions is found to exist." (Emphasis added.) The plain language of sec. 804.12(3) requires the court to award expenses upon the motion of the party requesting the admissions if (1) admissions were properly requested, (2) the party upon whom the request was served failed to admit the genuineness of a document or the truth of a matter, (3) that was subsequently proved genuine or true and (4) the court finds that none of the four exceptions listed in the statute exist.
APPLICATION OF SEC. 804.12(3), STATS.
We now turn to the question whether the trial court properly awarded Goodyear its requested costs and attorney's fees under sec. 804.12(3), Stats. We must uphold the trial court's factual findings unless they are clearly erroneous. Section 805.17(2), Stats. Whether, under sec. 804.12(3), those facts require the award of attorney's fees and costs to Goodyear is a question of law that we review independently of the trial court. See Brandt, 160 Wis. 2d at 361, 466 N.W.2d at 676.
It is undisputed that Goodyear properly served requests for admissions upon Solsrud and that Solsrud categorically denied most of the requests. Solsrud contends that Goodyear's requests for admissions failed to meet the requirements of sec. 804.11, Stats., because the requests "could not be admitted or denied without explanation." Not only does sec. 804.11 not require that requests for admissions be stated in a fashion that they can be admitted or denied without explanation, but subsec. (1)(b) provides, in pertinent part: "The answer shall ... set forth in detail the reasons why the answering party cannot truthfully admit or deny the matter. ... [W]hen good faith requires that a party qualify an answer or deny only a part of the matter ... the party shall specify so much of it as is true and qualify or deny the remainder."
We reject those arguments as hypertechnical, semantic gymnastics. Solsrud admitted that he was the general contractor, at least as it related to financing the Project. The fact that this admission is more specific than Goodyear's request does not render the trial court's finding that Goodyear proved the matter requested clearly erroneous. Additionally, all parties knew that the critical time period was August 1988, and we fail to see the difference between "doing business as" GASE and "operating" GASE as a sole proprietorship. We therefore conclude that the trial
Next, we turn to Solsrud's assertions that (1) the trial court failed to address whether he lacked reasonable grounds to believe he would prevail or other good reasons for failing to admit and (2) he did in fact possess reasonable grounds to believe he would prevail on the matters denied and there were other good reasons for the failure to admit.
Because we have concluded that the trial court's finding of bad faith amounts to a finding that Solsrud lacked reasonable grounds to believe he would prevail or other good reasons for failing to admit, we need not examine in detail each request to determine whether Solsrud had a reasonable ground to believe that he might prevail or other legitimate reason to enter his denial. We need only determine whether the record supports the trial court's finding.
We conclude that the record is replete with evidence supporting the court's finding. In every instance, Solsrud, on adverse examination, admitted the truth of the matter denied in response to Goodyear's request for admission. Several were also proven by documents bearing Solsrud's signature or dealing with his companies. In support of his contention that he had reasonable grounds to believe he would prevail, Solsrud reiterates his semantical arguments we previously rejected, cites testimony that allegedly conflicts with a finding of the truth of the matter and argues that some of the requests were directed at his bifurcated issues. However, "[t]he presence of a legal dispute does not obviate a party's responsibility to admit the truth of a matter which the party knows to be true" and does not allow a party to force the requesting party to prove the truth of those matters. Chemical Eng'g Corp. v. Essef Indus., Inc., 795 F.2d 1565, 1575 (Fed. Cir. 1986). All of the denied requests concerned actions and relationships in which Solsrud was intimately involved. There is simply no legitimate basis for Solsrud to contend that he did not know that the matters
Solsrud also argues that he had no duty to supplement his responses to various of Goodyear's requests because they were "defacto amended by Solsrud's and Lindquist's depositions." We are not persuaded. The questions concerning the matters denied in response to Goodyear's request for admissions asked during the deposition were necessitated by Solsrud's denials. However, Solsrud cites no legal authority, and we find none, to support his proposition that information revealed through other discovery methods satisfies or obviates the requirement in sec. 804.01(5), Stats. Furthermore, Solsrud should not be allowed to escape sanctions under sec. 804.12(3) by virtue of Goodyear's ability to elicit the truth by deposing Solsrud and others.
REASONABLENESS OF FEES
Solsrud contends that the trial court erred by awarding the total amount of costs and fees requested by Goodyear. Appellate courts will uphold trial court determinations of the amount of reasonable attorney's fees for services rendered unless the trial court erroneously exercised its discretion. Standard Theatres, Inc. v. DOT, 118 Wis.2d 730, 747, 349 N.W.2d 661, 671 (1984). "A trial court properly exercises its discretion if it employs a logical rationale based on the appropriate legal principles and facts of record." Chmill v. Friendly Ford-Mercury of Janesville, Inc., 154 Wis.2d 407, 412, 453 N.W.2d 197, 199 (Ct. App. 1990).
Solsrud first argues that an affirmative response to various of Goodyear's requests would not have reduced Goodyear's expenses. Whether Solsrud's assertion is correct is immaterial under sec. 804.12(3), Stats. The statute requires the court to award "the reasonable expenses incurred in [proving the truth of the matters denied], including reasonable attorney's fees." The statute does not qualify that award by authorizing it only if the requesting party's litigation expenses would have been less had the matter been admitted, or reducing it by the amount of expenses that would have been incurred had the matter been admitted. We therefore do not address this issue further.
Next, Solsrud contends that the award includes costs and fees not incurred in proving the truth of the matters denied and that the costs and fees requested that related to proving the truth of the matters denied were unreasonably high. The trial court found that Goodyear's application for costs and attorney's fees included only those costs and fees associated with "developing and proving the matters which were addressed in the request for admissions...." Solsrud argues that Goodyear is entitled only to the cost incurred for the time it took Goodyear to ask the questions that ultimately proved the truth of the matter, and not for the time spent listening to other counsel ask questions at depositions, give oral argument and make opening and closing statements. Solsrud also contends that Goodyear is not entitled to costs incurred during verdict and instruction conferences.
We disagree with Solsrud's suggestion that "reasonable expenses incurred in the [proof of the truth of the matters denied]" does not include time spent preparing
Lastly, Solsrud contends that the trial court denied him a meaningful hearing on the reasonableness of Goodyear's requested expenses. First, we note that, despite the fact that he had a month to respond to Goodyear's motion, Solsrud failed to respond until the morning of the motion hearing, giving the court approximately thirty minutes to review his response and Goodyear even less time. Further, during the twohour hearing on Goodyear's motion, Solsrud's counsel was given ample opportunity to argue that Goodyear's request was unreasonable. Finally, we note that Solsrud failed to object to the court proceeding to rule on the motion despite the short time it had to review Solsrud's response to Goodyear's motion. We conclude that the trial court gave Solsrud ample opportunity to be heard concerning the reasonableness of Goodyear's requested expenses and that the record supports the
In the face of increasingly complex and expensive litigation, discovery plays a vital role in issue formulation and limitation. As the role of discovery increases in importance, the need for effective sanctions against those who abuse the discovery process becomes greater. See Graczyk, supra at 523. "In this sense, section 804.12, [Stats.], is undoubtedly the most important rule in the discovery chapter, for it supplies the sanctions necessary to deter parties from either unjustifiably evading full disclosure or simply refusing to respond to discovery at all." Id. The judicial committee stated that the purpose of the sanction is to ensure that "[a]ny party who seeks to evade or thwart full and candid discovery incurs the risk of serious consequences ...." Note, Wis. Stat. Ann. sec. 804.12(4) (1992). The statute places the responsibility, indeed the duty, upon trial courts to prevent such conduct by imposing certain and sometimes severe sanctions upon persons who engage in it. Here, the trial court found that Solsrud abused and thwarted the statutory discovery process designed to clarify and simplify contested issues of fact by using denials to obscure and complicate the issues and to mislead Goodyear. The trial court determined that Solsrud's bad faith cost Goodyear $78,131.88. Such vigorous enforcement is exactly what the legislature intended in sec. 804.12: One who abuses the rules of discovery as a planned strategy must be made to suffer the financial consequences of his or her misconduct.
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