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A. and W. Hughes v. Diamond Mini-Storage et al (6/10/94), 875 P 2d 749
<![CDATA[
NOTICE: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers
are requested to bring errors to the attention of the
Clerk of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501.
THE SUPREME COURT OF THE STATE OF ALASKA
ALVIE HUGHES, WANDA HUGHES, ) Supreme Court No. S-5432
)
Appellants, )
) Superior Court
v. ) No. 3AN-91-5590 CI
)
MATTHEW BOBICH, GRACE BLACK, ) O P I N I O N
DIANE BLACK-SMITH, DAVID )
RICHARDS, AND CRAIG SMITH, ) [No. 4092 - June 10, 1994]
individually and as partners )
in ABC Partnership d/b/a )
PUBLIX STORAGE, and MATTHEW )
BOBICH and DAVID RICHARDS )
individually and as partners )
in DIMOND SELF-STORAGE, aka )
DIMOND MINI-STORAGE, and )
MATTHEW BOBICH, DIANE BLACK- )
SMITH, DAVID RICHARDS, and )
CRAIG SMITH, individually and )
as partners in ABC INVESTMENT )
GROUP aka DIMOND MINI-STORAGE, )
)
Appellees. )
________________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
Karl S. Johnstone, Judge.
Appearances: Kenneth W. Legacki,
Anchorage, for Appellants. C.R. Kennelly,
Stepovich, Kennelly & Stepovich, P.C.,
Anchorage, for Appellees.
Before: Moore, Chief Justice,
Rabinowitz, Matthews, Compton, Justices, and
Bryner, Justice, pro tem.*
BRYNER, Justice, pro tem.
Alvie and Wanda Hughes sued Matthew Bobich for back
wages and damages resulting from Bobich's alleged failure to
provide medical insurance. The superior court dismissed the
Hughes' suit due to a discovery violation; alternatively, the
court granted Bobich's summary judgment on the Hughes' claim for
back wages. The Hughes appeal, challenging the superior court's
use of litigation ending sanctions. We reverse.
I. BACKGROUND
The Hughes were employed by Matthew Bobich and his
business partners at the partnership's storage facility, Publix
Storage (hereinafter collectively Bobich).1 In 1991, the Hughes
filed a complaint alleging that Bobich had failed to pay them
overtime wages and had breached a promise to provide medical
insurance during their employment.
On August 6, 1991, Bobich served interrogatories,
requests for production of documents, and requests for admissions
upon the Hughes. Included in the discovery documents was a
request for the Hughes to admit that they had in fact been paid
all of their overtime wages. The Hughes did not respond.
Instead, their attorney, Kenneth Legacki, verbally agreed with
Bobich's attorneys, Donald McClintock and James McCollum, to
"hold off discovery"while they attempted to settle the case. By
a letter dated August 15, Legacki provided McClintock with an
itemized account of all overtime for which the Hughes claimed
they had received no compensation.
By fall of 1991, efforts toward an informal resolution
of the case had failed. Legacki notified Bobich's counsel that
"settlement discussions were over and [Legacki] was about to file
discovery and set [the case] for trial." Some time thereafter,
McClintock and McCollum withdrew from the case, and attorney C.R.
Kennelly entered an appearance on behalf of Bobich. On February
5, 1992, Bobich, through Kennelly, served new interrogatories,
requests for production of documents, and requests for releases
of information on the Hughes. The Hughes submitted vague and
incomplete answers to the interrogatories; they did not respond
to the requests for production or to the requests for release of
information.
As a result, on April 21, 1992, Bobich filed a motion
to compel discovery. On June 1, 1992, the superior court granted
the motion and issued an order compelling the Hughes to answer
the February 1992 interrogatories fully, to respond to the
requests for production of documents, and to provide the
requested releases of information within fifteen days. The
Hughes failed to comply with the court's order.
Based on the Hughes' failure to comply with the June 1
order, Bobich filed a motion for sanctions pursuant to Alaska
Civil Rule 37. A short time later, Bobich also filed a motion
for summary judgment on the Hughes' claim for overtime wages.
The summary judgment motion was based on the Hughes' failure to
respond to Bobich's August 6, 1991 request for admission, which
called on the Hughes to admit that they had been paid all of
their overtime wages. In his summary judgment motion, Bobich
argued that, under Alaska Civil Rule 36(a), the Hughes' failure
to file a timely response to his request should be construed as
an admission that they had already been paid. Relying on this
admission, Bobich maintained that he was entitled to judgment as
a matter of law.
The Hughes opposed Bobich's motion for Civil Rule 37(b)
discovery sanctions, asserting that Bobich had filed the motion
to harass them and claiming that they had already conveyed all
requested discovery documents to Bobich's former counsel. The
Hughes also opposed Bobich's motion for summary judgment, arguing
that Legacki's August 15, 1991 letter to McClintock and McCollulm
amounted to an answer to the August 6 request for admissions,
because the letter itemized overtime work for which the Hughes
claimed Bobich still owed them $108,008.92.
Superior Court Judge Karl M. Johnstone heard Bobich's
motions for discovery sanctions and summary judgment on August
17, 1992. With respect to the motion for Civil Rule 37 discovery
sanctions, Bobich acknowledged that the parties had initially
agreed to defer discovery pending settlement negotiations, but
pointed out that settlement efforts had clearly ended by the time
of Legacki's November 1991 letter to McClintock and McCollum,
which stated that the Hughes were about to file discovery and set
the case for trial. Bobich argued that even if the Hughes were
excused from engaging in discovery prior to November of 1991,
they had no excuse for violating the court's June 1, 1992 order,
which compelled their compliance with the discovery requests
propounded on February 5, 1992.
With respect to the Hughes' failure to answer his
August 6, 1991 request for admissions, the basis for the summary
judgment motion, Bobich asserted that Legacki had never been told
that his August 15, 1991 letter to McClintock and McCollum
concerning the Hughes' claim for overtime compensation would be
treated as a "substitute for formal discovery responses." This
assertion was supported by deposition testimony McClintock had
recently provided.
When the court questioned Legacki concerning the
Hughes' failure to comply with the June 1 discovery order,
Legacki advanced a variety of partially conflicting claims,
including that (1) he was the victim of a "paper war" initiated
by Bobich's counsel; (2) Bobich's counsel had refused to meet
with him to exchange discovery documents; (3) he was prepared to
give the releases of information to Bobich's counsel the next
day; and (4) he had already given all the documents to Bobich's
counsel.
The court rejected these explanations, concluding that
Legacki had failed to comply with its June 1 discovery order.
The court noted that Legacki's abuse of the discovery process
went beyond his failure to comply with the June 1 order. Other
violations mentioned by the court included Legacki's failure to
answer Bobich's August 6, 1991 request for admissions, his
failure to appear for a scheduled deposition of Wanda Hughes, his
scheduling of depositions of Bobich's former attorneys on unduly
short notice, and his failure to cure the Hughes' noncompliance
with the June 1 discovery order during the interim between the
filing of Bobich's motion for sanctions and the sanction hearing
itself. In addition, the court took judicial notice that Legacki
had recently been reprimanded in an unrelated case for conduct
the court deemed abusive.2
In the superior court's view, all of these occurrences
were indicative of Legacki's ongoing abuse of the discovery
process. Based on this pattern of conduct, the court found that
Legacki's failure to comply with its June 1 discovery order was
willful and that litigation ending sanctions were justified.
In addition, the court decided that Legacki's failure
to answer Bobich's August 6, 1991 request for admissions
justified granting Bobich's motion for summary judgment on the
Hughes' claim for overtime wages. The court found that Legacki's
August 15, 1991 letter to McClintock and McCollum concerning the
Hughes' claim for overtime wages did not comply with the formal
requirements for a response to a request for admission, as set
out in Civil Rule 36. The court also found that Legacki's
explanations for failing to respond formally were insufficient.
Consequently, the court deemed the subject matter of the request
admitted and granted Bobich summary judgment on the Hughes' claim
for overtime wages. The Hughes appeal these
rulings.
II. DISCUSSION
A. Discovery Sanctions Under Civil Rule 37
1. Standard of Review and Controlling Law
Civil Rule 37 affords trial courts broad power to
enforce discovery orders by the use of sanctions. In relevant
part, Alaska Civil Rule 37(b)(2) provides:
If a party . . . fails to obey an order
to provide or permit discovery, . . . the
court in which the action is pending may make
such orders in regard to the failure as are
just, and among others the following:
. . .
.
(C) An order striking out pleadings or
parts thereof, or staying further proceedings
until the order is obeyed, or dismissing the
action or proceeding or any part thereof, or
rendering a judgment by default against the
disobedient party[.]
A trial court's decision to
impose discovery sanctions is
generally subject to review only
for abuse of discretion.
Underwriters at Lloyds, London v.
The Narrows, 846 P.2d 118, 119
(Alaska 1993). We have nonetheless
recognized that litigation ending
sanctions are disfavored and that
the trial court's discretion to
impose such sanctions is narrowly
limited to extreme situations:
[S]ince the law disfavors litigation
ending sanctions, the superior court has the
discretion to impose such sanctions only in
"extreme circumstances." Otis Elevator Co.
v. Garber, 820 P.2d 1072, 1074 (Alaska 1991).
We have held that "a party should not be
barred from his or her day in court where an
alternative remedy would suffice to make the
adverse party whole." Power Constructors v.
Acres American, 811 P.2d 1052, 1055 (Alaska
1991).
Sandstrom & Sons, Inc. v. State, 843 P.2d 645, 647 (Alaska 1992).
Our cases clearly and narrowly define the permissible
range within which a trial court may impose litigation ending
sanctions:
The law on Rule 37 sanctions in
Alaska is well settled. Issue establishment
under Rule 37(b), that is, conclusively
resolving an issue against a party who does
not comply with discovery orders, is an
"extreme sanction which should be used only
in extreme cases." Otis Elevator Co. v.
Garber, 820 P.2d 1072, 1074 (Alaska 1991).
For this reason, the trial court must find
that the non-complying party "willfully"
violated the discovery order in question.
Alaska Trams Corp. v. Alaska Elec. Light &
Power, 743 P.2d 350, 354 (Alaska 1987), cert.
denied, 485 U.S. 905 (1988). "Willfulness"
is defined as the "conscious intent to impede
discovery, and not mere delay, inability or
good faith resistance." Hawes Firearms Co.
v. Edwards, 634 P.2d 377, 378 (Alaska 1981).
We have held that before a court may impose
litigation ending sanctions for discovery
violations the record must clearly indicate a
reasonable exploration of possible and
meaningful alternatives to dismissal.
Sandstrom & Sons, Inc. v. State, 843 P.2d 645
(Alaska 1992). Finally, the sanction must be
"sufficiently related" to the discovery
violation. Honda Motor Co. v. Salzman, 751
P.2d 489, 493 (Alaska 1988). We must
determine "if the established issue is an
`element of the dispute that cannot be
determined on the merits without disclosure
of the evidence the court has ordered the
party to produce.'"Id. (quoting Hazen v.
Municipality of Anchorage, 718 P.2d 456, 460
(Alaska 1986)).
Underwriters, 846 P.2d at 119-20.
2. Analysis
We apply these principles to the present case. The
Hughes first contend that the trial court erred in finding that
they willfully violated its June 1, 1992 discovery order. The
Hughes do not seriously dispute that they failed to comply with
the discovery order; instead, they argue that Bobich failed to
establish that their noncompliance was willful in the sense
required for litigation ending sanctions, that is, that the
Hughes engaged in a "conscious intent to impede discovery."
Alaska Trams Corp. v. Alaska Elec. Light and Power, 743 P.2d 350,
354 (Alaska 1987); Hawes Firearms Co. v. Edwards, 634 P.2d 377,
378 (Alaska 1981).
This argument, however, misallocates the applicable
burden of proof on the issue of willfulness. Once noncompliance
has been demonstrated, the noncomplying party bears the burden of
proving that the failure to comply was not willful. Alaska
Trams, 743 P.2d at 354; Dade v. State, Child Support Enforcement
Div., 725 P.2d 706, 708 (Alaska 1986). At the sanctions hearing,
Legacki conceded that the Hughes had failed to execute the
releases of information Bobich had requested or to provide
complete answers to all of the February 1992 interrogatories.
These concessions established noncompliance with the court's June
1 discovery order and imposed on the Hughes the burden of proving
the absence of willfulness.
When the court questioned Legacki regarding the Hughes'
noncompliance, Legacki offered a number of unsatisfactory
excuses, which were properly rejected. Because the evidence
established a substantial and continuing violation of the June 1
discovery order, and because the Hughes failed to meet their
burden of disproving willfulness, the court could properly find
that the Hughes' noncompliance was willful.
The Hughes next contend that the trial court failed to
engage in a reasonable exploration of alternatives to dismissal.
While we have recognized that the trial court need not make
detailed findings or examine every alternative remedy, we have
held that litigation ending sanctions will not be upheld unless
"the record clearly indicate[s] a reasonable exploration of
possible and meaningful alternatives to dismissal." Power
Constructors v. Acres Am., 811 P.2d 1052, 1055 (Alaska 1991); see
also Sandstrom, 843 P.2d at 648. Exploration of alternative
sanctions will not be assumed on a silent record. See, e.g.,
Sandstrom, 843 P.2d at 648. Nor will a conclusory rejection of
all sanctions short of dismissal suffice as a reasonable
exploration of meaningful alternatives. See Underwriters, 846
P.2d at 121.
Here, apart from the trial court's conclusory statement
that no sanction other than dismissal would remedy the Hughes'
failure to comply with its June 1 discovery order, the record
discloses no exploration of meaningful alternatives and provides
no insight into the reasons that impelled the court to reject
alternative sanctions.3 Nor does the record support the
conclusion that dismissal was actually necessary to remedy the
Hughes' disobedience of the court's order.
We have previously approved litigation ending sanctions
in cases involving repeated violations of discovery orders
relating to crucial information or issues.4 In contrast, in the
present case, although the record clearly establishes the Hughes'
willful and obstinate noncompliance with the June 1 discovery
order and a more generalized pattern of disregard for discovery
rules as a whole,5 the Hughes had violated no prior discovery
orders, and no previous sanctions had been imposed against them
during the course of this case.
Moreover, it appears that the Hughes' noncompliance
resulted in relatively little actual prejudice to Bobich. By the
time of the sanctions hearing, Bobich had taken depositions of
Alvie and Wanda Hughes. Through their testimony, he had
evidently obtained much of the information that the Hughes had
failed to provide in their incomplete responses to Bobich's
February 1992 interrogatories. Additionally, by the time of the
sanctions hearing, the Hughes had seemingly already produced
requested documents and were prepared to execute all requested
releases for information.
Our decisions have insisted that a litigation ending
discovery sanction be "sufficiently related"to the underlying
discovery violation. Honda Motor Co. v. Salzman, 751 P.2d at
493. We have held that a sufficient relationship can be found
only when "the established issue is an `element of the dispute
that cannot be determined on the merits without disclosure of the
evidence the court has ordered the party to produce.'" Id.
(quoting Hazen v. Municipality of Anchorage, 718 P.2d 456, 460
(Alaska 1976) and Bachner v. Pearson, 479 P.2d 319, 324 (Alaska
1970)). When a discovery violation does not threaten prejudice
of this magnitude, the extreme sanction of dismissal is
inappropriate.
While the issue of prejudice was not squarely addressed
by the trial court, the Hughes' noncompliance with the June 1
discovery order does not appear to have actually deprived Bobich
of his ability to defend his case on its merits. Under these
circumstances, the sanction of dismissal was disproportionately
severe.
Given the trial court's failure to engage in a
"reasonable exploration of possible and meaningful alternatives
to dismissal,"Power Constructors, 811 P.2d at 1055, the absence
of substantial evidence to support the trial court's rejection of
lesser sanctions, and the limited extent of prejudice resulting
from the Hughes' noncompliance with the June 1 discovery order,
we conclude that the trial court abused its discretion in
ordering the Hughes' claims dismissed.
B. Failure to Respond to Request for Admissions
1. Standard of Review and Controlling Law
We must separately consider the trial court's order of
summary judgment in favor of Bobich on the Hughes' claim for
overtime wages. The order was entered as a result of the Hughes'
failure to answer Bobich's August 6, 1991 request for admission.
Under Civil Rule 36(a), the subject matter of a request
for admission is automatically deemed admitted when the party to
whom the request is addressed fails to file a timely response or
objection.6 See 4A Moore's Federal Practice, 36.05[4], at 36-
58 n.6. The potential harshness of this automatic provision is
mitigated by Rule 36(b), which provides that the trial court "may
permit withdrawal or amendment [of the 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 that party in
maintaining the action or defense on the merits."7 See United
States v. Kasuboski, 834 F.2d 1345, 1350 n.6 (7th Cir. 1987).
The trial court's decision to allow or disallow the
withdrawal of an admission is subject to reversal for abuse of
discretion. City of Kenai v. Ferguson, 732 P.2d 184, 190 (Alaska
1987). We will find an abuse of discretion if our review of the
record leaves us with "a definite and firm conviction that the
judge made a mistake[.]" Id. (citing Channel Flying, Inc. v.
Bernhardt, 451 P.2d 570, 572 (Alaska 1969)).
2. Analysis
In the present case, Bobich requested the Hughes to
"[a]dmit that on or about the time you quit employment with
Publix Storage you were paid for all past due overtime
compensation." Almost immediately after the request for
admission was filed, the parties agreed to refrain from formal
discovery pending settlement discussions. The Hughes promptly
furnished Bobich detailed information pertaining to their claim
for overtime wages. Settlement discussions eventually
broke down and formal discovery resumed. The Hughes did not
formally respond to Bobich's earlier request for admission,
evidently believing that the information they had informally
supplied amounted to a sufficient answer to Bobich's request for
admission. This belief was not patently unreasonable, since the
information the Hughes had already disclosed unquestionably
answered Bobich's request for admission in substance, if not in
form. Notably, although the trial court ultimately concluded
that the Hughes' informal response did not technically satisfy
the requirements Civil Rule 36(a), the court did not find that
the Hughes had acted willfully or in bad faith. Moreover, the
information that the Hughes had informally disclosed
unquestionably placed Bobich on notice that the issue of overtime
wages was actually disputed and had not been admitted. In moving
for summary judgment based on the Hughes' failure to deny his
request for admission, Bobich candidly acknowledged that he had
suffered no actual prejudice.
Civil Rule 36(b) expressly authorizes withdrawal of an
admission when "the merits of the action will be subserved
thereby" and when no prejudice will result therefrom. City of
Kenai, 732 P.2d at 190. This court has held that "[a] party can
demonstrate that withdrawal of admissions subserves the merit by
showing that the admission concerns a key factual issue." Id.
Here, the disputed admission plainly concerned a key factual
issue.8 Furthermore, as we have already observed, withdrawal of
the admission would have resulted in no actual prejudice to
Bobich. Under the circumstances, we conclude that the trial court
abused its discretion in granting Bobich's motion for summary
judgment without first allowing the Hughes the opportunity to
withdraw the admission that resulted from their failure to
formally respond to Bobich's earlier request.9
III. CONCLUSION
The trial court's finding that the Hughes violated its
June 1, 1992 discovery order is amply supported by the evidence.
While the serious and willful nature of the violation certainly
justifies the imposition of substantial sanctions,10 we conclude
that the trial court abused its discretion in ordering the
Hughes' complaint dismissed. We further conclude that the court
abused its discretion in alternatively granting Bobich's motion
for summary judgment on the Hughes' overtime wage claim.
Accordingly, we REVERSE the judgment entered by the
superior court.11
_______________________________
* Sitting by assignment made under article IV, section 16
of the Alaska Constitution.
1 The partnership dissolved during the course of
this litigation, and Bobich agreed to indemnify the other
defendants for all liabilities arising out of the operation of
Publix Storage.
2 Judge Johnstone took judicial notice of Legacki's
conduct in LeDoux v. Unisea, No. 91-3354 Ci. (Alaska Super., 3d
Dist., Anchorage) (still pending), where Legacki evidently filed
"four or five motions to amend the pleadings," prompting the
court to warn Legacki that he had been abusing the process.
3 At the conclusion of the August 17 sanctions
hearing, Judge Johnstone stated, in relevant part:
I'm forced to conclude that this
cannot be remedied with anything short of
dismissal. I'm aware that the impact of this
is to your clients and not to you personally,
and I regret that, but I see no other
alternative to this after your answers to the
court's questions. . . . So, it's my
regrettable duty to dismiss your case with
prejudice on behalf of the Hughes on the
grounds that it's the only remedy I think
that will protect against further abuse.
Judge Johnstone's written findings of fact and conclusions of law
are equally conclusory in rejecting alternative sanctions:
Sanctions short of dismissal of Alvie
and Wanda Hughes['] complaint will not cure
the abuses of the discovery rules and
violations of this court's orders.
4 See, e.g., Honda Motor Co. v. Salzman, 751 P.2d
489 (Alaska 1988) (upholding litigation ending sanction for
repeated disregard of orders compelling disclosure of crucial
design documents in a products liability case); Alaska Trams
Corp. v. Alaska Elec. Light and Power, 743 P.2d 350 (Alaska 1987)
(approving the use of litigation ending sanction after plaintiff
had disregarded four discovery orders relating to the same
materials over a 14-month period, and after an express warning
that litigation ending sanctions would be imposed for a further
violation).
5 The broader pattern of discovery abuse noted by
the trial court could be construed as indicative of willfulness
and, to that extent, could properly be relied on by the trial
court. The precise issue before the court at the sanctions
hearing, however, was Legacki's failure to comply with the June 1
discovery order. Legacki's general abuse of the discovery
process was not in itself an appropriate subject for sanctions by
the trial court, because Legacki's "attitude in the abstract"was
not at issue. See Otis Elevator Co. v. Garber, 820 P.2d 1072,
1074 (Alaska 1991). Nevertheless, the trial court's findings
suggest that the sanctions it imposed were indeed meant to remedy
Legacki's more general pattern of abuse. To the extent the court
sought to sanction Legacki for his more general pattern of
discovery abuse, its order of dismissal amounted to "mere
punishment," and, as such, was impermissible. Hazen v.
Municipality of Anchorage, 718 P.2d 456, 460 (Alaska 1986)
(quoting Bachner v. Pearson, 479 P.2d 319, 324 (Alaska 1970)).
Particularly troublesome in this regard is the trial court's
judicial notice of conduct for which Legacki had evidently been
reprimanded in a separate case. The court's reliance on
Legacki's conduct in another case raises serious issues of
fairness, since the court gave Legacki no notice that his prior
conduct would be at issue and no opportunity to refute the
court's characterization of that conduct.
6 In this regard, Civil Rule 36(a) provides that a
"matter of which an admission is requested . . . is admitted
unless . . . the party to whom the request is directed serves
upon the party requesting the admission a written answer or
objection addressed to the matter[.]"
7 Similarly, when an answer is filed but fails to
provide an adequate response to a request for admission or
otherwise fails to comply with the requirements of Rule 36(a),
the rule grants the trial court broad discretion to deem a matter
admitted or to allow the filing of an amended answer:
If the court determines that an answer
does not comply with the requirements of
[Rule 36], it may order either that the
matter is admitted or that an amended answer
be served.
Alaska R. Civ. P. 36(a).
8 Bobich's request for admission effectively called
upon the Hughes to admit that their claim for overtime wages was
meritless. The trial court's decision to deem the matter
admitted necessarily precluded the Hughes from litigating their
overtime wage claim on its merits and entitled Bobich to summary
judgment on the issue.
9 Bobich argues that the trial court did not abuse its
discretion in granting the summary judgment motion without first
allowing the Hughes an opportunity to withdraw their admission,
since the Hughes did not move for withdrawal until after summary
judgment had already been granted. This argument is unpersuasive
under the circumstances of this case. In opposing Bobich's
motion for summary judgment, the Hughes claimed that their
previous informal response substantially complied with the
requirements of Civil Rule 36(a). Given this claim, the Hughes
had no occasion to move for withdrawal until the trial court
ruled that the information they had informally disclosed did not
qualify as a formal response to Bobich's request for admission;
yet the trial court made this ruling at the same time as it
granted Bobich's motion for summary judgment.
10 We leave the issue of appropriate sanctions to the
discretion of the trial court on remand.
11 Our reversal of the trial court's decision on these
grounds makes it unnecessary for us to decide the various
alternative grounds advanced by the Hughes in challenging the
trial court's orders of dismissal and summary judgment.
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