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CX Reinsurance Company Limited v. Johnson

United States District Court, D. Maryland

January 24, 2018

CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited
Devon S. Johnson



         Dear Counsel:

         Pursuant to Judge Titus's January 19, 2017 Order, this matter has been referred to me for discovery disputes and related scheduling matters. [ECF No. 40]. Presently pending is CX Reinsurance Company Limited's (“CX Re”) Motion to Deem Facts Admitted by Intervenor-Defendant Devon Johnson [ECF No. 98], Intervenor-Defendant Devon S. Johnson's (“Johnson”) Opposition [ECF No. 100], and CX Re's Reply [ECF No. 102]. I find that no hearing is necessary. See Loc. R. 105.6 (D. Md. 2016). For the following reasons, CX Re's Motion to Deem Facts Admitted is denied, although Johnson is ordered to amend certain responses in accordance with this letter opinion.

         I. Background

         In this action, CX Re seeks to rescind commercial general liability insurance policies (“Policies”) issued to Benjamin L. Kirson (“Kirson”), and other named insureds in 1997, 1998, and 1999. Pl.'s First Am. Compl., [ECF No. 17 ¶¶ 1, 7, 8]. The Policies provide insurance coverage for certain risks, including lead exposure, relating to specified residential rental properties in Baltimore, Maryland (“Properties”). See Policies, [ECF Nos. 1-2, 1-3].

         In particular, CX Re alleges that Kirson made a misrepresentation of material fact by falsely answering “No” to Question 16 of the Application upon which the Policies were issued, which asks whether “the [i]nsured ever had any lead paint violations in the buildings.” [ECF No. 17 ¶¶ 1, 13, 19-24]. CX Re argues that, if Kirson had answered this question truthfully, CX Re would not have issued the Policies, or would have issued the Policies subject to substantially higher premiums or substantially different terms. Id. ¶ 32. CX Re asserts that, “after learning of and investigating Kirson's misrepresentation . . ., [it] filed this rescission action.” Id. ¶ 34.

         On August 8, 2016, Johnson won a $1, 628, 000.00 judgment against Kirson in State court, representing damages for injuries sustained from lead paint exposure at a property covered by CX Re's policy (741 East 36th Street, Baltimore, Maryland). Devon Johnson, A Minor By His Next Friend v. Benjamin L. Kirson, 24-C-14005926; [ECF No. 19 ¶ 2]. Thus, to protect his interests, demonstrate that CX Re's policy remains in effect, and ensure that “rescission is inoperative and invalid as to his claims[, ]” Johnson intervened in this action on January 18, 2017. [ECF Nos. 19 ¶ 3, 38]. Thereafter, on November 1, 2017, CX Re served on Johnson its Requests for Admission [“RFAs”] [ECF No. 98-3], and, on November 8, 2017, Johnson served his responses thereto [ECF No. 98-4].

         The instant discovery dispute revolves around CX Re's RFA Nos. 1-24 and 26-29. [ECF No. 98 at 6]. These RFAs seek four categories of admissions: (1) admissions relating to Kirson's procurement of the Policies at issue (RFA Nos. 1-3, 14, 15); (2) admissions relating to the contents contained within the Kirson Application (RFA Nos. 4-13, 26, 28, 29); (3) admissions relating to a lead paint violation at 721 East 23rd Street in Baltimore (RFA Nos. 16-20); and (4) admissions relating to Johnson's tenancy at 341 East 36th Street in Baltimore (RFA Nos. 21-24, 27). [ECF No. 98-3]. Johnson responded to the first two categories of RFAs (RFA Nos. 1-15, 26, 28, 29), relating to the procurement of the policies and the information contained in the Application, stating that he had “no personal knowledge with which to either admit or deny th[e] request, as he was not a party to the application/contract in question. Th[e] request is more properly directed to the former Kirson parties.” [ECF No. 98-4 at 1-6, 12, 13-14]. Further, Johnson denied (in his amended responses) each RFA in the third category, relating to 721 East 23rd Street, stating that he had “no knowledge of any contact with a property located at” that address. [ECF No. 98-5 at 7]. Finally, Johnson responded to the fourth category, relating to his tenancy at 741 East 36th Street, stating that “he ha[d] no personal recollection from which to either admit or deny th[e] request, as he was born on 4/18/97 and was age 0-3 when he resided” there between 1997-2000. Id. CX Re requests that this Court deem each of these RFAs admitted, arguing that, had Johnson conducted a reasonable inquiry into the RFAs, as required by Federal Rule of Civil Procedure 36, Johnson would necessarily have admitted each of the facts contained therein. [ECF No. 98 at 6].

         II. Legal Standards

         Federal Rule of Civil Procedure 36 provides that “[a] party may serve on any other party a written request to admit[] . . . the truth of any matters within the scope of Rule 26(b)(1) relating to: (A) facts, the application of law to fact, or opinions about either; and (B) the genuineness of any described documents.” Fed.R.Civ.P. 36(a)(1). “The purpose of Rule 36(a) is to expedite trial by establishing certain material facts as true and thus narrowing the range of issues for trial.” Louis v. Martinez, No. 5:08-CV-151, 2011 WL 1832808, at *3 (N.D. W.Va. May 13, 2011). In responding to a request:

[i]f a matter is not admitted, the answer must specifically deny it or state in detail why the answering party cannot truthfully admit or deny it. . . . The answering party may assert lack of knowledge or information as a reason for failing to admit or deny only if the party states that it has made reasonable inquiry and that the information it knows or can readily obtain is insufficient to enable it to admit or deny.

         Fed. R. Civ. P. 36(a)(4). As such, “a party may not refuse to admit or deny a [RFA] based upon a lack of personal knowledge if the information relevant to the request is reasonably available to him.” Martinez, 2011 WL 1832808, at *3 (citation omitted). Moreover, pursuant to the Rule's language, “[i]f the party is asserting that it cannot admit or deny due to lack of knowledge or information, it must state that it has first made a reasonable inquiry into the matter.” Ball-Rice v. Bd. of Educ. of Prince George's Cty., No. CIV.A. PJM-11-1398, 2013 WL 2299725, at *2 (D. Md. May 24, 2013) (citing Fed.R.Civ.P. 36(a)(4)). “What constitutes a ‘reasonable inquiry' . . . depends upon the facts of each case.” Bado v. Southland Indus., Inc., No. CV PJM-07-1081, 2008 WL 11366413, at *1 (D. Md. May 21, 2008) (citing T. Rowe Price Small-Cap Fund, Inc. v. Oppenheimer & Co., Inc., 174 F.R.D. 38, 43 (S.D.N.Y. 1997)). “Generally, a ‘reasonable inquiry' is limited to review and inquiry of those persons and documents that are within the responding party's control[, ]” and includes investigation of the party's “officers, administrators, agents, employees, servants, enlisted or other personnel, who conceivably, but in realistic terms, may have information which may lead to or furnish the necessary and appropriate response.” T. Rowe Price, 174 F.R.D. at 43; see Dulansky v. Iowa-Illinois Gas & Elec. Co., 92 F.Supp. 118, 123 (S.D. Iowa 1950) (holding that it would be improper to “require a respondent to ascertain from third persons, known to him and to the court to be hostile or interested in the outcome of the suit, facts upon which to predicate a sworn response[.]”); but see Uniden Am. Corp. v. Ericsson Inc., 181 F.R.D. 302, 304 (M.D. N.C. 1998) (hereinafter Uniden America) (holding that a respondent “must make inquiry of a third party when there is some identity of interest manifested, such as by both being parties to the litigation, a present or prior relationship of mutual concerns, or their active cooperation in the litigation, and when there is no manifest or potential conflict between” them).

         Importantly, “[o]n finding that an answer does not comply with this rule, the court may order either that the matter is admitted or that an amended answer be served.” Fed.R.Civ.P. 36(a)(6). “Ordinarily, a district court should first order an amended answer, and deem the matter admitted only if a sufficient answer is not timely filed. . . .” Louis, 2011 WL 1832808, at *2. However, “[i]t is often appropriate to order the matter admitted where a party responds to a Rule 36 request in bad faith or does so evasively.” Ball-Rice, 2013 WL 2299725, at *2. Moreover, courts have deemed RFAs admitted when a party fails to state that it made reasonable inquiry before asserting a lack of knowledge or information as a reason for failing to admit or deny a request. See e.g., Louis, 2011 WL 1832808, at *3 (admitting defendants' responses because, in failing to state that they made a reasonable inquiry, “[a]t best, Defendants committed an oversight and, at worst, Defendants abused the discovery process by answering with multiple evasive and meritless responses.”); Poole ex rel. Elliott v. Textron, Inc., 192 F.R.D. 494, 499 (D. Md. 2000) (“Failure to adhere to the plain language of this statute requires that the fact in question be admitted.”) (citing Asea, Inc. v. S. Pac. Transp. Co., 669 F.2d 1242, 1245 (9th Cir. 1981)).

         III. Johnson's Failure to State that He Made a “Reasonable Inquiry” is Harmless asto RFA Categories 1, 2, ...

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