United States District Court, D. Maryland
XINIS UNITED STATES DISTRICT JUDGE.
before the Court is the United States' motion to withdraw
or amend deemed admissions, ECF No. 20, and Defendant
Abdelrahman Ayyad's motion for summary judgment. ECF No.
17. The motions are fully briefed, and no hearing is
necessary. See Loc. R. 105.6. For the following
reasons, the Court GRANTS the United States' motion and
DENIES Ayyad's motion.
15, 2018, the United States filed suit against Ayyad,
pursuant to 31 U.S.C. § 3711, to collect $1.4 million in
civil tax penalties that had been assessed against him for
willful failure to file Financial Bank and Financial Accounts
Reports (“FBARs”) related to two foreign bank
accounts held with the Cairo Amman Bank in Jordan from 2009
to 2012. ECF No. 1. Specifically, the United States contends
that, pursuant to 31 U.S.C. §§ 5314 and 5321 and
corresponding regulations, Ayyad was required to file FBARs
because he maintains “a financial interest in, or
signature or other authority over, a bank security, or other
financial account in a foreign country” with an
aggregate annual balance of more than $10, 000. See
also Treasury Form TD 90-22.1. Section 5321(a)(5)
imposes civil penalties for willful violations of FBAR filing
to the United States, Ayyad maintained a personal foreign
account and a business foreign account in the name of the
American Middle East Furniture Company, LLC, a business that
he operated in Jordan. ECF No. 1 ¶¶ 4-6; ECF No.
17-3 ¶ 6. The United States further contends that the
aggregate amount in both accounts exceeded $10, 000 during
the 2009 through 2012 tax years; that Ayyad reported the
foreign accounts on his federal income tax returns for these
tax years; and that he knowingly failed to file FBARs (either
accurately or at all). ECF No. 1 ¶¶ 10-20. Based on
this failure, says the United States, Ayyad owes $1, 448, 432
in penalties as of June 5, 2018, plus statutory interest and
other penalties that accrue, by law, until the balance is
paid in full. ECF No. 1 ¶ 25. To collect the unpaid
penalties, the United States initiated this action.
Court first issued a scheduling order on October 15, 2018,
and has amended discovery deadlines on three previous
occasions. ECF Nos. 7, 10, 14, 16. Discovery will close on
October 2, 2019. ECF No. 16.
April 15, 2019, Ayyad propounded on the United States his
Requests for Admissions (“Requests”) pursuant to
Rule 36(a) of the Federal Rules of Civil Procedure. ECF No.
21-1 (Ex. 3). Under Rule 36(a)(3), the party receiving the
Request must respond within thirty days or the subject matter
of the Request is deemed admitted. In this case, the parties
agreed to extend the deadline for the United States'
response until June 17, 2019. ECF No. 20 at 3-4. However, the
United States did not submit any response by this agreed-upon
date. ECF No. 20 at 4; ECF No. 21 at 2.
weeks after, on July 2, 2019, Ayyad moved for summary
judgment in his favor, relying exclusively on the putatively
deemed admissions in support. ECF No. 17. On July 17, 2019,
the United States served on Ayyad its responses to the
Requests. ECF No. 20-3 ¶ 9. The United States also
separately moved to withdraw or amend the matters deemed
admitted by virtue of its failure to respond to the Requests
by the agreed-upon date. As grounds, the United States
explained that Government counsel had been hospitalized for a
medical condition and after she was released, immediately
began trial in Chattanooga, Tennessee. Counsel also had
docketed erroneously the response deadline for July 17. ECF
No. 20-3 (Peyton Decl.). The failure to file a timely
response, asserts the United States, was thus inadvertent and
excusable. ECF No. 20 at 4.
Government's Motion to Amend or Withdraw
United States urges this Court to allow amendment or
withdrawal of the admissions due to Government counsel's
hospitalization and contemporaneous trial demands. ECF No. 20
initial matter, Rule 36 “does not require the
Court to treat all facts as admitted when a litigant fails to
timely respond to Requests for Admissions.” Uribe
v. Aaron's, Inc., No. GJH-14-0022, 2014 WL 4851508,
at *3 (D. Md. Sept. 26, 2014) (emphasis in original); see
also United States v. Turk, 139 F.R.D. 615, 617-18 (D.
Md. 1991) (recognizing that “the sanctions expressed by
Federal Rule of Civil Procedure 36(a) are not
mandatory” for the court). Indeed, “[t]he Rule
expressly provides that this Court may shorten or
lengthen the time a party is allowed to respond.”
Turk, 139 F.R.D. at 618 (emphasis added); see
also Fed. R. Civ. P. 36(a)(3) (“[a] shorter or
longer time for responding may be stipulated to under Rule 29
or be ordered by the court”) (emphasis added).
The Court, therefore, is well within its discretion to
enlarge the time to respond to Requests for Admission even if
the responses are already untimely. See e.g., Nguyen v.
CNA Corp., 44 F.3d 234 (4th Cir. 1995) (noting that it
is within the district court's discretion whether to deem
requests as admitted or allow an extension of time to
respond); Turk, 139 F.R.D. at 618 (“because
the district court has the power to allow a longer time,
courts and commentators view this to mean that the court, in
its discretion, may permit the filing of an answer that would
otherwise be untimely”) (internal quotation omitted).
Rule 36(b) further provides that the court may allow
withdrawal of such admissions to “promote the
presentation of the merits of the action and if the court is
not persuaded that it would prejudice the requesting party in
maintaining or defending the action on the merits.”
Fed.R.Civ.P. 36(b); see also Webb v. Green Tree
Servicing, LLC, No.-11-2105, 2013 WL 5442423, at *18 (D.
Md. Sept. 30, 2013).
the Court will allow the United States to amend the
responses. Government Counsel had been hospitalized and under
water with an out of state trial, resulting in a one-month
delay in responding. Ayyad's summary judgment motion
capitalizes on a one-month delay in responding, and urges the
Court to decide the case not on its actual merits, but solely
because the United States failed to respond to the admissions
by June 17. Allowing amendment ensures that the case is
decided on the evidence produced by both sides and in good
faith, not “admissions” that are the product of a
trial attorney's unfortunate hospitalization and
contemporaneous trial schedule. In this respect, allowing
amendment would align with this Circuit's “strong
policy that cases be decided on their merits.”
United States v. Shaffer Equip. Co., 11 F.3d 450,
453 (4th Cir. 1993); see also Fed. R. Civ. P. 36
Advisory Committee's Note on Rules-1970 Amendment (noting
that the purpose of Rule 36(b) “emphasizes the
importance of having the action resolved on the merits, while
at the same time assuring each party that justified reliance
on an admission in preparation for trial will not operate to
in response, contends that he has been
“prejudiced” because he complied with the
discovery schedule, expended resources to respond to written
discovery, and now would not be able to take advantage of
this diligence “in reliance on the Federal Rules of
Civil Procedure” if amendment were permitted. ECF No.
23 at 7. But compliance with the rules does not amount to
prejudice if the Court, in its discretion, finds enlargement
of time justified. This is especially so where discovery is
ongoing. See Butler v. PP & G, Inc., No. CIV.A.
WMN-13-43, 2013 WL 4026983, at *3 (D. Md. Aug. 6, 2013)
(finding no prejudice to opposing party where
“discovery has not yet closed and thus, [the opposing
party] still has the opportunity to gather evidence in
support of her case”); see also Union Pac. R.R. Co.
v. Balt. & Annapolis R.R. Co., No. 08-2685, 2009 WL
3633349 at *2 (D.Md. Oct. 27, 2009) (finding party would not
be prejudiced where opposing party's responses to the
admissions were only one month late). Ayyad has failed to
demonstrate how the brief delay prejudices him. Accordingly,
the Court grants the United States' motion, and its July
17 responses are the operative responses.