Expenses and Fees on Failure to Admit Under Wis. Stat. § 804.12(3)

WDC Journal Edition: Summer 2016
By: Sarah “Sally” Fry Bruch, Crivello Carlson, S.C.

I. Introduction

This Article provides an overview of Wis. Stat. § 804.12(3), which authorizes as a sanction the award of attorney fees and expenses for the failure to admit a request for admission. The Article explains the circumstances in which such a sanction is and is not appropriate, and also explains how the amount of the sanction is to be determined. Defense counsel are strongly encouraged to get familiar with the nuances of this statute.

II. Wisconsin Stat. § 804.12(3) Requires An Abuse of Discovery For Sanctions to Be Awarded.

Wisconsin Stat. § 804.12(3)[1] governs sanctions for failure to admit. The statute does not award reasonable expenses and attorney fees simply because the outcome of trial differs from the answers given to the Requests for Admission. Instead, for the severe sanction of an award of reasonable expenses incurred in making the proof of a matter or genuineness of a document not admitted, including reasonable attorney fees, to be ordered, the statute requires an intentional abuse of the discovery process, including unjustifiable evasion in order to thwart, obscure, complicate, and mislead.[2] For this reason, a circuit court should deny a plaintiff’s motion for reasonable expenses and attorney fees where that motion makes no assertions of discovery abuse.

The recovery of reasonable attorney fees must be expressly authorized by statute, and Wis. Stat. § 804.12(3) is such a statute.[3] The legislative intent of § 804.12(3) is punitive, however; it imposes sanctions for intentional misconduct in order to deter those who “abuse the discovery process,” “obscure and complicate the issues,” and “mislead” the opposing party.[4] The express legislative purpose of these sanctions “is to ensure that ‘[a]ny party who seeks to evade or thwart full and candid discovery incurs the risk of serious consequences.’”[5]

The Wisconsin Court of Appeals explained the punitive intent of Wis. Stat. § 804.12(3), and the requirement of discovery abuse as a prerequisite to its application, in Michael A.P. v. Solsrud.[6] In that case, Solsrud, the party answering the request for admissions, had “categorically denied” a number of specific requests concerning his business practices and control over a construction project.[7] The court of appeals found that these denials had essentially required an “extensive” amount of discovery and an “unnecessary” eight-day trial, during which “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.”[8] The court further found that, “[p]rior to trial, Solsrud failed to modify or supplement his responses to Goodyear’s request for admissions.”[9]

In support of its finding that an abuse of discovery had occurred, meriting the imposition of sanctions under Wis. Stat. § 804.12(3), the court of appeals specifically found that “[t]here is simply no legitimate basis for Solsrud to contend that he did not know that the matters he denied were true,” because “[a]ll of the denied requests concerned actions and relationships in which Solsrud was intimately involved.”[10]

The court of appeals further explained its conclusion that discovery abuse occurred:

We conclude in every instance that the record is replete with evidence supporting the court’s finding. 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.[11]

That the legislative intent of the statute is punitive and imposes actual expenses and reasonable attorney fees as a sanction for discovery abuses was further illustrated by the Wisconsin Court of Appeals in Mooney v. Royal Ins. Co. of America.[12] In that case, the award of expenses was “a sanction” for the failure to admit facts that the defendants “knew without a doubt”:

The club also appeals the awarding of attorney fees for failing to admit pursuant to sec. 804.12(3), Stats. The trial court had ample grounds to award sanctions under this section because the club failed to admit to certain facts when they had no reasonable belief that they might prevail on the matter at trial. For example, the trial court found that the club avoided admitting that the snow mounds were made by them, when their own officers and members knew without a doubt that they were.[13]

Mooney teaches that a successful Wis. Stat. § 804.12(3) motion must assert, based on the record, that the denying party either knew that the facts denied were “true” at the time the Requests for Admission were denied, or, that the denying party subsequently admitted the same facts at trial without having modified or supplemented its responses to the Requests for Admission. Thus, a plaintiff’s § 804.12(3) motion must fail where no discovery abuses such as those in Michael A.P. or Mooney are shown.

III. Exceptions (a) – (d) to Wis. Stat. § 804.12(3) May Preclude the Imposition of Sanctions for the Failure to Admit.

While maintaining that a plaintiff’s Wis. Stat. § 804.12(3) motion must be denied because it fails to assert any abuse of discovery, the defendants may also assert that the facts of record show that their “denials” fall within exceptions (a), (b), (c) and/or (d) to § 804.12(3), such that no sanctions may be imposed. Under the plain language of the statute, the circuit court “shall” order expenses on failure to admit “unless it finds” that an exception under (a) – (d) applies.

A. Exception (a)

Exception (a) (“the request was held objectionable pursuant to sub. (1)”) precludes imposition of the sanction of expenses and attorney fees for the denial of any of a plaintiff’s request for admissions where a plaintiff has not sought a determination of the sufficiency of the defendants’ objections prior to trial and the objections were meritorious. Thus, defendants may assert that denial is appropriate where the plaintiff has not sought a sufficiency determination from the court prior to trial.[14]

B. Exception (b)

Exception (b) (“the admission sought was of no substantial importance”) by its plain language may apply where the admission sought was of no consequence to any question on the verdict.

C. Exception (c)

Exception (c) (“the party failing to admit had reasonable grounds to believe that he or she might prevail on the matter”) may separately preclude imposition of any sanctions for the defendants’ denials pertaining to negligence, where at the time of making each denial, defendants reasonably believed they might prevail at trial. This is because defendants are simply not required to admit they were negligent where there are questions of fact, nor may they be sanctioned for denying negligence.[15] For example, exception (c) may be asserted where it has not been shown at trial that the defendants “knew” they were negligent at the time of the denials (Mooney). Exception (c) may also be asserted where the defendants’ witnesses did not admit “the truth of the matter” at trial that they had previously denied in response to the plaintiff’s request for admission (Michael A.P.).

D. Exception (d)

Exception (d) (“there was other good reason for the failure to admit”) may separately preclude imposition of sanctions where, for example, a plaintiff’s request for admissions of medical bills only attaches uncertified copies. A plaintiff’s failure to attach certified medical bills may provide “good reason” to deny under exception (d), as only certified medical bills are admissible at trial as patient health care records without an authentication witness under Wis. Stat. § 908.03(6m)(b)1., 2., and (bm).[16]

“[O]ther good reason” under exception (d) may also preclude sanctions where the defendant responds that it “has denied and continues to deny the cause, nature and extent of plaintiff’s claimed injuries.” This is because defendants are entitled to their day in court where facts are disputed on the issues of negligence and the underlying cause of a plaintiff’s claimed injuries.[17]

IV. The Circuit Court May Deny Attorney Fees and Expert Witness Expenses Requested Under Wis. Stat. § 804.12(3) As Unreasonable Unless They Were Incurred in Specifically Proving the Matters Improperly Denied.

While maintaining that a plaintiff’s Wis. Stat. § 804.12(3) motion must be denied because it fails to assert any abuse of discovery or because an exception applies, defendants may also assert that fees and expenses requested should be denied as unreasonable. This is “a matter for the circuit court’s discretion.”[18]

Reasonable expenses that may be awarded in the event of discovery abuse do not include the actual charges requested by a plaintiff’s attorney for all of their fees and expert witness expenses.[19] Only those costs and fees associated with developing and proving the facts improperly denied in the request for admissions may be awarded under the express language of Wis. Stat. § 804.12(3).[20] Thus, proof of reasonable expenses and attorney fees requires the court to “determine as a matter of law on the record presented what claimed expenses were reasonably incurred only in connection with proving matters improperly denied in response to requests for admission.”[21] Any fees or expenses incurred with respect to proof or witnesses that are not associated with the matters denied may not be awarded.[22]

Wisconsin Stat. § 814.045(1) sets forth factors the circuit court must consider in determining the reasonableness of attorney fees, and includes the factors required under SCR 20:1.5. The party seeking reasonable attorney fees is required to submit “adequate evidence to support the number of hours worked and rates charged.”[23] Absent such evidence, an award will not be sustained.[24] Thus, a circuit court should deny a plaintiff’s motion that fails to identify, by affidavit, how the fees requested were calculated.

V. Conclusion

An award of fees and expenses for the failure to admit is not easily given. Absent a showing of an abuse of the discovery process, such a punitive sanction should not issue. In addition, even in the event such a sanction is appropriate, only those fees and expenses specifically incurred in proving the matter denied may be awarded. Defense counsel are well advised to ensure that they fully understand the nuances of Wis. Stat. § 804.12(3).

References


[1] The full text of the statute is as follows:

(3) Expenses on failure to admit. If a party fails to admit the genuineness of any document or the truth of any matter as requested under s. 804.11, and if the party requesting the admissions thereafter proves the genuineness of the document or the truth of the matter, the requesting party may apply to the court for an order requiring the other party to pay the requesting party the reasonable expenses incurred in the making of that proof, including reasonable attorney fees. The court shall make the order unless it finds that (a) the request was held objectionable pursuant to sub. (1), or (b) the admission sought was of no substantial importance, or (c) the party failing to admit had reasonable ground to believe that he or she might prevail on the matter, or (d) there was other good reason for the failure to admit.

Wis. Stat. § 804.12(3) (emphasis added).

[2] Michael A.P. v. Solsrud, 178 Wis. 2d 137, 156, 502 N.W.2d 918 (Ct. App. 1993).

[3] Wisconsin Retired Teachers Ass’n v. Employe Trust Funds Bd., 207 Wis. 2d 1, 36, 558 N.W.2d 83 (1997).

[4] Michael A.P., 178 Wis. 2d. at 156.

[5] Id. (citing Judicial Committee Note, Wis. Stat. Ann. § 804.12(4) (1992)). Similarly, the legislative intent of Fed. R. Civ. P. 37, on which § 804.12(3) is based, provides for sanctions only against parties or persons who are “unjustifiably resisting discovery.” See Fed. R. Civ. P. 37, Notes of Advisory Committee on Rules—1970 Amendment. The legislative intent of the federal rule is persuasive authority for Wisconsin courts in interpreting the state rule. Rao v. WMA Securities, Inc., 2008 WI 73, ¶ 47, 310 Wis. 2d 623, 752 N.W.2d 220 (“Because the Wisconsin rules governing ... sanctions for violations of discovery orders mirror the federal rules, federal law is [] instructive in interpreting the Wisconsin rules….”).

[6] 178 Wis. 2d 137.

[7] Id. at 144-45.

[8] Id. at 145.

[9] Id.

[10] Id. at 152-53.

[11] Id. at 152 (emphasis added).

[12] 164 Wis. 2d 516, 476 N.W.2d 287 (Ct. App. 1991).

[13] Id. at 524-25 (emphasis added); see also Tesch v. Tesch, 63 Wis. 2d 320, 334-35, 217 N.W.2d 647 (1974).

[14] See also Wisconsin Discovery Law and Practice, § 5.34, ch. 5, pp. 44-46 (State Bar of Wisconsin PINNACLE 4th Ed. 2015) (citing Russo v. Baxter Healthcare Corp., 51 F. Supp. 2d 70, 78-79 (D.R.I. 1999)) (noting that, under Fed. R. Civ. P. 37, which is analogous to Wis. Stat. § 804.12(3), federal appellate courts have held that a party which objected to a request for admission should not be subject to sanctions where the objection may have been meritorious, especially where the party requesting the sanctions has not sought a determination of the sufficiency of the objection under exception (a) to the statute).

[15] Fischer v. Steffen, 2010 WI App 68, ¶ 20, 325 Wis. 2d 382, 783 N.W.2d 889 (“We do not look at the facts that were within the knowledge of the party being requested to admit, after the jury trial is over.”); see also Nelson v. L. & J. Press Corp., 66 Wis. 2d 779, 783-84, 223 N.W.2d 607 (1974).

[16] See Correa v. Farmers Ins. Exchange, 2010 WI App 171, ¶ 6, 330 Wis. 2d 682, 794 N.W.2d 259; see also J.K. v. Peters, 2011 WI App 149, ¶ 44, 337 Wis. 2d 504, 808 N.W.2d 141 (citing Correa, 330 Wis. 2d 682, ¶ 6); United States Classified Parking Sys., Inc., 213 F.2d 631, 634-35 (5th Cir. 1954).

[17] Fischer, 325 Wis. 2d 382, ¶¶ 20, 21 (“In determining whether a certain fact was reasonably debatable, we do not look at the facts that were within the knowledge of the party being requested to admit, after the jury trial is over. What we look to are the facts within the knowledge of the person being asked to admit at the time the request to admit was served.”) (citing Nelson v. L. & J. Press Corp., 65 Wis. 2d 770, 783-84, 223 N.W.2d 607 (1974)).

[18] Wisconsin Discovery Law and Practice, § 5.35, ch. 5, p. 48 (State Bar of Wisconsin PINNACLE 4th Ed. 2015) (citing Michael A.P., 178 Wis. 2d at 153).

[19] Id.

[20]Michael A.P., 178 Wis. 2d at 155.

[21] Id. at 153.

[22] Id. at 153-55.

[23] The Law of Damages in Wisconsin, Vol. III, § 37.36, Ch. 37, p. 24 (State Bar of Wisconsin PINNACLE 2015) (citing Kolupar v. Wilde Pontiac Cadillac, Inc., 2004 WI 112, ¶ 31, 275 Wis. 2d 1, 683 N.W.2d 58).

[24] Id.; see also Fireman’s Fund Ins. Co. of Wis. v. Bradley Corp., 2003 WI 33, ¶¶ 66-69, 261 Wis. 2d 4, 660 N.W.2d 666.