David Yount v. Carpenter Co. D/B/A Carpenter Realt

FILED Sep 07 2023, 8:52 am

CLERK Indiana Supreme Court Court of Appeals and Tax Court

ATTORNEY FOR APPELLANTS ATTORNEY FOR APPELLEES Amy L. Cueller James N. Scahill Striebeck Law P.C. Indianapolis, Indiana Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

David Yount and September 7, 2023 Susan Yount, Court of Appeals Case No. Appellants-Plaintiffs, 23A-PL-116 Appeal from the v. Brown Circuit Court The Honorable Carpenter Co. Inc. d/b/a Mary Wertz, Judge Carpenter Realtors, Trial Court Cause No. Janet Stitt, and 07C01-2004-PL-108 Patsy L. Coffey, Appellees-Defendants

Opinion by Judge Vaidik Judges Mathias and Pyle concur.

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Vaidik, Judge.

Case Summary [1] Indiana Trial Rule 37(A)(4) provides, in part, that when a court grants a motion

to compel discovery responses, it must order the party that opposed the motion

to pay the moving party’s expenses unless the opposition was “substantially

justified.” Here, the trial court ordered David and Susan Yount (“Plaintiffs”) to

pay $900 to Carpenter Co., Inc. d/b/a Carpenter Realtors and two of its

realtors, Janet Stitt and Patsy L. Coffey, (collectively, “Defendants”) after

Plaintiffs objected to numerous discovery requests, including requests for

admission that asked them to admit or deny that other people made certain

statements, knew certain facts, and relied on certain information. We reverse.

In objecting, Plaintiffs explained that they could not truthfully admit or deny

the matters at issue because they would have to speculate about the statements,

knowledge, or reliance of other people. Those objections were not just

substantially justified but entirely appropriate.

Facts and Procedural History [2] In 2019, Plaintiffs bought property in Brown County from Carrel Moore

(“Seller”). Defendants were the realtors in the transaction. Plaintiffs later sued

Defendants for fraud, deception, and breach of contract, claiming they made

misrepresentations about dock access, water access, the property boundary, and

a Surveyor Location Report. Plaintiffs’ complaint included claims for attorney’s

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fees under both the purchase agreement and Indiana’s Crime Victims Relief

Act, Indiana Code section 34-24-3-1. [3] Defendants sent Plaintiffs thirty-nine requests for admission and seventeen

requests for production. Plaintiffs answered eight of the requests for admission

and objected to the other thirty-one. They responded to eleven of the requests

for production and objected to the other six. Through letters and a

teleconference, the parties’ attorneys resolved some of the contested items, but

not all. [4] As a result, Defendants moved to compel answers to eighteen of the requests for

admission (1-5, 8-16, and 21-24) and responses to three of the requests for

production (7, 8, and 9).1 Request for admission 1 asked Plaintiffs to admit or

deny that Seller “told” Defendants certain information. Appellants’ App. Vol.

II pp. 111, 121. Requests 2, 4, and 9 asked Plaintiffs to admit or deny that

Defendants had “independent knowledge” of certain facts. Id. at 111-12, 121-

22. Requests 3, 5, 8, and 10 asked Plaintiffs to admit or deny the “knowledge”

of Defendants regarding certain facts. Id. Requests 11 and 12 asked Plaintiffs to

admit or deny that Defendants “relied” on certain statements by Seller. Id. at

113, 123. Plaintiffs objected to these requests (“the Factual Requests”) on the

basis that they called for “speculation” about the statements, knowledge, and

1 The motion to compel also mistakenly referenced request for admission 6, to which Plaintiffs had already responded.

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reliance of others and therefore Plaintiffs “cannot truthfully admit or deny the

matter.” Id. at 137-39, 149-51. [5] Requests for admission 13-16 and 21-24 asked Plaintiffs to admit or deny that

Defendants had certain rights and duties under Indiana Code section 25-34.1-

10-10, which sets forth the “duties and obligations” of “[a] licensee representing

a seller or landlord.” Plaintiffs objected to these requests (“the Legal Theory

Requests”) on the basis that they, as non-lawyers, are “not qualified” to opine

on the meaning and applicability of a statute. Id. at 139-42, 151-54. [6] Requests for production 7-9 asked Plaintiffs to produce invoices, payment

records, and time and billing records for their attorney’s fees relating to this

litigation. Plaintiffs objected to these requests on the basis that they are

“premature since the reasonableness and amount of attorney’s fees [Plaintiffs]

will be entitled to recover from the Defendants will be determined by the Court

after and only to the extent a jury returns a verdict against the Defendants on

[Plaintiffs’] fraud and/or deception claims.” Id. at 178-79, 195-96. [7] After a hearing, the trial court granted Defendants’ motion to compel in large

part, ordering Plaintiffs to respond to all the requests except the three requests

for admission about Defendants’ “independent knowledge” of certain facts. The

court found that the term “independent knowledge” is vague and would require

Plaintiffs “to guess regarding its meaning.” Id. at 238. Plaintiffs complied with

the court’s order to respond to the other requests.

Court of Appeals of Indiana | Opinion 23A-PL-116 | September 7, 2023 Page 4 of 12 [8] Defendants then moved for sanctions under Trial Rule 37(A)(4), arguing that

Plaintiffs’ objections to the discovery requests on which the motion to compel

was granted had not been “substantially justified.” Appellants’ App. Vol. III pp.

32-36. The motion stated that Defendants’ attorney had spent 6.2 hours on the

discovery dispute at a rate of $175 per hour. The trial court ordered Plaintiffs to

pay Defendants $900. [9] Plaintiffs now bring this interlocutory appeal as a matter of right under Indiana

Appellate Rule 14(A)(1).

Discussion and Decision [10] Plaintiffs contend the trial court erred by granting Defendants’ motion for

sanctions. Trial courts have broad discretion when ruling on discovery issues,

and we will reverse only for an abuse of that discretion. Huber v. Montgomery

Cnty. Sheriff, 940 N.E.2d 1182, 1185-86 (Ind. Ct. App. 2010). [11] Under Trial Rule 37(A)(4), when a court grants a motion to compel discovery,

it “shall” require the resisting party “to pay to the moving party the reasonable

expenses incurred in obtaining the order, including attorney’s fees, unless the

court finds that the opposition to the motion was substantially justified or that

other circumstances make an award of expenses unjust.” A party is

“substantially justified” in resisting discovery “if reasonable persons could

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conclude that a genuine issue existed as to whether a person was bound to

comply with the requested discovery.” Huber, 940 N.E.2d at 1186.2

I. Requests for Admission [12] Plaintiffs argue they were substantially justified in objecting to both the Factual

Requests and the Legal Theory Requests. Requests for admission are governed

by Trial Rule 36, which provides, in relevant part, that “[a] party may serve

upon any other party a written request for the admission, for purposes of the

pending action only, of the truth of any matters within the scope of Rule 26(B)

set forth in the request[.]” In turn, Trial Rule 26(B) provides that “[p]arties may

obtain discovery regarding any matter, not privileged, which is relevant to the

subject-matter involved in the pending action, whether it relates to the claim or

defense of the party seeking discovery or the claim or defense of any other

party[.]” As our Supreme Court has explained:

Requests for admission perform a vital role in permitting the parties to identify those legal contentions and issues for which evidentiary proof will not be necessary. Properly used, requests for admissions simplify pre-trial investigation and discovery, facilitate elimination of unnecessary evidence at trial, and reduce

2 In their motion for sanctions, Defendants mistakenly wrote that “reasonable people cannot conclude that the facts requested were relevant to the present litigation and were subject to discovery.” Appellants’ App. Vol. III p. 34. For the first time on appeal, Plaintiffs suggest this was a concession by Defendants that Plaintiffs acted reasonably in objecting to the discovery requests. Appellants’ Br. pp. 8, 10, 11, 14. But surely Plaintiffs’ attorney knows that the quoted language was a wording error by Defendants’ attorney. The whole point of the motion for sanctions was that Defendants believed Plaintiffs acted unreasonably by resisting the discovery requests. Arguments made based on obvious typographical errors undermine the credibility of counsel and are ineffective.

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the time and expense demands upon the parties, their counsel and the courts.

Gen. Motors Corp., Chevrolet Motor Div. v. Aetna Cas. & Sur. Co., 573 N.E.2d 885,

888 (Ind. 1991), reh’g denied.

A. Factual Requests [13] We begin with the Factual Requests. Those requests asked Plaintiffs to admit or

deny that Seller “told” Defendants certain information, that Defendants had

“knowledge” of certain facts, and that Defendants “relied” on certain

statements by Seller. Plaintiffs again assert they were not required to answer

these requests because they could not know definitively, as an opposing party,

what Seller told Defendants, what facts Defendants knew, or whether

Defendants relied on statements by Seller. We agree. “The essential function of

a T.R. 36 request for admission is to establish known facts. If a party wishes to

discover unknown facts, he should not resort to T.R. 36. Instead, the party

should use other discovery techniques.” Ind. Constr. Serv., Inc. v. Amoco Oil Co.,

533 N.E.2d 1300, 1301 (Ind. Ct. App. 1989). Defendants could have used

alternative discovery tools, such as depositions (Trial Rules 30 and 31) or

interrogatories (Trial Rule 33), to discover what Plaintiffs knew or didn’t know

about the statements, knowledge, and actions of other people. [14] We also note that while Plaintiffs framed their responses to the Factual

Requests as objections, they could just as easily be characterized as answers.

Trial Rule 36(A) provides, in part, that a responding party must serve “a written

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answer or objection” to a request for admission and that the party can “answer”

by “set[ting] forth in detail the reasons why the answering party cannot

truthfully admit or deny the matter.” That is essentially what Plaintiffs did. In

fact, they ended each “objection” by stating that they “cannot truthfully admit

or deny the matter.” [15] It is true that Trial Rule 36(A) also includes the following closely related

provision:

An answering party may not give lack of information or knowledge as a reason for failure to admit or deny unless he states that he has made reasonable inquiry and that the information known or readily obtainable by him is insufficient to enable him to admit or deny or that the inquiry would be unreasonably burdensome.

Here, Plaintiffs’ responses did not state that they “made reasonable inquiry and

that the information known or readily obtainable by [them] is insufficient to

enable [them] to admit or deny or that the inquiry would be unreasonably

burdensome.” But Defendants do not cite this part of the rule, and we do not

believe it applies to this situation. Even with “reasonable inquiry,” Plaintiffs

could not know with certainty what Seller told Defendants, what knowledge

Defendants had about particular facts, or whether Defendants relied on Seller’s

statements. The “reasonable inquiry” requirement is necessarily limited to facts

that parties are personally capable of discovering (e.g., information about

themselves or their property, statements they themselves have made or heard,

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or actions they have taken) and doesn’t extend to statements between others or

the knowledge or reliance of others. [16] For these reasons, we conclude that Plaintiffs’ responses to the Factual

Requests were not just substantially justified but entirely appropriate.

B. Legal Theory Requests [17] We reach the opposite conclusion as to the Legal Theory Requests. Those

requests asked Plaintiffs to admit or deny that Defendants had certain rights

and duties under Indiana Code section 25-34.1-10-10, the statute establishing

the duties and obligations of a seller’s realtor. Plaintiffs argue they were not

required to answer these requests because determining what the statute does or

does not demand of a realtor would require them to “engage in statutory

construction—an exercise strictly reserved for the courts.” Appellants’ Br. p. 18.

They cite no authority in support of this objection. And as the trial court noted

in its order on Defendants’ motion to compel, our courts have held that Trial

Rule 36 “permits a request for admission regarding an opinion, a contention, or

a legal conclusion, if the request is related to the facts of the case.” Gen. Motors

Corp., 573 N.E.2d at 888 (citing Ind. Constr. Serv., 533 N.E.2d 1300). Plaintiffs

do not attempt to distinguish this caselaw and do not dispute that Defendants’

requests addressing Section 25-34.1-10-10 relate to the facts of this case.

Plaintiffs’ objections to the Legal Theory Requests were not substantially

justified.

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II. Requests for Production [18] Plaintiffs also contend their objections to the requests for attorney-fee

documents were proper. We disagree. The requests asked Plaintiffs to produce

invoices, payment records, and time and billing records for their attorney’s fees

relating to this litigation. Requests for production are governed by Trial Rule

34, which provides, in relevant part, that a party can request any documents

“which constitute or contain matters within the scope of [Trial] Rule 26(B) and

which are in the possession, custody or control of the party upon whom the

request is served[.]” Again, Trial Rule 26(B) authorizes discovery on “any

matter, not privileged, which is relevant to the subject-matter involved in the

pending action[.]” Plaintiffs renew their argument that they were not required

to produce information about their attorney’s fees because their request for a fee

award “was contingent on a jury returning a favorable verdict on [Plaintiffs’]

fraud and deception claims against [Defendants]” and therefore “was not yet

ripe.” Appellants’ Br. p. 19. The trial court correctly rejected this argument.

Because Plaintiffs expressly sought an award of attorney’s fees in their

complaint, the documents sought in these requests are unquestionably relevant

to the subject matter of this case. As Defendants note, having this information

before trial would allow them to evaluate their potential liability and establish a

settlement position. Plaintiffs’ objections to these requests were not

substantially justified.

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III. Sanctions [19] Now that we have ruled in Plaintiffs’ favor on some issues and Defendants’

favor on others, we must decide whether to disturb the trial court’s $900

sanction award to Defendants. As noted above, Trial Rule 37(A)(4) provides

that when a motion to compel is granted, an award of expenses to the moving

party is generally appropriate. But the rule also provides that when a motion to

compel is denied, an award of expenses to the opposing party is generally

appropriate. Ind. Trial Rule 37(A)(4). And when a motion to compel is granted

in part and denied in part, “the court may apportion the reasonable expenses

incurred in relation to the motion among the parties and persons in a just

manner.” Id. [20] Here, Defendants were largely successful on their motion to compel, but not

completely. The trial court ruled that Plaintiffs were not required to answer

three of the requests for admission. And now, we have determined that

Plaintiffs properly objected to seven additional requests for admission. This

means that, ultimately, out of the twenty-one discovery requests addressed in

Defendants’ motion to compel (eighteen requests for admission and three

requests for production), Defendants prevailed on eleven and Plaintiffs

prevailed on ten. That is close enough to a wash that an award of expenses to

Defendants is unwarranted. We therefore reverse the trial court’s sanction

order. [21] Reversed.

Court of Appeals of Indiana | Opinion 23A-PL-116 | September 7, 2023 Page 11 of 12 Mathias, J., and Pyle, J., concur. Court of Appeals of Indiana | Opinion 23A-PL-116 | September 7, 2023 Page 12 of 12