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Case Bulletin – Sanctions Not Imposed on Defendant Who Stipulated to Liability After Denying Liability in Discovery Responses

In a Memorandum Decision announced on June 17, 2016 in McGhee et al. v. Smith et al., No. 15-0765, the Supreme Court of Appeals of West Virginia declined to impose sanctions on a defendant who denied liability in response to a request for admission but later stipulated to liability before trial.  The court held that, because a change in circumstances required the defendant to change her trial strategy, she had a “good faith basis” in initially denying the requests for admission.

 

In McGhee, the defendant was driving a vehicle that struck the plaintiff’s vehicle from behind.  The plaintiff brought suit against the defendant claiming that she suffered various injuries as a result of the collision and that her minor son suffered a loss of his mother’s consortium due to those injuries.  During discovery, the plaintiff filed requests for admission pursuant to Rule 36 of the West Virginia Rules of Civil Procedure, requesting that the defendant admit that she was entirely at fault for the collision, that she was not paying attention, and that the plaintiff did not contribute to the cause of the collision.  The defendant denied all of these requests.  In her deposition, the defendant continued to deny responsibility for the accident, claiming instead that the plaintiff was lying about the cause of the collision and that the plaintiff was 50% responsible for the collision.

 

Three days before trial, the defendant filed a stipulation which stated that her negligence was the cause of the motor vehicle accident.  At trial, the defendant offered testimony disproving that the plaintiff’s injuries were caused by the subject accident but did not contest liability for the accident itself.

 

After the trial concluded, the plaintiff moved for attorney’s fees, arguing that the defendant entered the pre-trial stipulation in bad faith.  The plaintiff argued that Rule 37(c) of the West Virginia Rules of Civil Procedure mandates sanctions when a party fails to admit the truth of any matter and thereafter the party requesting the admission proves the truth of that matter.  The plaintiff requested that the defendant pay the reasonable expenses incurred in making that proof, including attorney’s fees.  However, Rule 37(c) provides that sanctions are mandatory unless (1) the request was objectionable, (2) the admission was of no substantial importance, (3) the party failing to admit had reasonably ground to believe that they might prevail on the matter, or (4) there was “other good reason” for the failure to admit.

 

The Supreme Court of Appeals held that the defendant had a “good faith basis” to initially deny the requests for admission despite her later admission of negligence.  Prior to trial, extraordinary circumstances required the defendant to change her trial strategy.  The defendant’s mother-in-law, a passenger in her vehicle and eyewitness to the accident, began experiencing “heart-related health issues”.  In addition, the mother-in-law was caring for an ill family member.  The defendant averred that, to avoid a lengthy trial, she chose to stipulate to liability rather than call her mother-in-law as a witness.  The Supreme Court of Appeals held that, in this situation, the defendant’s initial denial of liability was in good faith despite her subsequent decision to stipulate to liability.  As such, the court declined to impose sanctions on the defendant.