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LLC v. Hemacare Plus, Inc.

United States District Court, S.D. Alabama, Southern Division

January 11, 2017

CARDINAL HEALTH 108, LLC, Plaintiff,
v.
HEMACARE PLUS, INC., Defendant/Third-Party Plaintiff.
v.
JANIS SPRATLIN, Third-Party Defendant.

          ORDER

          KRISTI K. DuBOSE, UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff's Amended Motion for Summary Judgment (Docs. 20, 22), [1] Defendant Response (Doc. 39) and Plaintiff's Reply (Docs. 32, 48).[2]

         I. Procedural Background

         This case stems from Defendant Hemacare Plus, Inc. (Hemacare)'s non-payment of approximately $667, 565.69 for specialty pharmaceutical products from Plaintiff Cardinal Health 108, LLC (Cardinal)[3] in 2015. (Docs. 1, 1-1). In its February 25, 2016 Complaint, Cardinal asserts six (6) counts against Hemacare for: goods sold/delivered (Count I); open account (Count II); account stated (Count III); unjust enrichment (Count IV); breach of contract (Count V); and attorneys' fees/costs (Count VI).[4] On April 13, 2016, Hemacare filed an untimely[5] answer denying all claims, and a three (3) count third-party complaint for fraud, conversion and unjust enrichment against Janis Spratlin (Spratlin), its former bookkeeper, alleging that she is responsible for the amounts owed as she exceeded her authority by ordering specialty pharmaceutical products from Cardinal, billing insurance carriers and diverting the proceeds from those transactions to her personal account. (Doc. 6).

         On June 1, 2016, the Rule 16(b) Scheduling Order issued, setting the close of discovery as February 24, 2017. (Doc. 10). On July 15, 2016, Cardinal served its first set of discovery on Hemacare, including requests for admission and interrogatories. (Docs. 19, 22-2, 22-3 (Aff. Jackson at 3-4)). Hemacare did not provide responses to Cardinal's discovery within 30 days of service as required under Rules 34 and 36. (Doc. 22-3 (Aff. Jackson at 3-4)). On September 26, 2016 Cardinal moved for summary judgment -- without any discovery responses from Hemacare -- asserting that summary judgment should be granted in its favor because Hemacare's failure to respond means that the facts contained therein are deemed admitted.

         On October 7, 2016, Hemacare provided untimely[6] responses to the requests for production and interrogatories, but still failed to respond to the requests for admission. (Doc. 25). In the interrogatory responses, Hemacare denies that Spratlin had authority to make the purchases from Cardinal. (Doc. 39 at 27-31 at ##4-6, 10-11, 15). On summary judgment, Hemacare neither references its failure to timely respond to the requests for admission nor opposes summary judgment on that basis. To date, Hemacare has not responded to Cardinal's requests for admissions. (See also Doc. 48-1 (2nd Aff. Jackson)).

         II. Requests for Admission

         Cardinal seeks summary judgment based on Hemacare's failure to timely file responses to its requests for admission asserting that, as a matter of law, Hemacare's failure means the admissions are undisputed and “deemed admitted” in this case.

         Rule 36(a)(3) of the Federal Rules of Civil Procedure provides that “[a] matter is deemed admitted unless, within 30 days after being served, the party to whom the request is directed serves on the requesting party a written answer or objection addressed to the matter and signed by the party or its attorney.” Rule 36(b) specifies further:

(b) Effect of an Admission; Withdrawing or Amending It. A matter admitted under this rule is conclusively established unless the court, on motion, permits the admission to be withdrawn or amended. Subject to Rule 16(e), the court may permit withdrawal or amendment if it would 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. An admission under this rule is not an admission for any other purpose and cannot be used against the party in any other proceeding.

         With regard to such circumstances, the Eleventh Circuit in Garmley v. Cochran, 651 Fed.Appx. 933, 936 (11th Cir. 2016) (emphasis added) concluded as follows:

The district court did not abuse its discretion by deeming admitted the requests for admission....neither Garmley nor Southern responded to Henderson's requests for admissions or moved the district court to withdraw the admissions. We have previously found that a party's failure to respond to requests for admission constituted admissions of the same, and we see no reason to depart from that rule today. See, e.g., Perez v. Miami-Dade Cty., 297 F.3d 1255, 1263 (11th Cir. 2002).….

         Additionally, in Perez v. Miami-Dade Cty., 297 F.3d 1255, 1263-1264 and 1268 (11th Cir. 2002) (footnotes and citations omitted, emphasis added), the Eleventh Circuit explained that:

Rule 36… governs requests for admissions…The purpose of the rule is “to expedite the trial and to relieve the parties of the cost of proving facts that will not be disputed at trial.”If a party fails to respond within thirty days, then “[t]he matter is admitted.” Id….Once the matter is admitted, Rule 36(b) provides that it is “conclusively established unless the court on motion permits withdrawal or amendment of the admission.”
***
….when a party uses the rule to establish uncontested facts and to narrow the issues for trial, then the rule functions properly. When a party…uses the rule to harass the other side or, as in this case, with the wild-eyed hope that the other side will fail to answer and therefore admit essential elements (that the party has already denied in its answer), the rule's time-saving function ceases; the rule instead becomes a weapon, dragging out the litigation and wasting valuable resources….

         Moreover, akin to the facts of this case, the court in Jacobs v. Electronic Data Sys. Corp., 2006 WL 3742202, *2-3 (N.D. Ala. Dec. 18, 2008) (emphasis added, footnotes omitted) concluded -- on summary judgment -- that unanswered requests for admission were admitted:[7]

…Jacobs's Title VII claim…cannot survive summary judgment....Jacobs has filed no motion to withdraw the admissions or set aside the…order. Nor did Jacobs even address the issue in her brief in opposition to summary judgment, despite the defendants having argued that summary judgment was warranted on the basis of the admissions....As Rule 36(b) expressly provides for withdrawal only “on motion, ” the court will not sua sponte withdraw Jacobs's admissions or set aside the order….
Jacobs has opposed summary judgment with other evidence that tends to contradict the admissions. Jacobs's deposition testimony is generally inconsistent with her admissions…[] But admissions are unlike other evidence in that a party cannot rebut its own admissions by introducing evidence that contradicts it. In re Carney, 258 F.3d 415, 420 (5th Cir.2001) (“Since Rule 36 admissions, whether express or by default, are conclusive as to the matters admitted, they cannot be overcome at the summary judgement [sic] stage by contradictory affidavit testimony or other evidence in the summary judgment record.”); United States v. Kasuboski, 834 F.2d 1345, 1350 (7th Cir.1987); see also 8A Wright, Miller & Marcus, § 2264, at 572-74. Once an issue is deemed admitted, the admission is conclusive unless withdrawn upon motion to the court. Perez v. Miami-Dade County, 297 F.3d 1255, 1264 (11th Cir.2002); United States v. 2204 Barbara Lane, 960 F.2d 126, 129 (11th Cir.1992); Stubbs v. Comm'r, 797 F.2d 936, 937-38 (11th Cir.1986) (per curiam).
As stated, the court's role at the summary-judgment stage is not to weigh the evidence or to determine the truth of the matter, but rather to determine only whether a genuine issue exists for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249…(1986). If this case were to proceed to trial, Jacobs would not be permitted to introduce evidence to rebut the admissions she has already made during the discovery phase of this litigation. Williams v. City of Dothan, 818 F.2d 755, 762 (11th Cir.1987); see also Am. Auto. Ass'n, 930 F.2d at 1120. ...These admissions preclude recovery....Hulsey, 367 F.3d at 1244. Accordingly, there is no genuine issue of material fact …and EDS is entitled to judgment as a matter of law.

         Further, as set forth by the Fifth Circuit in In re Carney, 258 F.3d 415, 420-421 (5th Cir. 2001) (footnotes omitted and emphasis added):

Federal Rule of Civil Procedure 56(c) specifies that “admissions on file” can be an appropriate basis for granting summary judgment….Since Rule 36 admissions, whether express or by default, are conclusive as to the matters admitted, they cannot be overcome at the summary judgement [sic] stage by contradictory affidavit testimony or other evidence in the summary judgment record...[] Instead, the proper course for a litigant that wishes to avoid the consequences of failing to timely respond to Rule 36 requests for admission is to move the court to amend or withdraw the default admissions in accordance with the standard outlined in Rule 36(b).
…[Defendant] did not avail…[itself] of the procedural mechanism for attempting to avoid the effect of…default. Consequently, application of this Court's precedent applying the plain language of Rule 36 compels us to conclude, on the record before us, that the validity of the…claim has been conclusively established. Moreover, this Court has affirmed a grant of summary judgment based on default admissions coupled with a district court's denial of a request to withdraw those admissions.…[Defendant's] failure to move…to withdraw his admission prior to or concurrently with the….motion for summary judgment simply compels affirmance of the grant of summary judgment….:
We recognize the potential harshness of this result. The failure to respond to admissions can effectively deprive a party of the opportunity to contest the merits of a case. This result, however, is necessary to insure the orderly disposition of cases; parties to a lawsuit must comply with the rules of procedure. In addition, the harshness is tempered by the availability of the motion to withdraw admissions, a procedure which [….] did not employ.

Kasuboski, 834 F.2d 1345.

         Because of…default admissions, we need not explore in detail the…. alternative holding that summary judgement [sic] was appropriate based on the absence of genuine material fact….

         Finally, in the Sixth Circuit (governing Tennessee law, and here the substantive claims are governed by the law of Tennessee as explained infra), “…a request for admissions which is not responded to within the applicable time period ‘is conclusively established unless the court on motion permits withdrawal or amendment of the admission.'” Kerry Steel, Inc. v. Paragon Indus., 106 F.3d 147, 153 (6th Cir. 1997). Additionally, a party may seek to request an admission as deemed admitted on “ultimate facts” and even where the request is “dispositive of the entire case.” Campbell v. Spectrum Automation Co., 601 F.2d 246, 253 (6th Cir. 1979) (citations omitted). Courts within the Sixth Circuit and Tennessee state courts routinely enforce Rule 36 when faced with unanswered requests for admission.[8]

         In light of the circumstances of this case and the relevant Rule 36 law, the Court finds that Cardinal's requests for admission are deemed admitted by Hemacare. Hemacare has had numerous opportunities to respond to Cardinal's requests, but has failed to do so. Hemacare has made no attempt to avoid the consequences of failing to timely respond to the requests - indeed not even acknowledging its failure. Hemacare has neither mentioned nor addressed the requests on summary judgment, much less endeavored to explain or justify its failure to file (or timely file) responses. Hemacare has not sought any relief in this Court concerning the requests via withdrawal or amendment (or otherwise). Cardinal would be unfairly prejudiced if Hemacare were permitted - at this juncture -- to respond to the requests for admission, as Cardinal has already moved for summary judgment on the grounds that the facts asserted in the requests have been deemed admitted by Hemacare.

         There is also no indication that Cardinal is using Rule 36 requests to “harass” Hemacare or as “a weapon” “with the wild-eyed hope” that it would “fail to answer and…admit essential elements.” Perez, 297 F.3d at 1268. Rather, Hemacare simply ignored the requests for admissions, and has done so to its detriment.

         Thus, the following facts/allegations are deemed admitted by Hemacare and will be treated as undisputed on summary judgment:[9]

         Exhibit A to the Complaint

         Ex. A are true and correct copies of the Invoices Cardinal sent to Hemacare from June-December 2015.

-Hemacare received copies of Ex. A.
-Hemacare never objected in writing to Ex. A.
-Cardinal delivered to Hemacare the specialty pharmaceuticals in Ex. A.
-Hemacare accepted the specialty pharmaceuticals delivered by Cardinal in Ex. A.
-Hemacare never refused delivery or returned any of the specialty pharmaceuticals from Cardinal in Ex. A.
-Hemacare used the specialty pharmaceuticals delivered by Cardinal in Ex. A.
-Hemacare has not paid Cardinal for the specialty pharmaceuticals in Ex. A.
-Hemacare has not paid the amounts due and owing in Ex. A.
-Hemacare has paid certain invoices received from Cardinal prior to June 2015.

         Exhibit B to the Complaint

-Ex.B to the Complaint is a true and correct copy of the Terms and Conditions of Sale that accompanied the Invoices sent to Hemacare from June-December 2015.
-Hemacare received copies of the Terms and Conditions of Sale - Ex. B.

         Exhibit C to the Complaint

Ex. C to the Complaint is a true and correct copy of the Account Statement showing the amounts due and owing in Ex. A.
Janis Spratlin
-Janis Spratlin was the bookkeeper for Hemacare during the relevant time period.
-During the relevant time period, Spratlin's job responsibilities for Hemacare included ordering and/or purchasing specialty pharmaceuticals from suppliers.
-During the relevant time period, Spratlin had authority to order specialty pharmaceuticals from Cardinal.

         Cardinal's motion will be assessed in light of these admissions, as set forth in Doc. 22-2.

         III. Findings of Fact[10]

         This case concerns Hemacare's failure to pay Cardinal approximately $667, 565.69 for specialty pharmaceutical products Cardinal supplied starting in May 2015. Specifically, from June to December 2015, Hemacare's employee, bookkeeper Janis Spratlin (Spratlin), ordered certain specialty pharmaceutical products as set forth in Cardinal's Invoices. (Docs. 22-1, 22-2 at #1, 14). Spratlin's job duties included ordering and purchasing such products from suppliers like Cardinal. (Doc. 22-2 ...


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