CX Reinsurance Company Limited v. Kirson

Filing 106

ORDER Denying 98 CX Re's Motion to Deem Facts Admitted. Signed by Magistrate Judge Stephanie A Gallagher on 1/24/2018. (heps, Deputy Clerk)

UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND
CHAMBERS OF
STEPHANIE A. GALLAGHER
UNITED STATES MAGISTRATE JUDGE

101 WEST LOMBARD STREET
BALTIMORE, MARYLAND 21201
[phone]
Fax [phone]

January 24, 2018
LETTER TO COUNSEL
RE:

CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited v.
Devon S. Johnson; Civil Case No. RWT-15-3132

Dear Counsel:
Pursuant to Judge Titus’s January 19, 2017 Order, this matter has been referred to me for
discovery disputes and related scheduling matters. [ECF No. 40]. Presently pending is CX
Reinsurance Company Limited’s (“CX Re”) Motion to Deem Facts Admitted by IntervenorDefendant Devon Johnson [ECF No. 98], Intervenor-Defendant Devon S. Johnson’s (“Johnson”)
Opposition [ECF No. 100], and CX Re’s Reply [ECF No. 102]. I find that no hearing is
necessary. See Loc. R. 105.6 (D. Md. 2016). For the following reasons, CX Re’s Motion to
Deem Facts Admitted is denied, although Johnson is ordered to amend certain responses in
accordance with this letter opinion.
I.

Background

In this action, CX Re seeks to rescind commercial general liability insurance policies
(“Policies”) issued to Benjamin L. Kirson (“Kirson”), and other named insureds in 1997, 1998,
and 1999. Pl.’s First Am. Compl., [ECF No. 17 ¶¶ 1, 7, 8]. The Policies provide insurance
coverage for certain risks, including lead exposure, relating to specified residential rental
properties in Baltimore, Maryland (“Properties”). See Policies, [ECF Nos. 1-2, 1-3].
In particular, CX Re alleges that Kirson made a misrepresentation of material fact by
falsely answering “No” to Question 16 of the Application upon which the Policies were issued,
which asks whether “the [i]nsured ever had any lead paint violations in the buildings.” [ECF No.
17 ¶¶ 1, 13, 19-24]. CX Re argues that, if Kirson had answered this question truthfully, CX Re
would not have issued the Policies, or would have issued the Policies subject to substantially
higher premiums or substantially different terms. Id. ¶ 32. CX Re asserts that, “after learning of
and investigating Kirson’s misrepresentation . . . , [it] filed this rescission action.” Id. ¶ 34.
On August 8, 2016, Johnson won a $1,628,000.00 judgment against Kirson in State court,
representing damages for injuries sustained from lead paint exposure at a property covered by
CX Re’s policy (741 East 36th Street, Baltimore, Maryland). Devon Johnson, A Minor By His
Next Friend v. Benjamin L. Kirson, 24-C-14005926; [ECF No. 19 ¶ 2]. Thus, to protect his
interests, demonstrate that CX Re’s policy remains in effect, and ensure that “rescission is
inoperative and invalid as to his claims[,]” Johnson intervened in this action on January 18, 2017.
[ECF Nos. 19 ¶ 3, 38]. Thereafter, on November 1, 2017, CX Re served on Johnson its Requests

CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited v.
Devon S. Johnson; Civil Case No. RWT-15-3132
January 24, 2018
Page 2 of 7
for Admission [“RFAs”] [ECF No. 98-3], and, on November 8, 2017, Johnson served his
responses thereto [ECF No. 98-4].
The instant discovery dispute revolves around CX Re’s RFA Nos. 1-24 and 26-29. [ECF
No. 98 at 6]. These RFAs seek four categories of admissions: (1) admissions relating to Kirson’s
procurement of the Policies at issue (RFA Nos. 1-3, 14, 15); (2) admissions relating to the
contents contained within the Kirson Application (RFA Nos. 4-13, 26, 28, 29); (3) admissions
relating to a lead paint violation at 721 East 23rd Street in Baltimore (RFA Nos. 16-20); and (4)
admissions relating to Johnson’s tenancy at 341 East 36th Street in Baltimore (RFA Nos. 21-24,
27). [ECF No. 98-3]. Johnson responded to the first two categories of RFAs (RFA Nos. 1-15,
26, 28, 29), relating to the procurement of the policies and the information contained in the
Application, stating that he had “no personal knowledge with which to either admit or deny th[e]
request, as he was not a party to the application/contract in question. Th[e] request is more
properly directed to the former Kirson parties.” [ECF No. 98-4 at 1-6, 12, 13-14]. Further,
Johnson denied (in his amended responses) each RFA in the third category, relating to 721 East
23rd Street, stating that he had “no knowledge of any contact with a property located at” that
address. [ECF No. 98-5 at 7]. Finally, Johnson responded to the fourth category, relating to his
tenancy at 741 East 36th Street, stating that “he ha[d] no personal recollection from which to
either admit or deny th[e] request, as he was born on 4/18/97 and was age 0-3 when he resided”
there between 1997-2000. Id. CX Re requests that this Court deem each of these RFAs
admitted, arguing that, had Johnson conducted a reasonable inquiry into the RFAs, as required
by Federal Rule of Civil Procedure 36, Johnson would necessarily have admitted each of the
facts contained therein. [ECF No. 98 at 6].
II.

Legal Standards

Federal Rule of Civil Procedure 36 provides that “[a] party may serve on any other party
a written request to admit[] . . . the truth of any matters within the scope of Rule 26(b)(1) relating
to: (A) facts, the application of law to fact, or opinions about either; and (B) the genuineness of
any described documents.” Fed. R. Civ. P. 36(a)(1). “The purpose of Rule 36(a) is to expedite
trial by establishing certain material facts as true and thus narrowing the range of issues for
trial.” Louis v. Martinez, No. 5:08-CV-151, 2011 WL 1832808, at *3 (N.D.W. Va. May 13,
2011). In responding to a request:
[i]f a matter is not admitted, the answer must specifically deny it or state in detail
why the answering party cannot truthfully admit or deny it. . . . The answering
party may assert lack of knowledge or information as a reason for failing to admit
or deny only if the party states that it has made reasonable inquiry and that the
information it knows or can readily obtain is insufficient to enable it to admit or
deny.
Fed. R. Civ. P. 36(a)(4). As such, “a party may not refuse to admit or deny a [RFA] based upon
a lack of personal knowledge if the information relevant to the request is reasonably available to
him.” Martinez, 2011 WL 1832808, at *3 (citation omitted). Moreover, pursuant to the Rule’s

CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited v.
Devon S. Johnson; Civil Case No. RWT-15-3132
January 24, 2018
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language, “[i]f the party is asserting that it cannot admit or deny due to lack of knowledge or
information, it must state that it has first made a reasonable inquiry into the matter.” Ball-Rice v.
Bd. of Educ. of Prince George's Cty., No. CIV.A. PJM-11-1398, 2013 WL 2299725, at *2 (D.
Md. May 24, 2013) (citing Fed. R. Civ. P. 36(a)(4)). “What constitutes a ‘reasonable inquiry’ . .
. depends upon the facts of each case.” Bado v. Southland Indus., Inc., No. CV PJM-07-1081,
2008 WL 11366413, at *1 (D. Md. May 21, 2008) (citing T. Rowe Price Small-Cap Fund, Inc. v.
Oppenheimer & Co., Inc., 174 F.R.D. 38, 43 (S.D.N.Y. 1997)). “Generally, a ‘reasonable
inquiry’ is limited to review and inquiry of those persons and documents that are within the
responding party's control[,]” and includes investigation of the party’s “officers, administrators,
agents, employees, servants, enlisted or other personnel, who conceivably, but in realistic terms,
may have information which may lead to or furnish the necessary and appropriate response.” T.
Rowe Price, 174 F.R.D. at 43; see Dulansky v. Iowa-Illinois Gas & Elec. Co., 92 F. Supp. 118,
123 (S.D. Iowa 1950) (holding that it would be improper to “require a respondent to ascertain
from third persons, known to him and to the court to be hostile or interested in the outcome of
the suit, facts upon which to predicate a sworn response[.]”); but see Uniden Am. Corp. v.
Ericsson Inc., 181 F.R.D. 302, 304 (M.D.N.C. 1998) (hereinafter Uniden America) (holding that
a respondent “must make inquiry of a third party when there is some identity of interest
manifested, such as by both being parties to the litigation, a present or prior relationship of
mutual concerns, or their active cooperation in the litigation, and when there is no manifest or
potential conflict between” them).
Importantly, “[o]n finding that an answer does not comply with this rule, the court may
order either that the matter is admitted or that an amended answer be served.” Fed. R. Civ. P.
36(a)(6). “Ordinarily, a district court should first order an amended answer, and deem the matter
admitted only if a sufficient answer is not timely filed. . . .” Louis, 2011 WL 1832808, at *2.
However, “[i]t is often appropriate to order the matter admitted where a party responds to a Rule
36 request in bad faith or does so evasively.” Ball-Rice, 2013 WL 2299725, at *2. Moreover,
courts have deemed RFAs admitted when a party fails to state that it made reasonable inquiry
before asserting a lack of knowledge or information as a reason for failing to admit or deny a
request. See e.g., Louis, 2011 WL 1832808, at *3 (admitting defendants’ responses because, in
failing to state that they made a reasonable inquiry, “[a]t best, Defendants committed an
oversight and, at worst, Defendants abused the discovery process by answering with multiple
evasive and meritless responses.”); Poole ex rel. Elliott v. Textron, Inc., 192 F.R.D. 494, 499 (D.
Md. 2000) (“Failure to adhere to the plain language of this statute requires that the fact in
question be admitted.”) (citing Asea, Inc. v. S. Pac. Transp. Co., 669 F.2d 1242, 1245 (9th Cir.
1981)).
III.

Johnson’s Failure to State that He Made a “Reasonable Inquiry” is Harmless as
to RFA Categories 1, 2, and 3, but not to Category 4.

Johnson’s Responses to RFA categories 1, 2, and 4 failed to comply with the
Requirements of Rule 36 because, prior to asserting that he could not admit or deny each RFA
due to lack of knowledge, Johnson failed to state that he first made a reasonable inquiry into the
matter. See e.g., Ball-Rice, 2013 WL 2299725, at *2; Jones v. Zimmer, No. 2:12-CV-01578-

CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited v.
Devon S. Johnson; Civil Case No. RWT-15-3132
January 24, 2018
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JAD, 2014 WL 6772916, at *6 (D. Nev. Dec. 2, 2014) (“As the disputed responses in question
fail to state that a reasonable inquiry was made, they violate Rule 36.”); Tequila Centinela, S.A.
de C.V. v. Bacardi & Co., 242 F.R.D. 1, 15 (D.D.C. 2007) (holding that a party’s responses were
deficient because the party failed to state that it made a “reasonable inquiry” prior to finding
insufficient information to either admit or deny the RFAs). Further, Johnson’s Responses to the
third category of RFAs were also insufficient because, despite denying each RFA relating to 721
East 23rd Street in Baltimore, Johnson’s denials stemmed from having “no knowledge of any
contact with” that property. [ECF No. 100-1 at 7-10]. As such, his denials were “on the basis of
insufficient information[,]” which Rule 36 does not permit. Zimmer, 2014 WL 6772916, at *6
(“Indeed, it is hard to understand how an answering party can ‘truthfully’ deny a request for an
admission while simultaneously asserting that he lacks sufficient information to respond to it.”).
Thus, Johnson’s denials here are insufficient to avoid the requirements of making a reasonable
inquiry into the matter. Id. For reasons discussed below, while Johnson’s Rule 36 violations are
harmless as to the first three RFA categories, he must amend his responses to CX Re’s RFAs in
category four, (RFA Nos. 21-24, 27), because a reasonable inquiry may subsequently permit him
to admit or deny the facts contained therein.
1. Categories 1, 2, & 3 – RFAs Relating to Kirson’s Procurement of the
Policies, the Kirson Application, and 721 East 23rd Street, Baltimore
As outlined above, the first three categories of RFAs seek admissions from documents
regarding: (1) Kirson’s procurement of the Policies; (2) the Kirson Application; and (3) a lead
paint violation at 721 East 23rd Street in Baltimore. Johnson, though, was not involved in any of
those events. Further, because Johnson won a $1,628,000.00 judgment against Kirson for lead
paint injuries sustained at his property, Kirson is a hostile third party. As such, Johnson’s
reasonable inquiry would not have to include seeking information from Kirson. See Dulansky,
92 F. Supp. at 123 (holding that, under Rule 36, it would be improper “to require a respondent to
ascertain from third persons, known to him and to the court to be hostile or interested in the
outcome of the suit, facts upon which to predicate a sworn response[.]”). CX Re argues instead
that, because these RFAs seek to confirm information that is: (a) “clear from the face of [] the
Application[;]” and (b) contained within other documents already produced by Kirson, a
reasonable inquiry would necessarily cause Johnson, even without contacting Kirson, to admit
each RFA. [ECF No. 98 at 7-8, 10-13]; see [ECF No. 102 at 5] (stating that “Johnson could []
have answered simply by reviewing the documents”).
CX Re’s argument fails. Both CX Re and Kirson produced the documents upon which
CX Re contends Johnson must base his answers. See, e.g., [ECF No. 98 at 11] (stating that
Johnson, “in light of the documents CX Re and Kirson produced[,]” should have admitted the
RFAs); id. at 13 (stating that, because “Kirson produced certified copies of the Health
Department’s inspection records of 721 East 36th Street,” Johnson should have admitted RFA
Nos. 16-20); [ECF No. 102 at 6] (same). Asking Johnson to confirm the contents within these
documents is, in essence, also a request for Johnson to admit the genuineness of these
documents. See In re Peregrine Fin. Grp. Customer Litig., No. 12 C 5546, 2015 WL 1344466,
at *6 (N.D. Ill. Mar. 20, 2015) (stating that only after the respondent admitted that the documents

CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited v.
Devon S. Johnson; Civil Case No. RWT-15-3132
January 24, 2018
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were genuine did the RFAs then ask the respondent “to respond in greater detail by identifying
more detailed portions of each document”). Thus, despite Johnson having the same access to the
documents as the other parties, prior to confirming the information therein, the documents would
need to be authenticated. Moreover, because the documents were not created by Johnson, but
by CX Re and Kirson, hostile parties, Johnson was under no obligation to contact them for
authentication purposes prior to responding to the RFAs. See e.g., Bado, 2008 WL 11366413, at
*2 (holding that the defendant was under an obligation to “make reasonable efforts to
authenticate” the documents it created, but that it need not authenticate documents created by
third parties); Hatchett v. United Parcel Serv., Inc., No. 13-CV-1183 MCA/SMV, 2014 WL
12786897, at *2-3 (D.N.M. Oct. 1, 2014) (holding that, in claiming it lacked sufficient
information either to admit or deny the RFA, the defendants need not have “obtained the
information from the [third parties] that created the documents”); Hanley v. Como Inn, Inc., No.
99 C 1486, 2003 WL 1989607, at *2 (N.D. Ill. Apr. 28, 2003) (holding that the defendant was
“certainly not required to ask plaintiffs” or his brother (with whom he lacked an amicable
relationship) “about the genuineness of the documents they produced”). As such, because the
scope of Johnson’s reasonable inquiry into these RFAs, had it been conducted, would not have
altered his responses, CX Re’s request that this Court deem them admitted pursuant to Rule 36 is
denied.
2. Category 4 – RFAs Relating to 741 East 36th Street, Baltimore
CX Re contends that Johnson should have admitted RFA Nos. 21-24 and 27 (seeking
admissions regarding Johnson’s tenancy at 741 East 36th Street in Baltimore), because the facts
alleged therein mirrored the facts which, in his underlying case against Kirson: (1) Johnson
alleged in his Complaint; and/or (2) Johnson’s mother testified to at trial. [ECF Nos. 98 at 9-10;
102 at 6]. Johnson, on the other hand, contends that he provided the “most honest, complete
admission” possible, by responding that he “has no personal recollection” from which to either
admit or deny the RFAs because he was “age 0-3” when he resided at the property. [ECF No.
100 at 9]. Nonetheless, he admits that he and his mother offered evidence to prove these facts at
his underlying trial against Kirson. Id.
Johnson must ascertain information from third parties “when there is some identity of
interest manifested, such as by both being parties to the litigation, a present or prior relationship
of mutual concerns, or their active cooperation in the litigation, and when there is no manifest or
potential conflict between the party and the third party.” Uniden America, 181 F.R.D. at 304. In
Uniden America, a RFA asked the defendant corporation to authenticate another corporation’s
letter. Id. at 303-04. The court stated that, because the plaintiff demonstrated that the
corporation in question had been cooperating with the defendant in the litigation, and the
defendant had failed to “show[] any conflict between itself, and [the corporation] so as to make a
Rule 36 inquiry unfair,” the defendant could be compelled to make inquiry of the corporation.
Id. at 304.
Here, unlike the first three categories of CX Re’s RFAs (requesting Johnson to confirm
the contents of documents produced by hostile third parties), “a present or prior relationship of

CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited v.
Devon S. Johnson; Civil Case No. RWT-15-3132
January 24, 2018
Page 6 of 7
mutual concerns” exists between Johnson and his mother, Ms. Vernell Dorsey. At the very least,
a “prior relationship of mutual concerns” existed between the two, because Ms. Dorsey, as
Johnson’s next friend, brought, on his behalf, his underlying lead paint claims against Kirson.1
[ECF No. 98-1 at 5]. For example, Johnson admits that, together, they sought to prove the very
facts contained within these RFAs. [ECF No. 100 at 9]. As such, even though Johnson lacks
“personal recollection” of the requested information, because he and his mother shared identical
interests as to the subject matter, and he has failed to identify any conflict, he must make inquiry
of Ms. Dorsey. Finally, however, CX Re’s request that this Court deem these RFAs admitted is
denied, because “a district court should first order an amended answer.” Louis, 2011 WL
1832808, at *2. Thus, Johnson is hereby ordered to conduct reasonable inquiry of Ms. Dorsey,
and to amend his answers to RFA Nos. 21-24 and 27.
IV.

Attorneys’ Fees

In light of Johnson’s deficient responses to the fourth category of RFAs, CX Re asks that
this Court award it the reasonable expenses and attorneys’ fees incurred in bringing this Motion.
[ECF No. 98 at 14-15]. Rule 37 provides that, if a motion to compel:
is granted--or if the . . . requested discovery is provided after the motion was
filed--the court must, after giving an opportunity to be heard, require the party . . .
whose conduct necessitated the motion, the party or attorney advising that
conduct, or both to pay the movant's reasonable expenses incurred in making the
motion, including attorney's fees.
Fed. R. Civ. P. 37(a)(5)(A). However, a “court must not order [] payment if . . . the opposing
party's nondisclosure, response, or objection was substantially justified[.]” Id. “A legal position
is ‘substantially justified’ if there is a ‘genuine dispute’ as to proper resolution or if ‘a reasonable
person could think it correct, that is, if it has a reasonable basis in law and fact.’” Proa v. NRT
Mid Atl., Inc., 633 F. Supp. 2d 209, 213 (D. Md. 2009), aff'd sub nom. Proa v. NRT Mid-Atl.,
Inc., 398 F. App'x 882 (4th Cir. 2010) (quoting Decision Insights, Inc. v. Sentia Grp., Inc., 311
Fed. Appx. 586 (4th Cir. 2009)).
Here, Johnson’s insufficient answers to RFA Nos. 21-24 and 27 were substantially
justified, such that an award of expenses and attorneys’ fees to CX Re pursuant to Rule 37(a) is
not warranted. Because a reasonable inquiry is generally “limited to review and inquiry of those
persons and documents that are within the responding party's control,” T. Rowe Price, 174
F.R.D. at 43, Johnson could reasonably believe, at the time he submitted his responses to RFA
Nos. 21-24 and 27, that they each contained the “most honest, complete admission” possible.
[ECF No. 100 at 9]. Thus, even though this Court determined that Johnson must make inquiry of
Ms. Dorsey and amend his responses, CX Re’s request that Johnson be ordered to pay its
1

Because Johnson specifically intervened in this action to protect the judgment he won against Kirson,
and to demonstrate that CX Re’s attempt at “rescission is inoperative and invalid as to his claims[,]” [ECF
Nos. 19 ¶ 3, 38], in all likelihood, he and Ms. Dorsey continue to share mutual concerns.

CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited v.
Devon S. Johnson; Civil Case No. RWT-15-3132
January 24, 2018
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expenses and attorneys’ fees incurred in filing this Motion is denied.
V.

Conclusion

For the reasons discussed above, CX Re’s Motion to Deem Facts Admitted [ECF No. 98]
is DENIED, though Johnson is ordered to make reasonable inquiry and amend his responses to
RFA Nos. 21-24 and 27. Despite the informal nature of this letter, it will be flagged as an
Opinion and docketed as an Order.
Sincerely yours,
/s/
Stephanie A. Gallagher
United States Magistrate Judge