Nonsuit: Voluntary Dismissal of Debt Suit under Rule of Procedure 162 (TRCP)

TRCP 162: THE TEXAS NONSUIT RULE

WHAT IS A NONSUIT?

A plaintiff's formal act of dropping a lawsuit is called nonsuit. It is done by notice of nonsuit or a motion for nonsuit under Rule 162 of the Texas Rules of Civil Procedure, cited as Tex. R. Civ. P. 162.  A motion is not even required because the judge has no discretion and must dismiss the lawsuit if no counterclaim remains on file and the case is not already in trial (for limited exceptions, see below). For the same reason, a hearing is not required either. Even in an ongoing trial, the plaintiff may still take a nonsuit if its attorney has not already finished presenting its case.

TRCP 162: THE NONSUIT RULE

The nonsuit rule gives the plaintiff the right to unilaterally terminate the lawsuit prior to trial as long as no counterclaim are on file and (s)he has not already presented all but rebuttal evidence at trial.

If counterclaims are on file, the plaintiff may still nonsuit its own claim(s), but it will not affect the opposing party's counterclaim, meaning that the lawsuit will continue on the counterclaim only. Even though it is not a counterclaim, a pending motion for sanctions will not be affected either if it is directed against the plaintiff or its attorney rather than against the Defendant (but there may be some room for argument on the issue, depending on the basis for sanctions).

EFFECT OF NONSUIT 

A nonsuit is effective when filed in writing, or dictated into the record, but the expiration of the court's plenary power, and the deadline to file a post-judgment motion, is based on the date the judge actually signs the order of dismissal, which may be a few days or more later. Once that happens, the lawsuit is officially over. A dismissal order may be delayed if the opposing party (the defendant) has a motion for sanctions pending, because the nonsuit does not nix such a motion.

The dismissal is supposed to be without prejudice rather than with prejudice because a termination by nonsuit does not involve an adjudication of the merits of the plaintiff's claims. The only thing the judge gets to do is sign the dismissal order, and that is considered a "ministerial" act, meaning that no "judging" in the common sense of the term is involved. But see -- > Dismissal with prejudice rather than without prejudice after nonsuit.

Cost of court in the nonsuit context are rarely an issue. The dismissal order may state that costs shall be borne by the party incurring same, but in a simple debt collection case all costs (in the form of filing and service fees) will already have been paid by the plaintiff, and they cannot be shifted to the defendant without a judgment against the defendant. Typically, there were no depositions in a debt collection case that ends with a nonsuit, which could otherwise entail significant costs because of the high fees charged by court reporters (typically assessed based on number of pages of double-spaced transcription of testimony).

SETTING ASIDE A PRIOR NONSUIT / DISMISSAL ORDER 

While the filing of the nonsuit leaves no discretion with the judge, a judge's approval is needed to undo it. This requires a motion to set aside the dismissal order, or other type of post-judgment motion. It may take the form of a motion for new trial even if there was no trial, and even though the notion of a new one  makes no sense under the circumstances. It could also be termed a motion to reinstate, which is the term more commonly used when the plaintiff seeks to revive a lawsuit that the court has dismissed on its own intiative (-- > DWOP; -- >  Dismissal for want of prosecution).

Like post-judgment motions under other circumstances, a motion to set aside the dismissal following a nonsuit, must be filed before the trial court's plenary power over the judgment (in this case, judgment of dismissal) expires. Such a post-judgment motion could be based on discovery of new evidence; or the plaintiff may claim that the nonsuit was filed in error. If the stated basis is dubious, the defendant's counsel may wish to oppose it. Otherwise, it may not be worth contesting it. If, for example, the plaintiff's counsel represents to the court that the nonsuit was accidentally filed in the wrong case, the trial judge will probably grant the motion and reinstate the case on the docket as an active case.

If the plaintiff files and nonsuit and the case is dismissed by the judge even though a claim for affirmative relief by the defendant against the plaintiff was pending at the time, the defendant may want to file a motion attacking the dismissal order as erroneous under Rule 162. The same time-line applies to the Defendant's motion (unless neither defendant nor defendant's counsel did not get notice of the dismissal, in which case another rule of procedure may provide a viable exception to the otherwise applicable deadline).

THE OPPOSING PARTY HAS NO SAY 

There is normally no basis for the defendant to complain of a nonsuit because the plaintiff's right to nonsuit is virtually absolute. For the same reason, there is no basis for an appeal by the other party. Even if the dismissal is with prejudice, it will rarely be worth complaining about it because such language is generally to the defendant's benefit. It can be used to support the defense of res judicata should the plaintiff refile the same lawsuit later, perhaps with a different attorney.

SPECIAL SCENARIO: PARTIAL SUMMARY JUDGMENT BEFORE NONSUIT

If a partial summary judgment has previously been granted in a pending case, the nonsuit does not vacate it. Instead, the nonsuit will make it final for purposes of appeal, as long as  the nonsuit covers all claims that remained pending after the partial summary judgment order was signed.

The rationale for the rule that a partial summary judgment is unaffected by a subsequent nonsuit is that such judgment constitutes a judicial decision on the merits. To attack it, it would have to be made the subject of a timely post-judgment motion or challenged by appeal after the partial summary judgment is rendered final by the nonsuit (dismissal) order that disposes of the rest of the lawsuit.

A common scenario in debt litigation is the following: The plaintiff's attorney has obtained a default judgment or a summary judgment against one of two defendants, and the plaintiff then nonsuits the second defendant so it can start enforcement action against the first based on a final judgment against that defendant. If the statute of limitations is not running out, a separate lawsuit can be filed against the second defendant later, should the collection efforts on the judgment against the first defendant be unsuccessful.

If the statute of limitations is an issue, the plaintiff may instead seek a severance so as to obtain a final enforceable judgment against one defendant while continuing the lawsuit against the other (-- > Motion to sever). This would also preclude that defendant from arguing that collateral estoppel should bar the claim against her. She might try that defense in a second, separate lawsuit, reasoning that the claim has already been litigated and resulted in a final judgment, -- a final judgment against someone else (the co-defendant in the first lawsuit) and that the plaintiff should not be allowed to split  the same debt claim.

Partial summary judgments involving some cause of actions or claim, but not others, are unlikely in debt suit litigation because the underlying facts and damages are the same for different theories of recovery. Thus, if the creditor's attorney obtains a judgment for breach of contract, the other theories (if any) will become moot because the plaintiff cannot recover the same damages twice using a different legal theory (-- > single satisfaction rule, alternative theories of recovery).

In any event, most likely the summary judgment order will not even specify the successful legal theory and will include the words that all relief not granted is denied, thus indicating that nothing remains to be decided. -- > Mother Hubbard Clause; interlocutory vs. final summary judgments; -- > finality of judgments for purposes of appeal.)

TRCP 166a - The Summary Judgment Rule in Texas State Courts

TRCP 166a - THE SUMMARY JUDGMENT RULE IN TEXAS STATE COURTS

All motions for summary judgment in Texas courts (not federal courts, which have their own summary judgment rule under the federal rules of procedure) are governed by Rule 166a of the Texas Rules of Procedure; cited as Tex. R. Civ. P. 166a.

The lower-case letter 'a' next to the number 166 suggests the summary judgment rule is a subsection of Rule 166, but that is not so. The summary judgment rule is a separate rule, and a very important one at that. Rule 166 (sans 'a') deals with another pre-trial matter: PRETRIAL CONFERENCE. The reason for the counter-intuitive numbering was presumably to have the summary judgment rule appear in the proximity of other rules relating to pretrial procedure.

Rule 166a - Image of first two (sub) sections:
(a) for Claimant, and (b) for Defending Party

There are other instances were the lower-case 'a' denotes a separate rule, rather than a subsection of the rule with the same number that precedes it, e.g. the DWOP rule (Rule 165a) or the recusal rule (Rule 18a). Rule 165a addresses dismissal for want of prosecution while rule 165 covers abandonment of claims or defenses. Rule 18a governs recusals and disqualification of judges while Rule 18 deals with nonavailability of judge as a result of events such as death or resignation before expiration of the term of office.

TRADITIONAL MOTION, NO-EVIDENCE MOTION, AND BLEND OF BOTH TYPES

Traditional motions are governed by subsection (c) of the summary judgment rule while no-evidence motions are addressed in subsection (i).  Based on the location within the Texas Rules of Civil Procedure, a motion for summary judgment may be titled a Motion for Summary Judgment under Rule 166a(c) or Rule 166a(i). But the title of a motion does not control; the substance does.  -- > Misnomered motions. Some attorneys even file motions for summary judgment without expressly saying under which subsection of the rule. Other invoke both subsections as grounds for summary judgment. Those motions are called hybrid motions or "combined" motions.

THE SUMMARY JUDGMENT RULE USES DIFFERENT TERMINOLOGY 

Rule 166a does not actually use the word TRADITIONAL to refer to this subtype of motion; nor does it make the distinction between plaintiff and defendant. Instead it uses the term "Claimant" and "Defending Party". The apparent reason for this is that there may be more parties than just the plaintiff and defendant, any of whom could file a summary judgment motion. After all, the rules are general and cover a wide and diverse spectrum of civil cases.

Rule 166a(i), the no-evidence rule, does use the term phrase "no evidence" and authorizes such a motion against anyone who has the burden of proof on a claim or a defense. The party that has the burden of proof has such burden on all of the essential elements (though that burden may be met on undisputed elements by judicial admission or stipulation); but a no-evidence motion may target just a single essential element. It need not attack all. Indeed, it may be counterproductive to do so because it will not be credible if there is no question that the plaintiff has some evidence, such as the contract that is actually attached to its pleadings.

CLAIMANTS AND DEFENDING PARTIES AS MOVANTS AND NON-MOVANTS 

The term "claimant" for purposes of traditional summary judgment motions is broader and encompasses third parties, cross-claimants, and defendants who assert a counterclaim. Correspondingly, a party may face claims from different types of opponents, not only from the plaintiff. A plaintiff becomes a defendant (counter-defendant) with respect to any counterclaim asserted by the original defendant, who thereby assumes the posture of counter-plaintiff. Cross-claims can also be asserted and third parties may be brought into a lawsuit, or may chose to get involved under the rule governing interventions, subject to being booted out as interlopers on motion of any party.

That said, the additional scenarios that justify the use of the broader terms in Rule 166a  rarely occur in debt collection cases involving unsecured bank debt.

The most common scenario in a debt collection case involving a consumer is one plaintiff (either the original creditor or a debtbuyer suing as assignee of the claim) and one defendant only.

The second most common scenario is that of a bank or debt buyer suing two defendants, typically spouses (sometimes former spouses by the time the debt suit is filed).

Going beyond consumer credit cases, another commonly seen type of collection action is one in which the creditor sues an individual and a business, either a corporation that is owned by the individual (or one for which the individual works) or a sole proprietorship (dba). There are many suits by American Express that are of this nature. -- > Amex debt suits on business credit card accounts.

If a corporation is a named party on the account, it will have to be named as a defendant because it is a separate legal entity (though corporate privileges may have been forfeited or suspended and/or alter ego  and other theories may provide a basis to hold a natural person such as owner or officers liable). If the business is a dba, the distinction between individual defendant and business will likely be of little or no significance (unless the nature of the debt, i.e. business debt vs consumer/household debt, becomes an issue for FDCPA counterclaim purposes). This is because a business conducted by an individual under an assumed name ("dba" for "doing business as") is not a separate legal entity under Texas law. -- > dba and sole proprietorship; -- > substitution of true name for assuming name in litigation.

Disputing the Existence of Deemed Admissions

Facing alleged deemed admissions, and disputing them   

This post discusses fact issues relating to the existence of deemed admissions, and related defense strategies, which are procedural and evidentiary in nature. Separate blog posts address, or will address, other defensive strategies:  (1) A motion to strike or un-deem, which is appropriate in a situation when the existence of deemed admissions cannot be in good faith denied; and (2) a challenge to deemed admissions on the grounds of legal sufficiency (or rather insufficiency) when the plaintiff offers no other evidence, or the other evidence is either not sufficient to entitle the plaintiff to judgment, or not admissible. The latter strategy may even be invoked post-judgment and/or on appeal.

THE DEEMED ADMISSIONS RULE 

Rule 198.1 of the Texas Rules of Civil Procedure entitles a litigant to serve requests for admissions on another party. Tex. R. Civ. P. 198.1. Depending upon the time they are served, the party to whom they are addressed has thirty or fifty days to respond to them. Tex. R. Civ. P. 198.2(a). Should the receiving party's response be untimely or nonexistent, each request is deemed admitted without the necessity of a court order. Id. at 198.2(c).

Texas Rule governing Requests for Admission (RFA) and Deemed Admissions
(click on image to enlarge)

DISPUTING THE EXISTENCE OF DEEMED ADMISSIONS

Parties may use deemed admissions as a substitute for evidence, either for summary judgment purposes, or at trial. While the rule states that no court order is required for deemed admissions to arise under the rules governing requests for admissions, the proponent of deemed admissions must nevertheless establish that deemed admissions even exist in order to take advantage of them.

Such proof has two components: Proof of service on a specific date, and proof of non-response before the date responses were due, based on the date of service.

When facing a motion for summary judgment based on deemed admissions, a defendant may have several options, depending on the circumstances: (1) filing evidence of non-receipt in the form of an affidavit, and thereby rebutting any presumption of receipt; (2) pointing to lack of anything giving rise to a presumption of receipt in the first instance; (3) pointing to absence of a certificate of discovery mentioning service of a request for admissions, or failing to show the date of such service (combined with the absence of evidence of service).

At trial, the defendant may testify about non-receipt, but if he or she is represented by counsel, the client's testimony about non-receipt would carry (even) less weight because any request would have been served upon his or her attorney of record pursuant to Rule 8. The best evidence of non-receipt may be an returned envelope bearing notation or rubber stamp to the effect that delivery was attempted but not successful. That evidence, of course, would be in the possession of the attorney or law firm that tried to serve the requests and may then be trying to rely on deemed admissions.

Were the requests for admissions served? ... and if so, when? 

In order to rely on deemed admissions in lieu of evidence, the proponent must  establish that the requests for admissions were served in compliance with the rules of civil procedure.  Such a showing can be made with with a certificate of discovery and a certificate of service appended to the requests for admissions.

The difference between the two is that a certificate of service is to be filed with the court, while discovery requests themselves are not supposed to be filed with the court. Therefore, if the proponent wishes to rely on the latter, it must attach a copy of the certificate of service that certifies that the RFAs were properly served upon the defendant or his/her attorney of record on such and such date. The date is essential because it controls the deadline to respond.

Unless the request for admissions itself is already on file with the court (a practice the rules do not condone), the proponent will also have to submit a copy of the requests. Otherwise, the court would not know what propositions the other party admitted by failing to respond. Even if deemed admissions exist, the nature of the admissions must be such as to establish the essential elements of the Plaintiff's claims (or the Defendant's affirmative defense, should the defendant wish to use deemed admissions against the Plaintiff.) Therefore, the existence of deemed admissions does not necessarily guarantee that the party in whose favor they operate will win.

The presumption of receipt is rebuttable, assuming it even arises in the first instance  

Service in conformity with Rule 21a, as certified by means of a certificate of service, creates a presumption of receipt.

Rule 21a of the Tex R. Civ. P. provides for several methods of service.
Regular first class mail is not one of them. Certified mail is.

A certificate by a party or attorney of record is prima facie evidence of the fact of service. Accordingly, rule 21a creates a presumption that documents mailed as provided in the rule were received by the addressee.
However, the opposing party may rebut that presumption by offering proof that the document was not received. The rule expressly provides for this situation by stating that "[n]othing herein shall preclude any party from offering proof that the notice or instrument was not received".

But there is twist: Even when a party does not receive actual notice of requests for admissions, where the serving party has complied with the requirements of rule 21a, "constructive notice" may be established if the serving party presents evidence "that the intended recipient engaged in instances of selective acceptance or refusal of certified mail relating to the case." To take advantage of the exception, the proponent of deemed admissions must adduce additional extrinsic evidence to establish that the defendant was dodging service of the discovery requests.

Is there evidence of non-response? And if so, is such evidence competent? 

Deemed admissions arise automatically if the party to whom they are directed does not respond. Therefore, in order to used deemed admissions in lieu of evidence, the proponent must not only establish fact and date of service, but also of non-response by the other party before the deadline.

That proof requirement is most easily met with a response that affirmatively reflects its untimeliness. If the other party never responded at all, however, the proof requirement is more difficult because the absence of a response could have been caused by other reasons, such as mail having been lost by the post office (probably a dubious claim in most cases given that the rules require certified or registered, rather than regular mail) or the response having been lost or misplaced, or misfiled, in the law office handling the plaintiff's case. Debt collection attorneys typically work in (or for) high-volume law offices, so a certain error rate in processing mail can be expected. Additionally, because of the high volume, it is likely that no one person will handle all incoming mail, with the effect that no one person will know what happened to any one particular piece of mail or a particular fax.  

Unless the court is satisfied that the absence of a certificate of service certifying service of responses to request of admissions is sufficient, the proponent of deemed admissions will have to present sworn testimony as to nonreceipt. For summary judgment purposes, this would be in the form of an affidavit; on occasion of a trial, it would have to be through live testimony, or an affidavit to which the Defendant does not object on hearsay or other grounds.

A plaintiff's attempt to establish nonreceipt is typically subject to challenge on the grounds that the witness/affiant does not have or would not have personal knowledge. For summary judgment purposes, the affiant would have to establish non-receipt based on routine business duty to process and record incoming mail. The attorney of record will hardly be the one to process mail pertaining to hundreds, if not thousands, of pending case and will arguably not be in a position to establish the fact of nonresponse based on absence of a response in the files of the lawfirm that handles litigation for the bank of debt buyer. Additionally, attorney testimony is frowned upon because attorneys are not supposed to appear as witnesses, at least not on substantive matters other than reasonableness and necessity of attorney's fees.

As for establishing non-receipt at trial, it is normally not practical to have a legal secretary, mail processor, file clerk or law firm staffer appear as a witness; and in many cases it is not even practical for the attorney of record to whom all documents are to be mailed under Rule 8) to try the case.

Rule 8 of the TRCP requires that  motions and discovery be directed
 to the attorney of record of a represented party.

Many big debt collection lawfirms use an attorney other than the one that signed the first pleading or even a local appearance attorneys. An attorney who merely handles the trial portion of a case would not be in a position to know that a discovery response was not received (not to mention, never served) merely because she does not actually have the document in her briefcase, or in the on-line folder made available for her use on the law firm's secure website or cloud storage facility. The trial court judge may or may not believe her representation about what was served and received, or not received, but statements of attorneys and argument in court are not generally not admissible evidence, and are accordingly objectionable.

OTHER DEEMED ADMISSIONS ISSUES AND DEFENSIVE STRATEGIES

In addition to challenging the existence of deemed admissions on procedural grounds with respect to evidence of service and non-receipt, deemed admissions can also be dealt with in other ways, which are the subject of separate blog posts:

RELATED POSTS 

Motion to un-deem deemed admissions / Motion to strike deemed admissions
Are the deemed admissions legally sufficient for judgment?

Rule 198.3 is the basis for a motion to "un-deem" deemed admissions,
although it does not use that term.

Deemed admissions - Trap for the pro se defendant
The problem of deemed admissions - How does it happen and what can be done about it?

CASELAW SNIPPET REGARDING PURPOSE OF REQUESTS FOR ADMISSION AND MISUSE OF DEEMED ADMISSIONS TO PRECLUDE RESOLUTION ON THE MERITS