Denying requests for admissions (RFAs) vs. failing to answer them altogether: What are the consequences?

DEEMED ADMISSIONS CAN BE USED AS EVIDENCE 

BUT NOT EXPRESS DENIALS OF REQUESTED ADMISSIONS 

In Medina v. Zuniga, the Texas Supreme Court recently reversed sanctions imposed on a defendant for having failed to admit matters addressing liability in response to spate of requests for admissions (RFAs) served at the inception of the law suit, where the defendant later stipulated to having been at fault, and only contested gross negligence at trial.* The case is a fact-intensive personal injury case arising from a vehicle-pedestrian collision and has nothing to do with debt collection.

* See TEX. CIV. PRAC. & REM. CODE § 41.001(11) (defining gross negligence as an act or omission that (1) objectively “involves an extreme degree of risk” and (2) the actor proceeds to perform “with conscious indifference” despite an “actual, subjective awareness of the risk”).

"REQUESTS FOR ADMISSIONS ARE NO METHOD FOR TRYING THE MERITS"

Medina v. Zuniga, No. 17-0498 (Tex. Apr. 26, 2019)
(sanctions for failure to admit requests for admissions reversed) 

That said, REQUESTS FOR ADMISSIONS are routinely served on defendants in consumer debt collection cases by certain debt collection attorneys for certain creditors, and they are designed to be merit-preclusive if they are not denied, meaning that the creditor can then rely on deemed admission to get a judgment.

DENY, DENY, DENY 

The received wisdom among consumer debt defense attorneys is that RFAs can be safely denied as a routine defensive litigation practice, lest they be used as substitutes for evidence supporting the debt claim.

The Texas Supreme Court's opinion in Medina v. Zuniga supports the proposition that an arguably insincere denial does not amount to sanctionable conduct because a defendant should be able to hold the plaintiff to its burden of proof, and should not be forced to either concede liability (by answering "Admitted" to RFAs that go to the merits) or face risk sanctions for answering "Denied".

Note that the Texas Supreme Court's most recent holding on the matter is also in line with rule 92 of the Texas Rules of Civil Procedure, which authorizes a blanket "general denial" rather than requiring a defendant to set forth a response denying or admitting each allegation in the plaintiff's petition one by one. (Some affirmative defenses, however, require a verified denial, and some conditions precedent, if applicable, require a specific denial, rather than merely an all-purpose general one). 

DEEMED ADMISSIONS 

The problem with ignoring requests for admissions, by contrast, is a more serious one. If RFAs are not answered, the propositions requested to be admitted are deemed true without any need for other proof. If a battery of deemed admissions covers the essential elements of the plaintiff's claims, they relieve the plaintiff of the burden to prove the claim with competent evidence on the merits. In many debt collection cases, courts have upheld summary judgments granted based entirely, or in part, on deemed admissions, even on issues such as standing to sue and amount of attorney's fees sought by the creditor's attorney.

BEWARE OF RFAs SERVED TOGETHER WITH SUIT PAPERS, OR EMBEDDED IN THE PETITION 

Some collection law firms routinely serve a REQUEST FOR ADMISSIONS together with the CITATION and the ORIGINAL PETITION, and then rely on the executed RETURN OF CITATION (or alternative proof of service, such as a sworn declaration by a private process server) to establish that the RFAs were served on the same date the citation was served, and that the requests are deemed admitted because they went unanswered within the 50 days that followed.

This practice can create a problem for defendants even in cases where the defendant promptly hires an attorney to answer the freshly-filed collection lawsuit in response to a debt-defense attorney's solicitation letter.

If the suit papers (citation, petition, and requests for admission, which are sometimes included in the petition itself rather than appearing on a separate document) are still in the hands of the process server, it is possible that the defendant may get served in person after her attorney has already filed an original answer. The defendant may end up ignoring the requests for admission, trusting the attorney to take care of everything. But the attorney will then likely fail to answer (deny) the RFAs by the due date if his office is unaware that the client has been served with requests for admissions in the interim, together with the citation. The Defendant's answer to the law suit will preclude a default judgment, but the creditor could still use deemed admissions to support a motion for summary judgment, or raise the matter of deemed admissions at trial.

All may not be lost, because the attorney can still file a MOTION TO STRIKE DEEMED ADMISSIONS (sometimes called a motion to un-deem), but there is no guarantee that the trial court will grant it. And a deemed admissions problem must, of course, be detected in time to take proper remedial action. When deemed admissions are brought up at trial, it may be too late.

More on requests for admissions and deemed admissions:
 -->  Dealing with a deemed admissions problem in a  consumer debt collection case |  Labeau v. GE Capital Retail Bank: Deemed admissions used against bank customer | Disputing the existence of deemed admissions |

Cousins v. Portfolio Recovery Associates: Debt Buyer nixes FDCPA violation claim with deemed admissions that contradict the debtor's essential allegations regarding the violation

Once more, a debt collector makes good use of classic gotcha tool in litigation - requests for admissions to the other party that kill the other parties' case if inadvertently not answered in timely fashion, then points to deemed admission in summary judgment motion to preclude consideration of any evidence on the real facts. Magistrate Judge recommends judgment for Portfolio Recovery in fair debt collection violations case against it based on deemed admissions, but the ruling may be contested and reviewed by the district court. More interestingly (given the pervasiveness of the use of deemed admissions by debt collectors, albeit here in a case in which PRA is the defendant, rather than the plaintiff), the Magistrate's report and recommendation approvingly cites a case for the proposition that conduct that is unlawful under the FDCPA is also unlawful under TDCA. That did not help the debtor here, but it can be highly relevant in a case where the 1-year statute of limitations for FDCPA claim has passed, but not for a claim under the TDCA, which is longer. Such a claim may then still be viable under the Texas fair debt collection act.  

BRADLEY COUSINS,
v.
PORTFOLIO RECOVERY ASSOCIATES, LLC and WESTERN SURETY COMPANY.

No. 1:16-CV-852-LY.

United States District Court, W.D. Texas, Austin Division.

November 3, 2017.

Bradley Cousins, Plaintiff, represented by Michael Jacob Wood, Community Lawyers Group, Ltd.

Bradley Cousins, Plaintiff, represented by Robert Alan Zimmer, Jr., Zimmer & Associates, Tyler Hickle, Law Office of Tyler Hickle, PLLC & Celetha Chatman, Community Lawyers Group Ltd.

Portfolio Recovery Associates, LLC, Defendant, represented by Eugene Xerxes Martin, IV, Malone Akerly Martin PLLC & Robbie Malone, Malone Akerly Martin PLLC.

Western Surety Company, Defendant, represented by Eugene Xerxes Martin, IV, Malone Akerly Martin PLLC & Robbie Malone, Malone Akerly Martin PLLC.

REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

ANDREW W. AUSTIN, Magistrate Judge.

TO: THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

Before this Court are Plaintiff's Motion for Summary Judgment (Dkt. No. 14), Defendants' Response (Dkt. No. 17), and Plaintiff's Supplemental Authority (Dkt. No. 30); and Defendants' Motion for Summary Judgment (Dkt. No. 33) and Plaintiff's Opposition to Defendants' Motion for Summary Judgment (Dkt. No. 41). The District Court referred the above motions to the undersigned Magistrate Judge for report and recommendation pursuant to 28 U.S.C. §636(b)(1)(A), FED. R. CIV. P. 72, and Rule 1(c) of Appendix C of the Local Rules.

I. GENERAL BACKGROUND

Plaintiff Bradley Cousins brings this suit against Defendants Portfolio Recovery Associates, LLC and Western Surety Company (collectively "PRA") under the Fair Debt Collection Practices Act and the Texas Debt Collection Act. Cousins alleges that PRA failed to communicate to a consumer reporting agency that a debt was disputed when it reported the debt. See 15 U.S.C. §1692e(8); TEX. FIN. CODE § 392.202(a).

Cousins allegedly incurred a credit card debt, but due to financial difficulties was unable to make his payments. Sometime later, this debt was sold to PRA. Cousins obtained a copy of his credit report, which stated that he owed PRA $12,086.00. Believing this to be incorrect, Cousins—with the assistance of the attorneys at the Community Lawyers Group—allegedly sent a letter on April 21, 2016 to PRA disputing the debt. This letter reads:

I am writing to you regarding the account referenced above. I refuse to pay this debt. My monthly expenses exceed my monthly income; as such there is no reason for you to continue contacting me, and the amount you are reporting is not accurate either. If my circumstances should change I will be in touch.

Dkt. No. 1-1 at 4. Cousins claims that this letter disputed the debt. However, when he once again checked his credit report from the Experian consumer reporting agency (CRA) in June 2016, he found that it still contained a line item from PRA for this debt that was not marked as disputed. This, Cousins alleges, violated the FDCPA and TDCA. Both Cousins and PRA have moved for summary judgment.

II. LEGAL STANDARD

Summary judgment shall be rendered when the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Washburn v. Harvey, 504 F.3d 505, 508 (5th Cir. 2007). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Washburn, 504 F.3d at 508. Further, a court "may not make credibility determinations or weigh the evidence" in ruling on a motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.

Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007). 

Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. Id. The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Adams v. Travelers Indem. Co. of Conn., 465 F.3d 156, 164 (5th Cir. 2006). If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.

III. ANALYSIS

The FDCPA was enacted:

to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

15 U.S.C § 1692(e). Section 1692e generally prohibits "false, deceptive, or misleading representation[s] or means in connection with the collection of any debt." 15 U.S.C. §1692e. The section provides a non-exhaustive list of examples of such conduct, including "[c]ommunicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed." 15 U.S.C. §1692e(8). Congress "clearly intended the FDCPA to have a broad remedial scope" and "[t]he FDCPA should therefore be construed liberally in favor of the consumer." Daugherty v. Convergent Outsourcing, Inc., 836 F.3d 507, 511 (5th Cir. 2016) (quoting Serna v. Law Office of Joseph Onwuteaka, P.C., 732 F.3d 440, 445 n.11 (5th Cir. 2013)). Further, "[t]he conduct prohibited under the TDCA is coextensive with that prohibited under the FDCPA, at least insofar as [t]he same actions that are unlawful under the FDCPA are also unlawful under the TDCA." Gomez v. Niemann & Heyer, LLP, 2016 WL 3562148, at *6 (W.D. Tex. June 24, 2016) (internal quotations omitted).^[1]

Cousins brings this motion for summary judgment contending that there are no genuine issues of material fact on his FDCPA and TDCA claims. PRA disputes this, arguing that Cousins has, at the very least, failed to establish that he disputed the debt.^[2] To establish a claim under either the FDCPA or TDCA, Cousins must show that: (1) he has been the object of collection activity arising from a consumer debt; (2) PRA is a debt collector as defined by the FDCPA; and (3) PRA has engaged in an act or omission prohibited by the FDCPA. Hunsinger v. Sko Brenner Am., Inc., 2014 WL 1462443, at *3 (N.D. Tex. Apr. 15, 2014).

PRA asserts that it issued Requests for Admissions to Cousins on December 22, 2016. Dkt. No. 17-2 at 1; Dkt. No. 33-3 at 3. However, Cousins failed to respond to these requests until June 30, 2017, more than six months after service and three months after Cousins filed his motion for summary judgment. Dkt. No. 33-3 at 3. PRA therefore argues that all admissions should be deemed admitted under Federal Rule of Civil Procedure 36. Cousins does not dispute this allegation, but merely asserts that "the evidence in the deemed admissions do not entitle PRA to summary judgment because actual damages are not required to prevail in an FDCPA lawsuit." Dkt. No. 41 at 1-2.

Rule 36 states that "[a] matter is 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." FED. R. CIV. P. 36(a)(3). Moreover, "[a] matter admitted . . . is conclusively established unless the court, on motion, permits the admission to be withdrawn or amended." FED. R. CIV. P. 36(b). The Fifth Circuit has held that a court may only allow the amendment or withdrawal of admissions on motion by the party. See In re Carney, 258 F.3d 415, 420 (5th Cir. 2001) (citing American Auto. Ass'n v. AAA Legal Clinic, 930 F.2d 1117, 1120 (5th Cir. 1991)). Cousins has not filed such a motion. Nor do his responses to PRA's motion for summary judgment evidence an intent to do so. Therefore, the admissions are deemed admitted. Id.

Here, this means Cousins has admitted that "at no time between March 2013 and April 21, 2016 did [he] notify Defendant that this debt was inaccurate" or that "this debt was disputed." Dkt. No. 33-3 at 10. As the sole basis for PRA's alleged knowledge that Cousins disputed the debt arose from the letter allegedly sent on April 21, 2016 (Dkt. No. 1 at 3), Cousins is unable to establish that PRA knew or should have known of the dispute. As deemed admissions "cannot be overcome at the summary judgment stage by contradictory affidavit testimony or other evidence in the summary judgment record," Cousins cannot prove that PRA has engaged in an act or omission prohibited by the FDCPA. In re Carney, 258 F.3d at 420. Similarly, because TEX. FIN. CODE § 392.301(a)(3) requires the same elements as a violation of the FDCPA, summary judgment should be granted for PRA on both of Cousins' claims.

IV. RECOMMENDATIONS

In accordance with the foregoing discussion, the Court RECOMMENDS that the District Court DENY Plaintiff's Motion for Summary Judgment (Dkt. No. 14) and GRANT Defendants' Motion for Summary Judgment (Dkt. No. 33).

V. WARNINGS

The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).

A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).

To the extent that a party has not been served by the Clerk with this Report & Recommendation electronically pursuant to the CM/ECF procedures of this District, the Clerk is directed to mail such party a copy of this Report and Recommendation by certified mail, return receipt requested.

[1] TEX. FIN. CODE § 392.202(a) reads in relevant part: "The third-party debt collector shall make a written record of the dispute. If the third-party debt collector does not report information related to the dispute to a credit bureau, the third-party debt collector shall cease collection until an investigation of the dispute . . . determines the accurate amount of the debt, if any."

[2] PRA additionally presents several evidentiary arguments. PRA first argues that the dispute letter and credit report were not authenticated. Id. at 2-4. Additionally, PRA contends that the deposition testimony was improperly included. Id. at 5. Though the objections are likely meritorious, the Court need not reach this issue as the motion for summary judgment should be denied, even considering this evidence. See Palomo v. Portfolio Recovery Assocs., LLC, No. A-16-CV-628-SS, Dkt. No. 26 (W.D. Tex. Apr. 4, 2017) ("Notwithstanding . . . the specific objections (primarily technical) of the defendant to the motion and supporting documents, the Court finds . . . that the alleged letter relied on by the plaintiff Palomo in this case and its further consequences establishes a factual issue that should be determined by the fact finder.").

Comment on Labeau v. GE Capital Retail Bank - Deemed admissions used against bank customer

Current rules give unfair advantage to mass-litigation attorneys targeting Texas consumers

Labeau v. GE Retail Bank formerly GE Money Bank

CASE NOTE AND COMMENT  ON USE OF DEEMED ADMISSIONS AGAINST DEBTORS WITHOUT LAWYERS 

This case has an important lesson, and a sad one: Don't try to help your spouse with litigation (unless you are a lawyer).

Husband was sued on a credit card, but did not get himself together to file his own paperwork, or thought the wife would do a better job being his advocate in addition to mounting her own defense. They were both named as defendants.

Creditor, GE Capital Retail Bank (formerly GEMB), filed motion for summary judgment based on deemed admissions, which was granted over the objection of the debtor's spouse. The Fort Worth Court of Appeals affirmed on appeal, pointing out the incompetence of the defense under the current rules governing litigation.

Some of these rules are bad rules, and the Supreme Court, and Texas Legislature (to the extent that's required), should change them. Why are they bad? Because they are out of sync with reality and lend themselves to abuse and deception, on a massive scale.

Unauthorized practice of law: Can't afford a lawyer. Out of luck. Family member can't help you. Is not allowed to help you!

The official purposes of the Unauthorized Practice of Law Committee (UPLC), and the law under which it operates, is to protect the public from substandard legal representation. But many people can't get a lawyer, good or otherwise, because they can't afford one. In the case of debtors, that's why they are in default in the first instance.

The rule that prohibits family members from helping family members in court punishes what the law otherwise recognizes as a duty (at least to some extent), namely that spouses take care of each other, not to mention a moral obligation and the right thing to do.

While trial judges condone many other procedural and evidentiary errors if there is no objection (you have to be an attorney, or be well-versed in law to make the right one), trial judges do enforce the rule that family members are not allowed to advocate on behalf of one of their own. They enforce that rule, while remaining silent on many others unless a competent lawyer raises the issue, such as pleading deficiencies, hearsay exceptions, and objections to incompetent or otherwise defective affidavits. This does not mean they are being mean. Some may very well stop non-lawyers in their tracks in good faith because what they are doing may also subject them to the possibility of criminal prosecution, though that's a stretch. Be that as it may, family members will typically not be allowed to speak for other family members in court (except as witnesses), and may not sign court-filed papers on their behalf. It's a big no-no, and courts of appeals have harped on it time and again.

This case is  no exception. Spouse, rather than defendant, signed motion for continuance and did not ask for withdrawal of deemed admissions. At least, this time the panel opinion did not go so far as to suggest that the spouse may have committed a crime.

Deemed admission: Perversion of a tool for lawyers to streamline litigation 

Deemed admissions result from failure to answer requests for admissions. The original purpose of that rule that authorizes Requests for Admissions is to allow litigants to reduce the number of issue for trial by disposing of those that are not really contested or not worth arguing about.

But requests for admissions are these days mostly used for an entirely different purpose: To trap unrepresented litigants who are known to be unlikely to respond. After all, they get these requests from an attorney suing them, -- an attorney who may even have stated in a letter or in the pleadings themselves that any information will be used for debt collection purposes. Sounds like another well-known phrase: Anything you say may be used against you. the Miranda warning. This one is known to the public from myriad cop and crime shows on TV. So why would average unsophisticated telly-watching folk who find themselves the target of a lawsuit respond  to request for information when they have just been warned that everything they say will be used against them?

What the lay defendants don't know or appreciate is how their failure to respond will be used against them, and that judgment can be entered on deemed admissions even if default judgment cannot be entered after they have filed an answer (or written a letter to the judge).

A modest proposal: Abolish the deemed admissions rule, and replace it with a rule authorizing the filing of stipulations signed by both parties or their attorneys.

The Texas Supreme Court should abolish or change the deemed admissions rule because it was being intentionally misused by attorneys engaging in mass-litigation against individuals most of whom will not hire legal counsel. Debt collection attorneys know how to exploit the current rules and use them for purposes for which they were not intended. Additionally, the rule allows them the get Defendants to admit (by doing nothing) facts that even the debt collection attorney knows to be false, or does not care if they are false.

Modest changes to benefit the lawyerless masses, but only in JP and family courts so far

The Supreme Court has recently promulgated new rules for justice court. Among those is a rule that allows family members to act on behalf of defendants in debt suits filed in those courts, though it requires the judge's permission, and the "representation" is limited. The operative word is "assisted".

Additionally, the Supreme Court has taken note that large numbers of people try to get divorced without a lawyer, many no doubt because they cannot afford one. The highest court, over the vociferous objections of the Family bar, thus promulgated pro se forms to help those unrepresented litigants.

The rules of procedure for county and district court should also be amended to make them more user-friendly, rather than giving an unfair advantage to debt collectors engaging in mass litigation. The debt collectors' tactics can be effectively countered only by those defendants who can afford to mount a defense with counsel, or become legally savvy extremely quickly. It only takes a little over 50 days to end up with deemed admissions; and only 30 if they are served under rule 21a. A typical pro se litigant would not know that, and most probably won't trust the debt collection attorney telling him or her as much. And a month is hardly enough for even a college-educated lay person to become legally savvy.

Even a three-year law school education, followed by bar exam passage, does not make freshly licensed attorneys ready for litigation. If left without supervision, they will predictable make numerous mistakes. How can the general public be expected to know how deemed admission operate and how to undo the damage once the relentless operation of the rule has inflicted it?

Here is the tale of LaBeau, as told by the court of appeals: 

LaBeau did not respond to the motion for summary judgment, but his wife attached to the June 5, 2012 motion for continuance (which bore only her signature) a document entitled "Facts to be Admitted or Denied." She admitted making the agreement with Lowe's Home Improvement, stated that Lowe's "third partied" the agreement with GE Capital, and denied the amounts due and owing. She also claimed she had sent two checks to Lowe's, one for $1,350 and one for $1,800, and that she had attempted to resolve the matter in good faith.

Even if the motion for continuance could be construed as a motion to withdraw the deemed admissions, it was filed by LaBeau's wife rather than LaBeau.[3] See Tex. R. Civ. P. 7. There is nothing in the record from LaBeau asking the trial court to withdraw the deemed admissions or otherwise responding to the motion for summary judgment.[4] See Unifund CCR Partners v. Weaver, 262 S.W.3d 796, 797-98 (Tex. 2008). Accordingly, we conclude and hold that the trial court did not err by granting summary judgment, and we overrule LaBeau's second issue.

Decision 

Having overruled both of LaBeau's issues, the Forth Worth Court of Appeals, in an opinion by Chief Justice Terrie Livingston, affirmed the trial court's judgment and ordered LaBeau to pay the costs of the appeal.

Comment 

The decision of the Second Court of Appeals is not wrong under existing law. It is just not right. It is not right because the rules under which the appeal was decided subvert, rather than promote, the merits-based resolution of cases. But the problem is the nature of the rules themselves that permit non-merits based adjudication of cases brought against unsophisticated defendants based on deemed admissions. The remedy is their amendment by the Texas Supreme Court, -- which is the relevant rule-making "agency" with respect to rules of procedure and evidence.

Case info and link to appellate docket sheet and on-line opinion on the court's website  

Michael LaBeau v. GE Capital Retail Bank f/k/a GE Money Bank, No. 02-12-00284-CV (Tex.App. -- Fort Worth, July 16, 2012) (Opinion by Chief Justice Terrie Livingston) (click docket number).

(Click image to enlarge it)

GE Capital Retail Bank formerly known as GEMB, Appellee, was represented by Joseph Marse O'Bell, a ZWICKER AND ASSOCIATES attorney handling debt collection cases in Texas for multiple creditors.

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

Donald D. DeGrasse - Amex collection attorney (profile and critique of pleadings)

DEBT COLLECTION ATTORNEY - INDIVIDUAL PROFILE 

Donald D. DeGrasse 

Donald D. ‘Don’ Degrasse is a debt collection lawyer based in Houston, Texas. In addition to creditor-debtor litigation (which involves large numbers of American Express debt suits), Degrasse lists Commercial Litigation and Real Estate as practice areas. He is a prolific litigator in the trial courts covering a broad array of civil cases, but is not very active in the courts of appeals.

Mr. Degrasse’s law degree is from Indiana University School of Law, where he completed his studies with a JD degree in 1979. He obtained his Texas bar license in 1981.

Attorney DeGrasse's Texas Bar Card Number is 05641800. In addition to the courts of the State of Texas, he is admitted to practice in the US Tax Court and in the U.S. District Court (and Bankruptcy Court) for the Southern District of Texas. Information available from the State Bar of Texas web site indicates that Attorney DeGrasse has no public disciplinary history.

PARTNERS / COLLEAGUES IN SAME FIRM: Robert L. Rolnick (name partner); Kevin T. McGuire

TYPICAL DEGRASSE PETITION IN A DEBT SUIT 

CAUSES OF ACTION: BREACH OF WRITTEN CONTRACT AND ACCOUNT STATED 

What does a typical DeGrasse petition in a debt suit contains (--> Sample DeGrasse Petition)

As causes of action in original creditor suits DeGrasse pleads Breach of Written Contract and Account Stated, each in a separate paragraph (IV and V, respectively).

DeGrasse's two theories are based on the same set of facts. Indeed, the section on "Account Stated" incorporates the allegations that precede it in full. It adds references to account statements sent by the original creditor, and alleges that there were never disputed by the defendant. DeGrasse seeks the same amount of damages on both theories. Unlike Anh Regent's pleading, DeGrasse's do not make any reference to acceleration of maturity of the revolving balance on the account, but characterize the pleaded-for amount of damages as "due and owing" on the account.

DISCOVERY WITHIN THE BODY OF THE PETITION

DeGrasse pleads discovery level 1. His petition template includes Requests for Disclosure and Request for Admission as numbered paragraphs, although the inclusion of the latter is not authorized by the rules of civil procedure, which specifically instruct litigants not to file discovery requests with the court. More on that topic below.

Although they contain discovery requests, DeGrasse's original petitions do not have a designated FACTS or FACTUAL BACKGROUND section separate and apart from the paragraphs devoted to the causes of actions; nor do they contain a CONCLUSION, or PRAYER section denominated as such. The untitled last paragraph lists the damages beings sought, including the amount of "the balance due, owing, and unpaid under the Agreement", court cost, post-judgment interest, and "any further relief to which the Plaintiff may show itself justly entitled." The prayer and list of damages does not include an express request for attorney's fees.

Requests for Admissions. DeGrasse's standard sets of "Requests for Admissions" comprise propositions sought to be admitted numbered with lower-case letters starting with a) through m) or w). There is more than one version of requests for admissions and they differ in length.

MOTIONS FOR SUMMARY JUDGMENT BY DEGRASSE 

In Amex debt suits DeGrasse acknowledges that American Express is a Utah bank, and that Utah law is relevant to the case. He nevertheless moves for summary judgment under Texas law on causes of action for breach of contract and account stated, and does not expressly ask for judicial notice and application of Utah law. When the issue comes up in litigation, DeGrasse argues that Amex is entitled to judgment regardless of whether Texas law or Utah law applies.

DEGRASSE MOVES FOR SUMMARY JUDGMENT ON DEEMED ADMISSIONS

DeGrasse is one of those debt collection attorneys who inserts request for admission into his pleading so as to take advantage of deemed admissions should the defendant fail to answer them. The practice of embedding discovery requests into pleadings is not proper under the rule of civil procedure (which state that discovery shall not be filed), but is not uncommon either. Some debt collection attorneys do it routinely while others do not. Those that do, typically get away with it.

The proper method of serving discovery at the same time as the citation and original petition is to prepare two documents separately, obtain a citation referencing both documents; file the pleading only with the court; but have both the petition and the discovery requests served on the defendant with the citation. Allen L. Adkins, who set a high standard in debt collection litigation and also authored CLE materials, followed that practice as a matter of law firm policy. Few other do. 

Injecting requests for admission into the initial pleading can confuse defendants because the deadline to answer the lawsuit differs from the deadline to answer discovery requests. Additionally, a defendant may be under the impression that the filing of a general denial will also deny the requested admissions, i.e. that it is enough to answer the lawsuit, only to be faced with a motion based on deemed admissions a few weeks later.

DeGrasse routinely files motions for summary judgment based, at least in part, on deemed admissions. Because he has the requests for admissions served as an integral component of the petition itself, he can rely on the return of service in the court's file not only as proof that the lawsuit papers were served on the defendant (for default judgment purposes) but as proof that requests for admissions were also served; and since the requests for admissions are part of the pleadings, their substance is also on file. The rules do not condone this stratagem, but it often works. Moreover, in a default scenario, no one is there to object in any event, and courts typically do not enforce pleading rules proactively.

RELATED TOPICS AND BLOG POSTS 

Deemed admissions: Trap for the unwary
Disputing the existence of deemed admissions
Motion to strike or withdraw deemed admissions after failure to answer requests for admissions (RFAs)

DEGRASSE NAME SPELLING VARIANTS

This prolific Texas litigator has a compound surname. It is rendered as one word in his address block with the G in Grasse sometimes capitalized within the character string. On his signature, however, the De and the Grasse sometimes appear as separate words, and both are capitalized. Differences in the appearance of the signature on different documents suggests that Attorney DeGrasse (or someone on his behalf) actually signs in person, rather than using a signature stamp or e-signing with an image of his signature. DeGrasse's cover letters do not contain the name of a secretary, paralegal, or other clerical staff.

ADDRESS OF DONALD D. DeGRASSE of DeGRASSE & ROLNICK 

Donald D. DeGrasse
DeGRASSE & ROLNICK
6363 Woodway, Suite 975
Houston, Texas 77057-1713
Tel.: (713) 840-9111
Fax: (713) 840-7263

Web address: www.degrasserolnick.com  

Arbitration vs Litigation - PROs and CONs in credit card collection context

Can an arbitration clause work in favor of the consumer sued on a debt? 

BENEFITS OF ARBITRATION TO THE DEBT SUIT DEFENDANT 

 
The official rationale for the public policy preference in favor of arbitration, and ADR in general, is that is provides a more efficient and less expensive mechanism for resolution of disputes in a private setting.   

Unlike mediation, however, which will result in a resolution only upon consent of both parties to the terms of a settlement facilitated by the mediator acting as a disinterested third party, the arbitrator renders a decision (arbitration award) that is binding upon the parties whether they like it or not. The arbitrators essentially performs the role of a judge, but is not a public official. 

Arbitration thus bears great resemblance to a court proceeding, but it still offers a number of distinct advantages over a court proceeding. At least for one party to an arbitration clause within a contract.   
   
Providing a benefit to customers was likely not the motivation for most credit card issuers to write arbitration provisions into account agreements. But the fact is that most such agreements still contain them, and they are equally available to both parties. Even if a credit issuer substituted a new cardmember agreement that omits arbitration to replace an earlier version, this may not cancel the right to arbitrate if the prior agreement contained an arbitration clause that was irrevocable. 

By filing a debt collection suit, the bank or its assignee has already expressed a preference for litigation over arbitration. But the defendant still has a choice, assuming there is no dispute as to the identity of the contract that governs the parties’ relationship (-- > existence of arbitration agreement; -- > contract formation).

ARBITRATION BEFORE AND AFTER INITIATION OF A DEBT COLLECTION SUIT

If the consumer has a choice to opt for arbitration prior to a lawsuit being filed, he or she can avoid a public record of a lawsuit having been filed in which he is the defendant (though that may eventually also happen after an arbitration, if the consumer loses, does not pay the debt, and the creditor files a suit to confirm arbitration award.)  

But even when a debt collection lawsuit is already on file, the Defendant should in most cases be able to better protect privacy by moving for arbitration because the creditor will then have to make its case privately in arbitration, rather than publicly in court. Court proceedings always create a public record and motions to seal the record are virtually unheard-of in debt collection cases. So, if a debtor does not want to have a public record, arbitration would seem to be the better forum, or will at least delay the creation of a public record. These days, of course, Creditors simply file collection suits en mass and do not bother with arbitration. 

Protection of Privacy Interests

If a motion for summary judgment is filed in a credit card debt suit, it often entails years worth of spending on credit cards becoming a matter of public record as summary judgment exhibits. Some defendants may not care if copies of credit card statements are filed in court, but others may not wish to have their spending history revealed to anyone who might be interested. In many court systems, exhibits are now accessible over the web along with pleadings and other court-filed documents.  

Additionally, sensitive information, such as social security numbers, birth dates, income and employment data, may make into the court’s file also (and possibly on-line), even if such information is supposed to be redacted. Plaintiffs' attorneys and their law office staff do not always take care to remove or blacken out protected information. Sensitive information of this nature typically appears on credit applications. Though not routine, some plaintiffs include an application for a credit card among their exhibits. In other types of debt collection litigation – such as on lines of credit and promissory notes – the inclusion of the application for credit as a summary judgment or trial exhibit is even more common.

Discovery Burdens 

The normal rules of discovery that govern a lawsuit filed in a Texas court do not apply in arbitration. The same is true of such matters as deadlines as they are found on court-issued docket control orders.  To the extent a creditor’s attorney has a policy of serving a load of discovery requests, the defendant can avoid the hassle of having to respond to it, and would not face a motion to compel or a motion for sanctions that would otherwise be authorized under the discovery rules.

By having the debt matter dealt with in arbitration, the consumer can also avoid being subpoenaed through the court system, on pain of contempt of court for noncompliance with the subpoena.

Depositions are rarely taken in debt collection suits. But it does happen occasionally and private court reporters that transcribe the question-answer-session are expensive. If the deponent loses, the cost of the deposition, which may run into the hundreds of dollars or more, qualifies as a part of the “taxable cost” of the lawsuit, and the looser becomes liable for it in addition to the amount of the judgment.

Grace period to weigh options and improve settlement posture

Although arbitration is touted as a quicker method of dispute resolution, this may not be the case. Particularly when the creditor and the lawfirm it retains for litigation are not set up to arbitrate cases on a large scale and in an efficient manner. 

If the diversion to arbitration results in a delay, it may provide the defendant additional time to earn or otherwise raise funds for a settlement, or to contemplate whether or not to file for bankruptcy. A delay in the resolution of a debt case may be of particular benefit to a debtor who is unemployed, but not unemployable, assuming continued improvement in the relevant job market enhances the prospect of improving his or her financial condition.

Additionally, if a defendant insists on arbitration, and this causes inconvenience to the Creditor or its lawyers, the chances of settlement on more favorable terms may improve.

Enforceability

An arbitration award constitutes a final authoritative resolution of the case, just like a judgment, but it is not enforceable as a judgment unless and until it is confirmed by a court of competent jurisdiction. This requires a return back to court and a proper motion to confirm (if a case was filed in court first and abated) or an independent lawsuit filed for the sole purpose of confirming the arb award and turning it into a judgment, with all the consequences such a judgment entails, -- such as execution and recording of an abstract of judgment in the county’s real estate records, and garnishment of bank accounts. 

DISADVANTAGES OF OPTING FOR ARBITRATION OF A DEBT SUIT

The Texas Rules of Civil Procedure and Rules of Evidence do not apply in arbitration because arbitration organizations have their own rules of procedure.

Therefore, in cases in which these rules could be invoked to secure a resolution in the defendant’s favor in court, they may not be effective in arbitration notwithstanding the applicability of the substantive law regardless of whether the case is in judicial or arbitral forum. The procedural aspects and admissibility issues are a different matter.

Examples would be objections to authenticity of documents and challenges to the competency and qualifications of affiants, particularly in the case of debt collection suits brought by downstream debt-buyers at the end point of a chain of assignments.  Such evidentiary objections are often successful in court in defeating a motion for summary judgment, and may also prove effective at trial. On the other hand, many arbitrators were previously judges, and may be receptive to evidentiary arguments because have had plenty of occasion to deal issues of authenticity and admissibility while on the bench.  

AVOIDING THE EFFECT OF DEEMED ADMISSIONS - "PLAN B" FALL-BACK 

That said, a motion to compel arbitration might be an alternative method to deal with deemed admissions because the deemed admissions would not be valid as a substitute for evidence in another proceedings. 
  
Since the Texas Supreme Court has set the standard for withdrawing (or striking) inadvertent deemed admissions rather low, however, a move for arbitration to avoid the consequences of not having answered requests for admission in a timely fashion will often be unnecessary. Still, it may provide a Plan-B option should the trial court, contrary to expectations, rule against the defendant’s motion to strike deemed admissions, which is the proper mechanism to deal with this type of problem.

A plaintiff avoid the effects of deemed admission (i.e. its failure to answer requests for admission served on it by the Defendant’s counsel) by non-suiting the pending action and causing it to be dismissed without prejudice to re-filing it later. 

But a non-suit is not an option for the defendant. Even if the Defendant had become a plaintiff by asserting a counterclaim for wrongful debt collection practices, a nonsuit by the Defendant as Counter-Plaintiff would only dispose of the counterclaim. It would not make the Creditor's claim go away. 
  Stated differently, the Defendant has no equivalent mechanism to terminate the lawsuit unilaterally and return the parties to their original positions. But a motion to compel arbitration might be a way to get the case into a different forum. To avoid claims of waiver, however, such a motion should not be filed late in the game. --> Waiver of the Right to Arbitrate by Litigation Conduct 

Last updated: 12/9/2018

Deemed Admissions - How it happens and what can be done about them

REQUESTS FOR ADMISSION & DEEMED ADMISSIONS 

Deemed admissions are one of the traps for the unwary; -- traps for those innocent of knowledge about how the rules of discovery and procedure operate.-- > Self-represented litigants.

Deemed admissions are different from admissions in the normal sense of the word. An admission ordinarily is a statement, either verbal or written, in which the person making it concedes that an allegation by the opponent is true. Such admissions can be made in a lawsuit, either as formal judicial admissions or as stipulations. Deemed admissions, by contrast, are not deliberate, but result from default.  All the defendant has to do to create a deemed admissions problem is do nothing, -- do nothing after having been served with requests for admissions, that is.

REQUESTS FOR ADMISSIONS AND THE HARSH CONSEQUENCES OF FAILING TO RESPOND

Requests for admissions are one of the tools of written discovery (-- > paper discovery). Their official justification is to allow the parties to narrow the issues in the litigation, and the burdens of proof associated with them, by eliminating those on which there is no real disagreement and those issues that are not really worth fighting over and wasting attorney time on.

Requests for admissions come in sets of affirmative statements that are to be either admitted or denied. A space is often provided next to or below each enumerated request for admissions for such responses, or both words (ADMITTED and DENIED) are printed after each statement, and the person answering is to check or circle the applicable one. Unlike interrogatories, the responses do not have to be sworn to. Some Creditors' law firms nevertheless create that impression by combining request for admission with interrogatories and attaching a form with blanks for "verification" of discovery responses under oath. 

Requests for admissions may be served with the original petition or separately at a later time. If they are served separately, the Defendant has 30 days to respond (and three additional days if the requests were delivered by mail). If they are served with the citation and original petition, the defendant has an additional 20 days to respond, for a total of 50 (to respond to the requests for admissions, not the lawsuit itself). It's not unheard of that the Creditor nevertheless requests are default judgment even before the 50 days are up.

The failure to meet the applicable deadline automatically results in the statements that the plaintiff requested be admitted (or denied) being considered admitted without any “yes” or “no”; “true” or “false”; or “admitted” or “denied”.  The defendant is “deemed” to have admitted everything by not affirmatively denying the statements by written response before the deadline. No court order is needed for this to happen. Deemed admissions are triggered automatically. And whether the fact statements are true or not is no longer an issue.

Deemed admissions have draconian consequences because the Plaintiff can use them as a substitute for actual proof to support its case. Assuming the admissions were properly phrased and cover all elements on which the Plaintiff has the burden of proof, the admissions alone are sufficient to support a motion for summary judgment or one for default judgment (which the Plaintiff's attorney may file in lieu of an MSJ if the Defendant never filed an answer to the lawsuit either). If the Plaintiff does not file either type of dispositive motion, it can still use the deemed admissions at trial too, -- either in lieu of evidence, or to supplement whatever other evidence it can marshal. The typical evidence at trial consists of cardmember agreement and account statements filed under business records affidavit; and -- in the case of debt suits by assignees of the original creditor - proof of transfer of title, typically a bill of sale, or several such bills of sale.

Rule 198.1 Requests for Admissions (click to enlarge image of rule text)

Rule governing Requests for Admission - Deemed Admissions - Withdrawal and Amendment

HOW TO FIX A DEEMED ADMISSIONS PROBLEM:  MOTION TO STRIKE OR “UN-DEEM” AS A REMEDY

A deemed admissions problem is not necessarily fatal because the party that ends up with such admissions by operation of the relevant rule may file a motion to have the deemed admissions struck or withdrawn. In a case decided a few years ago the Texas Supreme Court actually set the applicable standard pretty low, meaning that the excuse for failing to answer the requests for admissions in time does not have to be a very good one. The Supreme Court reasoned that cases should be decided on the merits, and on the strength of the evidence, not merely because of an oversight by one of the parties. But judges and appellate justices may find that argument more appealing in family law cases, rather than in debt collection cases. In many instances, deemed admission have been upheld as sufficient to function as a substitute for competent evidence in debt cases. 

Still, if a proper motion to strike deemed admissions is promptly filed in trial court, it may very well succeed.

Missing the deadline to respond to request for admissions will likely be considered an excusable mistake, but the problem can only be fixed if a proper motion is filed, heard, and granted.  If that does not happen, a final judgment can be based on deemed admissions even if the Plaintiff does not have good evidence and would otherwise lose. With deemed admissions, the creditor or debt buyer can still prevail because it can use the deemed admissions as a substitute for missing proof or for inadmissible or otherwise defective evidence. Sometimes even defendants with lawyers lose on the deemed admissions issue. 

Assuming they even realize the consequences of not having responded to requests for admission, unrepresented defendants typically do not know how to go about fixing the problem. That is yet another juncture in a debt suit where the benefits of legal representation come in.  If the debtor hires counsel in time, the deemed admissions can likely be dealt with. If no motion to undeem is filed, the available remedy will be waived, and the courts of appeals will almost certainly affirm the judgment even if a defendant manages to find an attorney to handle the appeal (unless there is another serious problem that provides a basis for a viable appeal).  Also see -- > failure to preserve error in the trial court; -- > frequent errors in appeals.

AFFIRMATIVE DEFENSES AND DEEMED ADMISSIONS

Deemed admissions may or may not neutralize affirmative defenses. It depends whether the requests for admission were directed at the elements of the affirmative defense, or elicited an admission that the defendant did not have any evidence to support those elements or a particular defense, such as limitations. A specific admission may also prove fatal because it negates an essential element of an affirmative defense, such as an admission that the last payment on the account was made less than four yours before the lawsuit was filed.

THE PURPOSES OF REQUESTS FOR ADMISSIONS AND THEIR MISUSE TO SUBVERT ADJUDICATION ON THE MERITS (caselaw clip)

DEEMED ADMISSIONS: AMPLIFICATION AND ADDITIONAL TOPICS 

The Deemed Admissions Rule
Are Deemed Admissions a valid substitute for evidence?
Motion for summary judgment based on deemed admissions
Motion to strike or un-deem Deemed Admissions
Disputing a claim of deemed admission on the ground that deemed admissions don't exist

OTHER CONSIDERATIONS AND OPTIONS TO DEAL WITH DEEMED ADMISSIONS

When the deemed admissions do not cover all the bases (i.e. all essential elements on which the plaintiff has the burden of proof.)

When deemed admissions contradict each other, or create a conflict with other evidence

Disputing the existence of deemed admissions by raising an issue as to service and proof of non-receipt

Escaping the effects of deemed admissions by invoking the right to arbitrate (if the underlying contract provides for arbitration)

Challenging deemed admissions based on requests for admission embedded in the Creditor's pleading.

Plaintiffs can avoid the effect of deemed admissions against them by nonsuiting the pending action, Defendants do not have that option, but could try to get the case moved to arbitration if the contract contains an arbitration clause (motion to compel arbitration) and argue in arbitration that the deemed admissions only apply in court because they arise from the Texas Rules of Civil Procedure, which do not govern the arbitration