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GATES, O'DOHERTY, GONTETt & GUY, LLP.
700 S. Flower Street Suite 1100
LOS ANGELES GSA 90017 TELEPHONE : [phone] FACSIMILE: [phone]
LAW OFFICES
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F.X. SEAN O'DOHERTY. STATE BAR NO . 87556 JEFFREY L LE PERE, STATE BAR NO . 201787
Attomeysfor
Defendant CBIZ VALUATION GROUP, and ZFLENKOFSKE, A}CELROD & CO ., UNITED
INC . LTD .
STATES DISTRICT COURT WESTERN DIVISION 1475 (RCx)
CENTRAL DISTRICT OF CALIFORNIA, In re HERITAGE BOND LITIGATION
MDL Docket Na . CASE NO .
01-5752 DT
Consolidate With Case Nos . : CV 02-382 DT (RCx)
CV CV CV CV 02-993 DT (RCx) 02-2745 DT (AJWx) 02-6484 DT (RCx) 02-6841 DT
Companzn Cases :
CV 02-6512 DT Transfer)
SA CV 02-989
(RCx)
(MDI,
This Document Relates To : CV O1-5752 DT (RCx) CV 02-382 DT (RCx) CV 02-993 DT (RCx) CV 07-6484 DT (RCx) CV 02-9221 DT (RCx) } NOTICE OF MOTION AND MOTION OF DEFENDANT VALUATION COUNSELORS GROUP INC TO WITHDRAW ADMISSIONS DEEMED ADMITTED AND TO RECONSIDER MAG . CHAPMA.N'S RULING ; DECLARATION OF JEFFREY L . LE PERE ; MEMORANDUM OF POINTS AND AiITHORITSES
TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD : PLEASE TAKE NOTICE THAT on June 28, 2004 at 10:00 a.m., or as soon as counsel can he heard in Courtroom 880 of the above-captioned court, located at 312 North Spring Street,
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Los Angeles, California 90012, defendant Valuation Counselors Group, Inc ., will move this court for an order to withdraw admissions previously formally deemed admitted on April 22, 2004. This motion is pursuant to Rule 7 of the Federal Rules of Civil Procedure. This motion is made following the conference of counsel pursuant co Local Rule 7.3 which took place on April 22, 2004. This motion is made on the grounds that the deemed admissions create a dispositive effect . Accordingly, Local Rule 72.2(a) does not apply. This motion is based upon this Notice of Motion, Memorandum of Points and Authorities, and Declaration of Jeffrey L. Le Pere, the Court's files and records herein, on such other and
9I I further authorities and documentary evidence as may be submitted, and on the arguments of 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2 MOTION TO WITHDRAW ADMISSIONS PREVIOUSLY DEEMED ADMITTED
counsel . Respectfully Submitted, Dated :May 14, 2004 GAT,O'DO~ i J~' Y aTER & GUY, LLP ;
L---- .
Bcito`rneys,ffir Defendant
VALUATION COUNSELORS GROUP, INC.
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DECLARATION OF JEFFREY L LE PERE I, Jeffrey L. Le Pere, declare as follows: 1. I am an associate for Gates, O'Doheny, Gonter & Guy, LLP, attorneys of record
for defendants Zelenkofske, Axelrod, & Co ., Ltd . and Valuation Counselors Group, Inc . collectively referred to as the C$IZ defendants . 2. This motion follows Honorable Rosyelyn Chapman's finding that Valuation
7 I Counselors Group Inc. served its verified responses untimely to plaintiffs' Request for Admissions 8 9 10 11 12 13 14
on March 17, 2004 and the self-executing nature of Rule 36 of the Federal Rules of Civil Procedure resulted in deeming the admissions to be admitted. 3. Valuation Counselors Group, Inc . (hereinafter "Valuation") contends with the
admissions being deemed admitted is dispositive Valuations' ability to defend itself in this For this reason, the timing for this motion is based not on Local Rule 72.1, but per Local Rule 7 .34. On April 22, 2004, in compliance with Local Rule 7 .3, i met and conferred with
Brian Barry, plaintiffs' counsel, regarding the deemed admissions and he was not willing to allow
15 I Valuation to withdraw its original responses . Thus, this necessitating this motion . 16 i 17 18 19 20 21 22 23 24 25 26 27 2$
5.
On March 5, 2004, I attempted to contact my client to obtain the verifications . l
informed Jill Betts of Brian Barry's office that we intended to serve verified responses on behalf both CBI7_ defendants, but I had not yet received the verifications on behalf of Valuation . I explained that I did not know the reason why this was the case, but considering the fact I intended to travel to Minneapolis, Minnesota for three critical depositions in this case during the week of March 8, 2004 I would do my best to get the verifications prior to my departure. Unfortunately, the verifications did not arrive, as explained below. 6. l returned from Minneapolis on March 15, 2004 . I immediately inquired about
Valuation's discovery responses . I once again asked my client for the verifications . I also explained that I would not serve the responses until I had the verifications . 7. On the day of my return, I was asked to cover the deposition of Steve Soper in
San Francisco the next day. This was a deposition I was not previously scheduled to cover. Mr. Soper was an associate with Healthcare Financial Solutions. This company prepared the financial
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feasibility studies for eight bond offerings . Valuation prepared either the corresponding appraisal ox market studies . In other words, Mr. Soper had material testimony to both of my clients . I obviously needed to time co prepare and make necessary travel arrangements. This last minute rescheduling obviously disrupted my first dayback in the office. I regrettably failed to communicate with Ms . Betts . 8. On March 17, 2004, I finally received the verifications pertaining to Valuation . My
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client informed me that they thought the verifications had been previously provided on March 4, 2004 along with Zelenkoskc's verifications and did not understand my requests for verifications . My client also knew I was in Minneapolis and did not attempt to contact my office . 9. On March 19, 2004, plaintiffs file an Order co Show Cause requesting that
Valuation's responses to request for admissions be deemed admitted . 10. On April 22, 2004, the court firmed the self-executing effect of Rule 36 and
granted plaintiffs' request . This created a dspostive result for Valuation . 11 . As shown below, plaintiffs can now possess the requisite foundation to file a motion
for summary judgment per Rule 56 . At least one co-defendant has indicated to me that it intends to
16 I file a cross-complaint against Valuation. 17 12. I am informed and believe that plaintiffs recently increased their settlement demand
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~ by $7.5 million because of the deemed admissions. 13 . To provide the court with a brief background of Valuation's role in this complicated
web of eleven bond offerings, Valuation performed the appraisal for the Sarasota and Chicago Heritage facilities . Valuation also prepared the market feasibility studies for six additional off Duvall Gardens/Austin ; Desert Tot Springs/Rancho 9; St. Joseph/Ft. Worth II; East Houston ; Seminole; and Brownsville . 14. relevant part: [Valuation] owed a duty to Plaintiffs and the Class to exercise due care, in accordance with the standards utilized by reasonable prudent professionals, with respect to the investigations for and the drafting of the Official Statements, including but not limited to, the appraisals and the market feasibility studies .
4 MOTION TO WITHDRAW ADMISSIONS
Paragraphs 462 and 465 of plaintiffs' Fifth Cause of Action for Negligence state in
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[Valuation] had a duty to investigate the Heritage Facility proposals, to compile data necessary to forecast the financial success of the Heritage Facilities, to take reasonable steps co ensure that this data m a reasonable and professional manner. 15 . Valuation now has no defense these allegations . Consider the following six
Requests for Admissions : Request for Admission No. 1 : Admit you know the appraised values listed in the appraisal reports would be included in the Official Statements distzibuted to prospective investors . Request for Admission No. 2: Admit each of the appraised values listed in the appraisal reports were calculated on a e simple absolute basis . Request for Admission No . 3 : Admit that the appraised values listed in the appraisal reports did not account for restrictive covenant andlor legal encumbrances . Request for Admission No. 4 : Admit that the appraisal reports did not take into account all factors and information that may have lessened the calculated valuations of the properties. Re uest f Admission No . 5 : Admit that the appraisal reports were influenced by directions you received from Heritage and/or Health Care Holdings employees . Request for Admission No. 6: Admit drat the appraisal reports were suppose to be facility-specific, but in reality were substantially similar in content. 16. The combined effect of these six admitted facts eliminates Valuation's viable
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defense against plaintiffs' negligence claim. Valuation would be prohibited from offering evidence that it did perform the appraisals in a reasonable and professional manner . For example, Valuation will be prohibited from offering evidence as to how it determined appraised values for the Sarasota and Chicago facilities . Also, Valuation would be prohibited from offering evidence that the appraisal reports were independently prepared and ultimately included in the respective Official Statements and the fact that Valuation was not paid for much of its work. The failure to pay breached terms contained in the engagement letter seating that Heritage would not have permission to publish the results unless its account was current, 17. Similarly, putative plaintiff Langdon Parrill testified that his Miller & Schzoeder
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broker, Mr. Pennwarden, informed him that the appraised value would cover the bond amount .
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(See, Exhibit A, Panrill Deposition 3520) . This testimony demonstrates an investor relying on the appraised value . The deemed admissions automatically mean that Mr. Parrill and others relied on flawed work . Valuation vigorously contests these allegations . 185
As to the six market feasibility studies Valuation prepared, the following request for Request for Admission No . 7. Admit you know the "market feasibility studies" would be included in the Official Statements distributed to "prospective investors." R~ uest for Admission No. 8. Admit that the market feasibility e studies you prepared did not take into account all factors and information that may have resulted in less favorable forecasts .
admissions are problematic to Valuation's attempt to defend itself:
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Request for Admission No. 2. Admit that the market feasibility studies you prepaced were supposed to be facility specific, but m reality were substantially similar m contentRequest for Admission No . 10. Admit that the market feasibility studies you prepared were influenced by directions you received from Heritage and/or Health Care Moldings employees . 19. These deemed admissions when read together would enable plaintiffs to seek
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summary adjudication . The market studies are to he an independent analysis of the demand for the services the management intended to offer in a particular community. The studies were also attached as an exhibit to the respective Official Statement . Considering the time line of each bond offering, the market study, feasibility study, and appraisal are the foundation opinion for subsequent steps in the underwriting of each bond offering. 20. Putative plaintiff, Laurexice Pilgeram testified that he would analyze the financial
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feasibility study, market feasibility, appraisal of the property to confirm adequate principal protection in case there was a problem . (See, Exhibit B, Pilgeram Deposition 125 :7-11) . 21 . Similarly, putative plaintiff Ralph Allmau testified that his Miller & Schroeder
told him "that the feasibility studies, appraisals done on the property and what they were investing the money in, even if this property defaults, we will get certainly - maybe not 100 % of your money back, but a good portion of it back . Because this feasibility study and this appraisal showed the money they were putting in was money well spent, and you'd get a good portion of your money back, not lose the whole thing." (See, Exhibit C, Allman Deposition 97:3-11) .
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22.
Short of compiling the necessary evidence for plaintiffs' summary adjudication
2 ~ motion, the Court can see that the deemed admissions combined with the exemplar sworn 3 a
testimony, Valuation will have no opportunity to legitimately defend itself unless the Court grants t1 motion . Puncher, at least one co-defendant has indicated an intent to file a cross-complaint against Valuation in light of the admitted facts . 23. A significant factor that has made it difficult to respond to plaintiffs Special
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Interrogatories and Request for Admissions is the fact that Valuation does not have a current single employee who worked on any Heritage transaction . Plaintiffs' counsel and T are faced with the same challenge of digesting the thousands of pages of documents previously produced to gleam information responsive to these requests . 24 . Mark Lussier and lean-Pierre LoMonaco are the two individuals who truly possess
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this information. These individuals reside in the Los Angeles area. My attempts to communicate with them have been frustrated by their request for counsel . Mr. Lussier's company has retained the Los Angeles office McDermott, Will & Emery. Unfortunately, this firm's Irvine office I previously represented Robert Kas9rer in this litigation. It was thought Mr. Kasirer would waive the I conflict of interest, but causing at least a month delay, Mr. Kasixer decided to not sign the conflict waiver. 25 . it is my understanding that Mr. Lussier is in the process of retaining additional
counsel. As of May 11, 2004, his attorney bas failed to confirm that Mr. Lussier signed his retainer. None of my phone calls have been returned. Regardless, nothing prevents plaintiffs from subpoenaing Mr. Lussier or Mr. LoMonaco for deposition. This is plaintiffs' strategic choice to not take these obvious depositions . 26. I also sent letters to the last known address to peripheral former employees . With
no way to verify the current status, the fact that no one has responded is not surprising .
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27.
I have spent numerous hours pouring through the documents in good faith to
respond plaintiffs' discovery demand . The response to the Request for Admissions I originally drafted directing the plaintiffs to the documents pursuant to Rule 3G(d) was not intended to spite plaintiffs . I did not want to provide a response potentially inconsistent with the documents . Judge Chapman politely corrected my errant thinking and honest mistake . 28 . I have since been more educated about the contents of the documents . This is why
I can state that Valuation is able to provide a more substantive response to plaintiffs' written discovery. 29. Attached as exhibit D are the proposed responses to Request for Admissions
10 I I which Valuation seeks leave to serve. Valuation has also included facts to support response . 11 12 13 14 z5 16 17 18 19 20 27. 22 23 24 25 26 27 I 28
30.
If the Court disagrees with Valuation's premise that this motion is properly brought
pursuant to Rule 7 of the Federal Rules of Civil Procedure and should have been filed within 10 days per Local Rule 72-2.1, then Valuation alternatively requests relief per Rule 60 of the Federal Rules of Civil Procedure, which enables the Court to grant relief for "mistake, inadvertence, surprise, or excusable neglect ." The net affect is that Valuation's motion is filed a mere eleven days' late. Plaintiffs cannot seriously contend prejudice . They knew Valuation's intent to file this motion on April 22, 2004. This was confirmed in the April Discovery report . 31 . I became aware of the potential missed deadline when securing a motion date and
this Court's clerk reminded me to revisit the Local Rules . Upon reconsidering the Local Rules, I then proceeded to modify this motion to incorporate Rule 60 as a basis for the Court to grant Valuations' motion. 32. Rule 60 also enables the Court to exercise its discretion contained in Rule 36(b) to
allow an otherwise untimely response to request for admissions. As demonstrated above, there were extenuating circumstances surrounding Valuation's tardy response to plaintiffs' request for admissions . I was traveling 9n the midst of a misunderstanding surrounding when the verification was provided . Unfortunately, my requests for assistance went unfulfilled . 33_ In granting this motion, there is no prejudice to plaintiffs. There is no delay because this motion is timely filed within the in accordance with Local Rule 7 .3 and is brought in good faith
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after discussing Valuation's intentions on April 22, 2004 and subsequently confirmed in the April Discovery Report . 34. This entire experience beginning with responding to the Request for Admissions and
filing this motion will stick with me for the rest of my career. As shown throughout, the consequences are devastating to my client . 35. Eased on the foregoing, defendant Valuation requests that the Court grant this
motion to withdraw the previously deemed admissions . I I declare wider penalty of perjury under the laws of e St o~California that die
9I foregoing facts are true and correct. Executed this 14"' d~f~2~0-4 at San Diego, California.
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MEMORANDUM OF POINTS ANA AUTZ;ORiTIES I. INTRODUCTION & FACTUAL SUMMATION The Court should grant Defendant Valuation Counselors Group, Int .'s motion to withdraw its previously deemed admission in order to resolve this case on the merits and because plaintiffs Valuation Counselors Group inc. brings this motion approximately two months before
6 ~ cannot establish substantial prejudice .
7I 8 I discovery cutoff. Guided by Federal Rules of Civil Procedure Rule 36(U), this Court has the
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discretion to permit Valuation Counselors Group Inc. to withdraw and amend its responses to plaintiffs' Request for Admissions . On January 7, 2004, plaintiffs propounded their first set of Request for Admissions. Plaintiffs subsequently granted two extensions and the parties eventually agreed that responses were due on March 5, 2003 . Due to various circumstances described in the attaclxed Declaration of Jeffrey L. Le Fere, responses were served twelve days late on March 17, 2004 . On March 14, 2004, plaintiffs filed their Order to Show Cause seeking to have the Valuation Counselor Group's responses be deemed admitted. On April 22, 2004, Honorable Rosalyn M. Cliapman ordered that plaintiffs First Set of Request for Admissions admitted in toto . This court recent extended discovery cut-off from June 28, 2004 to August 28, 2004.
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II.
Rule 36(b) of the Federal Rules of Civil Procedure states, Any matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission . Subject to the provision of Rule 16 governing amendment of a pre-trial order,. the court may permit withdrawal or amendment when the presentation of the meats of the action will be subserved thereby and the party who obtained the admission fails to satisfy the count that the withdrawal or amendment will prejudice that party in maintaining the action or defense on the merits. This Court has the discretion to permit Valuation Counselor Group, Inc . (Hereinafter I "Valuation") to either withdraw or amend its responses previously deemed admitted. Although trial ~ courts have been advised to be cautious when exercising this discretion when permitting the withdrawal or amendment of an admission . 999 v C.T.T. CQCO. 776 F.2d 866, 869 (9'h Cir .
1985). Rule 36(h) specifies "exactly how that discretion is to be exercised ." Perez v. Miami-Dale Coun 297 Fad 1255, 1265 (11`h Cir. 2002) (emphasis added) .
Rule 36(b) provides a two-prong test before an admission is withdrawn or amended : (1) presentation of the merits of the action must be subsezved, and (2) the party who obtained the admission must not be prejudiced by the withdrawal . See, Hadlev v. United States F.3d 45 1345, 1348 (9' Cir. 1995) . This test is "much more than merely hortatory. It emphasizes the importance of laving the action resolved on the metals , while at the same time assuring each party that justified reliance on an admission in preparation for trial will not operate co his prejudice ." Id. (citations omitted) (emphasis in original) . In other words, Valuation's motion should not be evaluated based upon the reasoning behind the twelve day delay, but "in terms of the effect upon the litigation and prejudice to the resisting party." Mid Valley Bank v. North Valley Bank, 764 F .Supp . 1377, 1391 (E.D_ Cal . 1991) . A. Responses Dezmed Admitted Prevent a P esentation of the Merits
As presently deemed, the admissions prevent a presentation of the merits of the case . The only cause of action pleaded against Valuation is Negligence. In this case, Valuation performed the
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appraisal for the Sarasota and Chicago facilities. These figures were ultimately incorporated into the Official Statement for each bond offering . Valuation subsequently performed the market feasibility study on six bond offerings : Duval Gardens/Austin Facility; Desert Hot Springs/Rancho II; St. Joseph Garden/Ft . Worth II ; East Houston; Mexico Beach/Seminole; and Brownsville.
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Request for Admission Nos 1 through 5 relate to the appraisals : Request for Admission No . 1 : Admit you know the appraised values listed in the appraisal reports would be included m the Official Statements distributed to prospective investors . Request for Adtuission No. 2 : Admit each of the appraised values listed in the appraisal reports were calculated on a e simple absolute basis. Request for Admission No. 3 : Admit that the appraised values listed in the appraisal reports did not account for restrictive covenant and/or legal encumbrances. Request for Admission No. 4: Admit that the appraisal reports did not take into account all factozs and information that may have lessened the calculated valuations of the properties . Request for Admission No. 5= Admit that the appraisal reports were influenced by directions you received from Heritage and/or Health Care Holdings employees . Request for Admission No. 6: Admit that the appraisal reports were suppose to be facility-specific, but in reality were substantially similar m content . The net impact of these three admitted facts eliminated Valuations's viable defense against plaintiffs' negligence claim . in sum, the appraisals would he summarized that Heritage and/or Health Care Holdings employees directed Valuation to not consider all factors when calculating values of each property by specifically excluding any restrictive covenant and/or legal encumbrance as each appraisal mirrors the other. Valuation would be prohibited from offering evideztce that it did perform the appraisals in a reasonable and professional manner . No evidence pertaining to the methodology would be relevant. The entire working file would be inadmissible . Testimony fonts Valuation's expert is rendered moot. No evidence relating to the indepenced of the appraisal reports could be offered . Evidence inconsistent with Rule 36 admission is inadmissible . erez, s_unra, at SG9-870 .
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Reliance and proximate cause is established, for example, in testimony from putative
plaintiff Langdon Parril . He testified that his Miller & Schroeder broker, Mr. Pennwarden, informed him that the appraised value would cover the bond amount . (See, Exhibit A, Pamill Deposition 35 :20). This testimony demonstrates an investor relying on die appraised value. The
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deemed admissions automatically mean that Mr. Pamill and others relied on flawed work. Valuation vigorously contests these allegations . The admissions combined whiz this testimony amount to reliance and proximate cause. Request for Admission Nos 7 through 10 relate to the six market feasibility studies : Reuest for Admission No. 7. Admit you know the "market feas~biliry studies" would be included m the Official Statements distributed to "prospective investors ." $eauest for Admission No. 8~ Admit that the market feasibility studies you prepared did not take into account all factors and information that may have resulted in less favorable forecasts . Request for Admission No. 9. Admit that the market feasibility studies you prepared were supposed to be facility specific, but in reality were substantially similar in content. Request for Admi ssion No. 10. Admit that the market feasibility studies you prepared were influenced by directions you received from Heritage and/or Health Care Holdings employees . When read together, these admitted facts amount to Heritage and/or Health Care Holdings employees directing each study to utilize similar content to ensure a favorable forecast by not including all factors in each study because each study will be distributed to prospective investors. In other words, plaintiffs have established a breach of duty. The market studies are an independent analysis of the demand for the services the management intended to offer in a particular community. The studies were also attached as an exhibit to the respective Official Statement. Considering the time line of each bond offering, the market study, feasibility study, and appraisal are the foundation opinion for subsequent steps in the underwriting of each bond offering . Once again, Valuation's working papers and expert testimony is rendered moot by these admissions . Evidence inconsistent with a Rule 36 admission is inadmissible . Perez . Supra at 869-870 .
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Putative plaintiff, Lawrence Pilgeram testified that he would analyre the financial feasibility study, market feasibility, appraisal of the property to confirm adequate principal protection in case there was a problem . (sec, Exhibit B, Pilgeram Deposition 125 :7-11). Similarly, putative plaintiff Ralph Allman testified dial his Miller & Schroeder broker told him "that the feasibility studies, appraisals done on the property and what they were investing the money in, even if this property defaults, we will get certainly - maybe not 100 "/o of your money back, but a good portion of it hack. Because this feasibility study and this appraisal showed the money they were putting in was money well spent, and you'd get a good portion of your money back, not lost the whole thing ." (See, Exhibit C, Allmau Deposition 97 :3-11) . These examples establish reliance and proximate cause . The deemed admissions combined with this testimony, Valuation will have no opportunity to legitimately defend itself unless the C grants this motion. Valuation faces additional exposure from anticipated cross-complaints. Plaintiffs have recently increased their settlement demand by $7.5 million, based in large part on these deemed admissions. B. Plaintiff$ Cannot Show Prejudice By Withdrawing Admissions
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Prejudice under Rule 36(b) is "not simply that the party who obtained the admission will now have to convince the fact finder of its truth. Rather, it relates to the difficulty a party may face in proving its case, e.g., caused by the unavailability of key witnesses, because of the sudden need to obtain evidence with respect to the questions previously deemed admitted ." Hadlev, supra, at 1348 (internal citations omitted). To simply state, "the test for prejudice ,has been held to twin on whether a parry opposing the withdrawal is rendered less able to prove the matters which bad been admitted ." leLegLOxnpter of Erie . Inc . v. City of Erie, 567 F .Supp . 1277, 1287 (W-D . Penn 1983). The party who obtained the admission has the burden of proving that withdrawal of the admission would prejudice its case. aH dlev, supra, at 1348 . Courts are likely to find prejudice
when the motion is made in the middle of trial . 999, supra, at 869 . For example, in 999 v. C .I.T. Corn ., the defendant motioned to withdraw admissions in the middle of trial. A more restrictive standard is applied under these circumstances . Td. at 869 . The court stated that the defendants arguments would have been more persuasive if it had moved to withdraw its admissions prior to
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trial . Id. These are the circumstances from which the count advised caution in exercising discretion when permitting the withdrawal or amendment of an admission . Id. In Sonoda v. Cabrera 255 Fad 1035 (9`h Cir. 2001) the defendant failed to timely respond to request for admissions . The plaintiff moved for an order that would deem admitted all request for admissions and subsequently filed a motion of summary judgment . The court emphasized the presentation of the merits of the action would not be subszrved if the admissions remained in effect. Id. at 1039 . The court also found that because defendants motion was made pre-trial, plaintiff would not be hindered in presenting evidence. Id, at 1040. Plaintiffs must show an elevated level of reliance to establish prejudice . , adle , sue, at 1349. For example, reliance is found when a party relies upon previously admitted fact, modifies discovery by taking depositions off calendar, and proceeds to trial. See, 999, says, at 869 . In Joy Hand promotions. Inc . v Chaves , 1998 WL 184271 *2 (N.D. Cal 1998), defendant argued that she would be prejudiced if the court granted plaintiffs motion to withdraw previously deemed admissions because of an alleged patter of prevention from obtaining legitimate discovery by failing to serve timely responses. The court found this argum ent unpersuasive and noted the parties were still in the discovery process and the trial date was over six months away. The court stated, "There (was] simply no suddent need for [the party] to obtain evidence with respect to questions ." Id . In this case, Valuation brings this motion shortly after this Court continued Discovery Cutoff to August 28, 2004. Plaintiffs cannot seriously contend that they relied upon the deemed admissions and modified their discovery plan. Brian Barry also represented to the court that plaintiffs have not decided whether to pursue Valuation's farmer employees . Valuation has previously provided all requested last known contact information . No trial date has been set in this case. Thus, plaintiffs cannot demonstrate prejudice as contemplated by Rule 36 and Valuation's motion to withdraw or amend previously deemed admissions should be granted. 111
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Plaintiffs may rely on qsea Inc. v Southern Pacific Trans
669 F .2d 1242 (9' Cir ), but
this case is clearly distinguishable- In Asea, Inc . v Southern Pacific Trans, the plaintiff moved eve weeks before trial to have the court deem defendants response admitted when the following
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response was provided: Answering party cannot admit or deny. Said party has made reasonable mquury. Information known or readily obtainable to this date is not complete. Investigation continues . Asea at 1244. At the hearing, defendant stood behind this response . Id. at 1245 . The court held that "when a party fails to admit or deny a proper request for admission does not comply with the requirements of Rule 36(a) if the answering party has not, in fact, made a `reasonable inquiry,' or if the
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information `readily obtainable; is sufficient to enable him to admit or deny the matter." Id. at 1247. The district court "should ordinary first order an amended answer, and deem the matter admitted only if a sufficient answer is not timely filed, this determination, like most involved in the oversight of discovery, is left to the sound discretion o the district judge ." Id. The most severe sanction is reserved for the most intentional disregard of discovery obligations imposed by Rule 36(a) . Id. As described in the declaration of Jeffrey L. Le Pere, counsel preparing the discovery made an honest mistake when preparing the objection and subsequently directed plaintiff's to the business records previously produced in accordance with F .R .C.P. Rule 33(d) . Valuation Counselors has no one available who worked on any Heritage transact...