REYNOLDS ALUMINUM BUILDING PRODUCTS COMPANY vs. ALBERT LEONARD & another. [Note 1]

LYNCH, J. In this contract action, we must determine the duties of the trial judge when he decides to ameliorate the effects of admissions that have become binding by the operation of Dist. Mun. Cts. R. Civ. P. 36 (1975). The plaintiff, Reynolds Aluminum Building Products Company (Reynolds), brought suit to recover for the sale and installation of a solar hot water heating system in the defendants' house. The defendants, the Leonards, denied liability because the system allegedly did not function as advertised, and they asserted a counterclaim based on G. L. c. 93A for false advertising. During the course of the proceedings, the Leonards made five requests for admissions, to which Reynolds made five requests for admissions, to which Reynolds never responded. [Note 2] After a trial in the District Court the judge found for Reynolds, and dismissed the Leonards' counterclaim without discussing the requests for admissions. [Note 3] The Leonards' report to the Appellate Division was dismissed, and they now appeal to this court. We reverse the order dismissing the report, and remand the case to the

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District Court for further findings, and entry of judgment based on those new findings.

On November 10, 1980, the parties entered into a contract under which Reynolds was to sell and install a solar hot water system in the Leonards' house. The total price of $3,795 was payable within thirty days after the installation was completed. The Leonards acknowledge that Reynolds completed installation, and that no part of the agreed price has been paid. The Leonards claim that the equipment did not function properly that it was not installed in a workmanlike manner, that it never supplied the advertised amount of hot water, and that Reynolds never corrected defects in the system despite notification. The Leonards filed a counterclaim alleging that Reynolds falsely advertised the effectiveness of the system and caused $750 damage to the Leonards' roof during installation. The Leonards also sought removal of the system from their house. At trial, Albert Leonard testified that he was never able to get any hot water from the system, that he made numerous complaints to Reynolds, and that Reynolds' representatives made three visits to his house but failed to correct the problem. The Leonards also introduced in evidence the five unanswered requests for admissions. Because of Reynolds' failure to answer these requests, they are considered "conclusively established" under Dist. Mun. Cts. R. Civ. P. 36 (1975). [Note 4] Reynolds' supervisor

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testified that on one of his visits to the house, he discovered that the Leonards had diverted hot water from the system to a radiator in order to heat one room, an unintended use of the solar hot water system. Following trial, the Leonards made several requests for rulings, including two which incorporated the information which was the subject of the prior requests for admission. [Note 5] All the requests were denied. The judge found in favor of Reynolds for the full contract price, plus interest, costs, and attorneys' fees. [Note 6] Giving no effect to Reynolds' admissions, the judge found that Reynolds had not represented that the system would provide sixty per cent or more of the Leonards' hot water requirements. In addition, he found that whether a permit was required was irrelevant to the case. Finally, he found that the Leonards failed to sustain their burden of proof on the counterclaim. The Appellate Division dismissed the Leonards' report.

1. Sufficiency of the report. Reynolds accurately notes that the report does not state any ruling by the judge with regard to Reynolds' failure to respond to the request for admissions. Reynolds argues that the Leonards had therefore failed to preserve their right of appellate review of this issue in accordance with Dist. Mun. Cts. R. Civ. P. 64 (a) (1975). However, the judge was not required to take any action; simply by operation of rule 36 (a), the matters were deemed admitted after thirty days. There is nothing in the record to suggest that the judge refused to allow the admissions in evidence, or even that

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Reynolds objected to them. Rule 64 (a) is therefore irrelevant to the preservation of the Leonards' appellate rights. The Leonards incorporated these admissions into two requested rulings, which were denied. A timely report was claimed, appealing the denial of these rulings. This was sufficient to preserve the Leonards' right of review in the Appellate Division.

2. Failure to obtain permits. The Leonards argue that Reynolds is not entitled to recover under the contract because Reynolds failed to obtain the necessary plumbing permit. See 248 Code Mass. Regs. Section 2.04 (3) (1983). Assuming, without deciding, that it was Reynolds' duty to obtain such a permit, we do not agree that its failure to do so prevents recovery in this case. The Leonards admit that there was no illegality in the formation of the contract, but claim that performance was illegal. Considering all of the circumstances of this case, the Leonards have advanced no reason to question the judge's conclusion that the conduct complained of was merely an incidental part of the contract and does not entitle the Leonards to the windfall they seek. See Town Planning & Eng'g Assocs. v. Amesbury Specialty Co., 369 Mass. 737, 745-747 (1976); Green v. Richmond, 369 Mass. 47, 51-52 (1975); Arrow Plywood Corp. v. Eighty Boylston St. Corp., 360 Mass. 705, 706-707 (1972).

3. Effect of the admissions. Under Dist. Mun. Cts. R. Civ. P. 36 (1975), Reynolds' failure to respond to the Leonards' request for admissions conclusively established the truth of those admissions for this case. This remains true regardless of the importance of the matters thus deemed to be admitted. See Rome v. United States, 450 F. Supp. 378, 383 (D.C. 1978), aff'd, 446 U.S. 156 (1980). See also Wang Laboratories, Inc. v. Docktor Pet Centers, Inc., 12 Mass. App. Ct. 213, 214 (1981) (admitted matter the basis of plaintiff's affirmative case); Equal Employment Opportunity Comm'n v. Baby Prods. Co., 89 F.R.D. 129, 132 (E.D. Mich. 1981) (admitted matter sufficient basis for granting summary judgment). [Note 7]

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The judge is empowered by the rule to permit withdrawal or amendment of the admission. The effect of the rule in a given case may be unduly harsh, and the ability of the judge to exert an ameliorating influence is essential to avoid a result in which form triumphs over substance. The judge may ameliorate the effect of the rule when: (1) the presentation of the merits of the action will be advanced, and (2) the party obtaining the admission fails to satisfy the court that withdrawal or amendment will prejudice him in maintaining his action or amendment will prejudice him in maintaining his action or defense on the merits. See rule 36 (b). Normally, the judge's decision will be set aside only on a showing of an abuse of discretion. See, e.g., Brown v. Arlen Management Corp., 663 F.2d 575, 580 (5th Cir. 1981).

In this case, however, we are presented with somewhat unusual circumstances. First, Reynolds never moved for withdrawal or amendment of the admissions. [Note 8] Had it done so, Reynolds would still have been required to make at least some showing of why that action would be justified, even though the rule places the burden of showing prejudice on the Leonards in this case. [Note 9] Jones v. Employers Ins., 96 F.R.D.

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227, 230 (N.D. Ga. 1982). Janczyk v. Davis, 125 Mich. App. 683, 692-693 (1983). Otherwise, rule 36 would "constitute nothing more than a paper tiger." Equal Employment Opportunity Comm'n v. Baby Prods. Co., supra at 132. Cf. Riley v. Northern Commercial Co., Mach. Div., 648 P.2d 961, 965 (Alaska 1982) ("Too liberal sufferance of a litigant's procrastination . . . would undermine the purposes of the rule").

Second, the record does not disclose when or if the judge gave the Leonards notice of how he planned to treat the admissions. [Note 10] Generally, neither a party nor the judge should wait until trial, or worse, after trial, to alleviate the impact of an admission, or to state his reasons for doing so. See Rainbolt v. Johnson, 669 F.2d 767, 769 (D.C. Cir. 1981); 4A Moore's Federal Practice par. 36.08, at 36-71 n.10 (1983). The purpose of the rule is to assist "the parties in their preparation for trial by facilitating proof with respect to issues that cannot be eliminated from the case, and by narrowing the issues by eliminating those that can be." Equal Employment Opportunity Comm'n v. Baby Prods. Co., supra at 130. See Advisory Committee Notes to Fed. R. Civ. P. 36, 1970 Amendments, 28 U.S.C., App. (1982). Obviously, these purposes are ill-served when a party is informed at, or subsequent to, trial that he must now establish facts for which he had no reason to suspect additional proof would be required. Neither are these purposes served when the judge fails to inform the parties, on the record, exactly how he intends to treat an admission and why. The Leonards were prejudiced by the judge's failure to explain his actions concerning the admissions, where the judge found as fact a matter directly contrary to one admission. It does not appear that the judge ever considered prejudice to the Leonards, nor does it appear that "manifest injustice" would have resulted by holding Reynolds to its admissions. The judge may not simply decide that he finds other evidence relating to the

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admitted matter more credible than the admission. See Brook Village N. Assocs. v. General Elec. Co., 686 F.2d 66, 71 (1st Cir. 1982).

Furthermore, the record does not disclose any justifiable reason for withdrawing the admission in this case, since the judge failed to make findings on this issue. As we have stated, ordinarily the judge has the discretion to ameliorate the effects of an admission resulting from the operation of rule 36. In this case, however, we will not sustain the sua sponte relief from the admissions the trial judge granted without explanation on the eve of trial. Even if there had been a timely motion under the rule, we would not, as Reynolds apparently urges, merely assume that the judge had good reasons for the exercise of his discretion. A judge must explain on the record his decision to allow relief from rule 36. Cf. Asea, Inc. v. Southern Pac. Transp. Co., 669 F.2d 1242, 1247 (9th Cir. 1981) (when sanctions imposed for discovery abuse, findings necessary for proper appellate review). These findings should examine the degree of culpability of the party seeking relief, the prejudice resulting to the other party, and whether relief will advance resulting to the other party, and whether relief will advance presentation of the case on the merits and otherwise promote effective justice. See, e.g., Equal Employment Opportunity Comm'n v. Baby Prods. Co., supra at 131-132; Westmoreland v. Triumph Motorcycle Corp., 71 F.R.D. 192, 193 (D. Conn. 1976).

For these reasons, the order dismissing the report must be reversed. We do not order entry of judgment for the Leonards, however, since there was other evidence at trial -- the Leonards' alleged modification of the solar hot water system -- on which the judge made no findings, and which might allow Reynolds relief despite its admissions. We therefore remand the case to the District Court for further findings and entry of judgment based on those findings.