Ollie B. Hadley, Plaintiff-Counterclaim-Defendant-Appellant v. United States of America, Defendant-Counterclaimant-Appellee

Ollie B. Hadley was assessed a penalty in the amount of $218,032 for willful failure to pay delinquent withholding taxes under 26 U.S.C. § 6672 . The government filed a claim to reduce that assessment to judgment. During the course of pretrial discovery, the government served a request for admissions on Hadley. Hadley failed to respond within 30 days, and the matters were deemed admitted under Fed.R.Civ.P. 36(a). The deemed admissions amounted to a complete admission of liability for willful failure to pay the taxes under § 6672. Hadley filed a mo *1347 tion to withdraw the deemed admissions under Fed.R.Civ.P. 36(b), but the district court denied the motion and entered judgment against Hadley for the delinquent taxes. Hadley now appeals the denial of his motion to withdraw the deemed admissions. We find that the district court erred in denying his motion, and we reverse.

FACTUAL BACKGROUND

The Central City Community Mental Health Center (“the Center”) was a nonprofit corporation which supplied mental health services in the Los Angeles area. In November or December, 1982, the Center appointed Ollie B. Hadley to be its Interim Executive Director for a three-month period. In April,…

dissenting:

The district court did not impose some draconian sanction upon Hadley. Far from it. The Rule itself imposes the sanction; it provides that the material “is admitted.” Fed.R.Civ.P. 36(a) (emphasis added). The Rule then goes on to give the district court discretion to permit withdrawal of that admission if certain conditions exist. However, as we have pointed out, there is no absolute right to withdraw an admission just because it relates to an ultimate issue in the case. Thus, when railroads asserted that their admissions were a virtual concession of liability and that the other side had made no affirmative showing of prejudice, we said:

Asea, Inc. v. Southern Pacific Transp. Co., 669 F.2d 1242, 1248 (9th Cir.1981). Moreover, as the Second Circuit pointed out in Donovan v. Carls Drug Co., Inc., 703 F.2d 650, 652 (2d Cir.1983) (citations omitted):

Here the failure to answer requests for admissions was not through some inadvertence. It was willful — Hadley’s counsel just decided not to respond even though he knew that he ought to. As the district court pointed out, counsel just disregarded the rules with no real justification whatever. Moreover, the government did…

45 F.3d 1345 75 A.F.T.R.2d 95 -1057, 95-1 USTC P 50,094 , 31 Fed.R.Serv.3d 1441 Ollie B. HADLEY, Plaintiff-Counterclaim-Defendant-Appellant, v. UNITED STATES of America, Defendant-Counterclaimant-Appellee. No. 93-56721. United States Court of Appeals, Ninth Circuit. Argued and Submitted Oct. 6, 1994. Decided Jan. 23, 1995. Robert B. Schachter and William Beverly, Hitchcock, Bowman, Schachter & Beverly, Torrance, CA, for plaintiff-counterclaim-defendant-appellant. Sarah K. Knutson and Linda Mosakowski, Tax Div. U.S. Dept. of Justice, Washington, DC, for defendant-counterclaimant-appellee. Appeal from the United States District Court for the Central District of California. Before: FLETCHER, BOOCHEVER, and FERNANDEZ, Circuit Judges. BOOCHEVER, Circuit Judge: 1 Ollie B. Hadley was assessed a penalty in the amount of $218,032 for willful failure to pay delinquent withholding taxes under 26 U.S.C. Sec. 6672 . The government filed a claim to reduce that assessment to judgment. During the course of pretrial discovery, the government served a request for admissions on Hadley. Hadley failed to respond within 30 days, and the matters were deemed admitted under Fed.R.Civ.P. 36(a). The…