Douglas Costello and Profit Search, Inc. v. Gersh ZavodnikDouglas Costello and Profit Search, Inc. v. Gersh Zavodnik
Gersh Zavodnik, Indianapolis, IN, Appellee Pro Se.
VAIDIK, Chief Judge.
[1] When Massachusetts resident Douglas Costello posted a used printer on Craigslist in 2009, he could not have predicted that he would spend much of the next seven years locked in a legal battle in Indiana. But he sold the printer—for less than $75—to Gersh Zavodnik, who has a penchant for suing after entering into online transactions. Zavodnik, claiming the printer was defective, sued Costello in small-claims court. He asked for the small-claims maximum of $6000, but Costello defended the case and prevailed, based on the fact that Zavodnik had prematurely disposed of the printer. Unfazed, Zavodnik appealed the matter to superior court, where he was allowed to conduct discovery. Zavodnik sent Costello requests for discovery pursuant to Indiana Trial Rule 36(A), asking Costello to admit, among other things, that he is liable for $30,044.07. Costello, who remained unrepresented following his victory in small-claims court, failed to respond (he later said he never received the requests). When Costello learned that his failure to respond rendered the matters admitted under Rule 36(A), he hired an attorney and moved to withdraw the admissions under subsection (B) of the rule. The trial court, believing itself constrained by our Supreme Court’s interpretation of Rule 36, denied Costello’s motion and awarded Zavodnik a judgment of $30,044.07. In light of Zavodnik’s abuse of Rule 36, we conclude that the trial court should have granted Costello’s motion.
Facts and Procedural History
[2] As our Supreme Court has recognized, Zavodnik is a “prolific, abusive litigant.” Zavodnik v. Harper, 17 N.E.3d 259, 261 (Ind. 2012). He spends much of his life prosecuting lawsuits against individuals and businesses with whom he has entered into online transactions. See Zavodnik v. Richards, 984 N.E.2d 699, 701 n. 2 (Ind. Ct. App. 2013), aff‘d on reh‘g, 988 N.E.2d 806 (Ind. Ct. App. 2013). This is the second time this particular case has been before us. The first time, it had been dismissed, along with twenty-six other cases Zavodnik had filed, pursuant to
[3] The transaction underlying this case occurred in late 2009, when Zavodnik purchased a used printer from Costello, a resident of Massachusetts, on Craigslist. The exact price is not clear from the record, but it is undisputed that Zavodnik paid Costello less than $75. A few months after Zavodnik received the printer, he sued Costello in small-claims court, alleging that it was defective and seeking $6000 in damages (at the time, the maximum recovery in Marion County small-claims courts). After holding a hearing at which both parties appeared without counsel, the small-claims court entered judgment in favor of Costello, having found that Zavodnik had disposed of the printer with an
[4] In November 2010, Zavodnik appealed the matter to the superior court to be tried de novo. On December 14, 2010, he sent Costello a set of requests for admission pursuant to
[5] As of March 2, 2011, Costello, who was still proceeding without counsel after prevailing in small-claims court, had not responded to Zavodnik’s requests. That was the day, however, that the trial court dismissed this case and twenty-six others pursuant to
[6] On remand, the case lingered for nine months with no substantive action until a pre-trial conference on December 13, 2012. A few days later, Zavodnik sent Costello a second set of requests for admission, asking Costello to admit that he and the judge “conspir[ed]” and “plotted” against Zavodnik and that he is liable to Zavodnik for more than $300,000. Appellants’ App. p. 72, 77. The next month, Zavodnik sent a third set of requests, this time asking Costello to admit, among other things, that he is liable to Zavodnik for more than $600,000. Id. at 83. Costello did not respond to Zavodnik’s second and third sets of requests.
[7] In early 2013, Zavodnik also started filing requests to have the judge removed from the case. The Indiana Supreme Court eventually appointed a different judge. In May 2013, after the case had been transferred to the new judge, Zavodnik filed a motion to have all of the matters set forth in his three sets of requests for admission deemed admitted, based on Costello’s failure to respond. While Rule 36 does not require either a motion or a hearing—matters set forth in requests that are not responded to are deemed admitted by the rule itself—the trial court held a hearing on Zavodnik’s motion on July 5, 2013. Zavodnik appeared but Costello did not. On July 10, 2013, the trial court issued an order acknowledging that all of the matters set forth in Zavodnik’s requests were admitted by operation of
[8] After receiving the court’s order, Costello contacted the court and was told to file any response to the order in writing. Costello then filed a motion to have the order vacated, claiming that he had never received (1) Zavodnik’s requests for admission or (2) notice that a hearing would be held on July 5, 2013.1 Meanwhile, Zavodnik, armed with Costello’s admissions, filed a motion for summary judgment and a 75-page memorandum in support. On November 15, 2013—the trial court having made no decision on Costello’s motion to vacate—an attorney entered an appearance on behalf of Costello and filed a motion under
[10] On September 30, 2014, our Supreme Court issued an opinion in another of Zavodnik’s cases. See Zavodnik v. Harper, 17 N.E.3d 259 (Ind. 2014). The Court actually denied Zavodnik’s petition to transfer in that case, but it issued an opinion that “gives guidance to this state’s courts on some options when confronted with abusive and vexatious litigation practices.” Id. at 261-62. The Court noted:
Nothing Mr. Zavodnik has filed or done in this case shows any desire to litigate this case expeditiously to resolution on the merits. Rather, he has burdened the opposing party and the courts of this state at every level with massive, confusing, disorganized, defective, repetitive, and often meritless filings. And this Court has previously warned Mr. Zavodnik against continuing such abusive and burdensome litigation tactics.
Id. at 263. The Court identified several measures that judges can take in dealing with abusive litigants, such as putting limits on the nature and size of future filings. Id. at 268-269. Finally, while the Court refrained from imposing any specific sanctions or restrictions on Zavodnik, it warned him that he “can expect any further abusive litigation practices in any judicial forum in this state to be met with appropriate sanctions and restrictions.” Id. at 270. Taking notice, the trial court in this case quickly issued an order subjecting Zavodnik to many of the filing restrictions that the Supreme Court had identified in its Zavodnik v. Harper opinion.
[11] Zavodnik laid low for the next few months. However, on February 19, 2015, the day the trial court was finally able to hold a hearing on Zavodnik’s motion for summary judgment and Costello’s motion to withdraw admissions, Zavodnik came prepared with a new 53-page motion to disqualify the judge. In the motion, which began with a seven-line, 65-word title, Zavodnik characterized the Supreme Court’s opinion as follows: “Zavodnik-character-assassinating-September 30th, 2014-biased-and-prejudiced-based-on-falsified-and-fabricated-capricious opinion issued by the Indiana Supreme Court, who will be held responsible for the said lies, the very same Supreme Court, which had no jurisdiction to issue that opinion[.]” Appellants’ App. p. 443. The trial court forged ahead with the scheduled hearing.
[12] In a written order issued a month later, the trial court granted Costello permission to withdraw some of the admissions but not others. Most relevant to our decision, Costello was permitted to withdraw his admissions that he is liable to Zavodnik for more than $300,000 and $600,000, but not the admission that he is liable for $30,044.07. In explaining this result, the trial court noted that Zavodnik asserted damages of $30,044.07 in relation to “a specific liability for breach of contract” (Zavodnik’s request said “$30,044.07 for breaching the legally binding contract” (emphasis added)) but asserted the higher amounts “without specifically identifying the basis for the damages.” Appellants’ App. p. 37, 43-44.
[13] Based on the surviving admissions, the trial court granted summary judgment in favor of Zavodnik in the amount of $30,044.07. The court acknowledged that this amount is “seemingly high”
[14] Costello now appeals, and Zavodnik cross-appeals. The CCS for this matter indicates that since the trial court entered its judgment, Zavodnik has obtained yet another change of judge and has made many additional filings.
Discussion and Decision
[15] Costello contends that the trial court should have (1) allowed him to withdraw all—not just some—of his Rule 36 admissions and (2) denied Zavodnik’s motion for summary judgment, which was based on the admissions. Zavodnik makes the converse arguments in his cross-appeal: that the trial court should have (1) denied Costello’s motion to withdraw in its entirety and (2) awarded Zavodnik a much higher judgment. Because both appeals turn on the propriety of the trial court’s decision on Costello’s motion to withdraw admissions, we need not address the two appeals separately.
[16] The withdrawal of admissions is governed by
Any matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission. Subject to the provisions of
Rule 16 governing amendment of a pre-trial order, the court may permit withdrawal or amendment when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice him in maintaining his action or defense on the merits.
This provision grants our trial courts discretion in deciding whether to allow the withdrawal of admissions, and we will reverse only for an abuse of that discretion. City of Muncie v. Peters, 709 N.E.2d 50, 54 (Ind. Ct. App. 1999), reh‘g denied, trans. denied.
[17] Here, we must conclude that the trial court abused its discretion when it denied part of Costello’s motion to withdraw his admissions. There is no question that presentation of the merits of the action will be subserved by allowing the withdrawal. As demonstrated by the trial court’s grant of summary judgment in favor of Zavodnik, Costello’s admissions, if allowed to stand, would bring this litigation to an end without any presentation of the merits. Requiring Zavodnik to prove the merits of his case is particularly appropriate in light of the fact that he already lost on the merits in the small-claims court based on his decision to dispose of the printer not long after he purchased it. With regard to damages, Zavodnik did not ask Costello to admit any facts that would justify an award of damages in excess of the purchase price. His failure in this regard strongly indicates that his requests asserting more than $30,000 in damages (at least 400 times more than the purchase price) had no basis in reality.
[18] Furthermore, allowing Costello to withdraw his admissions would not prejudice Zavodnik in maintaining his action on the merits. As used in
[19] As the trial court noted, our Supreme Court held in General Motors Corp. that even if both of the conditions stated in
[20] This case is nothing like General Motors Corp. Far from crafting narrow requests aimed at the actual merits of the case, Zavodnik asked Costello to admit that he was liable for $30,000, $300,000, or even $600,000 without also asking him to admit facts that would justify such an extraordinary award in a case involving a used printer sold for less than $75. Furthermore, as already mentioned, there was no trial date set, let alone a date that was just two months away. And Zavodnik certainly knew that Costello contested the matters at issue: Costello had already defended the case on the merits—and won—at the small-claims level.
[21] More fundamentally, the plaintiff in General Motors Corp. did not ask the defendant to admit liability 400, 4000, or 8000 times greater than the amount originally in dispute, as Zavodnik did here. Zavodnik’s misuse of
[22] And things could have been worse. As noted above, the trial court reaffirmed Costello’s admission to $30,044.07 in damages because Zavodnik’s assertion of that amount “relates directly to a specific liability for breach of contract,” that is, his assertion of $30,044.07 included the phrase “for breaching the legally binding contract.” Appellants’ App. p. 37, 43. However, the trial court allowed Costello to withdraw his admissions that he owes $300,000 and $600,000 because the underlying requests did not “specifically identif[y] the basis for the damages.” Id. at 38, 44. Following this logic, the trial court would have granted Zavodnik a judgment for $600,000, or $6,000,000, or $60,000,000, if Zavodnik had simply linked such an amount to the phrase “for breaching the legally binding contract.” We believe the withdrawal provisions of
[23] The trial court abused its discretion by partially denying Costello’s motion to withdraw admissions; it should have granted the motion in full. Because the trial court granted summary judgment in favor of Zavodnik based on the unwithdrawn admissions, we reverse the judgment and remand this matter to the trial court. Before conducting any further proceedings, the trial court shall hold a hearing for purposes of determining whether this case should be dismissed pursuant to
[24] Reversed and remanded.
BARNES, J., and MATHIAS, J., concur.