CALIFORNIA ATTORNEY'S FEES

Requests For Admission: $1,000,981.50 In Costs Of Proof Sanctions Awarded To Defendants Who Defeated Plaintiffs’ Claims At Trial Are Reversed On Appeal

Plaintiffs’ Lack Of Success At Trial Does Not Demonstrate That They Acted Unreasonably Or In Bad Faith In Denying Requests For Admissions Propounded By Defendants.

            In Walter v. Estate Strategies, Case No. B280172 (2d Dist., Div. 6 December 5, 2022) (unpublished), defendants moved for and were awarded $1,000,981.50 in costs of proof sanctions, under Code Civ. Proc., section 2033.420, after defeating plaintiffs’ claims at trial.  Plaintiffs appealed – arguing that their denials to Requests for Admission were reasonable because the requests improperly sought conclusions of law or conclusions based on facts they were not requested to admit.

            The 2/6 DCA agreed – finding there was good reason for plaintiffs’ failure to admit and that plaintiffs had reasonable ground to believe they would prevail. (See § 2033.420(b)(3)-(4); Grace v. Mansourian, 240 Cal.App.4th 523, 529 (2015).)  Plaintiffs had the same reason for denying the requests for admission, for successfully opposing defendants’ motions for summary judgment, and for going to trial – they believed they would prevail on their claims, which were supported by evidentiary bases and qualified expert witnesses.  (Universal Home Improvement, Inc. v. Robertson, 51 Cal.App.5th 116, 130-132 (2020) [reasonable basis to deny RFAs shown 40 where responding party later defeated propounding party’s motion for summary judgment and presented evidence at trial to contest each RFA]; Orange County Water Dist. v. The Arnold Engineering Co., 31 Cal.App.5th 96, 116 (2018) [“expert opinion evidence may provide a party with a reasonable ground to believe it will prevail on a matter covered by an RFA”].)

Costs, Deadlines, Requests For Admission, Section 998: 2/8 DCA Affirms Denial Of Costs Of Proof Sanctions And Untimely Fee Request, Sustains Some Costs Despite A Costs Memo Verification, And Reversed Expert Fee Award Based On Invalidity Of 998 Offer

Panoply Of Issues Addressed In This One.

            In Bogdan v. Polak, Case Nos. B306264/B309780 (2d Dist., Div. 8 Apr. 6, 2022) (unpublished), landlord won a gnarly retaliatory eviction lawsuit against tenant based on some nonsuits and an eventual jury trial.  In postjudgment proceedings, the lower court denied landlord’s attorney’s fees request as untimely, awarded some routine costs even though landlord failed to verify the costs memorandum, awarded expert witness fees under a CCP § 998 offer to landlord, and refused a costs-of-proof sanctions request for RFA denials.

            Everything was affirmed by the appellate court, except for a reversal of the expert witness award.

            Landlord’s fee motion was untimely; despite landlord’s argument that more time was allowed based on specific emergency orders during the pandemic, the appellate court found that those orders only allowed for “grace” if the litigant had difficulty filing documents, which it did on other items during the COVID-19 crisis.  The denial of tenant’s motion to tax costs was correct because attaching a costs memorandum verification is not jurisdictional and landlord substantially complied with the requirements.   However, the expert witness costs award was overturned because the CCP § 998 offer conditioned entry of any judgment on the offering party giving additional authority for the entry, which made the offer conditional and invalid.  Finally, no costs-of-proof sanctions could be awarded because the requesting party provided a table of RFAs, answers, and trial proof, but—alas!—did not provide the record citations to support the argument.

Requests For Admission: Costs-Of-Proof Sanctions Properly Denied Based On Ambiguity Of Requests And No Substantial Importance For Negligence Issues In Play

No Abuse Of Discretion Demonstrated.

            In Cleveland v. Taft Union High School Dist., Case No. F080084 (5^th Dist. Mar. 25, 2022) (unpublished), plaintiff obtained a $2 million negligence verdict against District in assessing the threat posed by a student who shot plaintiff in the stomach with a shotgun.  Plaintiff then moved for RFA costs-of-proof sanctions under CCP § 2033.420 for denying RFAS about “violent threats” for incidents occurring 11 months before the shooting.  Both the trial and appellate court agreed that no RFA sanctions should be levied against the defense.  The term “violent threats” was ambiguous, so that alone justified denial of sanctions.  Beyond that, however, these previous incidents were not crucial to a determination of negligence to an event occurring 11 months later, such that the trial judge could reasonably determine that the RFAs were not of substantial importance in the case. 

Request for Admissions: $239,170.86 Costs Of Proof Sanctions Order Affirmed On Appeal

Appellate Court Rejects Per Se Rule That Denials of Summary Judgment Motion Or Directed Verdict Presents Imposition Of These Type Of Sanctions.

            Hi, everyone.  We are back from the Thanksgiving break and hope you are all well.  The fee decisions were very sparse from mid-November to now, but they are ramping back up as we close in on the December Holidays.

            Code of Civil Procedure section 2033.420 allows a lower court to award “costs-of-proof” sanctions, typically attorney’s fees, unless it falls within one of these exceptions:  (1) an objection was sustained to the request or a response was waived; (2) the admission sought was of no substantial importance; (3) there was reasonable ground to believe the party refusing to admit the matter would prevail on the matter; or (4) there was other good reason for the failure to admit.” (Doe v. L.A. County Dept. of Children and Family Services, 37 Cal.App.5^th 675, 690 (2019).)  Usually, (2) or (3) are involved in most cases we have posted on since early May 2008.  However, the reasonable belief exception, as colorfully described in one case, involves showing more than a “hope or roll of the dice.”  (Doe, 37 Cal.App.5^th at 690.)

            Plaintiff learned that all too well, after being hit with a costs-of-proof sanctions order of $239,170.86 after an unsuccessful bench trial in Spahn v. Richards, Case No. A159495 (1^st Dist., Div. 3 Nov. 30, 2021) (published).

            The problem was that Plaintiff had no trial proof that defendant contractor had orally agreed to build a home at a specified fix price.  Based on the abuse of discretion review standard, the lower court did not err in awarding the “sanctions.”  Plaintiff tried to avoid that by advocating a per se rule that the previous denials of a summary judgment motion and a directed verdict motion at trial conclusively established a good faith belief that plaintiff would prevail at trial.  Given that summary judgment and directed verdict motions do not involve weighing of evidence, the appellate court refused to adopt the per se approach suggested by plaintiff given that the evidence presented at trial drives the section 2033.420 analysis.

Requests for Admission: Trial Court Did Not Err In Denying “Costs Of Proof” Sanctions Where Trial Court Implied A License Based On Recorded Documents

RFA Denials Were Properly Based On Documents Which Would Not Necessarily Conclude An Implied License Was At Issue.

            We have posted, many times, on “costs of proof” sanctions under CCP § 2033.420.  Most generally, these awards or denial of requests under that provision are factually oriented.  Badger v. Terribilini, Case No. A161178 (1^st Dist., Div. 3 Oct. 28, 2021) (unpublished), confirms that this is the usual case.  There, a dispute arose as to whether there was an irrevocable license on an adjacent lot, with the trial court determining there was an implied license not facially dependent on the express wording of the recorded documents.  The trial judge denied “costs of proof” sanctions, a ruling affirmed on appeal.  The RFA denials were made in good faith given that intent is subject to proof, and nothing showed that the contested issues were denied wrongfully given the heavily-contested intent issue.

Requests For Admission: $211,032.50 In Costs-Of-Proof Sanctions Affirmed On Appeal

Trial Judge Did Not Err In Granting Sanctions For Central RFA Denials In The Case.

            In Nilson v. White, Case No. D077046 (4^th Dist., Div. 1 Sept. 16, 2021) (unpublished), plaintiffs lost a case where they sought to hold their attorneys responsible for a loss of a farming business through a nonjudicial foreclosure.  The trial judge also granted the winners $211,032.50 in RFA costs-of-proof sanctions.  The court of appeal affirmed because these were central RFAS which were not correctly denied and were apportioned out as far as awarding costs to the winning parties.

Requests For Admission: $189,532.50 Costs-Of-Proof Sanctions Generally Affirmed With Minor Adjustments

No Motion To Compel Is Necessary Except Under Certain Circumstances And Costs-Of-Proof Sanctions Not Limited To Trial Evidentiary Stages.

            In DeJong v. Beach, Case Nos. C085462/C086526 (3d Dist. Sept. 13, 2021) (unpublished), the Third District affirmed major parts of a trial court’s grant of RFA costs-of-proof sanctions in the amount of $189,532.50.  Here are the takeaways from this case: (1) no motion to compel is necessary to claim costs-of-proof sanctions where the motion would be idle; (2) a motion to compel for certain incomplete answers may be a predicate for costs-of-proof sanctions depending on the facts; and (3) costs-of-proof sanctions are available for post-trial matters beyond evidentiary phases, even for post-trial briefing and attorney’s fees issues.

Requests For Admission: Trial Court’s Denial Of Prevailing Plaintiff’s Request For Costs Of Proof Fees Affirmed.

The Record Showed The Existence Of At Least One Of The Four Exceptions To The Otherwise Mandatory Fee Award Under Code Civ. Proc. § 2033.420.

            In Figg v. Mann, Case No. D078585 (4^th Dist., Div. 1 July 19, 2021) (unpublished), prevailing personal injury plaintiff appealed the trial court’s denial of his motion to recover his costs of proof against defendant for failure to admit to any of plaintiff’s injuries prior to trial – arguing that the award was mandatory under Code Civ. Proc. § 2033.420. 

            The 4/1 DCA found no abuse of discretion.  There are four exceptions to the mandatory costs of proof awards under § 2033.420: “(1) that an objection to the request was sustained or a response to the request was waived; (2) the admission sought was of no substantial importance; (3) the party failing to make the admission had reasonable ground to believe that the party would prevail on the matter; or (4) there was other good reason for the failure to admit the request.”  (Laabs v. City of Victorville, 163 Cal.App.4th 1242, 1276 (2008).)  The record in this case showed that plaintiff had opposed defendant’s attempts, no less than seven times, to obtain an expert medical examination that would have reasonably enabled defendant to admit or deny the requests for admission.  This created at least one clear reason that the trial court might have found a statutory exception to the mandatory award of costs – the “good cause” exception.  Based on the abuse of discretion review in this case – a “deferential standard of review . . . [that] requires [the reviewing court] to uphold the trial court’s determination . . . so long as it is reasonable” (Bloxham v. Saldinger, 228 Cal.App.4th 729, 753 (2014)) and determination as to whether any of the four exceptions apply falls “within the sound discretion of the trial court” (Brooks v. American Broadcasting Co., 179 Cal.App.3d 500, 508 (1986)), the panel affirmed.

Requests For Admission, Sanctions: 2/8 DCA Reverses And Remands Trial Court’s Denial Of Costs Of Proof Sanctions To Plaintiff Association And Amends $75,190.98 Judgment Entered In Plaintiff’s Favor To Add Over $7.8 Million In Damages

Trial Court Was Required To Award Plaintiff Its Reasonable Fees And Costs Incurred In Proving Matters Defendants Failed To Admit Without Reasonable Grounds To Do So, And Plaintiff Association Had Standing To Seek Damages On Behalf Of Its Members.

            In Assn. for L.A. Deputy Sheriffs v. Macias, Case No. B295086 (2d Dist., Div. 8 April 30, 2021) (published), plaintiff Association for Los Angeles Deputy Sheriffs (a nonprofit mutual benefit corporation that represents LASD and the district attorney’s bureau of investigations employees in contract negotiations) sued two of its board members for breaches of fiduciary duty, fraud, constructive fraud, conversion, and declaratory relief.  The breaches occurred after the board’s director and president had been removed due to lack of eligibility to be director under the Association’s bylaws.  He and the board’s vice president fought the removal by causing Association great disruption in its management by creating confusion and informing staff that Macias was still president, conducting board meetings without the required quorum, obtaining a $100,000 cashier’s check without approval from an Association account to retain counsel to fight the removal, and so on.

            After four years of litigation and a 7-day trial, the trial court entered judgment for $75,190.98, plus postjudgment interest, in Association’s favor, but sustained defendants’ last-minute objection to Association’s requested $7.8 million in damages on behalf of its members for lost salary increases – concluding Association had standing to sue only if it brought a class action.  On appeal, the 2/8 DCA concluded the class action analysis was an improper test for associational standing as California follows the federal rule on an association’s standing to sue on behalf of its members. “[A]n association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.” (Hunt v. Washington State Apple Advertising Com., 432 U.S. 333, 343 (1977).)  With substantial evidence supporting both causation and damages findings that Association members suffered $7,813,833 in lost salary increases due to defendants’ actions, the panel amended the judgment to add that amount.

            The trial court also denied Association’s postjudgment Code Civ. Proc. § 2033.420 motion for costs of proof sanctions, related to defendants’ failure to admit the truth of basic matters in their requests for admission responses, based on the following grounds: (1) lack of jurisdiction due to the parties’ pending appeals; (2) some denials were not unequivocal and Association had not identified the specific fees/costs incurred to prove those that were; and (3) defendants had reasonable grounds to believe they would prevail on the conversion claim and the breach of fiduciary duty claim as to the appointment of a member to the board without a quorum.

            The 2/8 DCA found abuse of discretion for each basis for denial stated by the trial court. 

            First, the trial court did retain jurisdiction to rule on the costs of proof motion as an appeal does not stay proceedings on “ ‘ancillary or collateral matters which do not affect the judgment [or order] on appeal’ even though the proceedings may render the appeal moot.” (Varian Medical Systems, Inc. v. Delfino, 35 Cal.4th 180, 191 (2005).) 

            Second, defendants’ claims of insufficient information to respond to matters they clearly knew or should have known constituted a “failure to admit” response as specified in §§ 2033.420(a) and (b)(4).  No motion to compel was necessary as the responses were complete, and Association did not waive its right to cost of proof fees.  Also, there is no statutory requirement that fees and costs must be separately allocated to each specific request for admission – especially where all the requests relate to a single issue as was the case here. 

            Third, nothing prevented defendants from admitting facts related to their taking of $100,000 and returning it 17 days later regardless of what they believed about Association’s standing was to recover funds taken from its own account, and defendants had no reasonable ground to deny that voting to appoint a board member without quorum was a breach of fiduciary duty based on their belief director/president should not have been removed.

            Finding the trial court was required by § 2033.420 to award Association its reasonable fees and costs incurred in proving matters defendants failed to admit without reasonable grounds to do so, the panel reversed and remanded for determination of those fees and costs. 

Deeds Of Trust, Requests For Admission, Section 1717: Civil Code § 1717 And Code Civ. Proc. § 2033.420 Award Of $191,619.47 In Attorney Fees And $29,345.97 In Costs To Defendants Prevailing Against Negligence And Fraud Claims At Trial Affirmed

Civil Code § 1717 Fees Are Awardable In An Action To Enforce Or, As In This Case, Avoid Enforcement Of A Contract, And Plaintiff Failed To Prove He Met Any Of The Four Exceptions To The Code Civ. Proc. § 2033.420 Mandated Fee Award For His Failures To Make Admissions.

            In Yoon v. Cam IX Trust et al., Case No. B301191 (2d Dist., Div. 8 January 29, 2021) (published), plaintiff sued alleging claims for negligence and fraud, statutory claims, and causes of action to set aside the trustee’s sale and quiet title in connection with a trustee’s sale of his home.  By the time the case went to a jury, only the negligence and fraud claims remained – which defendants successfully defeated.  Afterward, defendants – the assignee of the deed of trust securing repayment of a $640,000 promissory note, and assignee’s loan servicer – moved for Civil Code § 1717 fees pursuant to fee provisions in the promissory note and deed of trust, and under Code Civ. Proc. § 2033.420 for expenses incurred in proving the truth of matters plaintiff denied in responses to requests for admission.  The trial court, after making some reductions, found reasonable and awarded $191,619.47 in attorney fees and $29,345.97 in costs.  Plaintiff appealed.

            The 2/8 DCA affirmed.  Contrary to plaintiff’s argument that § 1717 did not apply because his negligence and fraud claims were not based on the contract, the gravamen of plaintiff’s lawsuit sought to avoid his obligations under the note by making claims defendant acted negligently and fraudulently during the foreclosure process – even arguing at trial that defendants’ failed to comply with the terms in the promissory note and deed of trust by improperly sending a foreclosure option notice to the wrong address.  “[F]ees should be awarded to the extent that the action in fact is an action to enforce – or avoid enforcement of – the specific contract.” (Shadoan v. World Savings & Loan Assn., 219 Cal.App.3d 97, 108 (1990).)

            As to the requests for admission, plaintiff argued that the trial court abused its discretion in making the § 2033.420 award because plaintiff had reasonable ground to believe that he would prevail on the matters – thus entitling him to an exception, under Code Civ. Proc. § 2033.420(b)(3), to the mandated fee award.  However, plaintiff failed to support his claim that he had reasonable ground with either evidence or circumstance both at trial and on appeal.  Finally, while the panel agreed with plaintiff’s argument that fees can be awarded only for the period after he denied the requests for admission, it found no adjustment in the fee award was necessary as fees were also properly awarded under § 1717.

Request For Admissions: Plaintiff Found 75% Negligent In Bike-Truck Accident Properly Not Awarded Costs-Of-Proof Sanctions Where Defense Had Good Faith Belief In Contesting Negligence And Causation Issues

Defense Did Better Than “Hope Or A Roll Of The Dice” in Denying Two Key RFAs.

            In Munoz v. County of Imperial, Case No. D075805 (4^th Dist., Div. 1 Jan. 20, 2021) (unpublished), a bike rider sued after a personal injury accident with a pickup truck.  The jury awarded plaintiff $120,000 after determining she was 75% at fault, later upped by another $36,875 for pain and suffering based on an additur.  Before trial, the defense denied two key requests for admissions on negligence and causation.  After she won, plaintiff moved for costs-of-proof sanctions under CCP § 2033.420, a request which was denied.

            The denial was affirmed on appeal.  The defense had a good faith belief to deny the RFAs based on the contested nature of the two issues at trial, confirmed by highly contested liability proof in the form of independent witnesses and accident reconstruction experts.  In a quote we like from another case, the appellate court said the defense denials were more than “hope or a roll of the dice” giving rise to costs-of-proof sanctions.  (Grace v. Mansourian, 240 Cal.App.4^th 523, 532 (2015).)

Requests For Admission: $80,658.75 Costs-Of-Proof Sanctions Affirmed On Appeal

Initial Denial That Association Rules Were Violated, Conceded Later At Trial, Justified The Award.

            In Verotel Merchant Services B.V. v. Rizal Commercial Bank, Case Nos. B276120/B281869 (2d Dist., Div. 4 Jan. 13, 2021) (unpublished), some plaintiffs won $1.526 million in compensatory damages and $7.5 million in punitive damages against defendants.  During the case, the defense denied certain requests for admissions.  After the jury verdict, with the defense finally conceding certain Association rules were not complied with after denying otherwise in RFA responses, the trial judge found that $80,658.75 was the costs-of-proof sanctions price under CCP § 2033.420 for denying the two crucial RFAs.  The record showed no abuse of discretion in making that award.

Requests For Admission: Plaintiff Boyfriend Winning Loan Dispute Against Girlfriend Properly Awarded $44,242.50 In Costs Of Proof Sanctions Where Boyfriend Won A $111,325 Recovery

However, Boyfriend Not Awarded Fees On Appeal Based On Failing To Identify A Fee Entitlement Basis.

            As the famous comedian Jackie Mason once quipped, “Money is not the most important thing in the world.  Love is.  Fortunately, I love money.”  That quote well encapsulates the result in the next case we post on.

            Plaintiff boyfriend, over a period of time, loaned a total of $110,000 to his girlfriend—his life savings.  We surmise that after things soured, boyfriend sued girlfriend for repayment of the loan, eventually recovering $111,385 against her.  During the litigation, boyfriend propounded three key requests for admission going to the heart of the case, which drew boilerplate objection and denials.  After his court victory, boyfriend sought to recoup $44,242.50 in costs of proof sanctions under CCP § 2033.420, which allows recovery of reasonable attorney’s fees if certain relevant requests for admission are denied without substantial justification.

            The trial court awarded boyfriend his entire request, which triggered an appeal by girlfriend in Fuller v. Campos, Case No. B296403 (2d Dist., Div. 2 Dec. 24, 2020) (unpublished).

            The 2/2 DCA affirmed.  Plaintiff’s counsel did a good job of explaining the fees being sought, carefully only claiming expenses incurred after the requests for admission were denied.  There was no requirement for itemized billing statements, because counsel’s breakdown of the hours expended was sufficient.  Boyfriend also requested attorney’s fees on appeal (if he won, which he did), but the appellate panel concluded nothing in section 2033.420 contained authorization for an award of “fees on fees,” the costs of bringing the costs of proof sanctions motion such that the lack of fee entitlement for such trial fees could not justify an award of appellate fees either.

Appealability, Request For Admissions: Appeal Of $52,245.40 Costs-Of-Proof Sanctions Upheld On Appeal, Because It Was Dismissed

Reason Was That Defense Insurer Voluntarily Paid Both The Judgment and Sanctions In Full.

            In Nelson v. Estate of Holguin, Case No. B298135 (2d Dist., Div. 3 July 28, 2020) (unpublished), defendant estate suffered a $167,250 adverse jury verdict and CCP § 2033.420 costs-of-proof sanctions of $52,245.40.  Defendant’s insurer voluntarily paid the judgment and costs-of-proof sanctions, but it subsequently appealed the section 2033.420 sanctions award.  The 2/3 DCA dismissed the appeal, determining that the insurer’s voluntary payment waived the right to appeal in the absence of a settlement or compromise.  (Miller v. Cabral, 13 Cal.App.3d 503, 506 (1970).)

            BLOG COMMENT:  There is an exception to the waiver rule, where the payment was made under risk of compulsion, such as where a mechanic’s foreclosure sheriff sale might take place and result in a draconian forfeiture.  (Reitano v. Yankwich, 38 Cal.2d 1, 3 (1951).)  Here, however, there was simply a voluntary payment, not hinged to a compromise or settlement preserving the ability to appeal. 

Requests For Admission, Sanctions: Costs Of Proof Sanctions Affirmed Against Contestants To Will Who Denied Critical RFA Without Reasonable Ground To Believe They Could Prevail On The Matter At Trial

The Only One Of Four Will Contestants Who Showed For Trial Provided No Evidence To Support The Request For Admission Denial.

            Estate of Moshier, Case No. G057076 (4^th Dist., Div. 3 June 29, 2020) (unpublished) involved a will contest brought by decedent’s adoptive brother and three adult nieces against decedent’s wife.  Decedent’s will named wife as the executor of his estate and left the entire estate to her – which included the house decedent had inherited from his late father where decedent and wife lived.  Decedent had no children. When wife petitioned to probate the will, brother and nieces contested – seeking an intestate share of the estate as, they argued, the will did not comply with Probate Code sections 6110 and 6111 because it was witnessed only by wife instead of two individuals, and was not signed by decedent because the signature omitted decedent’s middle initial.

            When wife propounded discovery, contestants denied a Request for Admission asking for admission that decedent’s intent was to leave his entire estate to wife.  Instead, contestants claimed the house decedent inherited was meant to stay in the family and decedent would not have left the house to anyone but decedent’s adoptive brothers.  At trial, decedent’s best friend and his biological half-sister testified that decedent’s intent was to leave his entire estate to his wife.  On the other side, only one person showed for trial – a niece who had not seen the decedent in over 25 years, had never spoken with decedent about his property, will or intentions as to his estate, and who had no documents or other witnesses to support the contention that the house was to stay in the family.  The trial court found evidence supporting decedent’s intent to leave everything to his wife to be clear and convincing, and denied the will contest.  Afterward, wife successfully moved for Code of Civil Procedure § 2033.420 costs of proof sanctions to recover the fees she incurred in proving the truth of the matter regarding decedent’s intent, and was awarded $23,675 in fees and $3,707 in costs.

            The 4/3 DCA affirmed.  Contestants’ argument that the trial judge, rather than a temporary judge, was required to hear the sanctions motion fell flat.  First, contestants had stipulated to having the temporary judge hear the motion and had failed to withdraw that stipulation.  Second, the motion for costs of proof sanctions involved sanctionable conduct during pretrial discovery, not sanctionable conduct during trial, and ruling on the motion did not require the trial judge’s knowledge of the parties’ trial conduct.  Beyond this, the 4/3 DCA concluded there was no abuse of discretion in awarding the costs of proof sanctions – wife proved the truth of decedent’s intent at trial, and contestants had no reasonable ground to believe they would prevail on the issue of decedent’s intent.

Requests For Admission: 1/2 DCA Opinion Reversing “Costs Of Proof” Sanctions For RFA Denials Suggests That Successful Moves Are To Make RFAs Deeper Into The Case And To Support These Type Of Sanctions With Detailed Trial Testimony

$35,595 Fee Award Under CCP § 2033.420(a) Reversed Based On Early Nature Of RFAs And Lack Of Supporting Evidence Of Trial Proof To Correlate Against RFA Denials.

            Universal Home Improvement, Inc. v. Robertson, Case Nos. A157067/A157562 (1^st Dist., Div. 2 June 24, 2020) (published) has some nice tips to litigators seeking to obtain “costs of proof” sanctions against a litigant who may have denied requests for admissions without a reasonable basis, which can trigger fee recovery under CCP § 2033.420(a).

            What happened here is that a different judge other than the trial judge awarded “costs of proof” sanctions against plaintiffs to the tune of $35,595 in attorney’s fees when the defense prevailed in a fraudulent transfer action. 

            That award was reversed as a matter of law, with the appellate court finding it was an abuse of discretion.  It, first of all, found that RFAs seeking a response that a “plaintiff has no case” early on in a suit should not ordinarily give rise to “cost of proof” sanctions, because that would be a strict liability exposure for any prosecuting litigant even though things were at an early stage of a matter.  However, more into the weeds, the defense failed to provide any trial testimony to show why the denied requests were sanctionable, given that most of the facts were vigorously contested at trial.  Simply drawing a straight line from the admissions to the ultimate result did not support sanctions under section 2033.420(a), especially in a contested matter with lots of conflicting testimony.  We believe that this demonstrates that there needs to be some supporting trial testimony, in moving papers, to show why the denials would lead to “costs of proof” sanctions in most situations. 

Appealability, Discovery, Family Law, Requests For Admission, Sanctions: Appeal Dismissed For Petitioner Who Was Dissatisfied With Trial Court’s Order On His Motion To Have Requests For Admission Deemed Admitted And For Sanctions

The Appellate Court Has No Jurisdiction To Review A Discovery Order.

            Petitioner father and respondent mother in Minasian v. Katz, Case No. A158517 (1^st Dist., Div. 2 June 11, 2020) (unpublished) were involved an incredibly protracted action – dating back to 2004 – regarding their child who was born the year before. 

            In 2018, petitioner served respondent with Requests for Admission, but considered petitioner’s original and second sets of responses inadequate, and filed a Request for Order to have the RFAs deemed admitted and for sanctions against respondent.  When the trial court ultimately ordered sanctions of $195 against respondent and that she file proper responses within 21 days, petitioner appealed – arguing the trial court exceeded its authority and discretion in ruling the respondent would have 21 additional days to file her RFA responses.  Unfortunately for petitioner, his appeal turned out to be an exercise in futility.  The 1/2 DCA dismissed.  The panel concluded petitioner’s appeal was of a discovery order, not a judgment, and that it was without jurisdiction to rule on the discovery order given there is no statutory provision allowing for an appeal of an order on a discovery motion.  (Lund v. Superior Court of Orange County, 61 Cal.2d 698, 709 (1964); Code Civ. Proc. § 904.1.)  

Probate, Request For Admissions, Sanctions: More Than $1.8 Million In CCP § 128.5 Sanctions Went POOF! On Appeal, But RFA “Cost Of Proof” Sanctions Of Over $1 Million Stuck On Appeal

128.5 Sanctions Went Away Because It Did Not Apply To The Action Datewise, While RFA “Sanctions” Were No Abuse Of Discretion Even Though Substantial In Nature.

            First of all, we hope all of our readers are safe—this pandemic has presented unprecedented, bizarre consequences, but hope you are well.  We are happy to report that the California appellate courts are doing a good job staying in business, which also means we get to post on the decisions which emanate from our busy California appellate courts.  So, let’s go to it on the one unpublished decision on April 28, 2020 dealing with fee issues.  Co-contributor Mike also wants to thank his paralegal, Shanna Strader, for her great work in making sure posts are timely made—not to mention that she writes some of them!

            In Estate of Khatri, Case No. A150546 (1^st Dist., Div. 3 Apr. 28, 2020) (unpublished), two brothers were involved in a long-running dispute over the divisions of family assets, primarily six commercial properties after their mother died.  Mother left all of the assets to one son, which triggered a brother-against-brother fight which featured undue influence allegations by the brother left out.  Ultimately, ousted brother lost after a 16-day bench trial.  Winning brother then sought fees under two regimes—CCP § 128.5 (sanctions) and CCP § 2033.420 (costs-of-proof sanctions for denying discovery requests for admissions without substantial justification).  The probate court was persuaded by winning brother’s submissions, giving him full relief as follows: (1) 128.5 motion -- $1,497,680.75 in attorney’s fees and $346,874.19 in costs; and (2) 2033.420 motion -- $865,559.25 in fees and $138,621.55 in costs.  As you can predict, losing brother appealed.

            The result on appeal?  A split verdict, but probably not the one desired by the losing brother/appellant.

            Initially, the good news for appealing brother.  He was able to get the 128.5 sanctions reversed as a matter of law.  The reason was that these sanctions only applied to actions filed (not pending) after January 1, 2015, the effective date of § 128.5 after some legislative “sunsets,” such that it simply did not apply to the case—all as clarified through 2017 amendments which were only declaratory of the result reached by the appellate court here.

            But now the bad news.  The appellate court found that the lower court did not abuse its discretion in awarding the costs-of-proof sanctions totaling over $1 million.  Losing brother did not meet his burden in showing that any good faith/substantial justification exceptions applied to his denials on critical undue influence requests for admissions—all the more so given his lack of medical proof to show there was undue influence.  So, substantial fees/costs affirmed on appeal.

Costs, Requests For Admissions: Jane Doe Plaintiff Losing At Trial Based On A Nonsuit Properly Assessed With $19,500 In Costs-Of-Proof Sanctions And With Routine Costs Of $107,440.35

Respondents Conceded $6,988.27 In Claimed Costs Were Not Allowable.

            Doe v. Dept. of Children & Family Services, Case No. B276699 (2d Dist., Div. 8 July 18, 2019) (published; previously issued as unpublished on June 20, 2019) is a case demonstrating how respondents, on appeal, can gain appellate credibility by conceding a legal issue for which there is no substantive response.

            In this case, plaintiff Jane Doe lost on a nonsuit at trial, after other claims were pared during pre-trial stages, to DCFS and other governmental defendants.  The lower court agreed that Jane Doe wrongfully denied 12 of 16 RFAs, imposing costs-of-proof sanctions for trial efforts in presenting evidence which led to the nonsuit to the tune of $19,500 (out of a requested $85,459.50).  Then, the lower court granted defendants $114,428.72 in routine costs after taxing $38,289.15 in claimed costs.  Jane Doe appealed.

            RFA Costs-of-Proof Sanctions.  The appellate court agreed that the 12 RFAs were wrongfully denied, especially ten of them in light of the County providing computer logs to refresh Jane Doe’s memory about certain visits. Her claim that she could not recall the exact dates did not resonate given the computer logs provided by the County.  Jane Doe also argued that none of the “denied” facts were used in the nonsuit determination, but the appellate court rejected this given that trial was under way and that defendants did have to present proof on the number of visits.  The nonsuit “twist” in the procedural context of this case was inconsequential.

            Routine Costs.  Respondents did a good thing upfront here.  They admitted that $6,988.37 in investigative costs were not allowable, which we believe added credibility to the defendants’ positions on appeal.  With respect to the other routine costs being challenged, they were sustained on appeal this way:  (1) filing fees were allowable because they were still “incurred” even though the government is exempt from paying such fees; (2) services fees for witnesses not called at trial are allowable in the lower court’s discretion; (3) section 998 expert fees for experts not called to testify are recoverable in the court’s discretion; (4) trial exhibit copying costs are authorized; (5) lodging and meal expenses for out-of-town depositions by attorneys and paralegals are discretionarily proper; (6) courier and messenger fees are recoverable in the lower court’s discretion; and (7) litigation support vendor fees and telephonic court appearance fees are authorized. 

Requests For Admission: Plaintiff Entitled To Costs Of Proof Sanctions Expenses, With Lower Court Improperly Shifting Burden Of Proof On Exceptions To Propounding, Rather Than Responding, Party With Respect To RFA Responses

Record Showed That Defense Failed To Prove Exceptions For Its RFA Denial Responses.

           In Samsky v. State Farm Mutual Automobile Insurance Company, Case No. B293885 (2d Dist., Div. 8 June 26, 2019) (published), a lower court denied plaintiff’s request for “costs of proof sanctions” based on defense denial of requests for admissions under CCP § 2033.420.  That RFA costs of proof sanctions denial order was reversed on appeal, remanding with directions that the trial court had to grant reasonable costs of proof sanctions under the circumstances. 

            The overarching infirmity was that the lower court improperly shifted the burden of proof in this area.  Specifically, the lower court impermissibly required the propounding party, not the responding party, to show the nonexistence of RFA denial exceptions such as immateriality and good faith denial.  That was the responding party’s burden, not the burden for the propounding party—with this published decision clarifying the burden of proof under CCP § 2033.420.  But there was more.  Substantial evidence showed that the defense failed to show justifiable grounds for denying certain requests such that the matter was remanded for a hearing to award reasonable “costs of proof sanctions” to plaintiff. 

Requests For Admissions, Sanctions: Defendants Properly Denied RFA Costs Of Proof Sanctions And Plaintiff Properly Denied CCP § 128.7 Request For Defense Bringing Frivolous Proof Of Costs/128.5 Sanctions Motion

Defendant Failed To Meet RFA Costs Of Proof Burden Or Segregate Out Costs For Actually Proving Truths Of Matters In A Demurrer Proceeding, While Plaintiff’s Request For 128.7 Sanctions In An Opposition Was Procedurally Infirm.

            I guess we can say that the results in Eng v. Brown, Case No. D072980 (4^th Dist., Div. 1 March 21, 2019) (unpublished) shows how meeting procedural requirements or burden of proof elements are keys in winning RFA costs-of-proof sanctions or CCP § 128.7 sanctions requests.

            In this one, the defendants prevailed after a jury trial against plaintiff, moving for costs of proof sanctions for request for admissions denials under CCP § 2033.420 and for CCP § 128.5 sanctions. In response, plaintiff asked for CCP § 128.7 sanctions against the defense for bringing frivolous motions, but only doing so through an opposition to the defense motions. The lower court denied the defense motions and never really ruled on plaintiff’s 128.7 request.

            The 4/1 DCA affirmed the defense appeal of the costs of proof sanctions denial and plaintiff’s cross-appeal of the 128.7 request denial.

            Defense Appeal. The problem with some of the costs of proof requests was that defendants failed to prove to the trial judge what they had to prove in the truth of certain facts with respect to RFA denials. They never submitted trial transcripts before the lower court so it could make the determination; simply supplying them on appeal did not help as far as showing how the lower court abused its discretion. However, the defense did win a demurrer with respect to a conversion cause of action for which certain RFA denials were made. Although expressing skepticism that CCP § 2033.420 could be used at a demurrer stage of proceedings, the appellate court assumed it could but found that the defense failed to isolate expenses relating to the denials at issue—instead, the defense sought all fees applicable in the demurrer proceeding, which did not meet its burden to segregate under section 2033.420.

            Plaintiff’s Cross-Appeal. The flaw in this cross-appeal was that Plaintiff never made a separate motion for 128.7 sanctions. Rather, plaintiff simply made a request for them in the opposition to the 2033.420/128.5 motions by the defense—a procedurally improper method of requesting 128.7 sanctions.

Costs, Requests For Admissions: In Trip And Fall Case Resolved Against Plaintiff On Summary Judgment, Trial Court Correctly Denied “Proof of Costs” Sanctions For RFA Denials And Properly Taxed Costs To Defense To Some Degree

Mathematical Error In Costs Award Corrected, But Nonparty Could Not Be Added As Joint Obligor On Costs Award.

            Sailors v. City of Fresno, Case No. F075577 (5^th Dist. March 20, 2019) (unpublished) (there are two other unpublished consolidated cases, but the results are the same) involved a plaintiff suffering severe injuries in a trip and fall at the Fresno Convention and Entertainment Center, resulting in a suit against the City of Fresno for a dangerous property condition and against the owner/property manager for general negligence. All defendants prevailed on summary judgment motions based on the theory that the premises condition was trivial in nature, with defendants seeking significant “costs of proof” sanctions under CCP § 2033.420 based on RFA denials and also seeking routine costs. They all sought a total of $305,833.56, with close to $251,000 being on the RFA costs of proof request. The lower court denied the RFA costs of proof request, but it did award $50,314.95 in routine costs against plaintiffs and in favor of defendants.

            Plaintiff lost the merits appeal, the defense lost the appeal of the RFA costs of proof denial, and plaintiff won a small mathematical reduction in the routine costs award.

            The RFA costs of proof sanctions request was correctly denied because plaintiff did prove some requests or had a reasonable basis for denying them. Although summary judgment was granted against plaintiff, this did not mean there was a total absence of evidence but simply there was no sufficient evidence to raise a triable issue of fact. That distinction was critical in affirming that the RFA costs of proof request denial was no abuse of discretion.

            On the costs award, plaintiff argued that a nonparty was a joint obligor which should be responsible for the costs award. However, the Fifth District found no authority that a nonparty to the case or appeal could be held so responsible for the costs award. With that said, there was a small mathematical error such that the costs award was reduced to $48,065.41—with appellate courts frequently making such a change so as to end the case and not lead to an unnecessary remand.

Requests For Admissions: Orange County Water District Decision Now Partially Published

Reliance On Expert Retained Opinions Can Demonstrate Reasonable Bases For RFA Denials.

           On December 22, 2018, we posted on Orange County Water District v. The Arnold Engineering Co., Case No. D070763 (4^th Dist., Div. 1 Dec. 19, 2018; partially published Jan.10, 2018), which was unpublished at the time. The appellate court reversed a hefty costs-of-proof sanctions award for denial of RFAs because expert opinions supported the RFA denials in some instances. We can now report that this aspect of the decision was partially published on January 10, 2018. However, the unpublished decision—relating to inadmissibility of the evidentiary submissions on expert costs—was not published, although it is instructive for practitioners when facing costs-of-proof sanctions as far as what needs to be competently introduced for purposes of obtaining a “sanctions” award in this area.

Request For Admissions: $313,000 Fee And $300,000 Expert Costs Awards Under RFA Costs-Of-Proof Sanctions Provision Reversed As Reasonable Basis Existed For Some Denials And Expert Costs Not Properly Authenticated Or Competently Introduced Into Evidence

4/1 DCA Decision, Although Unpublished, Suggests That Attorneys And Experts Should Correlate Their Time To Specific RFA Work So It Can Be Properly Allocated.

            Orange County Water Dist. v. The Arnold Engineering Co., Case No. D070763 (4^th Dist., Div. 1 Dec. 19, 2018) (unpublished) is an RFA costs-of-proof sanctions battle arising out of the North Basin Groundwater Protection Project contamination suit which has been brewing for a long time in Orange County Superior Court, Complex Division. After trial, defendant asked for costs-of-proof sanctions for certain District denials of RFAs to the tune of $2.5 million in fees and $400,000 in expert costs. After the lower court voiced some concerns, defendant lowered the request, respectively, to $650,000 and $300,000. Over District’s opposition, the lower court eventually awarded $313,000 in fees and $300,000 in expert costs for the RFA denials.

            The 4/1 DCA reversed and remanded.

            It initially rebuffed District’s advocacy of an elevated malicious prosecution standard in the CCP § 2033.420 area, reaffirming that abuse of discretion is the proper review standard. “The relevant question is whether the litigant had a reasonable, good faith belief he or she would prevail on the issue at trial. [Citation omitted.] Consideration of this question requires not only an assessment of the substantiality of the evidence for and against the issue known or available to the party, but also the credibility of that evidence, the likelihood that it would be admissible at trial and persuasive to the trier of fact, the relationship of the issue to other issues anticipated to be part of trial (including the issue's importance), the party's efforts to investigate the issue and obtain further evidence, and the overall state of discovery at the time of the denials and thereafter. Because the trial court supervises discovery and presides over trial, it is in a much better position to weigh these considerations and decide whether, in its discretion, the party who made the denials should be responsible for costs of proof on the issue.” (Slip Op., p. 29.)

            However, it did find that discretion was abused on awarding costs-of-proof sanctions on certain District RFA denials because it had a reasonable basis to deny based on percipient witness testing, undisputed scientific evidence, and opinions from qualified expert witnesses. So, the matter was reversed and remanded.

            Beyond that, the appellate court also reversed the $300,000 expert cost award, providing some instructive observations for attorneys and experts as far as the type of billing which should be employed to obtain costs-of-proof sanctions. Here, some of the work was allowable and some of it was not—meaning apportionment was necessary. It quoted from the Weil & Brown pre-trial practice treatise in recommending that attorneys and experts correlate their billing work to the RFA denial/proof which is at issue. The appellate court also found that the expert costs were incompetently introduced into evidence, because the attorney tried to authenticate the expert work. The attorney could testify that the invoices were paid, but could not attest to the work performed—evidentiary infirmities which were similar to those discussed in our posts on the Copenbarger decision [No. 9 of our 2018 Top Decisions] and on the Eith decision [see our December 19, 2018 post].

Appeal Sanctions, Requests For Admission: Litigant’s Failure To Show Why Costs-Of-Proof Sanctions Were Erroneous Drew Appeal Sanctions Of $32,960.70

We See A Growing Trend Of Appellate Sanctions In Recent Cases.

            Appellant in Knudson v. Ryer, Case No. A149532 (1st Dist., Div. 5 Dec. 17, 2018) (unpublished) failed to show why RFA costs-of-proof sanctions under CCP § 2033.420 should be reversed based on deficient analysis in the appellate briefing. That led the DCA to find the appeal frivolous, assessing $32,960.70 jointly and severally against plaintiff and plaintiff’s counsel and in favor of the respondent—a growing trend if you look at our posts in the last couple of months!

Request For Admissions, Section 998: Plaintiff Insured Losing Insurance Breach/Implied Covenant Lawsuit Had To Pay State Farm $167,861.50 In Costs-Of-Proof Sanctions For RFA Denials And $50,664.44 In Expert Witness Fees After 998 Offer Rejected

Substantial Costs Awards Are Becoming More Prevalent In Corporate Defendant Type Situations.

            In several recent posts in the last few months, we have noted a trend for personal injury or consumer plaintiffs to suffer adverse costs awards of a substantial nature. This, of course, counsels that CCP § 998 offers must be carefully assessed and that request for admissions need to be candidly answered. This next case continues the trend we have been reporting on.

            Huang v. State Farm General Ins. Co., Case No. B276878 (2d Dist. Div. 2 Sept. 27, 2018) (unpublished) was a situation where plaintiff insureds should have been aware of facts showing that damages to their residence resulted from long-term settlement rather than vibrations from some demolition work. Insured denied requests for admissions despite having prior reports and facts showing such inquiry notice and rejected insurance company’s pre-trial CCP § 998 offer to pay plaintiffs $5,000, with each side bearing their own attorney’s fees and costs.

            This conduct had disastrous consequences. The lower court granted summary judgment on the breach of implied covenant claim, and the jury found in favor of the defense on the contract claim. Then, the trial judge granted RFA costs-of-proof sanctions of $167,861.50 and post-rejection 998 expert witness fees of $50,664.44 (the total requests by State Farm).

            The appellate court affirmed based on the deferential abuse of discretion standard.   Plaintiffs did have enough data to know that preexisting damage was the culprit rather than the demolition vibrations. Even though some billings were redacted, plenty of substantiation was presented so that RFA costs-of-proof sanctions could be “settled” by the lower court as far as amount. The reasonableness of the 998 offer is not based on plaintiffs’ subjective belief but on information that was known or reasonably should have been known by them—and, in this case, they had lots of expert witness reports and other information to evaluate the offer and State Farm’s belief that their case was not worth much.

Requests For Admissions: Defendant Properly Not Penalized With Costs-Of-Proof Sanctions Where It Had Reasonable, Good Faith Basis To Deny RFAs In Very Factually-Oriented Negligence Case

Defense Had Lay And Expert Witnesses, Which If Believed, Supported Its Case, Even Though It Ultimately Lost.

            Grotenhuis v. Golden Gate Bridge, Highway & Transportation District, Case No. A151781 (1^st Dist., Div. 3 June 15, 2018) (unpublished) was a case where a trial judge denied a costs-of-proof RFA motion after plaintiff won a contested negligence case. The major takeaways are two in number as far as defeating RFA costs-of-proof sanctions, which are increasingly being used by litigants to gain attorney’s fees and costs in cases where they are not recoverable under traditional fee/costs entitlement principles. The two takeaways are: (1) make sure you have lay and expert witness supporting your defense case; and (2) make sure you have at least one defense where trial and appellate judges believe you had a nice chance to win, even if you ultimately lose.

            What happened here is that defendant District lost a wrongful death suit by a plaintiff son whose mother suffered injuries leading to death when a District bus struck her in an intersection. Although the jury decided a negligence action in favor of plaintiff son, the theories on both sides were diametrically polar opposite in nature. Plaintiff’s son, for his mother, claimed she had the right of way in an intersection as a pedestrian, and that the District bus was speeding and hit her. In contrast, District basically contended that mother improperly ran into the intersection with her head down, colliding into the bus (meaning no liability or at least comparative negligence reduction for mother’s actions). Plaintiff had propounded requests for admissions, asking the defendant to admit liability in three ways—basic negligence, causation, and lack of comparative negligence. After the jury verdict, plaintiff moved for costs-of-proof sanctions based on the RFA denials, but the trial court refused to award them.  

            Although the jury verdict was affirmed on appeal, plaintiff cross-appealed the denial of costs-of-proof sanctions under CCP § 2033.420. This provision allows a trial judge to award fees and costs narrowly tailored to request for admission denials which are proven opposite at trial, but with certain exceptions—the main exception being that these sanctions are not warranted where the denials were reasonable and made in good faith. Here, the trial and appellate judges concluded that the negligence case was contested heavily, that the defense had lay and expert witnesses (which if believed) could have led to a different result, and that the comparative negligence issue given mother’s possible “charging of the bus” was a real contested issue. The reviewing court sustained the denial of costs-of-proof sanctions.

            So, the moral here, if you are the defense, is to make sure you have witnesses and a theory which would support denial of the requests for admissions. If so, you likely will prevail on this issue as the defense did in Grotenhuis.

Request For Admissions: $56,700 Proof-Of-Sanctions Fee Award Affirmed On Appeal

Lack Of Reporter’s Transcript Sealed The Result.

            In Ayoub v. Candee, Case No. D073279 (4^th Dist., Div. 1 May 31, 2018) (unpublished), adjoining rural property owners in Temecula got into an “ado” regarding easements. Eventually, the losing parties/appellants were hit with $59,700 in attorney’s fees for making unjustified requests for admission denials under CCP § 2033.420.

            The attorney’s fees proof-of-sanctions award was affirmed.

            The real problem here was the lack of an adequate record. No reporter’s transcript of the hearing on the award was provided, such that any merits challenged was forfeited. Beyond that, the challenges to specific time entries being causally related seemed to be reasonable to the RFAs subject to the award, again based on the sparse record provided by appellants. Affirmed.

Private Attorney General, Requests For Admissions, Section 998: Former Employee Plaintiff Winning $50,000 In Damages Properly Denied Costs Of Proof Sanctions And Private Attorney General Fees

Trial Judge Also Properly Awarded Costs To Defense Under CCP § 998 Offer.

            One of the beauties of posting on unpublished decisions is to see the array of cross-over issues in fees/costs issues at the California state level.  Chamblee v. Inland Behavioral and Health Services, Inc., Case No. D073121 (4^th Dist., Div. 1 Apr. 19, 2018) (unpublished) illustrates such issues which must be routinely resolved by both trial and appellate judges.

            There, ex-employee sued employer for constructive termination based on illegal and improper conduct, with a jury verdict returning a $50,000 total damages verdict based on her belief the conduct was illegal/improper but with no jury finding to the effect that there was any illegal/improper conduct having been committed.  Earlier, the defense had made a CCP § 998 offer to settle for $75,000, along with terms indicating that an arbitrator would determine any pre-offer costs/fees as well as a general release of claims made in prosecuting the action—an offer rejected by plaintiff.  After the jury verdict, the trial court made three decisions: (1) denied plaintiff’s costs-of-proof sanctions for denying certain requests for admissions relating to illegal/improper practices; (2) denied plaintiff’s request for an award of attorney’s fees based on a private attorney general theory; and (3) awarded the defense certain costs based on plaintiff’s rejection of the 998 offer.  Plaintiff appealed, but all of the post-trial rulings were affirmed.

            Number one—costs of proof sanctions for denying certain requests for admissions—because the jury never determined the practices were illegal, RFA denials of admissions on this issue were made reasonably and in good faith.

            Number two—private attorney general fees—because plaintiff was pursuing her own financial interests and the jury never made a “public interest” finding that any practices were illegal/improper, no findings were made of a significant nature to the general public.

            Number three—section 998 costs-shifting—the offer to have the pre-offer costs determined by an arbitrator, rather than a court, did not make a whit of difference and the general release was limited to claims in the lawsuit.  The fact that the offer was made pre-suit, in this case, made no difference because plaintiff had ample opportunity to evaluate her claims, countering at $1 million a few days later so as to show she had made a risk assessment of the case.

Request For Admissions: Heavily Contested Case On Liability, Causation, And Damages Justified Denial Of Successful Plaintiff’s Cost Of Proof Sanctions Under CCP § 2033.420

4/1 DCA Actually Provided A Circumstance-Prone “Rule Of Thumb” To Use.

            In Markel Ins. Co. v. Controlled Environment HVAC, Inc., Case No. D073125 (4^th Dist., Div. 1 Apr. 4, 2018) (unpublished), plaintiff brought a res ipsa loquitur negligence case, one which was heavily contested on liability, causation, and damages—especially given the defense took the position that someone might be liable, but not our defendants.  Plaintiff ultimately prevailed and sought costs of proof sanctions under the RFA denial statute, CCP § 2033.420, based on the defense denial of actually proof-ending RFAs.  The trial judge refused to award such costs (which include attorney’s fees), finding the defense had reasonable grounds to believe defendants would prevail at trial—an exception which will prevent the award of costs of proof sanctions.

            The 4/1 DCA affirmed, based on the deferential abuse of discretion standard showing that the defense presented much proof, which if believed, could have led to a different result.  However, Justice Dato on behalf of the appellate panel did provide us all with somewhat of a pragmatic “rule of thumb” to keep in mind in this area:  costs of proof sanctions are usually imposed where the losing party offers no evidence or insignificant evidence to buttress an earlier denial, which did not happen in this case.  Instead, the defense offered their own witness, three experts, and surveillance video to challenge core issues of liability, causation, and damages covered by the RFAs—hardly the circumstances which would nod in favor of section 2033.420 “sanctions” (which are not penalties and not awarded simply because one party prevailed in the wake of a sturdy defense from the adverse parties).   

Request For Admissions/Section 1717: Trial Judge Correctly Denied Proof Of Costs Sanctions And Attorney’s Fees To Prevailing Parties

Losing Side Had Reasonable Cause To Deny RFAs And Lack Of Agreement With Fees Clause Precluded 1717 Recovery.

            In Preferred Auto Dealers Self Ins. Program, Inc. v. Anderson Enterprises, Inc., Case Nos. A148518 et al. (1^st Dist., Div. 4 Mar. 2, 2018) (unpublished), PADSIP (a group self-insurer of workers’ compensation claims) lost a breach of contract claim against various defendant members/private employers in complicated litigation involving group and membership exposure under the workers’ compensation security scheme.  Certain members then moved for an award of attorney’s fees under the RFA costs-of-proof sanctions provision (CCP § 2033.420) and under a contractual fees clause theory (Civil Code § 1717).  The trial court denied the fee requests, prompting an appeal by several members. 

            Those determination were upheld on appeal.

            With respect to the RFA costs-of-proof sanctions request, the appellate court agreed with the trial court’s conclusion that, although PADSIP’s legal theory of liability was erroneous, it was not unreasonable and based on a plausible interpretation of application regulations.  Also, PADSIP was found to hold a good faith belief in the validity of its case.  One membership group claimed there were discovery abuses in the case, but the Court of Appeal observed that CCP § 2033.420 in not a penalty or a discovery sanction for misuse of the discovery process, but rather a procedural compensatory mechanism to expedite trial by reducing the number of triable issues that must be adjudicated.

            The problem with the Civil Code section 1717 theory was that there was no contract or agreement with a fees provision.  Without a contractual predicate, no fees were recoverable.

Requests For Admissions: Costs-Of-Proof Sanctions Denied Where There Was A Partial Denial And No Motion To Compel Further Responses Was Brought

CCP § 2033.420(b)(1) Exception Prevented Sanctions Being Assessed.

            This next decision, Magco Drilling, Inc. v. Natoma Family Housing, L.P., Case No. A151586 (1^st Dist., Div. 1 Jan. 29, 2018) (unpublished), is a case reining in costs-of-proof sanctions under CCP § 2033.420 in a situation where there was a partial denial and the plaintiff tailored objections/partial denials in the correct manner.

            In this one, the defense sent out RFAs in a mechanic’s lien foreclosure dispute, garnering responses that plaintiff lacked sufficient information to either admit or deny the RFAs.  No challenges were made to the RFA responses, although the defense later obtained summary judgment against plaintiff and then moved for costs-of-proof sanctions to the tune of $55,245 in attorney’s fees in connection with efforts to prove that plaintiff’s RFA responses were not candid.

            The trial judge denied the motion for costs-of-proof sanctions, which was affirmed on appeal.

            The appeal focused on a costs-of-proof sanctions exception where “[a]n objection to the request was sustained or a response to it was waived” under CCP § 2033.420(b)(1).  In this situation, plaintiff never moved for a further response even though the defense objection was followed by a partial denial.  So, that left the lower court with discretion to decide that a motion to compel a further response was necessary in light of the partial denials by the defense.

            BLOG OBSERVATION—The reasoning in this case may provide the defense with a basis to avoid costs-of-proof sanctions, as long as the RFA responses are tailored well when it comes to denying the RFA requests.  

Requests For Admissions: Court Of Appeal Affirms $227,213.50 Costs Of Proof Sanctions Assessed Below

Appellant Did Not Meet Its Burden Of Showing Why Claims Costs Were Unrelated To RFAs Targeted In the Costs-Of-Proof Sanctions Motion.

            Code of Civil Procedure section 2033.420(a) allows the trial court to impose costs-of-proof sanctions against a party failing to admit requests for admissions (RFAs) unless certain exceptions exist.  MK Greentea Limited, Inc. v. Raskin Ritter LLP, Case Nos. B271801/B275273 (2d Dist., Div. 2 Jan. 16, 2018) (unpublished) shows how the appellate court sustained a substantial costs-of-proof sanctions to the tune of $227,213.50 in favor of a party, especially given what the other side did.  In short, the other side failed to show at the trial court level that the specific claimed costs were unrelated to RFAs targeted by the successful party’s motion.  Without such a showing, the substantial costs-of-proof sanctions order was affirmed on appeal. 

Requests For Admissions: Losing FEHA Plaintiff Properly Denied Request For Costs Of Proof Sanctions Of $239,967

Plaintiff Did Not Address All of the RFA Costs of Proof Sanctions Requirements, So Post-Trial Motion Denial Affirmed On Appeal.

            If you are an appellant on an appeal, you must focus on the trial court’s written and/or tentative decision, concentrating on showing how each basis is legally and prejudicially erroneous.  Appellant’s failure to do so in White v. County of Los Angeles, Case No. B264675 (2d Dist., Div. 3 Nov. 8, 2017) (unpublished) was fatal on appeal.

            Plaintiff brought a FEHA/related claims case, losing many claims on a trial judge nonsuit and the remainder after a jury trial.  Even in the wake of the loss, plaintiff filed a motion to obtain $239,967 in costs-of-proof sanctions for the defense denial of 16 requests for admissions under Code of Civil Procedure section 2033.420.  The trial judge denied it in a detailed decision.

            Plaintiff’s appeal was unsuccessful.  The primary reason was that appellant only relied on a simplistic theory that the defense denied certain RFA facts which plaintiff proved at trial.  This did not work because appellant failed to address responding party’s reasonableness/good faith, the materiality/importance of the RFAs, and requesting party’s proof of causation by only asking for expenses which were tied to RFA-related work.  Expense denial affirmed.

Employment, Indemnity, Reasonableness Of Fees, Requests For Admissions: Four Unpublished Decisions On July 11, 2017 Highlight These Issues

Fee Reasonableness—Neman Real Estate Investments, LLC v. Oken. Case Nos. B263196/B263718 (2d Dist., Div. 4 July 11, 2017) (unpublished).

            In this first one, defendants won a commercial property dispute and were awarded costs/fees of $619,566.75 based on a “blended” $495 hourly rate to L.A. real estate litigators that happened to be “below market.”  The appellate court affirmed, rejecting arguments that the rates allowed had to those charged to clients, had to take into account third party indemnity or insurance obligations, or had to be based on “non-blended” rates.

Employment—Allyn v. Fallbrook Union Elementary School Dist., Case No. D068325 (4^th Dist., Div. 1 July 11, 2017) (unpublished).

            In the second case, former employee won a $1.2 million retaliation verdict against school district, but the trial judge denied employee’s fee request of $791,750 under Labor Code section 218.5(a) against the school district.  The appellate court agreed that the fee request under section the Labor Code section did not apply to a public school district.

Employment/Requests For Admissions -- Harris v. InboundProspect, Inc., Case No. G052797 (4^th Dist., Div. 3 July 11, 2017) (unpublished) (author:  Fybel, J.).

            Case number three involved FEHA fees of $3,751.20 and RFA “costs of proof” sanctions under CCP § 2033.420 of $4,951.30 against a plaintiff losing a suit against a defendant because the defendant was not an employer.  The defense had sought exposure ranging from $24,784.44 - $60,894.06, such that the appellate court found no abuse of discretion on the amount of fees/costs awarded given that plaintiff’s financial position was explored by the lower court.  Plaintiff could not support its “employee” position.

Indemnity—Marin Schools Ins. Authority v. Schools Excess Liability Fund, Case No. A145365 (1^st Dist., Div. 5 July 11, 2017) (unpublished).

            This last decision involved defendant in an indemnity action prevailing on a summary judgment motion.  The issue was whether the trial judge properly awarded fees under CCP § 1038 to the defense because the action lacked reasonable cause and was not brought in good faith.  Although the action was thin, the summary win was not dispositive and did not suffice to establish that the action was frivolous in nature.  Fee award reversed.

Requests For Admissions: Attorney’s Fees Properly Awardable As A Condition To Granting Party Permission To Withdraw Admissions Mistakenly Made.

 

Issue Was Whether Attorney's Fees Were Costs Under CCP § 2033.300.

 

    The trial court in Rhule v. WaveFront Technology, Inc., Case No. B267359 (2d Dist., Div. 5 Feb. 23, 2017) (published) permitted plaintiff to withdraw admissions he mistakenly made to two defense requests for admissions, especially since the withdrawal was done after plaintiff was deposed (meaning that further questioning would be necessitated given the RFA admission withdrawals). Code of Civil Procedure section 2033.330 provides that a trial court can allow such withdrawal but "may impose conditions on the granting of the motion that are just, including, but not limited to, the following: (1) An order that the party who obtained the admission be permitted to pursue additional discovery related to the matter involved in the withdrawn or amended admission. (2) An order that the costs of any additional discovery be borne in whole or in party by the party withdrawing or amending the admission." The trial judge accordingly ordered that plaintiff pay the defense $8,125 in attorney's fees (out of a requested $10,000), likely for the fees to be incurred in retaking plaintiff's deposition and fees on fees to file the motion to obtain fees under section 2033.330.

 

    Plaintiff's appeal was unsuccessful. Although the lack of a reporter's transcript hampered review (a subject we will post on soon in a special post), the 2/5 DCA determined that "costs" under section 2033.330 did encompass attorney's fees. Beyond that, the omnibus "just" and "not limited to" language in the statutory provision also made imposition of attorney's fees a reasonable "additional" condition of relief.

Arbitration/Requests For Admission: Substantial RFA Costs-Of-Proof Sanctions Awarded By Arbitrator Correctly Not Confirmed As A Judgment

 

Arbitration Submission Agreement Did Not Envision Fees And Costs At All.

    An arbitrator in Centinela-Freeman Emergency Med. Associates v. Hispanic Physicians IPA Med. Corp., Case No. B258015 (2d Dist., Div. 1 Dec. 8, 2016) (unpublished) awarded request for admission costs-of-proof sanctions under CCP § 2033.420.  No trifling amount was awarded, because the RFA sanctions comprised $176,393.50 in attorney’s fees for RFA denials.  The trial court refused to confirm this component of the arbitration award, a ruling affirmed by the 4/1 DCA.  The parties’ arbitration submission agreement was quite narrow, not providing for an award of fees and costs.  This lack of breadth supported not confirming the RFA costs-of-proof award.

Requests For Admission: RFA Cost-Of-Proof Awards Are More Often Denied Than Affirmed On Appeal

Check Out Our Sidebar Category “Requests For Admission.”

     Under our sidebar category “Requests for Admission” we have posted some five dozen times about published, as well as unpublished, appellate decisions affirming or denying a trial court’s grant or denial of cost-of-proof sanctions for failure to admit requests for admission.  After doing this for eight years, we can now make a general observation:  appellate courts more often affirm denials and reverse grants than they affirm grants and reverse denials of cost-of-proof sanctions.  True, parties denying RFAs do sometimes get hit with costs-of-proof, and the award can be significant indeed.  However, in our posts, nearly twice as many appellate cases affirm denials or reverse grants as compared to cases that affirm grants or reverse denials of cost-of-proof sanctions.

     There are plenty of reasons for denying costs-of-proof, and several are baked right into the statute:

      “(1) An objection to the request was sustained or a response to it was waived under Section 2033.290.  [Motion for compelling further responses].

        (2)  The admission was of no substantial importance.

       (3)  The party failing to make the admission had reasonable ground to believe that that party would prevail on the matter.

       (4)  There was other good reason for the failure to admit.”  Cal. Code of Civ. Proc., section 2033.420(b).

     Based on a review of our posts on the subject, we can also include some specific reasons that (largely) build on the statutory exemptions:

• A demurrer was granted so no costs-of-proof were involved.
• A matter was stipulated to so no costs-of-proof were involved.
• A matter was denied, but later admitted – for example in a deposition – so no costs-of-proof were involved.
• The request for admission was propounded before there was a reasonable opportunity to do discovery, so that there was a reasonable basis for denying the request.
• The denials were not unequivocal, and the propounding party failed to follow up with a motion.
• The request for fees targeted an attorney, but only a party is liable for costs-of-proof.
• Form interrogatory responses [17.1] did a reasonably good job of explaining the basis for a denial.
• The party failed to establish true costs-of-proof by failing to allocate attorney time to the actual matter that was proved at trial.
• Costs-of-proof were denied by the trial court, and the record on appeal was too deficient to mount a challenge to the denial.
• A preemptive federal statute limited remedies that a party could recover.

    

Costs, Requests For Admissions: Plaintiff Winning Won One Out Of Ten Claims Entitled To Routine Costs

 

However, RFA Costs Of Proof Sanctions For Plaintiff Were Reversed.

    In Watkins v. Central Freight Lines, Inc., Case No. A145579 (1st Dist., Div. 1 Oct. 26, 2016) (unpublished), plaintiff won a $3,217.50 judgment against defendant based on a meal break claim, but lost nine other unrelated claims based primarily on discrimination.  The lower court awarded plaintiff $41,300.28 in routine costs as well as $31,596 in costs-of-proof sanctions for allegedly improperly denying a request for admission later proven at trial.

    This one was a “split” verdict on appeal, with the appellate court affirming the routine costs award but reversing the costs-of-proof sanctions award.

    With respect to the routine costs award, plaintiff did receive a net monetary recovery, with Michell v. Olick, 49 Cal.App.4th 1194, 1199-1201 (1996) being “on all fours” because it recognized that prevailing on one claim with a net recovery could still entitle a plaintiff to costs even if the defense obtained dismissal of other claims where the successful claims was unrelated to the other dismissed claims.  In reaching this result, the appellate court found that the reasoning of Sears v. Baccaglio, 60 Cal.App.4th 1136 (1998)—which held that an award of costs in these situations was “discretionary” rather than mandatory in nature—did not compel reversal because at least one other appellate court had disagreed with Sears on this point (see David S. Karton, A Law Corp. v. Dougherty, 231 Cal.App.4th 600, 613 (2014)) and the lower court’s decision was no abuse of discretion even under the Sears test.  Defendant also argued that it was the successful party based on obtaining a dismissal of other claims, but the reviewing court found that this likely only relates to dismissal of an entire action (Brown v. Desert Christian Center, 193 Cal.App.4th 733, 738 (2011)) and was at odds with the result reached in Michell.

    That brought the appellate court to the RFA costs-of-proof sanctions award.  The award was found to be an abuse of discretion given that the defense fell within an exception—it had a good faith basis to deny the RFA.  The defense did a good job of opposing the RFA sanctions motion below by showing it made an inquiry of an individual before making the RFA denial, which the appellate court found to be a credible basis for denying the RFA. 

Requests For Admission: Plaintiff’s Denial Of Two Material Requests For Admissions Justified Costs Of Proof Sanctions After Defendant Proved Facts In Summary Judgment Proceeding

 

$2,890 In Costs Of Proof Sanctions Affirmed On Appeal.

    We have blogged quite a bit on costs of proof sanctions under Code of Civil Procedure section 2033.420, with cases collected on our home page under the category “Requests For Admission.”  Most involve situations where facts were proved contrary to RFA denials at an actual trial.

    However, we would refer our readers to Nicolosi Distributing, Inc. v. Annex Santa Clara, Inc., Case No. A144736 (1st Dist., Div. 2 Oct. 13, 2016) (unpublished) for an unpublished decision which applied costs of proof sanctions in a summary judgment context—one we have not seen before.  There, in an automotive parts distribution dispute, a defendant won summary judgment against suing plaintiff, garnering $2,890 in costs of proof sanctions based on two unjustified denials of two material facts.   Defendant did prove these facts as a matter of law in a summary judgment proceeding, with both the trial and appellate courts finding that this “paperless trial” context did not make any difference.  Makes sense, given that a summary judgment is the equivalent of a trial and section 2033.420 does not limit costs of proof sanctions to just trial situations.