Requests for Admissions and Recovering Costs of Proof
Danielle Macedo, Law Clerk
Schwartz Semerdjian Cauley & Moot LLP
Are you using requests for admissions (RFAs) to recover your fees after trial? If not, you should be. Under California law, attorney’s fees are typically not recoverable in the absence of an agreement between the parties unless “specifically provided for by statute.” Cal. Code Civ. Proc., § 1021. Additionally, in the limited instances where fees are authorized by statute, they are usually reserved for the prevailing party. See, e.g., Cal. Code Civ. Proc., §§ 527.6, subd. (s), 1021.4, 1029.8, subd. (a); Cal. Civ. Code, §§ 1780, subd. (e), 2983.4. However, attorney’s fees may be awarded in practically any case to any party that propounds RFAs and proves the responding party wrongfully failed to make an admission without good cause.
Requests for Admissions
The RFA “mechanism” is a “dispute resolution device” predominately used to resolve triable issues in the early stages of litigation to avoid wasting time at trial. Orange County Water Dist. v. Arnold Engineering Co. (2018) 31 Cal.App.5th 96, 115. As numerous courts have noted, if a party can make an admission, it should do so during the discovery process rather than at trial. Bloxham v. Saldinger (2014) 228 Cal.App.4th 729, 752. Parties may obtain discovery by making written requests that another party admit “the truth of specified matters of fact, opinion relating to fact, or application of law to fact.” Cal. Code Civ. Proc., § 2033.010. If the responding party lacks sufficient personal knowledge, it must make a reasonable investigation into the facts prior to responding. Grace v. Mansourian (2015) 240 Cal.App.4th 523, 529.
Failure to Admit
To promote expeditious trials, the California legislature enacted a law to regulate parties that, when responding to a request, wrongfully fail to admit the “truth of any matter.” Cal. Code Civ. Proc., § 2033.420. So, what happens when you propound RFAs but the responding party wrongfully fails to make an admission? With some exceptions, which are explained below, if a propounding party proves a responding party failed to admit the truth, it may be entitled to reimbursement from the responding party for “reasonable expenses”—including attorney’s fees—“incurred in making that proof.” Id.
Notably, this rule is not merely applicable to prevailing parties. Smith v. Circle P Ranch Co. (1978) 87 Cal.App.3d 267, 275. Because costs of proof are intended to reimburse a propounding party for any unnecessary expenditures that result from proving issues unreasonably denied, any party may be awarded such costs, even if that party ultimately loses the lawsuit. Therefore, win or lose, if you can prove the responding party dishonestly or unreasonably denied an RFA, you may be compensated for costs and attorney’s fees incurred in the process of exposing the truth.
Motions for Costs of Proof
To justifiably deny an RFA, a responding party must have reasonable grounds to believe it will prevail on a given issue at trial, which “means more than a hope or a roll of the dice.” Grace v. Mansourian, supra, 240 Cal.App.4th at p. 532. Wishful thinking is not enough. Although a court cannot force a party to admit an obviously true fact, a responding party’s “mere refusal to concede [such] an issue” is a sufficient basis to award costs of proof to the propounding party. Id. An RFA denial is unreasonable even if the responding party lacks personal knowledge if it fails to make a reasonable investigation into the matter. Rosales v. Thermex-Thermatron, Inc. (1998) 67 Cal.App.4th 187, 198.
But how exactly do you get paid? If the propounding party can prove the responding party unreasonably denied an RFA, it may file a motion for costs of proof. See Cal. Code Civ. Proc., § 2033.420; Estate of Manuel (2010) 187 Cal.App.4th 400, 403–05. The moving party must identify whom it is seeking costs from and must submit a memorandum of points and authorities and a declaration containing particular facts that support the amount sought. Thomas, Cal. Civil Courtroom Handbook and Desktop Reference (2018) Sanctions and Contempt, § 25:29. Ultimately, the determination of whether a propounding party is entitled to costs of proof remains within the trial court’s “sound discretion.” American Federation of State, County & Municipal Employees v. Metropolitan Water Dist. (2005) 126 Cal.App.4th 247, 267.
Exceptions to the Rule
But what about those exceptions? Upon proper filing of a motion for costs of proof, the court is required to award costs unless the responding party can show (1) the court sustained its objection to the request or the propounding party waived the right to compel a further response; (2) the admission “was of no substantial importance” to the case; (3) it reasonably believed it would prevail on the matter; or (4) it had another “good reason” for its failure to admit. Cal. Code Civ. Proc. § 2033.420. But what type of matter is of substantial importance? And what is a reasonable belief or good reason for that matter? The case law provides some guidance.
To be of substantial importance—“such that [the] trial would have been expedited or shortened if the request had been admitted”—an RFA should, at the very least, have some direct connection to a “central issue” that, if unproven, would alter the outcome of the case. Brooks v. American Broadcasting Co. (1986) 179 Cal.App.3d 500, 509. Thus, costs of proof will only be awarded where an admission is central to the disposition of the case; however, the admission need not be outcome determinative.
For a party to have reasonable grounds to believe it will prevail at trial, it must consider all “evidence, both for and against the party’s position, known or reasonably available to the party at the time the RFA responses are served.” Orange County Water Dist. v. Arnold Engineering Co., supra, 31 Cal.App.5th at p. 118. Where expert opinion is involved, the expert’s qualifications, experience, rationale, and methodology are all pertinent. See id. Where a particular response depends on sophisticated expert opinion, courts are more willing to find the responding party had reasonable ground to believe it would prevail at trial. Id. at p. 120. However, a party may not depend on a clearly unqualified expert in an attempt to avoid paying costs of proof. Id. at p. 117.
To determine whether a party had some “other good reason” for its failure to admit, courts may consider whether the responding party had a “reasonably entertained good faith belief” that it would prevail on the particular issue at trial. Grace v. Mansourian, supra, 240 Cal.App.4th at p. 529. An unreasonable but good faith belief or hope is insufficient. See id. at p. 530. A court may also consider whether the responding party made good faith attempts to “reach a reasonable resolution” regarding the particular matter or whether the responding party informed the propounding party that it made the denial in error. Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at pp. 510–11. If a responding party can establish triable issues of material fact as to that matter, a court may find it does not owe the propounding party costs of proof, even if the responding party’s claim is ultimately unsuccessful. See Carlsen v. Koivumaki (2014) 227 Cal.App.4th 879, 904.
Costs of Proof Awards
Costs of proof awards are only available against a responding party that unreasonably denies an RFA, not opposing counsel. Estate of Manuel, 187 Cal.App.4th at p. 404. When awarding costs, courts must determine the amount and reasonableness of the propounding party’s incurred expenses. Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at p. 508. Such awards are available when proof is established during the summary judgment stage or at trial. Barnett v. Penske Truck Leasing (2001) 90 Cal.App.4th 494, 498–99. However, because a propounding party may only recover expenses where it proves the truth of the relevant matter, the court will not award costs for a case that is dismissed or settles before trial. See Wagy v. Brown (1994) 24 Cal.App.4th 1, 6.
To recover, a propounding party must show it actually incurred costs of proof that directly resulted from the responding party’s failure to admit. See Garcia v. Hyster Co. (1994) 28 Cal.App.4th 724, 736–37. So, what type of expenses can you be compensated for? In making an award determination, courts consider hourly fees and time spent on the case. Because the scope of the award should be limited to the reasonable expenses incurred in proving the particular matter, any requested amounts should be segregated from other costs and fees expended to prove unrelated issues. See Wimberly v. Derby Cycle Corp., supra, 56 Cal.App.4th at p. 636–37. Keeping organized records that document expenses made in the process of proving a specific matter can increase your chances of receiving a costs of proof award.
Overall, if RFAs are not in your discovery toolbox, they probably should be. To make the most out of your RFAs, contemplate the possibility of a costs of proof award when drafting them. Properly tailoring the requests can increase your chances of being awarded fees later on. If you incurred expenses in proving the truth of a substantially important matter that was unreasonably denied by a responding party, file a motion to recover costs of proof. You may be entitled to fees even if you do not ultimately prevail at trial.
Additionally, be realistic when responding to RFAs. Take an objective approach to evaluating your client’s liability. Denying liability where there is substantial evidence to the contrary can cost your client attorney’s fees. If relevant, designate an expert to support your RFA denials for significant matters. Doing so will make it more likely the court will find that your failure to admit was due to a reasonably entertained good faith belief.