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Case of the Month Archive

January 2022

Attorney fees and costs awarded against property owner for his failure to admit certain requests for admission. . .

 

In a partially published affirmance, the First District held that the trial court did not abuse its discretion by awarding attorney fees and costs per CCP §2033.420 [if a party unjustifiably denies requests for admission (RFA) and the requesting party ultimately proves the matter asserted, the requesting party may recover reasonable expenses, including attorney fees, necessary to establish that proof], where trial court concluded there were no reasonable grounds for plaintiff to deny the RFA and even though trial court previously denied Defendant's motions for summary judgment and directed verdict.

 

Spahn v. Richards

(November 30, 2021)

Court of Appeal 1 Civil A159495 (Div 3) 72 Cal.App.5th 208, 287 Cal.Rptr.3d 81, 2021 FA 2014, per Rodriguez, J. Alameda County, MacLaren, J., order affirmed. For Appellant (Jeffrey Spahn): Marc R. Stimpert and Andrew C. McClelland. For Respondent (Dan Richards): Kenneth S. Katzoff, Robert Ross Riggs, and Nicole Campbell. CFLP §D.52.

 

In 2014, Jeffrey Spahn, a licensed attorney, bought property with the intent to demolish the house on it and build a new residence. In May 2015, Jeffrey hired Ajay Manthripragada to design the home and together they interviewed Dan Richards, a licensed contractor. Dan agreed to demolish the existing house for $12,500. Dan did not agree to build Jeffrey's home at this time, but the parties continued to discuss the project over the ensuing months. After the meeting, Jeffrey and Ajay provided Dan with preliminary drawings marked with "NOT FOR CONSTRUCTION" and a blank schedule and no material specifications. Dan asked for contractor plans, but Ajay did not provide them.

 

On June 30, 2015, Dan signed a written contract for the demolition work and completed the project the same day. On July 4, 2015, Ajay told Dan that he and Jeffrey were waiting for Dan's bid for the construction project. That same day, Jeffrey told Ajay that they were "'looking into other options to hire contractors.'" That month, Jeffrey and Ajay considered written estimates from other contractors. These estimates ranged from $600,000 to $800,000. Meanwhile, Dan submitted a contractor qualification request with Jeffrey's lender.

 

On July 21, 2015, Jeffrey told Ajay that "'I think we have a committed contractor[.] [W]e just need to tread lightly until we have a contract signed.'" A week later, Jeffrey and Ajay prepared a proposed construction contract in which the total cost was $515,000. Jeffrey and Ajay arrived at these estimated costs based on proposals from other contractors. In August 2015, Jeffrey visited with Dan at Jeffrey's office and presented him with the proposed construction contract. Dan stated that he was "'flabbergasted' over the fake budget," declined to sign the contract, and informed Jeffrey that he was not going to pursue the construction project. As a result, Jeffrey hired another contractor to build the residence at a cost of $1 million.

 

In 2017, Jeffrey filed a lawsuit against Dan, alleging breach of contract, breach of implied covenant of good faith and fair dealing, and promissory estoppel. According to the complaint, Jeffrey alleged that in June 2015 the parties entered into an oral contract in which Dan agreed he would complete the construction project for $515,000. During the discovery phase, Dan propounded requests for admission (RFAs), specifically requesting that Jeffrey admit the parties did not enter into an oral contract. Jeffrey denied the RFAs. The trial court denied Dan's motion for summary judgment and later denied Dan's motion for directed verdict but noted "it was 'very close.'" The jury concluded there was no contract and that Dan did not make a promise to perform the construction project. In September 2019, the trial court entered judgment in favor of Dan.

 

Dan then moved for attorney fees and costs per CCP §2033.420 [if a party unjustifiably denies an RFA and the requesting party ultimately proves the matter asserted, the requesting party may recover reasonable expenses, including attorney fees, necessary to establish that proof]. Dan argued that Jeffrey had no reasonable grounds to deny his RFAs while Jeffrey argued that the "'reasonable ground'" for denial was based on Dan's conduct, which Jeffrey alleged was consistent with an oral agreement, including Dan submitting a contractor qualification request with Jeffrey's lender. In December 2019, the trial court issued an amended judgment, granting Dan's motion and awarding Dan $239,000 in attorney fees and costs. Jeffrey appealed, but the First District affirmed.

 

The rule regarding attorney fees against the party denying an RFA. . .
The panel first noted that CCP §2033.420 provides that if a requesting party proves the truth of an RFA previously denied by the other party, the requesting party may seek reasonable expenses incurred in making that proof, including reasonable attorney fees. Statutory exceptions exist and such costs may not be awarded if: (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.

 

Be careful what you deny. . .
The justices agreed with the trial court that Jeffrey did not have reasonable grounds to believe he would prevail on the issue of whether a contract existed. First, Dan had not submitted a written bid for the construction project, either before, during, or after the alleged date of the oral contract. The justices further noted that Dan could not have submitted a written bid since the preliminary drawings he was provided were incomplete and not suitable for construction. Second, at no time during their discussion did the parties address specific costs or a payment schedule. In fact, Jeffrey and Ajay had "'made up'" information about the construction costs and hoped Dan would sign the agreement. And third, after the alleged date of oral contract, Jeffrey and Ajay were soliciting bids from other contractors and themselves expressed uncertainty whether they had a "committed contractor."

The justices also rejected Jeffrey's request that the court adopt a per se rule that a party who defeats a motion for summary judgment conclusively establishes that the party reasonably entertained a good faith belief that he would prevail on trial. In so holding, the justices noted that the trial court must liberally construe evidence presented in opposition to a motion for summary judgment and resolve doubts in favor of the party opposing the motion, whereas the trial court is not obligated to give such deference at trial.

Similarly, the justices rejected Jeffrey's argument that the denial of Dan's motion for directed verdict precludes the trial court from later awarding costs of proof. Again, the justices noted that when ruling on a motion for directed verdict, a trial court does not have the power to weigh evidence and may not consider the credibility of witnesses. Instead, the trial court must "indulge 'every legitimate inference from such evidence in favor of [the party opposing the motion].'" Accordingly, the First District affirmed the amended judgment awarding Dan attorney fees and costs.

 

 

COMMENT:

  

In the unpublished part of its opinion, the First District rejected Dan's motion to dismiss in which he argued that the appeal was untimely because it was filed more than 60 days after notice of entry of the original judgment (the judgment that did not award costs of proof). Instead, the justices held that the amended judgment (the judgment that awarded costs of proof) superseded the original judgment for purposes of filing notice of appeal.

 

Library References
Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group) ¶¶11:276 et seq.

 

 

 
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