Denial of RFA Costs-of-Proof Sanctions to the Defense Also Sustained.
Both sides of the litigation in Terry v. Myers, Case Nos. B216925/B220128 (2d Dist., Div. 3 Oct. 29, 2012) (unpublished) probably went away very unhappy with the results of the Civil Code section 1717 fee award and the refusal to award costs-of-proof sanctions for plaintiff’s denial of pretrial requests for admissions.
The case involved a plaintiff “investor” who provided a promissory note to an alleged defendant promoter, both of whom were apparently scammed by third parties. Plaintiff sued for breach of a note (with a fees clause) and fraud (alleging he was the victim of a Ponzi scheme). The trial court found that plaintiff failed to meet his burden on the litigated claims. The lower court then did two things: (1) awarded defendant $41,117 out of a requested $388,190 under section 1717; and (2) refused to award RFA costs-of-proof sanctions to the defense in the requested amount of $238,190 arising out of plaintiff’s pretrial denial of certain RFAs.
Both orders were affirmed on appeal.
The lower court did not apply an inappropriate sliding scale of fault, after determining the $41,117 was justified because defendant won on only a small number of claims. Because it could determine that the contract and tort theories were not interrelated and involved different proof presentations, no discretion was abused by discounting for the proper claim “victories.”
With respect to the RFA denials, the Court of Appeal determined that plaintiff had a reasonable basis to deny many of them, given that they involved legal conclusions rather than facts. This “reasonable belief” ground is an express exception that will justify not imposing RFA costs-of-proof sanctions. (Code Civ. Proc., § 2033.420(b)(3)-(4).)