Judge John J. Kralik, Case Number: 20BBCV00444, Date: 2023-09-15 Tentative Ruling

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Plaintiff Robin Kim (“Plaintiff” or “Kim”), as sole trustee of the McIntosh Trust (“Trust” or “MT”), commenced this action against Defendants Yonatan Rabin and Liat Rabin and the company they owned and operated, Defendant Sapphire Development & Construction, Inc. (“SDC”).[1] Plaintiff alleges that the Trust owns real property located at 926 Hilldale Ave., West Hollywood, CA 90069. In 2016, the Trust, through its trustor Betty Jo Kim McIntosh and trustee Plaintiff, pursued the prospect of developing the property into residences for purposes of maximizing its value and ultimately selling the residences. The Trust alleged that it engaged the Rabins, SDC, and Defendant Joseph Bernstein to handle all aspects of the project. Plaintiff alleged that Defendants preyed on the Trust’s confidence in them and misrepresented their qualifications to perform the work.

The complaint, filed July 17, 2020, alleges causes of action for: (1) intentional misrepresentation/fraudulent inducement; (2) breach of fiduciary duty; (3) negligence; (4) unfair competition; (5) unjust enrichment; and (6) accounting.

The matter went to trial on July 5, 2023. Just prior to the empanelment of the jury, Plaintiff Kim dismissed the 5^th cause of action for unjust enrichment with prejudice. The 1^st (fraud) and 3^rd (negligence) causes of action were tried to the jury, while the Court considered the 4^th (unfair competition) and 6^th (accounting) causes of action based upon the evidence presented. The Court dismissed the fraud cause of action against Liat Rabin at the close of Plaintiff’s case.

On July 19, 2023, the jury returned a defense verdict on the 1^st and 3^rd causes of action as against all Defendants. The Court stated that based on the findings of the jury, with which the Court concurred, there was no basis upon which to grant relief under the 4^th and 6^th causes of action, and that judgement should therefore be entered for the defense. Judgment was entered on July 31, 2023.

On August 3, 2023, the Court issued a Statement of Decision regarding the 6^th cause of action for accounting.

On August 15, 2023, Defendants filed a motion for an award of attorney’s fees in the amount of $205,788, plus costs in the amount of $52,175 (less costs included but awarded as costs to Defendants as the prevailing parties).

The matter came for hearing initially on September 29, 2023. The Court ordered Defendants to file a supplemental declaration of counsel and a supplemental memorandum of points and authorities addressing why defense counsel is entitled to attorney’s fees incurred other than at trial by October 16, 2023. Plaintiff was ordered to file a responsive supplemental declaration and supplemental memorandum of points and authorities by October 20, 2023. The Court stated a reply may be submitted if necessary.

On October 11, 2023, Defendants filed a supplemental memorandum of points and authorities.

On October 20, 2023, Plaintiff filed the supplemental declaration of Solomon E. Gressen.

On October 25, 2023, Defendants file a reply to Plaintiff’s supplemental papers.

(a) If a party fails to admit the genuineness of any document or the truth of any matter when requested to do so under this chapter, and if the party requesting that admission thereafter proves the genuineness of that document or the truth of that matter, the party requesting the admission may move the court for an order requiring the party to whom the request was directed to pay the reasonable expenses incurred in making that proof, including reasonable attorney's fees.

(1) An objection to the request was sustained or a response to it was waived under Section 2033.290.

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

“One need not be a prevailing party to be entitled to sanctions under this statute.” (Smith v. Circle P Ranch Co. (1978) 87 Cal.App.3d 267, 274–275.)

“[W]here it becomes clear from evidence introduced by either party at trial that the party who denied for lack of information or belief had access to the information at the time requests for admissions were propounded, sanctions are justified because that party has a duty to investigate ….” (Bloxham v. Saldinger (2014) 228 Cal.App.4th 729, 752.) “[S]ince requests for admissions are not limited to matters within personal knowledge of the responding party, that party has a duty to make a reasonable investigation of the facts before answering items which do not fall within his personal knowledge.” (Id. at 751-52.)

Defendants move for fees and costs against Plaintiff pursuant to CCP § 2033.420, arguing that they requested that Plaintiff admit certain facts in the Requests for Admissions (“RFA”), but Plaintiff failed to admit them.

The Court notes that in the opposition brief, Plaintiff only disputes the reasonableness of fees, but does not dispute that Defendants are entitled to fees and costs for his failure to admit certain RFAs.

The Court has reviewed the motion, opposition, and reply papers. The fees sought by Defendants appear to include all fees incurred by defense counsel after the date of the denials of the RFAs without any apportionment for the time and effort to prove these specific matters at trial. Motions pursuant to CCP § 2033.420 should be limited to fees that would compensate the “reasonable expenses incurred in making that proof, including reasonable attorney's fees”—the Court declines to award all fees incurred after the denials of the RFAs were received.

The Court allowed the parties to file supplemental papers to discuss whether fees should be limited to only fees and costs incurred at trial.

Defendants argue that fees and costs other than incurred at trial are proper, relying on Garcia v. Hyster Co. (1994) 28 Cal.App.4th 724, Barnett v. Penske Truck Leasing Co. (2001) 90 Cal.App.4th 494, and Association for Los Angeles Deputy Sheriffs v. Macias (2021) 63 Cal.App.5th 1007.

· In Garcia, the trial court awarded Hyster its attorney’s fees, costs, and other expenses associated with the trial of the case and proving that RFA Nos. 1-15, all incurred after June 30, 1992, the date Hyster propounded its RFAs against Travelers (the plaintiff-in-intervention). (Garcia, supra, 28 Cal.App.4th at 736.) The Court of Appeal found that the trial court had relied on conclusory statements of counsel, which failed to set out the hourly rates and time spent on the case, such that the trial court abused its discretion in awarding Hyster everything it asked for. (Id. at 737.) The Court of Appeal revered such that fees and costs should be determined from at most the date of filing of the complaint in intervention (and not the complaint) and to consider which fees and costs related to the issues covered in the RFAs. (Id. at 737-738.)

· In Barnett, the Court of Appeal determined that sanctions pursuant to CCP § 2033(o) were available to a party that prevailed on a motion for summary judgment. The Barnett Court discussed the Garcia case, finding that it did not support a position that sanctions may be awarded only after trial. The Court of Appeal reasoned that allow sanctions in this situation was appropriate because the primary purpose of RFAs is to expediate trial and sanctions under section 2033(o) reimbursed a party proving the truth of an RFA and parties that successfully moved for summary judgment should not be penalized for avoiding trial by denying costs of proof. (Barnett, supra, 90 Cal.App.4th at 499.)

· In Macias, the Association served on defendants 28 RFAs, 14 of which Defendants denied. After judgment was entered in favor of the Association, it sought to recover costs to prove the truth of the matters defendants failed to admit. The Association submitted costs and time entries billed from March 20, 2015 (the date of Macias’ final responses) to October 31, 2018 (the last billing before the court’s November 13, 2018 statement of decision. (Macias, supra, 63 Cal.App.5th at 1026. The trial court denied the motion for lack of jurisdiction, that some of defendants’ denials were not unequivocal denials, and that defendants had reasonable ground that they would prevail on 2 issues. The Court of Appeal reversed on all 3 grounds, finding that the trial court was required under CCP § 2033.420 to award the Association “its reasonable expenses incurred in proving matters defendants failed to admit without reasonable grounds to do so.” (Id. at 1031.) The Court of Appeal stated: “On remand, the trial court has the discretion to determine whether defendants had reasonable grounds for failing to admit any specific request for admission not otherwise disposed of in this opinion. And the court has the discretion to determine the amount of reasonable expenses, to receive further evidence should it choose to do so, and to exclude any claimed expenses to the extent they relate to issues outside the scope of the requests for admission. What it cannot do is deny costs of proof that are mandated by statute.” (Id.)

In the supplemental opposition brief, Plaintiff provides the declaration of his counsel, Solomon E. Gresen. Mr. Gresen argues that the Court allowed Defendants to file an evidentiary declaration sufficient to “prove” a fact at issue but Defendants instead filed a supplemental memorandum of points and authorities without any evidentiary value. (Gresen Suppl. Decl., ¶9.) He requests that if the Court considers Defendants’ memorandum of points and authorities, that Plaintiff be given an additional week to file a 4-page reply brief. (Id.)

In the supplemental reply brief, Defendants argue that they provided authority showing they are entitled to fees beyond those incurred at trial and thus their supplemental papers properly addressed the Court’s initial order.

The Court allowed Defendants to file a supplemental declaration and supplemental memorandum of point sand authorities to address the issue of why defense counsel is entitled to attorney’s fees for hours incurred other than trial. Plaintiff was given the opportunity to respond by filing a responsive supplemental declaration and a responsive supplemental memorandum of points and authorities. Thus, there is nothing improper about Defendants’ supplemental memorandum of points and authorities. Further, the Court already continued the hearing on this motion in part due to Plaintiff’s counsel’s representations at the September 29, 2023 hearing that he did not realize that Defendants’ motion was based on CCP § 2033.420. (Although Plaintiff had opposed this motion, the opposition was devoid of any arguments related to the RFAs.) Thus, the Court denies Plaintiff’s request for further briefing on the RFA issue because Plaintiff has already had two opportunities to address the merits of this motion but failed to properly do so.

However, Defendants have not provided a supplemental declaration of Mr. Shapero detailing “the costs and fees of appearance at trial only,” as requested by the Court. Instead, Defendants appear to be arguing that they should be entitled to the entirety of the fees that they requested. (According to Mr. Shapero’s supplemental declaration, he is decreasing the costs/fees sought from $205,516 to $199,687.) On the other hand, Plaintiff argues that Defendants should only be entitled to recover $8,100 in attorney’s fees for the 2 hours deposition and 16-hour cross-examination (at $450/hour) to prove that the RFAs were incomplete. (Gresen Suppl. Decl., ¶15.)

While Defendants have provided some case law showing that attorney’s fees incurred beyond the time of trial can be recoverable, these cases do not provide a blanket proposition that the Court should award all fees from the date of denial of the RFAs; rather, in most of the cited cases, the Court of Appeal remanded to the trial court the issue of ascertaining and calculating fees. Similarly, this Court has discretion to ascertain what amount of fees is reasonable and what amount of time was spent to prove the RFAs based on its observations of counsels’ conduct and the trial proceedings.

The parties have presented adversarial viewpoints and allocations. Defendants seek $199,687 in “reasonable” attorney’s fees, while Plaintiff argues that only $8,100 should be recoverable. CCP § 2033.420 is not intended to be an attorney’s fees provision for all reasonable fees incurred in the action, but rather as a sanction for a party’s failure to reasonably investigate the facts. Section 2033.420 is intended to recompense counsel in part for the time spent to prove specific RFAs that were denied by the responding party Plaintiff. While arguably any action taken during this case from the RFA responses could be construed as time spent to prove the truth of the RFAs, the Court does not read the section so broadly. Instead, the Court will only award fees for the approximate amount of time spent by defense counsel to prove the genuineness of a document or truth of the matter in an RFA.

Based on the Court’s observations at trial and the time spent by the parties, the Court finds that awarding $60,000 in attorney’s fees and costs to Defendants and their counsel is reasonable. (See Mot., Ex. D [Billing Invoice #487, #493].) In making this determination, the Court takes into account the broad range of issues covered in the RFA, but considers the totality of the issues presented at trial and what portions were meant to counteract and overcome any bad faith denials by Plaintiff. Moreover, the Court’s examination of the papers indicates that approximately $21,000 in fees were spent as the result of counsel’s attendance at trial. Doubling this amount, and allowing for preparation of briefs, witnesses and exhibits during pre-trial proceedings, and the extra costs the Court finds attorney’s fees of $50,000 to be approximately reasonable as the extra cost of proving those matters that should have been admitted. While many of the RFAs should have ultimately been admitted, the Court does not find that Plaintiff necessarily denied them all without a reasonable basis of belief nor has Defendants proved this.

As such, the motion for attorney’s fees and additional costs is granted in the total amount of $50,000.

Defendants’ motion for attorney’s fees and costs is granted in the amount of $50,000, pursuant to CCP § 2033.420.

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[1] The caption of the complaint names Defendant Sapphire Development & Construction, Inc., but also refers to this company as Sapphire Construction & Development, Inc. The Court will hereinafter refer to this defendant as “Sapphire Development & Construction, Inc.” (or SDC) as this is how Defendants refer to SDC in their own papers.