Judge Randolph M. Hammock, Case Number: BC685560, Date: 2025-01-08 Tentative Ruling

Plaintiff, as trustee of the Keshet Inter Vivos Trust, alleges the Trust deposited $2,737,670.00 into bank accounts owned and controlled by Defendants based on the Trust’s belief that Defendants would use the funds in various investments for the Trust’s benefit. Plaintiff alleges Defendants later claimed the funds were repayments of loans that Defendants made to the Trust in prior years. The Trust demands repayment of the funds.

This is one of numerous actions between the parties. On October 15, 2019, the parties jointly stipulated to stay this action pending resolution of a separate case. The stay was lifted on September 19, 2022. Following a bench trial in this case, this court entered judgment in Plaintiff’s favor in the amount of $1,506,325.79, including pre-judgment interest. That judgment was subsequently utilized by the Court to partially satisfy another judgment between the parties.

“A party to a civil action may propound a written request that another party ‘admit the genuineness of specified documents, or the truth of specified matters of fact, opinion relating to fact, or application of law to fact.’ ” (City of Glendale v. Marcus Cable Associates, LLC (2015) 235 Cal.App.4th 344, 351-352.) The “main purpose” of a RFA “is to set issues at rest by compelling admission of things that cannot reasonably be controverted.” (LCPFV, LLC v. Somatdary Inc., No. B325599, 2024 WL 4762549, at *6 (Cal. Ct. App. Nov. 13, 2024) [certified for publication].) “[A]s a practical matter, ‘the important facts in a case are usually legitimately disputed’ and cannot be resolved by requests for admissions. [Citation]. As a result, requests for admissions are useful ‘only as to matters of lesser importance (for which they may not be necessary, since unimportant matters can usually be handled by stipulation with opposing counsel)’.” (Id.) “A trial court must judge whether use of a request for admissions is in conformity with the spirit of the law and serves substantial justice. [Citation]. When a court is ‘troubled’ by the way a party has used requests for admission, the court may take corrective action.” (LCPFV, LLC, supra, 2024 WL 4762549, at *6.)

Section 2033.420, subdivision (a) provides for an award of costs of proof where a party responding to such a request fails to admit the truth of a matter that is later proved: “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.” Such an award must be made unless, among other things, “[t]he party failing to make the admission had reasonable ground to believe that that party would prevail on the matter” or “[t]here was other good reason for the failure to admit.” (§ 2033.420, subd. (b)(3)-(4).) The award is not a penalty, but rather, “is designed to reimburse reasonable expenses incurred by a party in proving the truth of a requested admission where the admission sought was ‘of substantial importance’ [citations] such that trial would have been expedited or shortened if the request had been admitted.” (Orange Cnty. Water Dist. v. The Arnold Eng'g Co. (2018) 31 Cal. App. 5th 96, 115.)

Plaintiff brought this action against Defendants alleging Plaintiff deposited over a million dollars into bank accounts owned or controlled by Defendants. Plaintiff believed the transactions were for investments in various properties. Defendants later took the position that the funds did not belong to Plaintiff and refused to return them.

Years before trial, Plaintiff propounded Requests for Admissions, Set One (“RFAs”) on each Defendant with regard to specific money transfers. (Lebedev Decl. ¶ 2, Exhs. 1 and 2). Plaintiff asked Defendants to admit that various transactions involved money that belonged to Plaintiff. In response, Defendant denied the RFAs.

On November 2, 2023, this matter came for a bench trial. At trial, Plaintiff proved that various transactions corresponding to RFAs previously denied by Defendants did, in fact, involve Plaintiff’s money. The Court then issued its written Statement of Decision and entered judgment in favor of Plaintiff for the sum of $1,506,325.79, including pre-judgment interest. This was the sum of various transactions this court found involved Plaintiff’s money.

Plaintiff now contends these issues should have never been tried because there was no reasonable basis for Defendants’ failure to admit them in the first place. “Rubinstein had sole control over the subject bank accounts at all times, he knew the funds at issue did not belong to Defendants, and he knew Plaintiff had made the deposits into Defendants’ accounts.” (Mtn. 11: 24-26.) Therefore, Plaintiff contends Defendants are liable to Plaintiff for the costs incurred in proving these issues.

Plaintiff represents she incurred a total of $413,446.81 in reasonable attorneys’ fees from the time that the RFAs were denied until the end of trial. Plaintiff’s former and current counsel purport to have spent over 1100 hours of attorney time for the purpose of proving the issues denied by Defendants. (See Lebedev Decl. ¶¶ 4-6, Cohen Decl. 9-10.) Plaintiff also retained a forensic accountant at a cost of $80,821.50. (Benyamini Decl. ¶¶ 3, 4.)

Defendant opposes the motion. Defendant contends it had a reasonable basis to deny the RFAs. That is because the transfers were always made in someone else’s name and because the money belonged to Plaintiff’s husband, Yoram Yehuda. Defendant points to the previous Wells action in which the court found certain overlapping transfers involved money belonging to Yoram, and not Plaintiff. In evaluating whether a good reason exists for denying a request to admit, as would preclude recovery of costs of proof, a court may properly consider whether at the time the denial was made the party making the denial held a reasonably entertained good faith belief that the party would prevail on the issue at trial. See, e.g., Grace v. Mansourian (App. 4 Dist. 2015) 240 Cal.App.4th 523

Indeed, one of the exceptions available to oppose motions for cost-of-proof sanctions given in section 2033.420, subdivision (b)(4) is to show “other good reason” for the failure to admit a request for admission. This is a catch-all provision allowing courts significant discretion to deny motions for cost-of-proof sanctions. The determination of whether there were no good reasons for the denial of a requested admission, whether the requested admission was of substantial importance, and the amount of expenses to be awarded, if any, are all within the sound discretion of the trial court; an abuse of discretion occurs only where it is shown that the trial court exceeded the bounds of reason. Bloxham v. Saldinger (App. 6 Dist. 2014) 228 Cal.App.4th 729.

Here, the court concludes there was a reasonable dispute as to the transactions underlying the RFAs. There is a history of convoluted dealings and transactions between these parties, as evidenced by the multiple lawsuits between them. Under the totality of the circumstances and evidence produced at trial, at the time Plaintiff served the RFAs, Defendants acted reasonably in refusing to admit them. Or to be more specific: Defendants did not act “unreasonably” in denying the various RFAs at issue.

Indeed, the fact it took Plaintiff a forensic accountant and purportedly over $400,000 in fees to prove she was the owner of the funds at issue—a somewhat shocking amount at initial glance—would suggest this issue was ripe to be tried. Additionally, the history of litigation between the parties has demonstrated that at times the Yehudas would prevail at trial, and at other times Mr. Rubenstein would prevail.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.