RFA Denial Still In Bad Faith Where Total Delta On Invoices Asked To Be Admitted Was Less Than $6,000, And No Precise Amount Was Requested.
More and more, we are starting to see an increased reliance by litigators on “costs-of-proof” sanctions under Code of Civil Procedure section 2033.420, especially where there is no contractual or statutory fee entitlement basis for a fee award, as an independent ground to recover fees. If you have the facts, not a bad idea.
That strategy worked in a somewhat convoluted UCC dispute, Hebberd-Kulow Enterprises, Inc. v. Kelomar, Inc., Case No. D066505 (4th Dist., Div. 1 Jan. 27, 2016) (unpublished).
There, plaintiff finally prevailed in a UCC goods battle, winning “net” compensatory damages of $412,023.05. However, plaintiff thought the defense denials of certain RFAs were in bad faith, so they sought costs-of-proof sanctions and were awarded them to the tune of $74,725.25.
Those RFA “sanctions” held up on appeal.
The defense principally argued that the denied RFAs were not proven as specified or were not significant in the overall case—arguments rejected because the lower court carefully showed why the RFA sanctions were justified. The RFAs did not ask for exact damages, but were within the range for which admissions were appropriate; however, the $6,000 delta difference in ultimate damages did give an inference that the denials were in bad faith. The denials did involve invoices at the center of the case, so the insignificant RFA denial did not go very far. Because it was impossible to apportion time between the RFA denials at issue, the appellate court applied attorney’s fees “inextricably intertwined” principles so as to sustain the $74,725.25 costs-of-proof award—the denials could not be apportioned given the gestalt of the overall discovery RFA responses.