Costs of Proof

Orange Cnty. Water Dist. v. The Arnold Eng’g Co., No. D070763 (D4d1 Jan. 10, 2019)

This is a sixty-page opinion entirely devoted to an appeal of an award of $615,000 in costs of proof because the plaintiff—who lost at trial—denied a bunch of requests for admission. 

Requests for admission aren’t really a discovery device. They are a discovery avoidance device. That is, their purpose is to ascertain whether there are issues that are uncontested, eliminating the need for formal proof at trial. As a disincentive to litigate unnecessary issues, Code of Civil Procedure § 2033.420 permits the shifting of “costs of proof” if an RFA is unjustifiably denied. Those costs include both attorney and expert witness fees. But costs don’t get shifted if the party making the denial had a reasonable ground to believe it would prevail or if there’s some other good reason not to admit. To avoid cost-shifting, a party’s denials must be grounded in the evidence; mere hope or a “roll of the dice” doesn’t cut it. The standard is higher than substantial evidence or probable cause—a denial is justified if a litigant had a reasonable good faith belief that it would win on the issue.

A Water District is suing a Manufacturer over alleged pollution. Manufacturer asked Water District to admit that Manufacturer did not pollute its site or local groundwater with four different chemical solvents and that it did not contribute to soil or groundwater pollution. Answering them entailed technical analysis by Water District’s experts. So to the extent Water District relied on these experts in denying the RFAs and contested the issue at trial, it had a reasonable basis for denial, even if the trier of fact ultimately disagreed. So an award of cost shifting on these responses is reversed. On the other hand, the case for one of the chemicals was so weak that Water District abandoned the theory at trial. Its denial on that issue was unjustified. 

Because the trial court will have to re-calculate the aware based on the more limited set of RFAs whose denial was unjustified, the Court of Appeal gives some guidance on how to assess that evidence. The award is tied to the “costs of proof” of a particular issue, so the evidence needs to be specific enough to suss that out from the other issues in the case. 

Here, Manufacturer offered indications in attorney billing records and an accompanying declaration as to which RFAs were at issue. A court would be within its discretion to consider those entries, but it is not required to award all costs associated with them. 

Manufacturer ’s expert billing records, however, did not fare so well. They didn’t identify which RFAs they were addressed to and the descriptions were so general that segregation wasn’t possible. And they didn’t include a declaration from the expert explaining the entries or even laying foundation for the records as business records. The bills were only authenticated by a declaration from the attorney. Although that might be enough to establish that they are, in fact, invoices received from the expert, it is not enough to get over a hearsay objection sufficient to establish the proof of the facts stated therein.

Reversed in part.