Opinion
D053890.
7-13-2009
SCOTT KIM et al., Plaintiffs and Respondents, v. JAE HEE LEE, Defendant and Appellant.
Not to be Published in Official Reports
I.
INTRODUCTION
Jae Hee Lee appeals an order denying her motion for attorney fees in an action filed against her by Scott Kim, Yumi Ito, and Ginza Spa (collectively plaintiffs). After Ito dismissed one of her causes of action and the trial court granted summary adjudication or nonsuit with regard to all of the plaintiffs remaining causes of action, Lee filed a motion seeking $184,200 in attorney fees. Lee requested that the court order the plaintiffs to pay the fees pursuant to Code of Civil Procedure section 2033.420. Section 2033.420 provides that if a party fails to admit the truth of a matter in response to a request for admission, the requesting party may seek to recover attorney fees incurred in proving the truth of a matter. (§ 2033.420, subd. (a).)
The plaintiffs did not file a respondents brief in this court. Therefore, we decide this appeal based upon Lees brief and the record. (See Cal. Rules of Court, rule 8.220(a)(2).)
All subsequent statutory references are to the Code of Civil Procedure, unless otherwise specified.
In a tentative order denying Lees motion for attorney fees, the trial court noted that Lee sought to recover attorney fees for work performed in nearly every aspect of the case from the date the plaintiffs served their denials to Lees requests for admissions. The trial court further noted that because Lee had failed to specify the fees incurred in proving the truth of each of the requested admissions, the court had no basis on which to award a portion of the fees that Lee sought. After a hearing, the court confirmed its tentative ruling, stating that Lee was seeking an award for nearly all of the attorney fees she incurred in the case without establishing which fees were incurred in proving the truth of the matters sought in her requests for admissions.
On appeal, Lee claims that the trial court erred in denying her motion for attorney fees. We affirm the order.
II.
FACTUAL AND PROCEDURAL BACKGROUND
In August 2006, Kim, Ito, and Ginza Spa filed this action against Lee. In their complaint, plaintiffs alleged that they had paid Lee $145,000 for the purchase of all of Lees interests in a business named the Crystal Oriental Spa. The complaint further alleged that Lee violated the sale agreement by continuing to use the name Crystal Oriental Spa and its telephone number while running a new, competing business. Plaintiffs alleged five causes of action, including fraud and deceit, conversion, unfair business practices, unfair competition and false advertising. Plaintiffs also requested a preliminary and permanent injunction precluding Lee from using the name Crystal Oriental Spa and the telephone number associated with it.
Plaintiffs filed a first amended complaint on or about September 25, 2006. In their amended complaint, plaintiffs named Attorney Jeffrey Jackson as an additional defendant and alleged that Jackson acted as the attorney and agent for Lee during the sale of Crystal Oriental Spa. Plaintiffs alleged seven causes of action against Lee and Jackson, including fraud and deceit, improper use of trade name or likeness, conversion, unfair business practices, unfair competition, and false advertising. In addition, plaintiffs brought a claim of legal malpractice against Jackson and a claim of breach of contract against Lee. Plaintiffs again requested preliminary and permanent injunctive relief, as in their original complaint.
Many of the pleadings that are contained in the record, including the first amended complaint, do not bear a file stamp. We assume for purposes of this decision that the pleadings that do not bear a file stamp were filed on the dates indicated on the documents.
In October 2006, Lee propounded the following 19 requests for admissions on Kim and Ito:
"1. Admit that LEE has not defrauded YOU as YOU alleged in the first cause of action of YOUR COMPLAINT.
"2. Admit that LEE has not converted any of YOUR property.
"3. Admit that LEE has not committed any unfair practices acts as YOU allege in the fourth cause of action in YOUR COMPLAINT.
"4. Admit that LEE has not committed any acts of unfair competition as alleged in the fifth cause of action in YOUR COMPLAINT.
"5. Admit that LEE has not made false and misleading advertising as alleged in the sixth cause of action in YOUR COMPLAINT.
"6. Admit that LEE has not been a part of a civil conspiracy as alleged in the seventh cause of action in YOUR COMPLAINT.
"7. Admit that LEE has not breached a contract with you.
"8. Admit that LEE has not made any misrepresentations to YOU.
"9. Admit that LEE has not participated in any civil conspiracy to damage YOU.
"10. Admit that YOU did not intend to use . . . either `Crystal Spa or []Oriental Crystal Spa as the name of the business YOU purchased from LEE.
"11. Admit that YOU intended to use the name `Ginza Spa for the business YOU purchased from LEE.
"12. Admit that YOU obtained all the licenses necessary to operate the business YOU purchased from LEE.
"13. Admit that YOU recorded the fictitious business names `Crystal Spa and `Crystal Oriental Spa with the San Diego County Recorder after YOU knew those were already recorded by LEE.
"14. Admit that YOU conducted business as `Crystal Spa and `Crystal Oriental Spa before YOU recorded either of those names as YOUR fictitious business names with the San Diego County Recorder.
"15. Admit that YOU have not made any written demands on LEE to refrain from any activity before the filing of the COMPLAINT.
"16. Admit that the $148,900.00 that YOU claim was converted in YOUR third cause of action was money YOU paid to LEE pursuant to the purchase agreement for the business.
"17. Admit that LEE has not falsely advertised using the names `Crystal Spa or `Crystal Oriental Spa.
"18. Admit that Jae Hee Lee is LEEs name.
"19. Admit that LEE has not committed any Unfair Practices Act [sic] as alleged in YOUR COMPLAINT."
In February 2007, Lee propounded an identical set of requests for admissions on Ginza Spa.
In November 2006, the trial court entered an order granting plaintiffs request for a preliminary injunction. The injunction prohibited Lee from conducting any business using the trade names "Crystal Oriental Spa" or "Crystal Spa," during the pendency of the action. In addition, the trial court ordered Lee to transfer control of a telephone number associated with the Crystal Oriental Spa to plaintiffs.
In November 2006, Ito and Kim filed initial responses to Lees requests for admissions. In their responses, Ito and Kim raised various objections to Lees requests for admissions and, without waiving their objections, denied the requests.
In February 2007, Ito and Kim filed supplemental responses to Lees requests for admissions. In their responses, Ito and Kim again raised certain objections to Lees requests for admissions and, "expressly incorporating each of these general objections," denied all of Lees requests. In March 2007, Ginza Spa asserted similar objections to Lees requests for admissions, and, without waiving such objections, denied Lees requests.
In October 2007, plaintiffs filed a third amended complaint. In this complaint, plaintiffs brought claims against Lee and Jackson including fraud and deceit, invasion of privacy, conversion, unfair business practices, unfair competition, false advertising, civil conspiracy. In addition, plaintiffs brought a claim of legal malpractice against Jackson and a claim of breach of contract against Lee.
The record also includes an unsigned second amended complaint dated April 24, 2007. However, it is unclear whether this complaint was actually filed.
In November or December 2007, the trial court granted Lees motion for summary adjudication as to the plaintiffs claim for invasion of privacy, as alleged in the third amended complaint. In addition, the trial court granted Lees motion for summary adjudication of Itos and Ginza Spas breach of contract claims, as alleged in the third amended complaint. Ito subsequently dismissed her breach of contract claim against Lee.
Lees motion for summary adjudication is not contained in the record. In addition, while a November 29, 2007 tentative order granting summary judgment is in the record, the trial courts final order granting the motion for summary adjudication is not. The trial courts final judgment indicates that the court granted summary adjudication, as stated in the text.
In May and June 2008, the trial court held a jury trial in the matter. After all of the evidence in the case was submitted, the trial court granted Lees motions for nonsuit as to all of plaintiffs remaining causes of action, and entered judgment in favor of Lee as to all plaintiffs.
In June 2008, Lee filed a motion for attorney fees. In her motion, Lee indicated that she was seeking attorney fees in the amount of $184,200, pursuant to section 2033.420. After detailing the procedural history of the case and the applicable case law, Lee argued, "Plaintiffs steadfastly continued to insist on prosecution of their complaint in the face of overwhelming evidence that they did not have any viable cause of action. Lee was forced to defend against the action through trial and the presentation of all of the evidence."
In her motion, Lee provided examples of matters that she contended were related to her requests for admissions, and that she had proven at trial. For example, Lee stated:
"Plaintiffs made a denial concerning the allegation that Lee had committed unlawful business practices in violation of [Business and Professions Code section] 17000, et seq. From the beginning Lee briefed the eight enumerated acts that could give rise to a violation of [Business and Professions Code] section 17000 et seq[.] The only violation that [p]laintiffs ever alleged was for selling goods below cost. The evidence offered by [p]laintiffs during the case and during the trial was a $10 off coupon for a service that retailed for $100. The court found that such a discount coupon could not be the basis for a violation of [Business and Professions Code section] 17000 et seq. and granted non-suit in favor of Lee."
In support of her motion, Lee lodged the plaintiffs complaints, Lees requests for admissions and the plaintiffs responses to those requests, the courts tentative summary adjudication ruling, and billing statements from Lees attorney. Lee also filed declarations from her attorneys, Lowell Fuselier and David Hayek. In his declaration, Attorney Fuselier stated that he "struck out entries [from the billing statements] that w[ere] not . . . related to work, research, meetings, hearings, and trial necessary to develop the legal defenses and evidence to prove Lee had not committed the acts alleged in the complaint and raised by the request for admissions." Attorney Fuselier indicated that his firm had performed 736.8 hours of work in proving the matters addressed in Lees requests for admissions and that the firm had billed Lee $250 an hour, for a total of $184,200. Hayek stated that he charged Lee $250 an hour for the work that he performed on the case, and that the hours billed were accurately reflected in the billing statements that Lee lodged in support of her motion.
Plaintiffs opposed the motion for attorney fees on numerous grounds, including that a large portion of the fees that Lee sought to recover were not related to Lees requests for admissions. For example, plaintiffs argued that Lee sought "all the costs her attorney incurred as a result of the trial," including time spent related to prosecuting Lees cross-complaint against Jackson.
The cross-complaint is not in the record on appeal. However, the record indicates that during the trial, Lee dismissed a cross-complaint against Jackson, and Jackson dismissed a cross-complaint against Lee.
Lee filed a reply memorandum in support of her motion. In her memorandum, Lee argued that her "costs to prove the truth are not apportionable," and that "[p]laintiffs fail to explain how Lee could prove the truth of the Requests for Admissions without incurring the fees requested."
On August 15, the trial court issued a tentative ruling denying Lees motion for attorney fees. In its ruling, the court stated in relevant part:
"This motion is problematic because it is presented on an `all or nothing basis. The fees expended are not broken down as to the proof required for each asserted request for admission. Essentially, defendants argue that the entire trial would have been unnecessary if plaintiffs would have responded to the requests for admission in good faith. The sanction set forth in section 2033.420 was not intended to apply to an entire trial such that it acts as a pseudo sanction for malicious prosecution.
Although the trial court referred to "defendants," Lee is the only defendant who filed a motion for attorney fees.
"Awarding costs of proof is improper if the party who denied the request for admission held a reasonably entertained good faith belief it would prevail on the issue at trial. [Citation.] The court cannot find that all of the 19 broadly worded requests were so `cut and dried that plaintiffs could not, in good faith, believe they would prevail on at least some of the issues at trial. As the fees are not broken down for each request (as discussed above) a good faith belief that plaintiffs would prevail on at least one of the issues defeats the entire motion."
On August 21, after a hearing, the trial court confirmed its tentative ruling denying Lees motion for attorney fees. In its order, the court stated in relevant part:
The record on appeal does not contain the transcript of the hearing on the motion.
"The court confirms its ruling denying the motion for attorneys fees. This case differs from Garcia v. Hyster Co. (1994) 28 Cal.App.4th 724 [(Garcia)] because in this case plaintiffs had reasonable grounds, at the time they responded, to believe that they would prevail[,] at least in part. Also, this motion is problematic because [Lee] seeks an award of all of her attorneys fees without breaking down those fees down for the time spent trying those issues raised via the requests for admissions."
Lee timely appeals from the courts August 21, 2008 order denying her motion for attorney fees. (See § 904.1, subd. (a)(2) [providing for appealability of orders made after a judgment].).
III.
DISCUSSION
The trial court did not abuse its discretion in denying Lees motion for attorney fees pursuant to section 2033.420
Lee claims that the trial court erred in denying her motion for attorney fees. We apply the abuse of discretion standard of review in determining whether the trial court erred in denying a motion to recover attorney fees pursuant to section 2033.420. (Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1275-1276.)
A. Governing law
Section 2033.420 provides:
"(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 attorneys fees.
"(b) The court shall make this order unless it finds any of the following:
"(1) An objection to the request was sustained or a response to it was waived under Section 2033.290.
"(2) The admission sought was of no substantial importance.
"(3) The party failing to make the admission had reasonable ground to believe that that party would prevail on the matter.
"(4) There was other good reason for the failure to admit."
Section 2033.420 authorizes recovery of only the expenses associated with proving the truth of the matter sought by a request for admission. Thus, a party seeking recovery of expenses under the statute must establish that the expenses were incurred in proving matters sought by a requested admission. For example, in Garcia, supra, 28 Cal.App.4th 724, the Court of Appeal reversed a trial courts award of attorney fees pursuant to former section 2033, subdivision (o), the predecessor statute to section 2033.420, in part on the ground that the trial court had not adequately determined that the attorney fees sought were incurred for the purpose of proving the matters denied in response to a request for admission. The Garcia court reasoned:
"It should be further noted, the statute authorizes only those expenses `incurred in making that proof, i.e., proving the matters denied by the opposing party. Here, [defendant] likely devoted at least some resources to preparation of proof . . . [of] issues [that] were completely outside the scope of the request for admissions. Nothing in the bare-bones showing made below, or in the lower courts award, reflects that any consideration was given to the fact that [defendants] trial preparation might extend beyond those areas covered in the request for admissions. [Fn. omitted.]" (Garcia, supra, 28 Cal.App.4th at pp. 736-737; accord Hillman v. Stults (1968) 263 Cal.App.2d 848, 890 ["the fee for the entire case would not necessarily be the fee imposed for expenses reasonably required to prove facts improperly denied"].)
In light of this authority, one leading practice guide recommends, "If you anticipate a post-trial motion for sanctions under [section] 2033.420, keep track of your time and expenses in proving the particular matters in dispute. It will be your burden to segregate your time and expenses both in preparing for trial and trying the particular issue involved." (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2007) ¶ 8:1415, p. 8G-41.)
In addition to the requirement that the matters for which expenses are sought to be recovered be within the scope of a request for admission, only those expenses incurred in actually proving the matter are recoverable pursuant to section 2033.420. (§ 2033.420, subd. (a); see also Wagy v. Brown (1994) 24 Cal.App.4th 1 (Wagy).) In Wagy, the plaintiff sued defendants for injuries arising from an automobile accident. (Id. at p. 4.) In response to a request for admission, defendants denied having been negligent. (Ibid.) The matter was ordered to judicial arbitration. (Ibid.) Prior to arbitration of the matter, the defendants admitted their negligence, obviating the need for proof of that matter. (Ibid.) Following entry of judgment in the trial court in favor of the plaintiff, the plaintiff sought to recover attorney fees she claimed she had reasonably incurred in preparing to prove defendants negligence at the arbitration hearing. (Id. at p. 5) The trial court granted the plaintiffs motion for attorney fees. (Ibid.) The Wagy court reversed, reasoning:
"`"Proof" is the establishment by evidence of a requisite degree of belief concerning a fact in the mind of the trier of fact or the court. [Citation.] Given this definition, preparation for trial or arbitration is not the equivalent of proving the truth of a matter so as to authorize an award of attorney fees under [former] section 2033, subdivision (o). Expenses are recoverable only where the party requesting the admission `proves . . . the truth of that matter, not where that party merely prepares to do so. Plaintiff is not entitled to attorney fees under the statute and the trial court erred in awarding them." (Id. at p. 6, italics added; accord Garcia, supra, 28 Cal.App.4th at p. 737 [trial courts awarding all of a partys litigation costs from the date of service of partys requests for admissions "was far more than reasonable compensation under the circumstances"].)
B. Application
Strictly for the sake of argument, we assume that Lee "prove[d]," for purposes of section 2033.420, subdivision (a), the truth of all of the matters that she sought by way of her 19 requests for admissions. (Garcia, supra, 28 Cal.App.4th at p. 735 [a party who obtains a nonsuit in its favor may be determined to have proven matters sought by a request for admission].) However, even making this assumption, it is clear that the trial court did not abuse its discretion in denying Lees motion for attorney fees.
As the trial court stated in its order, Lee sought to recover nearly all of the attorney fees that she incurred in the case from November 2006, when Ito and Kim first executed denials of Lees requests for admissions, through the trial in June 2008. Lee sought to recover fees for a total of 736.8 hours of work performed by her lawyers, including approximately 600 hours of work they performed prior to the trial.
Ginza Spa served its denials in response to Lees requests for admissions in March 2007. Lee sought fees incurred as early as November 2006. It would appear that Ginza Spa could not be liable for fees that Lee incurred prior to Ginza Spas denials. (Garcia, supra, 28 Cal.App.4th at p. 736 [expenses and fees incurred before a party serves denial of request for admission are not recoverable].) However, in light of our conclusion that the trial court did not abuse its discretion in denying Lees motion for attorney fees in full, we need not definitively resolve this issue. For the same reason, we need not consider the validity, if any, of plaintiffs various objections to Lees requests for admissions. Nor need we consider whether Lee could recover fees incurred from the time Ito and Kim served their initial responses to Lees request for admissions in November 2006 to the time they served their supplemental responses in February 2007.
Even assuming that the holding in Wagy does not apply where the party requesting attorney fees proves the denied matter at trial, section 2033.420 provides that a party may recover only reasonable expenses incurred in proving the truth of a matter that was the subject of a request for admission. (§ 2033.420, subd. (a) [authorizing an award for "reasonable expenses incurred in making that proof"].) In this case, the trial court could have reasonably determined that Lee did not demonstrate that the work her attorneys performed prior to trial constituted such expenses. For example, Lee sought to recover attorney fees for tasks her attorneys performed more than a year before trial, which were described in her counsels billing statements as "[t]elephone conference with [plaintiffs counsel] re[garding] amending his complaint and insurance coverage" and "[t]elephone conference with client re[garding] costs of depositions and interpret[e]r." Beyond her counsels conclusory declaration that he had stricken entries from his billing statements that were not related to "work, research, meetings, hearings, and trial necessary to develop the legal defenses and evidence to prove Lee had not committed the acts alleged in the complaint and raised by the request for admissions," Lee failed to make any showing that these fees, or other similar fees, were reasonable expenses incurred in proving the truth of a matter that was the subject of a request for admission. Accordingly, the trial court could have reasonably determined that Lee did not demonstrate that the attorney fees she incurred for work performed prior to trial was recoverable pursuant to section 2033.420.
As noted above, in Wagy, the defendant eventually admitted its negligence after having initially denied it, in response to a request for admission prior to the arbitration on the matter, thereby obviating the need for proof as to this issue at the arbitration. (Wagy, supra, 24 Cal.App.4th at p. 5.)
In addition, although Lee sought to recover attorney fees incurred during the more than 100 hours that her lawyers spent at the trial of this matter, she failed to provide any specificity in her moving papers as to which of these hours were spent proving the truth of the matters included in her requests for admissions, and defense counsels billing statements for the time spent at trial did not establish that the fees were incurred proving matters sought in Lees requests for admissions. The billing statements state merely, "Attend trial." The trial court did not err in concluding that Lee failed to "show that all of the actual trial time attending trial [wa]s related to proving the truth of the requests for admissions." (See Garcia, supra, 28 Cal.App.4th at pp. 736-737.)
The trial court commented that, "[A] good portion of the trial concentrated on plaintiffs affirmative conduct of operating a brothel," which the court noted was beyond the scope of Lees requests for admissions. Lee has not demonstrated that the trial court erred in this regard.
Lee appears to acknowledge that some of the fees that she sought by way of her motion were not properly recoverable pursuant to section 2033.420, subdivision (a). In her brief, Lee states, "The trial Court concluded that some of the attorneys fees sought by Lee were incurred in preparing for trial and that those fees should not be awarded; however, the balance of the fees were spent proving the truth of the admissions, so Lee should be allowed to recover those fees." (Italics added.) However, in light of the lack of specificity in Lees motion for attorney fees, the trial court had no way of determining which fees were recoverable and which were not recoverable. Therefore, the trial court did not abuse its discretion in denying Lees motion in full.
In light of our conclusion that Lee failed to adequately demonstrate that she incurred attorney fees recoverable pursuant to section 2033.420, we need not address her contentions that plaintiffs had no reasonable basis for pursuing any of their claims against her. If Lee is correct in this assertion, the proper procedural mechanism to obtain redress would seem to be a malicious prosecution action. (See Java Oil Ltd. v. Sullivan (2008) 168 Cal.App.4th 1178, 1190, fn. 4 ["A malicious prosecution requires showing the underlying action was `"(1) commenced by or at the direction of the defendant and was pursued to a legal termination . . . plaintiffs . . . favor [citations]; (2) was brought without probable cause [citations]; and (3) was initiated with malice [citations]." [Citation.]".) Attorney fees are recoverable as damages in a malicious prosecution action. (Id. at p. 1190.) Nothing in this opinion should be construed as an expression of the merits of any such potential action.
IV.
DISPOSITION
The trial courts August 21, 2008 order denying Lees motion for attorney fees is affirmed. Lee is to bear costs on appeal.
WE CONCUR:
McDONALD, Acting P. J.
OROURKE, J.