Opinion
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. No. CV046741
McAdams, J.
At issue in this appeal is a post-judgment order for costs and attorney fees, made pursuant to a provision of the California Civil Discovery Act. The order was imposed on defendant, California Micro Devices, Inc., as a consequence of its denial of certain requests for admissions propounded by the plaintiff, Charles F. Bellavia.
The particular provision at issue in this case is Code of Civil Procedure section 2033.420, which is set out in full in the margin, infra, at footnote 3. In its current iteration, the California Civil Discovery Act is codified at Code of Civil Procedure sections 2016.010 through 2036.050. (Stats. 2004, ch. 182, § 23.) Further unspecified statutory references are to the Code of Civil Procedure.
In support of its bid for reversal, defendant makes three arguments on appeal: (1) the statute does not apply in the procedural context of this case, a judicial arbitration at which the plaintiff did not prove the subject matter of the admissions; (2) the statute does not apply because defendant reasonably believed that it would prevail on the matters addressed in the requests for admissions; and (3) even assuming that the statue applies here, the amount awarded was excessive.
Based on the unambiguous record before us, we agree in part with defendant’s first contention, that plaintiff did not prove the matters at issue in the requests for admissions, which is required to support an award under the statute. We therefore reverse.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff worked for defendant as its vice president of sales, from October 1998 until August 2001, when defendant terminated his employment. Under the terms of his written employment contract, plaintiff’s severance package included six months of base salary and “standard Company benefits.”
Pleadings
In August 2005, plaintiff instituted this action for breach of contract. As alleged in the complaint, defendant breached the employment contract by “failing to keep Plaintiff nominally on the Defendant’s payroll as an employee in order to obtain the monies and benefits to which he was entitled.” Plaintiff asserted damages based on “loss of the value of his benefits and stock options” in an unknown amount.
Defendant answered the complaint with a general denial and 17 affirmative defenses.
Requests for Admissions
Discovery in the case included a set of 28 requests for admissions, which plaintiff propounded in November 2005. Defendant responded in January 2006. At issue here are defendant’s denials to six of plaintiff’s requests for admissions: numbers 16, 20, 21, 24, 27, and 28. Those particular requests for admissions sought to establish that plaintiff did not receive stock option vesting upon his employment termination, to which he was entitled (numbers 16 and 20); that other former company officers had been allowed to vest stock options post-termination (number 21); that defendant had a policy and practice of allowing terminated officers to continue vesting stock options (number 24); and that defendant breached the employment contract and the covenant of good faith and fair dealing (numbers 27 and 28).
Judicial Arbitration
In September 2006, the parties participated in non-binding judicial arbitration, which was conducted by a volunteer arbitrator. (See § 1141.10, subd. (b)(3).) The hearing was relatively short. Neither party presented evidence in the form of witness testimony, declarations, or authenticated documents. Plaintiff did submit transcripts of deposition testimony, but “without offering originals or declarations authenticating the copies.” Instead, each side presented its arguments to the arbitrator, both orally and by written brief.
According to a declaration by defendant’s attorney, the hearing lasted less than an hour. Plaintiff’s counsel declared that the hearing took approximately two hours.
In his arbitration brief, plaintiff claimed damages for breach of contract totaling nearly $135,000. Plaintiff attributed the lion’s share of his damages (over $111,000) to “the value of the stock he lost” because defendant refused to permit stock options to vest after his employment ended. According to plaintiff, his remaining damages (nearly $24,000) represented six months’ worth of other company benefits that he was denied.
In its arbitration brief, defendant denied breaching its employment contract with plaintiff. It asserted that plaintiff was “paid six months of severance and provided with continuation of the fringe benefits in the agreement to the extent and in the [manner] permitted by the plans and by law”–including medical benefits, a life insurance policy, and money to secure disability insurance. According to defendant, further contributions to plaintiff’s pension plan were prohibited by law. And under the company’s stock option plan, plaintiff was not entitled continue receiving or vesting stock options after his termination. In any event, defendant argued, plaintiff’s damages were overstated. Under defendant’s analysis, even assuming entitlement to continued stock option vesting, plaintiff’s damages amounted to only $25,036.43.
In October 2006, the arbitrator rendered a decision in plaintiff’s favor, with an award of $25,036.43 in damages. As the arbitrator explained in a letter accompanying the award, he “sided with [plaintiff] on the issue of the contract, but with [defendant] on damages.” Explaining his finding of contract breach, the arbitrator stated that plaintiff’s counsel “showed me uncontradicted deposition testimony” supporting his view of the employment agreement that he was to be carried on defendant’s payroll for six months following termination. As for damages, the arbitrator explained, defense counsel “persuaded me that in fact [defendant] gave [plaintiff] the equivalent of the benefits he would have received.” More specifically concerning the stock options, the arbitrator “was also convinced” by defense counsel that plaintiff’s losses were “much less than he thinks.”
Judgment
The arbitration award was filed with the court in October 2006. Neither party requested a trial de novo, and the award was entered as a judgment the following month. (See §§ 1141.20, 1141.23; Cal. Rules of Court, rule 3.826; Jennings v. Marralle (1994) 8 Cal.4th 121, 128.)
Statutory Motion for Expenses
In December 2006, plaintiff moved for expenses pursuant to section 2033.420. In support of the motion, plaintiff submitted points and authorities, as well as the declaration of his counsel, with numerous exhibits. In his points and authorities, plaintiff urged his entitlement to an award under the statute. He sought to recover $31,088 in attorney fees, calculated by multiplying his counsel’s usual hourly rate of $335 times 92.8 hours. Regarding the number of hours, plaintiff asserted: “From the date of Defendant’s original denials of the Requests for Admissions through the arbitration of this matter, Plaintiff’s counsel spent 92.8 hours of time seeking to prove the facts which Defendant unequivocally denied as set forth above.”
Section 2033.420 provides in full as follows:
Defendant opposed the motion. Like plaintiff, defendant submitted points and authorities and its counsel’s declaration, with exhibits; defendant also included the declaration of its human resources director, also with exhibits. Defendant disputed plaintiff’s entitlement to compensation under section 2033.420, offering two grounds: that plaintiff did not prove anything at the arbitration and that defendant reasonably believed that it would prevail as to the denials. Concerning the amount requested, defendant argued that it was unsupported, citing three reasons. First, defendant noted, plaintiff had claimed the right to post-termination continuation of 15 different types of fringe benefits, but won an arbitration award as to only one of them. Additionally, defendant urged, counsel’s billing records made it impossible to determine how much time was spent on the single successful claim. Finally, defendant argued, plaintiff was not entitled to recovery at his counsel’s standard billing rate, because their agreement had been for $145 per hour, plus 25 percent of any recovery, which totals only $19,715.
In reply, plaintiff filed a memorandum of points and authorities defending his fee claim, along with another declaration from his attorney, with additional exhibits.
In January 2007, the trial court conducted a hearing on the motion, which it took under submission. The court issued a formal order the following day, granting the motion and awarding plaintiff the sum of $19,715.
Appeal
This appeal ensued. As noted above, defendant makes three arguments on appeal: first, that section 2033.420 does not apply in the procedural context of this case, a judicial arbitration, because plaintiff did not prove the subject matter of the admissions; next, that the statute does not apply because of defendant’s reasonable belief that it would prevail on the matters addressed in the requests for admissions; and finally, that the amount awarded was excessive in any event.
DISCUSSION
To establish the proper framework for our analysis of defendant’s contentions, we first summarize the relevant legal principles, including the applicable standards of appellate review. We then apply those precepts to the case before us.
I. Legal Principles
At issue here are the consequences for denial of requests for admissions.
A. Governing Law
Any party may obtain discovery by a written request that the other party admit “the truth of specified matters of fact, opinion relating to fact, or application of law to fact. A request for admissions may relate to a matter that is in controversy between the parties.” (§ 2033.010.) “Requests for admissions differ fundamentally from other forms of discovery. Rather than seeking to uncover information, they seek to eliminate the need for proof.” (Stull v. Sparrow (2001) 92 Cal.App.4th 860, 864.) Their purpose is to expedite trial. (Id. at p. 865.) “A party responding to requests for admissions has a duty to make a reasonable investigation to ascertain the facts even though the party has no personal knowledge of the matter when the party has available sources of information as to the matters involved in such requests for admissions.” (Brooks v. American Broadcasting Co. (1986) 179 Cal.App.3d 500, 510; accord, Rosales v. Thermex-Thermatron, Inc. (1998) 67 Cal.App.4th 187, 198.)
The unwarranted denial of a request for admissions may result in an order imposing expenses, including reasonable attorney fees, if the party propounding the request is later required to prove the truth of the matter as a result. (§ 2033.420.) As pertinent here, the statutory language of the expense recovery provision discloses two circumstances where it does not apply. The first is when the propounding party does not prove the matter at issue in the request for admissions. (§ 2033.420, subd. (a); Stull v. Sparrow, supra, 92 Cal.App.4th at p. 865; Wagy v. Brown (1994) 24 Cal.App.4th 1, 6.) The second is when the party denying the request for admissions has a reasonable belief in prevailing on the disputed matter. (§ 2033.420, subd. (b)(3); Wimberly v. Derby Cycle Corp. (1997) 56 Cal.App.4th 618, 636; cf. Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at p. 511.)
Allowing recovery of expenses “is directly related” to the purpose underlying requests for admissions, which is to expedite trial. (Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at p. 509.) “Unlike other discovery sanctions, an award of expenses pursuant to section [2033.420] is not a penalty. Instead, it is designed to reimburse reasonable expenses incurred by a party in proving the truth of a requested admission … such that trial would have been expedited or shortened if the request had been admitted.” (Ibid., discussing former § 2034, subd. (c); accord, Stull v. Sparrow, supra, 92 Cal.App.4th at p. 865; see also Hillman v. Stults (1968) 263 Cal.App.2d 848, 884 [the statute does “not provide for penalties but for reimbursement of expenses for going to trial as a result of the unfounded and unjustified denials”].) In light of the statute’s purpose, an award is too high if it exceeds the cost of proving the matter at issue in the request for admissions. (Garcia v. Hyster Co. (1994) 28 Cal.App.4th 724, 736; accord, Wimberly v. Derby Cycle Corp., supra, 56 Cal.App.4th at p. 638.)
Previously, the provisions governing requests for admissions were codified at former sections 2033-2034. Those provisions were repealed in 2004, and their substance was continued in the current, renumbered sections 2033.010 through 2033.420. (Stats. 2004, ch. 182, § 23.)
B. Appellate Review Standards
As a general and traditional rule, the “appellate court reviews a trial court’s award of attorney fees for abuse of discretion.” (Robbins v. Alibrandi (2005) 127 Cal.App.4th 438, 452 [fees in shareholder derivative suit].) “The trial court’s discretion must be based on proper matter” however. (Ibid.) In assessing the trial court’s exercise of discretion, relevant considerations include both the particular facts of the case, as disclosed in the record, and the applicable law.
Where a trial court’s discretionary decision depends on the facts of the case, its decision must find support in the evidentiary record, since a consideration of the evidence “is essential to a proper exercise of judicial discretion.” (Johns v. City of Los Angeles (1978) 78 Cal.App.3d 983, 998 [insufficient evidence of juror misconduct to support discretionary order for new trial].) “We do not defer to the trial court’s ruling when there is no evidence to support it.” (Robbins v. Alibrandi, supra, 127 Cal.App.4th at p. 452.)
The interplay between the governing legal principles and the exercise of judicial discretion has been aptly explained as follows: “Action that transgresses the confines of the applicable principles of law is outside the scope of discretion and we call such action an ‘abuse’ of discretion.” (City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1297 [fees under § 1021.5]; accord, Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 393 [fees under Gov. Code, § 12965].)
Finally, as the California Supreme Court recently clarified, the proper standard of appellate review depends on the extent to which there were disputed issues of fact below. If the issue is whether the statutory criteria for an award of attorney fees and costs have been satisfied, “this may be a mixed question of law and fact and, if factual questions predominate, may warrant a deferential standard of review.” (Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1175 [fees under § 1021.5].) If, on the other hand, the underlying facts are largely undisputed and the question is one of statutory construction, de novo review is proper. (Id. at pp. 1175-1176.)
II. Application
With the foregoing principles in mind, we turn to the specific issues raised here.
A. Does the statute apply to judicial arbitration?
Defendant frames its appeal in the first instance as a novel legal question, saying: “Whether a party may recover expenses under section 2033.420 after entry of judgment on a judicial arbitration award appears to be a matter of first impression. The court should answer this question in the negative.” Defendant painstakingly distinguishes between judicial arbitration and other proceedings, such as trials and motions for summary judgment. And it argues that judicial arbitrations are more akin to alternative dispute resolution than to adjudication.
This case does not require us to reach the broad question framed by defendant. The pivotal point here is whether plaintiff proved the subject matter of the requests for admissions in the judicial arbitration proceeding.
B. Did plaintiff prove the matters at issue?
As we now explain, we conclude that plaintiff did not fulfill the statutory predicate of proving the matters put at issue by defendant’s denial of his requests for admissions.
1. Legal Principles
“That an issue be proved is an express statutory prerequisite to recovery” under the statute. (Stull v. Sparrow, supra, 92 Cal.App.4th at p. 865, citing former § 2033, subd. (o).)
“Proof is something more than just evidence.” (Stull v. Sparrow, supra, 92 Cal.App.4th at p. 865, citing People v. Mahoney (1939) 13 Cal.2d 729, 732; see Evid. Code, §§ 140 [defining evidence], 190 [defining proof].) “It is the establishment of a fact in the mind of a judge or jury by way of evidence.” (Stull v. Sparrow, at p. 865.) As defined in the Evidence Code: “ ‘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.” (Evid. Code, § 190.)
Proof starts with evidence, however. (See, e.g., Garcia v. Hyster Co., supra, 28 Cal.App.4th at p. 735 [where “evidence was presented … and formed a basis for nonsuit, … employer negligence was in fact ‘proved’ ”].) Absent the presentation of evidence, mere “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 section [2033.420].” (Wagy v. Brown, supra, 24 Cal.App.4th at p. 6, citing former § 2033, subd. (o); accord, Stull v. Sparrow, supra, 92 Cal.App.4th at p. 866.)
2. Relevant Facts
In this case, the pertinent facts concerning proof at the arbitration hearing appear in the declarations of counsel for both parties, filed in connection with plaintiff’s motion for fees and costs.
According to the declaration of defendant’s attorney, neither party presented any evidence at the arbitration, whether in the form of witness testimony, declarations, or authenticated documents. As for deposition testimony, which was referenced both in plaintiff’s arbitration brief and in the arbitrator’s letter, defense counsel declared that deposition transcripts were presented “without offering originals or declarations authenticating the copies.”
The arbitrator’s letter further supports defense counsel’s statement that no evidence was offered at the arbitration hearing. That letter contains this comment by the arbitrator: “Had I had the benefit of direct and cross examination of the parties and other witnesses, as well as the time to go through the exhibits and legal argument in detail, I might well have reached a different result.”
In his reply declaration, plaintiff’s counsel did not dispute any of the cited statements by defense counsel. He simply declared: “Plaintiff proved his case.”
3. Analysis
As the foregoing recitation of facts makes clear, plaintiff did not offer any evidence at the arbitration hearing. (See Rietveld v. Rosebud Storage Partners, L.P. (2004) 121 Cal.App.4th 250, 256 [plaintiff’s counsel was properly sanctioned where he “failed to produce evidence” at arbitration hearing].)
Prior deposition testimony does not qualify as evidence ipso facto; it must be offered as such at the arbitration hearing. (See Cal. Rules of Court, rule 3.823(b)(3)(A) [allowing party to offer deposition transcripts in evidence at arbitration hearing]; id., rule 3.824(a)(3) [empowering arbitrator to accept deposition transcripts as evidence].) And an opportunity for cross-examination of the deponent generally must be given. (Id., rule 3.823(b)(3)(b); see Rietveld v. Rosebud Storage Partners, L.P., supra, 121 Cal.App.4th at p. 256 [“Although much of the content of the [plaintiffs’] testimony may have been included in the answers to interrogatories, the arbitrator should have been given the opportunity to evaluate their testimony and determine their credibility”].) Thus, the mere fact that deposition transcripts were given to the arbitrator does not mean that they constituted evidence at the hearing.
In this case, at the judicial arbitration hearing, plaintiff offered arguments and supporting documents showing how he intended to prove his case. But since he offered nothing that qualifies as evidence, his presentation was merely preparatory; it was not proof. As in Stull v. Sparrow, because plaintiff “did not put on any evidence, the question whether [he] would have been able to prove the point at issue could only be answered by resort to pure speculation.” (Stull v. Sparrow, supra, 92 Cal.App.4th at p. 866.)
4. Conclusion
As the record demonstrates without conflict, plaintiff failed to present any evidence at the judicial arbitration hearing. Without evidence, plaintiff could not and did not prove the matters at issue in the requests for admissions. Such proof “is an express statutory prerequisite to recovery” under the statute. (Stull v. Sparrow, supra, 92 Cal.App.4th at p. 865.)
Because the statutory requirement of proof was not satisfied, the trial court’s order was outside the scope of its discretion, and reversal is required. (Horsford v. Board of Trustees of California State University, supra, 132 Cal.App.4th at p. 396.)
In light of the foregoing conclusion, we need not address defendant’s other contentions.
DISPOSITION
We reverse the order awarding plaintiff costs and fees under Code of Civil Procedure section 2033.420. Defendant shall have costs on appeal.
I CONCUR:
Mihara, J.
I CONCUR IN JUDGMENT ONLY:
Bamattre-Manoukian, Acting P.J.
“(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.
“(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.”