Opinion
E044897.
4-23-2009
SCOTT KELLY et al., Plaintiffs, Cross-defendants and Appellants, v. STEVEN LaMUNYON et al., Defendants, Cross-complainants and Respondents; PATRICIA LaMUNYON, Defendant and Respondent; MARIE KELLY, Cross-Defendant and Appellant.
Reid & Hellyer and Daniel E. Katz for Plaintiffs, Cross-defendants, and Appellants. Law Offices of Daniel J. Doonan, Inc., Daniel J. Doonan and Lynne Rasmussen for Defendants, Cross-complainants, and Respondents.
Not to be Published in Official Reports
This action involves a dispute concerning the ownership of a condominium (the Property) located in the City of Canyon Lake. Following a court trial, title to the Property was quieted in favor of defendants, Steven LaMunyon and Patricia LaMunyon. Upon a subsequent motion for attorney fees seeking $182,469.75, the court awarded defendants the amount of $32,400. The basis of the courts order was that plaintiffs, Scott Kelly, Colleen Bishop, and Randall Bishop, unreasonably failed to admit seven requests for admission, thereby requiring defendants to prove the matters at trial. (Code Civ. Proc., § 2033.420.) Plaintiffs appeal solely from the order awarding attorney fees. They contend that the trial court abused its discretion. We affirm the order.
The LaMunyons filed a motion for sanctions for filing a frivolous appeal. We deny this motion.
I. BACKGROUND
Plaintiffs contend that in June 1995 they purchased the Property from defendants. As alleged in their first amended complaint for specific performance, breach of contract, and quiet title: "In or about June of 1995 defendant Steven La Munyon and plaintiff Colleen Bishop engaged in a series of discussions regarding the potential purchase by plaintiffs of the Property from defendants Steven La Munyon and Patricia La Munyon. Ultimately, the terms of the transaction were agreed to by plaintiffs and defendants Steven La Munyon and Patricia La Munyon and were documented by the Purchase Agreement, as attached hereto as Exhibit `A. The Purchase Agreement was prepared without the assistance of counsel." Exhibit A is entitled "Bill of Sale."
The Bill of Sale identifies a first trust deed in favor of a lender, Source One, securing a debt in the amount of $121,000. Pursuant to the terms of the Bill of Sale, the plaintiffs agreed to "assume and pay said secured debt." The Bill of Sale further identifies a second trust deed in favor of the LaMunyons, securing a note in the principal amount of $15,000. Under the Bill of Sales terms: "This note bears no specific interest. Buyer will repay this second trust deed at the minimum rate of $100 per month. [¶] Buyer will make every attempt to refinance said property and take title to the property as well as repay the second trust deed; however, seller is willing to allow the first and second trust deeds to remain pursuant to the current terms." Plaintiffs further alleged that: "Pursuant to the Purchase Agreement, plaintiffs agreed to and did make timely payments on the Source One Deed of Trust as well as [property owner association] Fees and the Condominium Fees due on the Property until February of 2004, at which time defendants Steven La Munyon and Patricia La Munyon repudiated the existence of the Purchase Agreement."
Defendants filed a general denial and asserted by way of a twelfth affirmative defense that "[t]here never was a meeting of the minds, and there is no contract or agreement."
The LaMunyons apparently also filed a cross-complaint which is not contained in the appellate record.
Throughout trial, the essence of plaintiffs position was that on June 19, 1995, they entered into a purchase agreement whereby they were to assume the payments on the first deed of trust to Source One, pay all association and condominium fees, and, when property values increased, they would refinance the Property and pay to the LaMunyons $15,000 in cash. At that time, title would be transferred from the LaMunyons to plaintiffs.
Defendants basic thrust was that a final contract was never entered into between the parties, and that the Bill of Sale, signed only by Patricia LaMunyon, was unenforceable because it was not also signed by Steven LaMunyon. They further contend that plaintiffs took possession of the Property as tenants of a rental, not as purchasers.
At no time between the date of June 1995 and the date of trial, was there ever a conveyance of title from the defendants to the plaintiffs, nor a formal assumption by plaintiffs of the Source One indebtedness.
II. STATEMENT OF FACTS
A. Plaintiffs Evidence
Colleen Bishop testified as follows: In 1995, the LaMunyons owned the Property, which was part of a duplex. Mrs. Bishop knew Mr. LaMunyon because he and her husband worked together as firefighters for the City of Covina. She also prepared the LaMunyons 1994 taxes. She knew that Mr. LaMunyon had retired from the Covina Fire Department on disability and that the LaMunyons were moving to Mexico. They had a "for sale" sign in front of the Property and advertised it in the local paper. In March 1995, Mr. LaMunyon told Mrs. Bishop that he was building a house in Mexico and that he could not afford two mortgages. During a June 1995 telephone conversation, Mr. LaMunyon indicated to Mrs. Bishop that the price for the condominium was $135,000. She told him that she would buy it. Mrs. Bishop intended to use the property as a home for her mother, Marie Kelly. Mrs. Bishops brother, Scott Kelly, and her husband were willing to move forward with the deal.
An hour and a half after the telephone conversation, Mrs. Bishop took her mother to see the Property; at that time she spoke with both of the LaMunyons about the terms. Mr. LaMunyon said he would like $135,000 for the Property; the buyers could assume all obligations against the Property and, when they could refinance it, he would take "$15,000 as a second." Mrs. Bishop said that this would be acceptable. Her understanding was that title would be transferred to the plaintiffs when the refinancing occurred. Mr. LaMunyon asked Mrs. Bishop to draft an agreement and told her that Mrs. LaMunyon would sign it because she handled all of their finances. Mrs. Bishop prepared the Bill of Sale for the Property. She filled in the blank portions of the Bill of Sale in her handwriting. The information was written into the document on June 19, 1995. Based upon information provided by the LaMunyons, she referred to the Source One first deed of trust in the amount of $121,000 in the Bill of Sale. The information about the Source One debt had been given to her by Mrs. LaMunyon when Mr. LaMunyon was present. After Mrs. LaMunyon signed the Bill of Sale, the LaMunyons gave Mrs. Bishop their coupon payment book. The owners of the Property were to be Mrs. Bishop, her husband, and her brother, Scott Kelly. She understood that they were obligated under the Bill of Sale to pay the existing mortgage. Mrs. Bishop told Mrs. LaMunyon that they would need to have a rental agreement signed by the LaMunyons so that the Canyon Lake Homeowners Association would allow Mrs. Bishops mother to live in the condominium.
Plaintiffs then began making the Source One mortgage payments. Mrs. Bishop did not know whether, apart from the Bill of Sale, any papers were signed confirming the $15,000 obligation. She had no discussions with Mr. LaMunyon about paying off the second trust deed at $100 per month. She did, however, make one $100 payment. After making the payment, Mr. LaMunyon told Mrs. Bishop in a telephone conversation not to "worry about the $100 per month."
In 2002, the plaintiffs felt they could refinance the Property. Mrs. Bishop wrote to Mrs. LaMunyon, saying: "The property values are recovering. I think we can do this quickly. Do the refinance. Let me know when we can work on it." Subsequently, she talked with Mrs. LaMunyon, who seemed excited about completing the sale. Later that day, Mr. LaMunyon called Mrs. Bishop and said, "Forget that little piece of paper. . . . That place is a rental." Thereafter, she and Mr. LaMunyon had a conversation about increasing the payment to the LaMunyons from $15,000 to $25,000.
As for maintenance on the premises, Mrs. Bishop testified that in November 2001, she and her husband replaced a heat pump. They replaced a garage door and garage door opener in November 2004, and did quite a bit of plumbing. They also replaced an upstairs deck. The LaMunyons did not pay for any repairs. Mrs. Bishop purchased the furniture in the residence prior to her mother moving in.
On June 19, 1995, Mrs. Bishop saw Mr. LaMunyon sign the bill of sale for a boat that the LaMunyons had docked on the lake. Both Mr. LaMunyon and Mrs. LaMunyon signed the certificate of ownership for the boat on that date. The LaMunyons also released all privileges and boating rights to their "lessee, Marie Kelly."
Randall Bishop testified that he worked with Mr. LaMunyon at the City of Covina Fire Department. After being told by his wife of the purchase terms of the Property, he agreed to buy it. He was present at the Property on June 19, 1995, with his wife, both the LaMunyons, and Marie Kelly. Mr. LaMunyon indicated that he was happy the Bishops were purchasing the property and that he was in no hurry to receive his $15,000. Mrs. LaMunyon also appeared happy that the plaintiffs were purchasing the property. Mr. Bishop further testified that on this date Mr. LaMunyon signed the document transferring the title to the boat. Between two and six days later, Mr. LaMunyon again indicated to Mr. Bishop that he was in no hurry for the $15,000, and that he was looking forward to moving to Mexico. The two had another conversation about the Property in 1996 at the Covina Fire Department during which Mr. LaMunyon told Mr. Bishop, "Just get it out of our name." In response, Mr. Bishop told him, "We cant. Its not worth enough." From June 1995 to April 2003, the LaMunyons never indicated that it was taking plaintiffs too long to comply with the $15,000 provision.
Defendants request that we take judicial notice of trial transcripts of proceedings in this case and a related case. The related case involves an unlawful detainer action by the LaMunyons against Marie Kelly. We have given the plaintiffs an opportunity to submit opposition to the request and informed them that the failure to serve an opposition may be deemed a consent to the request. Plaintiffs did not file an opposition to the request. In their reply brief, plaintiffs concede that the transcripts "are the proper subject of a Request for Judicial Notice," but contend that the evidence in the unlawful detainer action is not relevant to this appeal. We grant the request pursuant to Evidence Code sections 452, subdivision (d), and 459.
The defense evidence was elicited primarily through the testimony of the LaMunyons, as well as by cross-examination of Colleen Bishop and her brother, Scott Kelly.
Mrs. LaMunyon testified that Mrs. Bishop came to her house on June 19, 1995, for Mrs. LaMunyon to sign several documents relative to renting the property to Mrs. Bishops mother. The documents were presented in a "stack of papers" that included various documents relative to changing the utilities and other forms that were needed for Mrs. Bishops mother to obtain access to the lake. Mrs. LaMunyon signed the documents where she was told to sign. At the time she signed the documents, Mr. LaMunyon was in Mexico. She remembers signing the Canyon Lake property owners association form so that Mrs. Bishops mother could be shown as a renter. She signed her husbands name on the bill of sale for the boat. All the documents were signed prior to her moving to Encinitas, Mexico. She did not sign any documents on a date other than June 19, 1995. Mr. LaMunyon did not direct her to sign his name. She and Mrs. Bishop did not discuss the purchase of the Property. She never received from Mrs. Bishop $100 in cash.
Mr. LaMunyon testified that: At one point, while the Property was on the market, his real estate agent called indicating she was going to show the Property to a prospective purchaser for a second time. He was under the impression that he would net about $4,000 from a sale. At this time, he spoke with Mrs. Bishop. She indicated that she would buy the house and that he should stop "the real-estate lady." Mrs. Bishop indicated that she had a check with her and that she would give him $ 15,000 in cash. He communicated that it was acceptable. Later, the Bishops came to his house and indicated that they did not have the money to make the $15,000 payment. He told them that they could take a couple of months and that if the sale did not go through, he would either rent the Property or put it back on the market. He then worked out an agreement with Mrs. Bishop whereby he and his wife would move to Mexico and leave the Source One payment book with plaintiffs, and plaintiffs would make the payments, as rent. It was further agreed that the Bishops would take care of the association fees as part of the rent. He agreed to sell the Property to the plaintiffs if plaintiffs could come up with the money within "a couple months."
In 2003, Mrs. Bishop invited the LaMunyons to dinner, indicating that the plaintiffs were prepared to offer $25,000 for the equity in the house. Mr. LaMunyon called Mrs. Bishop to tell her that this was not acceptable. Later, he called Mrs. Bishop back and said he would accept the $25,000. Mrs. Bishop said that was agreeable, but that the LaMunyons would have to first deed the house to plaintiffs; he said he would not do that.
The first time Mr. LaMunyon saw the Bill of Sale was after the lawsuit in this case had been filed. He was not aware that his wife signed anything to that effect. He never had any conversations with anyone about the existence of the Bill of Sale, nor did he agree to the terms of the Bill of Sale. He never gave his wife instructions to sign any documents dealing with the house in June or July 1995. To his knowledge there was never a second deed of trust on the property. Additionally, he never had any discussions with anyone about repayment of a second deed of trust.
Defendants also established that in November 1995, five months after the Bill of Sale was signed, the Bishops filed a chapter 7 bankruptcy petition. They did not include the Property as property in which they owned an interest.
Mrs. Bishop explained that the reason the Property was not included was on the advice of an attorney; this advice was communicated to her by her sister-in-law, who worked for the attorney. Additionally, both Mrs. Bishop and Mr. Kelly explained that about the time of the filing of the bankruptcy petition, the two of them agreed that Mr. Kelly would take over 100 percent of the ownership of the Property and make all the payments. Mr. Kelly had no documentation of making any payments prior to July 1996. In or about November 1996, they went back to the initial ownership agreement.
III. ANALYSIS
A. The Court Did Not Err in Awarding Attorney Fees to Defendants
Within a year following the inception of this litigation, defendants propounded a total of 95 requests for admission. The courts award of attorney fees was based on its finding that plaintiffs unreasonably denied seven of those requests. In affirming the trial courts order, we conclude that the court did not abuse its discretion in finding that the seven requests for admission were of substantial importance to the litigation and were unreasonably denied by plaintiffs.
On appeal, plaintiffs do not challenge the amount that was awarded for attorney fees or the method of calculation.
Under Code of Civil Procedure section 2033.420, subdivision (a), if a party fails to admit the truth of any matter when requested to do so, the party requesting the admission may move the court for an order requiring the party who denied the request to pay the reasonable expenses incurred in proving the truth of the matter requested. Under subdivision (b), the court shall award reasonable expenses unless it concludes that: (1) the admission sought was not of "substantial importance" or (2) there was an existing "reasonable ground" for not admitting the truth of the matter.
"On appeal, the trial courts decision will not be reversed unless the appellant demonstrates that the lower court abused its discretion." (Brooks v. American Broadcasting Co. (1986) 179 Cal.App.3d 500, 508 (Brooks); see also Miller v. American Greetings Corp. (2008) 161 Cal.App.4th 1055, 1066 (Miller).) "`"Discretion is abused whenever, in its exercise, the court exceeds the bounds of reason, all of the circumstances before it being considered. The burden is on the party complaining to establish an abuse of discretion . . . ." `The abuse of discretion standard . . . measures whether, given the established evidence, the act of the lower tribunal falls within the permissible range of options set by the legal criteria. [Citation.]" (Dorman v. DWLC Corp. (1995) 35 Cal.App.4th 1808, 1815.)
1. The Seven Requests for Admission Were of "Substantial Importance" to the Disposition of the Case
As explained in Brooks, the main purpose for requests for admission is to set triable issues to rest, so that they need not be tried. They are aimed at expediting the trial. (Brooks, supra, 179 Cal.App.3d at p. 509.) In relying on case interpretation of the Federal Rules of Civil Procedure, the court in Brooks explained that for a request for admission to be of "substantial importance," it must be central to the outcome of the case. "[A]s a general rule a request for admission should have at least some direct relationship to one of the central issues in the case, i.e., an issue which, if not proven, would have altered the results in the case." (Brooks, supra, at p. 509, fn. omitted.)
From the inception of the present case, each of the seven requests were of "substantial importance" in that they had a direct relationship to the central issue of whether the LaMunyons entered into an enforceable sales contract. We first consider requests for admission Nos. 25, 63, 64, 66, and 94:
"25. That Colleen Bishop, for the period June 1, 1995 through the present date, knew that Steven La Munyon never executed a writing for the sale or transfer of any interest in the real property commonly known as 30146 Yellow Feather, City of Canyon Lake, County of Riverside, California, to Colleen Bishop."
"63. That Colleen Bishop has no facts, nor evidence, to support the allegation in the First Amended Complaint, at [paragraph] 13, that `Defendant Steven La Munyon, from and after June 19, 1995, also acknowledged the existence of the Purchase Agreement and requested performance from plaintiffs thereunder."
"64. That there are no writings to support the allegation in the First Amended Complaint, at [paragraph] 13, that `Defendant Steven La Munyon, from and after June 19, 1995, also acknowledged the existence of the Purchase Agreement and requested performance from plaintiffs thereunder."
"66. That there are no writings to support the allegation in the First Amended Complaint at [paragraph] 13, that `Defendant Steven La Munyon, on or about June 19, 1995, was aware that the Purchase Agreement had been prepared, and was aware that Patricia La Munyon was executing the Purchase Agreement on her behalf, as well as on the behalf of defendant Steven La Munyon as his authorized agent."
"[94.] YOU have never made one payment to Steven La Munyon and Patricia La Munyon in repayment of the Second Trust Deed identified in the BILL OF SALE.
[`YOU or `YOUR refers to responding Plaintiff and includes her present and former agents, employees, attorneys, accountants, with whom she deals or has dealt and anyone else acting on her behalf.]"
Each of the above five requests goes to the heart of plaintiffs case. As explained, the basic allegations in plaintiffs first amended complaint were that plaintiffs and defendants entered into a written purchase agreement. To the extent that Mr. LaMunyons signature was not on the Bill of Sale, Mrs. LaMunyon executed the document not only on her behalf but also on behalf of Mr. LaMunyon, as an authorized agent. Plaintiffs further contended that Mr. LaMunyon ratified and acknowledged the existence of the purchase agreement by accepting benefits thereunder. In their answer, defendants denied these allegations and alleged that there was no agreement between the parties. Each of these five requests is directed at whether Mr. LaMunyon signed any agreements, authorized his spouse to sign on his behalf, or accepted benefits under the contract with knowledge of its existence. In other words, they go to the dispositive issue of whether there was an enforceable contract.
Generally, a contract for the sale of real property must be in writing. The writing must be signed by either the party to be charged or by the partys lawful agent who has been authorized in writing to act on behalf of the party to be charged. (Civ. Code, § 1624, subd. (a)(3); Code Civ. Proc., § 1971.) However, part performance may obviate the necessity of complying with the statute of frauds. (Anderson v. Stansbury (1952) 38 Cal.2d 707, 715-716.) "Part performance allows enforcement of a contract lacking a requisite writing in situations in which invoking the statute of frauds would cause unconscionable injury. [Citation.] `[T]o constitute part performance, the relevant acts either must "unequivocally refer[]" to the contract [citation], or "clearly relate" to its terms. [Citation.] Such conduct satisfies the evidentiary function of the statute of frauds by confirming that a bargain was in fact reached. [Citation.] [Citation.] In addition to part performance, the party seeking to enforce the contract must have changed position in reliance on the oral contract to such an extent that application of the statute of frauds would result in an unjust or unconscionable loss, amounting in effect to a fraud." (Seacrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 555.) This rule is applicable to a conveyance of community property by only one spouse. To estop the nonsignator spouse from asserting that no valid contract exists, the nonsignator spouse must in some fashion engage in conduct in reference to the contract, which demonstrates his or her assent to the conveyance. (See Crittenden v. McCloud (1951) 106 Cal.App.2d 42; Rice v. McCarthy (1925) 73 Cal.App. 655.)
Here, request for admission No. 25 sought an admission that Mr. LaMunyon did not sign any document complying with the statute of frauds relative to the sale of the Property. Requests for admission Nos. 63, 64, and 94 sought an admission that Mr. LaMunyon did not in some fashion, with knowledge of the Bill of Sale, accept benefits under the contract thus estopping him from denying the existence of a contract for sale. And, request for admission No. 66 sought an admission that Mr. LaMunyon did not give authority in writing for Mrs. LaMunyon to act as his authorized agent. All of these facts were highly relevant to the issue of whether an enforceable contract for sale was entered into between the respective parties.
Requests for admission Nos. 85 and 86 sought admissions that at the time plaintiffs filed their bankruptcy petition, they did not own an equitable or legal interest in the Property. These two admissions were probative of whether plaintiffs maintained an ownership interest in the Property.
Accordingly, the court did not abuse its discretion in concluding that the requests sought admissions on matters of "substantial importance" to the disposition of the litigation.
2. The Trial Court Did Not Abuse Its Discretion in Concluding That There Was No Reasonable Ground for Not Admitting the Truth of the Matter
In making the determination as to whether a request for admission was unreasonably denied, the trial court generally assesses the situation at the time the request was denied. (Brooks, supra, 179 Cal.App.3d at pp. 509-510.) Factors to be taken into consideration in making this determination, include: (1) was the fact sought to be admitted of substantial importance at the time the request was made; (2) the extent to which the information sought to be admitted was within the personal knowledge of the responding party; (3) whether the necessary information to properly respond could have been gained through reasonable investigation; (4) did the responding party, in good faith, believe that he or she would prevail on the issue; (5) whether following an initial denial, the responding party subsequently offered to admit the fact rather than requiring the propounding party to prove-up the previously denied request for admission; and (6) at trial did the responding party actually submit evidence relative to admission sought by way of the request. (See id. at pp. 509-511; Wimberly v. Derby Cycle Corp. (1997) 56 Cal.App.4th 618, 634-635.)
As previously discussed, the matters sought by way of the requests were of substantial importance. Plaintiffs own pleading placed them in issue. Additionally, save and except for request for admission No. 66, no investigation was necessary for purposes of properly responding to the requests. All of the information was within the personal knowledge of one or more of the plaintiffs. From the record, it also does not appear that plaintiffs, following their denial of the requests, ever offered to admit or otherwise stipulate to the facts sought to be admitted.
Plaintiffs only arguable issue is that at the time they failed to admit the requests, they entertained a good faith belief that they would prevail on the matters sought to be admitted. In this vein, we initially note that on the motion for attorney fees, none of the plaintiffs nor their counsel submitted a declaration to the effect that at the time they failed to admit the requests, they entertained a good faith belief that they would prevail on the matters sought to be admitted. Additionally, in its statement of decision, the court found the credibility of Mrs. Bishop to be "low"; and as "between Steven LaMunyons testimony and Colleen Bishops testimony, Steven LaMunyon was far more credible." It is quite clear from the face of the record that plaintiffs unreasonably failed to admit request No. 25. It was well known by all plaintiffs that Mr. LaMunyon did not sign the Bill of Sale or any other document acknowledging the sale of the Property. From the evidence at trial, it is also obvious that plaintiffs had no facts, writings, or other evidence to support the allegation that Mr. LaMunyon acknowledged the existence of the purchase agreement, or that he was aware that it had been prepared. (Requests for admission Nos. 63, 64, & 66.) Equally, the trial court could find that requests for admission Nos. 85 and 86 were unreasonably denied, in light of plaintiffs omission of the Property from their chapter 7 bankruptcy schedules, which was filed under penalty of perjury. Lastly, as it relates to request for admission No. 94, we must defer to the trial courts finding in its tentative decision, that the credibility of Mrs. Bishop was "low"
The only possible evidence to support the denial of requests for admission Nos. 63 and 94 is that Mr. LaMunyon had knowledge that Mrs. Bishop gave to Mrs. LaMunyon $100 in cash and Mrs. LaMunyon keeping the $100. By having such knowledge, the plaintiffs argue that Mr. LaMunyon in some fashion acknowledged the existence of the sales transaction. Mrs. Bishop testified that she gave $100 in cash to Mrs. LaMunyon on the day that the LaMunyons left for Mexico and that she had conversations with Mr. LaMunyon about the $100 payments. Mrs. LaMunyon testified that she was never given $100 and Mr. LaMunyon testified that he had no knowledge of any sales document or the terms thereof. Given the trial courts finding relative to the credibility of Mrs. Bishop, we cannot say that it abused its discretion by implicitly finding that the substance of this testimony did not support the denial of requests for admission Nos. 63 and 94.
Plaintiffs rely on Stull v. Sparrow (2001) 92 Cal.App.4th 860 and Miller, supra, 161 Cal.App.4th 1055. Both cases are inapposite. In Stull, defendant had denied a request for admission seeking that he admit liability. Just prior to trial, defendant admitted liability. In light of the admission, the plaintiff submitted no evidence on the issue of liability. In affirming the trial courts denial of attorney fees based on an "unreasonable" denial of the request for admission, we stated: "[I]n the instant case, there is no indication in the record that any evidence on the issue of liability was offered. Under such circumstances, we cannot conclude that the trial court abused its discretion in determining that [the plaintiff] did not prove this issue, as that term is defined in Evidence Code section 190 and elsewhere. It is not beyond the bounds of reason for the trial court in this case to have determined that when a party has not put forth any evidence on an issue at trial, that issue has not been proved so as to merit an order under Code of Civil Procedure section 2033, subdivision (o)." (Stull v. Sparrow, supra, at pp. 867-868.) In the present matter, plaintiffs did not admit the substance of the facts sought by way of the admission prior to trial. It was therefore incumbent upon defendants to prove these facts at trial, which they did.
In Miller, a plaintiff had been hit by the driver of a pickup truck. The injured plaintiff and her husband sued the driver and his employer, American Greetings Corporation. As part of his employment, the driver worked from his home and car and relied on his cell phone to conduct business. (Miller, supra, 161 Cal.App.4th at p. 1061.) On the day of the accident, however, he had taken the day off work. (Ibid.) American Greetings Corporation requested that the plaintiffs admit that the driver was not acting within the course and scope of his employment at the time of the accident. (Id. at pp. 1058-1059.) The plaintiffs denied the request. The trial court found that the denial was unreasonable and awarded fees to the defendants. (Id. at p. 1061.) In finding that the award was an abuse of discretion, the appellate court explained that: "Because the law involving `mobile offices inside an employees car is unsettled, appellants could have reasonably entertained a good faith . . . belief that they could prevail here under respondeat superior." (Id. at p. 1066.) In the case at bar, the requests did not call for the application of unsettled law. Unlike in Miller, plaintiffs denials did not justify a failure to admit the requests for admission.
In conclusion, we do not believe the trial court abused its discretion in finding that the requests for admission were unreasonably denied. The courts conclusion was well within the permissible range of options guided by proper legal criteria.
B. Request for Sanctions
The LaMunyons filed with this court a motion for sanctions against plaintiffs and their counsel pursuant to California Rules of Court, rule 8.276 and Code of Civil Procedure section 907. The LaMunyons contend that the appeal is frivolous, dilatory, and serves no purpose other than to increase their fees and costs and waste the time and resources of this court. They seek $25,501.36. The motion is supported by the declarations of two of the LaMunyons attorneys, D. Scott Doonan and Lynne Rasmussen. In paragraph 2 of his declaration, Mr. Doonan testifies that on April 15, 2008, "a representative of [his] office, along with Steven LaMunyon, attended a several-hour mediation with [plaintiffs] at the Court of Appeal." He further declares that the defendants "position that the instant appeal had no merit was clearly laid out for [plaintiffs] at that time. The appeal did not settle and [plaintiffs] did not withdraw their appeal." The remainder of Mr. Doonans declaration and the entirety of Ms. Rasmussens declaration are devoted to supporting the amount of fees sought.
Plaintiffs filed an objection to paragraph 2 of Doonans declaration on the ground that "it lacks foundation establishing the personal knowledge of the declarant, as D. Scott Doonan, the declarant[,] did not attend the settlement conference in question." They further objected to that paragraph as hearsay and on the ground that it violates the mediation privilege under Evidence Code section 1119.
Plaintiffs also request that, if we are considering imposing sanctions, we notify them so that they may file an opposition to the motion. (See Cal. Rules of Court, rule 8.276(c), (d).) We find that we do not need the benefit of an opposition.
Subdivision (a) of Evidence Code section 1119 provides: "No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible . . . ." Subdivision (c) of that statute provides: "All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential."
The plaintiffs objection includes a declaration by Daniel E. Katz. Mr. Katz takes issue with Mr. Doonans description of the April 15, 2008, settlement conference that took place at this court. According to Mr. Katz, he, Colleen Bishop, Randall Bishop, and Scott Kelly attended the conference. Daniel Joseph Doonan (not D. Scott Doonan), attended that conference for defendants. Contrary to D. Scott Doonans declaration, "neither of the LaMunyons were present." Katz states that the merits of the appeal were never discussed, and the mediator never expressed an opinion to Katz regarding the merits of the appeal.
"`[A]n appeal should be held to be frivolous only when it is prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment—or when it indisputably has no merit—when any reasonable attorney would agree that the appeal is totally and completely without merit. [Citation.] [¶] However, any definition must be read so as to avoid a serious chilling effect on the assertion of litigants rights on appeal. Counsel and their clients have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win on appeal. An appeal that is simply without merit is not by definition frivolous and should not incur sanctions. Counsel should not be deterred from filing such appeals out of a fear of reprisals. [Citation.] Moreover, `the punishment should be used most sparingly to deter only the most egregious conduct. [Citation.]" (Friends of Riversides Hills v. City of Riverside (2008) 168 Cal.App.4th 743, 754-755, quoting In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650-651.)
We sustain the objection on the ground that it lacks foundation and that it violates the mediation privilege.
We have reviewed the record and the parties briefs on appeal in light of the motion for sanctions. Although we conclude that the trial court did not abuse its discretion in awarding defendants their attorney fees, we cannot conclude the appeal was frivolous or filed for an improper purpose. Accordingly, we deny the motion for sanctions.
IV. DISPOSITION
The order awarding attorney fees is affirmed. The motion for sanctions is denied. Respondents are awarded their costs on appeal.
We concur:
Ramirez, P.J.
Hollenhorst, J.