Opinion
D073125
04-04-2018
MARKEL INSURANCE COMPANY, Plaintiff and Appellant, v. CONTROLLED ENVIRONMENT HVAC, INC. et al., Defendants and Respondents; JAMES CARVER, Plaintiff and Appellant, v. CONTROLLED ENVIRONMENT HVAC, INC. et al., Defendants and Respondents.
Stockwell, Harris, Woolverton, & Helphre and Jeff Marsilio for Plaintiff and Appellant Markel Insurance Company. Russell & Lazarus and Marc Lazarus for Plaintiff and Appellant James Carver. Kennedy & Souza, James Patrick Souza and Todd P. Pearsall for Defendants and Respondents Controlled Environment HVAC, Inc. et al.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. CIVDS1303246) APPEAL from an order of the Superior Court of San Bernardino County, David Cohn, Judge. Affirmed. Stockwell, Harris, Woolverton, & Helphre and Jeff Marsilio for Plaintiff and Appellant Markel Insurance Company. Russell & Lazarus and Marc Lazarus for Plaintiff and Appellant James Carver. Kennedy & Souza, James Patrick Souza and Todd P. Pearsall for Defendants and Respondents Controlled Environment HVAC, Inc. et al.
Plaintiffs James Carver and Markel Insurance Company (Markel) prevailed at trial on their negligence action against defendants Controlled Environment HVAC, Inc. (Controlled) and its president Ors Gyene. Thereafter they filed a motion to recover costs of proof under Code of Civil Procedure section 2033.420 based on defendants' failure to admit requests for admissions regarding liability and damages. Plaintiffs appeal the denial of that motion. Finding no abuse of discretion, we affirm.
Further statutory references are to the Code of Civil Procedure unless otherwise indicated.
FACTUAL AND PROCEDURAL BACKGROUND
In November 2011, Carver was half an hour into his work installing breakers and electrical panels at a jobsite when a heavy air conditioning unit fell from the ceiling and struck him. He experienced pain, soreness, and limited range of motion in his left shoulder, upper back, and neck and underwent orthopedic procedures on his left shoulder in 2012 and 2014. In 2013, Carver and his workers' compensation insurance carrier (Markel) sued Gyene and Controlled for negligence. They claimed the doctrine of res ipsa loquitur applied.
Plaintiffs also sued general contractor Walden Structures (Walden), who is not a party to this appeal.
" 'The doctrine of res ipsa loquitur is applicable where the accident is of such a nature that it can be said, in the light of past experience, that it probably was the result of negligence by someone and that the defendant is probably the one responsible.' " (Howe v. Seven Forty Two Co., Inc. (2010) 189 Cal.App.4th 1155, 1161.) A defendant is presumptively negligent if a plaintiff proves three conditions: " '(1) the event must be of a kind which ordinarily does not occur in the absence of someone's negligence; (2) it must be caused by an agency or instrumentality within the exclusive control of the defendant; (3) it must not have been due to any voluntary action or contribution on the part of the plaintiff.' " (Ibid.; see former CACI No. 417 (2007 ed.).)
In April 2015, plaintiffs propounded requests for admission. As to liability, they asked defendants to admit the following:
17. Admit that YOU were negligent in installing the AIR CONDITIONING UNIT.They also propounded the following requests for admission as to causation and damages:
18. Admit that YOU were negligent in failing to warn Plaintiff that the AIR CONDITIONING UNIT was going to fall.
1. Admit that as a direct result of the INCIDENT, Plaintiff was injured.
13. Admit that the subject incident was a substantial factor in causing the Plaintiff's shoulder injury.
14. Admit that the subject incident was a substantial factor in causing the Plaintiff's shoulder pain.
15. Admit that the subject incident was a substantial factor in causing the Plaintiff's shoulder limitations.
16. Admit that the subject incident was a substantial factor in causing the Plaintiff[']s shoulder surgeries.Defendants objected to and denied each of these requests in June 2015.
19. Admit that YOUR negligence caused Plaintiff[']s Injuries.
21. Admit that Plaintiff was not the cause of his injuries.
22. Admit that Plaintiff did not contribute to his injuries.
24. Admit that Plaintiff has suffered a loss of earnings as a result of the INCIDENT.
25. Admit that Plaintiff has incurred medical expenses as a result of the INCIDENT.
The case proceeded to a jury trial in December 2015. Although we lack a record of trial proceedings, plaintiffs state the jury considered "evidence of how the incident occurred, medical records and bills concerning injuries, expert testimony, testimony of the Markel Insurance adjuster, the Markel Insurance records of payments for disability and medical expenses, the utilization review records, the [Panel Qualified Medical Evaluator] records, and the knowledge of Defendant, Ors Gyene, of the failure to properly install the [air conditioner] unit immediately following the incident as reflected in the Walden investigation report, as well as reflected in the Markel telephone log notes." The Walden investigation report that plaintiffs reference was prepared by general contractor Walden on the date of the incident. It concludes Controlled "did not install[] unit correctly, did not inspect[], creating a very serious unsafe condition."
Defendants challenged this evidence with their own liability and causation witnesses. The jury viewed deposition video of their liability expert, Chris Morgan, taken about a week before opening statements. Morgan disagreed with plaintiffs' liability expert that the unit fell because of missing washers, finding no basis for that conclusion. Morgan believed there was insufficient information to determine what caused the unit to fall. Because it was bolted at all four corners, he believed it unlikely that all four bolts dislodged evenly and caused the unit to come down all at once in the manner Carver described. Even assuming the unit was installed without washers, Morgan opined that "there would need to be some force put on it in order to get it to dislodge." For example, if Carver applied pressure while trying to connect electricity to the unit, that might have caused it to dislodge and fall. Nevertheless, Morgan conceded that if the unit had been properly installed, it would not have fallen.
Defendants also presented testimony of Controlled's president, Gyene, who arrived on the scene shortly after the incident. Gyene did not know what caused the air conditioning unit to fall but surmised in a phone call with a Markel agent, "maybe it wasn't installed all the way yet." Gyene admitted the unit was installed by someone from his company. He did not know the extent of Carver's injuries and believed Carver had only been scratched or scraped when the unit fell.
The record on appeal does not indicate whether Markel's phone log was admitted at trial—e.g., pursuant to the business records exception to the hearsay rule. On appeal, defendants argue the phone log and the entries within it were hearsay. As it makes no difference to our analysis, we will assume that the log and statements attributed to Gyene within it were held admissible and properly introduced at trial.
On causation and damages, defendants proffered testimony by medical experts Keolanui Chun and Stephen Rothman, who did not dispute Carver's need for medical treatment but challenged whether his injuries were caused by the fallen air conditioning unit. The jury viewed surveillance video showing Carver using his left arm and shoulder in various activities. Chun testified at his October 2015 deposition that these activities seemed inconsistent with Carver's claimed injuries, but the court did not allow Chun to offer that opinion at trial.
The trial court instructed the jury on the doctrine of res ipsa loquitur. (CACI No. 417.) The jury returned a verdict in plaintiffs' favor, finding defendants jointly and severally liable. The special verdict determined defendants were negligent; their negligence was a substantial factor in causing Carver's injuries; and Carver sustained damages totaling $424,951.
Plaintiffs filed a postjudgment motion to recover costs of proof as to the admissions defendants denied during discovery. (§ 2033.420, subd. (a).) Defendants opposed the motion on the basis they had reasonable grounds to believe they would prevail at trial. (§ 2033.420, subd. (b)(3).)
The court denied the motion. Despite the res ipsa loquitur instruction, it explained that the fact someone was negligent did not necessarily establish in this case that defendants were, particularly considering there were many people going in and out of the jobsite when the incident occurred. The court noted that defendants presented medical evidence challenging the extent of Carver's injuries and showed a video of Carver engaging in certain activities. Although this may not have been the strongest evidence, it was not a case where the defense was nonexistent. Despite the jury's verdict, the court could not find that defendants knew the truth of their liability, causation, and damages at the time they denied plaintiffs' requests for admission.
Carver filed a notice of appeal.
Defendants argue that because Markel did not file a separate notice of appeal, they lack standing. Plaintiffs respond that notices of appeal are to be liberally construed and that an appeal from an order binding both Carver and Markel should be construed as an appeal by both plaintiffs. We need not decide this issue. Even if Markel is properly part of this appeal, we affirm the order denying plaintiffs' motion.
DISCUSSION
During discovery, a party to a civil action may request another party to "admit the genuineness of specified documents, or the truth of specified matters of fact, opinion relating to fact, or application of law to fact." (§ 2033.010.) "The primary purpose of requests for admissions is to set at rest triable issues so that they will not have to be tried; they are aimed at expediting trial." (Brooks v. American Broadcasting Co. (1986) 179 Cal.App.3d 500, 509 (Brooks).) "Requests for admission are not restricted to facts or documents, but apply to conclusions, opinions, and even legal questions." (City of Glendale v. Marcus Cable Associates, LLC (2015) 235 Cal.App.4th 344, 353.) The responding party has a duty to make a reasonable investigation before answering items that do not fall within his or her personal knowledge. (Wimberly v. Derby Cycle Corp. (1997) 56 Cal.App.4th 618, 634 (Wimberly); Grace v. Mansourian (2015) 240 Cal.App.4th 523, 529 (Grace).)
California follows the American rule, and "each party to a lawsuit ordinarily pays its own attorney fees." (Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 751.) Nevertheless, a prevailing party may seek to recover fees required to prove the truth of certain matters. Pursuant to section 2033.420, subdivision (a), "[i]f a party fails to admit . . . the truth of any matter when requested to do so . . . , and if the party requesting that admission thereafter proves . . . 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." The court "shall" order costs of proof fees unless it finds that an exception applies. (§ 2033.420, subd. (b).) Relevant here, fees may properly be denied if the responding party "had reasonable ground to believe that [it] would prevail on the matter." (§ 2033.420, subd. (b)(3).)
"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 where the admission sought was 'of substantial importance' [citations] such that the trial would have been expedited or shortened if the request had been admitted." (Brooks, supra, 179 Cal.App.3d at p. 509.) In evaluating whether a "good reason" exists to deny a request for admission, "a court may properly consider whether at the time the denial was made the party making the denial held a reasonably entertained good faith belief that the party would prevail on the issue at trial." (Id. at p. 511.)
"The fact that matters denied were subsequently proved by uncontroverted evidence, if true, does not make the denial unreasonable per se, in retrospect." (Haseltine v. Haseltine (1962) 203 Cal.App.2d 48, 61.) Cost of proof expenses "are not recoverable simply because the party promulgating the request prevails at trial." (Brooks, supra, 179 Cal.App.3d at p. 513.) The focus is on whether, at the time of the denial, there was "some reasonable basis for contesting the issue in question." (Id. at p. 511.)
We review a trial court's denial of a costs of proof motion for abuse of discretion. (Bloxham v. Saldinger (2014) 228 Cal.App.4th 729, 753.) " 'An abuse of discretion occurs only where it is shown that the trial court exceeded the bounds of reason. [Citation.] It is a deferential standard of review that requires us to uphold the trial court's determination, even if we disagree with it, so long as it is reasonable.' " (Ibid.)
The standard is a difficult one to meet. In Wimberly, supra, 56 Cal.App.4th 618, we reversed an order denying costs of proof fees to the prevailing plaintiff in a products liability action. During discovery, the plaintiff requested admissions that there was a manufacturing defect, that the defect caused his injuries, and that medical expenses were reasonable and necessary. (Id. at p. 635.) The defendant bike manufacturer, Derby, continued to deny those requests a week before trial. (Id. at pp. 635-636.) But at trial, it "failed to produce any witness regarding the defect, causation, or future medical care issues." (Id. at p. 636, italics added.) We ruled Derby could not justify its denial on information received from its expert when it had failed to designate that expert as a trial witness. (Id. at p. 637.) Nor could it do so based on deposition testimony of a witness it clearly never intended to call at trial. (Ibid.)
Grace, supra, 240 Cal.App.4th 523 likewise reversed on the ground the denial of fees was an abuse of discretion. Personal injury plaintiffs sought admissions that the defendant motorist failed to stop at a red light, that his conduct was negligent, and that it caused the accident. (Id. at p. 530.) The defendant relied on his own belief that the light was yellow, notwithstanding a police report finding the motorist at fault, an eyewitness who saw him run a red light, and plaintiffs' accident reconstructionist who opined defendant was to blame. (Id. at p. 531.) In addition, the defendant did not offer a counter-reconstructionist to challenge the plaintiffs' expert. In reversing the fee denial, the court reasoned,
"To justify denial of a request, a party must have a 'reasonable ground' to believe he would prevail on the issue. [Citations.] That means more than a hope or a roll of the dice. In light of the substantial evidence defendant was at fault, plus defendants' apparent understanding of the weakness of their position, as evidenced in their opening statement, defendants' sole reliance on defendant's perception he entered the intersection on a yellow light was not a reasonable basis to believe they would prevail." (Id. at p. 532.)
Brooks, supra, 179 Cal.App.3d 500 sets helpful guideposts on either end. The court upheld the grant of fees as to requests for admissions that were denied and later contradicted by the Highway Patrol's report. It noted that counsel "admitted that he chose not to contest the issue at trial." (Id. at p. 512.) At the same time, it upheld the denial of fees as to a different request for admission where the plaintiff "had a reasonable basis, the anticipated testimony of his father, for denying [that] request . . . ." (Id. at p. 513.)
As these cases explain, where the losing party offers no evidence or insignificant evidence to buttress his or her earlier denial of a request for admission, the denial of a costs of proof motion under section 2033.420 is unreasonable. (Wimberly, supra, 56 Cal.App.4th at p. 636; Grace, supra, 240 Cal.App.4th at p. 532; Brooks, supra, 179 Cal.App.3d at p. 512.) But a different analysis applies where a party has reasonable basis to believe, based on anticipated trial testimony, that it will prevail. (Brooks, at p. 513.) On appeal, our inquiry is limited to whether "the trial court exceeded the bounds of reason in concluding that [Controlled and Gyene] had a reasonable basis to believe that [they] would prevail" on the topics covered by the requests for admission. (Carlsen v. Koivumaki (2014) 227 Cal.App.4th 879, 904.)
On the record before us, we cannot say the trial court exceeded the bounds of reason in denying plaintiffs' motion. Plaintiffs' requests for admission, propounded six months before trial, went to core contested issues of liability (Nos. 17, 18) and causation/damages (Nos. 1, 13-16, 19, 21, 22, 24-25). Defendants claimed they denied those requests in anticipation of trial testimony by its liability expert (Morgan), medical experts (Rothman and Chun), and (Controlled's President) Gyene. Three of those witnesses testified for defendants live at trial, and the jury viewed deposition testimony of the fourth. Despite the jury's verdict, the trial court found this was not a case with insignificant evidence on the defense side. It instead found this to be a case with "substantial evidence on the other side." (Italics added.)
We disregard plaintiffs' repeated reference to matters outside the record, such as the depositions of general contractor, Charles Walden, and Carver's employer, Matt Parise, defendants' alleged nonappearance at certain depositions, and information from the workers' compensation carrier regarding the extent of Carver's injuries.
That finding has ample support. Defendants' liability expert Morgan questioned plaintiffs' expert's claim that the unit fell due to missing washers. He did not know what made it fall, but thought it might have been caused (at least in part) by Carver or someone else applying force to it. Gyene did not know what caused the unit to fall and believed Carver suffered only a scratch. Medical experts Rothman and Chun opined that Carver's shoulder injuries were not caused by the fallen unit. In addition, defendants presented surveillance video of Carver using his left arm and engaging in activities seemingly inconsistent with his claimed injuries. This evidence goes directly to plaintiffs' requests for admission on issues of liability and causation. Although the verdict indicates plaintiffs had the stronger case, the trial court could reasonably conclude that defendants "had a reasonable basis" based on anticipated trial testimony to deny plaintiffs' requests. (§ 2033.420, subd. (b)(3); Brooks, supra, 179 Cal.App.3d at p. 513.)
Morgan could not say whether the unit fell because of missing washers; he explained that washers are not necessarily required for proper installation and that nuts alone sometimes suffice. With the nuts holding the unit at each corner, he believed it unlikely that it fell all at once in the manner Carver described. Considering that the unit had been held in place for at least an hour, he believed there must have been some force to dislodge it from a neutral position. Nevertheless, he later appeared to equivocate, stating the unit would not have fallen if it had been properly installed. Having reviewed Morgan's somewhat muddled testimony, we cannot say the trial court exceeded the bounds of reason in denying fees despite Morgan's acknowledgement that the unit was improperly installed.
Arguing against this result, plaintiffs improperly attempt to recast the record in the light most favorable to them. As to causation, they argue defense witness Dr. Chun did not disagree with Carver's doctors; but as defendants note, Chun never disputed that Carver needed surgery and only questioned whether his injuries were caused by a fallen air conditioning unit. Likewise, their claim that Rothman and Chun confirmed that an air conditioning unit fell on Carver ignores their testimony that it nevertheless did not cause his injuries.
As to liability, plaintiffs claim Gyene admitted improper installation in a call with Markel when the phone log actually reflects that Gyene did not know what happened but surmised, "maybe it wasn't installed all the way." They state Morgan testified the unit would not have fallen if the washers were properly installed, when Morgan also suggested the unit would not have fallen unless force had been applied. They claim Gyene failed to inspect the unit to determine why it fell when he arrived at the scene, overlooking that Gyene thought at the time that Carver had only been scratched. Plaintiffs are correct that the jury received a res ipsa loquitur instruction, but they ignore the trial court's finding that "a number of people . . . were in that room at different times" and that it was unclear who among them was presumably negligent. As to plaintiffs' claim that defendants admitted to a weak liability defense during opening and closing arguments, the quoted language merely reflects counsel's assertion that no one knew why the unit fell.
Plaintiffs' strongest evidence supporting their costs of proof motion is the report prepared by Walden on the date of the incident. Walden's safety coordinator concluded that Controlled caused the incident by improperly installing the air conditioning unit. Morgan, who was deposed near the start of trial, found the report lacking in detail as to what in particular was improperly installed. He explained that when he does safety investigations, he typically interviews people, looks at the unit, and takes photos. Although the Walden employee was present at the scene right after the event and reached a conclusion, Morgan found the conclusion "lacking." Given Morgan's testimony, we do not find the Walden report functionally identical to the uncontroverted Highway Patrol report in Brooks that warranted costs of proof fees for issues improperly denied. (Cf. Brooks, supra, 179 Cal.App.3d at p. 512.)
This is not a case where defendants justified their denials solely on their own unreasonable belief as to what happened. (Cf. Grace, supra, 240 Cal.App.4th at p. 532.) Nor is it a case where they claimed to do so based on testimony they had no intention of presenting at trial. (Cf. Wimberly, supra, 56 Cal.App.4th at p. 637.) Rather, defendants relied on the testimony of defendant Gyene, three experts, and surveillance video to challenge core issues of liability, causation, and damages covered by plaintiffs' requests for admission. Although the jury did not ultimately accept defendants' version of events, the trial court reasonably found "substantial evidence" on their side. The court did not abuse its discretion when it denied plaintiffs' motion for costs of proof fees under section 2033.420.
DISPOSITION
The order denying Appellants' motion for costs of proof fees is affirmed. Respondents are entitled to their costs on appeal.
DATO, J. WE CONCUR: NARES, Acting P. J. HALLER, J.