Reasonableness of Denial of Requests for Admission Based Upon Expert’s Opinions Depends On Factors Within Party’s Understanding

Stephen M. Tye and Lawrence S. Zucker II | Haight Brown & Bonesteel | January 16, 2019

In Orange County Water District v. The Arnold Engineering Company (D070763), the Fourth Appellate District examined the criteria for evaluating the reasonableness of a parties’ denial of requests for admission (RFA’s) based upon their expert’s opinions and the proof required to recover costs for unreasonable denials.

In Orange County Water District, the Orange County Water District (the District) sued several current and former owners and operators of industrial sites, including The Arnold Engineering Company (Arnold), to recover expenses associated with groundwater cleanup efforts intended to address groundwater contamination caused by volatile organic compounds (VOC’s) and other chemicals. Over six years, the parties conducted extensive discovery, including document productions, depositions, and soil sampling and monitoring.

Six months before trial, Arnold served the District with RFA’s asking it to admit that (1) Arnold did not release specific VOC’s during its business operations at the site, (2) Arnold did not release specific VOC’s that caused contamination of groundwater in the area, and (3) Arnold did not contribute to VOC contamination in the soil or groundwater in the area. The District denied these RFA’s, in part based upon the District’s expert’s opinions.

Following a trial during which parties presented testimony from lay witnesses regarding Arnold’s activities and qualified experts, who summarized Arnold’s activities and opined on their impact, the trial court issued a statement of decision. The trial court found in favor of all defendants, including Arnold, and that the District had not shown that Arnold had released VOC’s into the environment.

After judgment was entered, Arnold moved for an award of costs of proof against the District based on its refusal to admit RFA’s during discovery. The trial court awarded approximately $313,000 in attorneys’ fees and approximately $300,000 in experts’ fees. The District appealed the judgment itself (See Orange County Water Dist. V. Alcoa Global Fasteners, Inc.(2017) 12 Cal.App.5th 252) and the order awarding costs of proof. The latter was stayed until the former was affirmed.

Section 2033.420 makes mandatory an award of costs of proof where a party responding to a request fails to admit the genuineness of the truth of any matter and the party requesting that admission thereafter proves the truth of that matter unless “[t]he party failing to make the admission had reasonable ground to believe that the party would prevail on the matter” or “[t]here was other good reason for the failure to admit.” In evaluating the reasonableness of the District’s denials, the appellate court relied heavily on Brooks v. Am. Broad. Co. (1986) 179 Cal.App.3d 500 and its progeny, which hold a party’s denial must be based on a reasonable belief that they believe they would prevail on the issue at trial in light of the evidence at hand at the time of the denial.

In recognition that a party may be unable to fully assess an expert’s choice of methodology and the substance of their analysis, the appellate court held the proper criteria for determining reasonableness of a party’s denial was the factors within the reasonable understanding of a party, such as:

  • Whether the expert has sufficient qualifications and experience to opine on the matter at issue;
  • Whether the expert’s opinions will likely be admissible at trial; 
  • Whether the facts underlying the expert’s opinion are supported by the evidence; 
  • Whether the expert’s methodology appears reasonable; and 
  • Whether the expert’s analysis is grounded in logic.

After an exhaustive review of the documents, depositions, pre-trial expert reports, and trial testimony, the appellate court applied these factors in determining that the District had a reasonable ground to rely on its expert’s opinions for a majority of its responses to the RFA’s despite the trial court’s finding for Arnold.

The appellate court then turned to the adequacy of the evidence supporting Arnold’s claimed costs, examining whether the admissible evidence was sufficient to distinguish between allowable costs and other costs incurred by the party. In doing so, the appellate court found that attorney declarations and invoices that listed the relevant RFA’s for each time entry were sufficient to support the claimed costs. However, the appellate court rejected the claimed expert costs on the grounds the invoices did not identify which time entry or task it was related to and that Arnold had failed to present any testimony that the invoices accurately recorded the work done.

Ultimately, Orange County Water District provides important guidance to litigators for two reasons. First, a party’s evaluation of requests for admission involving issues implicating expert opinions must include whether the party has a reasonable basis for relying on their expert’s opinions. Second, a party seeking an award of costs under section 2033.420 must provide the court admissible evidence that justifies an award of costs and cannot rely merely on invoices.

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