Post-trial civil procedure - defense failure to stipulate to the authenticity of medical records as "business records" entitles plaintiffs to claim the cost of having to prove their admissibility
Division Seven of the Second Appellate District of California has upheld and reversed post-trial orders by the Hon. Graciela L. Freixes of the Los Angeles County Superior Court. (Vargas v. Gallizzi (October 13, 2023) B317540.) Following a prior appellate opinion remanding for a new trial to consider both loss of use and future non-economic damages, plaintiffs prevailed in the second trial and the parties wrangled over who should pay what after trial. Justice Perluss and his colleagues on the Second District panel affirmed the trial court’s award of costs to the defense based on a successful pre-trial offer to compromise, but reversed the trial court's denial of any of the requested "cost of proof" sanctions to plaintiffs, finding they were entitled to claim the reasonable cost of having to prove matters unreasonably denied by the defense. The final result is that the defense will owe the plaintiffs $15,125 in damages, plus a to-be-determined amount relating to attorneys fees and costs, while the plaintiffs will owe the defense its allowable costs of suit, or $28,547.66, including $12,000 for a particular expert’s fees for testifying.
What are sometimes called "cost of proof" sanctions may be awarded for the pre-trial costs of proving a matter the other party will not admit
Vargas explained California's procedure for claiming attorney fees and costs related to factual matters the other party will not admit:
During pretrial discovery a party may serve a written request that another party “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.) Such requests “‘are primarily aimed at setting at rest a triable issue so that it will not have to be tried. Thus, such requests, in a most definite manner, are aimed at expediting the trial. For this reason, the fact that the request is for the admission of a controversial matter, or one involving complex facts, or calls for an opinion, is of no moment. If the litigant is able to make the admission, the time for making it is during discovery procedures, and not at the trial.’” (Id., p. 9; emphasis added but citation omitted.)
Counsel for plaintiffs made multiple attempts to have defense counsel stipulate to the admissibility of medical records, to no avail. Indeed, defense counsel refused to stipulate that such records were "business records" under Evidence Code section 1271 and therefore twice denied requests for admissions to this effect. The trial court ultimately settled this contested issue pre-trial by ruling most of the records were in fact "business records:"
. . . [T]he court heard argument regarding the parties’ motions in limine. . . [and] it appears the admissibility of medical records was argued because the minute order for July 30, 2021 states, “The Court rules that any sealed subpoena records received will be considered as business records. The admissibility of said records is deferred to the time of trial.”
The issue was revisited during trial when Vargas and Garcia’s counsel indicated he would use some of the medical records to refresh Vargas’s recollection during her testimony. Gallizzi’s counsel objected that Vargas could not authenticate the documents and the records contained hearsay. The court responded, “I’ve deemed them not hearsay with regards to authentication and foundation because they were provided . . . as part of the subpoenaed records.” Ultimately the medical records proffered by Garcia and Vargas were admitted into evidence at trial except for approximately 10 pages the court ruled contained hearsay within hearsay. (Id., pp. 5-6.)
After trial plaintiffs brought a motion requesting a staggering $350,000 in attorney fees and costs related to defendant's supposedly “unreasonable” denial of the requests for admissions. The trial court denied this motion, explaining, inter alia, that the issue of the authenticity of the medical records had been decided before trial and there was therefore no need to expend attorney effort to "prove" such during the actual trial.
The Second District reversed, remanding the matter for reconsideration as to the amount of the attorney fees and costs to be awarded related to the denial of the requests for admissions. As the appellate court explained, Code of Civil Procedure section 2033.420 does not limit its scope to what is proven "at trial," providing a post-trial award to the party who "thereafter proves the genuineness of that document or the truth of that matter.” Consequently, a post-trial award may include attorney fees and costs incurred "pre-trial" as part of the "proof" referenced in the statute, including, as was the case in Vargas, efforts in bringing pre-trial motions.
The Vargas court explained that plaintiffs had "proven" the records were business records during the pre-trial hearing and, more to the point, the denial by the defense was not “reasonable:"
. . . [A] defendant ‘cannot be forced to admit [a] fact prior to trial despite its obvious truth. [Citation.]’ [Citation.] But the failure to do so comes with consequences, exposure to a costs of proof award.” Gallizzi had no reasonably held good faith belief she could prevail on the merits of the business records issue. Her denial rested solely on the potential for opposing counsel’s procedural error. Accordingly, Vargas and Garcia were entitled to recover the reasonable expenses incurred in proving the medical records were business records. (Id., p. 15.)
However, the plaintiffs were not permitted to claim the cost of proving causation at trial
Predictably, counsel also did not permit defendant to admit that she caused "some injury" to either plaintiff. However, during opening statements defense counsel stated "I believe these ladies were injured." Nonetheless, plantiffs’ post-trial motion asked for attorney fees and costs related to having prove causation at trial. The appellate court found the trial court and properly denied this request for “cost of proof” sanctions as the plaintiffs would have had to have proved the amount and severity of their damages no matter what the defenses admitted.
The appellate court also affirmed the award of costs to the defendant
The appellate court also affirmed, with no modifications, the substantial award of costs to the defense. Plaintiffs rejected an offer to compromise from the defendant made pursuant to Code of Civil Procedure section 998 and apparently "beat" this offer as the verdict at the second trial was less than this offer.
Plaintiffs quibbled with these costs, arguing the fact the defense expert designation stated the cost of testimony would be $6,000 for up to four hours indicated the claimed $12,000 should be reduced; however, as the court noted, the expert at issue testified over two separate days and thus charged a $6,000 minimum each day. The appellate court also rejected the claim the trial court abused its discretion in awarding the defense the cost of real-time court reporter transcription, explaining "[plaintiffs] have not cited any authority for the proposition that real-time transcription fees are not allowable when deemed appropriate by the trial court." (Id., p. 19.)
Tips for practitioners
This suit illustrates the effect of post-trial motions for sanctions and/or costs of suit in California, including that:
- In addition to any actual damages awarded, parties may recover from the other costs and/or sanctions and each party may therefore have a resulting award against the other; and,
- The result is that the "net" award may be to the defendant, and not the plaintiff, depending on amounts awarded by way of post-trial motion.
This second point is illustrated in Vargas by the judgment for damages of$15,125 to plaintiffs versus the costs awarded to the defense of $28,547.66. If the "cost of proof" sanctions are less than this amount, it appears likely the plaintiffs will owe the defendant money following this second trial.
Practitioners should therefore treat requests for admissions, particularly those related to the introduction of evidence at trial, very seriously. Matters that are routinely admitted, such as the authenticity and admissibility of documents, should be admitted if it would be unreasonable to deny them. At the same time, counsel whose clients reject section 998 offers to compromise should be aware of the increasing cost of litigation, including the charges of medical experts, and should take a "ballpark" estimation of these costs, including the cost of any and all experts called by opposing parties, into account when considering whether to reject or accept a statutory offer.
Scroll down below to send us a question or a comment.
