Smith v. Circle P Ranch Co. (1978)
87 Cal. App. 3d 267


[Civ. No. 52070. Second Dist., Div. One. Dec. 14, 1978.]

CLIFTON SMITH, Plaintiff and Respondent, v. CIRCLE P RANCH COMPANY, INC. et al., Defendants and Appellants.

(Opinion by Hanson, J., with Lillie. Acting P.J., and Thompson, J., concurring.) [87 Cal. App. 3d 268]

COUNSEL

Tom Halde & Associates, Kristofer Kallman, Lascher & Wilner, Edward L. Lascher and Wendy Cole Wilner for Defendants and Appellants.

Shapiro & Finn, David Sabih, Richard F. Harris and Leonard Sacks for Plaintiff and Respondent. [87 Cal. App. 3d 270]

OPINION

HANSON, J.

Defendants Circle P Ranch Company, Robert Palm and Kenneth Palm (hereinafter collectively referred to as the Circle P defendants) appeal from two post-judgment orders entered against them by the trial court following a jury verdict exonerating them from liability in this action for personal injuries instituted by Clifton Smith. The litigation proceeded to trial against Cal-Tex Livestock Development Corporation, Edwin Cox, Jr., and Kenneth Eng, Jr. (hereinafter referred to collectively as the Cal-Tex defendants), and the Circle P defendants. Following trial the court on motion by plaintiff-respondent entered its orders (1) striking the cost memorandum presented by the Circle P defendants and (2) imposing as sanctions against the Circle P defendants the costs incurred by plaintiff-respondent in proving the existence of certain facts which had been denied by the Circle P defendants in their responses to pretrial requests for admissions. The Circle P defendants appeal, none of the Cal-Tex defendants are parties to this appeal.

Facts

This case was appealed on a settled statement of facts. From the documents and settled statement on appeal it appears that the brothers Kenneth and Robert Palm, together with Kenneth Eng, Jr., and Edwin Cox, Jr., were at the time of this litigation owners of the land known as the Carrizo Ranch, the property upon which Clifton Smith was injured. The Carrizo Ranch was leased and operated by Cal-Tex, a corporation owned by the same individuals. The Palm brothers were also equal owners in Circle P, which appears to constitute a holding company for their interest in Carrizo Ranch.

In the granary at Carrizo Ranch an auger was installed which was used to grind and move grain into a grain elevator and then into a waiting truck. On September 3, 1975, while Clifton Smith was at the Carrizo Ranch for the purpose of hauling grain and barley from the premises, the auger became plugged. Smith testified that, in order to assist the foreman, Keith Milburn, in unplugging the auger, he offered to go into the granary to stem the flow of the grain inside the auger. While walking inside the granary, Smith slipped and fell inside the auger. As a result, his right leg was chewed up and amputated by the auger.

Smith filed an action for damages against the six defendants on October 25, 1975. After extensive discovery proceedings, the case came to [87 Cal. App. 3d 271] trial on Smith's first amended complaint on January 17, 1977. On February 25, 1977, the jury returned a general verdict in favor of plaintiff against Cal-Tex and a special verdict finding, inter alia, that Circle P and the Palm brothers were not negligent.

Following judgment, on March 25, 1977, a hearing was held on plaintiff Smith's motions to compel the various defendants to pay his attorney's fees and expenses for proof of facts and to strike the memoranda of costs filed by the various defendants in the case. By its order of March 25, 1977, the trial court granted Smith's motion for payment of expenses for proof of facts as to the Circle P defendants. The court found the reasonable cost of Smith's expenses, including reasonable attorney's fees and investigation fees incurred in proving the genuineness of certain photographs and truth of certain matters of fact sought to be established in requests for admissions which were wrongfully denied, to be the sum of $30,500. In addition, the trial court granted Smith's motion to strike the memorandum of costs filed by the Circle P defendants. It is from these orders that the Circle P defendants appeal.

Issues

The Circle P defendants contend on appeal: (1) That the trial court lacked the power to withhold costs from prevailing defendants; and (2) that the trial court erred in imposing sanctions, or alternatively, that even if sanctions were appropriate, there is no support in the record for the amount imposed by the trial court.

Discussion

I

[1] The Circle P defendants, appellants herein, contend that the trial court erred in striking their cost bill. In support of this contention, the Circle P defendants rely upon Code of Civil Procedure section 1032, subdivision (b), which provides that in an action for the recovery of money or damages: "[C]osts are allowed of course: ... To the defendant upon a judgment in his favor ... [and] when there are several defendants in any action ... not united in interest, and making separate defenses by separate answers, and plaintiff fails to recover judgment against all, the court must award costs to such of the defendants as have judgment in their favor." (Italics added.) The Circle P defendants point out that the single party against which Smith prevailed, Cal-Tex, was represented by [87 Cal. App. 3d 272] separate counsel who filed a separate answer and that, therefore, section 1032, subdivision (b), is applicable and the allowance of costs to the Circle P defendants is mandatory.

Plaintiff-respondent Smith argues, by contrast, that Code of Civil Procedure section 1032, subdivision (b), is not applicable in this case since the jury's finding of liability on the part of Cal-Tex "must necessarily include the two owners of the land, Robert Palm and Kenneth Palm [sic] who are also the two owners and alter ego of defendant Cal-Tex." Plaintiff-respondent Smith's contention that Robert Palm is liable for negligence and that the Palm brothers may be liable for the negligence of Cal-Tex either as the lessors of the property, as joint venturers in the operation of the ranch, or on the alter ego doctrine was recently considered by this court in the case of Smith v. Circle P Ranch Company, Inc. (Nov. 21, 1978) 2 Civ. 51541 (unpub. opn.). In that case it was determined that Robert Palm was individually liable for negligence as a matter of law and that the motion of Clifton Smith for a judgment notwithstanding the verdict should have been granted by the trial court as to Robert Palm. Since the legal basis for this conclusion is set forth in full therein, we need not further consider the matter except to note that our decision nullifies the argument of the Circle P defendants as to the applicability of Code of Civil Procedure section 1032, subdivision (b).

Section 1032, subdivision (b), establishes two requirements which must be met to determine which defendants are entitled to mandatory recovery of an award of costs in those cases where there are several defendants and plaintiff fails to recover judgment against all. Those requirements are: (1) Defendants must not be united in interest; and (2) defendants must make separate defenses by separate answers. Since Robert Palm and the other Circle P defendants were represented by the same counsel and filed a single joint answer, our determination that Robert Palm was negligent as a matter of law precludes the second statutory requirement from being met. Since one requirement is not fulfilled as a result of modification of the judgment on appeal, section 1032, subdivision (b), is not applicable and the recovery of costs by the Circle P defendants is not mandatory.

[2] In those instances in which several defendants are united in interest and/or join in making the same defenses in the same answer, the allowance or disallowance of an award to prevailing defendants lies within the sound discretion of the trial court. (Kramer v. Ferguson (1964) 230 Cal. App. 2d 237, 249 [41 Cal.Rptr. 61].) Since the record discloses no abuse of discretion on the part of the trial court, we affirm the order striking the costs as to the Circle P defendants. [87 Cal. App. 3d 273]

II

[3a] The Circle P defendants further contend that the trial court abused its discretion by imposing sanctions against them for bad faith failure to admit the genuineness of certain photographs introduced at trial and the truth of certain matters of fact which were propounded by plaintiff-respondent's pretrial requests for admissions.

[4] It is well established that although the principal aim of discovery procedures in general is to assist counsel to prepare for trial, requests for admissions are conceived for the purpose of setting to rest triable issues in the interest of expediting the trial. (Cembrook v. Superior Court (1961) 56 Cal. 2d 423, 429 [15 Cal.Rptr. 127, 364 P.2d 303]). Therefore, a party may request from the opposing party the truth of any facts or the genuineness of any documents that is relevant to the subject matter of the action or reasonably calculated to lead to admissible evidence. (Cembrook v. Sterling Drug Inc. (1964) 231 Cal. App. 2d 52, 62 [41 Cal.Rptr. 492]; Cembrook v. Superior Court, supra, 56 Cal. 2d 423, 429.) Furthermore, since requests for admissions are not limited to matters within personal knowledge of the responding party, that party has a duty to make a reasonable investigation of the facts before answering items which do not fall within his personal knowledge. (Lindgren v. Superior Court (1965) 237 Cal. App. 2d 743, 746 [47 Cal.Rptr. 298, 20 A.L.R.3d 748]; Chodos v. Superior Court (1963) 215 Cal. App. 2d 318, 323 [30 Cal.Rptr. 303].)

[3b] Where certain facts exist which the responding party does not intend to contest at trial, the proper time to admit and permit those facts to be established is during pretrial discovery. (Burke v. Superior Court (1969) 71 Cal. 2d 276, 282 [78 Cal.Rptr. 481, 455 P.2d 409]; Cembrook v. Superior Court, supra, 56 Cal. 2d 423, 429.) In the event, however, that the defendant denies a request for admission submitted by the plaintiff, he cannot be forced to admit the fact prior to trial despite its obvious truth. (Holguin v. Superior Court (1972) 22 Cal. App. 3d 812, 820 [99 Cal.Rptr. 653].) Code of Civil Procedure section 2034, subdivision (c), provides: "If a party, after being served with a request under Section 2033 of this code to admit the genuineness of any documents or the truth of any matters of fact, serves a sworn denial thereof and if the party requesting the admissions thereafter proves the genuineness of any such document or the truth of any such matter of fact, he may apply to the court in the same action for an order requiring the other party to pay him the reasonable expenses incurred in making such proof, including reasonable attorney's fees. If the court finds that there were no good reasons for the denial and [87 Cal. App. 3d 274] that the admissions sought were of substantial importance, the order shall be made." (Italics added.)

It was under Code of Civil Procedure section 2034, subdivision (c), that Mr. Smith moved for, and the trial court imposed, sanctions against the Circle P defendants. Clifton Smith's motion for sanctions was based upon his allegation that the defendants inadequately responded to some 35 requests for admissions which were propounded to all parties on May 12, 1976, September 20, 1976, and November 4, 1976. The Circle P defendants base their contention that the trial court erred in imposing sanctions on them upon the following factors: (1) They were prevailing parties; (2) certain of those responses upon which Mr. Smith based his motion were not "denials" for which sanctions are authorized (Code Civ. Proc., § 2034, subd. (c)); and (3) the trial court refused to identify those specific responses upon which its order was based in contravention of the requirement for findings (Code Civ. Proc., § 2034, subd. (c)).

The Circle P defendants contend, without citing legal authority, that it is improper for the court to impose on a party who prevails at trial sanctions for his failure to admit during pretrial discovery certain contested issues of fact later found to be false. They base this claim on the fact the case was ultimately decided in their favor by the jury. In a case such as the one at bench, where the jury made only the general finding that the Circle P defendants were not negligent, such a rule would preclude plaintiff from thereafter making any showing that sanctions were justified for wrongful denials during pretrial discovery. Such a general finding by the jury does not, however, establish that defendants were justified in their pretrial denials of specific facts later proved true. Nor does it constitute a determination that plaintiff failed to prove all facts to which defendants' denials were relevant.

To succeed at trial under a negligence cause of action plaintiff must establish by a preponderance of the evidence the truth of those allegations in his complaint which are placed in issue (Polk v. Polk (1964) 228 Cal. App. 2d 763, 787 [39 Cal.Rptr. 824]). It is clear that plaintiff's burden of proof that defendants were negligent in the present case was not coextensive with the showing required by plaintiff in seeking imposition of sanctions for denial of specific facts by defendants on pretrial requests for admissions. It is mandatory that the court impose sanctions against either party when the other party makes application showing that (a) any fact of substantial importance was denied by his opponent and (b) such denial was without good cause. (Code Civ. Proc., [87 Cal. App. 3d 275] § 2034, subd. (c).) One need not be a prevailing party to be entitled to sanctions under this statute.

The Circle P defendants argue further that many of the so-called "denials" upon which Mr. Smith's motion for sanctions was based were not express denials but were instead framed as (a) responding party "lacks information and belief sufficient to admit or deny the request" or (b) responding party "cannot truthfully admit or deny this request."

The Circle P defendants entered explicit denials to most of the requests for admissions upon which plaintiff based his motion for sanctions. As to a few items in issue the Circle P defendants responded that they lacked sufficient information and belief. As a result of plaintiff's motion, the court issued its order to compel further answers and defendants changed these responses to "As framed, denied." Each of the foregoing responses qualifies as a sworn denial. (See, e.g., Hillman v. Stults (1968) 263 Cal. App. 2d 848, 882-884 [70 Cal.Rptr. 295]; Allen v. Pitchess (1973) 36 Cal. App. 3d 321, 332 [111 Cal.Rptr. 658].) fn. 1

The Allen court in affirming sanctions