Spahn v. Richards

Filed 11/30/21

CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE

JEFFREY SPAHN et al., A159495
Plaintiffs and Appellants,
v. (Alameda County
DAN RICHARDS, Super. Ct. No. RG17851006)
Defendant and Respondent.

Plaintiffs Jeffrey Spahn and Paul Bontekoe (collectively, plaintiffs)
appeal from an amended judgment awarding defendant Dan Richards costs of
proof under Code of Civil Procedure section 2033.420 for plaintiffs’ failure to
admit certain requests for admission during discovery.
We affirm.1

Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this
*

opinion is certified for publication with the exception of Discussion, section I.
1Undesignated statutory references are to the Code of Civil Procedure.
While this appeal was pending, Richards moved for sanctions for plaintiffs’
filing of an allegedly defective record designation notice. (Cal. Rules of Court,
rules 8.130(a), 8.140(c).) We deferred ruling on the motion; we now deny it as
moot. Plaintiffs filed a corrected record designation notice, and Richards has
not demonstrated plaintiffs’ initial designation was made in bad faith or with
the intent to delay this proceeding. (Demkowski v. Lee (1991) 233 Cal.App.3d
1251, 1256.)

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 BACKGROUND
Plaintiffs purchased property in Berkeley intending to demolish the
existing structure and build a new residence. Richards, a licensed contractor,
demolished the structure but did not build the new house.
A.
The Lawsuit
In 2017, plaintiffs filed a complaint against Richards alleging causes of
action for breach of oral contract, breach of the implied covenant of good faith
and fair dealing, and promissory estoppel.2 Plaintiffs alleged they met with
Richards in June 2015 and reached “an agreement that Richards would
perform all work (the demolition and construction of the new residence) in
two phases; the demolition phase for $12,500 and building the new residence
for $515,000.” According to the complaint, plaintiffs and Richards “agreed on
this fixed price contract and entered into this oral contract in June 2015.”
Then, on July 1, 2015, Richards allegedly “confirmed and agreed that he
would perform the construction project” for $515,000 and would complete the
work by May 2016.
The complaint averred Richards breached the oral contract and
violated the covenant of good faith and fair dealing by refusing to build the
home. Plaintiffs’ promissory estoppel claim alleged Richards made a “clear
and unambiguous promise” to build a new residence for plaintiffs by a date
certain, and plaintiffs relied on this promise to their detriment. Plaintiffs
sought compensatory and punitive damages.

2 The complaint was consolidated with other litigation involving
plaintiffs’ property. We recite only those facts necessary to resolve the issues
on appeal, doing so in the light most favorable to the judgment. (See Cassim
v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 787.)
2
 Richards propounded requests for admission (RFAs) pertaining to
plaintiffs’ claim that the parties formed an oral contract in which Richards
agreed to build plaintiffs’ home. The RFAs asked plaintiffs to admit the
parties did not enter into an alleged oral contract and did not have a meeting
of the minds as to that alleged contract. The RFAs also asked plaintiffs to
admit the alleged oral contract was not binding or enforceable. Plaintiffs
denied the RFAs.
The trial court denied Richards’s motion for summary judgment,
concluding there were triable issues of material fact as to whether the parties
entered into an enforceable oral contract to build a new residence.3
B.
Trial
Plaintiffs purchased the property in 2014. They intended to demolish
the house on the property and build a new residence where Spahn — a
licensed California attorney — could showcase his art collection.
Plaintiffs hired Ajay Manthripragada to design the home. In May
2015, Spahn and Manthripragada interviewed Richards. They discussed
plaintiffs’ budget for the demolition and the construction. Richards agreed to
demolish the existing structure for $12,500. He did not agree to build
plaintiffs’ home.
After the meeting, plaintiffs gave Richards several sets of preliminary
drawings, all of which were marked “NOT FOR CONSTRUCTION” and had

3 Relying primarily on Spahn’s declaration in opposition to the motion,
the court concluded there were triable issues of material fact as to whether:
(1) the parties entered into an oral contract wherein Richards agreed to build
plaintiffs’ house; (2) Richards’s actions confirmed the parties’ alleged
understanding that they had entered into a binding oral contract; and (3) the
parties agreed on the terms necessary to form a binding oral contract.
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a blank schedule and no material specifications. Richards requested
“contractor” plans, but Manthripragada did not provide them. Without those
plans, Richards could not prepare a bid for the construction project. It was
Richards’s custom and practice to submit project estimates in writing and to
use written construction contracts. He did not submit a written bid for
plaintiffs’ construction project.
On June 30, 2015, Richards signed a written contract for the demolition
work and completed the demolition that same day. That evening, Spahn
emailed Manthripragada and Richards. Spahn wrote: “assuming we get
[Richards] approved, and we select [him] to do the job, fingers crossed,”
“the bank will still take 45 days to vest the loan and begin.” On July 4,
Manthripragada reminded Richards that he and Spahn were “waiting” for
Richards’s bid. That day, Spahn told Manthripragada that plaintiffs were
“looking into other options to hire contractors we like . . . . [B]udget on this
now should be well under $500k.”
During this time period, plaintiffs solicited bids for the construction
project. In July 2015, other contractors provided written estimates ranging
from $600,000 to $800,000. One contractor told Spahn the home could not be
built for $300 per square foot and called Spahn’s estimated $500,000 budget
“ridiculous.”
Richards completed the necessary paperwork to obtain approval from
plaintiffs’ lender. He also looked into increasing his insurance coverage and
may have spoken to at least one potential subcontractor. On July 21, 2015,
Spahn told Manthripragada: “I think we have a committed contractor we
just need to tread lightly until we have a contract signed.” About a week
later, Spahn and Manthripragada prepared, and later revised, a draft
construction agreement. The contract attached an “itemized budget” with

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a total cost of $515,000. Because Richards had not provided a bid or an
itemized cost breakdown, Spahn and Manthripragada “ ‘made up’ ” certain
costs and used cost estimates from other contractors’ bids.
In early August 2015, Spahn asked Richards to come to his office.
Richards agreed. During that meeting, Spahn presented Richards with the
written contract. It was signed by plaintiffs. Richards was “flabbergasted”
over the fake budget. He did not sign the contract. Several weeks later,
Richards told plaintiffs he was not going to pursue the construction project.
Plaintiffs hired another contactor to build the residence at a cost exceeding
$1 million.
Spahn testified that he and Richards reached an oral agreement in
June 2015 wherein Richards agreed to build plaintiffs’ home. In a telephone
call lasting a “couple of minutes,” Richards agreed to build the home for the
fixed price of $515,000. During the telephone call, Richards and Spahn did
not discuss specific costs or a payment schedule.
After the close of evidence, Richards moved for directed verdict. The
court denied the motion, but noted it was “very close.” Plaintiffs’ claims went
to the jury, which returned a defense verdict. The jury concluded there was
no contract, and that Richards did not make a promise with clear and
unambiguous terms. In September 2019, the court entered judgment in the
consolidated action.
C.
Costs of Proof
Richards moved for attorney fees and costs under section 2033.420. He
argued plaintiffs had no reasonable basis to deny the RFAs because
substantial evidence known to plaintiffs indicated Richards never agreed to
build plaintiffs’ “new residence for a fixed price of $515,000,” and plaintiffs

5
“failed to realistically evaluate their claims and perform a reasonable
investigation” before denying the RFAs.
In opposition, plaintiffs asserted they had “reasonable grounds” to deny
the RFAs. According to plaintiffs, Richards “engaged in conduct consistent
with the terms of the oral agreement” by submitting a contractor
qualification request with plaintiffs’ lender, by agreeing to sign a written
contract if required by plaintiffs’ lender, and by “lining up subcontractors” for
the construction project.
In December 2019, the court issued a thorough written order granting
the motion and awarding Richards $239,170.86 in attorney fees and costs
(costs of proof). The court determined plaintiffs had no reasonable grounds
for believing they would prevail on the issues raised in the RFAs because the
evidence at trial established plaintiffs knew they had not formed a binding
oral contract before they filed the lawsuit.
The court noted that plaintiffs alleged they entered an oral contract no
later than mid-June 2015, but that in late June and early July — after they
allegedly entered an oral contract — plaintiffs had not received a bid from
Richards or selected him to do the job and instead were soliciting and
receiving bids from other contractors. As the court pointed out, if plaintiffs
“had already entered an oral contract with Richards before June 30, there
would be no question as to whether they would later ‘select [him] to do the
job’ ” nor any “reason to ask Richards for his bid.” Next, the court observed
that, in late July 2015, “Spahn indicated that he thought he had a committed
contractor (Richards) but that [plaintiffs] ‘needed ‘to tread lightly’ ” until they
had “ ‘a contract signed.’ ” As the court deduced, if the parties had already
entered a binding oral contract, there would be no doubt Richards was the
contractor and no need for a signed written contract.

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 The court rejected plaintiffs’ assertion that Richards’s actions gave
them a reasonable basis to believe they had formed a binding oral contract.
It found Richards’s act of submitting a contractor qualification request, his
solicitation of subcontractor bids, and his statement that he would
investigate increasing his insurance coverage to enable him to work on the
project, were steps Richards would take before “entering any construction
contract, . . . to determine the feasibility of the project and its cost,” not “steps
Richards or any contractor would take after already entering into a contract
to build a project for a fixed price.” (Italics added.) In the court’s view,
neither Richards’s failure to explicitly inform plaintiffs that he had not
agreed to be their general contractor after they sent him a proposed written
contract, nor Richards’s failure to sign that contract, could be construed as
acceptance or confirmation of an oral contract. Those facts, the court
observed, supported “the opposite conclusion.”
In late December 2019, the court issued an amended judgment for
Richards which included costs of proof and awarded Richards prevailing
party costs. Plaintiffs timely appealed the amended judgment.
DISCUSSION
I.
The Notice of Appeal Encompasses
the Costs of Proof Order
Before plaintiffs filed their opening brief, Richards moved to dismiss
the appeal. He argued the notice of appeal was untimely because it was filed
more than 60 days after notice of entry of the September 2019 judgment
(original judgment). This court summarily denied the motion.
Richards renews the argument in his respondent’s brief. “A summary
denial of a motion to dismiss an appeal does not ‘preclude later full
consideration of the issue, accompanied by a written opinion, following review

7
of the entire record[.]’ ” (Turrieta v. Lyft, Inc. (2021) 69 Cal.App.5th 955, 967,
fn. 9; Kowis v. Howard (1992) 3 Cal.4th 888, 900.) Having fully considered
the issue anew and having reviewed the entire record, we again reject
Richards’s argument.
Richards contends plaintiffs were required to appeal the original
judgment. We disagree. The original judgment, which did not award costs of
proof, was superseded by the amended judgment, which did award those
costs. (See Ellis v. Ellis (2015) 235 Cal.App.4th 837, 842–843 [amended
judgment that makes a substantial modification supersedes original
judgment for purposes of filing a notice of appeal].) Thus, plaintiffs’ failure to
appeal the original judgment is of no consequence.
The same is true with respect to plaintiffs’ failure to separately appeal
the costs of proof order. The amended judgment included the costs of proof
award, and plaintiffs timely appealed that judgment. The “timely filing of
a notice of appeal is an absolute jurisdictional prerequisite,” but “technical
accuracy in the contents of the notice is not. [Citation.] Once a notice of
appeal is timely filed, the liberal construction requirement compels
a reviewing court to evaluate whether the notice, despite any technical defect,
nonetheless served its basic function—to provide notice of who is seeking
review of what order or judgment—so as to properly invoke appellate
jurisdiction.” (K.J. v. Los Angeles Unified School Dist. (2020) 8 Cal.5th 875,
882–883.)
Although plaintiffs’ notice of appeal refers to the amended judgment
and not the costs of proof order, it is reasonably clear plaintiffs intended to
challenge the costs of proof award as that is the only issue raised in plaintiffs’
briefs. (K.J. v. Los Angeles Unified School Dist., supra, 8 Cal.5th at p. 890.)
Moreover, there is no indication Richards was misled or prejudiced by the

8
notice of appeal. (Verceles v. Los Angeles Unified School Dist. (2021)
63 Cal.App.5th 776, 783.) Accordingly, we construe plaintiffs’ timely notice
of appeal to encompass the costs of proof order.
II.
No Abuse of Discretion in Awarding Costs of Proof
A party to a civil action may propound a written request for the
admission of “the truth of specified matters of fact, opinion relating to fact, or
application of law to fact.” (§ 2033.010.) “ ‘ “Requests for admissions . . . are
primarily aimed at setting at rest a triable issue so that it will not have to be
tried. . . . If the litigant is able to make the admission, the time for making it
is during discovery” ’ ” and not at trial. (Grace v. Mansourian (2015)
240 Cal.App.4th 523, 528–529 (Grace).) Under section 2033.420, if “the
requesting party proves the truth of an RFA previously denied by the other
party, the requesting party may move the court for an order requiring the
other party pay the reasonable expenses incurred in making that proof,
including reasonable attorney fees.” (Doe v. Los Angeles County Dept. of
Children & Family Services (2019) 37 Cal.App.5th 675, 690 (Doe).)
Pursuant to section 2033.420, subdivision (b), “the trial court shall
order the party denying the RFA to pay the costs of proof unless: (1) an
objection was sustained to the request or a response was waived; (2) the
admission sought was of no substantial importance; (3) there was reasonable
ground to believe the party refusing to admit the matter would prevail on the
matter; or (4) there was other good reason for the failure to admit.” (Doe,
supra, 37 Cal.App.5th at p. 690.) The party seeking to benefit from an
exception listed in section 2033.420, subdivision (b) “ ‘bears the burden to
establish the exception.’ ” (Samsky v. State Farm Mutual Automobile Ins. Co.
(2019) 37 Cal.App.5th 517, 523.)

9
 “In evaluating whether a ‘good reason’ exists for denying a request to
admit, ‘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.’ ” (Doe, supra,
37 Cal.App.5th at p. 690.) “A party’s reasonable belief must be grounded in
the evidence; it cannot be based merely on ‘hope or a roll of the dice.’
[Citation.] It is also not enough for a party making the denial to ‘ “hotly
contest” ’ the issue; instead, ‘there must be some reasonable basis for
contesting the issue in question before sanctions can be avoided.’ ” (Orange
County Water Dist. v. The Arnold Engineering Co. (2018) 31 Cal.App.5th 96,
116 (Arnold Engineering).) A party’s reliance on “self-serving testimony” may
be insufficient to establish a reasonable refusal to admit a request for
admission. (Doe, at p. 691.)
We review the trial court’s order awarding costs of proof under section
2033.420 for abuse of discretion. (Doe, supra, 37 Cal.App.5th at p. 690.)
“ ‘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.’ ” (Bloxham v. Saldinger (2014)
228 Cal.App.4th 729, 753.)
The trial court concluded plaintiffs did not have reasonable grounds to
believe they would prevail at trial on their claims arising out of the alleged
oral agreement. (§ 2033.420, subd. (b)(3).) The court did not abuse its
discretion in so concluding.
Plaintiffs alleged they reached an oral agreement with Richards to
build their home for $515,000 in June 2015. But the evidence introduced at
trial — which was known to plaintiffs when they denied the RFAs — belied

10
that contention. Plaintiffs were aware Richards had not submitted a written
bid for the project before, or after, the formation of the alleged oral contract.
(Nor could he, as the architectural renderings plaintiffs provided were
incomplete and not suitable for construction.) When they denied the RFAs,
plaintiffs were also aware that during the short telephone call where Spahn
asserted he and Richards reached the oral agreement, there was no
discussion of specific costs or a payment schedule. Finally, plaintiffs knew
that Spahn and Manthripragada “ ‘made up’ ” information about the
construction costs in the written contract they hoped Richards would sign.
In light of this evidence, the trial court could reasonably conclude
the claimed oral contract lacked essential and sufficiently definite terms
that would establish the existence of a meeting of the minds. (Carmel
Development Co., Inc. v. Anderson (2020) 48 Cal.App.5th 492, 518;
Robinson & Wilson, Inc. v. Stone (1973) 35 Cal.App.3d 396, 407.) Also
supported by the record was the court’s conclusion that plaintiffs’ belief that
they could prove the requested admissions at trial, “however firmly held,
was not reasonable.” (Grace, supra, 240 Cal.App.4th at p. 530; Brooks v.
American Broadcasting Co. (1986) 179 Cal.App.3d 500, 512.)
Plaintiffs’ arguments to the contrary are unavailing. According to
plaintiffs, the court failed to consider evidence supporting their “belief that
an oral contract had been formed.” Not so. The court considered the evidence
upon which plaintiffs relied, including testimony that Richards commenced
the demolition before the parties signed the demolition contract, and evidence
that Spahn emailed Richards in mid-July stating Richards’s “bid” was the
equivalent of a “fixed price contract at 515K.” Also before the
court was evidence that in July 2015 — after the date of the alleged oral
contract — plaintiffs had not yet selected Richards to perform the

11
construction and were instead actively soliciting bids from other contractors,
and evidence that Spahn acknowledged in late July that he was not certain
whether Richards was a “committed contractor.” This conduct, coupled with
Spahn’s effort to obtain Richards’s signature on the written contract, was
inconsistent with plaintiffs’ contention that an oral contract already existed.4
On this record, it was reasonable for the court to conclude plaintiffs did
not have a reasonable belief they would be able to establish the existence of
a binding oral contract at trial. It is not our role to reweigh the evidence: we
must defer to the trial court, which is in the best position to “decide whether,
in its discretion, the party who made the denials should be responsible for
costs of proof on the issue.” (Arnold Engineering, supra, 31 Cal.App.5th at
p. 119.) Here, the trial court was well positioned to evaluate the
reasonableness issue as it presided over the case from start to finish.
Plaintiffs also contend the costs of proof award was erroneous because
the court “previously denied” Richards’s motion for summary judgment. To
support this argument, plaintiffs rely on Universal Home Improvement, Inc.
v. Robertson (2020) 51 Cal.App.5th 116, 131 (Universal). In that case, which
concerned the Uniform Voidable Transactions Act (Civ. Code, § 3439 et seq.),
a division of this court reversed a costs of proof award because the plaintiffs
had offered “substantial” evidence at trial supporting their denial of the
requests for admission. (Universal, at pp. 128, 131, 132.) The Universal
court faulted the defendants for failing to cite any evidence in their costs of
proof motion and instead drawing “ ‘a straight line from the admissions to the

4 At oral argument, plaintiffs contended the trial court’s failure to
discuss each piece of their evidence demonstrated the court failed to consider
all the evidence. Hardly so. Plaintiffs cited no authority, and we are aware
of none, requiring a trial court to list evidence it considered and found
lacking.
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statement of decision as supporting their claim for fees.’ ” (Id. at p. 131.)
Additionally, Universal noted the trial court had previously denied the
defendants’ summary judgment motion and that, in the malicious prosecution
context, “a denial of summary judgment in the underlying case normally
establishes probable cause to sue.”5 (Ibid.)
Relying on the Universal court’s passing reference to summary
judgment, plaintiffs urge us to adopt a per se rule that defeating summary
judgment conclusively establishes the party reasonably entertained a good
faith belief it would prevail at trial. We decline plaintiffs’ invitation.
“Summary judgment is appropriate only ‘where no triable issue of material
fact exists and the moving party is entitled to judgment as a matter of law.’ ”
(Regents of University of California v. Superior Court (2018) 4 Cal.5th 607,
618.) In ruling on a summary judgment motion, a trial court must liberally
construe the evidence presented in opposition to the motion and resolve any
doubts about the evidence in favor of the party opposing the motion. (Aguilar
v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) At trial, the trier of fact
has no such obligation.
The focus of the trial court’s determination under section 2033.420,
subdivision (b) is whether “ ‘ “the party making the denial held a reasonably
entertained good faith belief that the party would prevail on the issue at
trial.” ’ ” (Grace, supra, 240 Cal.App.4th at p. 529, italics added; Arnold

5 Other courts have held the inquiry on a costs of proof motion is not
“whether the litigant had some minimum quantum of evidence to support
its denial (i.e., ‘probable cause’).” (Arnold Engineering, supra, 31 Cal.App.5th
at p. 119; Samsky v. State Farm Mutual Automobile Ins. Co., supra,
37 Cal.App.5th at p. 526.) Probable cause is a “ ‘low threshold designed to
protect a litigant’s right to assert arguable legal claims even if the claims
are extremely unlikely to succeed.’ ” (Mendoza v. Wichmann (2011)
194 Cal.App.4th 1430, 1449, italics added.)
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Engineering, supra, 31 Cal.App.5th at p. 119 [§ 2033.420, subd. (b) requires
consideration of “substantiality” and “credibility” of evidence offered at trial].)
Thus, the trial court did not abuse its discretion in determining plaintiffs’
success against summary judgment had limited relevance to its posttrial
determination that Richards was entitled to costs of proof. (See Arnold, at p.
131, fn. 13 [denial of motion for summary judgment did not justify plaintiff’s
failure to admit RFAs].)
In any event, Universal is distinguishable. Here, plaintiffs’ evidence at
trial was not substantial: it was implausible. Additionally — and unlike
Universal — Richards’s costs of proof motion described the evidence offered at
trial and explained why plaintiffs lacked a reasonable good faith belief they
would prevail in light of that evidence. Finally, in contrast to Universal, the
judge who presided over the trial also ruled on the costs of proof motion and,
in doing so, articulated why plaintiffs lacked reasonable grounds for believing
they would prevail. For these reasons, plaintiffs’ reliance on Universal is
misplaced.
Next, plaintiffs assert the denial of Richards’s motion for directed
verdict precluded the court from later awarding costs of proof. We are not
persuaded. In ruling on a motion for directed verdict, a “trial court has no
power to weigh the evidence, and may not consider the credibility of
witnesses.” (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 629.)
Instead, the court must give the opposing party’s evidence “all the value to
which it is legally entitled,” and indulge “every legitimate inference from
such evidence in favor of that party.” (Ibid.)
The court’s denial of the directed verdict motion did not, in the case
before us, establish plaintiffs presented credible evidence that they

14
entered into an enforceable oral contract with Richards. (Grace, supra,
240 Cal.App.4th at p. 531 [“the mere fact defendants presented evidence at
trial is not an automatic justification for denial of the requests”]; Yoon v.
CAM IX Trust (2021) 60 Cal.App.5th 388, 394–395 [denial of nonsuit motion
did not justify the plaintiff’s failure to admit RFAs].)
In sum, we conclude the court did not abuse its discretion in
determining plaintiffs lacked reasonable grounds for believing they would
prevail on their claims arising out of the alleged oral contract. As such, the
court properly awarded Richards costs of proof under section 2033.420.
DISPOSITION
The amended judgment is affirmed. Richards is entitled to costs on
appeal. (Cal. Rules of Court, rule 8.278(a)(2).)

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 _________________________
Rodríguez, J.

WE CONCUR:

_________________________
Tucher, P. J.

_________________________
Fujisaki, J.

A159495

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Superior Court of Alameda County, Hon. Ronni B. MacLaren

Lunski & Stimpert, Marc R. Stimpert and Andrew C. McClelland, for
Plaintiffs and Appellants Jeffrey Spahn and Paul Bontekoe.

Katzoff & Riggs, Kenneth S. Katzoff, Robert R. Riggs and Nicole C. Campbell,
for Defendant and Respondent Dan Richards.

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