September 27, 2009

Hodge v. Guarantee Real Estate: Defendant Entitled to Fees for Defending Meritless Punitive Damages Claim

Can a plaintiff who pursues a meritless punitive damages claim be forced to pay the defendant's attorney fees for defending that claim? Yes, according to this unpublished opinion from the California Court of Appeal (Fifth Appellate District).

Under California Code of Civil Procedure section 2033.420, if a party serves a proper request for admission (RFA) and the opposing party fails to admit the truth of a matter contained in the RFA, the party that served the request can recover its attorney fees for proving the truth of that matter at trial.

In this case, the plaintiffs' complaint included a claim for punitive damages. The defendants served RFAs on the plaintiffs, asking them to admit that the defendants did not act with malice, oppression, or fraud (the prerequisites for recovering punitive damages under Civil Code section 3294). The plaintiffs denied the RFAs. At trial, the plaintiffs were unable to present any evidence of malice, oppression, or fraud, so the trial court granted a nonsuit on punitive damages.

The defendants then moved for attorney fees under section 2033.420. The trial court agreed that the conditions for awarding fees under section 2033.420 were met, but the court denied the defendants' motion on the ground that the plaintiffs' punitive damages allegations did not increase the overall fees incurred by the defense.

The Court of Appeal reversed. It held that the trial court erred by refusing to award any attorneys' fees. At the least, the defendants should have been awarded the fees they incurred in bringing their nonsuit motion on punitive damages.

UPDATE: The California Attorney's Fees blog has a post about this opinion here.