Court Opinion

ID: 9905574
Source: CourtListenerOpinion
Date Created: 2023-11-29 19:04:16.093527+00
Date Added: 2024-06-11T09:23:45.795580
License: Public Domain

Filed 11/29/23 Yeng Midas Touch v. Phanichkul CA4/1
                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                 DIVISION ONE

                                         STATE OF CALIFORNIA

YENG MIDAS TOUCH, INC.,                                              D080981

         Plaintiff and Respondent,

         v.
                                                                     (Super. Ct. No. 37-2019-
TANACHAI EDDIE PHANICHKUL                                            00056185-CU-BT-CTL)
et al.,

         Defendants and Appellants.

         APPEAL from a judgment of the Superior Court of San Diego County,
Joel R. Wohlfeil, Judge. Affirmed in part, and reversed and remanded in
part.
         Vivoli Saccuzzo and Michael W. Vivoli on behalf for Defendants and
Appellants.
         Stephen M. Hogan; Barry APC and Su Barry for Plaintiff and
Respondent.
                           I.    INTRODUCTION

      Tanachai “Eddie” Phanichkul1 appeals from two orders denying his
posttrial motions for attorney fees and sanctions, after a jury ruled in his
favor in an action brought against him by Yeng Midas Touch, Inc. (YMT). In
the first motion, Phanichkul sought attorney fees pursuant to Penal Code
section 502, subdivision (e)(2) of the Computer Data Access and Fraud Act
(CDAFA). The trial court denied the motion on two grounds: first, it found
that the CDAFA attorney fee provision does not apply to defendants; and
second, it found that defendants had not met their burden on allocation. In
the second motion, Phanichkul sought cost of proof sanctions pursuant to
Code of Civil Procedure section 2033.420, based on YMT’s refusal to admit
several requests for admission (RFA’s). The trial court denied that motion as
well, finding that YMT had either a reasonable belief that it would prevail or
a good reason not to admit each RFA. As to the motion for attorney fees, we
affirm. As to the motion for cost of proof sanctions, we reverse and remand
for further proceedings.
         II.   FACTUAL AND PROCEDURAL BACKGROUND
      YMT owns and operates The Holding Company, a restaurant, bar, and
entertainment venue in Ocean Beach. Phanichkul began working for YMT,
as well as its then-owner, Steve Yeng, and a number of other associated
restaurants owned and operated by the Yeng family, sometime around the
fall of 2016, not long after YMT purchased the venue that would eventually

1      YMT sued Phanichkul and his company, M2Z PR. At trial, Phanichkul
asserted that he did not form M2Z PR until after he terminated his business
relationship with YMT. Regardless, the parties agree that M2Z PR was a
sole proprietorship formed by Phanichkul and that it had no role in the
litigation separate from Phanichkul himself. Accordingly, we refer generally
to Phanichkul as the defendant throughout this opinion.

                                       2
become The Holding Company. Phanichkul provided event, social media, and
other web-based marketing services as an independent contractor.
Phanichkul’s relationship with YMT ended about a year later, around the
time that YMT temporarily shut down The Holding Company venue for
renovations, but, according to Phanichkul, he continued to work for another
one of Yeng’s ventures for some time thereafter.
A. YMT’s Complaint Against Phanichkul

      In 2019, YMT filed a complaint against Phanichkul and his company,
M2Z PR. In the operative amended complaint (the Amended Complaint),
filed in March 2020, YMT asserted six causes of action, all focused on
Phanichkul’s work for YMT: (1) Interference with Prospective Economic
Advantage; (2) Conversion; (3) Violations of the CDAFA; (4) Negligence; (5)
Breach of Contract; and (6) Fraud.
      YMT generally alleged that Phanichkul had broad access to YMT’s
website and accounts both during and after his employment and that he
intentionally and improperly used that access to obstruct access to other key
individuals at YMT after his departure. YMT further alleged that
Phanichkul changed passwords, refused to provide the information they
needed to access information on their websites and accounts, and “refused to
return [YMT’s] Domain, email list, Social Media Email and other accounts.”
In addition, YMT alleged that Phanichkul “unlawfully access[ed] [YMT’s]
computer data and/or computer systems without authorization, including but
not limited to bank accounts, ticketing accounts, and marketing email lists,
both during the time of the parties’ contract and after the termination of the
parties’ contract.”
      YMT alleged, more specifically, that Phanichkul did this by using his
own personal contact information to set up an e-mail address

                                       3
(1502restaurants@gmail.com) for YMT’s benefit, which he then used to set up
additional accounts, such as PayPal and Zenreach, and a key web domain,
thcob.com. According to YMT, Phanichkul purported to hand over access to
all the accounts when he terminated his relationship with YMT, but failed to
disclose that he had changed the password to the underlying e-mail address,
and then subsequently refused to turn over the various other associated
accounts. In addition, Phanichkul registered the thcob.com domain in his
own name and refused to transfer it back to YMT.
B. Phanichkul’s Pretrial Requests for Admission

      In an attempt to narrow the scope of the case before trial, Phanichkul
served YMT with 68 RFA’s. The majority of the RFA’s were aimed at
identifying which accounts Phanichkul allegedly accessed without
permission, and which accounts YMT alleged it was unable to access. YMT
responded in October 2020, and denied over half of the requested RFA’s, and
objected to many more. Scott Yeng, Steve Yeng’s brother and business
partner, verified the responses for YMT.
      Phanichkul also served YMT with numerous requests for production.
YMT provided extensive objections but did not produce any documents until
approximately one month before trial.
C. Evidence at Trial

      The parties listed 40 witnesses in the joint trial statement, but YMT
only called three witnesses at trial: Phanichkul, as an adverse witness under
Evidence Code section 776; Jake Skolnick, the individual that introduced
Phanichkul to Steve Yeng and the YMT business; and Scott Yeng. Steve
Yeng did not appear or testify at trial.

                                           4
      1. Eddie Phanichkul
      Phanichkul testified that he created the 1502restaurants@gmail.com
account to streamline his work for YMT. He told YMT it would be an
important account for future web developers, marketers, and promoters. He
admitted that he used his personal e-mail address and cell phone number for
the password recovery, and stated that he did not recall ever changing them.
      Phanichkul sent an e-mail to Steve Yeng when he first created the
account. He included the password in the e-mail and stated that Steve Yeng
would have full access to the account so that he could pass it on to any future
marketers or website developers. Phanichkul also created a password list in
a Google document that was shared with several other people at YMT. He
said that he gave all of the passwords to YMT whenever he was asked and
did not change the password for the 1502restaurants@gmail.com account at
any point after his departure. He admitted that the password for the
1502restaurants@gmail.com account was not on the shared Google document,
but said that he had tested it and was able to login to the account using the
first password on the list. He did not recall anyone from YMT asking him for
the password.
      Regarding the thcob.com domain, Phanichkul testified that YMT had
already obtained the domain when he started working for them. He asked
them to transfer the domain to The Holding Company’s GoDaddy account so
he could begin developing the website, but they transferred it to his own
personal account instead. He explained that they were scrambling to get the
website up and running and it was not clear to him whether The Holding
Company even had its own GoDaddy account so he just accepted the transfer
and started working on the website.
      Phanichkul said that he entered into an agreement with Vendini, an
internet-based ticketing and content management service, and directed the

                                       5
tbcob.com domain to Vendini’s domain name service, or DNS. Phanichkul
made himself the administrator of the Vendini account, so that he could
make changes to the website as needed, using the
1502restaurants@gmail.com domain. However, there were multiple logins
for the Vendini account, and others at YMT also had direct access. With that
access, they would have been able to make changes to the thcob.com website,
even if the domain was not transferred.
      Phanichkul admitted that he had accessed certain YMT bank accounts
but said that he did so with Steve Yeng’s permission, to develop a profit and
loss statement for The Holding Company. He said he accessed the accounts
no more than five times, and each time Steve Yeng logged him in. When
confronted with his testimony from a prior deposition, Phanichkul admitted
that he previously stated on at least one occasion when he accessed the bank
account, “ ‘it was already logged in.’ ” Phanichkul said that he never hacked
into any website or account belonging to YMT.
      Finally, Phanichkul explained that he began working for Steve Yeng in
another capacity before terminating his relationship with YMT. Steve Yeng
and his wife, Brittany, were also developing another company, Skrewball
Whiskey, at the time, and Phanichkul also provided website marketing
services for Skrewball. Some of the work overlapped, and Phanichkul
continued to work for Skrewball, but that relationship eventually soured, and
Phanichkul filed a lawsuit against Yeng and his wife claiming that he was
entitled to an equitable interest in the company that owned the Skrewball
brand. Phanichkul said that YMT offered to drop the current litigation if he
would agree to settle the Skrewball matter.
      2. Jake Skolnick
      Jake Skolnick testified that he worked for YMT as a talent buyer since
about 2016. When Phanichkul came to work with YMT, they worked

                                      6
together to create content for the YMT website, and then Phanichkul would
populate the website with the content. When Phanichkul left YMT in 2017,
Skolnick “took over a lot of the marketing responsibilities that Phanichkul
was previously doing, [and] would do the Facebook or Instagram posts.” At
that point, Skolnick “would just coordinate the promotion by [himself] instead
of working with [Phanichkul] on it.”
      Skolnick said that when Phanichkul left YMT, he “turned over a
spreadsheet with all account information and passwords.” He also said that
Phanichkul had sent him that same list of accounts and passwords multiple
times while he worked at YMT. But, Skolnick testified that “not all” the
accounts were included in the spreadsheet, including most notably, the
1502restaurants@gmail.com account.
      Skolnick explained that YMT closed The Holding Company venue for a
substantial remodel in January 2018. The remodel took longer than
expected, and the venue did not reopen until July 2019. As YMT began to
prepare for reopening, in June of 2019, Phanichkul let Skolnick know that
the registration for the thcob.com website needed to be renewed, and asked if
Skolnick wanted him to transfer the domain to him or let it expire. Skolnick
requested that Phanichkul renew the domain and transfer the domain to
him, and he paid Phanichkul back for the registration. Although he asked

Phanichkul three times to transfer the domain, Phanichkul did not do so.2
Because the reopening was imminent, YMT decided to just use a different
domain name instead, so that they could get the website running.

2     On rebuttal, Phanichkul testified that he was hesitant to transfer the
thcob.com domain to Skolnick’s personal account without assurances from
Steve Yeng or someone else at YMT, since he was already in a legal dispute
with YMT.

                                       7
      Skolnick further testified that on August 26, 2019, he logged into the
YMT Vendini account and saw that Phanichkul was logged into the account
as well. Phanichkul did not have permission to access the account at that
time, as he no longer worked for YMT. Nevertheless, Phanichkul had
remained as the sole administrator for the Vendini account, and Skolnick had
to take steps to remove him. Skolnick also testified that when he worked at
YMT, Phanichkul had accessed YMT bank accounts and expressed a concern
that there may not be enough money to fund the remodel.
      Skolnick testified that the e-mail address Phanichkul created for YMT,
1502restaurants@gmail.com, was used by YMT as a login for any site that
required an e-mail login. When Skolnick asked another YMT employee for
the password, the employee sent Skolnick a screenshot of the e-mail that
Phanichkul had sent to Steve Yeng in September 2016, when he first created
the account, giving Steve Yeng the password. Steve Yeng then sent Skolnick
a screenshot of an attempt to login to the e-mail account, with a message
indicating that the e-mail password had been changed six months prior. The
password recovery information went to a phone whose last two numbers were
the same as Phanichkul’s phone.
      Skolnick estimated that he spent about five hours helping Phanichkul
put the thcob.com website together, and then spent about two hours a week
promoting the website. He then spent about 20 hours recreating the content
on the new website once they determined they would not be able to use the
thcob.com domain. In addition, he spent about three hours changing the
Vendini account to a new administrator and another five hours trying to
figure out what had gone wrong with the 1502restaurants@gmail.com and
thcob.com web domain accounts.

                                      8
      3. Scott Yeng
      Scott Yeng also testified. He is Steve Yeng’s brother, and the chief
operating officer (COO) and president of YMT. He testified to his family’s
history in the restaurant business in Ocean Beach. He explained that YMT
hired Matt Borza to set up the website for The Holding Company. Borza
purchased the domain, thcob.com, for YMT. YMT hired Phanichkul in 2016
to assist with the building out of the thcob.com website and to promote the
website and domain. The website was used for ticketing sales. Upon
reopening after the remodel, he learned that the website had not been
updated. He made the decision to create a new website for The Holding
Company because YMT did not have access to thcob.com.
      Scott Yeng also testified that he was unsuccessful in accessing the
1502restaurants@gmail.com e-mail account. He testified further that in 2016
and 2017, only three people had access to YMT bank accounts: his two
brothers, Steve and Kyle; and himself. He said that he had issues with
Phanichkul while he worked for YMT and that Phanichkul lacked
“boundaries.”
      Scott Yeng testified that his brother, Steve Yeng, had negotiated the
contract with Phanichkul and that Steve Yeng was the person who “was
primarily involved and interacting with Phanichkul.” Despite that
testimony, Steve Yeng did not appear at the trial and did not testify.
D. The Verdict

      While discussing the jury instructions on the last day of trial, YMT
voluntarily dismissed its claims for interference with prospective economic
advantage and for fraud. Thereafter, the jury was presented with a special
verdict form that asked them to answer questions regarding the following
four causes of action: CDAFA, conversion, negligence, and breach of contract.

                                       9
The questions included under the first two causes of action reference the web
domain thcob.com, the 1502restaurants@gmail.com account, a Chase Bank
account, and the Vendini account.
      The jury found that YMT had not met its burden on any of the asserted
causes of action and, as a result, the court entered judgment in favor of
Phanichkul and against YMT.
E. Phanichkul’s Posttrial Motions Under Penal Code Section 502,
   Subdivision (e)(2) and Code of Civil Procedure Section 2033.420

      After the jury rejected YMT’s claims in their entirety, Phanichkul filed
two posttrial motions for: (1) attorney fees under Penal Code section 502,
subdivision (e)(2); and (2) cost of proof sanctions under Code of Civil
Procedure section 2033.240. After hearing argument, the trial court denied
both motions.
      In the first of his two posttrial motions, Phanichkul sought recovery of
the attorney’s fees he incurred in his successful defense of YMT’s charges,
relying on Penal Code section 502, subdivision (e)(2), a provision of the

CDAFA3 which provides that the court “may award reasonable attorney’s
fees” in an action brought under CDAFA.
      In denying the motion, the trial court first stated that it “agrees with
the conclusion” of the court in Physician’s Surrogacy, Inc. v. German
(S.D.Cal. 2018) 311 F. Supp.3d 1190, 1195, that “[d]efendants are not entitled
to recover attorney’s fees” under section 502, subdivision (e)(2). Second, the

3     Penal Code section 502, subdivisions (c)(2) and (e)(1) provide in
pertinent part that the owner of a computer or computer system who suffers
damages because a person knowingly accesses and without permission takes,
copies, or makes use of any data from a computer, computer system, or
computer network, may bring a civil action against the violator for
compensatory damages and injunctive relief or other equitable relief.

                                       10
court further held that “even if an award of fees were permissible [under
CDAFA]”, “[d]efendant[] [has] not satisfied [its] burden” to allocate the fees,
to show which fees were incurred in connection with the CDAFA cause of
action and which fees were incurred in defense of the other causes of action in
the complaint. The court noted that it did “not agree that the [CDAFA]
claims are so intertwined [with the other causes of action] that allocation is
not possible.” Accordingly, the court held that “the Motion is also denied on
this [alternate] basis.”
      In his second motion, Phanichkul requested cost of proof sanctions
pursuant to Code of Civil Procedure section 2033.420, based on the numerous
RFA’s that YMT either denied or refused to answer. Although both the
attorney fees and sanctions motions were argued together, and addressed in
the tentative, the trial court initially neglected to mention the sanctions
motion in its final ruling. After Phanichkul sought clarification, the trial
court issued a short order confirming its tentative ruling denying the Code of
Civil Procedure section 2033.420 motion as well.
      In the subsequently confirmed tentative order, the trial court found
that Phanichkul had met his burden to prove the truth of the disputed facts
at trial, but that YMT had shown it either “had a ‘reasonable ground to
believe that (it) would prevail’ on the matters at trial or had ‘good reason for
the failure to admit’ the matters before trial.” The trial court explained
further that although YMT “did not appear to be credible” at trial, the trial
court “strongly subscribes to the philosophy of allowing the parties wide
latitude to try their cases,” and that this case was not so “extreme” as to
warrant cost of proof sanctions.
      Phanichkul appeals from both rulings.

                                       11
                              III.   DISCUSSION
A. Phanichkul Has Not Met His Burden to Establish the Trial Court
   Erred by Denying His CDAFA Motion for Fees

      In appealing the denial of his motion for fees under CDAFA,
Phanichkul challenges the court’s first basis for denying his motion for fees,
contending that the plain language of the statute does not limit its reach to
prevailing plaintiffs, and that the legislative history supports his view. He
further argues that the court could award his fees because the YMT litigation
was frivolous and abusive.
      However, nowhere in his opening brief does Phanichkul contend that
the trial court erred as to its second, alternate basis for denying the motion:
that even if an award of attorney’s fees under CDAFA were permissible,
Phanichkul failed to satisfy his burden of allocating fees between the CDAFA
and other causes of action. Indeed, as YMT pointed out, Phanichkul’s
attorney did not provide any invoices or time sheets, or otherwise attempt to
allocate his time between the various causes of action asserted in the
Amended Complaint. He simply averred, in a conclusory fashion, that all of
the time that he spent working on the case was necessary to defend the
CDAFA claim.
      Regardless, on appeal, Phanichkul does not allege that the trial court
erred in reaching that alternative determination, nor does he provide any
argument or legal support for such a proposition. In fact, Phanichkul only
mentions the issue in passing in his reply brief, noting, once again without
any supporting legal authority, that if further allocation is required, this
court should order “fair and appropriate” fees. As discussed below, by failing
to assert and brief any error as to the trial court’s alternate basis for denying
his motion, Phanichkul is deemed to have waived any challenge on appeal to
the trial court’s alternate basis for the denial of his motion.

                                        12
      We start with the presumption of correctness, that is, that the trial
court’s ruling is presumed to be correct. (Jameson v. Desta (2018) 5 Cal.5th
594, 608–609.) It is appellant’s burden to present argument and legal
authority for our consideration and review. Likewise, “the scope of our
review is limited to those issues that have been adequately raised and
supported in the appellant’s brief.” (Lee v. Kim (2019) 41 Cal.App.5th 705,
721 (Lee).) We cannot, on our own and without appellant doing so himself,
“furnish a legal argument as to how the trial court’s rulings in this regard
constituted an abuse of discretion.” (In re Marriage of Schroeder (1987)
192 Cal.App.3d 1154, 1164; see also Niko v. Foreman (2006) 144 Cal.App.4th
344, 368.) If an appellant fails to provide a legal argument and authorities in
support of a point on appeal, the appellate court must decline to consider it.
(In re Marriage of Schroeder, supra, at p. 1164.)
      Here, Phanichkul’s failure to allege error or to present any argument or
legal authority as to why the trial court might have erred in its alternate
basis constitutes a waiver of any appeal on this issue. “When an appellant
fails to raise a point, or asserts it but fails to support it with reasoned
argument and citations to authority, we treat the point as waived.” (Badie v.
Bank of America (1998) 67 Cal.App.4th 779, 784–785; accord Lee, supra, 41
Cal.App.5th at p. 721.) We must do so here.
      Moreover, because the trial court ruled in the alternative in denying
Phanichkul’s motion for fees under 502, subdivision (e)(2), our resolution of
the asserted error as to the trial court’s first basis—its interpretation of the
statute—will not affect the outcome on appeal. As noted by the trial court,
“even if an award of attorney fees was permissible” under CDAFA, the
“[m]otion is also denied” on the alternate basis. Accordingly, we decline to
reach the merits of Phanichkul’s challenge on appeal to the trial court’s first

                                        13
basis for the denial of his motion, because, regardless of our view on the
challenged first ruling, the motion was denied in the unchallenged alternate
ruling. (See Kaiser Foundation Health Plan, Inc. v. Superior Court (2012)
203 Cal.App.4th 696, 715–716 [“We decline to review an issue that will have
no effect on the parties.”].)
B. The Trial Court Erred By Denying Phanichkul’s Motion for Cost of
   Proof Sanctions

      Phanichkul also asserts that the trial court erred by denying his second
postjudgment motion, in which he sought cost of proof sanctions pursuant to
Code of Civil Procedure section 2033.420 based on YMT’s refusal to admit to

certain RFA’s.4 We review the denial of a motion for cost of proof sanctions
for abuse of discretion. (Laabs v. City of Victorville (2008) 163 Cal.App.4th
1242, 1275–1276.)
      Code of Civil Procedure section 2033.420 provides in relevant part as
follows:
           “(a) If a party fails to admit the genuineness of any document
           or the truth of any matter when requested to do so under this
           chapter, and if the party requesting that admission
           thereafter proves the genuineness of that document or the
           truth of that matter, the party requesting the admission may
           move the court for an order requiring the party to whom the
           request was directed to pay the reasonable expenses incurred
           in making that proof, including reasonable attorney’s fees.

           “(b) The court shall make this order unless it finds any of the
           following:

4     YMT asserts that Phanichkul waived this issue both by failing to
explain why the trial court’s finding that YMT acted reasonably was not
supported by substantial evidence and by presenting only the evidence
favorable to him. We are not persuaded by either argument.

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            “(1) An objection to the request was sustained or a
            response to it was waived under Section 2033.290.

            “(2) The admission sought was of no substantial
            importance.

            “(3) The party failing to make the admission had
            reasonable ground to believe that that party would prevail
            on the matter.

            “(4) There was other good reason for the failure to admit.”

      Here, the trial court found that Phanichkul “has carried his initial
burden that he proved at trial the truth of facts which, in discovery, [YMT]
had refused to admit.” YMT does not dispute that finding on appeal. Taking
that finding, and concession, into account, Code of Civil Procedure section
2033.420, subdivision (b) therefore required the trial court to impose
sanctions unless YMT established one of the enumerated exceptions set forth
therein. YMT, as the “party seeking to benefit from an exception listed in
[Code of Civil Procedure] section 2033.420, subdivision (b) ‘ “[bore] the burden
to establish the exception.” ’ ” (Spahn v. Richards (2021) 72 Cal.App.5th 208,
216 (Spahn); Samsky v. State Farm Mut. Auto. Ins. Co. (2019) 37 Cal.App.5th
517, 523 [party seeking to avoid sanctions has the burden of establishing one
or more of the exceptions in Code of Civil Procedure section 2033.420,
subdivision (b)].)
      The trial court found that YMT had met two of the enumerated
exceptions. It stated that YMT “has shown that it had a ‘reasonable ground
to believe that (it) would prevail’ on the matters at trial or had ‘good reason
for the failure to admit’ the matters before trial.” But, the trial court went on
to explain: “The Court agrees that, based on its observations at trial, one or
more of the matters testified to by [YMT] did not appear to be credible;
however, the Court strongly subscribes to the philosophy of allowing the

                                       15
parties wide latitude to try their cases. Though this philosophy can, at times,
test the propriety of the parties’ obligations in discovery, the Court is
reluctant, except in extreme cases, to retrospectively question the parties’
decisions with the verdict in hand. This case does not fall into the category of
one of the extreme cases.”
      The law does not permit the trial court, or the parties, such leeway.
“ ‘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.” ’ ” (Spahn, supra,
72 Cal.App.5th 208, 216.) It is not enough for the party to simply contest the
issue, no matter how strenuously they do so. Rather, a “ ‘party’s reasonable
belief must be grounded in the evidence;’ ” and “ ‘ “there must be some
reasonable basis for contesting the issue in question before sanctions can be
avoided.” ’ ” (Id. at p. 217.)
      Considering the totality of the record before us, including the credibility
issues noted by the trial court, we conclude that the trial court abused its
discretion in denying the cost of proof sanctions based on its finding that
YMT had a reasonable belief it would prevail on certain issues at trial or
otherwise had good reason to deny at least certain of the RFA’s. (See Shapell
Socal Rental Properties, LLC v. Chico’s FAS, Inc. (2022) 84 Cal.App.5th 166,
181 [“the abuse of discretion standard measures whether, in light of the
evidence, the lower court’s decision falls within the permissible range of
options set by the legal criteria”].)
      1. Issues Asserted by YMT Prior to the Trial
      We start with the allegations in YMT’s Amended Complaint, which
framed the action against Phanichkul. Fairly read, the Amended Complaint
consists primarily of generalized allegations regarding Phanichkul’s

                                        16
purported misconduct with respect to various unnamed accounts, banks and
e-mail addresses. The only items specifically named in the Amended
Complaint were the thcob.com domain; the 1502restaurants@gmail.com e-
mail address; and the Paypal and Zenreach accounts associated with that
address. But, in its more general allegations, the Amended Complaint also
alleged that Phanichkul was liable for misconduct far beyond these few
specifically identified accounts.
      No doubt in an effort to focus the issues at trial, Phanichkul served
YMT with 68 RFA’s. (See Grace v. Mansourian (2015) 240 Cal.App.4th 523,
528 (Mansourian) [explaining that RFA’s “ ‘ “are primarily aimed at setting
at rest a triable issue so that it will not have to be tried’ ” ’].) The vast
majority of the RFA’s were aimed primarily at identifying which accounts
Phanichkul allegedly accessed without permission, and which accounts YMT
alleged it was unable to access. Beyond the specifically identified accounts,
the RFA’s also asked for admissions as to other specific accounts, including
the OB Noodle House website, MailChimp, Go Daddy, Facebook, Yelp, and
AppleID accounts. YMT denied the majority of those requests and objected to
and then refused to answer many more. YMT admitted approximately 16 of
the 68 RFA’s and provided qualified admissions that were, effectively, denials

or refusals to answer as to five more.5
      Among its other responses, YMT refused to admit that in October 2017
it was able to use the information that Phanichkul had provided to access the
OB Noodlehouse website (RFA No. 29), the OB Noodlehouse webmail (RFA

5     Phanichkul refers, at times, to slightly different ranges of RFA’s on
appeal than in his briefing before the trial court. We focus our analysis on
those RFA’s referenced both in the original motion in the trial court and on
appeal. Accordingly, we decline to address RFA Nos. 33, 45, 50–54, And 58.

                                         17
No. 31); and the YMT Paypal, Zenreach, GoDaddy or Facebook accounts (RFA
Nos. 32, 34, 35, 36). Similarly, YMT refused to admit that from January to
October 2017 and from October 2017 through October 2019 it could access the
OB Noodlehouse website (RFA Nos. 30, 56); or that from November 2017
through December 2018, it could access the OB Noodle House Website, or its
Paypal, Mailchimp, Zenreach and GoDaddy accounts (RFA Nos. 43, 44, 46,
47, 48, 49); or that from January to October 2019, it could access the OB
Noodle House website, or its Paypal and MailChimp accounts (RFA Nos. 56,
57, 59, 60). We will refer to the RFAs in this paragraph as the “Specified-
Accounts RFAs.”
      Despite denying each of the Specified-Accounts RFAs, YMT continued
to assert broad and generalized charges against Phanichkul up until the start
of the trial. As YMT’s trial brief asserted:
         “When [Phanichkul] ended his work relationship with [YMT]
         in or about September 2017, he was under a legal obligation
         to return all of [YMT’s] intellectual property and computer
         data that were in his possession and/or control, including
         access to all of [YMT’s] accounts, which included an email
         account that was used for [YMT’s] accounts, including its
         PayPal, MailChimp, Yelp, and websites, and the main
         domain page for THC (thcob.com). [Phanichkul] alleges that
         he has returned all of [YMT’s] intellectual property and
         computer data, however, the evidence will show that he has
         not.”

      Just days before trial, the parties estimated a six-day trial with up to
forty potential witnesses.
      Yet when trial commenced, YMT’s case shrank dramatically. YMT
presented testimony from Phanichkul and only two other relatively brief
witnesses. It offered no evidence at all as to several of the accounts identified
in the Amended Complaint and/or the Specified-Accounts RFAs that it
denied, including PayPal, MailChimp, Yelp, Zenreach, and GoDaddy

                                       18
accounts, and made only fleeting references to the OB Noodle House website.
Skolnick testified only as to the issues with the thcob.com domain, the Gmail
address, and the associated Vendini account. Scott Yeng testified as to
problems updating The Holding Company website upon reopening the
restaurant, but despite verifying YMT’s responses to the RFA’s, he had no
personal knowledge of the circumstances underlying the problems or of any of
the specific accounts referenced in the Specified-Accounts RFAs.
      2. The Specified-Accounts RFAs Sought Admissions of
         Substantial Importance; The Trial Court Did Not Find
         Otherwise
      YMT argues that the matters presented in the RFAs underlying the
cost of proof motion were not of substantial importance. As an initial matter,
the trial court did not make such a finding, and there is no reason to believe
the trial court’s ruling was based on the “no substantial importance”
exception set forth in Code of Civil Procedure Section 2033.420, subdivision
(b)(2). Regardless, even if we were to consider this exception, we would
conclude that there would have been no reasonable basis for the trial court to
conclude that the exception applies.
      “An RFA has ‘substantial importance’ if it is ‘central to disposition of
the case.’ ” (Doe v. Los Angeles County Dept. of Children & Family Services
(2019) 37 Cal.App.5th 675, 690; Wimberly v. Derby Cycle Corp. (1997)
56 Cal.App.4th 618, 634–635 [“An issue is of ‘substantial importance’ if it has
‘at least some direct relationship to one of the central issues in the case, i.e.,
an issue which, if not proven, would have altered the results in the case.’ ”].)
      YMT contends its denials of the Specified-Accounts RFAs were not of
substantial importance because “[t]he issues in this case focused on Yeng’s
inability to access its Gmail account and the thcob.com domain (not website).”
This assertion must have come as a surprise to Phanichkul—although YMT

                                        19
chose to limit the evidence it introduced at trial to the single e-mail and
domain, until midway through trial, Phanichkul had no way to know that
YMT had decided to dramatically curtail its case against him and focus only
on the single domain and the single e-mail account. Responding to the
general allegations in YMT’s Amended Complaint and the denial of the
Specified Accounts RFAs, Phanichkul had to prepare to defend himself as to
allegations of misfeasance as to all conceivable accounts that YMT might
choose to raise at trial.
      The issues in the Specified-Accounts RFAs were substantial enough to
have been within the scope of the Amended Complaint, and within the issues
raised in YMT’s trial brief. We decline to speculate as to why YMT refused to
concede the irrelevance of the various accounts named in the Specified-
Accounts RFAs; but it cannot have claimed that Phanichkul was liable for
damages relating to unnamed accounts and now assert that information
about such accounts was not of substantial importance.
      3. YMT Did Not Establish a Reasonable Basis or Other Good
         Reason to Deny the RFA’s
      YMT also asserts that it had reasonable grounds to deny the requests.
At least as to the Specified-Accounts RFAs, we find no evidence, or argument,
in the record to support such a conclusion.
      As noted above, in assessing where there were reasonable grounds to
believe it could prevail on the issue, the question is not whether the
responding party “had some minimum quantum of evidence to support its
denial,” but whether “the litigant had a reasonable, good faith belief he or she
would prevail on the issue at trial.” (Orange County Water Dist. v. The
Arnold Engineering Co. (2018) 31 Cal.App.5th 96, 119.) “Consideration of
this question requires not only an assessment of the substantiality of the
evidence for and against the issue known or available to the party, but also

                                       20
the credibility of that evidence, the likelihood that it would be admissible at
trial and persuasive to the trier of fact, the relationship of the issue to other
issues anticipated to be part of trial (including the issue’s importance), the
party’s efforts to investigate the issue and obtain further evidence, and the
overall state of discovery at the time of the denials and thereafter.” (Ibid.)
      A party should admit an RFA if it can do so and “does not in good faith
intent to contest the issue at trial.” (Burke v. Superior Court (1969) 71 Cal.2d
276, 282.) “The question is not whether defendant reasonably believed he did
not run the red light but whether he reasonably believed he would prevail on
that issue at trial.” (Mansourian, supra, 240 Cal.App.4th at p. 530).
      Here, the trial court concluded that YMT met its burden as to its
reasonable belief or other good cause. Yet as to the Specified-Accounts RFAs,
there is nothing in the record to suggest that YMT had any reason to believe
that it could prevail on such issues. It presented no evidence to the jury as to
any of these accounts, essentially ceding the issue entirely. YMT did not
assert, let alone explain why, its denials were reasonable as to these specific
RFA’s in the trial court and it does not even make such an argument on
appeal. Thus, it is impossible to say that YMT could have had a reasonable
belief that it would prevail at trial on these matters, since its own witnesses
offered no evidence at all as to them.
      Similarly, the record is devoid of any evidence establishing any other
good reason for their denial of the Specified-Accounts RFAs, and YMT did not
seriously argue this alternative exception in the trial court or on appeal. (See
Brooks v. American Broadcasting Co. (1986) 179 Cal.App.3d 500, 510–511 [“if
a party in such circumstance stands on the initial denial and then fails to
contest the issue at trial, a court would be well justified in finding that there

                                         21
had been no good reasons for the denial, thus mandating the imposition of
sanctions”].)
      Thus, because there was essentially no credible evidence or argument
to support the trial court’s finding that YMT had a reasonable belief that it
could prevail on these specific issues, or that other good reason existed for its
denial of the Specified-Account RFAs, we conclude that the trial court abused
its discretion in denying the motion in its entirety. As to the remaining
RFA’s, it appears there was at least some evidence presented, or some valid
dispute as to them, and we therefore defer to the trial court’s discretion.
      In a final attempt to avoid this outcome, YMT asserts that Phanichkul
has not established prejudice as a result of the trial court’s ruling because the
amount he requested was not reasonable. However, unlike the trial court’s
ruling on the first motion, requesting attorney fees under Penal Code section
502, in which the trial court expressly relied on the alternate ground of
failure to allocate to deny the motion, the trial court did not make any
findings, alternate or otherwise, regarding the reasonableness of the fees
requested in the motion for cost of proof sanctions. YMT presented this as an
alternative argument in the trial court, but it appears the trial court did not
reach it in the first instance. Phanichkul was not required to rebut a finding
that the trial court did not make on appeal, and YMT presents no authority
to the contrary. Accordingly, we remand the matter to the trial court for
further consideration of the motion for cost of proof sanctions pursuant to
Code of Civil Procedure section 2033.420 consistent with the opinions
expressed herein.

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                            IV.   DISPOSITION
      The order denying Phanichkul’s motion for fees pursuant to section
502, subdivision (e) is affirmed. The order denying Phanichkul’s request for
cost of proof sanctions pursuant to Code of Civil Procedure section 2033.420
is reversed. The matter is remanded to the trial court for further proceedings
consistent with this opinion. The parties are to bear their own costs on
appeal.

                                                                  KELETY, J.
WE CONCUR:

O’ROURKE, Acting P. J.

CASTILLO, J.

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