Opinion
CIVIL ACTION NO. 97-3353
November 21, 2003
MEMORANDUM OF DECISION
I. INTRODUCTION
Presently before the court are the objections ("Pl.'s Objs.") of Gary C. Tyler ("plaintiff), to the Clerk's taxation of costs, which were filed on April 29, 2003. (Doc. No. 152.) Plaintiff requests that this court review the Clerk's taxation of costs, and vacate the judgment in the amount of $3,787.03 entered by the Clerk of Court against plaintiff. In their response, defendants George M. O'Neill, Michelenia O'Neill and William M. Hendrickson, ("defendants") oppose plaintiff's objections and request that this court overrule these objections for the reasons set forth in the Clerk's decision and supporting memorandum. (Doc. No. 153). For the reasons below, plaintiff's objections are overruled, and the taxation of costs entered by the Clerk is affirmed.
II. PROCEDURAL AND FACTUAL BACKGROUND
Plaintiff commenced this action against defendants on May 12, 1997, alleging breach of fiduciary duty, fraud, violation of RICO and conspiracy to violate RICO arising out of his ten (10%) percent shareholder interest in William M. Hendrickson, Inc. ("Hendrickson" or the "company"). Plaintiff asserted his claims individually and derivatively on behalf of Hendrickson. A jury trial held before the undersigned commenced on May 27, 1998. Defendants moved for judgment as a matter of law on all causes of action pursuant to Fed.R.Civ.P. 50 once plaintiff rested. Defendants' motion was based on insufficient evidence to substantiate any cause of action in favor of plaintiff and against defendants, and the statute of limitations. The court denied defendants' motion for judgment as a matter of law. Defendants renewed their motion for judgment as a matter of law at the close of their case asserting the same basis, including the statute of limitations. The court denied the renewed motion.
The jury rendered a verdict on June 4, 1998 by answering interrogatories. The jury determined that defendants were liable for breach of fiduciary duty and fraud to plaintiff individually, but not liable on plaintiff's other individual claims or on the derivative claims. (Jury Interrogatories, Question Nos. 1-4, 6, 7; Doc. No. 8.) The jury awarded compensatory damages to plaintiff in the amount of $225,000 against George O'Neill and zero dollars against Michelenia O'Neill. (Jury Interrogatories, Question No. 9.) The jury found in favor of the plaintiff on the defendants' counterclaim. The court entered Civil Judgments in accordance with the jury's findings. (Doc. Nos. 87, 89.)
Plaintiff filed his Bill of Costs on September 11, 1998, to which defendants filed objections on September 23, 1998. Subsequent to the trial, defendants filed a motion for judgment as a matter of law to vacate, alter or amend judgment, which was opposed by plaintiff. After consideration of defendants' motion and plaintiff's response thereto, this court found that plaintiff's claims of fraud and breach of fiduciary duty were barred by the statute of limitations. On December 15, 1998, this court entered an order vacating the Civil Judgments entered in accordance with the jury's findings. (Doc. Nos. 87, 89.) The jury verdict on the counterclaim in favor of plaintiff was not disturbed. Defendants filed their Bill of Costs on December 30, 1998.
On December 19, 2001, a telephone conference on the taxing of costs was coordinated by the Clerk of Court. Bruce S. Marks, Esquire, plaintiff's counsel, and Jeffrey B. McCarron, Esquire, defense counsel, participated in the conference call. On April 8, 2003, the Clerk of Court entered a taxation of costs in favor of defendants in the amount of $3,787.03.See Clerk's Tax. of Costs and Order, Doc. Nos. 150-51. Plaintiff now seeks to appeal the taxation of costs entered by the Clerk of Court.
Federal Rule of Civil Procedure 54(d)(1) provides, in relevant part:
Except when express provision therefor is made either in a statute of the United States or in these rules, costs other than attorneys' fees shall be allowed as of course to the prevailing party unless the court otherwise directs; . . . Such costs may be taxed by the clerk on one day's notice. On motion served within 5 days thereafter, the action of the clerk may be reviewed by the court.
Fed.R.Civ.P. 54(d)(1). In addition, Local Rule of Civil Procedure 54.1(b) provides the following:
All bills of costs requiring taxation shall be taxed by the Clerk, subject to an appeal to the Court. Any party appellant shall, within five (5) days after such taxation, file a written specification of the items objected to and the grounds of objection. A copy of the specifications of objections shall be served on the opposing party within five (5) days. An appeal shall be dismissed for non-compliance with the appeal requirement.
Local R. Civ. P. 54.1(b). The clerk's taxation of costs is subject to de novo review. City of Rome. Italy v. Glanton, 184 F.R.D. 547, 548 (E.D. Pa. 1999). In addition, "Rule 54(d) creates a strong presumption that costs are to be awarded to the prevailing party."In re Paoli R.R. Yard PCB Litig, 221 F.3d 449, 462 (3d Cir. 2000). "[T]he losing party bears the burden of making the showing that an award is inequitable under the circumstances." Id. at 462-63. Factors a court can consider in reviewing the taxation of costs are: "(1) the unclean hands, or bad faith or dilatory tactics, of the prevailing party; (2) the good faith of the losing party and the closeness and difficulty of issues they raised; (3) the relative disparity of wealth between the parties; and (4) the indigence or inability to pay a costs award by a losing party." Id. at 463. A prevailing party for Rule 54(d) purposes is usually no different from a prevailing party in other circumstances. See Institutionalized Juveniles v. Secr, of Pub. Welfare 758 F.2d 897, 926 (3d Cir. 1985). "A `prevailing party' is one that obtained a `material alteration of the legal relationship of the parties' through either (1) an enforceable judgment on the merits, or (2) a settlement agreement enforceable through a court-ordered consent decree." Edwards-DiPasquale v. Wilfran Agric. Indus., Inc., 2001 WL 1632122, at *6 (E.D. Pa. Dec. 17, 2001) (quoting Buckhannon Bd. and Care Home. Inc. v. West Virginia Dept. of Health and Human Res, 532 U.S. 598, 604 (2001). In addition, the court must consider the nature of any counterclaim, and determine whether the counterclaim was related in some way to the main complaint or required "proof outside the scope of plaintiff's claim," since the counterclaim may be an important factor in determining which party prevailed. In Lacovara v. Merrill Lynch, 102 F.R.D. 959, 961 (E.D. Pa. 1984), the court held that when defendants advance counterclaims that do not require proof outside of plaintiffs' claim, costs may be taxed on plaintiffs even if defendants do not prevail on their counterclaim. In City of Rome. Italy v. Glanton, 184 F.R.D. at 550, the court held that a defendant who successfully defended himself against a complaint but advanced an unsuccessful counterclaim did not always lose his presumptive right to costs.
In his objections to the Clerk's taxation of costs, plaintiff concedes that he ultimately lost on his "claims based on a post trial motion on the technical defense of the statute of limitations." (Pl.'s Objs. at 6.) Notwithstanding this concession, plaintiff maintains that he was the prevailing party in this case for two reasons. First, plaintiff avers that during the course of litigation, he "sought to inspect the companies [sic] books and records pursuant to 15 Pa.C.S.A. § 1508. During the course of the litigation, the court compelled Defendants to produce these records; therefore, plaintiff prevailed on this claim." Second, plaintiff argues that he sought payment "for wages due to him pursuant to 43 P.S. § 260.1et seq, These wages were tendered to him immediately prior to trial. Thus, Plaintiff effectively prevailed on this claim." (PL's Objs. at 4-5.)
The court finds this reasoning unpersuasive. Prevailing party status is determined at the final stage of a lawsuit. Lacovara v. Merrill Lynch, 102 F.R.D. at 961. "The focus of this analysis is on the relief actually obtained rather than on the success of the legal theories." Institutionalized Juveniles v. Sec, of Pub. Wel, 758 F.2d at 911. "[A] determination of who is the prevailing party for purposes of awarding costs should not depend on the position of the parties at each stage of the litigation but should be made when the controversy is finally decided." 10 Charles Alan Wright Arthur R. Miller, Federal Practice and Procedure § 2667 (3d ed. 1998). Prevailing on a discovery motion or settlement of one of the minor claims does not make one a prevailing party in the litigation when at the end, judgment is entered against him on the major claims. See Thomas v. Nat'l Science Found, 330 F.3d 486, 493 (D.C. Cir. 2003) (securing a preliminary injunction and partial summary judgment does not make one a prevailing party when they did not change the legal relationship between the party in a way that afforded plaintiffs the relief they sought in their lawsuit.) In the instant case, plaintiff lost on all of the claims he submitted to the jury, and there was no change in his relationship with defendants. Moreover, plaintiff has neither challenged the actual total amount of costs that have been taxed by the Clerk of Court, nor shown that the taxation of costs award is inequitable. Furthermore, the Third Circuit affirmed the judgment notwithstanding the verdict in favor of defendants entered by this court on December 15, 1998. Tyler v. O'Neill, 189 F.3d 465 (3d Cir. 1999)(table), cert. denied, 528 U.S. 1137 (2000). Accordingly, this court finds that defendants prevailed in the case at bar for purposes of Fed.R.Civ.P. 54(d)(1).
Plaintiff advances one final argument — that the award of costs to defendants was inequitable. He asserts that defendants lost on the counterclaim, the defense against the counterclaim required "extensive discovery" and plaintiff's costs in defending the counterclaim "were at least equal to Defendants' requested costs." (Pl.'s Objs. at 6.) Plaintiff maintains that the Clerk's taxation of costs against him should be vacated, and the matter "remanded to the Clerk to determine and offset Plaintiff's costs in defending the Counterclaim." Id.
Defendants litigated a counterclaim for rescission, wherein they contested plaintiff's ten percent ownership in Hendrickson. See Answer of Defendants to Second Amended Complaint with Affirmative Defenses and Counterclaim for Rescission. (Doc. No. 55.) This court finds that defendants' counterclaim "involved the same legal and factual issues which formed the basis of the defense to the complaint." Hubner v. Schoonmaker, 1993 WL 273689, at *3-4 (E.D. Pa. July 20, 1993). As stated heretofore, plaintiff prevailed on none of his claims. "Where plaintiffs fail to sustain their original claim and defendants assert a counterclaim which presents no issue requiring proof outside the scope of plaintiffs' claim, even where the plaintiffs prevail on the counterclaim, costs maybe taxed in favor of defendants as the prevailing parties."Id. at 3. Accordingly, defendants were the prevailing party in this action, and it was proper for the Clerk of Court to assess costs against the plaintiff, despite the fact that defendants did not prevail on their counterclaim. As the court held in Hubner, "[D]efendants should not be stripped of their status as the prevailing party simply because they chose to parlay their defense into the basis of a counterclaim; such is the risk to plaintiffs for initiating litigation." Id. Therefore, this court affirms the taxation of costs assessed by the Clerk.
III. CONCLUSION
In his objections to the Clerk's taxation of costs, plaintiff advanced no persuasive argument why this court should overturn the Clerk's taxation of costs. Plaintiff failed to overcome the presumption that defendants were prevailing parties, and thus entitled to a taxation of costs. Plaintiff also failed to meet his burden that the award was inequitable. After a review of the Clerk's taxation of costs, this court finds that the total costs awarded to defendants were reasonable. For all the foregoing reasons, plaintiff's objections to the Clerk's taxation of costs are overruled, and the Clerk's taxation of costs is affirmed.
An appropriate order follows.
ORDER
AND NOW, this ___ day of November, 2003, upon consideration of plaintiff's objection to the Clerk's Taxation of Costs (Doc. No. 152), and defendants' response thereto, (Doc. No. 153) it is hereby
ORDERED that Plaintiff's objections are overruled, and the Clerk's Taxation of Costs is AFFIRMED.