Opinion ID: 2520876
Heading Depth: 2
Heading Rank: 2

Heading: The circuit court abused its discretion by denying costs without an adequate explanation.

Text: Skydive argues that costs should be awarded as a consequence of Ranger's breach of duty to defend Skydive. Ranger argues that costs should not be awarded because the declaratory judgment action was voluntarily dismissed with prejudice and Skydive is not at risk of future litigation. Both arguments are without merit. Nonetheless, the circuit court erred by failing to adequately explain its denial of costs. HRCP 54(d) states that costs shall be allowed as of course to the prevailing party unless the court otherwise directs[.] A presumption exists in favor of awarding costs to the prevailing party and that presumption must be overcome by the losing party. Wong, 88 Hawai'i at 52, 961 P.2d at 617. Furthermore, a court must adequately explain its reasons for denying or reducing costs unless its reasons are clear from the record. Id. Rule 54(d) creates a strong presumption that the prevailing party will recover costs.... [T]he court may not deny costs to the prevailing party without explanation, unless the circumstances justifying denial of costs are plain from the record. Not only must the court explain its reasons for denying costs to the prevailing party, but the reasons given must also be adequate. The presumption that the prevailing party is entitled to costs must be overcome by some showing that an award would be inequitable under the circumstances. The losing party bears the burden of making this showing. Id. (quoting 10 Moore's Federal Practice 54.101(1)(a-b) (3d ed.1998)) (emphasis added); see also Schefke v. Reliable Collection Agency, 96 Hawai'i 408, 459, 32 P.3d 52, 103 (2001) (vacating and remanding the court's order as to costs because the court did not explain its ruling, and its reasons for doing so are not readily discernible); Finley v. Home Ins. Co., 90 Hawai'i 25, 38, 975 P.2d 1145, 1158 (1998) (holding that the circuit court abused its discretion in reducing the amount of taxable costs awarded without explanation or a readily discernable rationale); Zenith, 108 F.3d at 207 (remanding because the district court failed to explain its decision in any detail). In the instant case, a presumption exists that Skydive, as the prevailing party, should be awarded costs. Ranger's argument that there is no risk of future litigation is insufficient to overcome the presumption of awarding costs. Nonetheless, the circuit court denied costs, stating that Skydive failed to sustain its burden of establishing valid legal grounds for an award of attorneys' fees and costs in this action[] and then cited to S. Utsunomiya Enters., Inc. S. Utsunomiya Enters., Inc. did not address costs, and the record is devoid of any evidence of impropriety on Skydive's part. Thus, the circuit court failed to provide any adequate explanation for denying Skydive's motion for costs, pursuant to HRCP Rule 54(d) as defined by HRS § 609-7, and the same is not clear from the record.