Court Opinion

ID: 218879
Source: CourtListenerOpinion
Date Created: 2011-06-15 18:44:11+00
Date Added: 2024-06-11T17:28:38.262397
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 10-1509

GARY ELLIS,

                Plaintiff – Appellee,

           v.

GRANT THORNTON LLP,

                Defendant – Appellant,

           v.

FEDERAL DEPOSIT INSURANCE CORPORATION,

                Party-in-Interest.

Appeal from the United States District Court for the Southern
District of West Virginia, at Bluefield. David A. Faber, Senior
District Judge. (1:04-cv-00043)

Argued:   May 10, 2011                    Decided:   June 15, 2011

Before GREGORY and DUNCAN, Circuit Judges, and HAMILTON, Senior
Circuit Judge.

Affirmed in part, vacated in part, and remanded by unpublished
per curiam opinion.

ARGUED: Stanley Julius Parzen, MAYER BROWN, LLP, Chicago,
Illinois, for Appellant. Benjamin L. Bailey, BAILEY & GLASSER,
LLP, Charleston, West Virginia, for Appellee. ON BRIEF: John H.
Tinney, John H. Tinney, Jr., THE TINNEY LAW FIRM, PLLC,
Charleston, West Virginia; Justin A. McCarty, MAYER BROWN, LLP,
Chicago, Illinois, for Appellant.     Eric B. Snyder, BAILEY &
GLASSER, LLP, Charleston, West Virginia, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

                              - 2 -
PER CURIAM:

     Following our reversal of the district court’s judgment in

favor of the plaintiff, Gary Ellis, Grant Thornton LLP (Grant

Thornton) sought $68,983.70 in costs in the district court.             The

amount sought included $7,026.25 in costs ordered by this court

as part of our mandate to the district court.                The Clerk of

Court   for   the   Southern     District    of   West   Virginia     taxed

$68,983.70 in costs against Ellis, and Ellis moved for review of

this taxation pursuant to Rule 54(d)(1) of the Federal Rules of

Civil Procedure.        In ruling on this motion, the district court

denied all costs sought by Grant Thornton, including the amount

ordered by this court as part of our mandate.             Grant Thornton

appeals from this ruling.         We affirm in part, vacate in part,

and remand the case to the district court with instructions to

tax costs against Ellis in the amount of $7,026.25.

                                     I

     Ellis    brought    a   negligent   misrepresentation    claim   under

West Virginia law against Grant Thornton, alleging that Grant

Thornton, an accounting firm that was retained by First National

Bank of Keystone (Keystone) in response to an investigation by

the Office of the Comptroller of the Currency into Keystone’s

banking activities, owed a duty of care to Ellis, who allegedly

relied on oral statements made by Stan Quay, a Grant Thornton

                                   - 3 -
partner, and a Grant Thornton audit report of Keystone’s 1998

financial statements in deciding to accept the job as president

of Keystone.      Following a bench trial, the district court ruled

in favor of Ellis and entered judgment in Ellis’ favor in the

amount of $2,419,233.00.

      On    appeal,     we    reversed     the    district       court’s    judgment.

Ellis v. Grant Thornton, 530 F.3d 280, 292 (4th Cir. 2008).                           In

our   decision,    we    held      that   Ellis   failed    to    offer    sufficient

proof at trial to support his negligent misrepresentation claim.

Id.     at 289-92.      Following our decision, Grant Thornton filed a

bill of costs in this court pursuant to Rule 39(d)(1) of the

Federal Rules of Appellate Procedure (FRAP).                       After the time

elapsed for Ellis to file an objection to the bill of costs

pursuant to FRAP 39(d)(2), we awarded $7,026.25 in costs, and

such costs were included in our mandate to the district court. 1

      On remand, Grant Thornton initially sought $38,983.70 in

costs in the district court.              This amount included the $7,026.25

ordered by this court, $1,957.45 for the costs of obtaining a

trial      transcript,       and    $30,000.00     for     premiums       paid   on    a

supersedeas bond (covering the March 28, 2008 to March 28, 2009

      1
       The $7,026.25 awarded in costs can be broken down as
follows: (1) $450.00 for the docketing fee; (2) $6,285.00 for
printing the joint appendix; (3) $244.00 for printing Grant
Thornton’s opening brief; and (4) $47.25 for printing Grant
Thornton’s reply brief.

                                          - 4 -
time    period).        On     August     27,      2008,     Grant    Thornton          filed     an

amended bill of costs seeking an additional $30,000.00 for an

earlier appeal bond premium it had neglected to include in its

initial bill of costs.                 Thus, the amount of costs sought by

Grant Thornton totaled $68,983.70.

       On March 18, 2009, the Clerk of Court for the Southern

District    of     West      Virginia     taxed       $68,983.70       in     costs        against

Ellis.      Ellis       sought    review        of    this    taxation,          by     filing     a

“Motion to Review and Reverse the Clerk’s Taxation of Costs”

pursuant     to     Rule       54(d)(1)       of     the   Federal         Rules      of        Civil

Procedure.        On March 31, 2010, the district court granted Ellis’

motion, and denied all costs to Grant Thornton.                              In its ruling,

the    district     court      noted     that      Grant     Thornton        engaged        in    no

misconduct,       and     further       noted      that      the     costs    were         neither

excessive nor of limited value.                      The district court found that

requiring     Ellis       to    pay     the     requested          costs     would      “work      a

substantial hardship on Ellis,” because, at the time of trial in

2004,    Ellis’     yearly       salary       was     $52,630.00,          and     he      is    now

retired.     The district court further found that the issues in

the case were “close and difficult,” because (1) the judgment

was reversed on appeal, and (2) in the district court’s view,

Ellis    probably       would     have     prevailed          if     the    case      had       been

remanded     for    a     retrial.         Because         the      case     was      close      and

                                              - 5 -
difficult, the district court observed that Ellis brought the

action in good faith.

                                             II

      Rule    54(d)(1)     of    the    Federal          Rules      of   Civil    Procedure

provides in pertinent part: “Unless a federal statute, these

rules, or a court order provides otherwise, costs—other than

attorney’s     fees—should       be    allowed          to    the   prevailing      party.”

Fed. R. Civ. P. 54(d)(1).               Pursuant to this rule, prevailing

parties may move for an award of costs, and we review the grant

or denial of such costs for an abuse of discretion.                               Cherry v.

Champion Int’l Corp., 186 F.3d 442, 446 (4th Cir. 1999).

      We have recognized that the language of Rule 54(d)(1) gives

rise to a “presumption that costs are to be awarded to the

prevailing party.”         Id.     Accordingly, it is incumbent upon the

unsuccessful party to show circumstances sufficient to overcome

the presumption favoring an award of costs to the prevailing

party.       Teague v. Bakker, 35 F.3d 978, 996 (4th Cir. 1994).

      Although the district court has the discretion to deny an

award of costs, it must “articulat[e] some good reason” for its

denial.       Cherry,      186   F.3d    at        446       (citations     and    internal

quotation marks omitted); Constantino v. American S/T Achilles,

580   F.2d    121,   123    (4th      Cir.    1978)          (reversing     the    district

court’s   denial     of    costs      where       the    district        court    stated   no

                                        - 6 -
reason for its action).          In essence, that reason must be that

“there would be an element of injustice in a presumptive cost

award.”      Cherry,    186    F.3d   at   446.     Among    the   factors    that

justify denying an award of costs are: (1) misconduct by the

prevailing party; (2) the unsuccessful party’s inability to pay

the costs; (3) the excessiveness of the costs in a particular

case; (4) the limited value of the prevailing party’s victory;

or (5) the closeness and difficulty of the issues decided.                    Id.

Moreover,    although     the    unsuccessful      party’s    “good   faith    in

pursuing an action is a virtual prerequisite to receiving relief

from the normal operation of Rule 54(d)(1), that party’s good

faith, standing alone, is an insufficient basis for refusing to

assess costs against that party.”             Id. (internal quotation marks

omitted).

      Grant Thornton contends that the district court abused its

discretion when it failed to award them $68,983.70 in costs.

Grant Thornton principally takes issue with the district court’s

analysis of Ellis’ inability to pay the $68,983.70 in costs.

      We begin our analysis by noting that the district court

abused its discretion when it refused to award the $7,026.25 in

costs that were ordered by this court as part of our mandate to

the district court.           See Invention Submission Corp. v. Dudas,

413   F.3d   411,   415   (4th    Cir.     2005)   (noting   that,    under   the

mandate rule, a lower court generally may not consider questions

                                      - 7 -
that the mandate has laid to rest). 2                  Accordingly, we vacate this

portion     of     the    district          court’s    judgment     and     remand    with

instructions to the district court to tax costs against Ellis in

the amount of $7,026.25.

     With    regard        to       the    remaining    $61,957.45    in     costs,    the

district court correctly found that the issues in the case were

close and difficult.                The case was hotly contested at trial and

in the previous appeal.                   The legal issues in the case were not

as clear cut as Grant Thornton would have us believe.                                  And

although the judgment in favor of Ellis was vacated on the basis

of a lack of proof to support Ellis’ negligent misrepresentation

claim,    such     conclusion         was    reached    with     difficulty    and    only

after a thorough and careful evaluation of West Virginia law.

Moreover,        even    though       Grant     Thornton    is     correct     that    the

district court did not discuss in detail the presence of other

assets in Ellis’ name, held individually or jointly, which could

be used to satisfy the award of costs, there was sufficient

evidence    admitted           at    trial    to   allow   the    district     court    to

carefully    evaluate          Ellis’      financial    condition     and    assess    his

ability to pay the award of costs.                     In sum, we find no abuse of

discretion        in     the    district       court’s     refusal    to      award    the

     2
       Although deviation from the mandate rule is permitted in a
few exceptional circumstances, Dudas, 413 F.3d at 415, such
circumstances are not present here.

                                             - 8 -
remaining $61,957.45 in costs to Grant Thornton.                     Cf. Teague, 35

F.3d at 996-97 (“We cannot say that the district court abused

its discretion in [denying costs,] considering plaintiffs’ good

faith    in   pursuing     claims     against     Taggart    and     DH   &   S,   the

closeness     of    the   outcome,    or    the   equities      in   conducting    its

analysis;     nor    do   we   find   any    abuse   in   the    district     court's

conclusion.”).

                                           III

        For the reasons stated herein, the judgment of the district

court is affirmed in part and vacated in part, and the case is

remanded to the district court with instructions to tax costs

against Ellis in the amount of $7,026.25.

                                                                 AFFIRMED IN PART,
                                                                  VACATED IN PART,
                                                                      AND REMANDED

                                       - 9 -