Gary Ellis v. Grant Thornton LLP , 434 F. App'x 232 ( 2011 )

UNPUBLISHED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Affirmed in part, vacated in part, and remanded by unpublished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Unpublished opinions are not binding precedent in this circuit.
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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
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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.
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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
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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
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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
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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.
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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
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