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BASF AG v. Great American Assurance Co.

January 29, 2009

BASF AG, PLAINTIFF,
v.
GREAT AMERICAN ASSURANCE COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendant Federal Insurance Company's ("Federal") bill of costs, Defendant Great American Assurance Company's ("Great American") amended bill of costs, and Defendant Westchester Fire Insurance Company's ("Westchester") amended bills of costs. For the reasons stated below, we grant in part and deny in part the bills of costs.

BACKGROUND

On August 4, 2008, we entered judgment in favor of Defendants. Defendants subsequently filed bills of costs pursuant to Federal Rule of Civil Procedure 54(d) ("Rule 54(d)"). Great American and Westchester then filed amended bills of costs. Federal seeks $853,083.37 in costs, Great American seeks $264,444.59 in costs, and Westchester seeks $578,693.06 in costs. Plaintiff BASF AG ("BASF") opposes the requests for costs and has filed a consolidated opposition to the bills of costs.

LEGAL STANDARD

Federal Rule of Civil Procedure 54(d) provides that the prevailing party shall be allowed to recover costs other than attorneys' fees, unless a statute or other rule states otherwise, or the court specifically disallows such costs. Fed. R. Civ. P. 54(d); see also 28 U.S.C. § 1920 (setting forth costs that are generally recoverable). The Seventh Circuit has made it clear that when reviewing a bill of costs, a district court should keep in mind that "[t]here is a presumption that the prevailing party will recover costs, and the losing party bears the burden of an affirmative showing that taxed costs are not appropriate." Beamon v. Marshall & Ilsley Trust Co., 411 F.3d 854, 864 (7th Cir. 2005); see also Weeks v. Samsung Heavy Indus. Co., Ltd., 126 F.3d 926, 945 (7th Cir. 1997)(stating that "[t]he presumption in favor of awarding costs to the prevailing party is difficult to overcome, and the district court's discretion is narrowly confined"). In addition to making sure that requested costs are recoverable, a district court must also ensure that the costs are reasonable. See Majeske v. City of Chicago, 218 F.3d 816, 824 (7th Cir. 2000)(stating that "[t]axing costs against a losing party requires two inquiries: (1) whether the cost imposed on the losing party is recoverable and (2) if so, whether the amount assessed for that item was reasonable").

DISCUSSION

I. Denial of Bills of Costs in their Entirety

BASF argues that the court should deny the bills of costs in their entirety given the special circumstances in this case. BASF argues that it asserted its claims in good faith and the "circumstances evidence the underlying strength and merit to BASF's claims." (P Ans. 5). BASF argues that it would be unfair to award costs to Defendants. (P Ans. 5). BASF further argues that to award the significant amount of costs that Defendants seek would discourage future plaintiffs from bringing suits. BASF, in support of its argument, cites Republic Tobacco Co. v. North Atlantic Trading Co., Inc., 481 F.3d 442 (7th Cir. 2007) for the proposition that a court has discretion to deny costs where there is a default award. (Ans. 4). However, there was not a default award in the instant action, and although the court has discretion in awarding costs, the presumptions mentioned above are still applicable as well. The Seventh Circuit has stated that this court's "discretion is 'narrowly confined' because of the strong presumption created by Rule 54(d) that the prevailing party will recover costs." Contreras v. City of Chicago, 119 F.3d 1286, 1295 (7th Cir. 1997). In general, "'only misconduct by the prevailing party worthy of a penalty . . . or the losing party's inability to pay will suffice to justify denying costs.'" Id. (quoting Congregation of the Passion, Holy Cross Province v. Touche, Ross & Co., 854 F.2d 219, 222 (7th Cir. 1988)). BASF has failed to point to any such special circumstances or that Defendants caused an unreasonable delay in this case or engaged in other misconduct that would suffice to overcome the presumption in favor of awarding costs.

BASF also cites Rawson v. Sears, Roebuck & Co., 678 F.Supp. 820 (D. Colo. 1988) for the proposition that special circumstances would justify the denial of an award of costs. (Ans. 4). However, BASF has not pointed to special circumstances in the instant action that would warrant such a denial. In Rawson the court also found that due to the plaintiff's fixed income of less than $1,000 per month, the plaintiff would be unable to pay the anticipated costs. 678 F.Supp. at 823. In contrast, in the instant action there has been no showing by BASF that it is unable to pay the costs. Furthermore, Rawson is not controlling precedent and there is controlling Seventh Circuit precedent, as indicated above, specifically addressing the presumption in favor of awarding costs.

BASF also cites Union Industrielle Et Maritime v. Nimpex Intern., Inc., 459 F.2d 926, 931 (7th Cir. 1972) for the proposition that a showing of good faith on the part of the losing party is sufficient to warrant a denial of costs. (Ans. 4). However, as indicated above, more recent Seventh Circuit precedent since 1972 has emphasized the presumption in favor of awarding costs as provided in Rule 54(d). The Seventh Circuit has specifically stated that "[m]ore than just a showing of good faith is necessary to immunize the losing party from paying costs." Muslin v. Frelinghuysen Livestock Managers, Inc., 777 F.2d 1230, 1236 (7th Cir. 1985); see also Gardner v. S. Ry. Sys., 675 F.2d 949, 954 (7th Cir. 1982)(stating that the losing party's burden requires "something more than mere good faith on its part"). This conclusion is consistent with Rule 54(d), which provides that "costs--other than attorney's fees--should be allowed to the prevailing party." Fed. R. Civ. P. 54(d)(1). Thus, it is not sufficient that BASF may have proceeded in good faith to warrant denying costs. BASF also argues that to award such costs to Defendants would discourage litigants from filing actions. However, Rule 54(d) provides for the award of costs to the prevailing party and 28 U.S.C. § 1920 provides the list of recoverable costs. This court cannot disregard such controlling law merely based on BASF's policy argument concerning the cumulative effects of such law. Thus, BASF's requests to deny the bills of costs in their entirety, is denied.

II. Federal's Bill of Costs

Federal requests $853,083.37 in costs. BASF argues in the event that the court denies BASF's request to deny the bills of costs in their entirety, which this court has done, then in the alternative, Federal's award for costs relating to appellate bond premiums should be reduced by $404,307.67 and that Federal's award for trial-related costs should be reduced by $9,163.51. In BASF's alternative argument, BASF therefore has not contested the appropriateness of the remaining $439,612.19 requested by Federal. In regards to the $439,612.19 in costs, which is uncontested by BASF as indicated above, Federal has ...


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