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Nova Design Build, Inc. v. Grace Hotels

June 8, 2010

NOVA DESIGN BUILD, INC. AND ANNEX BUILDERS LLC, PLAINTIFFS,
v.
GRACE HOTELS, LLC, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-Yeghiayan United States District Court Judge

MEMORANDUM OPINION

SAMUEL DER-YEGHIAYAN, District Judge

This matter is before the court on Defendant Grace Hotels, LLC's, Defendant Mukesh Bheda's, Defendant JS Capital Construction, Inc.'s and Defendant Jeff Schmitz's (collectively referred to as "Grace Defendants") bill of costs and on Grace Defendants' motion for attorneys' fees. For the reasons stated below, we grant the request for costs and deny the motion for attorneys' fees without prejudice.

BACKGROUND

On February 26, 2010, we granted Grace Defendants' motion for summary judgment on Plaintiffs' copyright infringement claims (Count I), and we granted Grace Defendants' motion for summary judgment on the copyright declaration claims in the counterclaim (Count I). We also declined to exercise supplemental jurisdiction over the remaining state law claims and terminated the action. Grace Defendants now seek costs and attorneys' fees.

DISCUSSION

Plaintiffs contend that Grace Defendants are not prevailing parties in this case, and thus are not entitled to costs or attorneys' fees. Determining whether a party has a prevailing party status when seeking attorneys' fees under 17 U.S.C. § 505 or whether a party is a prevailing party under Federal Rule of Civil Procedure 54(d) (Rule 54(d)) are separate issues and the court will address each separately. See, e.g., Hastert v. Illinois State Bd. of Election Com'rs, 28 F.3d 1430, 1438 (7th Cir. 1993)(indicating that an attorneys' fee award and a costs award under Rule 54(d) are not automatically treated the same); See also, e.g., Buckhannon Bd. and Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, 532 U.S. 598, 603 (2001)(referring to prevailing on the merits for attorneys' fees recovery); Citizens for a Better Environment v. Steel Co., 230 F.3d 923, 930 (7th Cir. 2000)(stating that "a court may lack authority to resolve the merits of a claim yet have jurisdiction to award costs and attorneys' fees to the prevailing party").

I. Taxable Costs

Grace Defendants request $2,534.70 in taxable costs relating to court reporter fees. Rule 54(d) provides that the prevailing party shall be allowed to recover costs other than attorneys' fees as a matter of course, 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 in reviewing a bill of costs, the 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). In addition to making sure that the requested costs are recoverable, a district court must also ensure that the costs are "reasonable and necessary to the litigation . . . ." Little v. Mitsubishi Motors North America, Inc., 514 F.3d 699, 702 (7th Cir. 2008); see also Majeske v. City of Chicago, 218 F.3d 816, 824 (7th Cir. 2000)(referring to recoverable and reasonable considerations and to the "heavy presumption in favor of awarding costs").

Plaintiffs contend that Grace Defendants prevailed on jurisdictional grounds rather than on a decision on the merits, and thus they are not prevailing parties. The Seventh Circuit has indicated that, in regard to an award of costs under Rule 54(d), "success on a fundamental jurisdictional point can make a litigant a 'prevailing party.'" Citizens for a Better Environment v. Steel Co., 230 F.3d 923, 930 (7th Cir. 2000)(stating that "when a dismissal for want of jurisdiction forecloses the plaintiff's claim, the defendant is the 'prevailing party'"); see also, e.g., St. John Health System, Inc. v. Cohen, 2010 WL 1727971, at *6 (N.D. Okla. 2010)(stating that "a defendant is a 'prevailing party' under Rule 54(d) if a plaintiff's claim is dismissed for lack of subject matter jurisdiction"). The court ruled in favor of Grace Defendants and effectively foreclosed Plaintiffs from bringing a new action on the copyright claims. Citizens, 230 F.3d at 930. Grace Defendants obtained more than just a moral victory on a minor jurisdictional point. Thus, Grace Defendants are prevailing parties for the purpose of recovering costs under Rule 54(d). Grace Defendants have shown that the requested costs are recoverable and reasonable and have provided sufficient documentation to support the requested costs. Therefore, we award Grace Defendants $2,534.70 in costs.

II. Attorneys' Fees

Grace Defendants request an award of $482,930.00 in attorneys' fees and related non-taxible costs pursuant to 17 U.S.C. § 505. Pursuant to 17 U.S.C. § 505, in a civil copyright action, "the court may . . . award a reasonable attorney's fee to the prevailing party as part of the costs." Id.

A. Prevailing Party Status

Plaintiffs argue that Grace Defendants are not prevailing parties, for the purposes of an attorneys' fee award, since Grace Defendants did not prevail on the merits, but instead on jurisdictional grounds. The Seventh Circuit has pointed out that the "Supreme Court has adopted a generous formulation of the term prevailing party; . . . parties are said to have prevailed in litigation for attorney's fees purposes if they succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit." King v. Illinois State Bd. of Elections, 410 F.3d 404, 411 (7th Cir. 2005). The Seventh Circuit has indicated that "[a]t a minimum, to be considered a prevailing party . . . [a party] must be able to point to a ...


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