Gary Ellis v. Grant Thornton LLP

Filing

UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 1:04-cv-00043. Copies to all parties and the district court/agency. [998612220] [10-1509]

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Document: 32

Date Filed: 06/15/2011

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UNPUBLISHED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Affirmed in part, vacated in part, and remanded by unpublished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,

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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Unpublished opinions are not binding precedent in this circuit.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.
Court

for

the

Southern

District

of

West

The Clerk of
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.
appeals from this ruling.

Grant Thornton

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).
our

decision,

we

held

that

Ellis

failed

to

offer

In

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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Appeal: 10-1509

time

Document: 32

period).

Date Filed: 06/15/2011

August

On

Page: 5 of 9

Grant

27,

2008,

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

Ellis.

Ellis

Virginia

sought

taxed

review

$68,983.70

of

this

in

costs

taxation,

by

against

filing

a

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

to

Procedure.

Rule

54(d)(1)

of

the

Federal

Rules

of

Civil

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

motion, and denied all costs to Grant Thornton.

In its ruling,

the

engaged

district

misconduct,

court
and

noted

further

that

Grant

noted

that

excessive nor of limited value.
requiring

Ellis

to

pay

the

Thornton
the

costs

were

in

no

neither

The district court found that

requested

costs

would

“work

a

substantial hardship on Ellis,” because, at the time of trial in
2004,

Ellis’

retired.

yearly

salary

was

$52,630.00,

and

he

is

now

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

remanded

for

would
a

have

retrial.

prevailed
Because

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if
the

the

case

had

been

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

Fed. R. Civ. P. 54(d)(1).

to

the

prevailing

party.”

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.”

Accordingly, it is incumbent upon the

Id.

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

court’s

121,

denial

123
of

(4th
costs

Cir.

1978)

where

the

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(reversing
district

the

court

district
stated

no

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Date Filed: 06/15/2011

reason for its action).

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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.
Moreover,

although

the

unsuccessful

party’s

“good

faith

Id.
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.
413

F.3d

411,

415

See Invention Submission Corp. v. Dudas,
(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

judgment

of

the

district

court’s

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

carefully

evaluate

at

trial

Ellis’

to

allow

financial

ability to pay the award of costs.
discretion

in

the

district

district

condition

and

court
assess

to
his

In sum, we find no abuse of

court’s

2

the

refusal

to

award

the

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

closeness

of

analysis;

nor

the
do

claims

against

Taggart

and

outcome,

or

equities

in

we

any

find

the

abuse

in

the

DH

&

S,

the

conducting

its

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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