Leontiev v. Varshavsky
MEMORANDUM ORDER: Defendant's challenge to the Clerk's award of costs to plaintiff is denied in its entirety, and as further set forth. (Signed by Judge Jed S. Rakoff on 5/1/2017) (ras)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
16 Civ. 3595
JED S. RAKOFF, U.S.D.J.
On March 1, 2017, the Court, on consent of the parties,
granted summary judgment against defendant Alexander Varshavsky
and in favor of plaintiff Sergey Leontiev on the latter's only
remaining cause of action, which sought a declaration that
Leontiev owed no debt or obligation to Varshavsky in connection
with certain loans that were in neither party's name. See Final
Judgment, ECF No. 70. Earlier in the case, the Court had
dismissed Leontiev's only other cause of action, a state-law
claim for intentional infliction of emotional distress,
failure to state a claim. See Memorandum Order dated Sept. 1,
2016, ECF No. 31. Following the entry of final judgment, the
Clerk of Court taxed costs of $19,975.85 against Varshavsky, see
ECF No. 74. Varshavsky now appeals that determination. For the
reasons stated below, the Court hereby upholds the Clerk's
The "prevailing party" in an action is generally entitled
to recover certain costs unless "a court order provides
otherwise." Fed. R. Civ. P.
54(d) (1). Because Rule 54(d)
provides that costs "should be allowed," id., "the losing party
has the burden to show that costs should not be imposed."
Scully, 241 F.3d 264,
in part on other grounds by Bruce v.
(2016). Ultimately, however,
(2d Cir. 2001), abrogated
Samuels, 136 S. Ct.
the decision to award costs is
committed to the "broad discretion" of the district court. See
L-3 Commc'ns Corp. v. OSI Sys.,
2010); Dattner v. Conagra Foods,
607 F.3d 24,
458 F.3d 98,
In opposition to the Clerk's award, Varshavsky principally
argues that Leontiev is not a "prevailing party" within the
meaning of Rule 54(d)
and is therefore not entitled to costs.
"[F]or a party to be 'prevailing,' there must be a
sanctioned change in the legal relationship of the parties.'"
458 F.3d at 101
Inc. v. W. Va.
(quoting Buckhannon Bd.
Dep't of Health & Human Res.,
& Care Home,
(2001)). Although this definition is "generous," nonetheless,
"purely technical or de minimis" success is insufficient to
satisfy it. See Tex. State Teachers Ass'n v. Garland Indep. Sch.
(1989). Thus, a litigant who wins a
declaratory judgment prevails "if, and only if,
declaration] affects the behavior of the defendant toward the
plaintiff." See Rhodes v. Stewart,
488 U.S. 1, 4 (1988)
Applying these principles, the Court concludes that
Leontiev is the prevailing party in this case.
In the final
judgment, the Court "declare[d] that Sergey Leontiev owes no
debt or obligation to defendant Alexander Varshavsky in the
defendant's personal capacity with respect to the loans and
other debt instruments described in paragraph 32 of the
complaint in this case." See Final Judgment. This declaration is
effectively a "judicially sanctioned change in the legal
relationship of the parties." See Dattner,
458 F.3d at 101.
Moreover, the declaration necessarily "affects the behavior of
the defendant toward the plaintiff," see Rhodes,
488 U.S. at 4,
for it stymies any efforts by Varshavsky to collect on the loans
in his own name, and makes plain that any further debt
collection efforts must be in a purely representative capacity.
Indeed, Varshavsky's current protests to the contrary,
throughout most of the case Varshavsky suggested to the Court
that he might be owed money from Leontiev in his
personal capacity. For example, Varshavsky, in his answer to the
complaint, denied the allegation that "Mr. Leontiev owes Mr.
Varshavsky nothing," see Complaint, ECF No. 1, '!! 4; Amended
Answer, ECF No. 27,
II. '!! 4. Then,
in opposition to Leontiev's
motion for judgment on the pleadings, Varshavsky took the
position that this allegation and his denial said nothing at all
about whether Varshavsky was potentially owed in his personal
capacity. See Defendant's Memorandum of Law in Opposition to
Plaintiff's Motion for Judgment on the Pleadings as to
Plaintiff's First Cause of Action, ECF No. 28, at 11.
Varshavsky's brief opposing that motion also contained caveats
that were unmistakably designed to suggest that Varshavsky's
personal right to enforce the loans was a live issue. See, e.g.,
id. at 12
("Even if Mr. Leontiev had established that no debt
was owed to Mr. Varshavsky personally (and he has not),
."). Most tellingly, even after Leontiev stated in open
court at oral argument on his motion for judgment on the
pleadings that he only sought relief declaring that he was not
indebted to Varshavsky in Varshavsky's personal capacity, see
Transcript dated Sept. 21, 2016, ECF No.
42, at 5-6, Varshavsky
not only did not concede that he was not owed anything from
Leontiev in his
(Varshavsky's) personal capacity, but also
continued to litigate the case tenaciously for many months
Varshavsky nonetheless argues that Leontiev's victory was
de minimis because plaintiff's emotional distress claim was
dismissed, because plaintiff won a narrower declaration than he
originally sought, and because plaintiff's eventual victory was
on consent. In fact,
Varshavsky goes so far as to say that
Leontiev won nothing at all, for,
early in the case,
Varshavsky's counsel supposedly admitted to Leontiev's counsel
that Varshavsky was not owed anything in his personal capacity.
This argument falls flat. Varshavsky's own scorched-earth
tactics put the lie to the idea that Leontiev's victory was de
minimis. Leontiev's victory was,
substantial. Whatever private and off-the-record proffer
Varshavsky's counsel allegedly might have made to Leontiev's
counsel - and Leontiev's counsel flatly denies it was made,
Plaintiff's Memorandum of Law in Support of Affirmance of
Clerk's Taxation of Costs, ECF No. 75, at 3-4 - is irrelevant,
for Varshavsky never so conceded in court and, on the contrary,
continued to hold this issue open.
Thus, Leontiev's win was not de minimis, and he is the
prevailing party under Rule 54(d).
Varshavsky also argues that costs associated with
deposition transcripts should not be taxed against him because,
in light of his consent to entry of judgment, the Court
supposedly did not "use" the transcripts in granting summary
judgment for Leontiev.
In other words, Varshavsky claims that,
Varshavsky's brief advances a number of arguments of this
nature against specific classes of costs that the Clerk of Court
accepted, and whose denial Leontiev did not cross-appeal. The
Court accordingly does not reach these other issues.
because he rolled over at the last minute, costs associated with
preparing for the contest cannot be taxed. This argument borders
on the frivolous,
as Varshavsky could easily have avoided these
costs by conceding to the Court earlier what he seemingly knew
all along: that he had no personal right to enforce the loans.
Moreover, costs for deposition transcripts may be taxed if
they were "necessarily obtained for use in the case," 28 U.S.C.
1920(2). As the Second Circuit has held, "the filing of a
deposition transcript [in connection with litigating a summary
judgment motion] necessarily means a court will
'use' it," see
Whitfield, 241 F.3d at 271, because summary judgment may be
granted only if, upon review of the record submitted by the
parties, the court finds the "that there is no genuine dispute
as to any material fact and the movant is entitled to judgment
as a matter of law." Fed. R. Civ. P. 56(a),
(c) (1) (A). Under
this standard, the Court plainly "used" the transcripts,
notwithstanding Varshavsky's consent to judgment, because that
consent was itself based on the fact that the record before the
including the contested deposition transcripts,
established that he had no personal right to enforce the loans.
Leontiev may therefore recover these costs.
Leontiev may also recover the challenged transcript costs
for the independent reason that the depositions appeared to be
"reasonably necessary to the litigation at the time they were
taken." See Farberware Licensing Co. LLC v. Meyer Mktg. Co.,
Ltd., No. 09-cv-2570
(HB), 2009 WL 5173787, at *5 (S.D.N.Y. Dec.
30, 2009). For this reason, the costs associated with Leontiev' s
deposition of Vadim Voronin, for which Leontiev did not file a
transcript in support of his motion for summary judgment, are
For the foregoing reasons, defendant's challenge to the
Clerk's award of costs to plaintiff is denied in its entirety.
New York, NY
May j_, 2017
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