1999 -NMCA- 28, Key v. Chrysler Motors Corp.
| Decision Date | 29 December 1998 |
| Docket Number | No. 18,633,18,633 |
| Citation | 976 P.2d 523,1999 NMCA 28,127 N.M. 38 |
| Parties | 1999 -NMCA- 28 Jack KEY and Jack Key Motor Company, Inc., Plaintiffs/Appellants/Cross-Appellees, v. CHRYSLER MOTORS CORPORATION, Defendant/Appellee/Cross-Appellant. |
| Court | Court of Appeals of New Mexico |
¶1 This appeal and cross appeal come at the end of protracted litigation that has already found its way to this Court and the Supreme Court once before. At issue now is the district court's order awarding costs. Jack Key and Jack Key Motor Company, Inc. (Key), appeal the order contending that the award of costs should be reduced or eliminated altogether. Chrysler Motors Corporation (Chrysler) cross appeals arguing that the cost award should be increased. For the reasons that follow, we affirm in part and reverse in part.
¶2 This case arises out of a dispute under the New Mexico Motor Vehicle Dealers Franchising Act (the Act). See NMSA 1978, §§ 57-16-1 to -16 (1997). Key filed suit against Chrysler, alleging that Chrysler violated the Act by unreasonably refusing to consent to Key's prospective purchase of a Chrysler dealership franchise. Key succeeded in obtaining a judgment in district court awarding Key $300,000 in damages. Chrysler had tried on several occasions in district court to have Key's complaint dismissed based on lack of standing under the Act. Chrysler reasserted its standing argument in this Court with no success. However, Chrysler successfully petitioned for certiorari in the Supreme Court. The Supreme Court agreed with Chrysler's standing argument, reversed the district court's judgment, and remanded for entry of judgment in favor of Chrysler. See Key v. Chrysler Motors Corp., 121 N.M. 764, 778, 918 P.2d 350, 364 (1996) (Key I ).
¶3 Upon remand to the district court, Chrysler filed a cost bill asking for an award of $291,105.23 in costs. Key objected to the cost bill, and a hearing was held on the matter. At the hearing, Chrysler voluntarily deducted $28,723.64 from its original cost bill. Chrysler also presented the testimony of one of its trial attorneys, George Finger, to establish the reasonableness and necessity of its costs. Key did not present any evidence at the hearing. Key argued, however, that Chrysler's request for costs should be reduced or denied because: (1) the Supreme Court had already ruled that each party was to bear its own costs; (2) Chrysler was not the prevailing party entitled to costs; (3) Chrysler's expert witness fee was not reasonable and necessary; (4) other costs requested by Chrysler were not directly associated with the trial of the case; (5) the award of a large cost bill would have a chilling effect on future litigation under the Act; and (6) a large cost award was inappropriate in light of the financial disparity between the parties.
¶4 The district court ruled that with the exception of some of the photocopying charges, all of the items in Chrysler's cost bill would be allowed. However, the district court then reduced the allowed costs by 80% in consideration of Key's ability to pay, the difference between the resources of Key and Chrysler, and because of the chilling effect of a large cost award in this case. Consequently, Key was only required to pay $47,570.52 in costs to Chrysler.
¶5 In general, the costs of litigation may be recovered by the prevailing party. See Rule 1-054(E) NMRA 1998 (); NMSA 1978, § 39-3-30 (1966) (). Costs are considered to be a statutory allowance for expenses incurred in litigation. See Dunleavy v. Miller, 116 N.M. 353, 362-63, 862 P.2d 1212, 1221-22 (1993). In this regard, the district court has the discretion to award the prevailing party its necessary and reasonable costs incident to its prosecution or defense of the action. Id. at 362, 862 P.2d at 1221. On appeal, the district court's ruling will not be disturbed absent an abuse of that discretion. See Pioneer Sav. & Trust, F.A. v. Rue, 109 N.M. 228, 231, 784 P.2d 415, 418 (1989). However, "[t]he district court should exercise [its] discretion sparingly when considering expenses not specifically authorized by statute and precedent." Dunleavy, 116 N.M. at 363, 862 P.2d at 1222.
¶6 Because the judge who ordered the cost award in this case was not the same judge who presided over the trial, Key argues that this Court is in as good a position to evaluate Chrysler's cost bill, suggesting that we need not apply the deferential abuse-of-discretion standard of review in this appeal. Key has not cited any authority to support this argument. See In re Adoption of Doe, 100 N.M. 764, 765, 676 P.2d 1329, 1330 (1984) (). In any event, we simply note that live testimony was presented on the hearing on Key's objections to Chrysler's cost bill. Thus, we remain committed to applying the abuse-of-discretion standard of review.
¶7 Key initially argues that the district court should not have awarded costs because the Supreme Court declined to award costs in its opinion in Key I even though it ruled in favor of Chrysler on the merits. As Chrysler correctly observes, the Supreme Court's original opinion provided that "[n]o costs are awarded." Key I, S.Ct. No. 22,587 slip op. at 22 (Filed May 31, 1996). Because of this statement in the original opinion, Chrysler filed a motion in which it requested clarification regarding Chrysler's right to costs at the district court level. The Supreme Court denied the motion but revised the opinion to state that "[n]o appellate costs are awarded." Key I 121 N.M. at 778, 918 P.2d at 364. We agree with Chrysler that the Supreme Court's amended opinion demonstrates that the Supreme Court limited its ruling to the award of costs on appeal.
¶8 Key also argues that as a matter of consistency the district court should have denied Chrysler's trial costs since Chrysler was not allowed to recover its appellate costs. We disagree. If the Supreme Court had perceived any potential inconsistency, it could have directed that Chrysler was not to be awarded its trial costs. Instead, the Supreme Court's actions underscore the fact that New Mexico courts are afforded discretion in the award of costs. In short, we believe the Supreme Court intended to allow the trial court to exercise its own sound discretion with regard to the award of costs at the trial court level.
¶9 Key also argues that even if the Supreme Court's decision did not explicitly preclude the award of costs at the district court level, the district court should not have awarded Chrysler its costs because Chrysler did not prevail at trial. However, Key's argument ignores the fact that while Key may have won the battle at trial, it lost the war on appeal. See Rodriguez v. Handy, 873 F.2d 814, 817 (5th Cir.1989) (); Givens v. Lederle, 556 F.2d 1341, 1346 (5th Cir.1977) (); see also South v. Lucero, 92 N.M. 798, 804, 595 P.2d 768, 774 (Ct.App.1979) (); Read v. Western Farm Bureau Mut. Ins. Co., 90 N.M. 369, 376, 563 P.2d 1162, 1169 (Ct.App.1977) (). Accordingly, we hold that the district court did not err in awarding Chrysler some of its trial costs even though Chrysler initially lost at the trial court level.
¶10 Even though the district court reduced Chrysler's cost award by 80%, Key argues that the district court should have completely denied Chrysler's costs because of the financial disparity of the parties. In contrast, Chrysler argues that the district court abused its discretion in reducing its cost award because of a perceived disparity between Key's financial resources and those of Chrysler. New Mexico case law provides that the district court may use its discretion to deny or limit an award of costs to the prevailing party when the losing party lacks the resources to pay the cost award. See Gallegos v. Southwest Community Health Serv., 117 N.M. 481, 489-91, 872 P.2d 899, 907-09 (Ct.App.1994).
¶11 Chrysler maintains that the district court abused its discretion because Key failed to present any evidence to establish the financial condition of the parties. We disagree. First, the court appropriately took note of the "gross disparity between the size and resources of the litigants." Indeed much of Chrysler's sizable cost bill seems to have been incurred based on Chrysler projecting the national impact of a potential award for Key in this case, which means that Key was being asked to pay costs beyond the normal anticipated scope of one lawsuit. Second, the court was concerned about Key's ability to pay such a large award. Although the evidence of ability to pay was somewhat ambiguous, counsel for Key characterized that evidence to the court, without objection from Chrysler, as showing Key's business value to be less then $200,000. Appellate counsel for Key made a similar representation to this Court which Chrysler did not specifically deny. It is up to the trial court to draw appropriate inferences from the evidence. Given that the...
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Key v. CHRYSLER MOTORS CO.
...on the cost bill, and Chrysler filed a cross-appeal to the Court of Appeals. Key v. Chrysler Motors Corp., 1999-NMCA-028, ¶ 1, 127 N.M. 38, 976 P.2d 523 (Key II). {5} The Court of Appeals reversed the district court's order with regard to the allowance of costs for phone, facsimile, package......