Key v. CHRYSLER MOTORS CO.

Citation998 P.2d 575,128 N.M. 739,2000 NMSC 10
Decision Date10 March 2000
Docket NumberNo. 25562.,25562.
PartiesJack KEY and Jack Key Motor Company Inc., Plaintiffs-Respondents, v. CHRYSLER MOTORS CORPORATION, Defendant-Petitioner.
CourtSupreme Court of New Mexico

Reeves, Chavez, Greenfield & Walker, P.A., Barney James Reeves, William R. Anderson, Las Cruces, for Petitioner.

Norman Todd Law Office, Norman E. Todd, Las Cruces, for Respondents.

OPINION

SERNA, Justice.

{1} Defendant-Petitioner Chrysler Motors Corporation (Chrysler) filed a cost bill resulting from litigation with Plaintiffs-Respondents Jack Key and Jack Key Motor Company, Inc. (Key) in the district court. Although the district court found that Chrysler incurred reasonable and necessary expenses, the district court significantly reduced the entire award and disallowed costs for computer-assisted legal research. Key appealed the order, and Chrysler cross-appealed to the Court of Appeals, which affirmed the district court's reduction of costs and disallowance of costs for computer-assisted legal research. This Court granted Chrysler's petition for writ of certiorari. Chrysler raises two issues: whether the district court abused its discretion by reducing Chrysler's allowable costs without evidence indicating Key's inability to pay, and whether Chrysler's computer-assisted legal research costs were reasonable and necessary and should have been awarded to it as the prevailing party. We conclude that the district court abused its discretion by reducing Chrysler's total costs and remand for a new evidentiary hearing on this issue consistent with this opinion, but we affirm the district court's decision regarding computer-assisted legal research.

I. Facts and Background

{2} In 1989, Jack Key filed a complaint for violation of the Motor Vehicle Dealers Franchising Act, NMSA 1978, §§ 57-16-1 to -16 (1973, as amended through 1997) (Franchising Act), against Chrysler, alleging that Chrysler was in violation of the Franchising Act because of Chrysler's refusal to consent to Key's prospective purchase of a Chrysler dealership franchise. In 1990, Chrysler filed a motion for judgment on the pleadings, alleging that the complaint failed to state a claim upon which relief may be granted because Key lacked standing under the Franchising Act. The district court denied the motion and permitted Chrysler to seek an interlocutory appeal, which was denied by the Court of Appeals. In 1991, Key filed an amended complaint, adding Jack Key Motor Company, Inc., as a plaintiff and adding an allegation that Chrysler retaliated against the company because of Key's initial lawsuit. Chrysler again filed a motion for judgment on the pleadings or, alternatively, a motion for summary judgment, but the district court denied the motions.

{3} Following a bench trial, the district court entered judgment for Key in the amount of $300,000 plus $125,000 in attorney fees. The court found in favor of Chrysler regarding the retaliation claim. The judgment was appealed by both parties. This Court, which granted certiorari after the Court of Appeals affirmed the district court, reversed and found in favor of Chrysler and against Key on the standing issue. Key v. Chrysler Motors Corp., 1996-NMSC-038, 121 N.M. 764, 778, 918 P.2d 350, 364 (Key I).

{4} In 1996, Chrysler filed its cost bill in the district court. The court found that Chrysler incurred reasonable and necessary expenses in the amount of $237,852.60, rejecting costs for meals, computer-aided research, filing fees, and other expenses. The district court then reduced the total costs by 80%. The court articulated three reasons for reducing the award: first, it found Key unable to pay; second, it found a great disparity between the resources of Key and Chrysler; and third, it found that a large cost award in this case would cause a chilling effect on car dealers bringing a claim under the Franchising Act in the future. Key was thus required to pay Chrysler $47,570.52 in costs. Key appealed this order and judgment 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 courier, delivery, and photocopy charges. Key II, 1999-NMCA-028, ¶ 17, 127 N.M. 38, 976 P.2d 523. The Court of Appeals affirmed the remainder of the order, holding that the district court did not abuse its discretion in reducing Chrysler's costs or in refusing to allow Chrysler's charges for computer-assisted legal research. Id. ¶¶ 13, 19. Chrysler observes, and the Court of Appeals recognized, that although Key requested a hearing on his objection to the cost bill, Key did not present any evidence regarding the financial condition of the parties. Id. ¶ 3. The Court of Appeals specifically concluded that the district court did not abuse its discretion by declining to award the costs for computer-assisted legal research, and determined such costs to be similar to attorney fees, to which Chrysler was not entitled. Id. ¶ 19. In 1999, this Court granted Chrysler's petition for writ of certiorari regarding the appropriateness of the district court's reduction in Chrysler's costs and the denial of computer-assisted legal research costs.

II. Reduction in Chrysler's Costs

{6} "In all civil actions or proceedings of any kind, the party prevailing shall recover his [or her] costs against the other party unless the court orders otherwise for good cause shown." NMSA 1978, § 39-3-30 (1966). Similarly, our rules provide that "[e]xcept when express provision therefor is made either in a statute or in these rules, costs, but not attorneys' fees, shall be allowed as a matter of course to the prevailing party unless the court otherwise directs...." Rule 1-054(D)(1) NMRA 2000. As the prevailing party, Chrysler is entitled to a presumption that it should be awarded costs. See Marchman v. NCNB Tex. Nat'l Bank, 120 N.M. 74, 94, 898 P.2d 709, 729 (1995)

("Rule [1-054] creates a presumption that the prevailing party will be awarded costs."); Pioneer Sav. & Trust, F.A. v. Rue, 109 N.M. 228, 231, 784 P.2d 415, 418 (1989) (noting that Rule 1-054 "allows costs to be awarded to the prevailing party as a matter of course"). Key must overcome this presumption by showing bad faith on Chrysler's part, misconduct during the course of the litigation, that an award to Chrysler would be unjust, or that other circumstances justify the denial or reduction of costs. Marchman, 120 N.M. at 94,

898 P.2d at 729.

{7} "The trial court has discretion in assessing costs, and its ruling will not be disturbed on appeal unless it was an abuse of discretion." Pioneer, 109 N.M. at 231, 784 P.2d at 418; accord Dunleavy v. Miller, 116 N.M. 353, 362-63, 862 P.2d 1212, 1221-22 (1993)

. "While it is clear that the trial court is invested with wide discretion in determining whether to award costs, ... such discretion is not unlimited." Martinez v. Martinez, 1997-NMCA-096, ¶ 20, 123 N.M. 816, 945 P.2d 1034.

{8} Chrysler's first argument is that the district court abused its discretion by reducing Chrysler's allowable costs by 80% based on unsupported findings that there was a disparity of wealth between the parties. The district court stated:

However, I'm going to reduce the entire—whatever is left, I'm going to allow those costs but reduce that by 80 percent and allow 20 percent of that. The reason being, is there is clearly a gross disparity between the size [and] resources of the litigants.
Given the resources of the plaintiff, it could be—allowing the full amount could possibly result in a bankruptcy of the party, and the court does have to take in consideration the ability of the parties to pay the costs.
Additionally, the Court is concerned that allowing the full amount of costs to be taxed would not only have a chilling [e]ffect, but would close the courthouse door to automobile dealers under this particular statute.

The Court of Appeals concluded that "the district court properly exercised its discretion when it decided to partially reduce the cost award in this case because of the financial disparity between the parties, Key's perceived inability to pay all of Chrysler's costs, and the chilling effect that a large cost award would have on future litigation under the Act." Key II, 1999-NMCA-028, ¶ 13, 127 N.M. 38, 976 P.2d 523.

{9} "If the trial court exercises its discretion not to award costs to the prevailing party it should articulate the reasons for its ruling, unless the basis for denying costs is readily apparent on the face of the record." Marchman, 120 N.M. at 94-95, 898 P.2d at 729-30 (quoted authority and internal quotation marks omitted). While the district court found that there was a gross disparity in the size and resources of the parties, that a chilling effect would result, and that Key was unable to pay, we conclude that there was no evidence supporting these findings in the record. See Marshall v. Providence Wash. Ins. Co., 1997-NMCA-121, ¶ 35, 124 N.M. 381, 951 P.2d 76 ( "[T]he trial court did not find Defendants' conduct to be willful, unreasonable, or in bad faith. Moreover, the record does not clearly establish willfulness, bad faith, or other fault indicating the basis for the trial court's award of costs against Defendants and the reason for deviating from the general rule that the prevailing parties are entitled to an award of costs. Under these circumstances, we deem it necessary to remand for entry of specific findings of fact and conclusions of law detailing the basis for the court's award of costs.").

{10} In upholding the district court's reduction of Chrysler's costs, the Court of Appeals, Key II, 1999-NMCA-028, ¶ 10, 127 N.M. 38, 976 P.2d 523, relied on Gallegos v. Southwest Community Health Services, 117 N.M. 481, 489-91, 872 P.2d 899, 907-09 (Ct.App.1994). The Court of Appeals, in Gallego...

To continue reading

Request your trial
30 cases
  • Apodaca v. AAA Gas Co.
    • United States
    • Court of Appeals of New Mexico
    • March 11, 2003
    ...reviews the trial court's assessment of costs in a civil action under an abuse of discretion standard. Key, 2000-NMSC-010, ¶ 7, 128 N.M. 739, 998 P.2d 575; Gallegos ex rel. Gallegos, 117 N.M. at 489, 872 P.2d at 907. Under Rule 1-054(D)(1), "costs . . . shall be allowed [as a matter of cour......
  • Pulawa v. Gte Hawaiian Tel
    • United States
    • Hawaii Supreme Court
    • September 14, 2006
    ..."wide disparity in economic resources" between parties, a party's indigence is a proper ground for denying costs); Key v. Chrysler Motors Corp., 998 P.2d 575, 579 (N.M.2000) (recognizing disparity in wealth between parties as a factor in determining costs, but reversing trial court's disall......
  • Helena Chem. Co. v. Uribe
    • United States
    • Court of Appeals of New Mexico
    • September 20, 2012
    ...court's decision regarding the amount of costs for an abuse of discretion. See Key v. Chrysler Motors Corp., 2000–NMSC–010, ¶ 7, 128 N.M. 739, 998 P.2d 575. A court abuses its discretion when its decision is contrary to logic and reason or if its decision is premised on a misapprehension of......
  • OR&L Constr., L.P. v. Mountain States Mut. Cas. Co.
    • United States
    • Court of Appeals of New Mexico
    • April 25, 2022
    ...Mountain States is "entitled to a presumption that it should be awarded costs." Key v. Chrysler Motors Co. , 2000-NMSC-010, ¶ 6, 128 N.M. 739, 998 P.2d 575. The burden is on the losing party to demonstrate that an award of costs would be unjust or that other circumstances justify a denial o......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT