United States District Court, D. Colorado
RAYMOND P. MOORE UNITED STATES DISTRICT JUDGE.
matter is before the Court on Defendants' motions for
judicial review of the Clerk's taxation of costs (ECF
Nos. 146, 149.) The motions have been fully briefed and, for
the reasons stated below, are DENIED.
Rockhill Insurance Company (“Rockhill”) prevailed
on summary judgment in this insurance coverage dispute,
obtaining a declaration that it had no obligation to defend
or indemnify Defendant CFI - Global Fisheries Management
(“CFI”) in the arbitration brought against it by
Heirloom 1, LLC (“Heirloom”). (See ECF
No. 132.) The award to Heirloom in that proceeding was nearly
$900, 000. Rockhill also prevailed on Defendants'
counterclaims for breach of contract and declaratory judgment
and on CFI's counterclaims for bad faith.
then submitted a proposed bill of costs (ECF No. 134) seeking
reimbursement for $36, 017.64 in costs under Fed.R.Civ.P.
54(d)(1), 28 U.S.C. § 1920, and Colorado law. Defendants
filed separate objections, and the Clerk of the Court heard
argument on the proposed bill of costs. The Clerk awarded
Rockhill $30, 093.05, including $21, 253.03 under federal law
and $8, 840.02 under Colorado law. The Clerk ordered CFI and
Heirloom to split the costs 70/30, respectively.
Costs Awarded Under Federal Law
argues that the Court should disallow deposition costs for
six witnesses because they were deposed for discovery
purposes only. However, as CFI concedes, these individuals
were designated as potential witnesses should the case go to
trial. “[W]e do not employ the benefit of hindsight in
determining whether materials for which a prevailing party
requests costs are reasonably necessary to the litigation of
the case. We base this determination, instead, solely on the
particular facts and circumstances at the time the expense
was incurred.” In re Williams Sec. Litig. - WCG
Subclass, 558 F.3d 1144, 1148 (10th Cir. 2009)
(quotation and citation omitted). Thus, “we will not
penalize a party who happens to prevail on a dispositive
motion by not awarding costs associated with that portion of
discovery which had no bearing on the dispositive motion, but
which appeared otherwise necessary at the time it was taken
for proper preparation of the case.” Id.
(quotation omitted). The Court concludes the depositions were
reasonably necessary for the preparation of this case.
also argues that the Court should exercise its discretion to
deny additional costs potentially recoverable under §
1920 because Rockhill was only partially successful and the
issues were close and difficult. Although the Court agrees
with CFI's characterization of the issues, it assesses
Rockhill's level of success quite differently. The key
issue in the case was who would be liable for the $900, 000
arbitration award. Rockhill obtained a declaration that it
was not liable, and it prevailed on every counterclaim
asserted against it. The fact that it did not prevail on
every argument about the scope of insurance coverage or the
applicability of some policy exclusions does not
significantly detract from its success in this case. As a
result, the Court declines to exercise its discretion to
disallow Rockhill's costs on this basis.
extent CFI argues the Clerk's apportionment of the costs
is not appropriate, the Court disagrees. CFI's poor
workmanship supplied the basis for the underlying arbitration
award, and its decision to pursue bad-faith counterclaims
against Rockhill, including speculative claims for lost
business income that it could not substantiate, needlessly
increased the litigation costs for all parties. Therefore, it
is appropriate that it pay a larger portion of the costs than
part, Heirloom also argues the Court should disallow costs
that were not reasonably necessary. Like CFI, Heirloom seems
to hold the view that costs pertaining to discovery that was
not incorporated into Rockhill's successful motion for
summary judgment should not be allowed. But as explained
above, we view the costs from the perspective of when they
were incurred and whether they were reasonably necessary to
prepare for whatever course the litigation might take. The
Court discerns no basis for exercising its discretion to
further reduce the costs allowed by the Clerk.
Costs Awarded Under State Law
both argue that Rockhill cannot recover costs under Colo.
Rev. Stat. § 13-16-105 because the Court previously
denied its request under Colo. Rev. Stat. § 10-3-1116
for costs and attorney fees. (See ECF No. 132 at 34
n.22.) Under § 1116(5), if a court finds that a claim
brought under the statute governing unreasonable delay or
denial of benefits is frivolous, it must award costs and
attorney fees to the defendant insurer. Section 105 is a more
general statute which requires an award of costs to a
prevailing party, including an insurer that prevails in a
declaratory judgment action. Globe Indem. Co. v.
Travelers Indem. Co., 98 P.3d 971, 977 (Colo.App. 2004).
In its motion for summary judgment, Rockhill argued that
CFI's counterclaims for bad faith were frivolous, and
therefore Rockhill was entitled to costs and attorney fees
under § 1116. The Court denied that request because it
was unable to find no rational basis for CFI's
counterclaims. Defendants argue that an award of costs under
§ 105 is precluded when a court has denied a motion for
costs and attorney fees under a more specific statute such as
§ 1116, but they cite no authority directly supporting
such a proposition. Colorado courts favor construing statutes
harmoniously to give effect to all provisions. Mullins v.
Kessler, 83 P.3d 1203, 1205 (Colo.App. 2003). Section
1116 is part of a statutory framework intended to
“increase the penalties on [insurance] companies that
unreasonably delay or deny payment by offering consumers in
those situations . . . a private right of action beyond the
remedies in existing law.” Kisselman v. Am. Family
Mut. Ins. Co., 292 P.3d 964, 972-73 (Colo.App. 2011)
(quotation and emphasis omitted). But there is no indication
that this provision is meant to supplant a prevailing
party's right to recover costs under § 105. The
Court concludes that its denial of Rockhill's earlier
request for costs and attorney fees under § 1116 does
not preclude an award of costs under § 105.