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Otay Land Company, A Delaware v. United Enterprises Ltd.

March 14, 2012

OTAY LAND COMPANY, A DELAWARE LIMITED LIABILITY COMPANY; FLAT ROCK LAND COMPANY, A DELAWARE LIMITED LIABILITY COMPANY, PLAINTIFFS-APPELLANTS,
v.
UNITED ENTERPRISES LTD., A CALIFORNIA LIMITED PARTNERSHIP; UNITED ENTERPRISES, INC., A DELAWARE CORPORATION; JOHN T. KNOX; THE OTAY RANCH L.P., A CALIFORNIA LIMITED PARTNERSHIP; BALDWIN BUILDERS, A CALIFORNIA CORPORATION; SKY COMMUNITIES, INC., A CALIFORNIA CORPORATION; OLIN CORPORATION, A VIRGINIA CORPORATION; PHIL G. SCOTT; RAY ENNISS; PATRICK J. PATEK; SKY VISTA, INC., DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Southern District of California Roger T. Benitez, District Judge, Presiding D.C. No. 3:03-cv-02488-BEN-POR

The opinion of the court was delivered by: McKEOWN, Circuit Judge:

FOR PUBLICATION

OPINION

Argued and Submitted November 8, 2011-Pasadena, California

Before: Ferdinand F. Fernandez, Karen Nelson Moore,*fn1 and M. Margaret McKeown, Circuit Judges.

Opinion by Judge McKeown

OPINION

Given the complexities of litigation and the escalating magnitude of attorneys' fees, it is no surprise that appellate review of attorneys' fees and costs has focused overwhelmingly on fees. Nonetheless, costs also can add up to a considerable amount and because fees are not always available by contract, statute or otherwise, an award of costs can take on heightened importance.

Under 28 U.S.C. § 1919, when a suit is dismissed for lack of jurisdiction, the court "may order the payment of just costs." This case requires us to parse the term "just" and consider what constitutes "just costs." Here, the district court awarded costs to defendants on the ground that they were necessarily incurred in defending the action. Because the district court implied a presumption of award of costs that is absent in the permissive statute, and because it equated incurred costs with "just costs," we conclude that the court abused its discretion under § 1919.

BACKGROUND

This case, which is on its second trip to this court, began in December 2003 when Otay Land Company and Flat Rock Company, LLC (collectively, "Otay") filed a federal action against U.E. Limited, L.P., United Enterprises Ltd., United Enterprises Inc., John T. Knox, Baldwin Builders, The Otay Ranch L.P., Sky Communities, Inc., Sky Vista, Inc., Olin Corporation, Ray Enniss, Phil Scott, and Patrick Patek (collectively, "United Enterprises"). Otay's Third Amended Complaint alleged that United Enterprises, comprised of former owners and operators of a shooting range in Chula Vista, California, was responsible under § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act and § 7002 of the Resource Conservation and Recovery Act for removing lead and other pollutants from the real property in question, now owned by Otay. The complaint also included a claim under the California Hazardous Substances Account Act, as well as other state causes of action.

After extensive discovery, United Enterprises filed motions for summary judgment and partial summary judgment. The district court granted the motions for summary judgment, dismissing the federal environmental claims on the merits and declining to exercise ancillary jurisdiction over the pendent state law claims. See Otay Land Co. v. U.E. Ltd., L.P., 440 F. Supp. 2d 1152, 1157-58 (S.D. Cal. 2006), vacated by Otay Land Co. v. United Enters. Ltd., 338 F. App'x. 689 (9th Cir. 2009). Following the dismissal, Otay filed a nearly identical action against United Enterprises in a California state court. As the prevailing party, United Enterprises submitted its cost bill to the district court. Pursuant to Federal Rule of Civil Procedure 54(d) and 28 U.S.C. § 1920, the district court awarded United Enterprises costs of $271,990.56 for court reporter, witness and service fees. On appeal, our court vacated the district court's judgment and remanded with directions to dismiss Otay's complaint. See Otay Land Co., 338 F. App'x. at 691. The panel reasoned that the case was not yet ripe for judicial review because "no public agency has indicated the need for remediation of the subject property and Otay has not demonstrated a reliable basis for its claimed remedial costs . . . ." Id. The panel remanded to the district court for determination of whether defendants were entitled to costs under 28 U.S.C. § 1919. Id. at 692.

On remand, at a hearing on costs, the district court advised the parties:

Counsel, I have to tell you, I have reviewed the case pretty thoroughly. I don't see any reason why costs should not be imposed in this case. Even though there is, perhaps, no prevailing party, it does certainly appear to me that just cause [sic] should be awarded to the defendants. It appears that this action was filed prematurely, ...


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