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Tri-City Healthcare District v. HC Tri-City I, LLC

United States District Court, Ninth Circuit

January 17, 2014

TRI-CITY HEALTHCARE DISTRICT, a California local healthcare district, Plaintiff,
v.
HC TRI-CITY I, LLC, a Wisconsin limited liability company, et al., Defendant.

ORDER: (1) DENYING DEFENDANT HC TRI-CITY I, LLC'S MOTION FOR ATTORNEY FEES PURSUANT TO FRCP 54(d)(2), (ECF NO. 95); (2) GRANTING PLAINTIFF TRI-CITY HEALTHCARE DISTRICT'S MOTION FOR REVIEW OF CLERK'S TAXATION OF COSTS, (ECF NO. 112)

GONZALO P. CURIEL, District Judge.

Presently before the Court is defendant HC Tri-City I, LLC's ("HC") Motion for Attorney Fees under Federal Rule of Civil Procedure 54(d)(2) ("Fee Motion"). (ECF No. 95.[1]) Plaintiff Tri-City Healthcare District ("District") has filed an opposition to the Fee Motion, (ECF No. 105), and HC has filed a reply, (ECF No. 111).

Also before the Court is the District's Motion for Review of Clerk's Taxation of Costs ("Costs Motion"). (ECF No. 112.) HC has filed an opposition to the Costs Motion, (ECF No. 115), and the District has filed a reply, (ECF No. 116).

In May 2013, the Court took both motions under submission without oral argument, pending the outcome of the related case.[2] (ECF No. 117.) Having considered the parties' submissions, and for the reasons that follow, the Court will DENY HC's Fee Motion and GRANT the District's Costs Motion.

BACKGROUND

This case involves a dispute between plaintiff-lessor Tri-City Healthcare District ("District") and defendant-lessee HC Tri-City I, LLC ("HC") regarding a ground lease governing the construction and operation of a medical office building and ambulatory surgery center on the District's hospital campus in Oceanside, California ("Ground Lease").

In its initial Complaint filed in the San Diego Superior Court, the District asserted a single claim against HC for declaratory relief as to the District's and HC's rights and obligations under the Ground Lease. (ECF No. 1 at 6.) HC then removed this case to federal court.[3] (ECF No. 1.) Sometime after removal, the District sought and obtained leave to file its First Amended Complaint ("FAC"). (ECF No. 25.)

In its FAC, the District maintained its claim for declaratory relief and added a claim for breach of contract, alleging HC breached the Ground Lease by failing to obtain government approvals, financing for construction, and the requisite number of sub-leases required to begin construction of the medical office building and ambulatory surgery center. Thereafter, the District obtained leave to file its Second Amended Complaint ("SAC"). (ECF No. 52.)

In its SAC, the District abandoned its claim for breach of the Ground Lease, again asserting only a single cause of action for declaratory relief. The District alleged:

An actual controversy has arisen between the parties in relation to the interpretation of and performance of the [Ground] Lease, [the District]'s alleged liability to HC for development costs, the timeliness of HC's Notice and HC's diligence in obtaining governmental approval and sub-leases as required by the [Ground] Lease.

(Id. ¶ 22.) The District thus requested "a judicial declaration that [the District] is not liable to HC for development costs, that HC failed to act with commercial reasonableness in obtaining governmental approvals and sub-leases and that [the District] is excused from performing further under the [Ground] Lease." (Id. ¶ 23.)

Thereafter, Judge Sammartino (the district judge previously assigned to this case) issued an order to show cause why the District's sole remaining claim for declaratory relief in this case should not be dismissed. (ECF No. 75.) After briefing and a hearing, this Court dismissed the District's declaratory relief claim in December 2012 and directed that this case be terminated. (ECF No. 94.) The Court concluded the District's claim for declaratory relief should be dismissed because no underlying controversy remained after the District abandoned its claim for breach of the Ground Lease and after Judge Sammartino granted summary judgment in the District's favor on HC's and Hammes' claim for breach of the Ground Lease in the related case. In dismissing the District's claim for declaratory relief, the Court stated: "As to their requests for declaratory relief only, neither party is the prevailing party' for purposes of awarded costs, as... their requests for declaratory relief do not, by themselves, state a claim." (ECF No. 94 at 8 n.9.)

After the District's declaratory relief claim was dismissed, this case was terminated and judgment was entered as follows: "The declaratory relief claim is dismissed without prejudice. This case is terminated. The pending motion to dismiss is denied as moot." (ECF No. 103.) Thereafter, HC sought and obtained a Clerk's award of costs in the amount of $14, 585.97. (ECF No. 110.)

In the related case, HC and affiliate Hammes sued the District and others for, among other things, breach of the Ground Lease and breach of a letter of intent that the District and Hammes signed at the beginning of their relationship in 2005. As noted above, the District ultimately obtained summary judgment in its favor on HC's and Hammes' Ground Lease claims. In granting summary judgment, Judge Sammartino expressly found ...


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