FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT July 15, 2015
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Elisabeth A. Shumaker
Clerk of Court
KELLY BRYANT; HOLLIE BRYANT,
Plaintiffs - Appellants,
v. No. 15-7000
(D.C. No. 6:13-CV-00240-RAW)
SAGAMORE INSURANCE COMPANY, (E.D. Okla.)
Defendant - Appellee.
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ORDER AND JUDGMENT*
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Before HARTZ, PHILLIPS, and McHUGH, Circuit Judges.
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Plaintiffs Kelly Bryant and his daughter Hollie Bryant (the Bryants) appeal the
district court’s award of costs pursuant to Fed. R. Civ. P. 54(d) in favor of Defendant
Sagamore Insurance Company (Sagamore). This court previously affirmed the
district court’s grant of summary judgment in favor of Sagamore. Bryant v.
Sagamore Ins. Co., 597 F. App’x 968 (10th Cir. 2015). We have jurisdiction under
28 U.S.C. § 1291 and affirm.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
I.
Briefly, Kelly Bryant obtained car insurance from Sagamore in a policy
excluding coverage for his teen daughter, Hollie, who was covered under her
stepfather’s policy. Hollie drove Kelly’s car and was in an accident involving a third
party, Cuba Lawrence. Sagamore was notified of the accident by Lawrence’s insurer
and repeatedly tried to contact Kelly and Hollie to investigate the accident by sending
them letters, leaving voice mail messages, sending a representative to Kelly’s home
and finally sending them a letter by Federal Express warning that failure to contact
Sagamore would be grounds for denying coverage. Bryant, 597 F. App’x at 969-70,
972-73. The Bryants never responded to Sagamore, and when they failed to appear
for a scheduled examination, Sagamore declined coverage, citing both the exclusion
provision and the Bryants’ failure to cooperate.
Thereafter, Lawrence filed suit against Hollie, who failed to answer, and
Lawrence obtained a default judgment against Hollie for almost $700,000.00. The
Bryants did not notify Sagamore of Lawrence’s lawsuit or request Sagamore to
defend Hollie. The Bryants then filed breach-of-contract and bad-faith claims against
Sagamore, relying on an Oklahoma case published after Sagamore denied coverage
that held it violated state policy to exclude a teen driver from both parents’ insurance
policies. Sagamore then paid Lawrence its full $50,000 policy limit. The district
court granted summary judgment, ruling the recent Oklahoma case lacked
precedential effect at the time Sagamore denied coverage, and Sagamore had
reasonably denied the claim based on the Bryants failure to cooperate.
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Sagamore timely filed a bill of costs seeking to recover $13,706.43 in
litigation costs as a prevailing party under Rule 54(d). The district court clerk
entered an order taxing costs of $11,731.60. The Bryants filed objections to the cost
order, arguing that they were indigent, Sagamore should be penalized for not paying
its policy limit to Lawrence sooner, and the case was complex and close. The district
court accepted that the Bryants had a low income, but ruled Sagamore should not be
penalized for paying its policy limits to an innocent third party and its denial of
coverage did not present a close or complex case, given the Bryants’ failure to
cooperate as required by the policy. This appeal followed.
II.
Rule 54(d)(1) provides: “Unless a federal statute, these rules, or a court order
provides otherwise, costs—other than attorney’s fees—should be allowed to the
prevailing party.” “The district court possesses broad discretion in awarding costs.”
In re Williams Sec. Litig.-WCG Subclass, 558 F.3d 1144, 1148 (10th Cir. 2009)
(internal quotation marks omitted). “Accordingly, we review costs awards only for
an abuse of that discretion.” Id.
“Rule 54(d) creates a presumption that the prevailing party shall recover
costs.” Klein v. Grynberg, 44 F.3d 1497, 1506 (10th Cir. 1995). “Once a prevailing
party establishes its right to recover allowable costs, however, the burden shifts to the
non-prevailing party to overcome the presumption that these costs will be taxed.”
Williams, 558 F.3d at 1148. Although the district court has discretion to deny costs
to the prevailing party, we have held that doing so is a “severe penalty” and that
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“there must be some apparent reason to penalize the prevailing party if costs are to be
denied.” Klein, 44 F.3d at 1507. These reasons “include[e] when the prevailing
party was only partially successful, when damages were only nominal, when costs
were unreasonably high or unnecessary, when recovery was insignificant, or when
the issues were close or difficult.” Williams, 558 F.3d at 1150-51 (internal quotation
marks omitted).
The Bryants do not challenge the reasonableness of the amount of taxable
litigation costs awarded under Rule 54(d). Rather, they argue the district court
should have exercised its discretion to deny costs in order to penalize Sagamore for
not settling with Lawrence when she first filed a claim with Sagamore. We cannot
agree. The Bryants failed to cooperate with Sagamore’s investigation into the
accident, allowed default judgment to be entered against Hollie by failing to file an
answer to Lawrence’s complaint, and failed even to notify Sagamore about
Lawrence’s lawsuit. Under these facts, Sagamore can hardly be said to have delayed
in paying its policy limit to Lawrence. The Bryants “caused this litigation to be
brought” and caused Sagamore’s “costs to be incurred.” Id. at 1151 (internal
quotation marks omitted). The Bryants also argue they were partially successful
because Sagamore ultimately paid its policy limit, but in the previous appeal, we
rejected their similar argument that the payment constituted a confession of
judgment. See Bryant, 597 F. App’x at 971 (“[T]his argument ignores the fact that
Sagamore resolved Lawrence’s claim while disputing liability at all times and with
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explicit acknowledgment from Lawrence that the settlement was in compromise of a
doubtful and disputed claim.” (internal quotation marks omitted)).
The Bryants also argue the district court should have exercised its discretion to
deny costs because they are indigent. While this court has acknowledged that a court
may consider indigent circumstances in exercising discretion whether to award costs,
we have also concluded that a district court does not abuse its discretion in awarding
costs to the prevailing party simply because the non-prevailing parties were indigent.
Rodriguez v. Whiting Farms, Inc., 360 F.3d 1180, 1190-91 (10th Cir. 2004)
(affirming an award of costs despite the plaintiffs’ indigent status because they failed
to show that the prevailing party should be penalized).
The Bryants do not identify any facts or law the district court overlooked or
failed to comply with, and we conclude it did not abuse its discretion in awarding
costs under Rule 54(d). See Williams, 558 F.3d at 1148 (“A district court abuses its
discretion where it (1) commits legal error, (2) relies on clearly erroneous factual
findings, or (3) where no rational basis exists in the evidence to support its ruling.”).
The judgment of the district court is affirmed.
Entered for the Court
Carolyn B. McHugh
Circuit Judge
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