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Key v. Chrysler Motors Corporation12/29/1998
{1} This appeal and cross appeal come at the end of protracted litigation that has already found its way to this Court and the Supreme Court once before. At issue now is the district court's order awarding costs. Jack Key and Jack Key Motor Company, Inc. (Key), appeal the order contending that the award of costs should be reduced or eliminated altogether. Chrysler Motors Corporation (Chrysler) cross appeals arguing that the cost award should be increased. For the reasons that follow, we affirm in part and reverse in part.
FACTUAL BACKGROUND
{2} This case arises out of a dispute under the New Mexico Motor Vehicle Dealers Franchising Act (the Act). See NMSA 1978, §§ 57-16-1 to -16 (1997). Key filed suit against Chrysler, alleging that Chrysler violated the Act by unreasonably refusing to consent to Key's prospective purchase of a Chrysler dealership franchise. Key succeeded in obtaining a judgment in district court awarding Key $300,000 in damages. Chrysler had tried on several occasions in district court to have Key's complaint dismissed based on lack of standing under the Act. Chrysler reasserted its standing argument in this Court with no success. However, Chrysler successfully petitioned for certiorari in the Supreme Court. The Supreme Court agreed with Chrysler's standing argument, reversed the district court's judgment, and remanded for entry of judgment in favor of Chrysler. See (Key I).
{3} Upon remand to the district court, Chrysler filed a cost bill asking for an award of $291,105.23 in costs. Key objected to the cost bill, and a hearing was held on the matter. At the hearing, Chrysler voluntarily deducted $28,723.64 from its original cost bill. Chrysler also presented the testimony of one of its trial attorneys, George Finger, to establish the reasonableness and necessity of its costs. Key did not present any evidence at the hearing. Key argued, however, that Chrysler's request for costs should be reduced or denied because: (1) the Supreme Court had already ruled that each party was to bear its own costs; (2) Chrysler was not the prevailing party entitled to costs; (3) Chrysler's expert witness fee was not reasonable and necessary; (4) other costs requested by Chrysler were not directly associated with the trial of the case; (5) the award of a large cost bill would have a chilling effect on future litigation under the Act; and (6) a large cost award was inappropriate in light of the financial disparity between the parties.
{4} The district court ruled that with the exception of some of the photocopying charges, all of the items in Chrysler's cost bill would be allowed. However, the district court then reduced the allowed costs by 80% in consideration of Key's ability to pay, the difference between the resources of Key and Chrysler, and because of the chilling effect of a large cost award in this case. Consequently, Key was only required to pay $47,570.52 in costs to Chrysler.
DISCUSSION
{5} In general, the costs of litigation may be recovered by the prevailing party. See Rule 1-054(E) NMRA 1998 (costs allowed as a matter of course to the prevailing party unless court otherwise directs); NMSA 1978, § 39-3-30 (1966) (prevailing party shall recover costs "unless the court orders otherwise for good cause shown"). Costs are considered to be a statutory allowance for expenses incurred in litigation. See . In this regard, the district court has the discretion to award the prevailing party its necessary and reasonable costs incident to its prosecution or defense of the action. . On appeal, the district court's ruling will not be disturbed absent an abuse of that discretion. See . However, " he district court should exercise di
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