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First South Bank v. Fifth Third Bank, N.A.

United States District Court, D. South Carolina, Spartanburg Division

August 6, 2014

First South Bank, Plaintiff,
v.
Fifth Third Bank, N.A., doing business as Fifth Third Bank and formerly known as and successor in interest of First Charter Bank and First Charter Corporation, First Charter Bank and First Charter Corporation, Defendant.

OPINION AND ORDER

MARY G. LEWIS, District Judge.

Before this Court are Plaintiff First South Bank ("Plaintiff")'s Bill of Costs (ECF No. 244), Plaintiff's Motion for Taxation of Expert Witness Costs (ECF No. 245), Defendant Fifth Third doing business as Fifth Third Bank and formerly known as and successor in interest of First Charter Bank and First Charter Corporation, First Charter Bank and First Charter Corporation Bank(collectively "Defendant")'s Renewed Motion for Judgment as a Matter of Law, or Alternatively for a New Trial (ECF No. 261), Plaintiff's Motion for Reconsideration and to Alter or Amend Judgment Related to Violation of the Unfair and Deceptive Trade Practices Act Cause of Action (ECF No. 263), Plaintiff's Motion to Alter or Amend Judgment for Entry of Pre-Judgment Interest and to Amend the Post-Judgment Interest Rate (ECF No. 264), and Defendant Fifth Third Bank's Motion to Strike Declarations of Callison and Lyerly. (ECF No. 267.) For the reasons set forth below, this Court GRANTS the request set forth of Plaintiff's Bill of Costs (ECF No. 244) and also GRANTS IN PART and DENIES IN PART Plaintiff's Motion for Taxation of Expert Witness Costs (ECF No. 245.) Defendant's Renewed Motion for Judgment as Matter of Law, or Alternatively for a New Trial (ECF No. 261), Plaintiff's Motion for Reconsideration and to Alter or Amend Judgment Related to Violation of the Unfair and Deceptive Trade Practices Act Cause of Action (ECF No. 263), Plaintiff's Motion to Alter or Amend Judgment for Entry of Pre-Judgment Interest and to Amend the Post-Judgment Interest Rate (ECF No. 264), and Defendant's Motion to Strike Declarations of Callison and Lyerly are DENIED. (ECF No. 267.)

INTRODUCTION

This is an action involving claims of breach of contract, breach of contract accompanied by a fraudulent act, gross negligence, misrepresentation, and fraud for actions arising out of a Participation Agreement entered into between the parties to finance an $11, 000, 000.00 loan to an investment group ("Loan" or "Burton Creek Loan"). (ECF No. 72.) Plaintiff's Amended Complaint alleges several errors on the part of Defendant as a part of the closing, servicing, monitoring, and administration of the Loan. (ECF No. 72.) This Court granted Plaintiff leave to file a second amended complaint on September 12, 2013 adding a cause of action under the North Carolina Unfair and Deceptive Trade Practices Act. (ECF Nos. 212 & 213.) The jury trial in this case was held before this Court on September 12, 2013 through September 25, 2013. The jury returned a verdict in favor of Plaintiff. Thereafter, the Court entered judgment in favor of Plaintiff in the amount of two million, three hundred sixty-eight thousand, two hundred thirty-two dollars and 46/100 cents ($2, 368, 232.46) dollars in actual damages and three hundred ninety-six thousand dollars in punitive damages ($396, 000.00) for a total verdict in the amount of two million, seven hundred sixty-four thousand, two hundred thirty-two dollars and 46/100 cents ($2, 764, 232.46) dollars, plus post judgment interest at the rate of.11% along with costs. (ECF No. 243.)

On October 4, 2013, Plaintiff submitted a Bill of Costs seeking additional statutory costs as the prevailing party in this matter pursuant to Rule 54(d)(1) of the Federal Rules of Civil Procedure. (ECF No. 244.) On October 5, 2013, Plaintiff filed a motion seeking compensation for costs associated with Plaintiff's expert witness fees. (ECF No. 245.) Defendant filed a renewed motion for judgment as a matter of law, or alternatively for a new trial on October 28, 2013, challenging the sufficiency of the evidence offered by Plaintiff to support its claims and seeking a new trial due to purported improper and prejudicial arguments made by Plaintiff's counsel during the trial. (ECF No. 261.) Plaintiff filed a motion for reconsideration or to alter or amend the judgment related to Plaintiff's claim for violation of the North Carolina Unfair and Deceptive Trade Practices Act on October 28, 2013. (ECF No. 263.) On October 28, 2013, Plaintiff also filed a motion to alter or amend the judgment in this case to include an award of pre-judgment interest to Plaintiff as a matter of law and to amend the rate of post-judgment interest. (ECF No. 264.) Finally, Defendant filed a Motion to Strike the Declarations of Frank Callison and W.C. Lyerly, III filed by Plaintiff in support of its post-trial motions. (ECF No. 267.) The Court held a hearing on the above-referenced motions on February 24, 2014.

DISCUSSION AND ANALYSIS

I. Plaintiff's Bill of Costs

Plaintiff filed a Bill of Costs (ECF No. 244) asking the Court to tax costs in its favor in the amount of $28, 825.15. The parties reached a stipulation concerning Plaintiff's submission to the Court and agree that Plaintiff is entitled to have this Court tax costs in favor of Plaintiff in the amount of $24, 000.00 as part of the final judgment entered in this action. (ECF No. 258.) In accordance with that stipulation, which the Court finds reasonable, this Court hereby taxes statutory costs in the amount of $24, 000.00 in favor of Plaintiff.

II. Plaintiff's Motion for Taxation of Costs for Expert Witnesses

Plaintiff filed a Motion for Taxation of Costs for Expert Witnesses pursuant to Rule 54[1] and Rule 26(b)(4)(E) on October 5, 2013 (ECF No. 245) and a Supplemental Response on October 10, 2013 making an amended request for expert costs and fees. (ECF No. 247.) Defendant filed an opposition on October 24, 2014 (ECF No. 259) and Plaintiff filed its reply on October 31, 2014. (ECF No. 266.) Plaintiff seeks to recover the costs of experts James Watson and Thomas Steele for preparing for, traveling to, and attending depositions. Defendant has opposed the motion by arguing that neither expert ultimately testified at trial and that Plaintiff failed to provide sufficient evidence and justification for the expenses. Plaintiff maintains that the experts' failure to testify does not preclude the recovery of costs.

Under Rule 26(b)(4)(E), unless manifest injustice would result, the Court must require that the party seeking discovery pay the expert a reasonable fee for time spent in responding to discovery under Rule 26(b)(4)(A). Rule 26(b)(4)(A) permits a party to "depose any person who has been identified as an expert whose opinions may be presented at trial." Fed.R.Civ.P. 26(b)(4)(A); see also Goldberg v. 401 N. Wabash Venture LLC, No. 09 C 6455, 2013 WL 4506071, *6 (N.D. Ill. Aug. 23, 2013)("[T]he basic proposition under Rule 26(b)(4)(e) is relatively straightforward-a party that takes advantage of the opportunity afforded by Rule 26(b) [ ] to prepare a more forceful cross-examination should pay the expert's charges for submitting to this examination." (internal citation and quotations omitted)). Courts have generally found that "manifest injustice" occurs only where the deposing party is indigent or if requiring the party to pay a deposition fee would create an undue hardship. Harris v. San Jose Mercury News, Inc., 235 F.R.D. 471, 473 (N.D. Cal. 2006).

The goal of Rule 26(b)(4)(E) is to "calibrate expert fees" so that the party seeking discovery will not be hampered by unreasonably high fees which prevent feasible discovery and unduly burden efforts to hire quality experts. Fleming v. United States, 205 F.R.D. 188, 189 (W.D.Va. 2000). The party seeking reimbursement bears the burden of showing the requested fees and expenses are reasonable. See Packer v. SN Servicing Corp., 243 F.R.D. 39, 42 (D. Conn. 2007). Ultimately, it is in the Court's discretion to set an amount for payment that it deems reasonable. Fleming v. United States, 205 F.R.D. 188, 189 (W.D.Va. 2000).

Plaintiff seeks the amount of $9, 345.38 for the deposition of Mr. Watson (ECF No. 247) and $5, 337.50 for the deposition of Mr. Steele (ECF No. 245) to compensate for deposition time, preparation time, and travel time and expenses. Defendant argues that compelling payment in this case would result in manifest injustice because the opinions asserted by the experts were improper and inadmissible, and the reports submitted deficient. (ECF No. 259 at 5.) At trial, the Court excluded the testimony of Mr. Steele and expressed concerns about Mr. Watson's testimony. Ultimately, Mr. Watson was not called as a trial witness and thus, neither expert offered any testimony at trial concerning their opinions. Defendant relies on a case from the Eastern District of Texas, Rogers v. Fenland, 232 F.R.D. 581 (E.D.Tex., 2005), in support of its position. In Rogers, the defendant retained four experts, all of whom the plaintiffs deposed. But at trial, the defendant did not call any of the experts to testify or introduce any of their deposition testimony. Rogers v. Fenland, 232 F.R.D. 581, 582 (E.D.Tex., 2005). Additionally, one of the experts was precluded from testifying at trial because his testimony was deemed unreliable. Id. at 583. The Rogers court allowed for fee awards for time clearly spent in preparation for depositions, travel to depositions, and in depositions, even for experts not called at trial. However, the court concluded that to "require a party to pay for the costs of a witness who was not even called, and against whom the court had sustained a Daubert challenge is manifestly unjust." Id. at 583. Defendant's argument and reliance on Rogers fails to establish manifest injustice in this case. Even Rogers- distinguishable in significant part and ultimately not binding on this Court-permitted the recovery of some reasonable fee amounts related to deposition preparation, travel, and deposition testimony. Defendant has not shown that compelling payment for experts would result in manifest injustice just because Mr. Steele and Mr. Watson did not testify at trial. Simply put, Rule 26(b)(4)(E) pertains to experts "whose opinions may be presented at trial." Fed.R.Civ.P. 26(b)(4)(A) (emphasis added). There is no language in the Rule that specifically limits compensation to experts whose opinions were ultimately presented at trial. Thus, Defendant is not automatically excused from reimbursing Plaintiff for the expert fees on this ground. See Brown v. Butler, 30 F.App'x 870, 876 (10th Cir.2002) (recognizing that the choice not to callan expert witness at trial does not preclude an award of expert discovery costs); Cunningham Charter Corp. v. Learjet, Inc., No. 07cv-00233, 2011 WL 1549214 (S.D. Ill. Apr. 22, 2011) (reasoning that experts costs would be granted even though the expert's testimony was excluded.); Ndubizu v. Drexel University, No. 07-3068, 2011 WL 6046816, at *5 (E.D. Pa. Nov. 16, 2011)(requiring payment for deposition of experts who did not testify at trial or testify in accordance with their reports based on a plain reading of the Rules). As there is no manifest injustice in compelling reimbursement, the Court must determine a reasonable amount for reimbursement.

In determining whether an expert fee is "reasonable, " courts are guided by the following factors: "(1) the witness's area of expertise, (2) the education and training that is required to provide the expert insight that is sought, (3) the prevailing rates for other comparably respected available experts, (4) the nature, quality and complexity of the discovery responses provided, (5) the cost of living in the particular geographic area, (6) the fee being charged by the expert to the party who retained him, (7) fees traditionally charged by the expert on related matters, and (8) any other factor likely to be of assistance to the court in balancing the interests implicated by Rule 26." Adams v. Memorial Sloan Kettering Cancer Center, 2002 WL 1401979, at *1 (S.D.N.Y. June 28, 2002) (internal quotations and citation omitted). Courts have exercised their discretion to impose reasonable fees for expert witnesses for a number of types of expenses. The most common expenses that are compensable are for time of the deposition ( See e.g., Fisher v. Accor Hotels, Inc., No. 02-cv-8576, 2004 WL 73727, *1 (E.D. Pa. Jan 12, 2004)), for preparation time for the deposition ( See e.g., Fleming v. United States, 205 F.R.D. 188, 190 (W.D.Va. 2000)), and for reasonable and substantially documented travel expenses ( See e.g., LG Electronics U.S.A., Inc. v. Whirlpool Corp., No. 08-c-0242, 2011 WL 5008425 at *5 (N.D. Ill. Oct. 20, ...


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