United States District Court, S.D. New York
March 1, 2017, the Court, on consent of the parties, granted
summary judgment against defendant Alexander Varshavsky and
in favor of plaintiff Sergey Leontiev on the latter's
only remaining cause of action, which sought a declaration
that Leontiev owed no debt or obligation to Varshavsky in
connection with certain loans that were in neither
party's name. See Final Judgment, ECF No. 70.
Earlier in the case, the Court had dismissed Leontiev's
only other cause of action, a state-law claim for intentional
infliction of emotional distress, for failure to state a
claim. See Memorandum Order dated Sept. 1, 2016, ECF
No. 31. Following the entry of final judgment, the Clerk of
Court taxed costs of $19, 975.85 against Varshavsky,
see ECF No. 74. Varshavsky now appeals that
determination. For the reasons stated below, the Court hereby
upholds the Clerk's award.
"prevailing party" in an action is generally
entitled to recover certain costs unless "a court order
provides otherwise." Fed.R.Civ.P. 54(d)(1). Because Rule
54(d) provides that costs "should be allowed, "
id., "the losing party has the burden to show
that costs should not be imposed." Whitfield v.
Scully, 241 F.3d 264, 270 (2d Cir. 2001), abrogated
in part on other grounds by Bruce v. Samuels, 136 S.Ct.
627 (2016). Ultimately, however, the decision to award costs
is committed to the "broad discretion" of the
district court. See L-3 Commc'ns Corp. v. OSI Sys.,
Inc., 607 F.3d 24, 30 (2d Cir. 2010); Dattner v.
Conagra Foods, Inc., 458 F.3d 98, 100 (2d Cir. 2006)
opposition to the Clerk's award, Varshavsky principally
argues that Leontiev is not a "prevailing party"
within the meaning of Rule 54(d) and is therefore not
entitled to costs. "[F]or a party to be 'prevailing,
' there must be a * judicially sanctioned change in the
legal relationship of the parties.'"
Dattner, 458 F.3d at 101 (quoting Buckhannon Bd.
& Care Home, Inc. v. W.Va. Dep't of Health &
Human Res., 532 U.S. 598, 605 (2001)). Although this
definition is "generous, " nonetheless,
"purely technical or de minimis" success
is insufficient to satisfy it. See Tex. State Teachers
Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782,
792 (1989). Thus, a litigant who wins a declaratory judgment
prevails "if, and only if, [the declaration] affects the
behavior of the defendant toward the plaintiff." See
Rhodes v. Stewart, 488 U.S. 1, 4 (1988) (per curiam).
these principles, the Court concludes that Leontiev is the
prevailing party in this case. In the final judgment, the
Court "declare[d] that Sergey Leontiev owes no debt or
obligation to defendant Alexander Varshavsky in the
defendant's personal capacity with respect to the loans
and other debt instruments described in paragraph 32 of the
complaint in this case." See Final Judgment.
This declaration is effectively a "judicially sanctioned
change in the legal relationship of the parties."
See Dattner, 458 F.3d at 101. Moreover, the
declaration necessarily "affects the behavior of the
defendant toward the plaintiff, " see Rhodes,
488 U.S. at 4, for it stymies any efforts by Varshavsky to
collect on the loans in his own name, and makes plain that
any further debt collection efforts must be in a purely
Varshavsky's current protests to the contrary, throughout
most of the case Varshavsky suggested to the Court that he
might be owed money from Leontiev in his (Varshavsky's)
personal capacity. For example, Varshavsky, in his answer to
the complaint, denied the allegation that "Mr. Leontiev
owes Mr. Varshavsky nothing, " see Complaint,
ECF No. 1, ¶ 4; Amended Answer, ECF No. 27, II. ¶
4. Then, in opposition to Leontiev's motion for judgment
on the pleadings, Varshavsky took the position that this
allegation and his denial said nothing at all about whether
Varshavsky was potentially owed in his personal capacity.
See Defendant's Memorandum of Law in Opposition
to Plaintiff s Motion for Judgment on the Pleadings as to
Plaintiff's First Cause of Action, ECF No. 28, at 11.
Varshavsky's brief opposing that motion also contained
caveats that were unmistakably designed to suggest that
Varshavsky's personal right to enforce the loans was a
live issue. See, e.g., id. at 12
("Even if Mr. Leontiev had established that no debt was
owed to Mr. Varshavsky personally (and he has not), . . .
."). Most tellingly, even after Leontiev stated in open
court at oral argument on his motion for judgment on the
pleadings that he only sought relief declaring that he was
not indebted to Varshavsky in Varshavsky's personal
capacity, see Transcript dated Sept. 21, 2016, ECF No. 42, at
5-6, Varshavsky not only did not concede that he was not owed
anything from Leontiev in his (Varshavsky's) personal
capacity, but also continued to litigate the case tenaciously
for many months thereafter.
nonetheless argues that Leontiev's victory was de
minimis because plaintiff s emotional distress claim was
dismissed, because plaintiff won a narrower declaration than
he originally sought, and because plaintiff's eventual
victory was on consent. In fact, Varshavsky goes so far as to
say that Leontiev won nothing at all, for, early in the case,
Varshavsky's counsel supposedly admitted to
Leontiev's counsel that Varshavsky was not owed anything
in his personal capacity. This argument falls flat.
Varshavsky's own scorched-earth tactics put the lie to
the idea that Leontiev's victory was de minimis.
Leontiev's victory was, in fact, hard-won and
substantial. Whatever private and off-the-record proffer
Varshavsky's counsel allegedly might have made to
Leontiev's counsel - and Leontiev's counsel flatly
denies it was made, see Plaintiff s Memorandum of Law in
Support of Affirmance of Clerk's Taxation of Costs, ECF
No. 75, at 3-4 - is irrelevant, for Varshavsky never
so conceded in court and, on the contrary, continued to hold
this issue open.
Leontiev's win was not de minimis, and he is the
prevailing party under Rule 54(d).
also argues that costs associated with deposition transcripts
should not be taxed against him because, in light of his
consent to entry of judgment, the Court supposedly did not
"use" the transcripts in granting summary judgment
for Leontiev. In other words, Varshavsky claims that,
because he rolled over at the last minute, costs associated
with preparing for the contest cannot be taxed. This argument
borders on the frivolous, as Varshavsky could easily have
avoided these costs by conceding to the Court earlier what he
seemingly knew all along: that he had no personal right to
enforce the loans.
costs for deposition transcripts may be taxed if they were
"necessarily obtained for use in the case, " 28
U.S.C. § 1920(2). As the Second Circuit has held,
"the filing of a deposition transcript [in connection
with litigating a summary judgment motion] necessarily means
a court will 'use' it, " see Whitfield,
241 F.3d at 271, because summary judgment may be granted only
if, upon review of the record submitted by the parties, the
court finds the "that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a
matter of law." Fed.R.Civ.P. 56(a), (c)(1)(A). Under
this standard, the Court plainly "used" the
transcripts, notwithstanding Varshavsky's consent to
judgment, because that consent was itself based on the fact
that the record before the Court, including the contested
deposition transcripts, established that he had no personal
right to enforce the loans. Leontiev may therefore recover
may also recover the challenged transcript costs for the
independent reason that the depositions appeared to be
"reasonably necessary to the litigation at the time they
were taken." See Farberware Licensing Co. LLC v.
Meyer Mktg. Co., Ltd., No. 09-CV-2570 (HB), 2009 WL
5173787, at *5 (S.D.N.Y. Dec. 30, 2009). For this reason, the
costs associated with Leontiev's deposition of Vadim
Voronin, for which Leontiev did not file a transcript in
support of his motion for summary judgment, are fully
foregoing reasons, defendant's challenge to the
Clerk's award of costs to plaintiff is denied in its