Otay Land Co. v. UNITED ENTERPRISES LTD.

Given the complexities of litigation and the escalating magnitude of attorneys’ fees, it is no surprise that appellate review of attorneys’ fees and costs has focused overwhelmingly on fees. Nonetheless, costs also can add up to a considerable amount and because fees are not always available by contract, statute or otherwise, an award of costs can take on heightened importance.

Under 28 U.S.C. § 1919 , when a suit is dismissed for lack of jurisdiction, the court “may order the payment of just costs.” This case requires us to parse the term “just” and consider what constitutes “just costs.” Here, the district court awarded costs to defendants on the ground that they were necessarily incurred in defending the action. Because the district court implied a presumption of award of costs that is absent in the permissive statute, and because it equated incurred costs with “just costs,” we conclude that the court abused its discretion under § 1919.

Background

This case, which is on its second trip to this court, began in December 2003 when Otay Land Company and Flat Rock Company, LLC (collectively, “Otay”) filed a federal action against U.E. Limited, L.P., United Enterprises…