Publication Source: New York Law Journal
To the victor go the spoils—or so the saying goes. The old adage refers to the added perks and bonuses a person receives for winning something, like a contest or battle. Unlike some other legal systems, the American legal system does not entirely embrace this concept to its fullest extent when it comes to litigation. Here, for instance, litigants generally do not recover their attorney fees for winning, absent the application of some statutory or contractual right entitling them to such an award. In a sense, however, the American legal system does bestow upon the winner some modicum of 'spoils' in the form of an award of costs and disbursements. Compared to an award of attorney fees, which monetarily could be very substantial, such an award is often viewed as a token gesture. However, in some instances, disbursements can be quite significant. They can also be improper.
As the unfortunate litigant aggrieved by a large and improper disbursement soon discovers, such a scenario can quickly turn what is often viewed as a perfunctory procedure rounding out the end of a lawsuit into a costly and time-consuming dispute in and of itself. The application of the Civil Practice Law and Rules (CPLR) process meant to address such an improper disbursement, known as 'retaxation,' tends only to compound the problem and convert what is meant to be a quick and purely ministerial act into a multi-layered and burdensome procedure.1 And, at the end of the day, navigating the procedure may end up costing more in attorney fees than the challenged disbursement itself.
Costs and Disbursements
The retaxation procedure is set forth in CPLR 8403 and provides that, within five days of receipt of an adversary's bill of costs, an aggrieved party 'may serve notice of retaxation of costs…to the party who has taxed the costs, specifying the item as to which retaxation is sought.' No other guidance is offered by the provision, which can have the effect of leaving the practitioner, and even the clerk to whom such notices are directed, befuddled as to how to proceed.
The process quickly reveals, however, that correcting an improperly assessed cost or disbursement is not as simple as one might imagine. In fact, the cost and burden of the retaxation procedure itself should provide an incentive to parties to be more circumspect in their initial taxation of costs and disbursements upon an adversary, or at least be more receptive to resolving such disputes amicably when they arise.
For the most part, costs and disbursements are statutorily limited and often amount to negligible sums, which, as a result, are rarely scrutinized by the party against whom they are awarded. CPLR 8201 to 8204 govern the amounts of costs that, either mandatorily or discretionarily, may be awarded to a prevailing party. Depending upon the stage of a lawsuit, costs typically range from $200 for the pre-note of issue phase to $500 on an appeal to the Court of Appeals.2 Even though costs are awarded on a cumulative basis (i.e., an increasing award of costs for each occurring event, such as pre- and post-note of issue phases, multiple trials and appeals), the amounts often still do not amount to much in any single litigation. Like costs, disbursements are also statutorily defined, and some are capped at a nominal amount (e.g., $250 limit for the taking of two depositions in a single action).3
Unlike costs, however, a number of categories of disbursements are unlimited and even open to interpretation, thereby affording a prevailing party wide latitude in assessing the amount of its disbursements. Indeed, certain categories are notoriously rife for dispute and susceptible to abuse for this very reason.4 For instance, CPLR 8301(a)(6) allows for the 'reasonable expenses of printing the papers for a hearing, when required.' Similarly, CPLR 8301(a)(12) permits 'such other reasonable and necessary expenses as are taxable according to the course and practice of the court….'
One dispute that sometimes surfaces as a result of these provisions is the propriety of awarding a disbursement for the printing costs of a record on appeal.5 For instance, an aggrieved party may challenge the disbursement on the grounds that an appendix contained materials that were improper, not reasonable and necessary to the appeal or dehors the record.6 Such appellate printing costs disbursements, like some other disbursements, can be quite costly and, therefore, economically worth challenging.
In this context, the CPLR's use of concepts that are open to interpretation, such as 'reasonable,' 'necessary,' 'when required,' and 'course and practice,' provides little practical guidance and is problematic.7 This is especially true when the prevailing party is vested with the discretion to assess its costs and disbursements initially, and the authority to submit them ex parte to the judgment clerk for taxation.8
Once they are submitted, the clerk is statutorily charged with the obligation to (i) 'examine the bills presented to him for taxation,' (ii) 'satisfy himself that all the items allowed by him are correct and allowable,' and (iii) 'strike out all items of disbursements…not supported by affidavit showing that they have been necessarily incurred and are reasonable in amount.'9
Once costs are taxed without notice, the prevailing party must 'immediately' serve its bill of costs upon the opposing parties.10 In practice, the bill of costs is usually served along with a copy of the entered judgment and notice of entry, thereby commencing the 30-day time period in which to appeal from the judgment.11
Upon receipt of a judgment and bill of costs containing an improper disbursement, often the initial reaction is to file a notice of appeal or move to vacate the judgment. However, this is a mistake.12 And, if time is wasted pursuing such incorrect methods, it could be a costly one at that. As noted above, the CPLR affords an aggrieved party a very short window of five days in which to commence the retaxation procedure.13 Failure to commence the retaxation procedure within such time period has been held to be grounds for denial of the application as untimely and barred by laches.14
Though CPLR 8403 offers no guidance on where to submit the notice of retaxation, the practice commentaries to CPLR 8403 advise that the application should be made to the clerk at a 'pre-arranged time suitable to the clerk.'15 This comment seems to suggest there may be an appearance or oral argument before the clerk on the date of retaxation. But, do not count on it. In fact, do not count on the clerk even being aware of this little-known procedure. Indeed, one should not be surprised if the clerk advises that the procedure is essentially one of first impression for the particular office. Also, do not be surprised if the clerk's office seeks to reject the filing of the notice of retaxation due to unfamiliarity with the procedure, and suggests making a motion to the court instead. However, such a motion is, as a practical matter, the second step in this cumbersome process.
While CPLR 8404 does provide for 'judicial review of taxation or retaxation' by motion to the court, it expressly limits the review to 'any item objected to before the clerk.' Thus, this limitation on relief makes objecting to the disbursements through retaxation before the clerk a prerequisite to judicial review.
Alternatively, CPLR 8404 authorizes the court to order a retaxation before the clerk. However, such relief would have the effect of merely placing the parties back before the clerk for retaxation (i.e., step one). And, after the clerk makes a determination on the retaxation, either party could then utilize CPLR 8404 and again make a motion for judicial review of the retaxation. Thus, an additional layer will be added to the process. Instead of one retaxation and one motion for judicial review, there will be one retaxation and two motions for judicial review.
Accordingly, the first step taken should be retaxation before the clerk pursuant to CPLR 8403. Even though there is a second step involving judicial review, do not take the first step lightly. It is by no means a practice swing. In fact, it has been held that a court, hearing a motion to review a retaxation by a clerk, may only consider the objections and papers that were before the clerk.16
Thus, it is essential that the notice of retaxation be comprehensively prepared and briefed as if it were a formal motion. All objections, arguments and exhibits should be included lest the party risk being precluded from offering such to the court during a subsequent motion for judicial review.17 This must be performed expeditiously considering the time constraints of the five-day window.
After receiving the decision from the clerk concerning the retaxation, either party may then seek judicial review by the court pursuant to CPLR 8404, as noted above. A party should be mindful that the rule requiring a decision be made on a 'motion' within 60 days is not, on its face, applicable to a 'notice' of retaxation before the clerk.18 So, in some cases, a party should be prepared to wait well beyond 60 days for a decision of the clerk. Then, after the court renders its decision on the motion for judicial review of the clerk's retaxation decision, either party is free to appeal the court's decision to the appellate division if appropriate grounds warrant.19
It is important to note, too, that, during this multi-layered and time-consuming process, the judgment in its full amount, including the challenged disbursement amount, is enforceable. Thus, it may be necessary to seek a stay from the court pending the retaxation process, which involves the time and expense of making yet an additional motion.
Streamlining the Process
All of this begs the question: Can anything be done to streamline the process? The answer is yes, but it will require legislation.20 First, providing a more comprehensive list of allowable disbursements and eliminating the open-ended qualifiers such as 'reasonable and necessary' would provide more definitive guidance and help avoid disputes initially.21 Second, eliminating the prerequisite of retaxation before the clerk and allowing for unrestricted judicial review of the taxation will also help by eliminating a layer of the process. Requiring taxation always to occur on notice so that both parties may be heard by the clerk before a decision is made would also be helpful. However, a valid counter-argument to this point is that the winning party needs to docket its judgment without delay so as to establish its lien priority.22
Third, awarding attorney fees to the winning party on a retaxation motion may also help as it would (i) serve as a deterrent against seeking improper disbursements in the first instance, (ii) deter baseless challenges to otherwise proper disbursements and (iii) encourage the parties to work out the dispute initially before resorting to the court.
In sum, the retaxation process, as it currently exists, is quite time-consuming, cumbersome and costly. A dispute over something as ancillary as a disbursement during the winding down of a litigation can take on a life of its own. The best alternative is to attempt to resolve the dispute with one's adversary before embarking on the cumbersome retaxation process. If that fails, the legal expenses associated with the retaxation process may end up exceeding the amount of the challenged disbursement, leaving the aggrieved party to ponder: At what price glory?
Michael J. Antongiovanni is a partner at Meyer, Suozzi, English & Klein and a member of its litigation and dispute resolution practice group.
2. CPLR 8201- 8204.
3. CPLR 8301 to 8303-a; see also, CPLR 8301(9).
5. See Soc'y of New York Hosp. v. Mogensen, 81 Misc. 2d 1089, 370 N.Y.S.2d 354 (App. Term 1975).
6. E. Thirteenth St. Cmty. Ass'n v. New York State Urban Dev. Corp., 164 Misc.2d 589, 625 N.Y.S.2d 418 (Sup. Ct., N.Y. Co., 1995).
7. CPLR 8301(a)(6) and (12).
8. CPLR 8403.
9. CPLR 8401.
10. CPLR 8403.
11. CPLR 5513(a).
13. CPLR 8403.
15. CPLR 8403, McKinney's Practice Commentaries, C8403:1.
16. O'Hara v. Derschug, 156 Misc. 454, 282 N.Y.S. 6 (Sup. Ct., Onondaga Co., 1935); see also Soc'y of New York Hosp. v. Mogensen, 75 Misc.2d 62, 63, 346 N.Y.S.2d 561 (Civ. Ct., N.Y. Co., 1973) rev'd on other grounds, 81 Misc.2d 1089, 370 N.Y.S.2d 354 (App. Term 1975).
18. See CPLR 2219.
19. See, generally, Verga v. Scaduto, 99 A.D.2d 534, 471 N.Y.S.2d 321 (2d Dept. 1984).
20. See Siegel, N.Y. Prac. §415 (5th ed.).