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Walsh v. Federal National Mortgage Association

United States District Court, D. Arizona

August 14, 2019

Brandon M. Walsh, Plaintiff,
Federal National Mortgage Association, Defendant.



         At issue is Plaintiff's Motion to Vacate Costs Taxed (Doc. 192, Mot.), to which Defendant filed a Response (Doc. 194, Resp.) and Plaintiff filed a Reply (Doc. 195, Reply).

         I. BACKGROUND

         Plaintiff filed a Complaint (Doc. 1) in April 2015 on behalf of himself and a putative class of individuals who sold their homes in short sales that were later reported as foreclosures in Defendant's automated Desktop Underwriter system (“DU”), and who allege that they were denied home mortgage loans as a result. After years of litigation in this and related matters, the Ninth Circuit held in a separate case that Defendant is not a Consumer Reporting Agency (“CRA”) and thus is not subject to the relevant provision of the Fair Credit Reporting Act (“FCRA”). See Zabriskie v. Fed. Nat'l Mortgage Ass'n, 912 F.3d 1192 (9th Cir. 2019). Based on the Ninth Circuit's ruling in Zabriskie, the Court granted Defendant's Motion for Summary Judgment in this case and denied as moot Plaintiff's Motion to Certify a Class. (Doc. 177.)

         On March 13, 2019, after considering Plaintiff's objections, the Clerk entered judgment on taxable costs against Plaintiff in the amount of $15, 237.88-about $8, 000 less than Defendant originally requested. (Doc. 190). Plaintiff now moves to vacate the taxable costs in their entirety.


         Federal Rule of Civil Procedure 54(d)(1) provides that “[u]nless a federal statute, these rules, or a court order provides otherwise, costs-other than attorney's fees-should be allowed to the prevailing party.” The Rule “creates a presumption in favor of awarding costs to a prevailing party, but vests in the district court discretion to refuse to award costs.” Ass'n of Mexican-American Educ. v. California, 231 F.3d 572, 591 (9th Cir. 2000). The Court's discretion “is not without limits.” Id. Rather, the Court “must specify reasons for its refusal to award costs.” Id. (internal citation omitted).

         Appropriate reasons for the Court to deny costs include: “(1) the substantial public importance of the case, (2) the closeness and difficulty of the issues in the case, (3) the chilling effect on future similar actions, (4) the plaintiff's limited financial resources, and (5) the economic disparity between the parties.” Escriba v. Foster Poultry Farms, Inc., 743 F.3d 1236, 1247-48 (9th Cir. 2014). These five indicators are not “‘an exhaustive list of good reasons for declining to award costs,' but rather a starting point for analysis.” Id. (quoting Ass'n of Mexican-American Educ., 231 F.3d at 591).

         III. ANALYSIS

         While the Court's review is not necessarily limited to the five considerations in Escriba, both parties seem to agree that those are dispositive in this matter, and indeed the Court reaches its conclusion based on those indicators alone.

         1. Substantial Public Importance

         The Court finds that the first factor-the public importance of the case-weighs in Plaintiff's favor. While Defendant argues that the case does not reflect an issue of public importance, in part because “Plaintiff's constitutional or civil rights were [not] at issue, ” that is not a requirement for substantial public importance. (Resp. at 2.) Cases do not have to pertain to constitutional or civil rights in order to be a matter of public importance. See Ass'n of Mexican-American Educ., 231 F.3d at 593 (“Nor are we attempting to create an exhaustive list of ‘good reasons' for declining to award costs.”).

         Defendant also argues that the issue is not of public importance because “DU was adjusted in 2013 (before Plaintiff's lawsuit was filed) to enable lenders to instruct DU to disregard foreclosure information after validating the applicant had only a short sale.” (Resp. at 3.) But while Defendant's decision to change its DU policy is important in evaluating the third indicator-the potential chilling effect on future actions-it is not relevant to the Court's analysis of what constitutes an issue of substantial public importance. Plaintiff should not be prejudiced because a policy that allegedly caused him harm has since been remedied, at least in part. At the time of his suit, the DU policy had been a matter of public importance because it affected other people seeking home financing in the same way it affected Plaintiff. While the Court is not persuaded by Plaintiff's argument that the sheer volume of amicus briefs in the pending Ninth Circuit en banc review renders this matter important, it is persuaded by the fact that this issue affected many consumers and, by implication, the nationwide housing market. Thus, the first indicator weighs in Plaintiff's favor.

         2. Closeness and ...

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