Frank Dufour v. Robert Allen et al

Filing 251

MINUTES (IN CHAMBERS) - PLAINTIFF'S MOTION TO REVIEW MAGISTRATE JUDGE SEGAL'S ORDER ENTERED FEBRUARY 24, 2016 (Dkt. 247, filed March 3, 2016) by Judge Christina A. Snyder denying 247 MOTION for Review: In accordance with the foregoing, the Court DENIES plaintiff's motion for reconsideration. (see document for further details) (bm)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:14-cv-05616-CAS(SSx)

Title

FRANK DUFOUR V. ROBERT ALLEN, ET AL.

Present: The Honorable

Date

‘O’

March 31, 2016

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Not Present
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(IN CHAMBERS) - PLAINTIFF’S MOTION TO REVIEW
MAGISTRATE JUDGE SEGAL’S ORDER ENTERED
FEBRUARY 24, 2016 (Dkt. 247, filed March 3, 2016)

The Court finds this motion appropriate for decision without oral argument. See
Fed. R. Civ. P. 78; C.D. Cal. Local Rule 7-15. Accordingly, the hearing date of April 4,
2016, is vacated, and the matter is hereby taken under submission.
I.

INTRODUCTION & BACKGROUND

Plaintiff Frank Dufour initiated this action on February 8, 2012 in Los Angeles
County Superior Court. Dkt. 1. After several motions to dismiss and for summary
judgment, the sole remaining defendant is Millennium Bank, N.A. (“Millennium Bank”).
On February 28, 2014, the FDIC was appointed as receiver of Millennium Bank, which is
a failed bank. On July 29, 2015, the FDIC filed a motion for summary judgment as to all
of plaintiff’s claims against Millennium Bank. Dkt. 183. On September 28, 2015, the
Court granted the FDIC-receiver’s motion for summary judgment in its entirety. Dkt.
228. Thereafter, plaintiff filed a motion for reconsideration, Dkt. 229, which the Court
granted in part, Dkt. 237. Specifically, the Court permitted plaintiff to proceed on his
claims for breach of the implied covenant of good faith and fair dealing and for
constructive trust against Millennium Bank.
After the Court issued its order on plaintiff’s motion for reconsideration, the parties
met and conferred to clarify the scope of discovery in light of the Court’s order.
Nonetheless, a dispute arose between the parties regarding the appropriate scope of
discovery. At base, it appears that plaintiff believes the FDIC has not been forthcoming
in searching the records of Millennium Home Loans––a former subsidiary of Millennium
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:14-cv-05616-CAS(SSx)

Date

Title

‘O’

March 31, 2016

FRANK DUFOUR V. ROBERT ALLEN, ET AL.

Bank. The FDIC contends that it is the receiver solely for Millennium Bank, and not
Millennium Home Loans. According to the FDIC, “Millennium Home Loans ceased to
exist seven years before Millennium Bank was placed in receivership.” Opp., at 1. Thus,
the FDIC has insisted that plaintiff’s discovery requests be limited to the records of
Millennium Bank, because the FDIC “does not have [the Records of Millennium Home
Loans] except to whatever unknown extent they were commingled with Millennium
Bank’s records at the time the bank closed.” Id. at 2. Plaintiff, however, has refused to
limit his discovery requests to the records of Millennium Bank. Accordingly, on January
25, 2016, plaintiff filed a motion to compel seeking additional searches and production of
documents by the FDIC relating to Millennium Home Loans. Dkt. 240. On February 24,
2016, Magistrate Judge Segal denied this motion. Dkt. 246.
On March 3, 2016, plaintiff filed a motion for review of Magistrate Judge Segal’s
order denying plaintiff’s motion to compel. Dkt. 247. On March 14, 2016, the FDIC
filed an opposition, Dkt. 248, and on March 21, 2016, plaintiff filed a reply, Dkt. 249.
Having carefully considered the parties’ arguments, the Court finds and concludes as
follows.
II.

LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 72(a), a party may file objections to a
magistrate judge’s non-dispositive order within fourteen days. “The district judge in the
case must consider timely objections and modify or set aside any part of the order that is
clearly erroneous or is contrary to law.” Fed. R. Civ. P. 72(a). The magistrate judge’s
decision “is entitled to great deference by the district court” United States v.
Abonce–Barrera, 257 F.3d 959, 969 (9th Cir. 2001).
III.

ANALYSIS

Magistrate Judge Segal denied plaintiff’s motion to compel principally on the
grounds that it was procedurally defective––in particular, on the grounds that plaintiff
had failed to comply with the requirement of Central District Local Rule 37 that a motion
to compel be submitted with a joint stipulation. In the alternative, Magistrate Judge Segal
also determined that plaintiff’s motion could be denied on the grounds that it was
substantively defective, because the FDIC had represented that it had produced all
responsive documents and plaintiff failed to demonstrate that this representation was
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:14-cv-05616-CAS(SSx)

Date

Title

‘O’

March 31, 2016

FRANK DUFOUR V. ROBERT ALLEN, ET AL.

false. The Court finds that Magistrate Judge Segal’s ruling can be upheld on either of
these grounds.
A.

Plaintiff’s Motion to Compel was Procedurally Defective

Pursuant to Central District Local Rule 37-1, prior to filing any discovery motion
pursuant to Federal Rules of Civil Procedure 26 to 37, counsel for the parties must meet
and confer in a good faith effort to eliminate the necessity for hearing the motion or to
eliminate as many of the disputes as possible. If counsel are unable to settle their
differences, Local Rule 37-2 then provides that counsel “shall formulate a written
stipulation” that “shall be filed and served with the notice of motion.” The joint
stipulation “must be set forth in one document signed by both counsel” and “shall contain
all issues in dispute and, with respect to each such issue, the contentions and points of
authorities of each party.” C.D. Cal. L.R. 37-2.1.
Local Rule 37-2.2 sets forth the procedure for preparing the joint stipulation.
Specifically, “following the conference of counsel, counsel for the moving party shall
personally deliver, e-mail, or fax to counsel for the opposing party the moving party’s
portion of the stipulation.” C.D. Cal. L.R. 37-2.2 (emphasis added). Opposing counsel
then has seven days to prepare its portion of the stipulation and deliver it to the moving
party. Id. The moving party must then combine the two parties’ portions of the
stipulation, sign the stipulation, and deliver it to the opposing counsel for signature. Id.
Finally, the moving party is responsible for filing the fully signed joint stipulation with
the notice of motion. Id.
Pursuant to Central District Local Rule 37-2.4: “The Court will not consider any
discovery motion in the absence of a joint stipulation.” Moreover, the rule only excuses
the joint stipulation requirement if counsel for the moving party submits a declaration
establishing that opposing counsel: (a) failed to confer in a timely manner in accordance
with L.R. 37-1; (b) failed to provide the opposing party’s portion of the joint stipulation
in a timely manner in accordance with L.R. 37- 2.2; or (c) refused to sign and return the
joint stipulation after the opposing party’s portion was added. C.D. Cal. L.R. 37-2.4.
In her order, Magistrate Judge Segal concluded that “Plaintiff’s counsel ha[d]
failed to file the required joint stipulation along with the Motion [to Compel]” and that
“[n]one of L.R. 37-2.4’s exceptions appl[ied].” Dkt. 246, at 2. Accordingly, Magistrate
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:14-cv-05616-CAS(SSx)

Date

Title

‘O’

March 31, 2016

FRANK DUFOUR V. ROBERT ALLEN, ET AL.

Judge Segal denied plaintiff’s motion to compel for “failure to comply with the Local
Rules.” Id. Failure to comply with the requirements of Local Rule 37 is a valid grounds
for denying a discovery motion. See Cavanaugh v. S. Cal. Permanente Med. Grp., Inc.,
583 F. Supp. 2d 1109, 1139 (C.D. Cal. 2008) (“Under Local Rule 32–2.4, the failure to
provide a Joint Stipulation and/or a Fed. R. Civ. P. 37(a)(2) certification will result in the
court’s refusal to consider any such discovery motion.”); Lumber Liquidators, Inc. v.
Sullivan, 2012 WL 4464867, at *4 (C.D. Cal. Aug. 31, 2012) (denying discovery motion
for failure to comply with C.D. Cal. L.R. 37-2); So v. Land Base, LLC, 2009 WL
2407954, at *2 (C.D. Cal. Aug. 4, 2009) (same). Moreover, this is the second time in this
case that one of plaintiff’s discovery motions has been denied for failure to comply with
Local Rule 37. See Dkt. 220, at 3 (“[T]he Motions are DENIED for failure to comply
with the provisions of Local Rule 37-2 requiring discovery disputes to be presented to the
Court in the form of a Joint Stipulation.”). Accordingly, Magistrate Judge Segal correctly
concluded that plaintiff’s motion to compel was procedurally defective and could be
denied on that ground.
Plaintiff argues, nonetheless, that Local Rule 37 does not apply in this case because
his motion to compel is not properly considered a discovery motion. Specifically,
plaintiff contends that, rather than seeking to compel discovery, his motion sought to
compel the FDIC’s compliance with a prior court order issued by Magistrate Judge Segal
on September 11, 2015. This argument fails for two reasons: First, regardless of how
plaintiff styles his motion, it is still at base a motion to compel discovery. In his motion,
plaintiff expressly stated that he was moving “for an order compelling production of
documents” and referenced two of his earlier filed Requests for Production of
Documents. See Dkt. 240, at 2. Thus, plaintiff’s motion was, for all intents and
purposes, a discovery motion subject to the requirements of Local Rule 37.
Second, plaintiff incorrectly reads Magistrate Judge Segal’s September 11, 2015
order. In that order, Magistrate Judge Segal set forth a discovery protocol for the parties
to comply with. However, she expressly stated that this discovery protocol would apply
“only in the event that Judge Snyder, for the express purpose of permitting further
discovery, denies the FDIC’s summary judgment motion as premature or continues ruling
on the summary judgment motion for the purpose of conducting additional discovery.”
Dkt. No. 220, at 4 (emphasis in original). This Court did not deny as premature or
continue ruling on the FDIC’s motion for summary judgment. Nor did the Court deny
the FDIC’s motion “for the express purpose of permitting further discovery.” Rather, the
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:14-cv-05616-CAS(SSx)

Date

Title

‘O’

March 31, 2016

FRANK DUFOUR V. ROBERT ALLEN, ET AL.

Court initially granted the FDIC’s motion in its entirety on the grounds that all of
plaintiff’s claims were barred by the applicable statutes of limitation. Then, after
reconsideration, the Court determined that two of plaintiff’s claims might not be barred
and, accordingly, denied the motion for summary judgment—on its merits––as to these
two claims. Thus, Magistrate Judge Segal’s September 11, 2015 order does not apply.
Accordingly, the Court finds that Magistrate Judge Segal’s order denying
plaintiff’s motion to compel was not “clearly erroneous or contrary to law.”
B.

Plaintiff’s Motion to Compel was Substantively Defective

Magistrate Judge Segal also concluded in the alternative that, even if plaintiff’s
motion to compel were not procedurally defective, she would still deny the motion on its
merits. Specifically, she stated:
Plaintiff seeks to compel an additional search, using the term
“Millennium Home Loans, etc.” However, the FDIC acts only as a
receiver for “Millennium Bank.” The FDIC-Receiver does not
possess the records of Millennium Home Loans. The FDIC-Receiver
has already searched for and produced all responsive documents from
Millennium Bank’s records in its possession, custody or control.
Accordingly, the Motion also fails on the merits, as all responsive
documents have been produced. Plaintiff has failed to demonstrate
that any of the assertions regarding the production of documents by
the FDIC is incorrect. The Motion is DENIED on this alternative
ground as well.
Dkt. 246, at 2-3 (citations omitted).
In his papers, plaintiff appears to principally disagree with Magistrate Judge
Segal’s conclusion that, because the FDIC is only the receiver of Millennium Bank, the
FDIC is unable to search or produce the records of Millennium Home Loans. However,
when the FDIC was appointed receiver of Millennium Bank it only received the records
of Millennium Bank, not Millennium Home Loans. The FDIC has conceded that there
may be records pertaining to Millennium Home Loans “commingled with Millennium
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:14-cv-05616-CAS(SSx)

Date

Title

‘O’

March 31, 2016

FRANK DUFOUR V. ROBERT ALLEN, ET AL.

Bank’s records.” Opp’n., at 2. But the fact remains that the only records the FDIC
possesses are those that belonged to Millennium Bank at the time the bank failed. As
such, the FDIC cannot search the records of Millennium Home Loans for the simple
reason that it does not possess them.1
In his reply, plaintiff cites several out of circuit cases for the proposition that a
party may be ordered to produce documents in the possession of a non-party if “the party
has control or has a legal right to obtain” those documents. Reply, at 11 (citing In re
Bankers Trust Co., 61 F.3d 465, 469 (6th Cir. 1995); Japan Halon Co., Ltd. v. Great
Lakes Chem. Corp., 155 F.R.D. 626, 627 (N.D. In. 1983); United States v. Faltico, 586
F.2d 1267 (8th Cir. 1978); FDIC v. Butcher, 116 F.R.D. 196, 199 (E.D. Tenn. 1996)).
Plaintiff appears to contend that, because Millennium bank held a majority stake in
Millennium Home Loans, the FDIC should be able to search for the documents plaintiff
is requesting. But the problem here is not whether Millennium Bank holds legal
authority over the documents and records of Millennium Home Loans. Rather, according
to the FDIC, Millennium Home Loans no longer exists and, in fact, ceased to exist seven
years before the FDIC took receivership of Millennium Bank. Plaintiff makes no effort
to refute this in his papers. Thus, it is not clear what has happened to the documents
formerly in the possession of Millennium Home Loans. Even if Millennium Bank at one
point had the authority to obtain possession of Millennium Home Loans’ records—an
assertion that is unclear from the record in this case—the FDIC cannot be expected to
search for documents that no longer exist. And if any of Millennium Home Loans
records have been “commingled” with the records of Millennium Bank, a search through
Millennium Bank’s records will likely produce those documents.
Finally, plaintiff takes issue with Magistrate Judge Segal’s finding that the “FDICReceiver has already searched for and produced all responsive documents from

1

In fact, plaintiff has previously acknowledged that because the FDIC is only the
receiver of Millennium Bank that necessarily limits the information available to the
FDIC. See Dkt. 171, May 5, 2015 Stipulated Protective Order, at 4 (“Plaintiff
acknowledges that, because the FDIC was appointed receiver for Millennium Bank, the
‘information known or reasonably available’ to the FDIC-Receiver is limited to
information that the FDIC- Receiver is able to obtain from a good faith investigation of
the books and records of Millennium Bank.”).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:14-cv-05616-CAS(SSx)

Date

Title

‘O’

March 31, 2016

FRANK DUFOUR V. ROBERT ALLEN, ET AL.

Millennium Bank’s records in its possession, custody and control.” Plaintiff contends
that “[t]his is indisputably wrong” and that “[t]he FDIC has not even conducted a search
for documents responsive to [Request for Production of Documents set 2], let alone
produced, any of the documents responsive to that request. Dkt. 247, at 9 (emphasis in
original). But the FDIC has searched and produced documents from the records of
Millennium Bank. See Dkt. 241-2, Christensen Decl. ¶ 4 (noting that, pursuant to a letter
agreement between the parties, “the FDIC-Receiver has produced all responsive
documents from Millennium Bank’s records from December 1, 2005 through August 31,
2006 that refer to: “Millennium Home Loans,” “Dufour,” “Kenny,” “Gregg,” “Trent,”
“Staggs,” and “Jackson, Mississippi,” among other search terms listed in the letter
agreement.”). And the FDIC states that it is willing to perform more searches and
produce further documents if plaintiff is willing to limit his request to the records of
Millennium Bank—i.e., the records actually in the FDIC’s possession. Thus, it appears
the FDIC is willing to produce additional discovery if plaintiff is willing to agree to their
request to limit discovery solely to documents in the FDIC’s possession, custody, or
control. As the FDIC explains, it “simply cannot search records that it does not have.”
Opp’n., at 15.
Accordingly, the Court agrees with Magistrate Judge Segal’s conclusion that there
was no basis for compelling the FDIC to produce additional discovery. Magistrate Judge
Segal’s ruling was, therefore, not “clearly erroneous or contrary to law.”
IV.

CONCLUSION

In accordance with the foregoing, the Court DENIES plaintiff’s motion for
reconsideration.
IT IS SO ORDERED.
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