Rudnick et al v. Bank of America, National Association et al
Filing
96
ORDER granting in part and denying in part 69 Plaintiffs Motion for Order Compelling Discovery Under Fed. R. Civ. P. 37 ; granting 70 Plaintiffs Motion for Sanctions Against Defendants Bank of America and Litton Under Fed. R. Civ. P. 37(d) Motion for Sanctions by Magistrate Judge Michael J. Watanabe on 5/16/2011.(erv, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 10-cv-00144-WJM-MJW
MICHAEL D. RUDNICK and
ANN K. SMITH RUDNICK,
Plaintiffs,
v.
BANK OF AMERICA, NATIONAL ASSOCIATION,
as SUCCESSOR BY MERGER TO LASALLE BANK, NATIONAL ASSOCIATION,
TRUSTEE UNDER THE POOLING AND SERVICE AGREEMENT DATED AS OF
FEBRUARY 1, 2007, GSAMP TRUST 2007-NC-1;
LITTON LOAN SERVICING, LP;
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.;
PUBLIC TRUSTEE OF DENVER COUNTY; and
All Unknown Persons Who Claim Any Interest in the Subject Matter of this Action,
Defendants.
ORDER REGARDING:
(1) PLAINTIFFS’ MOTION FOR ORDER COMPELLING DISCOVERY UNDER
FED. R. CIV. P. 37(A) (DOCKET NO. 69)
AND
(2) PLAINTIFFS’ MOTION FOR SANCTIONS AGAINST DEFENDANTS BANK OF
AMERICA AND LITTON UNDER FED. R. CIV. P. 37(D) (DOCKET NO. 70)
Entered by Magistrate Judge Michael J. Watanabe
This matter is before the court for hearing on Plaintiffs’ Motion for Order
Compelling Discovery Under Fed. R. Civ. P. 37 (a) (docket no. 69) and Plaintiffs’ Motion
for Sanctions Against Defendants Bank of America and Litton Under Fed. R. Civ. P.
37(d) (docket no. 70). The court has reviewed the subject motions (docket nos. 69 and
70), the responses (docket nos. 81 and 82), and the replies (docket nos. 83 and 84).
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The court has also reviewed, in camera, the privilege log and redacted and unredacted
documents outlined in such privilege log. This court had previously ordered Defendants
Bank of America, National Association, Litton Loan Services, LP, and Mortgage
Electronic Registration Systems, Inc., to file the documents outlined in the privilege log
(docket no. 81-10) with the court for in camera review. See minute order (docket no.
87). In addition, the court has taken judicial notice of the court file and has considered
applicable Federal Rules of Civil Procedure and case law. The court now being fully
informed makes the following findings of fact, conclusions of law, and Order.
In this case, Plaintiffs allege that Defendant Bank of America does not hold a
valid security interest in the subject real property located at 2820 South Harlan Way,
Denver, Colorado 80227 [Plaintiffs’ home], due to lack of a valid sale, assignment, or
transfer of the Plaintiffs’ promissory note to the mortgage-backed securities trust for
which Defendant Bank of America serves as trustee, and therefore had no right to
invoke the power of sale contained in the Deed of Trust in a Rule 120 Public Trustee
Deed Foreclosure Action in the Denver District Court, under Denver District Court Case
No. 09-cv-7496. In addition, Plaintiffs allege that Defendant Bank of America is not the
Real Party in Interest and therefore Defendant Bank of America does not have a legal
basis to proceed to foreclose on the subject property [Plaintiffs’ home] under Colorado
Rule of Civil Procedure - Rule 120 in the Denver District Court, and Defendant Bank of
America failed to comply with federal and state requirements to not hold a foreclosure
sale until it complied with federal and state modification and loss mitigation
requirements. Further, Plaintiffs allege that Defendant Bank of America failed to comply
with the guidelines and provisions of the Federal Home Affordable Modification Program
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(HAMP) when Plaintiffs sought a loan modification on the subject real property
[Plaintiffs’ home] prior to seeking foreclosure of the subject real property [Plaintiffs’
home]. Lastly, Plaintiffs allege that Defendant Bank of America breached the covenant
of good faith and fair dealing.
Defendant Bank of America alleges that it owns the subject real property
[Plaintiffs’ home] and that Co-Defendant Litton Loan Services, LP, can proceed to take
possession of the subject property [Plaintiffs’ home] since Plaintiffs are in default on the
promissory note. Defendant Bank of America alleges that since Plaintiffs are in default
on the promissory note, it can invoke the power of sale contained in the Deed of Trust
that secures the promissory note and foreclose on the subject property [Plaintiffs’ home]
pursuant to Colorado Rule of Civil Procedure - Rule 120 in the Denver District Court
under Case No. 09-cv-7496.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The court finds:
1.
That I have jurisdiction over the subject matter and over the parties
to this lawsuit;
2.
That venue is proper in the state and District of Colorado;
3.
That each party has been given a fair and adequate opportunity to
be heard;
4.
That in the subject motion (docket no. 69), Plaintiffs seek an Order
from the court that compels Defendants Bank of America and
National Association, Litton Loan Services, LP (“Defendant Litton”),
to produce the following:
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a.
Litton’s electronic records, and printouts of electronic
records, of Litton’s “ModTrack” database concerning
everything that was done on the Rudnicks’ file, including loan
modification consideration under requirements of HAMP
program;
b.
All data, information, notations, text, figures and information
contained in Defendant’s mortgage servicing and accounting
computer systems including, but not limited to, ModTrack,
Alltel or Fidelity CIP System, Lender Processing Services,
Inc., or any other similar mortgage servicing software or
service used by Defendant, any servicers, or sub-servicers
of this mortgage account from the inception of the Rudnicks’
account to the date of deposition;
c.
The accounting and servicing system used by Defendant
and any sub-servicers or previous servicers from the
inception of this account to the present date so that experts
can decipher the data provided;
d.
Policies, procedures, contracts, agreements, and other
documents related to Defendant’s loan modification,
reformation, refinance, or forbearance programs and
activities under the Federal Affordable Modification Program
(HAMP) or any other program for modifications reformation,
refinance, or forbearance on loans serviced by Defendant;
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e.
Any and all documents indicating any sale, transfer, funding
source, legal and beneficial ownership, charges, credits,
debits, transactions, reversals, actions, payments, analyses
and records related to the servicing of the account of
Michael and Ann Rudnick from its origination to the present
date;
f.
All assignments, transfers, allonges, or other documents
evidencing a transfer, sale or assignment of the Deed of
Trust, monetary instruments or other documents that secure
payment by Michael and Ann Rudnick to the obligations in
this account from the inception of this account to the present
date including any such assignment on MERS;
g.
All electronic transfers, assignments and sales of the
note/asset, mortgage, deed of trust or other security
instrument; and
h.
All other items specified in Exhibits 1 & 2, Notices of
Depositions, not already produced. [Exhibits 1 & 2 are
attached to docket no. 70];
5.
That in subject motion (docket no. 69), Plaintiffs also seek an
additional Order from the court requiring all Defendants to produce
competent and knowledgeable Rule 30(b)(6) witnesses to be
deposed concerning the following matters:
a.
The servicing of the account of Michael and Ann Rudnick, in
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all respects and particulars, including, but not limited to, a
detailed accounting of their account with Litton Loan
Servicing, matters addressed in documents specified below,
and including, but not limited to, any and all documents,
communications, and conduct involved in or related to
consideration of Michael and Ann Rudnick for a loan
modification, reformation, refinance, or forbearance under
the Federal Home Affordable Modification Program (HAMP);
b.
The decisions to consider, or not consider, Michael and Ann
Rudnick for a loan modification, reformation, refinance, or
forbearance under the Federal Home Affordable Modification
Program (HAMP) or any other program for modification
reformation, refinance, or forbearance related to the
Rudnicks’ loan;
c.
The nature of the relationship between Litton Loan Servicing
and Defendant Bank of America and Defendant Mortgage
Electronic Registration Systems, Inc.; and
d.
The relationship between Bank of America and Defendant
Litton Loan Servicing, under the terms of any Pooling and
Servicing Agreement and any other agreements pertaining
to Litton Loan Servicing’s Servicing of Michael and Ann
Rudnick’s account for POOLING AND SERVICE
AGREEMENT DATED AS OF FEBRUARY 1, 2007, GSAMP
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TRUST 2007-NC-1.;
6.
That in subject motion (docket no. 69), Plaintiffs also seek an
additional Order from the court requiring Defendant Litton to
produce an unredacted version of the “CommLog” for inspection by
the Court;
7.
That in subject motion (docket no. 69), Plaintiffs also seek an
additional Order from the court requiring Defendants to provide to
Plaintiffs the subject Promissory Note for inspection by a qualified
document examiner at a time and place to be determined;
8.
That Rule 26(b)(1) of the Federal Rules of Civil Procedure defines
the scope of discovery as follows:
Unless otherwise limited by court order, the scope of
discovery is as follows: Parties may obtain discovery
regarding any nonprivileged matter that is relevant to
any party’s claim or defense–including the existence,
description, nature, custody, condition, and location of
any documents or other tangible things and the
identity and location of persons who know of any
discoverable matter. For good cause, the court may
order discovery of any matter relevant to the subject
matter involved in the action. Relevant information
need not be admissible at the trial if the discovery
appears reasonably calculated to lead to the
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discovery of admissible evidence. All discovery is
subject to the limitations imposed by Rule 26(b)(2)(C).
Fed. R. Civ. P. 26(b)(1). However, “a party’s right to obtain
discovery of ‘any matter, not privileged, that is relevant to the claim
or defense of a party’ . . . may be constrained where the court
determines that the desired discovery is unreasonable or unduly
burdensome given the needs of the case, the importance of the
issues at stake in the litigation, and the importance of the proposed
discovery in resolving the issues.” Simpson v. University of Colo.,
220 F.R.D. 354, 356 (D. Colo. 2004). “The Federal Rules of Civil
Procedure permit a court to restrict or preclude discovery when
justice requires in order to protect a party or person from
annoyance, embarrassment, oppression, or undue burden or
expense. . . .” Id. See Fed. R. Civ. P. 26(b) and (c);
9.
That Fed. R. Civ. P. 37 addresses the sanctions to be imposed
when a party fails to comply with valid discovery obligations. That
rule provides, inter alia, that if a party fails to obey an order to
provide or permit discovery, the court may issue further just orders,
including an order “dismissing the action or proceeding in whole or
in part.” Fed. R. Civ. P. 37(b)(2)(A). When a court imposes
sanctions under Fed. R. Civ. P. 37, “the court must order the
disobedient party, the attorney advising that party, or both to pay
the reasonable expenses, including attorney’s fees, caused by the
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failure, unless the failure was substantially justified or other
circumstances make an award of expenses unjust.” Fed. R. Civ. P.
37(b)(2)(C). In addition, a district court retains the power to dismiss
an action with prejudice for failure to comply with the Federal Rules
of Civil Procedure or with the court’s orders. Fed. R. Civ. P. 41(b);
10.
That as to the requested documents and information as outlined in
paragraph 4 a., b., c., d., e., f., g., and h. above, I find such
documents and information are relevant to the issues before this
court and such documents and information are discoverable and
may lead to admissible evidence at trial;
11.
That as to the requested documents and information as outlined in
paragraph 5 a., b., c., and d., I find that on December 10, 2010,
Plaintiffs served Notices of Depositions on Defendants Litton and
Bank of America pursuant to Fed. R. Civ. P. 30(b)(5) and (6),
requesting each of these Defendants to produce: (1) persons to
provide competent and knowledgeable testimony on January 11,
2011, in areas specified in paragraphs 1-3 of the respective notices
and (2) to bring documents and other materials, paper and
electronic, specified in paragraphs 1-15 of the respective requests
for production contained in said Notices [Notices of Depositions are
attached as Exhibits 1 & 2 to docket no. 70];
12.
That on January 7, 2011, Counsel for Defendants served multiple
objections to the Notice of Depositions on Plaintiffs’ Counsel, which
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made no objections to the production of persons to testify, made
several “boilerplate” objections to the production of documents and
other things, but agreed to produce documents in the respective
Defendants’ custody, possession, and control. See Exhibits 3 & 4
attached to docket no. 70;
13.
That on January 11, 2011, neither Defendant Litton nor Defendant
Bank of America produced any documents or other materials, and
the only deponent produced was Christopher Sprading, Litigation
Manager for Litton Loan Servicing. See deposition transcript of Mr.
Sprading, Exhibit 5 attached to docket no. 70;
14.
That I find that Defendant Litton and Defendant Bank of America
each had a duty to produce documents and a competent and
knowledgeable witness at the Rule 30(b)(6) deposition on January
11, 2011, and they did not do so. See Robinson v. Countrywide
Home Loans, Inc., 2010 WL 4225884 (W.D. Pa. Oct. 21, 2010).
Clearly, after reviewing all exhibits attached in both docket nos. 69
and 70, I find that Mr. Sprading lacked competence and knowledge
in many areas of relevant inquiry that Plaintiff attempted to address
during Mr. Sprading’s deposition. I find that both Defendant Litton
and Defendant Bank of America have failed to produce a
competent and knowledgeable witness to address those topics as
outlined in the Notices of Depositions listed above;
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15.
That as to the requested documents and information as outlined in
paragraph 6 above, I find that all of the redacted portions of the
“CommLog” are protected by the Attorney-Client Privilege and such
redacted portions of the “CommLog” should not be disclosed to the
Plaintiffs;
16.
That as to the request for the Original Promissory Note to be
delivered for inspection to a qualified document examiner, I find that
nowhere in the pleadings does Plaintiff suggest that they did not
sign the Original Promissory Note, and to have such Promissory
Notice delivered to a qualified document examiner for inspection is
totally unnecessary and would not make the existence of any fact
that is of consequence to the determination of this action more
probable or less probable that it would be without such inspection
and examination by a qualified document examiner; and
17.
That pursuant to Fed. R. Civ. P. 37(d)(3), this court may impose
whatever sanctions are just, including those listed in Fed. R. Civ. P.
37(b)(2)(A)(i-vi).
ORDER
WHEREFORE, based upon these findings of fact and conclusions of law this
court ORDERS:
1.
That Plaintiffs’ Motion for Order Compelling Discovery Under Fed.
R. Civ. P. 37 (a) (docket no. 69) is GRANTED IN PART AND
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DENIED IN PART. The motion is GRANTED as to the requested
documents and information as outlined in paragraph 4 a., b., c., d.,
e., f., g., and h. above and as to the requested documents and
information as outlined in paragraph 5 a., b., c., and d. above.
Defendants Litton and Defendant Bank of America shall provide to
Plaintiffs the documents and information on or before May 31,
2011. The parties shall forthwith meet, confer, and re-set the Rule
30(b)(6) depositions, and Defendants Litton and Bank of America
shall provide competent and knowledgeable Rule 30(b)(6)
deponents to address the topics as outlined in the Notice of
Depositions (Exhibits 1 & 2 attached to docket no. 70) and to
address the topics listed in 5 a., b., c., and d, above. The parties
shall comply with D.C.COLO.LCivR 30.1 and 30.3 in setting and
conducting these depositions. The remainder of relief sought in this
motion is DENIED;
2.
That Plaintiffs’ Motion for Sanctions Against Defendants Bank of
America and Litton Under Fed. R. Civ. P. 37(d) (docket no. 70) is
GRANTED. As a sanction under Rule 37(b)(2)(A)(i-vi), the
Plaintiffs will be permitted to re-take the Rule 30(b)(6) depositions
of Defendant Litton’s and Defendant Bank of America’s designated
Rule 30(b)(6) witnesses. Such Rule 30(b)(6) witnesses from both
Defendant Litton and Defendant Bank of America shall be
competent and knowledgeable to answer all inquiries as outlined in
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paragraph 1 of the Order Section of this Order above.
As a further sanction, Defendants Litton and Bank of America shall
pay the costs for re-taking these Rule 30(b)(6) depositions. The
costs shall include the court reporter’s costs and the cost for the
original transcript of each Rule 30(b)(6) deposition, and these costs
shall be borne by Defendants Litton and Bank of America. Plaintiffs
shall pay for their own copy cost for such transcripts of these Rule
30(b)(6) witnesses. Defendants Litton and Bank of America shall
provide a location in Colorado Springs, Colorado, to re-take these
Rule 30(b)(6) depositions and pay all costs for using such location.
That discovery is extended until June 30, 2011, for the limited
purpose of taking the above-mentioned Rule 30(b)(6) depositions
only.
The Plaintiffs are awarded reasonable and necessary attorney
fees and costs for having to file these motions (docket nos. 69 and
70). The parties shall meet forthwith to see if the amount of
attorney fees and costs can be stipulated. If the parties are able to
stipulate to the amount of attorney fees and costs, then the parties
shall file such stipulation with the court. If the parties are unable to
stipulate to the amount of attorney fees and costs, then the
Plaintiffs shall have up to and including June 1, 2011, to file their
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itemized affidavit for attorney fees and costs. The Defendants shall
have until June 16, 2011, to file their response to Plaintiffs’ affidavit
for attorney fees and costs. If a response is filed, then Plaintiffs
shall have up to and including June 30, 2011, to file any reply to
Defendants’ response; and
3.
That the Privilege Log and “CommLog” documents that were
submitted to this court for in camera review in redacted and
unredacted form shall be SEALED and not opened except by
further Order of Court.
Done this 16th day of May, 2011.
BY THE COURT
s/Michael J. Watanabe
MICHAEL J. WATANABE
U.S. MAGISTRATE JUDGE
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