Bowers et al v. Mortgage Electronic Registration Systems, Inc. et al

Filing 109

MEMORANDUM AND ORDER granting 62 Defendants' Motion for Entry of Protective Order from Corporate Representative Deposition Notice. Defendant MERS is granted a protective order from producing any representatives to testify to Plaintiffs' Notice of Rule 30(b)(6) Deposition of MERS, Duces Tecum, dated July 1, 2011. Plaintiffs may, however, serve MERS with another notice of deposition pursuant to Fed. R. Civ. P. 30(b)(6) in accordance with the rulings in this Memorandum and Order. It i s further ordered that any future Rule 30(b)(6) deposition of Defendant MERS shall be held at its principal place of business in Virginia, unless the parties otherwise agree to another location. Signed by Magistrate Judge David J. Waxse on 12/2/2011. (byk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
ROY AND SHEILA BOWERS,
Plaintiffs,
v.
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS,
INC., et al.,
Defendants.

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CIVIL ACTION
Case No. 10-4141-JTM–DJW

MEMORANDUM AND ORDER
This matter is before the Court on Defendants’ Motion for Entry of Protective Order from
Corporate Representative Deposition Notice (ECF No. 62). Defendant Mortgage Electronic
Registration Systems (“MERS”) seeks a protective order under Fed. R. Civ. P. 26(c) relieving it
from the obligation to produce a corporate representative to testify to the 22 topics set forth in
Plaintiffs’ Rule 30(b)(6) deposition notice. The motion is granted.
I.

Relevant Factual Background
Plaintiffs Roy and Sheila Bowers executed a residential mortgage on or about October 9,

2008, in order to secure repayment of a loan from Security National Mortgage Company. To obtain
the loan, Plaintiffs granted their lender a security interest in their property via the mortgage and
executed a promissory note in the amount of $184,222.00. Wells Fargo serviced the loan and
eventually came to own the promissory note, on which the Plaintiffs made regular monthly
payments.
Plaintiffs attempted to refinance their loan with Wells Fargo, who terminated the 2008 loan
on July 1, 2009. Wells Fargo also executed a Certificate of Satisfaction on July 3, 2009, which

provided that Plaintiffs’ mortgage had been released, and also sent a letter of congratulations to
Plaintiffs on July 6, 2009, informing them of the loan payoff.
On November 13, 2009, MERS executed a document entitled “Caveat as to the Existence
of a Mortgage Lien Due to Erroneous Release of Mortgage”(hereafter the “Caveat”). The Caveat
is signed by Lorna Slaughter, as Vice President of MERS and states that MERS, as nominee for
Lender and the Mortgagee, “does hereby certify and declare that [the October 9, 2008] Mortgage
was released in error by the instrument identified as ‘Certificate of Satisfaction,’ which was recorded
in the office of the Register of Deeds of Shawnee County, Kansas, . . . on July 15, 2009.”1 The
Caveat further states:
This Caveat of the existence of a valid mortgage lien is being recorded as the
reinstatement and reaffirmation of that valid first real estate mortgage by Grantors
to Grantee which was released in error; further, that the underlying debt obligation
owed by Grantors, evidenced by said Mortgage has not been fully paid, nor satisfied,
nor discharged, but, instead, continues to exist; and, further, that “Certificate of
Satisfaction,” which was made in error, should not be construed as any impairment
to the Mortgage.2
The Caveat was recorded in Shawnee County, Kansas, by the Register of Deeds on November 20,
2009.
Plaintiffs sued Defendants for slander and disparagement of title, conversion, negligence,
fraud and/or misrepresentation, and violation of the Kansas Consumer Protection Act in the District
Court of Shawnee County, Kansas. Defendants removed the case to this Court on November 16,
2010.
On April 15, 2011, Wells Fargo filed a motion to intervene in the case as a party defendant

1

Caveat, Ex. 3 to Def.’s Amendment to Mot. for Protective Order & Reply (ECF No. 90-2).

2

Id. (underlining in original).
2

and counterclaim plaintiff to protect its alleged lien interest in a promissory note issued to Plaintiffs.
The Court granted the motion on August 3, 2011, and Wells Fargo was permitted to intervene in the
case. On August 4, 2011, Wells Fargo filed its answer and counterclaim.
While the motion to intervene was pending, Plaintiffs issued a Notice of Rule 30(b)(6)
Deposition (ECF No. 56) to Defendant MERS, Duces Tecum, on July 1, 2011. This Notice set the
deposition on August 2, 2011, to be held at the offices of Plaintiffs’ counsel in Oskaloosa, Kansas.
The Notice also requested that MERS representative(s) be produced for deposition to testify as to
22 topics. The topics listed in the Notice can be grouped into five general categories: (1) History
and corporate structure of MERS; (2) April 13, 2011 consent order between MERS and the
government; (3) the policies and business practices of MERS; (4) Information regarding its members
and member services; and (5) Information specific to Plaintiffs’ mortgage.
II.

Timeliness of the Motion for Protective Order
Plaintiffs argue that Defendants’ Motion for Protective Order is made out of time. They

contend that D. Kan. Rule 26.2(b)(2) requires that a motion for protective order be filed within 14
days of service of the deposition notice. Defendant MERS maintains that it timely filed its motion
for protective order to stay the deposition on July 18, 2011. By its calculation, if the three days for
mailing provided by Fed. R. Civ. P. 6(d) are included, then its motion for protective order was filed
within the 14 days of the notice of the deposition, which was served on July 1, 2011.
Plaintiffs argue that the “local rules require the Defendant to both file an objection within
14 days of being served [with the deposition notice] and at least 48 hours prior to the noticed time
of the deposition” and cite to D. Kan. Rule 26.2(b)(2). These deadlines, however, are not deadlines
for the filing of a discovery motion directed toward a deposition, but rather are the deadlines for

3

when a properly-noticed deposition is automatically stayed. A close reading of D. Kan. Rule
26.2(b)(2) reveals that motions for protective order pursuant to Fed. R. Civ. P. 26(c) are not included
in the list of motions that require a copy of the motion be delivered within 14 days of service of the
deposition notice and at least 48 hours prior to the noticed time of the deposition to be automatically
stayed. Subsection (a) of D. Kan. Rule 26.2 provides that the filing of a motion for a protective
order pursuant to Fed. R. Civ. P. 26(c) stays the discovery at which the motion is directed pending
order of the court. Subsection (b) of that Rule provides that a properly-noticed deposition is
automatically stayed if:
(1) one of the following motions has been filed:
(A)
motion to quash or modify a deposition subpoena pursuant to Fed. R.
Civ. P. 45(c)(3)(A); or
(B)
motion to order appearance or production only upon special
conditions pursuant to Fed. R. Civ. P. 45(c)(3)(C); and
(2) the objecting party has filed and served the motion upon the attorneys or parties
(A)
by delivering a copy within 14 days after service of the deposition
notice; and
(B)
at least 48 hours prior to the noticed time of the deposition.3
Subsection (b) does not include motions for protective order pursuant to Fed. R. Civ. P. 26(c).4 The
Court therefore concludes that under a plain reading of D. Kan. Rule 26.2(b) the requirements that
a copy of the motion be delivered within 14 days of service of the deposition notice and at least 48

3

D. Kan. Rule 26.2(b).

4

The Court notes that D. Kan. Rule 26.2 was amended December 1, 2009, to change the 11day deadline to 14 days to be consistent with the 2009 changes to the Federal Rules of Civil
Procedure. The amendment made other changes to the local rule. Before the 2009 amendment, D.
Kan. Rule 26.2 did not expressly limit the 11-day and 48-hour requirements to the Rule 45(c)
motions. Rather it generally provided that: “No properly noticed deposition shall be automatically
stayed under this rule unless the motion directed at it shall have been filed and served upon counsel
or parties by delivering a copy within 11 days after service of the deposition notice, and at least 48
hours prior to the noticed time of the deposition.”
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hours prior to the noticed time of the deposition are limited to Rule 45(c) motions and do not apply
to a motion for entry of a protective order filed pursuant to Fed. R. Civ. P. 26(c). Instead, the motion
is governed by subsection (a) of D. Kan. Rule 26.2, which provides that the filing of a motion for
a protective order pursuant to Fed. R. Civ. P. 26(c) stays the discovery at which the motion is
directed pending order of the court. The Rule 30(b)(6) deposition of Defendant MERS is
appropriately stayed until the Court rules on Defendants’ motion for protective order.
III.

Relief Sought by Defendant MERS
In their original motion, Defendants sought a protective order that narrowed and/or

eliminated the topics in Plaintiffs’ Rule 30(b)(6) deposition notice that were overly broad, unduly
burdensome, and sought irrelevant information. Defendant MERS also requested that the Court
order the deposition(s) to be held at its principal place of business in Virginia rather than the Kansas
offices of Plaintiffs’ counsel. In its amendment to the motion and supplemental reply (ECF No. 90),
Defendant MERS now asks the Court to quash the Rule 30(b)(6) deposition notice in its entirety
now that Wells Fargo has been permitted to intervene in the case and because Plaintiffs failed
employ the administrative procedure required to obtain non-public information under the control of
the Office of the federal Comptroller of the Currency (“OCC”).
Plaintiffs argue that MERS fails to show good cause for a protective order or provide any
authority why it should not have to produce representatives for its deposition. They request that the
Court order MERS to designate their corporate representatives and order them to appear for
deposition to answer all 22 topics in the Rule 30(b)(6) deposition notice.
A.

Law Regarding Protective Orders and Rule 30(b)(6) Depositions

A party seeking to preclude a Rule 30(b)(6) deposition may apply to the court for a

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protective order under Federal Rule of Civil Procedure 26(c)(1). That Rule provides that “[t]he
court may, for good cause, issue an order to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense.” To establish good cause, a party must
make “a particular and specific demonstration of fact, as distinguished from stereotyped and
conclusory statements.”5
The court has broad discretion to decide when a protective order is appropriate and what
degree of protection is required.6 The Supreme Court has recognized that “[t]he trial court is in the
best position to weigh fairly the competing needs and interests of the parties affected by discovery.
The unique character of the discovery process requires that the trial court have substantial latitude
to fashion protective orders.”7 Furthermore, the court is required by Fed. R. Civ. P. 26(b)(2)(C)(I)
to limit the frequency or extent of discovery if it determines that “the discovery sought is
unreasonably cumulative or duplicative, or can be obtained from some other source that is more
convenient, less burdensome, or less expensive.” The court is also required to limit the extent of
discovery if the burden of the proposed discovery “outweighs its likely benefit, considering the
needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at
stake in the action, and the importance of the discovery in resolving the issues.”8
Where the corporation’s undue burden argument against a Rule 30(b)(6) deposition is based
on the relevance of the topics specified in the notice, the court must take its well-established liberal
5

Gulf Oil Co. v. Bernard, 452 U.S. 89, 102 n.16 (1981).

6

MGP Ingredients, Inc. v. Mars, Inc., 245 F.R.D. 497, 500 (D. Kan. 2007) (quoting Seattle
Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984)).
7

Seattle Times, 467 U.S. at 36.

8

Fed. R. Civ. P. 26(b)(2)(C)(iii).
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approach to discovery relevance. “The [United States Supreme] Court has more than once declared
that the deposition-discovery rules are to be accorded a broad and liberal treatment to effect their
purpose of adequately informing litigants in civil trials.”9 To accomplish that purpose, Rule 26(b)(1)
provides that “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to
any party’s claim or defense . . . . For good cause, the court may order discovery of any matter
relevant to the subject matter involved in the action.”
Federal Rule of Civil Procedure 30(b)(6) sets forth the procedure for deposing a party who
is a business organization such as MERS. The Rule provides as follows:
In [its deposition] notice . . . a party may name as the deponent a public or private
corporation . . . or other entity and must describe with reasonable particularity the
matters for examination. The named organization must then designate one or more
officers, directors, or managing agents, or designate other persons who consent to
testify on its behalf; and it may set out the matters on which each person designated
will testify . . . . The persons designated must testify about information known or
reasonably available to the organization.10
In order for Rule 30(b)(6) to function effectively, the party seeking the deposition “must take care
to designate, with painstaking specificity, the particular subject areas that are intended to be
questioned, and that are relevant to the issues in dispute.”11 “An overbroad Rule 30(b)(6) notice
subjects the noticed party to an impossible task.”12 When the notice is overbroad, the responding
party is unable to identify the outer limits of the areas of inquiry noticed, and designating a

9

Cotracom Commodity Trading Co. v. Seaboard Corp., No. 97-2391-GTV, 2000 WL 796142
at *2 (D. Kan. June 14, 2000) (quoting Herbert v. Lando, 441 U.S. 153, 176 (1979)).
10

Fed. R. Civ. P. 30(b)(6) (emphasis added).

11

Sprint Commc’ns Co., L.P. v. Theglobe.com, Inc., 236 F.R.D. 524, 528 (D. Kan. 2008)
(quoting Prokosch v. Catalina Lighting, Inc., 193 F.R.D. 633, 638 (D. Minn. 2000)).
12

Reed v. Bennett, 193 F.R.D. 689, 692 (D. Kan. 2000).
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representative in compliance with the deposition notice becomes impossible.13
B.

Request to Preclude Deposition in its Entirety
1.

Wells Fargo’s Intervention

MERS asks the Court to quash the deposition notice in its entirety because Wells Fargo has
been permitted to intervene in the action. It argues that Wells Fargo’s subsequent intervention as
a defendant and counterclaim plaintiff has fundamentally altered the discovery landscape in this case
and no longer can Plaintiffs argue they should look only to MERS for discovery because Wells
Fargo is not a party. Rather, because Wells Fargo is Plaintiffs’ lender, Wells Fargo is and always
has been the entity that knows of any facts or information that would be relevant to Plaintiffs’
claims. The only involvement of MERS with the loan is that it held a very limited role by serving
as the mortgagee of record, as the nominee for Wells Fargo, a role Plaintiffs acknowledged when
they executed their Mortgage in 2008. The instrument at issue here, which Plaintiffs describe as the
key piece of evidence in their case, was executed by Lorna Slaughter, as an officer of MERS at the
direction of Wells Fargo. Ms. Slaughter testified that she executed the document at the direction of
Wells Fargo, and because it was necessary to protect Wells Fargo’s interest in the promissory note
secured by Plaintiffs’ Mortgage. MERS itself had no involvement with Plaintiffs at any time;
Plaintiff Sheila Bowers testified at her deposition that she did not even know what MERS was and
only communicated with Wells Fargo, not MERS.
Plaintiffs argue that Wells Fargo’s intervention as a party does not relieve MERS of its
discovery obligations to produce a corporate representative to testify to a properly noticed Rule
30(b)(6) deposition notice. It points out that MERS is still a party to the action, and even non parties
13

Lipari v. U.S. Bancorp, N.A, No. 07-2146-CM-DJW, 2008 WL 4642618, at *5 (D. Kan.
Oct. 16, 2008).
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can be deposed.
Plaintiffs are correct that Wells Fargo’s intervention in the case does not relieve MERS of
its discovery obligations, including producing a corporate representative to testify to a properly
noticed deposition notice. The argument that MERS should not have to respond to Plaintiffs’
deposition notice because of its very limited involvement with Plaintiffs’ loan does not relieve it of
its discovery obligations as a party in the case. Plaintiffs have asserted claims for slander and
disparagement of title, conversion, negligence, fraud and/or misrepresentation, and violation of the
Kansas Consumer Protection Act against MERS. They are entitled to discovery to support those
claims by deposing MERS. Defendant MERS is not exempt from its discovery obligations merely
by virtue of Wells Fargo’s intervention in the case. Defendant MERS has not shown sufficient good
cause to preclude its Rule 30(b)(6) deposition in its entirety based upon Wells Fargo’s intervention
in the case.
2.

Non-Public OCC Information

MERS also asks the Court to quash the deposition notice in its entirety because Plaintiffs
have provided no notice that permission was sought and obtained for the OCC to gain access to nonpublic OCC information. It asserts that under 12 C.F.R. § 4.33(a)(1), “[a] person seeking non-public
OCC information must submit a request in writing to the OCC.” The requester must make certain
showings under § 4.33(a)(3)(iii)(A)-(E) for the request to be considered. MERS asserts that
Plaintiffs have not submitted any written request to the OCC under § 4.33, and thus have not sought
or obtained OCC approval to receive non-public OCC information. For these reasons, it is
appropriate for the Court to quash the deposition notice to MERS in its entirety.
Plaintiffs argue that this is the first time MERS has raised the issue that Plaintiffs are

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required to seek information from it, a party to a lawsuit, by administrative avenues rather than by
the scheduling order or the Federal Rules of Civil Procedure. As MERS did not raise this in their
original motion, Plaintiffs claim that the Court should not consider it. Plaintiffs further argue that
the regulation cited by MERS, 12 C.F.R. § 4.33, refers to seeking OCC information, not MERS
information. MERS also fails to address or identify that any document or subject that Plaintiffs seek
that would not be available under 12 C.F.R. § 4.12.
Although MERS asserts this argument as a reason to preclude its deposition in its entirely,
the Court views this argument to relate only to Topic Nos. 3-6 asking for information on the 2011
consent order. In any event, MERS has not provided any authority for its position that Plaintiffs
must obtain OCC approval before they can depose MERS about the consent order. Furthermore,
the Court agrees with Plaintiffs that regulation cited by MERS, 12 C.F.R. § 4.33, refers to seeking
information from OCC, and does not apply to information sought from MERS.
C.

Objections to Deposition Notice Topics

Even though MERS is not exempt from being deposed in this case, either by Wells Fargo’s
intervention in the case or because Plaintiffs never requested OCC approval to receive non-public
OCC information, it may nevertheless still be entitled a protective order. MERS asserts several
objections to the 22 topics, some with multiple subparts. It argues that the topics are overly broad,
unduly burdensome, cumulative, harassing, and seek discovery not relevant to the claims asserted
by Plaintiffs in this case.
The Court has reviewed the 22 disputed deposition topics contained in the deposition notice.
Based upon that review, the Court finds that the wide-ranging and broad nature of the deposition
topics subjects MERS to an undue burden. First, several of the noticed deposition topics are not

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described with the requisite reasonable particularity required under Rule 30(b)(6). Plaintiffs, as the
party seeking the 30(b)(6) deposition, “must take care to designate, with painstaking specificity, the
particular subject areas that are intended to be questioned, and that are relevant to the issues in
dispute.”14 Specifically, the Court finds that Plaintiffs’ Deposition Topic Nos. 1, 7, 16, and 19 are
not described with reasonable particularity. Topic No. 1 requests that Defendant MERS produce
a representative who can testify knowledgeably about “Authority.” The Topic further attempts to
narrow this to:
Able to explain how authority is derived and the history of MERS (MERS I &
MERS II) with details of dissolution of the entities and creation of the next MERS
as well as the current MERS. (All variations- evolution of MERS including the
Articles and Bylaws of each entity).
The Court finds that Topic No. 1 is not described with the reasonable particularity required by Rule
30(b)(6). The topic’s general and vague reference to “authority” is not sufficient to identify the type
or nature of “authority” that MERS should produce a representative to testify knowledgeably about.
The Court speculates that Plaintiffs may be referring to the authority for Ms. Slaughter to execute
the Caveat, but the Topic does not state that. Furthermore, with regard to the Topic’s request for
the history of MERS and MERS II, dissolution of the entities and creation of the next MERS, as
well as the current MERS, the Court fails to see the relevance of this information to any of the
claims and defenses in this case. As Defendant MERS points out, the claims asserted in this case
are fairly narrow and are not as broad as Plaintiffs seem to believe. Plaintiffs have failed to convince
the Court of the relevance of information on the history of MERS and MERS II, or dissolution of
the entities and creation of the next MERS, as well as the current MERS, all as sought by Topic No.
1.
14

Sprint, 236 F.R.D. at 528 (quoting Prokosch, 193 F.R.D. at 638).
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The Court further finds that Topic No. 7 is not stated with reasonably particularity. Topic
No. 7 seeks a MERS representative who can testify about “Quality Assurance and Data Integrity
including the reporting systems including reconciliation between members.” The Topic fails to
identify or define what Plaintiffs are referring to as “Quality Assurance and Data Integrity.”
Topic No. 16 also fails to describe the matters for examination with reasonable particularity.
It seeks testimony about “Transaction Authorized by Member Certificate including the description
of the “transactions” with both charges with details of the “certificate.” The Topic fails to identify
what Plaintiffs are referring to as the “Transaction Authorized by Member Certificate.” It further
fails to identify the “transactions” MERS is supposed to describe.
Finally, the Court finds that Plaintiffs have not described Topic No. 19 with reasonable
particularity. The general and vague reference to “Terms and Conditions” without any reference
to an underlying document is not described with the reasonable particularity required by Rule
30(b)(6).
The Court finds the remaining topics, while sufficiently reasonably particular, are otherwise
so overly broad that they subject MERS to an undue burden in attempting to respond to the
deposition notice. Many of the topics have no application to the claims asserted in this case, but
rather to the claims in other litigation, some theoretical problem with MERS or the industry in which
it operates. Considering the needs of this case, the importance of the issues at stake in the action,
and the importance of the discovery sought in resolving the issues in this case, the Court finds that
the burden on MERS of producing a representative to testify to the far-reaching 22 topics contained
its Rule 30(b)(6) deposition notice outweighs the likely benefit of the discovery sought.
Accordingly, under Fed R. Civ. P. 26(b)(2)(C)(iii), the Court must limit the discovery. The Court

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will therefore grant Defendants’ motion for a protective order from Plaintiffs’ Notice of Rule
30(b)(6) Deposition, served on July 1, 2011. The Court, however, is not entering a protective order
that Plaintiffs can never depose MERS, only that this particular deposition notice subjects MERS
to an undue burden. Any future 30(b)(6) deposition notice that Plaintiffs may serve upon MERS
should describe the matters for examination with the reasonable particularity required by Rule
30(b)(6) and should limit the topics to matters that are not unreasonably cumulative or duplicative
of other discovery.15 Finally, Plaintiffs should keep in mind that the deposition topics should be
limited to discovering information relevant to their claims actually asserted in this case.
IV.

Location of the Rule 30(b)(6) Deposition
Plaintiffs designated the Oskaloosa, Kansas offices of Plaintiffs’ counsel as the site for the

Rule 30(b)(6) deposition. Defendants argue in their motion that the Rule 30(b)(6) deposition should
take place at the corporation’s principal place of business in Virginia. The Court agrees. It is wellsettled that there is an initial presumption that “a defendant should be examined at his residence or
the principal place of business.”16 To relocate a Rule 30(b)(6) deposition from its designated site,
“the party seeking protection should demonstrate its principal place of business to be different from
the location designated by the notice.”17 The Court finds that Defendant MERS has demonstrated
its principal place of business to be in Virginia. Unless the parties agree otherwise, Virginia is the
proper location for the Rule 30(b)(6) deposition of MERS.

15

See Fed. R. Civ. P. 26(b)(2)(C)(i) (requiring the court to limit the extent of discovery if it
is “unreasonably cumulative or duplicative, or can be obtained from some other source that is more
convenient, less burdensome, or less expensive”).
16

Starlight Int’l Inc. v. Herlihy, 186 F.R.D. 626, 644 (D. Kan. 1999).

17

Id.
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IT IS THEREFORE ORDERED THAT Defendants’ Motion for Entry of Protective Order
from Corporate Representative Deposition Notice (ECF No. 62) is granted. MERS is granted a
protective order from producing any representatives to testify to Plaintiffs’ Notice of Rule 30(b)(6)
Deposition of MERS, Duces Tecum, dated July 1, 2011. Plaintiffs may, however, serve MERS with
another notice of deposition pursuant to Fed. R. Civ. P. 30(b)(6) in accordance with the rulings in
this Memorandum and Order.
IT IS FURTHER ORDERED THAT any future Rule 30(b)(6) deposition of Defendant
MERS shall be held at its principal place of business in Virginia, unless the parties otherwise agree
to another location.
IT IS SO ORDERED.
Dated in Kansas City, Kansas on this 2nd day of December, 2011.

s/ David J. Waxse
David J. Waxse
United States Magistrate Judge

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