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

Filing 119

MEMORANDUM AND ORDER denying 82 Defendants' Motion for Order of Contempt of Court or to Show Cause Why Non-Party Home Quest Mortgage, LLC Should Not Be Held in Contempt. It is further ordered that the subpoena duces tecum commanding Home Quest to produce documents dated August 5, 2011 is quashed for lack of proper service. Each party should bear its own costs associated with the motion. Signed by Magistrate Judge David J. Waxse on 12/22/2011. (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 Order of Contempt of Court or
to Show Cause Why Non-Party Home Quest Mortgage, LLC Should Not Be Held in Contempt
(ECF No. 82) (“Motion for Contempt”). Defendants request, pursuant to Fed. R. Civ. P. 45(e),
that the Court enter an order finding non-party Home Quest Mortgage, LLC (“Home Quest”) in
contempt of Court for failing to respond to a document subpoena issued on August 5, 2011.
Defendants alternatively request that the Court order Home Quest to appear and show cause why
it should not be held in contempt for its failure to respond to the subpoena. In either case,
Defendants request that the Court order Home Quest to comply with the subpoena and produce
the documents requested therein. As explained below, the motion is denied.
I.

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

2008, in order to secure payment 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 Plaintiffs made regular
monthly payments.
Plaintiffs attempted to refinance their loan with Wells Fargo, which 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, Defendant Mortgage Electronic Registration Systems, Inc.
(“MERS”) executed a document entitled “Caveat as to the Existence of a Mortgage Lien Due to
Erroneous Release of Mortgage” (“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.
1

Caveat, Ex. 3 to Defs.’ Amendment to Mot. for Protective Order & Reply (ECF No. 90-

2

Id.

2).

2

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 August 5, 2011, Defendants prepared a subpoena duces tecum commanding non-party
Home Quest to produce “[a]ll records, notes, letters, file references, or similar documentation
reflecting, referring or relating to all communications between Roy Bowers and/or Sheila
Bowers and Home Quest Mortgage, LLC . . . concerning Roy Bowers’ mortgage loan(s) serviced
by Wells Fargo Home Mortgage.”3 It commanded Home Quest to produce the documents on
August 26, 2011, at Home Quest’s office located at 301 Jefferson, Oskaloosa, Kansas.4 In
accordance with Fed. R. Civ. P. 45(b)(1), Defendants filed a Notice of Intent to Serve Subpoena
Duces Tecum (“Notice”), with a copy of the subpoena. Because the Notice was filed through the
Court’s electronic filing system, all parties, including Plaintiffs’ counsel Donna Huffman,
received a copy of the Notice when it was filed. Following the filing of the Notice, Defendants
sought to serve Home Quest with the subpoena in accordance with Fed. R. Civ. P. 45(b)(1).
Home Quest is a limited liability company registered to do business in the state of Kansas. As a
limited liability company, service of process for Home Quest must be made on its registered
agent, who happens to be Donna Huffman. A process server went to Home Quest’s office at 301
Jefferson, Oskaloosa, Kansas, on August 8, 2011, and August 10, 2011.5 On both occasions, the
process server was unable to serve Ms. Huffman. The Return of Non-Service dated August 24,
3

Subpoena to Produce Documents, Ex. 1 to Defs.’ Mot. for Contempt (ECF No. 82-1).

4

See Notice of Intent to Serve Subpoena Duces Tecum (ECF No. 76).

5

See Return of Non-Service (ECF No. 82-3).
3

2011, and filed on August 30, 2011, states that service was discontinued or cancelled due to the
process server’s inability to make contact with Ms. Huffman. Home Quest never responded to
the Notice filed on August 5, 2011, and did not object to the Notice or its contents.
II.

Defendants’ Motion for Contempt
Defendants request that non-party Home Quest be held in contempt for its failure to

respond to the subpoena, or alternatively be commanded to appear and show cause why it should
not be held in contempt for its failure to respond. Defendants argue that the filing of the Notice
with the Court’s electronic filing system either constitutes proper service of the subpoena on
Home Quest’s registered agent or is an adequate substitute for service.
Defendants support this argument by relying on Ms. Huffman’s unique position as both
counsel of record for the Plaintiffs and the registered agent of Home Quest. Defendants correctly
note that Ms. Huffman, in her role as counsel of record for Plaintiffs, the received electronic
notification of the Notice filed on August 5, 2011. Defendants contend that this electronic
notification of the Notice constituted service of the subpoena upon Home Quest’s registered
agent, Ms. Huffman. Additionally, Defendants imply that service on Ms. Huffman by more
traditional means was difficult or impossible. Defendants describe the multiple unsuccessful
attempts by the process server to contact Ms. Huffman via cell phone. The process server also
attempted to serve Ms. Huffman at her personal residence, and she indicated that vehicles were
present at the residence when these unsuccessful attempts to serve the subpoena were made.
Although the subpoena at issue was never served on Ms. Huffman, Defendants assert that Home
Quest’s failure to produce the documents requested in the subpoena constitutes contempt of court
because Ms. Huffman was aware of the subpoena via her receiving electronic notification of the
Notice in her role as Plaintiffs’ counsel.

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The Court rejects Defendants’ position that Ms. Huffman’s knowledge of the Notice is
proper service of the subpoena or an adequate substitute for service. The Notice filed on August
5, 2011, does not constitute proper service of the subpoena. Under Fed. R. Civ. P. 45(b)(1),
service of a subpoena “requires delivering a copy to the named person.”6

The advisory

committee’s note to Fed. R. Civ. P. 5(b) makes clear that service under Rule 45 is only satisfied
if it complies with the specific requirements of that rule.7 Moreover, this Court has recognized
that the notice requirement for document production subpoenas and the actual service of the
subpoena are exclusive acts.8 Therefore, the Notice filed through the Court’s electronic filing
system alone is not an equivalent or substitute for the service of process mandated by Rule 45(b).
Additionally, Rule 45(b)(1) requires that delivery for the purpose of service must be
made to the person named in the subpoena.9 Because Home Quest is a limited liability company,
personal delivery must be made on the individual who is its registered agent for the service of
process.10 Although Ms. Huffman received a copy of the Notice through the Court’s electronic
filing system in her role as attorney for Plaintiffs, this does not satisfy the requirement of Rule
45(b) that delivery must be made on her as registered agent for Home Quest.
6

Although

Fed. R. Civ. P. 45(b)(1).

7

See Fed. R. Civ. P. 5(b)(1) advisory committee’s note (2001 Am.) (“Service under
Rule[] . . . 45(b) . . . must be made as provided in [that] rule[].”).
8

See Walker v. Bd. of Cnty. Comm’rs of Sedgwick Cnty., No. 09-1316-MLB, 2011 WL
2118636, at *5–6 (D. Kan. May 27, 2011) (discussing the notice and service requirements under
Rule 45(b) as separate requirements that occur at different times).
9

See Fed. R. Civ. P. 45(b)(1) (“Serving a subpoena requires delivering a copy to the
named person . . . .”).
10

See Fed. R. Civ. P. 4(h)(1) (stating that an LLC must be served “(A) in the manner
prescribed . . . for serving an individual; or (B) by delivering a copy of the [subpoena] to . . . any
other agent authorized by appointment or by law to receive service of process”).
5

mischaracterized by Defendants as “a courtesy,” the repeated attempts to serve the subpoena on
Ms. Huffman as registered agent for Home Quest suggest their awareness that the service
requirement of Rule 45 was not satisfied by the Notice alone. The process server attempted to
serve Ms. Huffman in accordance with the requirements of Rule 45, but she was unable to do so.
Accordingly, the process server filed the Return of Non-Service, indicating that the subpoena
was not served.11
Despite the likelihood that Ms. Huffman was aware of the Notice in her capacity as
Plaintiffs’ attorney, the subpoena was never delivered to her as required for service under Rule
45. Service of the subpoena was therefore never successfully made. Accordingly, the Court
denies Defendant’s Motion for Contempt for Home Quest’s alleged failure to comply with the
subpoena issued on August 5, 2011. As it was not properly served with the subpoena, Home
Quest had no obligation to respond, object, or comply with the subpoena. Because the subpoena
has been outstanding for several months without any additional attempts to properly serve Home
Quest, the Court quashes the subpoena for failure to properly serve it.
III.

Home Quest’s Request for Expenses and Fees
In its Response, Home Quest requests that the Court order Defendants to pay its expenses

and attorneys’ fees incurred by responding to the Motion for Contempt. Home Quest cites to the
requirement under Fed. R. Civ. P. 45(c)(1) that the court enforce the duty incumbent upon any
party serving a subpoena to “avoid imposing undue burden or expense on a person subject to the
subpoena.”12 Rule 45(c)(1) requires the Court to enforce this duty by “impos[ing] an appropriate
sanction—which may include lost earnings and reasonable attorney’s fees—on a party or
11

See Return of Non-Service (ECF No. 82-3).

12

Fed. R. Civ. P. 45(c)(1).
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attorney who fails to comply.”13 “Once the Court has determined that an attorney has violated
Rule 45(c)(1), the imposition of sanctions is mandatory.”14 In Heartland, the court concluded
that the party serving the subpoenas had not violated its duty under Rule 45(c)(1) largely because
of their legitimate concerns that the discovery period would end and foreclose their opportunity
to obtain the requested documents.15
Home Quest emphasizes the disparity in pecuniary resources between Defendants and it,
and the relative capacities of counsel for each party to prosecute discovery disputes. Although
the Court is denying Defendants’ Motion for Contempt, there has been no showing that
Defendants breached their duty to avoid imposing an undue burden or expense by filing the
Motion for Contempt. Defendants made repeated attempts to serve Home Quest’s registered
agent with the subpoena. They also had a reasonable, although erroneous, basis for asserting that
service had been properly made on Ms. Huffman as Home Quest’s registered agent via the filing
of the Notice with the Court’s electronic filing system. Much like Heartland, moreover,
Defendants here were concerned that they would be unable to obtain the records sought from
Home Quest if discovery closed. Under the original Scheduling Order (ECF No. 24), discovery
was scheduled to close on August 30, 2011, which was the same day Defendants filed their
Motion for Contempt.

The Court concludes that Defendants did not breach their duty under

Rule 45(c)(1), but instead were attempting to ensure the requests in their subpoena did not fall
outside of the discovery period. The Court therefore concludes that Defendants should not be
ordered to pay Home Quest’s costs and attorney’s fees incurred in responding to this motion.
13

Id.

14

Heartland Surgical Specialty Hosp., LLC v. Midwest Div., Inc., 05-2164-MLB, 2007
WL 2122436, at *7 (D. Kan. July 20, 2007).
15

Id.
7

Accordingly, each side must bear their own fees and costs associated with Defendants’ Motion
for Contempt.
IT IS THEREFORE ORDERED that Defendants’ Motion for Order of Contempt of
Court or to Show Cause Why Non-Party Home Quest Mortgage, LLC Should Not Be Held in
Contempt (ECF No. 82) is denied.
IT IS FURTHER ORDERED that the subpoena duces tecum commanding Home Quest
to produce documents dated August 5, 2011 is quashed for lack of proper service.
IT IS FURTHER ORDERED that each party should bear its own costs associated with
this motion.
IT IS SO ORDERED.
Dated in Kansas City, Kansas, on this 22nd day of December 2011.

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

cc:

All counsel and pro se parties

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