Guaranteed Home Mortgage Company, Inc. v. Gissell

Filing 49

ORDER denying 35 Motion to Compel; denying 35 Motion for Sanctions; denying 35 Motion for Attorney Fees. Gissell response to GHMC requests for fees and costs is due by 10/30/2013. Signed by Magistrate Carolyn S Ostby on 10/18/2013. (Hard copy mailed to M. Gissell.) (JDH, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
GUARANTEED HOME
MORTGAGE COMPANY, INC.,

CV 13-44-BLG-CSO

ORDER ADDRESSING
MOTION TO COMPEL

Petitioner,
vs.
MIKI GISSELL,
Respondent.

This case arises from employment-related disputes between
Petitioner Guaranteed Home Mortgage Company, Inc. (“GHMC”) and
pro se Respondent Miki Gissell (“Gissell”). GHMC generally claims
that its employment agreement with Gissell requires that their
disputes be arbitrated. First Am. Pet. for Order Compelling Arbitration
(ECF 21). Gissell disagrees that there is any agreement between them
requiring arbitration. Respondent[’s] Second Am. Answer (ECF 27) at
3. She also asserts various counterclaims against GHMC. Id. at 23-31.

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On August 26, 2013, Gissell filed a motion for an order compelling
GHMC to answer her Requests for Admission (“RFA”) numbered 1-5, 8,
14, and 28-40.1 Mtn. to Compel (ECF 35). Gissell also requests
sanctions and costs, and “an Order striking the verification of the
Responses by [GHMC].” Id. On September 9, 2013, GHMC filed its
response to Gissell’s motion. ECF 38. On September 26, 2013, Gissell
filed her reply brief. ECF 39. Having considered the parties’
arguments, the Court rules as discussed below.
I.

Summary of Parties’ Arguments
Gissell argues generally that GHMC “refuses to let [her] conduct

discovery on her theories of the case or to even allow for the possibility
that her discovery requests could lead to the discovery of additional
helpful information.” Gissell’s Decl. in Support of Mtn. (ECF 36) at 2.
Gissell argues that she “should be able to conduct discovery ... so as to
prepare a defense that [the] conduct of both parties was at variance to
1

In her motion, Gissell included RFA 27 as an RFA for which she
seeks a response. ECF 35 at 1. She did not, however, include either
the text of and response to RFA 27 or any argument about it in her
supporting declaration. ECF 36 at 13-19. Thus, the Court is unable to
address RFA 27 and denies Gissell’s motion to the extent it seeks an
order compelling an answer to RFA 27.
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any agreement to arbitrate” and that “mistake [respecting her
signature on the Employment Agreement with GHMC] entitles her to
discovery that is broader than that that occurred at a moment in time.”
Id. at 3.
GHMC argues that the parties, after participating in a joint
discovery conference on May 14, 2013, filed the Joint Discovery Plan
upon which they agreed. ECF 38 at 2 (referring to Joint Discovery Plan
(ECF 13)). GHMC argues that “[t]he parties agreed that this Discovery
Plan related only to the issue of whether [Gissell] should be required to
arbitrate her claims against GHMC.” Id. at 3. GHMC argues that, at
the parties’ preliminary pretrial conference with the Court, “the parties
agreed with the Court that the issues in this case should be bifurcated
between the initial issue of arbitration and, depending upon the
outcome of that issue, the underlying employment dispute.” Id. GHMC
notes that, despite the parties’ agreement, Gissell sent it 42 RFAs and
other discovery. While it answered some of this discovery, GHMC
argues, “it has objected to those [discovery requests] that are purely
related to the underlying employment dispute or those that are

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irrelevant to all issues in the case and not reasonably calculated to lead
to the discovery of admissible evidence.” Id.
In reply, Gissell essentially argues that the scope of discovery at
this juncture is broader than asserted by GHMC. Gissell’s Reply Br.
(ECF 39). She argues that, to support her theory of the case – that is,
that no contract for arbitration was ever formed – she is entitled to
propound discovery that sheds light on GHMC’s “sloppy” business
practices. Id. at 2-4.
II.

Legal Standards
Rule 36(a)(1)2 provides for requests for admission as follows:
A party may serve on any other party a written
request to admit, for purposes of the pending action
only, the truth of any matters within the scope of Rule
26(b)(1) relating to:
(A)

facts, the application of law to fact, or opinions
about either; and

(B)

the genuineness of any described documents.

Rule 26(b)(1), in turn, provides in part:
Unless otherwise limited by court order, the scope of
2

References to rules are to the Federal Rules of Civil Procedure
unless otherwise indicated.
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discovery is as follows: Parties 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. Relevant
information need not be admissible at the trial if the
discovery appears reasonably calculated to lead to the
discovery of admissible evidence.
“Relevant information for purposes of discovery is information
‘reasonably calculated to lead to the discovery of admissible evidence.’”
Surfvivor Media, Inc. v. Survivor Productions, 406 F.3d 625, 635 (9th
Cir. 2005) (quoting Brown Bag Software v. Symantec Corp., 960 F.2d
1465, 1470 (9th Cir. 1992)). Courts have broad discretion in
determining relevancy for discovery purposes. Id. (citing Hallett v.
Morgan, 296 F.3d 732, 751 (9th Cir. 2002)).
Respecting requests for admission, Rule 36(a) generally requires
one of four responses: (1) an admission; (2) a denial; (3) a statement
detailing why the answering party is unable to admit or deny the
matter; or (4) an objection. Rule 36(a)(4) and (5). If a party objects, as
GHMC did here, “[t]he grounds for objecting to a request must be
stated.” Rule 36(a)(5). “The requesting party may move to determine
the sufficiency of an answer or objection. Unless the court finds an
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objection justified, it must order that an answer be served.” Rule
36(a)(6).
The Federal Arbitration Act (“FAA”), which governs contracts
that involve interstate commerce, declares a national policy favoring
arbitration. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440,
445 (2006); Southland Corp. v. Keating, 465 U.S. 1, 2 (1984). The
United States Supreme Court has very clearly interpreted
the FFA as circumscribing the role of courts in considering challenges
to arbitration clauses. See AT&T Mobility LLC v. Concepcion, 131
S.Ct. 1740, 1748-49 (2011); Rent-A-Center, West, Inc. v. Jackson, 130
S.Ct. 2772, 2778 (2010); Volt Information Sciences, Inc. v. Board of
Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989).
The Supreme Court finds that a court is limited to determining: (1)
whether a valid agreement to arbitrate exists and, if it does, (2)
whether the agreement encompasses the dispute at issue. Cox v. Ocean
View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008). For this
purpose, “an arbitration provision is severable from the remainder of
the contract.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440,

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445 (2006). If the arbitration provision is valid, the validity of the
remainder of the contract is for the arbitrator to decide. Nitro-Lift
Technologies, L.L.C. v. Howard, 133 S.Ct. 500, 503 (2012).
Thus, at this stage of the proceedings, discovery may be had
pursuant to Fed.R.Civ.P. 26 and 36, provided it is pertinent to the
narrow questions of whether there is a valid arbitration provision and
whether that provision, if valid, encompasses the disputes at issue.
III. Discussion
Applying the above standards, the Court’s task is to decide
whether GHMC’s objections to Gissell’s RFAs are justified.
A.

RFAs 1-5

Gissell propounded RFAs 1-53 asking GHMC to admit that: (1) “in
2012 GHMC withheld no income from Gissell’s earnings for deposit on
her behalf with the New York State Department of Taxation and
Finance as New York State income tax withholding[,]” (RFA 1); (2) “in
2012 GHMC paid no unemployment insurance assessments occasioned
3

Gissell sometimes refers to her discovery requests as “Request[s]
to Admit.” ECF 36 at 3, 4, 6, 8, 10, and 12. For clarity, the Court
refers to such requests as Requests for Admission consistent with Rule
36.
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by Ms. Gissell’s employment with GHMC to the New York State
Department of Labor, Unemployment Insurance Division[,]” (RFA 2);
(3) “in 2012 GHMC withheld $2,195.00 in income from Gissell’s
earnings for deposit on her behalf with the Montana Department of
Revenue as Montana State income tax withholding[,]” (RFA 3); (4) “in
2012 GHMC paid unemployment insurance assessments occasioned by
Ms. Gissell’s employment with GHMC to the Montana Department of
Labor, Unemployment Insurance Division[,]” (RFA 4); and (5) “GHMC
did not in 2012 advise orally or in writing Ms. Gissell that it intended
to file a 2012 W-2 with the State of New York[,]” (RFA 5). ECF 36 at 310.
GHMC responded to each RFA as follows:
Objection; not relevant or reasonably calculated to lead to
the discovery of admissible evidence on the issue of whether
this matter should be arbitrated. As set forth in the Joint
Discovery Plan of the parties (Doc. #13), the initial discovery
is limited to the issue of arbitration. Gissell’s Request for
Admission goes beyond the scope of the arbitration issue and
is not discoverable at this time. If the Court determines
that arbitration is not the appropriate forum for this matter,
GHMC will supplement its response.
Id.

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Gissell argues that the admissions she seeks in RFAs 1-5 are
relevant. She argues that the admissions sought pertain to GHMC’s
employee “on-boarding” and human resources processes that she went
through when employed by GHMC. She maintains that the admissions
sought illustrate that these processes were “seriously flawed” and
“generally ... rife with mistakes” which she believes is probative of her
affirmative defense that mistake voids the arbitration contract. Id.
Some of the requests, she argues, go “to error in setting up Gissell for
employment, which GHMC, in effect, admits when it concedes that it
sent two W-2s to Gissell at different times.” Id. Gissell also argues
that some of the admissions sought are relevant respecting “course of
conduct” and to GHMC’s credibility and to her own credibility
respecting her mistake affirmative defense. Id. at 7 and 9-11.
The Court is not persuaded. Proceedings in this matter thus far
have been directed at resolving in the first instance the issue of
whether Gissell must arbitrate her claims against GHMC. In the
parties’ Joint Discovery Plan, they represent that they “agree that this
Discovery Plan relates only to the issue of whether [Gissell] should be

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required to arbitrate her claims against GHMC.” ECF 13 at 2. And
also reflecting the parties’ intention of having that issued decided first,
in the Scheduling Order issued on June 12, 2013, the Court imposed a
September 30, 2013 deadline for the parties to file cross motions for
summary judgment, adding a provision for holding another scheduling
conference, if necessary, after decisions are made on all motions filed by
that deadline. ECF 24 at 2.
RFAs 1-5 do not seek admissions pertaining to the arbitration
provision in the contract at issue. Gissell implicitly acknowledges that
she signed the contract at issue (ECF 36 at 5 (arguing that “her
signature a single time on one document is not probative”)), but she
challenges the validity of the contract as a whole. If there is a valid
arbitration provision, however, the validity of the remainder of the
contract is, as set forth above, a matter the arbitrator must decide.
Whether admitted or denied by GHMC, answers to the questions posed
in Gissell’s RFAs 1-5 support neither the existence nor absence of a
valid arbitration provision or of an agreement to arbitrate a dispute.
Gissell argues that the requests are directed toward her

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affirmative defense of “mistake” and to showing that GHMC’s “onboarding process and the human resources process generally is rife
with mistakes that goes (sic) to Gissell’s affirmative defense.” ECF 36
at 6. But to be discoverable at this stage of the proceedings, the
requests would need to be directed to any mistakes regarding the
arbitration provision. Also, to understand the law of mistake, “ one
must appreciate the phrases of art that are applied.” 27 Williston on
Contracts § 70:1 (4th ed.). A mistake made by a GHMC employee
regarding state law on taxation, for example, is not relevant to the
issue of whether the contract requires arbitration. The “Williston on
Contracts” treatise further explains:
The word mistake refers to an erroneous belief as to operative
facts. A party's erroneous belief is said to be a mistake of that
party. The belief need not be an articulated one, and a party may
have a belief as to a fact when merely making an assumption with
respect to it, without being aware of alternatives. This term is not
used here, as it is sometimes used in common speech, to refer to
an improvident act, including the making of a contract, that is the
result of such an erroneous belief. This usage is avoided here for
the sake of clarity and consistency. Furthermore, the erroneous
belief must relate to the facts as they exist at the time of the
making of the contract. A party's prediction or judgment as to
events to occur in the future, even if erroneous, is not a mistake
as that word is defined here. An erroneous belief as to the
contents or effect of a writing that expresses the agreement is,
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however, a mistake.
Id.
The Court, therefore, concludes that GHMC’s objection is
justified. Gissell’s motion to compel, to the extent it relates to RFAs 15, is denied.
B.

RFA 8

Gissell propounded RFA 8 asking GHMC to admit that “upon
hiring employees resident in the State of Montana in 2012 [GHMC] did
not investigate the requirements of Montana Code Annotated 39-2-901
et seq.” ECF 36 at 12.
GHMC responded to RFA 8 with the same relevance objection
stated above in response to RFAs 1-5. Id.
Gissell argues that the admission she seeks with RFA 8 is
relevant. She argues that “GHMC boasted of having 250 employees
working in more than 20 states” and reasons that “[i]f their human
resources process was so unsophisticated that it would hire employees
in various states without regard to that state’s labor law, then it is
comprehensible that GHMC made mistakes affecting the existence of a

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contract for arbitration with Gissell.” Id.
Gissell’s argument is unpersuasive. First, whether GHMC
investigated MCA §§ 39-2-901, et seq., which sections comprise
Montana’s Wrongful Discharge from Employment Act, is not related to
whether there exists a valid arbitration provision or an agreement to
arbitrate Gissell’s claims against GHMC. The Court is unable to
discern a connection as Gissell suggests.
For these reasons, and for those reasons stated above respecting
the Court’s rejection of Gissell’s arguments concerning RFAs 1-5, the
Court will deny Gissell’s motion to compel to the extent it relates to
RFA 8.
C.

RFA 14

Gissell propounded RFA 14 asking GHMC to admit that “Kelley
Berkheiser, an employee of GHMC, as of June 20, 2012, had had no
formal human resource training.” ECF 36 at 12-13.
GHMC responded to RFA 14 with the same relevance objection
stated above. Id. at 13.
Gissell argues that the admission she seeks is relevant because,

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“[o]bviously, if Ms. Berkheiser, who was in charge of all on-boarding of
new employees and who reported directly to Mr. Wind, had no training
in human resources, the chances that she might err, unintentionally
even, is high.” Id.
The Court rejects Gissell’s argument. Whether there was a lack
of human resources training at GHMC employee is not relevant to the
narrow issue of whether there is a valid, applicable arbitration
provision, nor is it likely to lead to the discovery of admissible evidence.
For this reason, and for the same reasons previously stated concerning
RFA 8, the Court will deny Gissell’s motion to compel to the extent it
relates to RFA 14.
D.

RFAs 28-40

Gissell propounded RFAs 28-40 asking GHMC to admit that: (1)
“David Wind knew that GHMC was employing an immigrant who could
not legally work in the United States during 2012[,]” (RFA 28); (2)
“Marie Gannon and Amanda Granados knew that GHMC was
employing an immigrant who could not legally work in the United
States during 2012[,]” (RFA 29); (3) “David Wind knew that GHMC was

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not paying that immigrant so as to hide her employment from the
relevant government agencies[,]” (RFA 30); (4) “Marie Gannon and
Amanda Granados knew that GHMC was not paying that immigrant so
as to hide her employment from the relevant government agencies[,]”
(RFA 31); (5) “in 2012 David Wind hired a young woman to work as an
executive assistant for Marc Schwaber[,]” (RFA 32); (6) “in 2012 shortly
after hiring her, David Wind started seeking bets from senior male
officers about how long it would [be] before Marc Schwaber sexually
harassed her[,]” (RFA 33); (7) “Marc Schwaber did sexually harass this
employee[,]” (RFA 34); (8) “in 2012 David Wind dispensed prescription
drugs to Marc Schwaber[,]” (RFA 35); (9) “in 2012 Marc Schwaber
dispensed prescription drugs to David Wind[,]” (RFA 36); (10) “in 2012
David Wind personally borrowed better than $3 million that he then
infused into GHMC[,]” (RFA 37); (11) “in 2012 David Wind
misrepresented the source of these funds to a [sic] potential warehouse
lenders[,]” (RFA 38); (12) “David Basaleli and Gerald Infantino and
Amanda Granados and Marie Gannon were all aware that Mr. Wind
was not being honest with a third party about the source of these

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funds[,]” (RFA 39); and (13) “GHMC is aware that money was paid in
2012 to at least one third party to make at least one mortgage payment
on behalf of at least one delinquent FHA borrower to cause their loan,
originated by GHMC, to appear current or less delinquent[,]” (RFA 40).
ECF 36 at 13-15.
For each RFA, GHMC responded as follows: “Objection; irrelevant
and not reasonably calculated to lead to the discovery of admissible
evidence.” Id. at 15.
Gissell first argues that each of these RFAs is related to her
mistake affirmative defense, including “the circumstances surrounding
the mistaken signature by Gissell, and to specific instances of conduct
that are admissible on cross-examination of a witness under Federal
Rule of Evidence 608.” Id. She notes that “[a]ll of the conduct about
which these Requests inquire reveal a deeply flawed human resources
process and environment, indeed one that is in some instances simply
corrupt. ... [E]vidence of the mistake-prone, slovenly human resources
process is probative of the likelihood of there being no contract for
arbitration.” Id. at 15-16. Gissell also argues that “the human

16

resources sophistication of the party claiming there is an arbitration
contract arising out [of] its human resources process is relevant here.”
Id. at 16 (citing Bixler v. Next Financial Group, Inc., 858 F.Supp.2d
1136 (D. Mont. 2012)). She argues that she is entitled to attack the
credibility of GHMC witnesses who testify to prove there was an
arbitration contract by presenting “specific instances of conduct that
[is] probative of whether [they are] telling the truth.” Id.
For the same reasons articulated above with respect to other
requests for admission, the Court is unpersuaded. Also, Gissell’s
reliance on Rule 608 of the Federal Rules of Evidence is misplaced in
this instance. Rule 608, Fed. R. Evid., provides:
(a) Reputation or Opinion Evidence. A witness’s credibility
may be attacked or supported by testimony about the
witness’s reputation for having a character for truthfulness
or untruthfulness, or by testimony in the form of an opinion
about that character. But evidence of truthful character is
admissible only after the witness’s character for
truthfulness has been attacked.
(b) Specific Instances of Conduct. Except for a criminal
conviction under Rule 609, extrinsic evidence is not
admissible to prove specific instances of a witness’s conduct
in order to attack or support the witness’s character for
truthfulness. But the court may, on cross-examination, allow
them to be inquired into if they are probative of the
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character for truthfulness or untruthfulness of:
(1) the witness; or
(2) another witness whose character the witness
being cross-examined has testified about.
By testifying on another matter, a witness does not waive
any privilege against self-incrimination for testimony that
relates only to the witness’s character for truthfulness.
Although this rule permits the Court to allow, on crossexamination, inquiry into specific instances of a witness’s conduct to
attack the witness’s character for truthfulness, the rule does not
provide for inquiry into such instances during discovery. Equal
Employment Opportunity Commission v. First Wireless Group, Inc., 225
F.R.D. 404, 406 (E.D. N.Y. 2007) (noting that under Rule 608(b),
admissibility of extrinsic evidence to impeach witness’s credibility is
not a standard governing discovery). Thus, at this juncture in the
proceedings, Rule 608, Fed. R. Evid., does not provide Gissell an avenue
to obtain the admissions she seeks.
As noted above, the specific instances of conduct by various
individuals to whom Gissell refers in her RFAs appear unrelated, and
therefore irrelevant, to whether there exists an agreement that
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contains a valid arbitration provision and, in it, an agreement to
arbitrate Gissell’s employment disputes with GHMC. Rule 608, Fed. R.
Evid., simply does not provide a basis for seeking, during the discovery
process, admissions respecting specific instances of misconduct by the
GHMC employees named, particularly when such instances are
unrelated to the issue at hand. Thus, GHMC’s objection is justified.
For these reasons, the Court will deny Gissell’s motion to compel to the
extent it relates to RFAs 28-40.
E.

Allegedly Inadequate Verification by GHMC

Gissell argues that GHMC Vice President David Basaleli’s
verification of GHMC’s responses to her discovery requests is
inadequate. ECF 36 at 16-18. The Court declines to address this
argument because Gissell has not made the verification part of the
record. Also, as GHMC notes, Rule 36 does not require verified
responses, but only a response “signed by the party or its attorney.”
Fed.R.Civ.P. 36(a)(3). Gissell’s motion is denied to the extent it seeks
an order striking Basaleli’s declaration.

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F.

Motion for Sanctions and Attorney’s Fees

Gissell seeks sanctions and attorney’s fees. ECFs 35 and 36. As
discussed above, however, her motion to compel was denied in its
entirety. GHMC also requests its fees and costs for being made to
respond to Gissell’s motion. ECF 38 at 15.
Rule 37(a)(5)(B) provides that, when a motion to compel is denied,
the court ... must, after giving an opportunity to be heard,
require the movant ... to pay the party ... who opposed the
motion its reasonable expenses incurred in opposing the
motion, including attorney’s fees. But the court must not
order this payment if the motion was substantially justified
or other circumstances make an award of expenses unjust.
To afford Gissell an opportunity to be heard on the issue of
whether she should be required to pay GHMC its reasonable expenses,
including attorney’s fees, incurred in opposing her motion to compel,
the Court will afford Gissell time to file a response.
IV.

Conclusion
Based on the foregoing, IT IS ORDERED that Gissell’s motion

(ECF 35) for an order: (1) compelling GHMC to answer her Requests for
Admission (“RFA”) numbered 1-5, 8, 14, and 28-40; (2) striking GHMC’s
verification of the responses; and (3) awarding sanctions and costs, is
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DENIED.
IT IS FURTHER ORDERED that, on or before October 30, 2013,
Gissell must file a response to GHMC’s requests for fees and costs in
responding to Gissell’s motion. Gissell must limit her discussion to the
issues of whether her positions taken in her motion to compel were
substantially justified or whether an award of fees and costs would be
unjust. Should the Court determine that an award of fees and costs is
appropriate, it will direct the parties to file additional briefing
respecting appropriate amounts.
DATED this 18th day of October, 2013.

/s/ Carolyn S. Ostby
United States Magistrate Judge

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