Fuchs et al v. Selene Finance, LP
ORDER granting 67 Motion for Leave to File; denying as moot 71 Motion to Continue; denying 73 Motion to Strike. Selene is directed to file a responsive brief to Plaintiffs' motion to compel discovery and motion for sanctions (Doc. 72 ) within fourteen days. Signed by Magistrate Judge Terence P. Kemp on 2/21/2017. (agm)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
Mary Fuchs, et al.,
Selene Finance, LP,
Case No. 2:15-CV-895
JUDGE MICHAEL H. WATSON
Magistrate Judge Kemp
This action was brought against Selene Finance, LP
(“Selene”) and raises claims relating to the handling of
Plantiffs’ mortgage loan.
The Government National Mortgage
Association was also a defendant but was recently dismissed as a
party to this litigation. (Doc. 99). This matter is now before
the Court to consider the following four motions: Selene’s motion
for leave to withdraw and amend responses to Plantiffs’ requests
for admissions and amended responses to Plantiffs’ requests for
admissions instanter (Doc. 67); Plantiffs’ motion for continuance
of discovery cutoff date and dispositive motion deadline (Doc.
71); Plantiffs’ motion to compel discovery and motion for
sanctions (Doc. 72); and Selene’s motion to strike Plantiffs’
second motion to continue, motion to strike Plantiffs’ motion to
compel and request for a protective order, and motion for
sanctions (Doc. 73).
Motion for Leave to Withdraw and Amend Responses
Selene moves pursuant to Fed.R.Civ.P. 36(b) for leave to
withdraw and amend its responses to three of Plantiffs’ requests
for admissions “because this will substantially serve the
presentation of the merits of this action and because it would
not prejudice Plaintiffs.” (Doc. 67 at 1).
servicing Plantiffs’ mortgage loan in August of 2014. In April of
2015, in response to Plantiffs’ request for information
pertaining to their loan, Selene inadvertently credited the loan
for six monthly payments of $1,862.60 each, for a total amount of
$11,175.60, and waived late fees in the amount of $646.08.
According to Selene, the mistake was made because
Plantiffs’ prior loan serivcer, BAC Home Loans Servicing (“BAC”)
filed a proof of claim in Plantiffs’ 2009 bankruptcy inaccurately
identifying the borrower’s post-petition delinquency as prepetition debt.
Plaintiffs filed their second amended complaint
(Doc. 25) on July 17, 2015, and served discovery requests,
including requests to admit, upon Selene on August 10, 2015.
(Doc. 67, Ex. A).
Selene completed the request for admissions
and subsequently discovered the error.
Selene now seeks leave to
withdraw and amend its responses to the following requests for
admission, as follows:
Admit you misapplied at least $11,175.60 in
payments from Plaintiffs.
Plaintiff [sic] admits that there may have been an
unintentional error in the application of payments
but generally denies the request. Plaintiff [sic]
reserves the right to amend this response as it
continues its investigation of the allegations
that are contained in the Plaintiff’s [sic]
NEW RESPONSE: Deny.
Admit the “Amount Due” of $75,914.78 in the March
2015 mortgage statement attached as Exhibit A was
in excess of what Plaintiffs actually owed as of
April 1, 2015.
PREVIOUS RESPONSE: Admit.
NEW RESPONSE: Deny.
Admit You failed to acknowledge receipt of the
Letter within five days, excluding weekends and
PREVIOUS RESPONSE: Admit.
NEW RESPONSE: Deny.
Selene asserts that because of its early responses to the
discovery requests it had not yet fully investigated the matter,
and its foreclosure counsel mistakenly understood Plantiffs’
bankruptcy order as requiring an adjustment to its account, thus
resulting in admitting the balance referred to in Request for
Admission No. 13. (Doc. 67, Ex. 15, ¶18). Selene also points out
that Plantiffs sent it a Qualified Written Request (“QWR”) dated
February 23, 2015 requesting information on their mortgage loan,
but that this was not received by Selene until March 9, 2015.
Selene states that although its counsel responded to the letter
on the same day as receipt, he inadvertently admitted that Selene
failed to acknowledge the receipt of the letter within five days.
Id. at ¶20.
Selene requests that the Court permit the withdrawal
and amendment of the three Requests for Admissions to promote
presentation of the merits of the action.
Plantiffs oppose the motion, arguing that permitting changes
in the responses at this late date would prejudice their ability
to prosecute their claims as well as to respond to Selene’s
motion for summary judgment (Selene and Plantiffs both filed
motions for summary judgment on October 31, 2016, about two weeks
after the filing of the instant motion).
The Plantiffs state
that they will be prejudiced because the admissions and qualified
admission at issue “weigh heavily in evidence to prove both RESPA
and FDCPA violations.” (Doc. 76 at 5-6).
When a mortgage
servicer misapplies a mortgage payment and is so notified by a
QWR, then the servicer must perform a reasonable investigation
into the matter, and respond within 30 days by either (1)
correcting the misapplication or (2) concluding that there was no
error and responding with an explanation.
12 U.S.C. §2601 et seq.
The Plantiffs argue that had they received the responses
Selene now wishes to provide, they would have conducted discovery
differently. They also assert that the proposed response changes
do not promote a presentation of the merits in this case.
Plantiffs accuse Selene of withholding evidence which could
reveal the truth of matters admitted in the Requests for
They contest Selene’s stated date of receipt of the
QWR, including a certified mail receipt showing that Selene
received the QWR on March 6, 2015, and assert that Selene’s
statement that it “acknowledged” receipt on March 9, 2016 is a
mis-characterization because it only referred to the responding
letter date. Id. Ex. A; Doc. 67.
Finally, the Plantiffs argue
that if the Court grants this motion it should also re-open
A. Legal Standard
Fed. R. Civ. P. 36(b), “Effect of an Admission; Withdrawing
or Amending It,” provides:
A matter admitted under this rule is conclusively
established unless the court, on motion, permits the
admission to be withdrawn or amended. Subject to Rule
16(e), the court may permit withdrawal or amendment if
it would promote the presentation of the merits of the
action and if the court is not persuaded that it would
prejudice the requesting party in maintaining or
defending the action on the merits. An admission under
this rule is not an admission for any other purpose and
cannot be used against the party in any other
“The first prong of the test articulated in Rule 36(b) is
satisfied ‘when upholding the admission would practically
eliminate any presentation on the merits of the case.’” Clark v.
Johnston, 413. Fed. Appx. 804, 818 (6th Cir. Jan. 25, 2011),
quoting Riley v. Kurtz, 194 F.3d 1313 (6th Cir. Sept. 28,
1999)(internal quotation and citation omitted). The prejudice at
issue in the second prong of the test in Rule 36(b) “is not
simply that the party who initially obtained the admission will
now have to convince the factfinder of its truth, [but] rather,
relates to special difficulties a party may face caused by a
sudden need to obtain evidence upon withdrawal or amendment of
admission.” Id., quoting Kerry Steel, Inc. v. Paragon Indus., 106
F.3d 147, 154 (6th Cir. 1997) (internal quotations omitted).
Courts must also consider whether the admissions go to the very
heart of the case, and if the party who made the admissions will
be prevented, absent withdrawal, from presenting his or her case
on the merits. LaJiness v. Reactor Controls, Inc., 642 F.Supp. 27
(E.D. Mich. 1985). “A district court has considerable discretion
over whether to permit withdrawal or amendment of admissions.”
Kerry Steel, 106 F.3d at 154.
First, the Court considers whether allowing amendment of the
admissions will aid in presentation of the merits.
A court may
consider the following factors in making this determination: (1)
whether the admission is contrary to the record; (2) whether an
admission is no longer true because of changed circumstances; (3)
whether, through an honest error, a party has made an improvident
admission; and (4) whether the effect of upholding the admissions
would practically eliminate presentation on the merits.
See Ropfogel v. United States, 138 F.R.D. 579, 583 (D. Kan.
In this matter, it is uncontroverted that the admissions
as they stand now are contrary to the record in this case, and it
appears by all accounts that the erroneous admissions were not
made in bad faith.
Moreover, in its original Admission No. 12
Selene indicated only that it “may have” misapplied funds and
reserved its right to change its answer upon further
Thus, Plantiffs were at least on notice as to
this issue and would have been able to conduct their discovery
It is in the interest of justice for the record to
reflect accurate facts.
The Court is not convinced that the
Plantiffs will be unfairly prejudiced by allowing the amendment
of the admissions to conform to the record.
Even if, as they
contend, the QWR was received by Selene on March 6 rather than
March 9, 2015, Selene acknowledged receipt on March 9, 2015,
within the required 5 day period.
The QWR was produced in time
for Plaintiffs to have conducted questioning on it in the
The Court finds that both prongs of the test in Fed.R.Civ.P.
36(b) are satisfied.
In sum, allowing amendment will further
presentation of the merits and will not cause Plantiffs to suffer
any unfair prejudice.
See e.g. Visteon Global Technologies, Inc.
V. Garmin Intern, Inc., 2013 WL 8017532, *12 (E.D. Mich. Oct. 25,
2013); citing Conlon v. United States, 474 F.3d 616, 624 (9th
Cir. 2007) (“We agree with the other courts that have addressed
the issue and conclude that reliance on a deemed admission in
preparing a summary judgment motion does not constitute
prejudice); FDIC v. Prusia, 18 F.3d 637, 640 (8th Cir. 1994)
(“preparing a summary judgment motion in reliance upon an
erroneous admission does not constitute prejudice.”).
reasons set out above, the Court will grant Selene’s motion to
amend its responses to the Plantiffs’ request for admissions as
set out above.
On October 3, 2016, Plantiffs filed two motions: (1) motion
for continuance of October 1, 2016 discovery cutoff date and
October 31, 2016 dispositive motion deadline (Doc. 71); and (2) a
motion to compel discovery and motion for sanctions (Doc. 72).
Rather than filing a response, two days later Selene filed a
motion to strike Plantiffs’ motion to continue and motion to
compel, request for a protective order, and motion for sanctions
That motion has been fully briefed, and covers the
issues raised in the Plantiffs’ two motions.
Plaintiff’s Motion for Continuance of October
31, 2016 Discovery Cutoff Date and October
31, 2016 Dispositive Motion Deadline
Because the discovery cutoff date has passed and both
Plaintiffs and Selene filed motions for summary judgment by the
October 31, 2016, deadline, Plaintiffs’ motion to continue that
deadline is deemed moot and will be denied, subject to reopening
of discovery should the Court grant the motion to compel.
Plaintiff’s Motion to Compel and Selene’s
Motion to Strike and Request for a Protective
Plaintiffs move to compel discovery, arguing that
“[t]hroughout the course of discovery, Selene ignored requests
for deposition dates for almost two months, pushed the
depositions back as close to the discovery cutoff as possible,
objected to areas of knowledge in the Notice of Deposition in an
attempt to limit discovery, objected to requests for production
inappropriately, failed to produce repeatedly requested
documents, waited until documents were revealed in deposition to
produce documents well within discovery requests, and gave
evasive responses to withhold discovery production.
refused to produce the lawfully requested discovery requested in
this motion.” (Doc. 72 at 2).
Plaintiffs provide a number of
exhibits which they assert demonstrate Selene’s “blatant
disregard” for the rules of discovery and its intention to evade
compliance with the rules of discovery. By way of example, the
exhibits include correspondence between the parties related to
scheduling depositions, Selene’s objections to certain requests
deemed to be overly broad and unduly burdensome, and an affidavit
of Plaintiffs’ counsel setting out timeline of various events
during the discovery process.
Selene contests the motion, relying primarily on the fact
that the motion was not timely and was filed on October 3, 2016,
two days after the October 1, 2016, cutoff date (October 1 fell
on a Saturday; October 3 was the next business day). The Court
denies the motion to strike, however, because the motion to
compel was timely filed.
The pretrial order setting the initial
deadline for discovery states that “[i]f any date set in this
order falls on a Saturday, Sunday or legal holiday, the date is
automatically deemed to be the next regular business day.” (Doc.
14). Subsequent extensions to the deadline did not alter that
portion of the Order. In its motion to strike Selene seeks leave
to file a substantive response to the merits of Plaintiffs’
motion to compel in the event that the motion to strike is
The Court will therefore grant 14 days to file a
responsive brief to the motion to compel.
The Parties’ Request for Sanctions
The parties each move for sanctions against one another.
Both Plantiffs and Selene have engaged in contentious motion
practice in this matter. Selene argues generally that Plantiffs
should be sanctioned for repeatedly failing to comply with the
Local Rules and for misrepresenting the status of discovery to
the Court. Plantiffs move for sanctions in the form of costs and
attorney fees in the event that their motion to compel is
granted, based on their arguments that Selene has wilfully
withheld pertinent discovery.
The Court has authority under Fed.R.Civ.P. 37 and Local Rule
1.1.(c) to impose various sanctions.
However, sanctions are
discretionary and are a drastic remedy that courts should be
cautious in imposing.
See Tahfs v. Proctor, 316 F.3d 584, 594-95
(6th Cir. 2003). The Court recently issued an Order (Doc. 98)
denying Selene’s request for sanctions in relation to its denial
of Plantiff’s motion for leave to file a third amended complaint
(Doc. 90). The Court concluded in that Order that “[p]laintiffs’
failure to comply with the rules or provide a proposed amended
pleading does not amount to bad faith or behavior that would
justify sanctions at this juncture.” (Doc. 98 at 3). Given that
the motion for leave to amend referenced in that Order was filed
approximately two months after the motions currently under
consideration, the Court remains of the view that sanctions are
not appropriate at this time.
The parties are put on notice of
their ongoing duty to comply with all relevant local and federal
rules for the duration of this litigation.
The parties’ requests
for sanctions will generally be denied, although the Court
reserves ruling on whether sanctions are appropriate in
connection with the yet-to-be-briefed discovery motion.
Based on the foregoing, Selene’s motion for leave to
withdraw and amend responses to Plantiffs’ requests for
admissions and amended responses to Plantiffs’ requests for
admissions instanter (Doc. 67) is granted.
for continuance of discovery cutoff date and dispositive motion
deadline (Doc. 71) is denied as moot; and Selene’s motion to
strike Plantiffs’ second motion to continue, motion to strike
Plantiffs’ motion to compel and request for a protective order,
and motion for sanctions (Doc. 73) is denied. Selene is directed
to file a responsive brief to Plantiffs’ motion to compel
discovery and motion for sanctions (Doc. 72) within 14 days of
Motion for Reconsideration
Any party may, within fourteen days after this Order is
filed, file and serve on the opposing party a motion for
reconsideration by a District Judge.
28 U.S.C. §636(b)(1)(A),
Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt.
I., F., 5.
The motion must specifically designate the order or
part in question and the basis for any objection.
objections are due fourteen days after objections are filed and
replies by the objecting party are due seven days thereafter.
The District Judge, upon consideration of the motion, shall set
aside any part of this Order found to be clearly erroneous or
contrary to law.
This order is in full force and effect, notwithstanding the
filing of any objections, unless stayed by the Magistrate Judge
or District Judge.
S.D. Ohio L.R. 72.4.
/s/ Terence P. Kemp
United States Magistrate Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?