UNITED STATES OF AMERICA et al v. Ocwen Loan Servicing LLC

Filing 448

MEMORANDUM OPINION AND ORDER - DENYING 338 SEALED MOTION TO (I) RECONSIDER JANUARY 22, 2016 ORDER GRANTING IN PART RELATORS' MOTION FOR MODIFICATION OF PROTECTIVE ORDER [OCWEN DKT. NO 322; HOMEWARD DKT. NO. 240] AND (II) MODIFY PROTECTIVE ORDER filed by Ocwen Loan Servicing LLC, Ocwen Financial Corporation. Signed by Judge Amos L. Mazzant, III on 5/26/2016. (baf, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

UNITED STATES OF AMERICA
Ex rel., Michael J. Fisher, and Michael Fisher
Individually, and Brian Bullock, and Brian
Bullock, Individually
v.
OCWEN LOAN SERVICING, LLC and
OCWEN FINANCIAL CORPORATION
UNITED STATES OF AMERICA
Ex rel., Michael J. Fisher, and Michael Fisher
Individually, and Brian Bullock, and Brian
Bullock, Individually
v.
HOMEWARD RESIDENTIAL, INC. f/k/a
AMERICAN HOME MORTGAGE
SERVICING, INC. and OCWEN
FINANCIAL CORPORATION

§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§

CIVIL ACTION NO 4:12-CV-543
Judge Mazzant

CIVIL ACTION NO 4:12-CV-461
Judge Mazzant

MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendants’ Motion to (I) Reconsider January 22, 2016
Order Granting in Part Relators’ Motion for Modification of Protective Order [Ocwen Dkt. No.
322; Homeward Dkt. No. 240] and (II) Modify Protective Order (Dkt. #254 in 4:12-cv-461; Dkt.
#338 in 4:12-cv-543). After reviewing the relevant pleadings, the Court finds that the motion
should be denied.
BACKGROUND
The Homeward Action (the 4:12-cv-461 Action)
On July 25, 2012, Relator Michael J. Fisher (“Fisher” or “Relator”) filed his original
complaint under seal (Dkt. #1 in 4:12-cv-461). In his original complaint, Fisher alleged that
1

Homeward Residential, Inc. (“Homeward”) did not provide disclosures required by the Truth in
Lending Act (“TILA”) and Regulation Z with any of its Home Affordable Modification Program
(“HAMP”) or non-HAMP modifications (Dkt. #1 in 4:12-cv-461).
On June 4, 2014, the Court ordered that the complaint be unsealed and served upon
Defendant, after the United States declined to intervene (Dkt. #27 in 4:12-cv-461). On October
16, 2014, Relators filed Qui Tam Relators’ First Amended Complaint (Dkt. #39 in 4:12-cv-461).
The First Amended Complaint incorporated new allegations including: (1) Federal Housing
Administration (“FHA”) violations, (2) Dodd-Frank Act violations, (3) Real Estate Settlement
Procedures Act (“RESPA”) violations, and (4) Texas, New York, and Massachusetts state law
violations (Dkt. #39 in 4:12-cv-461). It also added a new relator, Brian Bullock (“Bullock” or
“Relator”) (Dkt. #39 in 4:12-cv-461).
On February 9, 2015, the parties filed their Joint Motion for Entry of Protective Order
(Dkt. #96 in 4:12-cv-461). The Court granted the motion, and entered the Protective Order on
February 9, 2015 (Dkt. #98 in 4:12-cv-461).
On March 3, 2015, Relators filed their second amended complaint (Dkt. #101 in 4:12-cv461). The second amended complaint added a new defendant, Ocwen Financial Corporation
(“OFC”) (Dkt. #101 in 4:12-cv-461).
On November 23, 2015, Relators filed their Motion for Modification of Protective Order
[ECF #98] to Allow Relators Access to Confidential Information (Dkt. #205; Dkt. #206 in 4:12cv-461). On December 10, 2015, Defendants filed their response (Dkt. #216; Dkt. #217 in 4:12cv-461). On December 18, 2015, Relators filed their reply (Dkt. #221 in 4:12-cv-461). On
December 31, 2015, Defendants filed their sur-reply (Dkt. #231 in 4:12-cv-461). On January 22,
2016, the Court granted in part and denied in part Relators’ motion (Dkt. #240 in 4:12-cv-461).

2

On January 26, 2016, Relators filed notice of their proposed modified protective order
(Dkt. #249 in 4:12-cv-461). Also on January 26, 2016, Defendants filed their response to
Relators’ notice, in which they requested that the Court defer entering the modified protective
order, while Defendants filed their motion to reconsider (Dkt. #251 in 4:12-cv-461).
On January 29, 2016, Defendants filed their Motion to (I) Reconsider January 22, 2016
Order Granting in Part Relators’ Motion for Modification of Protective Order [Ocwen Dkt. No.
322; Homeward Dkt. No. 240] and (II) Modify Protective Order (Dkt. #254 in 4:12-cv-461). On
February 16, 2016, Relators filed their response (Dkt. #285 in 4:12-cv-461). On February 29,
2016, Defendants filed their reply (Dkt. #290 in 4:12-cv-461). On March 14, 2016, Relators
filed their sur-reply (Dkt. #294 in 4:12-cv-461).
The Ocwen Action (the 4:12-cv-543 Action)
On August 20, 2012, Fisher filed his original complaint under seal (Dkt. #1 in 4:12-cv543). In his original complaint, Fisher claimed that Ocwen Loan Servicing LLC’s (“OLS”)
HAMP modifications violated TILA because OLS did not provide a TILA notice of rescission in
connection with its loan modifications. (See Dkt. #1 in 4:12-cv-543).
On April 7, 2014, United States Magistrate Judge Don Bush ordered that the complaint
be unsealed and served upon Defendant, after the United States declined to intervene (Dkt. #19
in 4:12-cv-543). On August 1, 2014, Relator filed his amended complaint (Dkt. #23 in 4:12-cv543). On August 6, 2014, Relator filed his second amended complaint (Dkt. #29 in 4:12-cv543).
On November 13, 2014, Relators filed their third amended complaint (Dkt. #59 in 4:12cv-543). The third amended complaint incorporated allegations including: (1) Federal Housing
Administration (“FHA”) violations, (2) Dodd-Frank Act violations, (3) Real Estate Settlement

3

Procedures Act (“RESPA”) violations, and (4) Texas, New York, and Massachusetts state law
violations (Dkt. #59 in 4:12-cv-543). It also added Bullock as a new relator (Dkt. #59 in 4:12cv-543).
On February 9, 2015, the parties filed their Joint Motion for Entry of Protective Order
(Dkt. #95 in 4:12-cv-543), which Judge Bush granted and entered on February 11, 2015 (Dkt.
#98 in 4:12-cv-543).
On April 17, 2015, Relators filed their fourth amended complaint (Dkt. #126 in 4:12-cv543).

This complaint added OFC as a defendant, and alleged that OFC made false

representations to the government, which induced the government to enter the SPA (See Dkt.
#126 in 4:12-cv-543). The fourth amended complaint also claimed that OFC is the parent
company of OLS (Dkt. #126 in 4:12-cv-543).
On November 20, Relators filed their Motion for Modification of Protective Order [ECF
#98] to Allow Relators Access to Confidential Information (Dkt. #267 in 4:12-cv543). On
December 10, 2015, Defendants filed their response (Dkt. #282; Dkt. #283 in 4:12-cv-543). On
December 18, 2015, Relators filed their reply (Dkt. #288 in 4:12-cv-543). On December 31,
2015, Defendants filed their sur-reply (Dkt. #301 in 4:12-cv-543). On January 22, 2016, the
Court granted in part and denied in part Relators’ motion (Dkt. #322 in 4:12-cv-543).
On January 26, 2016, Relators filed notice of their proposed modified protective order
(Dkt. #331 in 4:12-cv-543). Also on January 26, 2016, Defendants filed a response to Relators’
notice, in which they requested that the Court defer entering Relators’ modified protective order,
while Defendants filed their motion to reconsider (Dkt. #333 in 4:12-cv-543).
On January 29, 2016, Defendants filed their Motion to (I) Reconsider January 22, 2016
Order Granting in Part Relators’ Motion for Modification of Protective Order [Ocwen Dkt. No.

4

322; Homeward Dkt. No. 240] and (II) Modify the Protective Order (Dkt. #338 in 4:12-cv-543).
On February 16, 2016, Relators filed their response (Dkt. #378 in 4:12-cv-543). On February 29,
2016, Defendants filed their reply (Dkt. #387 in 4:12-cv-543). On March 14, 2016, Relators
filed their sur-reply (Dkt. #393 in 4:12-cv-543).
LEGAL STANDARD
A motion seeking “reconsideration” may be construed under either Federal Rule of Civil
Procedure 59(e) or 60(b). Shepherd v. Int’l Paper Co., 372 F.3d 326, 328 n. 1 (5th Cir. 2004);
see also Milazzo v. Young, No. 6:11-cv-350-JKG, 2012 WL 1867099, at *1 (E.D. Tex. May 21,
2012).

Such a motion “‘calls into question the correctness of a judgment.’”

Templet v.

HydroChem Inc., 367 F.3d 473, 478 (5th Cir. 2004) (quoting In re Transtexas Gas Corp., 303
F.3d 571, 581 (5th Cir. 2002)).
“If a motion for reconsideration is filed within 28 days of the judgment or order of which
the party complains, it is considered to be a Rule 59(e) motion; otherwise, it is treated as a Rule
60(b) motion.” Milazzo, 2012 WL 1867099, at *1; see Shepherd, 372 F.3d at 328 n. 1; Berge
Helene Ltd. v. GE Oil & Gas, Inc., No. H-08-2931, 2011 WL 798204, at *2 (S.D. Tex. Mar. 1,
2011)).

Defendants filed their motion for reconsideration within 28 days of the order that

granted in part and denied in part Relators’ motion for a protective order; therefore, the motion
will be considered a Rule 59(e) motion.
A Rule 59(e) motion is “not the proper vehicle for rehashing evidence, legal theories, or
arguments that could have been offered or raised before the entry of judgment.” Templet, 367
F.3d at 479 (citing Simon v. United States, 891 F.2d 1154, 1159 (5th Cir. 1990)). “Rule 59(e)
‘serve[s] the narrow purpose of allowing a party to correct manifest errors of law or fact or to
present newly discovered evidence.’” Id. (quoting Waltman v. Int’l Paper Co., 875 F.2d 468,

5

473 (5th Cir. 1989)). “Relief under Rule 59(e) is also appropriate when there has been an
intervening change in the controlling law.” Milazzo, 2012 WL 1867099, at *1 (citing Schiller v.
Physicians Res. Grp., 342 F.3d 563, 567 (5th Cir. 2003)). “Altering, amending, or reconsidering
a judgment is an extraordinary remedy that courts should use sparingly.” Id. (citing Templet, 367
F.3d at 479). “The alternative, Federal Rule of Civil Procedure 60(b)(6) states, “On motion and
just terms, the court may relieve a party or its legal representative from a final judgment, order,
or proceeding for the following reasons: […] (6) any other reason that justifies relief.” Id.
ANALYSIS
Defendants assert that “[r]econsideration is warranted…because (i) new evidence of
Relators’ consistent efforts to mislead potential nonparty witnesses illustrates why Relators’
limitations on nonparty contract are inadequate; and (ii) the Court overlooked Defendants’
opposition to those inadequate limitations.” (Dkt. #254 at p. 7; Dkt. #338 at p. 7). Relators
assert that “[t]he Court did not deny any request Defendants made by motion, and there is no
new evidence in this compelling an expansion of the third-party-contact portion of the Court’s
January 22, 2016 order.” (Dkt. #285 at p. 1; Dkt. #378 at p. 1).
Defendants’ Contention of New Evidence Regarding Relators’ Nonparty Contact
First, Defendants assert that there is new “[e]vidence Defendants have uncovered since
the briefing on Relators’ motion was complete [that] reveals a pattern of Relators’ misleading ex
parte communications with Defendants’ former employees.” (Dkt. #254 at p. 8; Dkt. #338 at p.
8). Relators assert that both Fisher’s remarks to Leigh Ann Chmielewski (“Chmielewski”) and
Relators’ counsel remarks have not been misleading (See Dkt. #285; Dkt. #378). Furthermore,
Relators assert that “[t]here is no evidence that Relators have committed any wrongdoing or any
improper conduct meriting prior restraints on their lawful discovery conduct with witnesses…in

6

this action.” (Dkt. #285 at p. 13; Dkt. #378 at p. 13).
The Court agrees with Relators.

After reviewing the allegedly improper

communications, the Court finds that Relators have not misrepresented their capacity within the
case or had inappropriate contact with nonparties. For example, Defendants reference an email
sent by Grant Schmidt (“Schmidt”) (Dkt. #254, Exhibit D; Dkt. #338, Exhibit D). In the email,
Schmidt writes the following:
I am an attorney prosecuting a case on behalf of the U.S. government in an effort
to recover taxpayer funds paid to Homeward and/or Ocwen to which Homeward
and/or Ocwen was not entitled. We are seeking information from former
employees about Homeward and Ocwen’s loan servicing practices, and Jessica
Herrera told us you are someone we should speak with. To be clear—this lawsuit
does not implicate you or any other particular employees. Rather, it is about the
company’s failure to comply fully with federal and state laws.
We would greatly appreciate the chance to speak with you informally.
(Dkt. #254, Exhibit D at p. 5; Dkt. #338, Exhibit D at p. 5) (emphasis added). The Court finds
that Relators and their attorneys were not attempting to mislead current or former employees, but
were instead attempting to explain their role in the qui tam action. Defendants also provide as
evidence of Relators’ “misleading” current employees of the Defendants’ companies, an email
from Victoria Kubos (“Kubos”), which stated the following:
I received a call…from an attorney with Fish & Richardon…. The attorney said
that Ocwen provided my name and number and permission to talk with him about
a case his firm is filing (or has filed) to sue Ocwen for money owed to consumers.
I advised the gentleman that if Ocwen was releasing my name to speak with any
non-Ocwen attorney I would have received internal notification of that and would
have Ocwen counsel present. He then said that he was notified that I wasn’t
presently employed by Ocwen, but since I was he couldn’t continue the call.
(Dkt. #254, Exhibit B; Dkt. #338, Exhibit B) (emphasis added). The Court finds that nothing in
the email suggests that Relators’ counsel was attempting to discuss the case with a current
employee, as once Kubos represented that she currently worked for Ocwen, Relators’ counsel
7

ended the communication. Additionally, the Court is unable to find that anything within the
communication was inappropriate or misleading. Although the email states that, “The attorney
said that Ocwen provided my name and number and permission to talk with him about [the]
case…[,]” the email does not include the communication with the lawyer, himself, and thus, the
Court is unable to determine the actual statement that was made to Kubos (See Dkt. #254,
Exhibit B; Dkt. #338, Exhibit B). In the communications that the Court has reviewed that are
given by Relators’ counsel, the Court finds that they are not inappropriate; the communications
are merely attempts to explain Relators’ and their counsel’s role in the qui tam action, and how
they obtained the former employees’ names.
Additionally, Defendants state that Fisher misled Chmielewski when he contacted her in
late 2014 (Dkt. #254 at p. 4; Dkt. #338 at p. 4). However, upon reviewing Chmielewski’s
deposition, Chmielewski testified to the following:
A. […] I can’t really remember the call but I remember those kind of…
Q. When Mr. Fisher reached out to you, what [ ] did he tell you?
A. Verbatim, I couldn’t recite, but he indicated in the phone – phone message
that – or in the phone call that he was working with the DOJ. And that they
wanted to speak to me.
Q. And what did you do in response to that telephone call?
A. I met with him.
Q. Did you feel like you had to meet with him?
A. Yes.
Q. Why did you feel that way?
A. It was just the – his conversation, his statement about the Department of
Justice, he just gave me that feeling that I really didn’t have a choice.
(Dkt. #254, Exhibit E at 231:17-232:11; Dkt. #338, Exhibit E at 231:17-232:11). The Court
finds that Chmielewski did not recall the majority of her conversation with Fisher, and the
portions she did recall do not demonstrate that Fisher was trying to mislead her. In fact, after
meeting with Fisher, Chmielewski was contacted by Relators’ counsel, Sam Boyd (“Boyd”) (See
Dkt. #254, Exhibit E at 237:19-239:25; Dkt. #338, Exhibit E at 237:19-239:25). Although Boyd
8

contacted Chmielewski, she never contacted him back (Dkt. #254, Exhibit E at 240:8-11; Dkt.
#338, Exhibit E at 240:8-11). Therefore, the Court finds that Chmielewski was not misled by
Fisher or Relators’ counsel as her actions demonstrate that she understood that she did not have
to respond to their communications.
Therefore, the Court finds that the modified protective order will protect the interests of
any nonparties contacted by Relators as part of the present action. Additionally, the Court finds
that the additional modifications proposed by Defendants would be unduly burdensome and
would create confusion for Relators’ counsel when contacting potential sources of information.
Because the modified protective order will protect the rights of the nonparties and Relators and
their counsel have not been misleading nonparties in their communications, the Court finds that
the new evidence present by Defendants does not require the Court to reconsider its previous
determination as to the modification of the protective order.
Defendants’ Contention that the Court Overlooks Defendants’ Opposition to Relators’ Request
Defendants also assert that “the Court appears to have overlooked arguments in
Defendants’ brief opposing Relators’ motions.” (Dkt. #254 at p. 11; Dkt. #338 at p. 11). In its
Memorandum Opinion and Order, the Court stated,
In their response, Defendants include their own proposed modification of the
Protective Order in the efforts of “compromise.” (See Dkt. #282 at p. 8; Dkt.
#283, Exhibit G, Exhibit H). However, the Court will not consider Defendants’
request for relief as it was not filed in accordance with Local Rule CV-7, which
states, “[e]ach pleading, motion, or response to a motion must be filed as a
separate document, except for motions for alternative relief….” Additionally,
Defendants do not argue that Relators’ proposed modifications relating to
contacting the nonparties are inappropriate. Therefore, the Court finds that
Defendants do not oppose Relators’ proposed modifications as they relate to
contacting the nonparties.
As Defendants do not oppose the proposed
modifications for the nonparties, and the Court finds there is good cause for the
proposed modifications, the Court will grant Relators’ modifications in regards to
those modifications alone.

9

(Dkt. #240 at p. 4 n. 3; Dkt. #322 at p. 4 n. 3). Specifically, Defendants assert that the Court did
not consider their opposition that Relators’ October 21, 2015 proposed modifications were
“facially inadequate” because they “would have allowed Relators to (i) review all
evidence in these cases; (ii) contact Defendants’ borrowers as long as they
explained the borrowers were not obligated to talk to Relators; (iii) discuss these
cases with litigation investors, as long as they were not one of the ten largest
mortgage servicers involved in HAMP modifications; and (iv) discuss these cases
with industry analysts….”
(Dkt. #254 at pp. 11-12; Dkt. #338 at pp. 11-12) (citing Dkt. #216 at p. 4; Dkt. #282 at p. 4).1 In
its order, the Court found that Defendants did not address the proposed modifications for
contacting nonparties that Relators addressed based on arguments made during a telephonic
hearing with the Court (See Dkt. 205 at pp. 9-11; Dkt. #267 at pp. 9-11). Moreover, Defendants
argue that their “advocacy in favor of stronger limitations on Relators’ communications with
nonparties should be fairly read as a direct repudiation of Relators’ proposed modifications.”
(Dkt. #254 at p. 12; Dkt. #338 at p. 12).
In making its determination, the Court did consider that Defendants requested stronger
limitations on Relators’ communications with nonparties. However, Defendants did not file a
motion requesting stronger limitations than those proposed by Relators, and thus, the Court could
not consider their request. See Local Rule CV-7. Other than its improper request for stronger
limitations on Relators’ nonparty contact, Defendants did not address whether Relators’
proposed modifications were sufficient in the present case. The Court finds that it did not
overlook an argument in making its determination, and thus, reconsideration is not warranted in
the present case.

1

In their motion for reconsideration, Defendants cite to “Opposition at pp. 10-11.” However, upon the Court’s
review of Defendants’ response, it could only locate the quoted language within the “Factual Background” section
on page four.

10

CONCLUSION

.

It is therefore ORDERED that Defendants’ Motion to (I) Reconsider January 22, 2016
Order Granting in Part Relators’ Motion for Modification of Protective Order [Ocwen Dkt. No.
322; Homeward Dkt. No. 240] and (II) Modify Protective Order (Dkt. #254 in 4:12-cv-461; Dkt.
#338 in 4:12-cv-543) is hereby DENIED.

SIGNED this 26th day of May, 2016.

___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

11