Romero et al v. US Bank National Association
Filing
59
MEMORANDUM OPINION AND ORDER granting 48 Selene's Expedited Motion for Protective Order from Certain Deposition Topics, 49 Defendant's Expedited Motion for Protective Order from Certain Rule 30(b)(6) Deposition Topics. (Ordered by US Magistrate Judge Brian McKay on 1/28/2025) (mcrd)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
ANA M. ROMERO AND JOSE
A. ROMERO,
Plaintiffs/Counter-Defendants
v.
U.S. BANK TRUST NATIONAL
ASSOCIATION, In Its Individual
Capacity and as Owner Trustee for
RCF2 Acquisition Trust,
Defendant/Counter-Plaintiff.
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Case No. 3:24-cv-1175-S-BW
MEMORANDUM OPINION AND ORDER
On January 15, 2025, Defendant and Counter-Plaintiff U.S. Bank Trust
National Association, Not In Its Individual Capacity But Solely As Owner Trustee
For RCF 2 Acquisition Trust (“Defendant” or “U.S. Bank”), filed an Expedited
Motion for Protective Order from Certain Rule 30(b)(6) Deposition Topics (Dkt. No.
49), a supporting brief (Dkt. No. 49-1), and an appendix 1 (Dkt. No. 49-2). Plaintiffs
and Counter-Defendants Ana M. Romero and Jose A. Romero (collectively,
“Plaintiffs”) filed a response on January 22, 2025 (Dkt. No. 56), and Defendant filed
a reply on January 23, 2025 (Dkt. No. 57).
The appendix contains a copy of the notice of intent to remotely (via Zoom or
similar platform) take the oral deposition of a corporate representative of U.S. Bank on
Friday, December 20, 2024, at 9:00 a.m. (See Dkt. No. 49-2 (“U.S. Bank App.”).)
11
Also on January 15, 2025, Nonparty Selene Finance LP (“Selene”) 2 filed an
Expedited Motion for Protective Order from Certain Deposition Topics (Dkt. No.
48), a supporting brief (Dkt. No. 48-1), and an appendix 3 (Dkt. No. 48-2). Plaintiffs
filed a response (Dkt. No. 55) on January 22, 2025, and Selene filed a reply (Dkt.
No. 58) on January 24, 2025.
Pursuant to 28 U.S.C. § 636(b) and Special Order No. 3-354, this case is
referred to the undersigned United States magistrate judge for pretrial management,
which includes making findings and a recommended disposition when appropriate.
(See Dkt. No. 18.) Having carefully reviewed the briefing and the applicable law, the
Court finds that both motions (Dkt. Nos. 48, 49) are GRANTED.
I. BACKGROUND
The parties and the Court are familiar with the factual and procedural
background of this case, so the Court will not repeat it here. See Romero v. U.S. Bank
Tr. Nat’l Ass’n, No. 3:24-CV-1175-S-BW, 2025 WL 220405, at *1 (N.D. Tex. Jan. 16,
2025).
With respect to the present motions for protective orders (collectively, the
“MPOs”), U.S. Bank and Selene contend that expedited briefing and ruling are
2
Selene is the mortgage servicer for U.S. Bank. (See generally Dkt. No. 49-1.)
The appendix contains a copy of an amended notice of subpoena for deposition
duces tecum issued to Selene, pursuant to Rule 45 of the Federal Rules of Civil Procedure,
requesting the personal appearance of a corporate representative on January 31, 2025 at
9:00 a.m. (See Dkt. No. 48-2 (“Selene App.”).)
3
2
necessary to meet the current discovery deadline of January 31, 2025. 4 (See Dkt. No.
49-1 at 4; Dkt. No. 48-1 at 4.) Plaintiffs respond that U.S. Bank and Selene failed to
confer with Plaintiffs regarding the requested shortened briefing schedule as required
by Local Rule 7.1 and Fed. R. Civ. P. 26(c) and object to the request for expedited
briefing because the time shortage was unilaterally and directly caused by
Defendant’s and Selene’s own failure to diligently object to the deposition notices as
issue in the MPOs. (See Dkt. No. 56 at ¶¶ at 54-55; Dkt. No. 55 at ¶¶ 52-53.)
Plaintiffs also contend that they proposed to continue the depositions to a later date
by agreement, rather than “waste[] judicial resources and the parties’ time with
needless motion practice.” (Id.) Defendant and Selene argue in reply that they were
required to proceed with their MPOs after Plaintiffs did not agree to quash and/or
limit the topics as requested. (See Dkt. No. 57 at 15; Dkt. No. 58 at 13.)
Plaintiffs also allege that U.S. Bank and Selene made “multiple
misrepresentations” pertaining to agreements allegedly reached during the parties’
meet-and-confer discussions (see Dkt. No. 56 at ¶ 21; Dkt. No. 55 at ¶¶ 24, 44), which
U.S. Bank and Selene deny (see Dkt. No. 56 at 13 n.2; Dkt. No. 58 at 11 n.3).
Plaintiffs’ allegations aside, the Court finds that, in light of the January 30, 2025
discovery deadline, expedited briefing on the MPOs is warranted. (See Dkt. No. 43.)
Furthermore, Plaintiffs’ position that U.S. Bank’s deposition should have been
Without an expedited ruling on the motions, Plaintiffs’ responses would not be due
until February 5, 2025 (21 days after filing), and additional time would then be required (up
to 14 days) for U.S. Bank and Selene to file their replies (see N.D. Tex. Loc. R. 7.1(e)), and
for this Court to consider the briefing and issue a ruling.
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continued “rather than involv[ing] the Court” (see Dkt. No. 56 at ¶ 54), would have
required further continuance of case deadlines—a request by Plaintiffs that the Court
has already denied (see Dkt. No. 52).
The record reflects that on November 27, 2024, Plaintiffs served Selene with a
notice of subpoena for deposition duces tecum, to occur on December 17, 2024. (See
Dkt. Nos. 38, 40.) Following a “substantive meet and confer” on December 5, 2024,
Plaintiffs issued an amended notice to Selene on December 18, 2024 (Selene App. 116), which increased the deposition topics from 11 to 33. (Compare Dkt. No. 38 with
Selene App. 1-16.) On January 7, 2025, Selene re-urged its objections as discussed in
the parties’ December 5, 2024 meeting, asserted objections for the new topics, and
requested Plaintiffs to quash and/or limit certain topics. (Selene App. 17-19.) After
Plaintiffs did not respond, Selene filed the instant motion for protective order
(“Selene MPO”) requesting protection from the following objected-to topics.
No. 5: The person with the most knowledge about Your organizational
chart.
No. 6: The person with the most knowledge about Selene Finance’s
engagement as servicer of the HELOC 5 and/or the FRLO. 6
No. 10: The person with the most knowledge about Your compensation
for acting under the POA. 7
HELOC” means the Home Equity Line of Credit at issue in this lawsuit. (See
Selene App. 8.)
5
6
“FRLO” means the Fixed Rate Loan Option at issue in this lawsuit. (See id.)
7
“POA” means the Limited Power of Attorney between Selene and U.S. Bank. (See
id.)
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No. 11: The person with the most knowledge about Your compensation
for acting as the servicer of the HELOC and/or the FRLO.
No. 12: The person with the most knowledge about all written
agreements between Selene Finance and the Trustee and which involve,
control, or contain information about the HELOC and/or the FRLO.
No. 20: The person with the most knowledge about the agreement
between the Trustee and its counsel of record for the Lawsuit and the
Foreclosure, as well as the total sum in attorneys’ fees which the
Trustee or You on behalf of the Trustee is claiming through the date of
this deposition, along with what sum in attorneys’ fees has been
actually paid to counsel for the Foreclosure and/or the Lawsuit, what
sum in attorneys’ fees remains due and outstanding for the Lawsuit
and/or Foreclosure, all invoices and bills for attorneys’ fees incurred for
the Foreclosure and/or Lawsuit and which You or the Trustee have
received to date, and the rates charged by each of the attorneys who has
billed You or the Trustee any time for representing You or the Trustee
in the Foreclosure and/or Lawsuit.
No. 22: The person with the most knowledge about the Trustee’s
assignment of rights with respect to the HELOC and the FRLO,
including consideration paid to BoA for said assignment.
No. 33: The person with the most knowledge about all representations
and warranties BoA made to You with respect to the HELOC and/or
the FRLO.
(Selene App. 1-16.)
On December 5, 2024, Plaintiffs served U.S. Bank with a deposition notice, to
occur on December 20, 2024. (U.S. Bank App. 1-9.) That same day, Plaintiffs and
U.S. Bank engaged in a “substantive meet and confer” wherein U.S. Bank both
lodged its objections to the deposition topics and sought to avoid a forthcoming
deposition notice to U.S. Bank, in its individual capacity by providing Plaintiffs with
an affidavit declaring that U.S. Bank had no individual interest in the subject loan
and security instrument. (See Dkt. No. 49-1 at 5.) Thereafter, on January 3, 2025,
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Plaintiffs moved to dismiss U.S. Bank, in its individual capacity, without prejudice.
(See Dkt. No. 44-46.)
Then, on December 18, 2024, Plaintiffs issued the present amended notice
(U.S. Bank App. 10-18), which is mostly unchanged from the original notice and lists
40 topics upon which U.S. Bank is required to designate an individual to provide
testimony. (See id.) By letter dated January 7, 2025, U.S. Bank re-urged its
objections as discussed in the parties’ December 5, 2024 meeting and requested
Plaintiffs to quash and/or limit certain testimony. (U.S. Bank App. 19-23.) After
Plaintiffs did not respond, U.S. Bank filed the instant motion for protective order
(“U.S. Bank MPO”) requesting protection from the following objected-to topics.
No. 5: The person with the most knowledge about Your organizational
chart.
No. 6: The person with the most knowledge about Selene Finance’s
engagement as servicer of the HELOC2 and/or the FRLO.
No. 10: The person with the most knowledge about Selene Finance’s
compensation for acting under the POA.
No. 11: The person with the most knowledge about Selene Finance’s
compensation for acting as the servicer of the HELOC and/or the
FRLO.
No. 12: The person with the most knowledge about the assets of the
Trust, and how they were acquired.
No. 13: The person with the most knowledge about all written
agreements between U.S. Bank and the Trustee and which involve,
control, or contain information about the HELOC and/or the FRLO.
No. 14: The person with the most knowledge about all written
agreements between Selene Finance and the Trustee and which involve,
control, or contain information about the HELOC, the FRLO, or
Selene Finance’s role in the Foreclosure or the captioned lawsuit.
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No. 16: The person with the most knowledge about the organizational
chart and leadership for the Trust and/or the Trustee, including where
it is organized, where its offices and personnel are, and where its
decisionmakers are located.
No. 23: The person with the most knowledge about Your agreement
with Your counsel of record for the Lawsuit and the Foreclosure, as
well as the total sum in attorneys’ fees which You are claiming through
the date of this deposition, along with what sum in attorneys’ fees has
been actually paid to Your counsel for the Foreclosure and/or the
Lawsuit, what sum in attorneys’ fees remains due and outstanding for
the Lawsuit and/or Foreclosure, all invoices and bills for attorneys’ fees
incurred by You for the Foreclosure and/or Lawsuit and which You
have received to date, and the rates charged by each of the attorneys
who has billed You any time for representing You in the Foreclosure
and/or Lawsuit.
No. 25: The person with the most knowledge about Your assignment of
rights with respect to the HELOC and the FRLO, including
consideration paid to BoA for said assignment.
No. 36: The person with the most knowledge about all representations
and warranties BoA made to You and/or U.S. Bank with respect to the
HELOC and/or the FRLO.
No. 37: The person with the most knowledge about the trustees of the
Trust.
No. 38: The person with the most knowledge about the beneficiaries of
the Trust.
No. 39: The person with the most knowledge about the settlors of the
Trust.
No. 40: The person with the most knowledge about any agreements
which control operation of the Trust, powers of the Trustee(s), rights of
the beneficiary/beneficiaries, and all other management, control, or
leadership of the Trust.
(U.S. Bank App. 10-18.)
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II. LEGAL STANDARDS
A.
Discovery Scope and Limits.
Rule 26(b) of the Federal Rules of Civil Procedure provides:
Parties may obtain discovery regarding any nonprivileged matter that is
relevant to any party's claim or defense and proportional to the needs of
the case, considering the importance of the issues at stake in the action,
the amount in controversy, the parties’ relative access to relevant
information, the parties’ resources, the importance of the discovery in
resolving the issues, and whether the burden or expense of the proposed
discovery outweighs its likely benefit.
Fed. R. Civ. P. 26(b)(1). Information must therefore be nonprivileged, relevant, and
proportional to the needs of the case to constitute discoverable material. See Samsung
Elecs. Am., Inc. v. Chung, 321 F.R.D. 250, 279 (N.D. Tex. 2017) (citing Rocha v. S.P.
Richards Co., No. 5:16-CV-411-XR, 2016 WL 6876576, at *1 (W.D. Tex. Nov. 17,
2016)) (“Under Rule 26(b)(1), discoverable matter must be both relevant and
proportional to the needs of the case—which are related but distinct requirements.”).
Relevant information includes “any matter that bears on, or that could reasonably
lead to other matter that could bear on, any issue that is or may be in the case.”
Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). Thus, “[r]elevancy is
broadly construed, and a request for discovery should be considered relevant if there
is ‘any possibility’ that the information sought may be relevant to the claim or
defense of any party.” S.E.C. v. Brady, 238 F.R.D. 429, 437 (N.D. Tex. 2006)
(quoting Merrill v. Waffle House, Inc., 227 F.R.D. 467, 470 (N.D. Tex. 2005)).
Consequently, “[u]nless it is clear that the information sought can have no possible
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bearing on the claim or defense of a party, the request for discovery should be
allowed.” Brady, 238 F.R.D. at 437.
B.
Protective Orders.
Conversely, Rule 26(c)(1) authorizes the Court to issue a protective order, for
good cause shown, “to protect a party or person from annoyance, embarrassment,
oppression, or undue burden or expense.” Fed. R. Civ. P. 26(c)(1). Under Rule
26(c), a court may impose a protective order that forbids “the disclosure or
discovery” or prohibits “inquiry into certain matters, or limit[s] the scope of
disclosure or discovery to certain matters.” Fed. R. Civ. P. 26(c)(1)(A), (D). “The
burden is upon the party seeking the protective order to show the necessity of its
issuance, which contemplates a particular and specific demonstration of fact as
distinguished from stereotyped and conclusory statements.” Meisenheimer v. DAC
Vision Inc., No. 3:19-CV-1422-M, 2019 WL 6619198, at *2 (N.D. Tex. Dec. 4, 2019)
(quoting In re Terra Int’l, 134 F.3d 302, 306 (5th Cir. 1998) (brackets omitted)).
Courts have generally concluded that to obtain a protective order, the moving party
must show both “good cause and a specific need for protection.” Id. (citing Landry v.
Air Line Pilots Ass’n, 901 F.2d 404, 435 (5th Cir. 1990)).
The Fifth Circuit has noted the following with respect to Rule 26(c)’s good
cause requirement:
[T]he federal courts have superimposed a somewhat demanding
balancing of interests approach to the Rule. Under the balancing
standard, the district judge must compare the hardship to the party
against whom discovery is sought against the probative value of the
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information to the other party. Courts also weigh relevant public
interests in this analysis.
Cazorla v. Koch Foods of Miss., L.L.C., 838 F.3d 540, 555 (5th Cir. 2016) (internal
quotations and citations omitted). To successfully oppose a motion for protective
order, however, the party seeking discovery may “need to make its own showing
of . . . the proportionality factors, including the importance of the issues at stake in
the action, the amount in controversy, the parties’ relative access to relevant
information, the parties’ resources, and the importance of the discovery in resolving
the issues[.]” Dennis v. United States, No. 3:16-CV-3148-G-BN, 2017 WL 4778708, at
*4 (N.D. Tex. Oct. 23, 2017). The court has broad discretion in determining whether
to impose a protective order. Harris v. Amoco Prod. Co., 768 F.2d 669, 684 (5th Cir.
1985).
The scope of what is discoverable is not limited simply to facts, but also may
properly include other “matter[s]” that are relevant to a party's claims or defenses,
“even if not strictly fact-based.” Samsung v. Chung, 321 F.R.D. 250, 279 (N.D. Tex.
2017). For example, the information sought need not, standing alone, prove or
disprove a claim or defense, or even have strong probative force. Id. The role of
discovery in this respect is merely to find support for properly pleaded claims, rather
than to find the claims themselves. Torch Liquidating Trust ex rel. Bridge Assocs. L.L.C.
v. Stockstill, 561 F.3d 377, 392 (5th Cir. 2009).
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C.
Depositions Directed to Organizations.
Rule 30(b)(6) permits a party to name a corporate entity as a deponent and
requires the notice or subpoena to “describe with reasonable particularity the matters
for examination.” Fed. R. Civ. P. 30(b)(6). “For Rule 30(b)(6) to effectively
function, the requesting party 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.” Fulbright v. Union P. R.R. Co., No. 3:20-CV2392-BK, 2021 WL 3809103, at *1-2 (N.D. Tex. June 29, 2021) (quoting Dennis v.
United States, No. 3:16-CV-3148-G-BN, 2017 WL 4778708, at *8 (N.D. Tex. Oct. 23,
2017)). “Otherwise, an overly broad Rule 30(b)(6) notice may subject the noticed
party to an impossible task. If the noticed organization cannot identify the outer
limits of the areas of inquiry noticed, compliant designation is not feasible.” Dennis,
2017 WL 4778708, at *8 (citation omitted). And while a party who receives a
deposition notice may move for a protective order pursuant to Fed. R. Civ. P.
26(c)(1) to limit the scope of the topics for examination, a corporation nevertheless
has a duty to present and prepare a Rule 30(b)(6) designee “to the extent matters are
reasonably available, whether from documents, past employees, or other sources.”
Brazos River Auth. v. GE Ionics, Inc., 469 F.3d 416, 433 (5th Cir. 2006).
III. ANALYSIS
In opposing the MPOs, Plaintiffs argue that the requested discovery is
necessary to determine whether diversity jurisdiction exists, because they believe they
11
can defeat diversity jurisdiction if, through deposition testimony, they determine that
(1) Selene is a necessary party and (2) the citizenship of the Trust (rather than the
citizenship of U.S. Bank), controls for diversity purposes.
On January 16, 2025, the Court entered a Memorandum Opinion and Order
denying Plaintiffs’ motion for a continuance. (See Dkt. No. 52.) In that motion,
Plaintiffs sought to continue all deadlines (Dkt. No. 34), including the September 19,
2024 deadline for amended pleading and joinder of parties. Among other things,
Plaintiffs sought to amend their complaint to bring claims against Miguel
Hernandez, the party from whom they purchased the Property. (See Dkt. No. 34 at
¶ 24.) But, as the Court explained, Plaintiffs were aware, or should have been aware,
of their potential claims against Hernandez at the inception of their lawsuit. (See
Dkt. No. 52 (citing Dkt. No. 1-2 (“Compl”) at ¶ 12).) Plaintiffs’ only explanation for
failing to timely file a motion to amend their complaint and continue deadlines was
that they hoped the case would settle early. (See Dkt. No. 34 at ¶¶ 21-27.)
Plaintiffs also claim they delayed certain discovery activities while waiting for
the case to settle because they wanted to keep litigation costs down. (See id. at ¶¶ 14,
21.) As the Court noted, “[t]he Fifth Circuit has admonished litigants against taking
this kind of ‘wait and see’ approach to requesting leave to amend.” (See Dkt. No. 52
at 10-11 (citing Goldstein v. MCI WorldCom, 340 F.3d 238, 255 n.6 (5th Cir. 2003)
(citation omitted).)
Plaintiffs’ “wait-and-see” approach having proven unsuccessful, Plaintiffs now
seek to launch a jurisdictional challenge. Plaintiffs contend that U.S. Bank’s
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organizational structure regarding who is carrying out its duties and control over the
assets of the Trust is relevant to the Court’s diversity jurisdiction. (See generally Dkt.
No. 56.) Plaintiffs also contend that testimony is necessary (from both U.S. Bank
and Selene) to determine whether Selene has any interest in the subject loan, making
it a necessary party and, therefore, defeating diversity jurisdiction. (See id.)
Specifically, Plaintiffs seek testimony from U.S. Bank regarding: (1) U.S.
Bank’s organizational chart and structure (topics 5 and 15); (2) U.S. Bank’s
compensation for acting under the POA between Selene and U.S. Bank and Selene’s
compensation for acting as servicer of the FRLO and/or the HELOC (topics 10 and
11); (3) U.S. Bank’s servicing agreement with Selene (topic 14); (4) the consideration
U.S. Bank paid to Bank of America for the assignment of the security instrument
(topic 25); and (5) the assets, trustees, beneficiaries, and settlors of the trust and the
applicable trust agreements (topics 12, 37, 38, 39, and 40). (See generally Dkt. No.
56.)
Plaintiffs similarly seek testimony from Selene regarding: (1) Selene’s
organizational chart (topic 5); (2) Selene’s compensation for acting under the POA
and as servicer of the FRLO and/or the HELOC (topics 10 and 11); (3) Selene’s
servicing agreement with U.S. Bank (topic 12); and (4) the consideration U.S. Bank
paid to Bank of America for the assignment of the security instrument (topic 22) are
necessary to determine whether Selene has any interest in the subject loan, making
Selene a necessary party and, therefore, defeating diversity jurisdiction. (See generally
Dkt. No. 55.)
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U.S. Bank and Selene both respond that Plaintiffs’ jurisdictional arguments
lack merit. (See Dkt. No. 57 at 6-10; Dkt. No. 58 at 6-9.) U.S. Bank argues that its
organizational chart and structure, the compensation paid to Selene for acting under
the POA as servicer of the FRLO or the HELOC, U.S. Bank’s servicing agreement,
consideration U.S. Bank paid to Bank of America for the assignment of the security
instrument, and the assets, trustees, beneficiaries, and settlors of the trust and the
applicable trust agreements have no bearing on U.S. Bank’s citizenship for diversity
purposes. (See Dkt. No. 57 at 7.)
U.S. Bank argues that because it holds legal title to, and broad authority over,
the trust assets on behalf of the trust, U.S. Bank’s citizenship controls, and U.S. Bank
is a Minnesota citizen. (See id. (citing Dkt. No. 1).) U.S. Bank further argues that
even if the Trust’s Delaware citizenship should control, as Plaintiffs argue (see Dkt.
56 at ¶¶ 49-52), complete diversity still exists. (See Dkt. No. 57 at 8.)
With respect to Selene, U.S. Bank and Selene both respond that Plaintiffs
could have sued Selene when they initiated this lawsuit, but did not do so, and now
they attempt to blame U.S. Bank for their decision not to timely seek leave to add
Selene as a party to this lawsuit. (See generally Dkt. Nos. 58, 58.) And despite
Plaintiffs’ claims that U.S. Bank attempted to conceal Selene’s role as mortgage
servicer, U.S. Bank avers that U.S. Bank’s application for an expedited foreclosure
order in the underlying rule 736 action (filed on June 1, 2023)—to which Plaintiffs
were served with and appeared—included a Selene affidavit stating that Selene
services the subject loan, and U.S. Bank identified Selene in its initial disclosures
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served on Plaintiffs on July 8, 2024. (See Dkt. No. 57 at 5, 9 ((citing Dkt. 48-2,
Appendix (“App.”) 079).) U.S. Bank and Selene further argue that, Selene, as a
mortgage servicer, is only a nominal party, and not a necessary party whose absence
would prevent adjudication of Plaintiffs’ claims. (See Dkt. No. 57 at 8; Dkt. No. 58
at 7.)
The objections in the MPOs primarily go to relevance. The bar for relevancy
is low and includes any matter “that bears on, or that reasonably could lead to other
matter that could bear on, any issue that is or may be in the case.” Oppenheimer
Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978) (citing Hickman v. Taylor, 329 U.S.
495, 501 (1947)). Discovery is not limited to issues raised by the pleadings or to the
merits of a case, for discovery itself is designed to help define and clarify the issues.
Id. For example, where issues arise as to jurisdiction or venue, discovery is available
to ascertain the facts bearing on such issues. Oppenheimer Fund, 437 U.S. at 351 n.34
(citing 4 J. Moore, Federal Practice ¶ 26.56 [6], p. 26–131 (2d ed. 1976)).
Under Rule 26(b)(1) and Fifth Circuit case law, discovery requests must seek
information that is relevant to the parties' claims or defenses as pleaded and may not
be used only to find new claims or defenses. And as explained above, to successfully
oppose a motion for protective order, a party may well need to make its own
showing of many or all of the proportionality factors, including the importance of the
issues at stake in the action, the amount in controversy, the parties' relative access to
relevant information, the parties' resources, and the importance of the discovery in
15
resolving the issues, in opposition to the resisting party’s showing. Dennis, 2017 WL
4778708, at *4. Plaintiffs here have failed to make such a showing.
Every argument that Plaintiffs make regarding relevance comes down to the
same contention: They seek information to defeat diversity jurisdiction, based on
either (1) their contention that Selene, a citizen of Texas, is a necessary party, or
(2) their contention that the citizenship of the Trust, not the citizenship of U.S. Bank,
is controlling. Neither of these arguments establish that the requested discovery is
relevant to the claims or defenses pleaded.
A.
Plaintiffs’ jurisdictional arguments fail.
When a trustee is sued in its capacity as trustee of a trust, the trustee’s
citizenship controls so long as it is an active trustee whose control over the assets
held in its name is real and substantial. Bynane v. Bank of New York Mellon, 866 F.3d
351, 357 (5th Cir. 2017) (citing Navarro v. Sav. Ass’n v. Lee, 446 U.S. 458, 464–65
(1980) (holding that when the trustees are named as parties in the lawsuit, “a trustee
is a real party to the controversy for purposes of diversity jurisdiction when he
possesses certain customary powers to hold, manage, and dispose of assets for the
benefit of others”)); compare Americold Realty Tr. v. Conagra Foods, Inc., 577 U.S. 378
(2016) (explaining that, because corporations and unincorporated entities, such as
the Maryland “real estate investment trust” at issue, are treated differently for
jurisdictional purposes, the Supreme Court “adhere[s] to [the] oft-repeated rule that
diversity jurisdiction in a suit by or against the entity depends on the citizenship of
‘all [its] members’”). As the Fifth Circuit explained in Bynane, the rules expressed in
16
Navarro and Americold “coexist,” and “the Navarro rule still controls when the trustee
sues or is sued in its own name.” Bynane, 866 F.3d at 357.
Applying the appropriate analytical framework to this case, U.S. Bank's
citizenship determines diversity jurisdiction. Plaintiffs sued “Defendants U.S. Bank
Trust National Association” 8 and “U.S. Bank Trust National Association, Not In Its
Individual Capacity But Solely As Owner Trustee For RCF 2 Acquisition Trust.”
(See Compl.) Because U.S. Bank, the trustee, was named as the defendant in this
lawsuit, U.S. Bank is the real party to the controversy (and therefore its citizenship is
what matters in determining diversity jurisdiction) because its control over the Trust's
assets is real and substantial. See Navarro, 446 U.S at 464–65; Bynane, 866 F.3d at
357. U.S. Bank alleged in its removal notice that it is a Minnesota citizen. (See Dkt.
No. 1 at ¶¶ 4-5.) Plaintiffs do not challenge this statement, nor do they dispute they
are Texas citizens. (See Dkt. No. 56 at ¶¶ 49-52.) Accordingly, there is complete
diversity of citizenship, and Plaintiffs have failed to show how information regarding
the Trust is relevant to their claims. See Dennis, 2017 WL 4778708, at *4; Brady, 238
F.R.D. at 437.
Plaintiffs’ argument that they need discovery into the Trust’s assets, including
the trustee, settlors, and beneficiaries of the Trust, and the trust agreements, to
determine whether the Trust’s Delaware citizenship should control fails for an
As noted above, Plaintiffs have since moved to dismiss U.S. Bank, in its individual
capacity, without prejudice. (See Dkt. No. 44-46.)
8
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additional reason. (See Dkt. No. 56 at ¶¶ 49-52.) Even if the Trust’s Delaware
citizenship controlled—which the Court does not find to be the case—complete
diversity still exists.
Additionally, to the extent Plaintiffs contend that these topics are relevant to
explore whether Selene is a necessary party, these arguments likewise fail. “[C]ourts
that have addressed the issue of whether the mortgage servicer was a necessary party
have determined that the mortgage servicer was only a nominal party whose
presence was not necessary and whose absence would not prevent the courts from
entering a final judgment.” U.S. Bank Nat’l Ass’n v. Richardson, No. 3:17-CV-2271-L,
2019 WL 1115059, at *4 (N.D. Tex. Mar. 11, 2019) (citing Powell v. Nationstar Mortg.
LLC, No. 4:16-CV-251, 2017 WL 191261, at *2 (E.D. Tex., Jan. 18, 2017)), and
Schmelzer v. Nationstar Mortg., LLC, No. 4:16-CV-389, 2016 WL 4368735, *1 (E.D.
Tex. Aug. 16, 2016)). Therefore, “[Selene’s] participation in this lawsuit is not
required for foreclosure by U.S. Bank to be proper.” Id.; see also Schmelzer, 2016 WL
4368735, *1 (a mortgage servicer was not a necessary party to a request for
declaratory relief seeking to invalidate a lien).
Furthermore, “[w]hen removal is based on diversity of citizenship, diversity
must exist at the time of removal.” Tex. Beef Grp. v. Winfrey, 201 F.3d 680, 686 (5th
Cir. 2000); see also Doddy v. Oxy USA, Inc., 101 F.3d 448, 456 (5th Cir. 1996)
(jurisdiction is fixed at the time of removal). “Accordingly, when determining
whether jurisdiction is present and removal is proper, the Court is to consider the
claims as alleged in the state court petition as they existed at the time of removal.”
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Quibodeaux v. Nautilus Ins. Co., No. 1:10-CV-739, 2012 WL 12919188, at *3 (E.D.
Tex. July 30, 2012) (citing Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264
(5th Cir. 1995)), adopted, 2012 WL 12919189 (E.D. Tex. Aug. 21, 2012). Plaintiffs
here have not disputed that diversity jurisdiction existed at the time of removal.
Moreover, Selene is not a party to this case. Although Plaintiffs could have
sued Selene when they initiated this lawsuit, they did not do so. Plaintiffs assert that
U.S. Bank “concealed” Selene’s role as mortgage servicer, appearing to suggest that
this “concealment” prevented them from moving to remand, but the record does not
support this assertion. Contrary to Plaintiffs’ assertion, U.S. Bank’s application for
expedited foreclosure order in the underlying rule 736 action (filed on June 1, 2023)
included a Selene affidavit stating Selene services the subject loan (U.S. Bank App. 69), and U.S. Bank disclosed Selene in its initial disclosures served on Plaintiffs on
July 8, 2024 (U.S. Bank App. 79).
Plaintiffs also acknowledged in the parties’ June 21, 2024 Joint Status Report
that Selene was the servicer of the loan, that Selene and U.S. Bank had the same
address, and that Selene is a domestic Texas company. (See Dkt. No. 13 at 5.)
Although Plaintiffs stated in the Joint Status Report they intended to file a remand
motion due to lack of jurisdiction (see id. at 6), they have not done so. Thus,
Plaintiffs cannot now attempt to cure their decision not to timely seek leave to add
Selene as a party by disputing that diversity jurisdiction existed at the time of
removal. Even assuming that Plaintiffs could add Selene as a party at this juncture—
which they cannot—Selene’s presence would be nominal and would not destroy
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diversity jurisdiction for the reasons outlined above. See Richardson, 2019 WL
1115059, at *4; Powell, 2017 WL 191261, at *2; Schmelzer, 2016 WL 4368735, at *1.
Plaintiffs also claim that, because U.S. Bank has refused to produce
documents regarding these topics (see Dkt. No. 56 at 12-13, 15-18, 20-23; Dkt. No. 55
at 12-19), Selene’s testimony is their last resort to obtain this information, but
Plaintiffs did not to move to compel U.S. Bank to produce additional documents;
and the January 15, 2025 deadline to file motions to compel U.S. Bank to produce
additional documents has passed. (See Dkt. No. 43.) Therefore, Plaintiffs waived
any complaint regarding U.S. Bank’s production. See Slack v. Outback Steakhouse of
Fla., LLC, No. 6:20-CV-00103, 2022 WL 1177892, at *1 (E.D. Tex. Apr. 20, 2022)
(“Likewise here, Slack did not move to compel production or seek to have the court
overrule Outback’s objections to the document request. As such, Slack waived her
complaint that Outback did not produce additional incident reports.” (citing Calderon
v. Presidio Valley Farmers Ass’n, 863 F.2d 384, 389 (5th Cir. 1989))).
B.
Any discovery regarding the servicing agreement is irrelevant.
Plaintiffs also seek testimony regarding the December 10, 2020 servicing
agreement between U.S. Bank and Selene, arguing that the servicing agreement is
relevant because it predates the November 2, 2023 POA by three years, and
therefore, Selene must have only been acting on U.S. Bank’s behalf pursuant to the
servicing agreement when loan servicing transferred to Selene effective May 2, 2022.
(See Dkt. No. 56 at 13-15 (topic 6), 16-17 (topic 14).); Dkt. No. 55 at14-15 (topic 6),
16-17 (topic 12.) U.S. Bank responds that Plaintiffs misunderstand mortgage
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servicing, as “[i]t is common practice for mortgage servicers and mortgagees to
execute new powers of attorney over time.” (See Dkt. No. 57 at 10; U.S. Bank App.
82-95 (POAs dated January 20, 2022, August 17, 2022, and November 2, 2023).)
Plaintiffs do not dispute that Selene services the loan for U.S. Bank, and in
fact, they state: “This lawsuit can be distilled down to competing claims for
declaratory judgment as to whether a security interest in the Plaintiffs’ home held by
Defendant US Bank . . . is valid.” (See Dkt. No. 56 at 5.) Furthermore, as
previously explained, Selene is, at best, “only a nominal party whose presence is not
necessary and whose absence would not prevent the courts from entering a final
judgment.” Richardson, 2019 WL 1115059, at *4 (citation omitted); Schmelzer, 2016
WL 4368735, *1 (a mortgage servicer was not a necessary party to a request for
declaratory relief seeking to invalidate a lien). Thus, Plaintiffs have not shown that
the rights and obligations of U.S. Bank and Selene under the servicing agreement
and the parties’ compliance with obligations under that agreement are any way
relevant to the validity of the lien at issue in this litigation.
C.
Until there is a determination of liability, attorneys’ fees are irrelevant.
Plaintiffs also seek deposition testimony as to U.S. Bank and Selene’s
attorneys’ fees because U.S. Bank “has pled a claim for its attorneys’ fees as damages
in both this lawsuit and the fees incurred in the 736 Action.” (See Dkt. No. 56 at 1920 (topic 23); see also Dkt. No. 55 at 17-18 (topic 20).) Plaintiffs contend “[i]t is
unclear which entity Selene and Defendant will claim actually incurred the fees
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Defendant is claiming herein[.]” (See Dkt. No. 56 at 20.) Selene, however, is not a
party to this lawsuit and therefore has not asserted a claim for attorneys’ fees.
More importantly, “Texas courts ‘have long distinguished attorney’s fees from
damages.’” Richardson v. Wells Fargo Bank, N.A., 740 F.3d 1035, 1038 (5th Cir. 2014)
(quoting In re Nalle Plasics Family Ltd. P’ship, 406 S.W.3d 168, 172 (Tex. 2013)). “To
differentiate the two, Texas courts draw a distinction between compensation owed
for an underlying harm and fees that may be awarded for counsel’s services.” Id.
Thus, attorneys’ fees are not damages in these circumstances. They are, therefore,
only relevant after a determination of liability. See Straus v. DVC Worldwide, Inc., 484
F. Supp. 2d 620, 633 (S.D. Tex. 2007) (“attorneys’ fee claims are . . . resolved at the
close of the case, after both liability and damages have been determined.”). If a
judgment is entered in U.S. Bank’s favor, Plaintiffs will have the opportunity to
challenge the reasonableness of any motion for attorneys’ fees at that time.
Therefore, Plaintiffs have not shown the relevance of this testimony at this stage of
the lawsuit.
D.
Neither the consideration U.S. Bank paid Bank of America for the
assignment of the security instrument, nor Bank of America’s
representations and warranties pertaining to the loan are relevant.
Plaintiffs claim that testimony regarding the amount of consideration U.S.
Bank paid Bank of America is relevant to their equitable estoppel defense “to help
determine if [Bank of America] knowingly sold [U.S. Bank] a loan which it knew
was required to be released and the security instrument for the same was invalid, if
BOA mistakenly included the Loan in a broader group of loans that it sold to [U.S.
22
Bank], knowing it had been paid off, or if [U.S. Bank] paid nothing for the
assignment because [U.S. Bank] knew the Loan had been repaid and the Security
was invalid, but which [U.S. Bank] is wrongfully pursing nevertheless.” (Dkt. No.
56 at ¶ 48.)
Plaintiffs do not dispute that Bank of America assigned the loan to U.S. Bank.
The face of the assignment from Bank of America to U.S. Bank provides it was made
with “good and valuable consideration, the sufficiency of which is hereby
acknowledged.” (Dkt. No. 17-3.) This recitation of consideration on the
assignment’s face is sufficient to validate it. See Redi-Mix Sols., Ltd. v. Express
Chipping, Inc., No. 6:16-CV-298-RWS-KNM, 2016 WL 7634050, at *6 (E.D. Tex.
Dec. 2, 2016) (citing Dale v. Alethes, LLC, 2013 WL 12114867, at *3 (W.D. Tex. July
1, 2013) (collecting cases)), adopted, 2017 WL 26083 (E.D. Tex. Jan. 3, 2017).
Therefore, the amount paid for the assignment of the security instrument has no
bearing on the validity of the lien, and further discovery into the consideration paid
has no bearing on the parties’ claims or defenses.
Regarding Plaintiffs’ contention that testimony pertaining to Bank of
America’s representations and warranties is relevant to their equitable estoppel
defense, Plaintiffs’ argument hinges on an alleged representation by Bank of America
to Community National Title, LLC (“CNAT”) (see Dkt. No. 56 at ¶ 46) during a
previous transfer of title to the Property, not any representation or warranty from
Bank of America to U.S. Bank. Furthermore, Plaintiffs fail to explain how Bank of
America’s alleged representations to CNAT establish a representation to “all
23
subsequent purchasers of the Property–including Plaintiffs.” (Id.) Because the
validity of the lien at issue in this litigation will not be established or disproved by
any representation or warranty that Bank of America made to U.S. Bank, any
testimony in this regard is irrelevant.
Considering the above factors and all the circumstances of this case, the Court
finds that Plaintiffs have not shown “any possibility that the information sought may
be relevant to the claim or defense of any party.” Brady, 238 F.R.D. at 437; see
Merrill, 227 F.R.D. at 470. Consequently, the deposition topics at issue should not
be allowed.
IV. CONCLUSION
For all the foregoing reasons, Defendant’s Expedited Motion for Protective
Order from Certain Rule 30(b)(6) Deposition Topics (Dkt. No. 49) is GRANTED,
and Selene’s Expedited Motion for Protective Order from Certain Deposition Topics
(Dkt. No. 48) is likewise GRANTED.
SO ORDERED on January 28, 2025.
BRIAN McKAY
UNITED STATES MAGISTRATE JUDGE
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