Fenske-Buchanan v. Bank of America NA, et al, No. 2:2011cv01656 - Document 86 (W.D. Wash. 2012)
Court Description: ORDER granting in part and denying in part 41 Motion to Compel; denying 51 Motion for Sanctions; granting 58 Motion for Extension of Time to Complete Discovery; denying 60 Motion to Strike Response ; granting 64 Motion for Reconsideration. Parties are to submit a revised case schedule by 6/21/12; signed by Judge Marsha J. Pechman.(SC)
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Fenske-Buchanan v. Bank of America NA, et al Doc. 86 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 PK FENSKE-BUCHANAN, 11 12 13 14 Plaintiff, CASE NO. C11-1656 MJP ORDER ON MOTIONS, DISCOVERY AND SCHEDULING v. BANK OF AMERICA N.A., Defendant. 15 16 The Court, having received and reviewed: 17 1. Plaintiff’s Motion to Compel (Dkt. No. 41), Defendants’ Response (Dkt. No. 44), and 18 19 20 21 22 Plaintiff’s Reply (Dkt. No. 48); 2. Defendants’ Supplemental Statement (Dkt. No 55); Plaintiff’s Motion to Strike (Dkt. No. 60), and Defendants’ Opposition to Motion to Strike (Dkt. No. 61); 3. Plaintiff’s Motion for Sanctions (Dkt. No. 51), Defendants’ Opposition (Dkt. No. 66), Plaintiff’s Reply (Dkt. No. 69), and Defendants’ Surreply (Dkt. No. 71); 23 4. Plaintiff’s Motion for Extension of Time to Complete Discovery (Dkt. No. 58), 24 Defendants’ Opposition (Dkt. No. 62) and Plaintiff’s Reply (Dkt. No. 65); ORDER ON MOTIONS, DISCOVERY AND SCHEDULING- 1 Dockets.Justia.com 1 2 5. Plaintiff’s Motion for Reconsideration (Dkt. No. 64) and Defendants’ Response to Motion for Reconsideration (Dkt. No. 85). 3 and all attached declarations and exhibits, makes the following rulings: 4 IT IS ORDERED that Plaintiff’s Motion to Compel is GRANTED IN PART and 5 DENIED IN PART. 6 IT IS FURTHER ORDERED that Plaintiff’s Motion to Strike is DENIED. 7 IT IS FURTHER ORDERED that Plaintiff’s Motion for Sanctions is DENIED. 8 IT IS FURTHER ORDERED that Plaintiff’s Motion for Extension of Time to Complete 9 Discovery is GRANTED. 10 IT IS FURTHER ORDERED that the parties will meet and confer and present to the 11 Court a proposed case schedule with new deadlines for discovery and dispositive motions and a 12 proposed new trial date by no later than June 21, 2012. 13 IT IS FURTHER ORDERED that Plaintiff’s motion for reconsideration of the dismissal 14 of the Consumer Protection Act claim is GRANTED; the claim alleging a violation of the 15 Washington Consumer Protection Act is reinstated. 16 Background 17 This is a multi-count complaint against Defendants Bank of America , N.A. (BANA) and 18 BAC Home Loans Servicing, L.P. (BACHLS) by Plaintiff, a mortgagee who claims in essence 19 that her prepayments of principal were systematically misapplied and that Defendants retaliated 20 against her when she complained. The Court will not attempt to summarize the lengthy and 21 complex factual setting in which these claims arise; such facts as are necessary to explain the 22 rulings on the various motions at issue will be included in the relevant sections. 23 The motions at issue are primarily concerned with issues which have arisen during the 24 discovery process, as well as a motion for reconsideration arising out of the Court’s ruling on an ORDER ON MOTIONS, DISCOVERY AND SCHEDULING- 2 1 earlier motion to dismiss. On June 14, 2012, the Court held a status/scheduling conference with 2 the parties at which the discovery issues were discussed and (hopefully) resolved – the results of 3 that conference will be reflected in this order. 4 Discussion/Analysis 5 Motion to Compel 6 Following the status/scheduling conference, the parties agreed that the following 7 information either has been provided or will be provided following a further meet and confer: 8 1. The names of all of Defendants’ employees who touched Plaintiff’s file for the period 9 between her first request for application of a principal prepayment and a time to be 10 determined by the parties. 11 2. The organization charts for the departments who employed the people identified in #1. 12 3. All communications between the people identified in #1 concerning Plaintiff’s file. 13 4. Copies of the policies and procedures by which the decisions by people identified in #1 14 affecting Plaintiff’s loan were made. 15 Additionally, defense counsel has agreed to sit down with Plaintiff’s attorney, go through 16 the collection of undifferentiated documents which were provided in response to Plaintiff’s 17 discovery requests and identify which documents were provided in response to which specific 18 discovery request. 19 Several of Plaintiff’s disputed discovery requests involve interrogatories or requests for 20 production (RFPs) for records on events or practices which affected loan recipients throughout 21 Defendants’ customer base. Defendants have responded to these requests by labeling them 22 “overbroad” and “unduly burdensome.” The Court has encouraged counsel for both sides to 23 confer with each other to narrow the requests down to information which is relevant to Plaintiff’s 24 claims and to confer with Defendants’ IT department to identify databases and search terms ORDER ON MOTIONS, DISCOVERY AND SCHEDULING- 3 1 which can produce the information which is useful to Plaintiff without being wasteful of 2 Defendants’ time and resources. 3 The parties also have what appears to be a minor dispute centering on the impact of the 4 Gramm-Leach-Bliley Act (GLBA), which prohibits financial institutions from disclosing 5 “nonpublic personal information” to nonaffiliated third parties without notice to their customers. 6 15 U.S.C.A. § 6801(a). There does not seem to be any real disagreement that Plaintiff’s 7 discovery requests fall under an exemption to GLBA where the disclosure is necessary to 8 “respond to judicial process” (15 U.S.C.A. § 6802(e)(8)). To the extent that Defendants believe 9 that a court order is required to trigger their obligation to disclose, they may consider this ruling 10 to constitute that court order. Defendants are also ordered to reveal to Plaintiff forthwith 11 whether they are withholding any documents under a claim of GLBA immunity; if not, they shall 12 state so definitively. 13 14 Defendant’s “Supplemental Statement”/Plaintiff’s Motion to Strike 15 Following the ruling on their motion to dismiss, Defendants filed a “supplemental 16 statement” concerning Plaintiff’s motion to compel which argued that, in the wake of the 17 dismissal of the Plaintiff’s Consumer Protection Act (CPA) claims, any discovery request of 18 Plaintiff’s which was “company-wide” in its scope should be mooted, since she now had no need 19 for information which could establish a “public-wide” impact of any of Defendants’ actions. 20 The Court finds (as Defendants have conceded) that the argument was improperly raised 21 by means of Defendants’ “supplemental statement” -- the FRCP makes no allowance for such a 22 pleading. At the very least, Defendants should have requested permission to file the statement. 23 24 ORDER ON MOTIONS, DISCOVERY AND SCHEDULING- 4 1 Nevertheless, as the issue has now been raised and briefed by both sides, the Court will proceed 2 to rule on it by denying Defendants’ request. 3 First, as indicated above and discussed in greater detail below, the Court is reinstating 4 Plaintiff’s CPA claim. This entitles Plaintiff to seek discovery on the “public interest” element 5 of that claim relevant to the impact of Defendants’ policies and practices on their customers 6 within Washington State. 7 Second, even had the CPA claim been dismissed, it would still be incorrect to state that 8 Plaintiff has no need for customer information that could lead to the discovery of a “pattern or 9 practice” of malfeasance on Defendants’ part. The Court agrees that “to prove fraudulent intent, 10 retaliation and systematic and deliberate practice, discovery into how many times the practice 11 has been employed necessarily is relevant.” Mtn to Strike, p. 2. Proof of scienter required for 12 establishing fraud alone can support the production of information related to company-wide 13 practices. 14 15 Motion for Sanctions 16 Following entry of a protective order, Defendants provided Plaintiff with 67 pages of 17 Bates-stamped material (Dkt. No. 54-4) – although no narrative was provided, the material 18 appeared to be the transaction record for Plaintiff’s mortgage account. The documents were 19 redacted and accompanied by a privilege log justifying every redaction on the basis that “[n]otes 20 reflect attorney-client communication regarding litigation.” Dkt. No. 54-6. An unredacted copy 21 of the document was inadvertently provided to Plaintiff’s expert who contacted Plaintiff’s 22 counsel with that information. Although Plaintiff’s counsel returned the unredacted version to 23 defense counsel, concerns had been raised about the redactions and Plaintiff’s counsel requested 24 ORDER ON MOTIONS, DISCOVERY AND SCHEDULING- 5 1 that Defendants submit the redacted and unredacted copies to the Court for in camera review. 2 Defendants declined that request and instead delivered an unredacted copy of the materials to 3 Plaintiff, accompanied by a declaration that the documents were still subject to claims of 4 protection and privilege. Dkt. No. 54-12. 5 Defendants argue that all the redacted material represents good faith claims of attorney- 6 client privilege and/or work product. The Ninth Circuit defines the elements of attorney-client 7 privilege as follows: 8 9 10 11 1. 2. 3. 4. 5. 6. 7. 8. Where legal advice of any kind if sought From a professional legal advisor in his or her capacity as such The communications relating to that purpose Made in confidence By the client Are, at that instance, permanently protected From disclosure by the client or by the legal advisor Unless the privilege is waived. 12 In re: Fischel, 557 F.2d 209, 211 (9th Cir. 1977). Work-product protection applies to 13 “documents and tangible things prepared in anticipation of litigation or for trial” by or on behalf 14 of a party, and protects materials prepared for litigation that reflect the thought process of 15 counsel. FRCP 26(b)(3); see Hickman v. Taylor, 329 U.S. 495, 511 (1947). 16 The Court fails to see how either of these privileges applies to the material which was 17 redacted by Defendants’ counsel from the documents at issue. 18 In some of the redacted instances, there is no indication at all that the redacted activity 19 (e.g., “REQUEST: REVERSE FUNDS AND REPOST WITH THE CORRECT EFF DATES” at 20 pp. 722, 726) was done at the request of Defendants’ counsel or that Defendants’ counsel was 21 notified. Some of the redacted material simply lists the name of a BANA employee (e.g., 22 PATRICIA BUCHANAN at pp. 731, 733, 734). Even where the redaction indicates the 23 possibility of attorney involvement (e.g., “RECEIVED EMAIL FROM BAC LEGAL RE 24 ORDER ON MOTIONS, DISCOVERY AND SCHEDULING- 6 1 MISAPPLIED PYMTS BEGINNING 03/30/10. SENT REPLY ADV WILL RESEARCH 2 LOAN HISTORY AND HAVE ANY PYMTS MISAPPLIED CORRECTED WILL REPLY TO 3 LEGAL AFTER FURTHER RESERARCH OF PYMTS” at p. 718; ‘LOAN HISTORY WAS 4 REQUESTED TO BE FAXED WITH DATES FROM 07/2010 TO 11/20/11… Attention1: 5 PATRICIA K BUCHANAN Attention 2: JAMIE WALK (BANA attorney)” at p. 723), there is 6 no indication that the activity occurred because “legal advice was sought by the client” or that 7 the redaction was protecting any “documents prepared in anticipation of litigation.” “Work 8 product” does not apply to notations made in Plaintiff’s loan account that a request was 9 communicated from an attorney to an employee of a client. 10 The notations in the loan account that do not reflect any attorney involvement are clearly 11 not protected. Nor does the Court find that the notations that make mention of legal counsel are 12 protected because they do not represent instances where legal advice was being sought by the 13 client; they represent either notations of a communication where research was requested or the 14 results of proactive research requested by the attorneys themselves. 15 All of which leads to the conclusion that this material was improperly redacted, and the 16 effect of the redaction would have been to hamper Plaintiff’s efforts to discover who was 17 involved in correcting the misapplication 1 of her principal prepayments. However, having met 18 with the parties and placed the case back on a course which will (again, hopefully) avoid these 19 sorts of misunderstandings for the remainder of the litigation, the Court is not inclined to impose 20 sanctions and will simply let this ruling stand as a caution to the parties to utilize their privileges 21 and protections wisely and with restraint. 22 1 Plaintiff claims that one effect of the redactions is to “conceal” Defendants’ awareness that her principal 23 prepayments had been misapplied. Defendants note, correctly, that there is plenty of mention in the originally unredacted portions of the document that the payments had been misapplied; e.g., Dkt. Nos. 54-5 and 54-12 at p. 24 719. ORDER ON MOTIONS, DISCOVERY AND SCHEDULING- 7 1 Motion for Extension of Discovery 2 It was agreed between the Court and the parties that additional time would be needed for 3 discovery and dispositive motions in light of the current state of discovery, so Plaintiff’s motion 4 in this regard will be granted. The parties will submit a proposal for a revised case schedule. 5 6 Motion for Reconsideration 7 Plaintiff seeks reconsideration of the dismissal of Count VII, her CPA claim. That claim 8 was dismissed on the grounds that Plaintiff had done nothing more than argue that the practices 9 of which she complained had the “capacity” to impact the public, which was found to be 10 inadequate to satisfy the “public interest” requirement of a CPA violation. Dkt. No. 50, Order, p. 11 13. Plaintiff argues that the Court improperly analyzed the “public interest” element and the 12 Court agrees. 13 A close reading of the leading CPA case, Hangman Ridge, reveals that the “likelihood” 14 that others will be injured in a similar fashion is sufficient to support the “public interest” 15 element of the a CPA cause of action: 16 [I]t is the likelihood that additional plaintiffs have been or will be injured in exactly the same fashion that changes a factual pattern from a private dispute to one that affects the public interest. [citation omitted] Factors indicating public interest in this context include: (1) Were the alleged acts committed in the course of defendant's business? (2) Did defendant advertise to the public in general? (3) Did defendant actively solicit this particular plaintiff, indicating potential solicitation of others? (4) Did plaintiff and defendant occupy unequal bargaining positions? As with the factors applied to essentially consumer transactions, not one of these factors is dispositive, nor is it necessary that all be present. 17 18 19 20 21 Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash.2d 778, 790-791 22 (1986). 23 The factors enumerated by the Hangman Ridge court for the purpose of establishing the 24 “likelihood that additional plaintiffs have been or will be injured in exactly the same fashion” ORDER ON MOTIONS, DISCOVERY AND SCHEDULING- 8 1 emphasize that, from a standpoint of proper pleading, Plaintiff need only allege circumstances 2 which are at best tangentially related to the actual impact on consumers other than herself (e.g., 3 her mortgage was part of Defendants’ business, Defendants advertise to the general public, she 4 was actively solicited as a customer by Defendants and did not bargain with them from a position 5 of equivalent power). Plaintiff has plead a sufficient number of these factors to satisfy the 6 Hangman Ridge test for “likelihood of public impact” and it was error to dismiss her claim for 7 failure to plead that impact with more precision. 8 The fact that at least a portion of Plaintiff’s claims against Defendants springs from 9 allegedly boilerplate language in her mortgage documents lends further support to her argument 10 that the practices of which she complains have the potential to impact the wider public and is 11 sufficient to defeat (at this early stage) Defendants’ argument that she has not plead specific facts 12 suggesting a generalized pattern of conduct. It is entirely plausible that routine language utilized 13 in documents by institutions as large as BANA has a real and substantial potential for impacting 14 a wider public if there is an actionable gap between what the institution is representing as its 15 practice and what it is actually practicing. Plaintiff’s CPA claim may yet be vulnerable, post16 discovery, to an attack on summary judgment grounds, but she has plead the claim adequately 17 enough to proceed to discovery. 18 Plaintiff also argues that she has plead violations of several state statutes which were 19 created to protect the public interest and that a finding of violation of those statutes would 20 constitute a per se violation of the “public interest” element of the CPA. Hangman Ridge makes 21 it clear that it is a little more complicated than that: 22 23 24 ORDER ON MOTIONS, DISCOVERY AND SCHEDULING- 9 1 [T]he public interest element may be satisfied per se. The per se method requires a showing that a statute has been violated which contains a specific legislative declaration of public interest impact. In Haner v. Quincy Farm Chems., Inc., supra, 97 Wash. at 762, 649 P.2d 828, we stated the rule, which has continuing validity: [U]nless there is a ‘specific legislative declaration’ of a public interest, the public interest requirement ... is not per se satisfied ... 2 3 4 5 Id. at 791. 6 Plaintiff specifically argues that the Consumer Loan Act claim which the Court upheld 7 operates as a per se qualifier for CPA claims. But the statute itself reads that “[a]ny violation of 8 this chapter… is an unfair and deceptive act or practice and unfair method of competition in the 9 conduct of trade or commerce in violation of RCW 19.86.020 [CPA].” RCW 31.04.208. The 10 “public interest” element is specifically excluded from “per se violation” status in this statute, 11 and on that basis the Court does not accept that portion of Plaintiff’s argument. Nevertheless, the 12 CPA claim will be reinstated and permitted to proceed. 13 14 Conclusion 15 Plaintiff’s motion to compel will be granted in part and the parties are to proceed forward 16 with discovery utilizing the guidelines worked out at the status conference. Plaintiff’s motion to 17 strike Defendants’ supplemental statement will be denied, but Plaintiff will be permitted to 18 proceed forward with her discovery requests for certain information from the Defendants’ 19 customer-wide databases. 20 While the Court agrees that Defendants provided Plaintiff with improperly-redacted 21 materials, her motion for sanctions will be denied. 22 Plaintiff’s motion for an extension of discovery will be granted and incorporated into the 23 revised case schedule which the parties will file with the Court by June 21, 2012. 24 ORDER ON MOTIONS, DISCOVERY AND SCHEDULING- 10 1 Finally, Plaintiff’s motion for reconsideration of the dismissal of the Consumer 2 Protection Act claim will be granted, and the claim alleging a violation of the Washington 3 Consumer Protection Act is reinstated. 4 The clerk is ordered to provide copies of this order to all counsel. 5 Dated June 21, 2012. 6 8 A 9 Marsha J. Pechman United States District Judge 7 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 ORDER ON MOTIONS, DISCOVERY AND SCHEDULING- 11
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