Consumer Financial Protection Bureau v. Ocwen Financial Corporation, Inc. et al

MOTION to Compel Answer to Interrogatory 2 of its Second Set of Interrogatories

S.D. Fla.June 8, 2018

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA WEST PALM BEACH DIVISION CASE NO. 9:17-CV-80495-MARRA-MATTHEWMAN CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff, v. OCWEN FINANCIAL CORPORATION; OCWEN MORTGAGE SERVICING, INC.; and OCWEN LOAN SERVICING, LLC Defendants. PLAINTIFF’S MOTION TO COMPEL A COMPLETE ANSWER TO INTERROGATORY TWO OF ITS SECOND SET OF INTERROGATORIES Case 9:17-cv-80495-KAM Document 115 Entered on FLSD Docket 06/08/2018 Page 1 of 9 1 I. Introduction Pursuant to Fed. R. Civ. P. 37(a), Plaintiff, the Bureau of Consumer Financial Protection (“the Bureau”), respectfully moves the Court for an order compelling Ocwen Financial Corporation, Ocwen Mortgage Servicing, Inc., and Ocwen Loan Servicing, LLC (collectively “Defendants”) to provide a complete and accurate answer to Interrogatory 2 of the Bureau’s Second Set of Interrogatories. II. Background In its Complaint, the Bureau alleges that Defendants unlawfully foreclosed on borrowers in violation of Regulation X, 12 C.F.R. § 1024.41(g).1 Based on data that Defendants produced during the Bureau’s pre-litigation investigation, the Bureau identified approximately 2,200 affected borrowers. Defendants have claimed that not all of these borrowers are entitled to foreclosure protection under Regulation X. To assess this defense, the Bureau previously propounded Requests for Admissions (“RFAs”) to Defendants to identify the borrowers who are not covered by Regulation X. Instead of responding, Defendants sought a protective order to allow them to not answer the RFAs on the grounds that the form of discovery (i.e., via RFAs) was improper.2 As part of a compromise, the Bureau agreed to withdraw its RFAs and Defendants agreed they would instead produce the requested information through the production of electronically stored information (“ESI”) and answers to three interrogatories.3 The Bureau served its Second Set of Interrogatories on Defendants on April 2, 2018. Interrogatory 2 requests: For each Borrower listed in Exhibit A and identified in Your Responses to the Bureau’s Third Set of Document Requests, if you contend that the Borrower was not entitled to protection under Regulation X, 12 C.F.R. 1024.41(g), with respect to Your foreclosure sale upon his or her Loan: a. Describe in detail the factual basis (or bases) for Your contention, including all relevant dates related to the factual basis (or bases) for Your contention; and b. Identify, including by bates number, the specific documents and information, such as the specific data fields and entries from Your or Your service providers’ database(s), that support the factual basis (or bases) for Your contention. 1 Complaint ¶ 308 (Doc. 1). 2 See Doc. 55. 3 See Doc. 76. At the time of this compromise agreement, the Bureau provided Defendants with drafts of the three interrogatories, including Interrogatory 2 that is at issue in this motion. At that time, Defendants indicated that they may object to Interrogatory 2. Case 9:17-cv-80495-KAM Document 115 Entered on FLSD Docket 06/08/2018 Page 2 of 9 2 On May 2, 2018, Defendants served their written answers and objections to the Bureau’s Second Set of Interrogatories, in which they objected and refused to answer Interrogatory 2 on the grounds that it: (1) improperly seeks attorney work product and mental impressions and calls for a legal conclusion; (2) will be answered during expert discovery; and (3) is a premature contention interrogatory.4 The parties met-and-conferred on May 18, 2018, during which Defendants maintained their objections and refused to answer Interrogatory 2. III. Argument Contention interrogatories require the responding party to “state the basis of particular claims, defenses, or contentions in pleadings or other documents.”5 Rule 33(a)(2) provides that “[a]n interrogatory is not objectionable because it asks for an opinion or contention that relates to fact or the application of law to fact . . . .” 6 Indeed, as this Court has noted, “contention interrogatories constitute a valid and constructive discovery tool when used correctly.”7 Interrogatory 2 is a narrowly-tailored contention interrogatory that seeks the factual basis for Defendants’ defenses to the Bureau’s unlawful foreclosure claims. As discussed below, Defendants have no valid objections to answering Interrogatory 2—it does not seek Defendants’ work product, mental impressions, or call for a legal conclusion; it requests facts and should be answered during fact discovery; and it is not premature at this advanced stage of fact discovery. A. Interrogatory 2 seeks basic factual information, not mental impressions or legal conclusions. Interrogatory 2 is a straightforward contention interrogatory. For each borrower who Defendants contend is not entitled to foreclosure protection under Regulation X, Interrogatory 2 requests that Defendants identify: (1) the factual bases for their contention; and (2) all documents from the borrower’s servicing file that support the factual bases for their contention. Defendants nonetheless have objected to Interrogatory 2 on the ground that it improperly seeks attorney work product and mental impressions and calls for a legal conclusion. 4 Attached as Ex. 1. 5 McCarthy v. American Airlines, Inc., No. 07-61016, 2008 WL 11399631, at *1 (S.D. Fla. Mar. 12, 2008). 6 Fed. R. Civ. Proc. 33(a)(2). 7 Maharaj v. GEICO Casualty Co., No. 12-80582-CIV-Marra/Matthewman, 2013 WL 12084486, *2 (S.D. Fla. Jan. 7, 2013) (quoting Suncast Techn., L.L.C. v. Patrician Products, Inc., No. 07-80414-CIV, 2008 WL 179648, at *10 (S.D. Fla. Jan. 17, 2008)). Case 9:17-cv-80495-KAM Document 115 Entered on FLSD Docket 06/08/2018 Page 3 of 9 3 Courts in this district have consistently rejected such objections to contention interrogatories. In Maharaj, for example, the defendant objected to answering a contention interrogatory on the ground that it would improperly disclose attorney work product.8 This Court rejected that argument, finding that the interrogatory was “narrowly tailored and simply seeks [defendant’s] factual basis for one of its denials in its Answer to the Complaint.”9 In Spadaro v. City of Miramar, the court rejected the plaintiff’s objection to answering the defendants’ contention interrogatory, explaining: [I]n answering contention interrogatories the party is only giving the factual specifics which the party contends support a claim, and this in no way impinges on the attorney’s impressions or analysis as to how the attorney will endeavor to apply the law to facts. If this elementary principle were not applicable, contention interrogatories would not exist.10 And in Chauve v. Crociere, as here, the defendant objected to answering a contention interrogatory seeking the factual basis for his defenses on the grounds that it would improperly disclose attorney mental impressions or call for a legal conclusion.11 The court summarily rejected both of these objections and required the defendant to answer the interrogatory.12 As the court in a different case explained: “A defendant cannot assert numerous . . . defenses, and then take the position that any discovery concerning them calls for a legal conclusion.”13 Here, Interrogatory 2 only seeks the factual bases for Defendants’ contentions that certain foreclosed-on borrowers were not entitled to foreclosure protections under Regulation X. As in 8 2013 WL 12084486, at *2. 9 Id. (emphasis added). 10 No. 11-61907-CIV, 2012 WL 3042988 at *3–4 (S.D. Fla. Jul. 25, 2012); see also id. at *3 (citing (Perfect Web Tech, Inc. v. Inousa, Inc., No. 07-80286-CIV, 2008 WL 725726, at * 2–3 (S.D. Fla. Mar. 17, 2008) (rejecting work product objection to contention interrogatories that sought factual basis for defense); Hamilton v. RadioShack Corp., No. C 11-00888 LB, 2012 WL 2327171, at *4 (N.D. Cal. Jun. 18, 2012) (rejecting work production objection to contention interrogatory because “work product doctrine does not protect the facts of a particular claim”)); cf. Belfleur v. Salman Maintenance Service, Inc., No. 07-20219-CIV, 2007 WL 2608668, at *4 (S.D. Fl. Sep. 5, 2007) (granting motion to compel complete answers to interrogatory seeking all facts and legal justifications supporting each affirmative defense and to identify all documents relied in the response). 11 Case No. 06-61907, 2007 WL 2916326 at *7 (S.D. Fla., Oct. 8, 2007). 12 Id. 13 Donahay v. Palm Beach Tours & Transp., Inc., 242 F.R.D. 685, 688 (S.D. Fla. 2007) (rejecting objection that answering contention interrogatory improperly calls for a legal conclusion). Case 9:17-cv-80495-KAM Document 115 Entered on FLSD Docket 06/08/2018 Page 4 of 9 4 Maharaj, Spadaro, Chauve, Donahay, and other cases, the Court should reject Defendants’ objections that providing such basic information would improperly disclose attorney work product or mental impressions or calls for a legal conclusion. B. Defendants should answer Interrogatory 2 during fact discovery. Defendants have also objected to answering Interrogatory 2 until expert discovery—i.e., after fact discovery has concluded.14 But the fact that Defendants have hired a third party to review the servicing files of affected borrowers does not absolve them of their obligation to answer an interrogatory seeking critical facts that support their defenses during fact discovery.15 As discussed above, Interrogatory 2 seeks basic, factual information that supports Defendants’ defense that certain borrowers were not entitled to foreclosure protections under Regulation X. 16 For example, Defendants could contend that a borrower did not meet the requirements for foreclosure protections under Regulation X because: (1) the borrower did not submit a complete loss mitigation application; or (2) even if she did, it was not submitted more than 37 days before a scheduled foreclosure sale.17 If so, for that borrower, Defendants’ answer to Interrogatory 2 would just need to identify these facts (e.g., the borrower submitted a complete loss mitigation application less than 37 days before the scheduled foreclosure sale) and identify those documents from the borrower’s servicing file that support these facts. 14 Defendants’ agreement to provide an answer to Interrogatory 2 during expert discovery further undermines their objection that answering would improperly impinge on protected attorney work product or mental impressions. 15 See Arrowpac Incorporated v. Sea Star Line, LLC, Case No. 3:12–cv–1180, 2014 WL 12618688 at *1 (M.D. Fla. Aug. 22, 2014) (“The fact that [plaintiff] may later supplement its interrogatory answers with an expert report does not permit it to refuse to respond with whatever discoverable information it now holds.”) (citations and quotations omitted); Essex Builders Grp., Inc. v. Amerisure Ins. Co., 230 F.R.D. 682, 685 (M.D. Fla. 2005) (“It is no answer for plaintiffs to assert that they will need discovery or to consult with an expert to determine their losses.”); In re Allergan, Case No. 14–cv–02004, 2016 WL 10719393 at *6 (C.D. Cal. Sept. 14, 2016) (holding that “[p]laintiffs may not withhold basic facts of which they have knowledge simply because forthcoming expert analysis may alter their presently held factual contentions”). 16 Indeed, Defendants are already providing factual information in their answer to Interrogatory 1— which requests, for each borrower: (1) the date Defendants received a complete loss mitigation application; and (2) the date of the scheduled foreclosure sale as of the date Defendants received a complete loss mitigation application—that is relevant to their answer to Interrogatory 2. There is no reason why Defendants can answer Interrogatory 1 during fact discovery (they have stated they will answer by July 6) but must wait until expert discovery to provide some of this same information for Interrogatory 2. 17 See 12 C.F.R. 1024.41(g). Case 9:17-cv-80495-KAM Document 115 Entered on FLSD Docket 06/08/2018 Page 5 of 9 5 Defendants also have the information available to answer Interrogatory 2. They previously represented to the Bureau that they had reviewed the servicing files for the borrowers at issue and determined that a large number of these borrowers are not covered by Regulation X. Defendants also hired a third party to conduct an additional review of the servicing files for these borrowers. Defendants therefore have the exact information the Bureau seeks through Interrogatory 2: the factual bases for any defense that a borrower was not entitled to protection under Regulation X, and the documents that support the factual bases. Defendants both can and should answer Interrogatory 2 during fact discovery. The requested information is critical so that the Bureau can conduct targeted, follow-up discovery, including depositions, to assess Defendants’ defenses to the Bureau’s foreclosure claims. Needless to say, the Bureau would be severely prejudiced if it is unable to conduct such fact discovery. C. Interrogatory 2 is not a premature contention interrogatory. Defendants’ final objection, that Interrogatory 2 is premature, is also meritless. The Bureau filed its Complaint well over a year ago, on April 20, 2017. The parties have been engaged in fact discovery for the past 12 months, with approximately three months remaining until the close of fact discovery. Courts have repeatedly affirmed the propriety of contention interrogatories at similar points in fact discovery.18 And as discussed above, Defendants can and should answer Interrogatory 2 right now—especially because the Bureau still needs to take further discovery, including depositions, during the limited time remaining for fact discovery based on the information Defendants are to provide in their answer to Interrogatory 2. The court’s pronouncement in Donahay is equally apt here: “The time for more targeted, meaningful questions is now at hand.”19 IV. Conclusion For the foregoing reasons, the Bureau respectfully requests this Court to enter an Order compelling Defendants to provide a complete and accurate answer to Interrogatory 2. 18 See Spadaro, 2012 WL 3042988, at * 2 (contention interrogatory was not premature where parties had been litigating for over a year and near the close of fact discovery); see also Linde v. Arab Bank, PLC, Case No. CV–04–2799, 2012 WL 957970, at *1 (E.D.N.Y. Mar. 21, 2012) (same); see also Donahay, 242 F.R.D. at 688 (contention interrogatory not premature where case had been ongoing for several months and the plaintiff had already propounded basic identity interrogatories). 19 Donahay, 242 F.R.D. at 688. Case 9:17-cv-80495-KAM Document 115 Entered on FLSD Docket 06/08/2018 Page 6 of 9 6 Dated: June 8, 2018 Respectfully submitted, Attorneys for Plaintiff, BUREAU OF CONSUMER FINANCIAL PROTECTION JOHN C. WELLS Deputy Enforcement Director GABRIEL O’MALLEY Assistant Litigation Deputy /s/ Jan Singelmann Jan Singelmann E-mail: jan.singelmann@cfpb.gov Phone: 202-435-9670 Jean M. Healey jean.healeydippold@cfpb.gov Atur Desai atur.desai@cfpb.gov Tianna Baez tianna.baez@cfpb.gov Amanda Roberson amanda.roberson@cfpb.gov Erin Mary Kelly erin.kelly@cfpb.gov James Savage james.savage@cfpb.gov Stephanie Brenowitz stephanie.brenowitz@cfpb.gov Greg Nodler greg.nodler@cfpb.gov 1700 G Street NW Washington, DC 20552 Facsimile: (202) 435-7722 Case 9:17-cv-80495-KAM Document 115 Entered on FLSD Docket 06/08/2018 Page 7 of 9 7 CERTIFICATE OF GOOD FAITH CONFERENCE; CONFERRED BUT UNABLE TO RESOLVE ISSUES PRESENTED IN THE MOTION Pursuant to Local Rule 7.1(a)(3)(A), I hereby certify that counsel for the Bureau has met- and-conferred with Defendants in good faith but have been unable to resolve the issues. /s Jan Singelmann Jan Singelmann Case 9:17-cv-80495-KAM Document 115 Entered on FLSD Docket 06/08/2018 Page 8 of 9 8 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing was served on June 8, 2018 via CM/ECF on all counsel or parties of record listed below and : Attorneys for Defendants Bridget Ann Berry BerryB@gtlaw.com Andrew Stuart Wein weina@gtlaw.com GREENBERG TRAURIG, P.A. 777 South Flagler Dr., Suite 300 West Palm Beach, FL 33401 Telephone: 561-650-7900 Facsimile: 561-655-6222 Sabrina Rose-Smith SRoseSmith@goodwinlaw.com Catalina Azuero CAzuero@goodwinlaw.com Michelle Treadwell Briggs MBriggs@goodwinlaw.com Molly Madden MMadden@goodwinlaw.com Thomas Hefferon THefferon@goodwinlaw.com GOODWIN PROCTOR, LLP 901 New York Ave., NW Washington, D.C. 20001 Telephone: 202-346-4000 Facsimile: 202-346-4444 Matthew Previn mprevin@buckleysandler.com BUCKLEYSANDLER, LLP 1133 Ave. of the Americas, Suite 3100 New York, NY 10036 Telephone: 212-600-2310 Facsimile: 212-600-2405 /s Jan Singelmann Jan Singelmann Case 9:17-cv-80495-KAM Document 115 Entered on FLSD Docket 06/08/2018 Page 9 of 9