IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA
February 15, 2012
GREGG A. STANFORD, PLAINTIFF,
OCWEN FEDERAL BANK, FSB, ET AL.,
The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge
ORDER and FINDINGS & RECOMMENDATIONS
Previously pending on this court's law and motion calendar for February 9, 2012, was defendants' motion for monetary and terminating sanctions, filed January 26, 2012. Plaintiff filed an opposition on February 2, 2012. Chris Chapman appeared telephonically for defendants. Plaintiff made no appearance.*fn1 Having reviewed the papers in support of and in opposition to the motion and heard oral argument, the court now issues the following order.
Moving defendants are Ocwen Loan Servicing, LLC, successor in interest to Ocwen Federal Bank, FSB, and Bank of America, National Association as Successor by merger to LaSalle National Bank Association, as Trustee for the Certificateholders of the Mortgage Pass-Through Certificates 1997-R2 (erroneously sued as "Lasalle National Bank").
This action was originally filed in state court and removed to this court on July 8, 2010. After various motions, the case is proceeding on the second amended complaint, but only on the breach of contract claim. Plaintiff alleges that defendants did not reduce the principal balance on his home loan as agreed to in the contract for loan modification. Defendants point out that plaintiff has not made a payment on his loan since December, 2006, and for this reason it is apparent that plaintiff is in no hurry to prosecute this case.
Defendants previously brought a motion to compel plaintiff's attendance at deposition, in which they represented that they had twice noticed plaintiff's deposition, on October 13 and December 6, 2011,*fn2 only to receive a phone call from plaintiff's counsel the day before the scheduled depositions, telling them that plaintiff had disappeared and could not be located. Defendants sought and received an order setting plaintiff's deposition for January 26, 2012.*fn3 The order noted that plaintiff's counsel's actions were beyond reproach; however, plaintiff's own actions were not substantially justified. The order stated that "facts before the undersigned suggest that plaintiff is purposefully stalling his own prosecution of this action for reasons of remaining in his house -- payment free." (Order, filed January 6, 2012.)
The instant motion indicates that plaintiff did not appear at the re-scheduled deposition on January 26, 2012, but called his attorney on that date to prepare for his deposition which he claims he thought was on January 27th. Plaintiff contends that he made a mistake in scheduling his deposition. Plaintiff has now failed to appear at three scheduled depositions, and finally paid the monetary sanctions imposed in the previous order, but not within the time required by the order. The court finds plaintiff's most recent excuse not to be credible.
Defendants seek terminating sanctions under Rule 37(b) (2)(A)(v) and expenses in the amount of $3,730.90*fn4 under 37(d)(3) and (b)(2)(A)(v).
Rule 37 authorizes "a wide range of sanctions" for a party's failure to comply with discovery rules or court orders enforcing them. Wyle v. R.J. Reynolds Industries, Inc., 709 F.2d 585, 589 (9th Cir. 1983). Penalizing a party "for dilatory conduct during discovery proceedings" is discretionary. Bollow v. Federal Reserve Bank of San Francisco, 650 F.2d 1093, 1102 (9th Cir. 1981) (citing Fed. R. Civ. P. 37(a)(4)).
Fed. R. Civ. P. 37(a)(5) provides in part that if the motion to compel is granted "the court must, after giving an opportunity to be heard, require the party...whose conduct necessitated the motion, the party or attorney advising that conduct, or both to pay the movant's reasonable expenses incurred in making the motion, including attorneys' fees. But the court must not order this payment if: (i) the movant filed the motion before attempting in good faith to obtain the disclosure or discovery without court action; (ii) the opposing party's nondisclosure, response, or objection was substantially justified; or (iii) other circumstances make an award of expenses unjust." Fed. R. Civ. P. 37(a)(5)(A).
Precluding evidence so that the recalcitrant party cannot support defenses is comparable to entering dismissal, which "represent[s] the most severe penalty that can be imposed." U.S. v. Kahaluu Const., 857 F.2d 600, 603 (9th Cir. 1988); accord, Valley Engineers v. Electric Engineering Co., 158 F.3d 1051 (9th Cir. 1998). Accordingly, such sanctions are authorized only in "extreme circumstances" for violations "due to willfulness, bad faith, or fault of that party." Kahaluu Const., 857 F.2d at 603; see also Commodity Futures Trading Com'n v. Noble Metals Intern., Inc., 67 F.3d 766,770 (9th Cir. 1995) (affirming standard and upholding sanctions in egregious circumstances).*fn5 Bad faith does not require actual ill will; substantial and prejudicial obduracy may constitute bad faith. B.K.B. v. Maui Police Dept., 276 F.3d 1091, 1108 (9th Cir. 2002).
Five relevant factors also determine whether severe sanctions are appropriate:
(1) the public's interest in expeditious resolution of litigation;
(2) the court's need to manage its docket;
(3) the risk of prejudice to the other party;
(4) the public policy favoring disposition of cases on their merits; and
(5) the availability of less drastic sanctions.
Wanderer v. Johnston, 910 F.2d 652 (9th Cir. 1990) (default judgment for defendants' failure to comply with discovery); Malone v. U.S. Postal Service, 833 F.2d 128, 130 (9th Cir.1987).
This circuit has acknowledged that "[l]ike most elaborate multifactor tests, our test has not been what it appears to be, a mechanical means of determining what discovery sanction is just." Valley Engineers Inc. 158 F.3d at 1056. Inevitably where a court order is violated or discovery belatedly is produced, factors 1 and 2 support preclusive sanctions, and factor 4 cuts against them. Prejudice to the opposing party and the availability of less drastic sanctions, factors 3 and 5, are most often decisive. Id. Most critical for evaluating the risk of prejudice and whether less drastic sanctions would suffice is whether the discovery violations "so damage the integrity of the discovery process that there can never be assurance of proceeding on the true facts." Valley Engineers Inc., 158 F.3d at 1058.
Plaintiff's opposition states that he made an honest mistake in thinking his deposition was the day after the scheduled date, and he suggests that his deposition could have been taken a day later. He has offered to pay sanctions and costs for the last deposition and to be deposed if his deposition is reset. Because plaintiff did not appear at the hearing, his opposition may be deemed withdrawn. E.D. Local Rule 230(i).
Disregard of this court's order was not substantially justified. Plaintiff's excuse that he mistakenly calendared his deposition for the day after the scheduled deposition is difficult to fathom, especially in light of his history of not appearing at two prior depositions and the seriousness of the last hearing on this matter. This court's previous order warned plaintiff that failure to appear at his deposition, and failure to produce requested documents, would result in possible dismissal of his case and contempt charges. Defendants point out that plaintiff is a disbarred attorney and former officer of the court. If true, plaintiff is charged with additional knowledge of the seriousness of his inaction and the consequences of violating a court order, which is indicative of the willfulness of disobedience. Plaintiff has failed to put forth any justification or explanation for his disobedience, which further illustrates willfulness. Plaintiff's blatant failures to appear at his deposition, appear at hearings, and obey court orders has caused this case to be delayed for over four months, since October, 2011 when plaintiff first failed to appear at his deposition. This court's previous order found that plaintiff's counsel acted only in good faith in this litigation, and therefore only plaintiff himself was at fault. Plaintiff's failure to appear at the last court ordered deposition was inexcusable, and his non-credible excuse indicating he thought the deposition was the next day is not accepted in light of defendants' representations that plaintiff's own counsel attempted to reach him on the morning of the deposition and prior to it without success. According to defendants, plaintiff's counsel had considered calling defense counsel the day before the deposition to advise them not to travel to Sacramento because plaintiff had once again gone "underground and failed to communicate with his attorney." (Defs.' Reply at 2.)
The prejudice to defendants is great as this case has been pending since July, 2010, and plaintiff has not made payments on his home loan since December, 2006. Defendants have been put to the task of setting three depositions and bringing two motions in regard to plaintiff's refusal to attend his deposition. Furthermore, plaintiff has failed to pay the monetary sanctions ordered to be paid by February 3, 2012, but instead paid them on February 7, 2012. Plaintiff also failed to produce documents as ordered by the court on January 26, 2012.
The complete lack of discovery responses evidence affirmative bad faith, and have been solely within the control of plaintiff. "[D]isobedient conduct not shown to be outside the control of the litigant" is all that is required to demonstrate willfulness, bad faith or fault. Henry v. Gill Industries, Inc, supra, 983 F.2d at 949, quoting Fjelstad v. American Honda Motor Co., Inc., supra, 762 F.2d at 1341. Despite this court's prior ruling ordering responses and appearances, and imposing monetary sanctions, plaintiff failed to heed these warnings. Moreover, plaintiff's complete lack of discovery responses are so clearly abusive as to be made in bad faith. Accordingly, the court concludes that plaintiff's total failure to provide any discovery responses or appear at his third scheduled deposition represents willful violations of the Federal Rules of Civil Procedure and the prior order in this case.
The court next considers the factors set forth in Malone. "'The first two of these factors favor the imposition of sanctions in most cases, while the fourth cuts against a ... dismissal sanction. Thus the key factors are prejudice and the availability of lesser sanctions.'" Henry v. Gill Industries, Inc., supra, 983 F.2d at 948 (citation omitted).
The Ninth Circuit has held that "[a] defendant suffers prejudice if the plaintiff's actions impair the defendant's ability to go to trial or threaten to interfere with the rightful decision of the case." Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir.1990). Defendants, as well as the court, have been prejudiced in both these ways. Defendants' inability to obtain the most basic and initial discovery from plaintiff are no longer tolerable at this stage of pretrial proceedings, where the case has been pending in this court for over 19 months. At the time when both parties should be consolidating and refining their respective positions, defendants have been forced to formulate their case around gaping omissions and guesswork. The court is in no better position to overcome such overwhelming problems. The court has an interest in the efficient resolution of cases and managing its own docket, and does not have time to resolve each and every discovery dispute by reviewing every motion describing plaintiff's total lack of responses and participation which would have been unnecessary but for plaintiff's bad faith.
Moreover, no less drastic sanction appears appropriate. Monetary sanctions would clearly be to no avail as plaintiff continued to refuse to comply with his discovery obligations even after the sanctions were ordered. Evidence preclusion would also be to no avail. The discovery deadline of July 13, 2012 is looming; however, the parties are no further along than they were a year ago. The court holds out no hope that plaintiff will be willing to provide legitimately sought discovery. The abusiveness of plaintiff's discovery responses indicate a lack of cooperative spirit. "A judge with a caseload to manage must depend upon counsel [and/or the parties] meeting each other and the court halfway in moving a case toward trial." Buss v. Western Airlines, Inc., 738 F.2d 1053, 1054 (9th Cir. 1984). Thus, the court concludes, particularly in light of its prior order, that no sanction short of dismissal would be appropriate.
The court therefore concludes, based on a finding of bad faith and consideration of the critical Malone factors, that dismissal is warranted as a result of plaintiff's failure to comply with his discovery obligations.
In summary, plaintiff's willful disregard of the Federal Rules, and his lack of communication and cooperation with defense counsel in regard to all discovery, undermine the judicial process plaintiff himself has invoked. "[D]istrict courts cannot function efficiently unless they can effectively require compliance with reasonable rules." Chism v. National Heritage Life Ins. Co., 637 F.2d 1328, 1332 (9th Cir. 1981), overruled on other grounds, Bryant v. Ford Motor Company ("Bryant II"), 844 F. 2d 602, 605 (9th Cir. 1988) (en banc). It is therefore the conclusion of this court that there is no effective alternative short of dismissal.
In addition to the above sanction, the court also finds that monetary sanctions are required for defendants' having to bring this motion. In light of the previous order on monetary sanctions (Order of January 6, 2012), and its analysis, the undersigned will not engage here in lengthy analysis. Defendants' counsel shall be paid at the rate of $225/hr. for four hours in preparing the motion and reply and attending the hearing telephonically, 10.5 hours in preparing for, traveling to, and attending the January 26, 2012 deposition, and costs of $385.40 in airfare and $83 in taxi fare. Fees of $3,262.50 and costs of $468.40, for a total sanction award of $3,730.90 is imposed. Plaintiff shall personally pay this sum within twenty-eight days of the filed date of this order.*fn6 CONCLUSION
Accordingly, IT IS ORDERED that:
1. Defendants' motion for, inter alia, monetary sanctions, filed January 26, 2012, (dkt. no. 47), is granted.
2. Plaintiff shall personally pay the sum of $3,730.90 directly to defendants' counsel within twenty-eight days of this order.
IT IS HEREBY RECOMMENDED that: Defendants' motion for terminating sanctions, filed January 26, 2012, (dkt. no. 47), be granted, and this action be dismissed.
These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(l). Within fourteen (14) days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties. Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." Any reply to the objections shall be served and filed within fourteen (14) days after service of the objections. The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).