Coronado v. National Default Servicing Corp.

          ORDER ON DEFENDANT SELECT PORTFOLIO SERVICING, INC.’S MOTION TO COMPEL RESPONSES, FOR SANCTIONS AGAINST PLAINTIFFS, AND TO MODIFY THE COURT’S SCHEDULING ORDER (DOC. 13)

          SHEILA K. OBERTO UNITED STATES MAGISTRATE JUDGE

         I. INTRODUCTION

         Plaintiffs Ivan and Tammi Coronado filed suit against various corporate entities involved in the ownership, servicing, and non-judicial foreclosure of their home. (Doc. 1-4 (Complaint).) Defendant Select Portfolio Servicing, Inc. (“SPS”) seek to compel discovery related to Plaintiffs’ allegations “regarding the alleged fraudulently recorded documents, communications related to the Loan, Plaintiffs’ Loan payments, Plaintiffs’ default, non-judicial foreclosure proceedings, Plaintiffs’ alleged damages and other documents and information related to the causes of action asserted in Plaintiffs’ Complaint.” (Doc. 13 (Motion to Compel Responses (“Motion”), p. 5.)

         Because this information is necessary for SPS to adequately notice and prepare for Plaintiffs’ depositions and fully prepare its motion for summary judgment, SPS’s motion to compel is GRANTED. The scheduling order will be MODIFIED to allow the parties sufficient time to complete and review non-expert discovery. Finally, SPS’s motion to impose monetary sanctions against Plaintiffs to compensate SPS for its time and expenses in preparing the Motion is GRANTED in part.

         II. Background

         In September 2006, Plaintiffs obtained a home loan (the “Loan”) from Central Pacific Mortgage Company (“Central”) for $380, 000.00 to purchase real property located at 820 East Ashlan Avenue, Fresno, California 93704 (the “Property”). (Compl., ¶ 21.) In connection with the Loan, Plaintiffs executed a deed of trust (“DOT”) in favor of Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for Central and Central’s successors and assigns, securing the promissory note (“Note”) Plaintiffs executed in connection with the purchase of the Property. (Id.)

         On April 8, 2013, MERS recorded an Assignment of the Deed of Trust (“Assignment”), evidencing MERS’s assignment of the DOT to the Bear Sterns Mortgage Funding Trust.^[1] After SPS began servicing the Loan, Plaintiffs fell behind on their Loan payments and a Notice of Default and Election to Sell Under Deed of Trust (“NOD”) was recorded on May 13, 2014, with the Fresno County Recorder’s Office. (Id., ¶ 23, 28.) On December 10, 2014, a Notice of Trustee’s Sale (“NOTS”) was recorded with the Fresno County’s Recorder’s Office, evidencing the unpaid principal balance and other charges totaling $433, 244.08. (Id., 33.)

         On June 1, 2015, Plaintiffs filed the instant Complaint.^[2] Plaintiffs claim that (1) Defendants did not properly account for their Loan payments; (2) Defendants stated incorrect sums due and owing in the NOD and NOTS; (3) Defendants failed to contact them to discuss options to avoid foreclosure prior to recording the NOD; and (4) the chain of title is void because MERS lacked authority to assign the Loan to the Trust and SPS fraudulently executed a substitution of trustee. (Id., ¶¶ 4-6, 23-25, 27-28, 30-32.) Plaintiffs alleged claims for: (1) violation of California Homeowners’ Bill of Rights; (2) violation of California Civil Code section 2923.5; (3) negligence; (4) violation of California Business and Professions Code § 17200 et seq.; (5) constructive fraud; (6) slander of title; (7) quiet title; (8) declaratory relief; and (9) injunctive relief. (Id., pp. 12-29.)

         Defendants filed their Answer to the Complaint in state court on June 23, 2015. (Doc. 1-6.) On March 15, 2016, SPS served Interrogatories, Set One, Numbers 1-22 (the “Interrogatories”) and Requests for Production of Documents, Set One, Numbers 1-25 (the “RFPs”) (collectively, the “Propounded Discovery”) separately upon each of the Plaintiffs. (Doc. 13-1 (Declaration of Kristapor Vartanian), ¶ 2.)^[3]

         The Propounded Discovery includes various questions and document requests related to Plaintiffs’ allegations regarding the alleged fraudulently recorded documents, communications related to the Loan, Plaintiffs’ Loan payments, Plaintiffs’ default, non-judicial foreclosure proceedings, Plaintiffs’ alleged damages and other documents and information related to the causes of action asserted in Plaintiffs’ Complaint. (Id. at Ex. A.) Defendants seek this discovery “so that they may notice each of the Plaintiffs’ depositions in a timely manner and to properly prepare their motion for summary judgment within the required timeframe. Plaintiffs’ responses to the Propounded Discovery were due to SPS by no later than April 19, 2016.” (Doc. 13, p. 2; see also Vartanian Decl., ¶ 3.)

         No responses were received by SPS on April 19, 2016. (Id.) On May 6, 2016, SPS sent a meet and confer letter to Plaintiffs informing Plaintiffs that all objections to the discovery requests are waived, and attempting to schedule a telephonic conference to discuss the issue. (Id. at ¶ 4, Ex. B.) The parties met and conferred by telephone on May 10, 2016, and Plaintiffs agreed to provide complete, verified responses, without objections, to the Propounded Discovery (including all responsive documents), by May 16, 2016. (Id. at ¶ 5, Ex. C.)

         On May 16, 2016, however, Plaintiffs failed to produce any responses to the Propounded Discovery. (Id. at ¶ 6.) Though Plaintiffs provided some documents, it is unclear the documents include all responsive documents, because Plaintiffs have not responded in any way to the RFPs. (Id., ¶ 6, n. 2.) Defense counsel emailed Plaintiffs and again informed Plaintiffs of their failure to respond. (Id. at ¶ 7, Ex. D.) Plaintiffs responded that “[w]e were hoping to work this out Pro Se, but after further review of the questions . . . [w]e will not be answering” until “we [have] retain[ed] counsel.” (Id.) Plaintiffs still have neither provided any responses to the Propounded Discovery nor contacted Defendants regarding the outstanding discovery.

         SPS filed the instant motion on June 29, 2016, seeking an order compelling Plaintiffs to respond to the outstanding discovery, imposing sanctions on Plaintiffs, and modifying the scheduling order to allow the completion of non-expert discovery. (Doc. 13.) In lieu of filing an opposition, Plaintiffs filed a notice of change of address on July 6, 2016. (doc. 14.) Out of an abundance of caution, the Court ordered SPS to serve Plaintiffs with another copy of the Motion at their post office box and reset the deadline for Plaintiffs to file their opposition to the Motion, if any. (Doc. 15.) When Plaintiffs failed to file any opposition, pursuant to the Court’s order, the matter was deemed unopposed and submitted on the pleadings and the hearing was vacated. (Doc. 17.) The non-expert discovery motion deadline is currently set for August 15, 2016. (Doc. 12.)

         III. Scope of ...