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Federal Deposit Insurance Corp. v. Bayone Real Estate Investment Corp.

United States District Court, N.D. California, San Jose Division

April 4, 2017

FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff,
v.
BAYONE REAL ESTATE INVESTMENT CORPORATION, et al., Defendants.

          ORDER GRANTING MOTION TO EXTEND DISCOVERY CUT-OFF [RE: ECF 75]

          BETH LABSON FREEMAN United States District Judge.

         Plaintiff Federal Deposit Insurance Corporation (“FDIC”), as Receiver for BankUnited, FSB, brings this suit, alleging that Defendants breached a written Mortgage Broker Agreement that set forth terms by which BankUnited would purchase or fund loans and Defendant Bayone Real Estate Investment Corporation (“Bayone”) would originate, sell, or assign loans. Compl. ¶ 9, ECF 1. According to FDIC, the loan documents for three loans submitted by Bayone to BankUnited-including a loan to borrower Lydia Fangon (the “Fangon Loan”)-contained inaccuracies, misrepresentations, and fraudulent statements. Id. ¶ 39. Defendants have denied liability. Answer, ECF 18. Defendants Bayone and Jinsong Guo have also filed counterclaims against FDIC and a third-party complaint, alleging that BankUnited approved loan applications submitted by third-parties without their consent and without conducting the required review and verification. Am. Countercl. ¶ 7-9, ECF 25; Am. Third-party Compl. ¶¶ 14-17, ECF 33.

         Before the Court is FDIC's motion to enlarge time for discovery so that it can depose third parties Yung-Ming Chou and Sarah C. Huang. ECF 75. This motion is unopposed by any party. For reasons set forth below, the Court GRANTS the motion.

         I. BACKGROUND

         Discovery closed on March 6, 2017, except for the deposition of Bayone, which took place on March 9, 2017. ECF 60; Gibbs Decl. ¶ 8-13. At Bayone's deposition, FDIC first learned that Bayone had been sued in 2009 by borrower Lydia Fangon, regarding the Fangon Loan at issue in this matter. Id. ¶ 14. Bayone's 30(b)(6) witness, Defendant Jinsong Guo, was unable to testify regarding the allegations or positions Bayone took in this previously undisclosed Fangon action and stated that all related documents would be in the possession of Bayone's former attorney Yung-Ming Chou. Id. ¶¶ 15-17.

         As to Sarah C. Huang, FDIC was unable to take her deposition prior to the discovery cutoff because difficulties in scheduling the deposition and personally serving Ms. Huang. Id. ¶¶ 25-32. Defendants allege that Sarah C. Huang, the appointed manager of Bayone's Cupertino office, submitted the loans at issue without Defendants' knowledge or consent. Mot. 5. Defendants further allege Ms. Huang forged Ms. Guo's signature. Id. This Court recently granted FDIC's request to serve Ms. Huang with a deposition subpoena via certified mail and with a copy of the subpoena served by certified mail on Ms. Huang's attorney, Kent Tierney. ECF 66.

         II. EGAL STANDARD

         Pretrial deadlines “may be modified only for good cause and with the judge's consent. Fed.R.Civ.P. 16(b)(4). In determining whether there is good cause to re-open discovery, courts consider the following factors:

1) whether trial is imminent, 2) whether the request is opposed, 3) whether the non-moving party would be prejudiced, 4) whether the moving party was diligent in obtaining discovery within the guidelines established by the court, 5) the foreseeability of the need for additional discovery in light of the time allowed for discovery by the district court, and 6) the likelihood that discovery will lead to relevant evidence.

U.S. ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d 1512, 1526 (9th Cir. 1995) vacated on other grounds, 520 U.S. 939 (1997) (citing Smith v. United States, 834 F.2d 166, 169 (10th Cir. 1987)).

         “Rule 16(b)'s ‘good cause' standard primarily concerns the diligence of the party seeking the amendment.” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992); see also Fed. R. Civ. P. 16 Advisory Committee's Notes (1983 amendment) (noting district court may modify pretrial schedule “if it cannot reasonably be met despite the diligence of the party seeking the extension.”). “If [the party seeking the modification] was not diligent, the inquiry should end there.” See Johnson, 975 F.2d at 609. “The district court is given broad discretion in supervising the pretrial phase of litigation, and its decisions regarding the preclusive effect of a pretrial order . . . will not be disturbed unless they evidence a clear abuse of discretion.” Id. at 607 (internal quotation marks and citation omitted).

         III. DISCUSSION

         The Court finds that there is good cause to extend discovery specifically for the depositions of Yung-Ming Chou and Sarah C. Huang. Given that trial is not imminent and about five months away, extending the discovery cut-off for 30 days only for these two depositions would not affect the trial schedule. The extension of the cut-off is also specific for the purpose of these two depositions and would not open up discovery of other issues. In addition, FDIC's motion is unopposed by Defendants and there is no showing of prejudice to Defendants by a significant delay of the proceedings or loss of evidence.

         The depositions sought by FDIC are also relevant and are delayed despite FDIC's diligence. With respect to Yung-Ming Chou, Defendant Bayone did not reveal the Fangon action until Bayone's 30(b)(6) deposition was taken on March 9, 2017. The Fangon action is relevant because it relates to one of the loans at issue in this case and the parties' statements or admissions in that action regarding Bayone's role in the origination the Fangon Loan would be important. Although several of FDIC's requests for production would have required production of documents relating to the Fangon action, Bayone ...


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