Trevino v. Caliber Home Loans, Inc. (In re Trevino), CASE NO: 10–70594

• Decision Date: 12 January 2017
• Docket Number: CASE NO: 10–70594,ADVERSARY NO. 13–7031
• Citation: 564 B.R. 890
• Parties: IN RE: Jose TREVINO, Sr., et al, Debtors Teresa Trevino, et al, Plaintiffs v. Caliber Home Loans, Inc., et al, Defendants
• Court: U.S. Bankruptcy Court — Southern District of Texas

564 B.R. 890

IN RE: Jose TREVINO, Sr., et al, DebtorsTeresa Trevino, et al, Plaintiffs

v.Caliber Home Loans, Inc., et al, Defendants

CASE NO: 10–70594

ADVERSARY NO. 13–7031

United States Bankruptcy Court, S.D. Texas, McAllen Division.

Signed January 12, 2017

Theodore O. Bartholow, Megan F. Clontz, Karen L. Kellett, Caitlyn N. Wells, Kellett & Bartholow PLLC, Dallas, TX, for Plaintiffs.

Melissa S. Hayward, Franklin Hayward LLP, Dallas, TX, Michael Peter Parmerlee, Golden Operating Corporation, Richardson, TX, for Defendants.

MEMORANDUM OPINION

[Resolving ECF Nos. 45, 138, 150, 167, 178 ]

Eduardo V. Rodriguez, United States Bankruptcy Judge

I. INTRODUCTION

The first duty of man is the seeking after and the investigation of truth.¹ Today the Court issues its memorandum opinion in this seemingly endless saga of discovery disputes between the litigants. Pending before the Court are five matters: (i) Defendants U.S. Bank Trust, N.A. as Trustee for LSF8 Master Participation Trust and Caliber Home Loans, Inc.'s Joinder in Defendant HSBC's (1) Expedited Motion for Stay of Debtors' Motion to Compel Discovery Pending Ruling on HSBC's Dispositive Motion; (2) Expedited Motion for Protective Order; and (3) Response to Debtors' Motion to Compel HSBC to Produce Documents; and Response to Motion to Compel Production of Documents; (ii) Plaintiffs' Amended Motion to Compel Caliber Home Loans, Inc. and U.S. Bank Trust, N.A. to Produce Documents; (iii) Plaintiffs' Motion for Leave to File Supplemental Complaint; (iv) Plaintiffs' Expedited Motion for Sanctions Pursuant to Fed. R. Civ. P. 37 to Exclude Testimony of Clint Burton or Anyone Else Not Presented on July 27, 2016 for the Rule 30(B)(6) Corporate Represen[t]ative Depos[i]tion; and (v) Defendants' Motion To Reopen The Evidence Pursuant to Rule 59(a)(2). See generally [ECF No. 45] (the "Joinder "); [ECF No. 138] (the "Motion to Compel "); [ECF No. 150] (the "Motion for Leave "); [ECF No. 167] (the "Motion for Sanctions "); [ECF No. 178] (the Motion to Reopen "). This Court conducted an evidentiary hearing on the instant matters on September 13, 2016, and which concluded on October 18, 2016. In consideration of the arguments presented in the hearings on these matters, all other evidence in the record, and relevant case law, for the reasons stated in this Memorandum Opinion, this Court determines that (i) the Joinder should be granted in part and denied in part, (ii) the Motion to Compel should be granted in part and denied in part, (iii) the Motion for Leave should be denied, (iv) the Motion for Sanctions should be denied as moot as to all relief except for Plaintiffs' reservation of the right to seek attorney's fees in the future due to the Motion to Strike being granted by the Court, and (v) the Motion to Reopen should be denied.

II. FINDINGS OF FACT

This Court makes the following Findings of Fact and Conclusions of Law pursuant to Federal Rules of Bankruptcy Procedure 7052, which incorporates Fed. R. Civ. P. 52, and 9014. To the extent that any Finding of Fact constitutes a Conclusion of Law, it is adopted as such. To the extent that any Conclusion of Law constitutes a Finding of Fact, it is adopted as such.

For the purposes of this Memorandum Opinion and, to the extent not inconsistent herewith, this Court adopts and incorporates by reference each of the Finding of Facts in this Court's Amended Memorandum Opinion. [ECF No. 105 at 3–6] (the "Amended Memorandum Opinion "); see also In re Trevino , 535 B.R. 110, 123–25 (Bankr. S.D. Tex. 2015).

On August 25, 2010, Jose and Teresa Trevino (collectively, the "Plaintiffs ") filed a Chapter 13 bankruptcy petition. [Case No. 10–70594, ECF No. 1]. On December 30, 2013, Plaintiffs initiated this adversary proceeding against Defendants HSBC Mortgage Services, Inc. ("HSBC "), U.S. Bank Trust, N.A. ("U.S. Bank "), and Caliber Home Loans, Inc. ("Caliber ") (collectively, the "Defendants "). [Case No. 13–07031, ECF No. 1].

On February 3, 2014, U.S. Bank and Caliber, (collectively, the "Caliber Defendants ") filed their Motion to Dismiss Adversary Proceeding with Prejudice, to which Plaintiffs filed their response on March 19, 2014. [ECF Nos. 13, 22]. At the scheduling conference held on April 21, 2014, the court directed the Caliber Defendants to file a reply, amendment, or amended motion to dismiss regarding their argument that a transferee of a loan in bankruptcy can be a holder in due course, which the Caliber Defendants filed on May 5, 2014. [ECF No. 28 at 12–14, 18]; [ECF No. 29]. Plaintiffs filed a reply brief on May 19, 2014. [ECF No. 32]. On August 18, 2014, HSBC filed its Motion for Judgment on the Pleadings or, in the alternative, Summary Judgment. [ECF No. 38].

On April 25, 2014, HSBC served Plaintiffs with its Rule 26 Initial Disclosures. [ECF No. 33–1]; [ECF No. 138–2]. Caliber Defendants also served Plaintiffs with their Rule 26 Initial Disclosures on April 25, 2014. [ECF No. 138–2]. After Plaintiffs received the Initial Disclosures from HSBC and Caliber Defendants, Plaintiffs' Counsel initiated written communications with the Defendants and served requests for production and deposition notices. See generally [ECF No. 33–1]; [ECF No. 138–2]. Specifically, Plaintiffs served requests for production of documents² upon the Caliber Defendants on July 2, 2014, and the Caliber Defendants served their responses to the Plaintiffs on August 4, 2014. [ECF No. 138 at ¶ 13]; see also [ECF No. 138–2 at 52–81].

On July 28, 2014, Plaintiffs filed their Motion to Compel HSBC to Produce Documents as a result of HSBC's alleged failure to cooperate meaningfully with discovery. [ECF No. 33]. In response, HSBC filed its Expedited Motion for Stay of Debtor's Motion to Compel and Discovery Pending Ruling of HSBC's Dispositive Motion wherein it requested the Court grant a stay of consideration of Plaintiffs motion to compel and a stay of discovery until the Court resolved HSBC's Motion for Judgment on the Pleadings, or in the alternative, Summary Judgment. [ECF No. 39]. On August 25, 2014, Plaintiffs next filed their Emergency Motion to Compel [Caliber Defendants] to Produce Documents and Deposition Dates. [ECF No. 43]. In that motion to compel, Plaintiffs allege that Caliber Defendants failed to produce the documents in response to Plaintiffs' requests for production of documents though they had produced the documents identified in their initial disclosures, and additionally would not provide prospective dates for depositions. Id. at 2–4. In response, Caliber Defendants filed their Joinder in HSBC's Motion to Stay in which Caliber Defendants requested, among other things, a protective order as to "documents and information produced by them ...." [ECF No. 45 at ¶ 2].

On August 26, 2014, the court held a hearing on Defendants' motions and allowed Plaintiffs until October 15, 2014 to file an amended complaint. [ECF No. 47]. After timely filing their First Amended Complaint, Plaintiffs filed their Motion for Leave to File a Second Amended Complaint on November 4, 2014. [ECF Nos. 58, 59]. On February 27, 2015, the court held a hearing on the Plaintiff's Motion for Leave to File a Second Amended Complaint and dismissed four of the claims asserted in the First Amended Complaint before granting Plaintiffs' motion and giving Plaintiffs until March 13, 2015 to file a second amended complaint. [ECF No. 74].

Plaintiffs filed their Second Amended Complaint on March 12, 2015, wherein Plaintiffs asserted claims against both HSBC, separately, and the Caliber Defendants. [ECF No. 78] (the "Second Amended Complaint "). In response to the Second Amended Complaint, HSBC filed its motion to dismiss on April 1, 2015, as did the Caliber Defendants. [ECF Nos. 79, 80]; see also [ECF Nos. 81, 82, 89, 90].

On April 30, 2015, the court conducted a hearing on the motions to dismiss. See [ECF Nos. 96, 97, 105, 106]; see also [ECF No. 92]. In the court's Amended Memorandum Opinion, the court dismissed multiple claims that had been asserted by the Plaintiffs, but denied the requested dismissal of the remaining claims. [ECF No. 105]. To wit, the following claims were dismissed:

• Count I: Abuse of process claims against HSBC.

• Count IV: Relief pursuant to Fed. R. Bankr. P. 3002.1(i).

• Count V: Claim objection to Proof of Claim No. 21.

• Count VIII: The claims against HSBC pursuant to 15 U.S.C. §§ 1692e(2) and 1692e(10).

• Count IX: The claim against Caliber pursuant to 15 U.S.C. § 1692e(12). All other claims contained in Count IX are allowed.

• Count X: All claims under the Texas Debt Collection Act.

• Count XI: Unreasonable debt collection claims against all Defendants

• Count XVI: The request for sanctions under 11 U.S.C. § 105(a) against HSBC.

• Count XXI: All negligence claims against HSBC.

• No other claims are dismissed.

Id. at 1.

The Plaintiffs assert the following remaining claims against the Defendants: (i) Abuse of Process; (ii) Objection to HSBC's 3002.1 notice;³ (iii) Violations of 15 U.S.C. §§ 1692e, 1692e(2), 1692e(5), 1692f, and 1692k (Fair Debt Collection Practices Act) as to Caliber regarding the 3002.1 notice filed on July 24, 2013, a letter concerning that 3002.1 notice, and March 2013 letter sent by HSBC; and (iv) Breach of Contract solely as to U.S. Bank and HSBC. See generally [ECF No. 105]; see also [ECF Nos. 138 at ¶ 12, 146 at ¶ 40]. Plaintiffs also seek injunctive relief, declaratory relief, sanctions, and actual and punitive damages. See generally [ECF No. 105]; see also [ECF Nos. 138 at ¶ 12, 146 at ¶ 40]. Finally, Plaintiffs seek attorney's fees on multiple bases. See generally [ECF No. 105]; see also [ECF Nos. 138 at ¶ 12, 146 at ¶ 40].

Prior to the issuance of the Amended Memorandum Opinion, [ECF No. 105], the Defendants, respectively, filed their answers to Plaintiffs' Second Amended Complaint. See generally [ECF Nos. 100, 101].

On August 26, 2015, Plaintiffs filed an unopposed motion seeking to schedule a status conference to discuss the lack of a scheduling order, which was...