Preview
ELECTRONICALLY FILED
COURT OF COMMON PLEAS
Friday, June 24, 2011 3:25:43 PM
CASE NUMBER: 2007 CV 09439 Docket ID: 16243925
GREGORY A BRUSH
CLERK OF COURTS MONTGOMERY COUNTY OHIO
COURT OF COMMON PLEAS
MONTGOMERY COUNTY, OHIO
HSBC BANK USA, N.A., AS CASE NO. 2007 CV 09439
INDENTURE TRUSTEE FOR THE
REGISTERED NOTEHOLDERS OF
RENAISSANCE HOME EQUITY LOAN
TRUST 2007-1,
Plaintiff, JUDGE: STEVEN K. DANKOF
MAGISTRATE: ROBERT F. COWDREY
-vs-
JAMIE W. THOMPSON, et al.,
Defendants.
PLAINTIFF HSBC BANK USA, N.A.’S MOTION TO STAY DISCOVERY
Plaintiff HSBC Bank USA, N.A., as Indenture Trustee for the Registered Noteholders of
Renaissance Home Equity Loan Trust 2007-1 (“HSBC”) respectfully submits this motion to stay
discovery relating to the counterclaim brought under the Fair Debt Collection Practices Act
(“FDCPA”) by Defendants Jamie W. Thompson and Jamie W. Thompson, Administratrix
(“Estate”) pending the Court’s rulings on HSBC’s motion for leave to file renewed motion for
summary judgment instanter, motion for summary judgment, and motion to set aside the
Magistrate Judge’s Order compelling discovery.
1
BACKGROUND
After nearly four years of litigation, the merits of the Estate’s counterclaim have now
been presented to the Court. And, as HSBC’s renewed motion for summary judgment makes
clear, the undisputed evidence demands dismissal of the Estate’s FDCPA counterclaim because
HSBC is not a “debt collector” and the challenged foreclosure complaint was not false or
misleading as a matter of law. Subjecting the parties to the burden and expense of wide-ranging
class discovery while HSBC’s motions are pending is unwarranted and prejudicial. None of the
recently-ordered discovery is related to the merits of the Estate’s counterclaim and thus is
irrelevant to the adjudication of summary judgment on that claim. Moreover, the broad scope of
the discovery request, which directs HSBC to identify, collect and review foreclosure-related
files for tens of thousands of Ohio borrowers, likely exceeds the scope of permissible pre-
certification discovery in any event. (See HSBC’s Mot. Set Aside.) A temporary stay of
discovery thus will avoid a significant and potentially unnecessary burden and expense to HSBC
while causing no prejudice to the Estate. (See Affidavit of Fernando Acebedo at ¶¶ 6-10
(attached as Ex. 1 to HSBC’s Reply Br. Supp. Mot. Set Aside) (“Acebedo Aff.”).)
For the reasons that follow, HSBC therefore respectfully requests a temporary stay of
discovery while HSBC’s motions are pending.
ARGUMENT
It is hornbook law that Ohio courts have the power to supervise their dockets, including
the power to grant discretionary stays and continuances when appropriate. See State ex rel. Buck
v. McCabe (1942), 140 Ohio St. 535, 537, 45 N.E.2d 763 (A Court of Common Pleas has
“supervisory power and control over its docket.”); Civ. R. 53 (“[T]he court may by order stay the
effectiveness of a magistrate’s order.”); see also Colley v. Colley, Franklin App. No. 09AP-333,
2009-Ohio-6776, at ¶ 69 (“[T]he trial court had the authority to stay the effectiveness of the
2
magistrate’s order as a result of Michael’s motion to set aside, and its exercise of that authority in
rendering its decisions on the related motions does not rise to the level of an abuse of
discretion.”). In the discovery context, courts have held that, “it is appropriate to stay discovery
until the underlying action is determined. The purpose of this is to avoid subjecting parties to the
burden and expense of discovery.” Watley v. Wilkinson, Franklin App. No. 03AP-1039, 2004-
Ohio-5062, at ¶ 18 (citing Harlow v. Fitzgerald (1982), 457 U.S. 800, 818, 102 S. Ct. 2727, 73
L. Ed. 2d 396). So too here, a temporary discovery stay would avoid the expenditure of
potentially unnecessary resources collecting and producing information that has no bearing on
the Estate’s counterclaim.
HSBC’s motion for summary judgment, if considered and granted, will dispose of the
Estate’s case in its entirety. Courts routinely grant temporary discovery stays pending the
resolution of preliminary questions that may be dispositive of the entire case. See Gettings v.
Bldg. Laborers Local 310 Fringe Bens. Fund (C.A.6, 2003), 349 F.3d 300, 304 (affirming
temporary stay of discovery where summary judgment motion turned on issues that could be
decided as a matter of law). Such temporary stays are particularly appropriate where the
resolution of such “preliminary questions” may be “based on legal determinations that could not
have been altered by any further discovery.” Muzquiz v. W.A. Foote Memorial Hospital, Inc.
(C.A. 6, 1995), 70 F.3d 422, 430; see also Hahn v. Star Bank, 190 F.3d 708, 719 (C.A.6, 1999)
(affirming stay of discovery when any additional discovery “would not have salvaged their
claims”). Here, HSBC’s motion for summary judgment establishes that the FDCPA
counterclaim is barred as a matter of law because HSBC is not a “debt collector” as defined by
the statute and was not engaged in debt collection activity. See 15 U.S.C § 1692a(6)(F)
(excluding from “debt collector” “any person collecting or attempting to collect any debt owed
3
or due or asserted to be owed or due another to the extent such activity . . . (iii) concerns a debt
which was not in default at the time it was obtained by such person.”). It is undisputed that
HSBC owned the note as of March 2007. (See Plaintiff HSBC USA, N.A.’s Motion and
Memorandum In Support of Motion For Summary Judgment On The Estate’s Counterclaim,
Statement of Undisputed Material Facts at ¶¶ 8-17.) It is undisputed that the mortgage loan was
current at the time. (See, e.g., Affidavit of Nichelle Jones at ¶¶ 9-11 (attached as Exh. 1 to
HSBC’s Mot. Summ. J.).) Evidence that the assignment of mortgage to HSBC was executed and
recorded shortly after filing the foreclosure complaint similarly bars the counterclaim. As
determined by several federal courts, the “filing of a foreclosure action by a plaintiff in the
process of obtaining an assignment not yet fully documented is not a deceptive, misleading, or
abusive tactic and does not violate the FDCPA.” Whittiker v. Deutsche Bank Nat’l Trust Co.
(N.D. Ohio 2009), 605 F. Supp. 2d 914, 931. Similarly, filing a foreclosure action is not a debt
collections activity within the purview of the FDCPA. Courts routinely distinguish an attempt to
enforce a security interest from debt collection activity subjected to the FDCPA. See, e.g.,
Glazer v. Chase Home Fin. LLC (N.D. Ohio Mar. 31, 2010), No. 1:09-cv-1262, 2010 U.S. Dist.
LEXIS 31457, at *11 (affirming report and recommendation that “activities in bringing a
mortgage foreclosure action are not subject to the FDCPA” because “actions in foreclosure, as
the Magistrate Judge correctly recommends, do not fall within the ambit of the FDCPA.”); see
also Warren v. Countrywide Home Loans, Inc., (C.A. 11, 2009), 342 Fed. App’x 458, 460
(C.A.11 2009) (“enforcement of a security interest through the foreclosure process is not debt
collection for purposes of the [FDCPA].”). Accordingly, the merits of the Estate’s FDCPA
counterclaim can be determined now as a matter of law; no additional fact gathering through the
discovery process is required.
4
Forcing HSBC to litigate while its motions are pending would be highly prejudicial.
There is no question that a “defendant must incur enormous litigation costs preparing for and
defending against a class action.” Chamberlain v. Ak Steel Corp. (1998), 82 Ohio St. 3d 389,
391, 1998-Ohio-401, 696 N.E.2d 569. So too here. As HSBC’s Motion to Set Aside the
Magistrate Judge’s Order makes clear, the expense and burden involved in producing the
discovery ordered here would be enormous. The voluminous documents and information
concerning tens of thousands of foreclosure proceedings compelled by the Magistrate Judge, for
instance, are not in HSBC’s possession, and the information is not easily attainable. (See
Acebedo Aff. at ¶¶ 6-10.) The information requested by the Estate is maintained by several
different servicers that store the information in varying ways, which may not include storing the
information on a state-by-state basis, further complicating HSBC’s ability to identify the relevant
mortgage loans. (See id.) In order to obtain the requested information, HSBC would have to
request all of the potentially relevant information from several different servicers, and then spend
significant resources reviewing the information to determine what is responsive. (See id.) By
contrast, the discovery requested – which seeks foreclosure documents for tens of thousands of
Ohio borrowers in connection with the Estate’s bid to seek certification of a class of Ohio
borrowers – has no bearing whatsoever on the merits of the Estate’s counterclaim. The
counterclaim can be resolved conclusively based on the undisputed factual record set forth in
HSBC’s motion for summary judgment, and without the aid of any of the discovery compelled
by the Court. Thus, a temporary stay will cause no prejudice to the Estate.1
1
Likewise, the Estate’s counterclaim arises out of a debt incurred by Howard Turner, who agreed not “to
participate in a class action in court or in arbitration, either as a class representative or a class member” if either
party elects to arbitrate a claim.
(Arbitration Agreement at ¶ 5 (attached as Tab A to Affidavit of Adam C.
Goldstein, attached as Exh. 1 to HSBC’s Notice of Reservation of Rights to Compel Arbitration.) The claims of
absent class members that entered into agreements similar to Mr. Turner’s Arbitration Agreement are subject to
arbitration.See 9 U.S.C. § 3. Requiring the parties to nonetheless litigate issues of class certification would simply
waste the valuable time of the Court and the resources of the parties.
5
CONCLUSION
For the foregoing reasons, HSBC respectfully requests that the Court grant a temporary
stay of discovery while its Motion for Leave to File Renewed Motion for Summary Judgment
Instanter, Motion for Summary Judgment, and Motion to Set Aside The Magistrate Judge’s
Order are pending.
RESPECTFULLY SUBMITTED,
DINN, HOCHMAN & POTTER, LLC:
/s/ Benjamin D. Carnahan, #0079737
BENJAMIN D. CARNAHAN (0079737)
THOMAS A. BARNI (0064555)
5910 Landerbrook Drive, Suite 200
Cleveland, Ohio 44124
Telephone: (440) 446-1100
Facsimile: (440) 446-1240
bcarnahan@dhplaw.com
Adam C. Goldstein (pro hac vice)
O’MELVENY & MYERS LLP
1625 Eye Street, N.W.
Washington, D.C. 20006
Telephone: (202) 383-5300
Facsimile: (202) 383-5414
agoldstein@omm.com
Attorneys for HSBC
6
PROOF OF SERVICE
Attorney for HSBC served a copy of the foregoing on the following parties by
Ordinary U.S. Mail, this 24th day of June, 2011.
Andrew M. Engel, Esq.
7071 Corporate Way
Suite 201
Centerville, OH 45459
Attorney for Defendants
Jamie W. Thompson, Administratrix and
Jamie W. Thompson
Amy K. Kaufman, Esq.
150 East Gay Street, 21st Floor
Collection Enforcement
Columbus, Ohio 43215-3130
Attorney for Defendant, State of Ohio
Department of Taxation
Colette S. Carr Esq.
301 W. Third Street
Dayton, OH 45402
Attorney for Defendant
Montgomery County Treasurer
/s/ Benjamin D. Carnahan, #0079737
DINN, HOCHMAN & POTTER, LLC
BY: BENJAMIN D. CARNAHAN,
#0079737
NOTICE
Defendants will take notice that a ruling on the within Motion will take place at the convenience
of the Court.
/s/ Benjamin D. Carnahan, #0079737
DINN, HOCHMAN & POTTER, LLC
BY: BENJAMIN D. CARNAHAN,
#0079737
7
Preview
ELECTRONICALLY FILED COURT OF COMMON PLEAS Friday, June 24, 2011 3:25:43 PM CASE NUMBER: 2007 CV 09439 Docket ID: 16243925 GREGORY A BRUSH CLERK OF COURTS MONTGOMERY COUNTY OHIO COURT OF COMMON PLEAS MONTGOMERY COUNTY, OHIO HSBC BANK USA, N.A., AS CASE NO. 2007 CV 09439 INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN TRUST 2007-1, Plaintiff, JUDGE: STEVEN K. DANKOF MAGISTRATE: ROBERT F. COWDREY -vs- JAMIE W. THOMPSON, et al., Defendants. PLAINTIFF HSBC BANK USA, N.A.’S MOTION TO STAY DISCOVERY Plaintiff HSBC Bank USA, N.A., as Indenture Trustee for the Registered Noteholders of Renaissance Home Equity Loan Trust 2007-1 (“HSBC”) respectfully submits this motion to stay discovery relating to the counterclaim brought under the Fair Debt Collection Practices Act (“FDCPA”) by Defendants Jamie W. Thompson and Jamie W. Thompson, Administratrix (“Estate”) pending the Court’s rulings on HSBC’s motion for leave to file renewed motion for summary judgment instanter, motion for summary judgment, and motion to set aside the Magistrate Judge’s Order compelling discovery. 1 BACKGROUND After nearly four years of litigation, the merits of the Estate’s counterclaim have now been presented to the Court. And, as HSBC’s renewed motion for summary judgment makes clear, the undisputed evidence demands dismissal of the Estate’s FDCPA counterclaim because HSBC is not a “debt collector” and the challenged foreclosure complaint was not false or misleading as a matter of law. Subjecting the parties to the burden and expense of wide-ranging class discovery while HSBC’s motions are pending is unwarranted and prejudicial. None of the recently-ordered discovery is related to the merits of the Estate’s counterclaim and thus is irrelevant to the adjudication of summary judgment on that claim. Moreover, the broad scope of the discovery request, which directs HSBC to identify, collect and review foreclosure-related files for tens of thousands of Ohio borrowers, likely exceeds the scope of permissible pre- certification discovery in any event. (See HSBC’s Mot. Set Aside.) A temporary stay of discovery thus will avoid a significant and potentially unnecessary burden and expense to HSBC while causing no prejudice to the Estate. (See Affidavit of Fernando Acebedo at ¶¶ 6-10 (attached as Ex. 1 to HSBC’s Reply Br. Supp. Mot. Set Aside) (“Acebedo Aff.”).) For the reasons that follow, HSBC therefore respectfully requests a temporary stay of discovery while HSBC’s motions are pending. ARGUMENT It is hornbook law that Ohio courts have the power to supervise their dockets, including the power to grant discretionary stays and continuances when appropriate. See State ex rel. Buck v. McCabe (1942), 140 Ohio St. 535, 537, 45 N.E.2d 763 (A Court of Common Pleas has “supervisory power and control over its docket.”); Civ. R. 53 (“[T]he court may by order stay the effectiveness of a magistrate’s order.”); see also Colley v. Colley, Franklin App. No. 09AP-333, 2009-Ohio-6776, at ¶ 69 (“[T]he trial court had the authority to stay the effectiveness of the 2 magistrate’s order as a result of Michael’s motion to set aside, and its exercise of that authority in rendering its decisions on the related motions does not rise to the level of an abuse of discretion.”). In the discovery context, courts have held that, “it is appropriate to stay discovery until the underlying action is determined. The purpose of this is to avoid subjecting parties to the burden and expense of discovery.” Watley v. Wilkinson, Franklin App. No. 03AP-1039, 2004- Ohio-5062, at ¶ 18 (citing Harlow v. Fitzgerald (1982), 457 U.S. 800, 818, 102 S. Ct. 2727, 73 L. Ed. 2d 396). So too here, a temporary discovery stay would avoid the expenditure of potentially unnecessary resources collecting and producing information that has no bearing on the Estate’s counterclaim. HSBC’s motion for summary judgment, if considered and granted, will dispose of the Estate’s case in its entirety. Courts routinely grant temporary discovery stays pending the resolution of preliminary questions that may be dispositive of the entire case. See Gettings v. Bldg. Laborers Local 310 Fringe Bens. Fund (C.A.6, 2003), 349 F.3d 300, 304 (affirming temporary stay of discovery where summary judgment motion turned on issues that could be decided as a matter of law). Such temporary stays are particularly appropriate where the resolution of such “preliminary questions” may be “based on legal determinations that could not have been altered by any further discovery.” Muzquiz v. W.A. Foote Memorial Hospital, Inc. (C.A. 6, 1995), 70 F.3d 422, 430; see also Hahn v. Star Bank, 190 F.3d 708, 719 (C.A.6, 1999) (affirming stay of discovery when any additional discovery “would not have salvaged their claims”). Here, HSBC’s motion for summary judgment establishes that the FDCPA counterclaim is barred as a matter of law because HSBC is not a “debt collector” as defined by the statute and was not engaged in debt collection activity. See 15 U.S.C § 1692a(6)(F) (excluding from “debt collector” “any person collecting or attempting to collect any debt owed 3 or due or asserted to be owed or due another to the extent such activity . . . (iii) concerns a debt which was not in default at the time it was obtained by such person.”). It is undisputed that HSBC owned the note as of March 2007. (See Plaintiff HSBC USA, N.A.’s Motion and Memorandum In Support of Motion For Summary Judgment On The Estate’s Counterclaim, Statement of Undisputed Material Facts at ¶¶ 8-17.) It is undisputed that the mortgage loan was current at the time. (See, e.g., Affidavit of Nichelle Jones at ¶¶ 9-11 (attached as Exh. 1 to HSBC’s Mot. Summ. J.).) Evidence that the assignment of mortgage to HSBC was executed and recorded shortly after filing the foreclosure complaint similarly bars the counterclaim. As determined by several federal courts, the “filing of a foreclosure action by a plaintiff in the process of obtaining an assignment not yet fully documented is not a deceptive, misleading, or abusive tactic and does not violate the FDCPA.” Whittiker v. Deutsche Bank Nat’l Trust Co. (N.D. Ohio 2009), 605 F. Supp. 2d 914, 931. Similarly, filing a foreclosure action is not a debt collections activity within the purview of the FDCPA. Courts routinely distinguish an attempt to enforce a security interest from debt collection activity subjected to the FDCPA. See, e.g., Glazer v. Chase Home Fin. LLC (N.D. Ohio Mar. 31, 2010), No. 1:09-cv-1262, 2010 U.S. Dist. LEXIS 31457, at *11 (affirming report and recommendation that “activities in bringing a mortgage foreclosure action are not subject to the FDCPA” because “actions in foreclosure, as the Magistrate Judge correctly recommends, do not fall within the ambit of the FDCPA.”); see also Warren v. Countrywide Home Loans, Inc., (C.A. 11, 2009), 342 Fed. App’x 458, 460 (C.A.11 2009) (“enforcement of a security interest through the foreclosure process is not debt collection for purposes of the [FDCPA].”). Accordingly, the merits of the Estate’s FDCPA counterclaim can be determined now as a matter of law; no additional fact gathering through the discovery process is required. 4 Forcing HSBC to litigate while its motions are pending would be highly prejudicial. There is no question that a “defendant must incur enormous litigation costs preparing for and defending against a class action.” Chamberlain v. Ak Steel Corp. (1998), 82 Ohio St. 3d 389, 391, 1998-Ohio-401, 696 N.E.2d 569. So too here. As HSBC’s Motion to Set Aside the Magistrate Judge’s Order makes clear, the expense and burden involved in producing the discovery ordered here would be enormous. The voluminous documents and information concerning tens of thousands of foreclosure proceedings compelled by the Magistrate Judge, for instance, are not in HSBC’s possession, and the information is not easily attainable. (See Acebedo Aff. at ¶¶ 6-10.) The information requested by the Estate is maintained by several different servicers that store the information in varying ways, which may not include storing the information on a state-by-state basis, further complicating HSBC’s ability to identify the relevant mortgage loans. (See id.) In order to obtain the requested information, HSBC would have to request all of the potentially relevant information from several different servicers, and then spend significant resources reviewing the information to determine what is responsive. (See id.) By contrast, the discovery requested – which seeks foreclosure documents for tens of thousands of Ohio borrowers in connection with the Estate’s bid to seek certification of a class of Ohio borrowers – has no bearing whatsoever on the merits of the Estate’s counterclaim. The counterclaim can be resolved conclusively based on the undisputed factual record set forth in HSBC’s motion for summary judgment, and without the aid of any of the discovery compelled by the Court. Thus, a temporary stay will cause no prejudice to the Estate.1 1 Likewise, the Estate’s counterclaim arises out of a debt incurred by Howard Turner, who agreed not “to participate in a class action in court or in arbitration, either as a class representative or a class member” if either party elects to arbitrate a claim. (Arbitration Agreement at ¶ 5 (attached as Tab A to Affidavit of Adam C. Goldstein, attached as Exh. 1 to HSBC’s Notice of Reservation of Rights to Compel Arbitration.) The claims of absent class members that entered into agreements similar to Mr. Turner’s Arbitration Agreement are subject to arbitration.See 9 U.S.C. § 3. Requiring the parties to nonetheless litigate issues of class certification would simply waste the valuable time of the Court and the resources of the parties. 5 CONCLUSION For the foregoing reasons, HSBC respectfully requests that the Court grant a temporary stay of discovery while its Motion for Leave to File Renewed Motion for Summary Judgment Instanter, Motion for Summary Judgment, and Motion to Set Aside The Magistrate Judge’s Order are pending. RESPECTFULLY SUBMITTED, DINN, HOCHMAN & POTTER, LLC: /s/ Benjamin D. Carnahan, #0079737 BENJAMIN D. CARNAHAN (0079737) THOMAS A. BARNI (0064555) 5910 Landerbrook Drive, Suite 200 Cleveland, Ohio 44124 Telephone: (440) 446-1100 Facsimile: (440) 446-1240 bcarnahan@dhplaw.com Adam C. Goldstein (pro hac vice) O’MELVENY & MYERS LLP 1625 Eye Street, N.W. Washington, D.C. 20006 Telephone: (202) 383-5300 Facsimile: (202) 383-5414 agoldstein@omm.com Attorneys for HSBC 6 PROOF OF SERVICE Attorney for HSBC served a copy of the foregoing on the following parties by Ordinary U.S. Mail, this 24th day of June, 2011. Andrew M. Engel, Esq. 7071 Corporate Way Suite 201 Centerville, OH 45459 Attorney for Defendants Jamie W. Thompson, Administratrix and Jamie W. Thompson Amy K. Kaufman, Esq. 150 East Gay Street, 21st Floor Collection Enforcement Columbus, Ohio 43215-3130 Attorney for Defendant, State of Ohio Department of Taxation Colette S. Carr Esq. 301 W. Third Street Dayton, OH 45402 Attorney for Defendant Montgomery County Treasurer /s/ Benjamin D. Carnahan, #0079737 DINN, HOCHMAN & POTTER, LLC BY: BENJAMIN D. CARNAHAN, #0079737 NOTICE Defendants will take notice that a ruling on the within Motion will take place at the convenience of the Court. /s/ Benjamin D. Carnahan, #0079737 DINN, HOCHMAN & POTTER, LLC BY: BENJAMIN D. CARNAHAN, #0079737 7