FBC Mortgage, LLC v. Broker Solutions, Inc

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 EUREKA DIVISION 7 8 FBC MORTGAGE, LLC, Case No. 23-cv-00143-CRB (RMI)

9 Plaintiff, ORDER 10 v. Re: Dkt. Nos. 112, 121, 122 11 BRIAN SKARG, et al., 12 Defendants.

13 14 Now pending before the court are three motions filed by Plaintiff: two motions for 15 attorneys’ fees, and a motion to compel (see dkts. 112, 121, 122). The motions have been fully 16 briefed (dkts. 114, 117, 124, 125, 126, 127), and the matters came on to be heard at oral argument 17 (dkt. 130). For the reasons stated below, Plaintiff’s First Motion for Attorneys’ fees (dkt. 112) is 18 granted, and Plaintiff’s Second Motion to Compel and its Second Motion for Attorneys’ Fees 19 (dkts. 121, 122) are denied. 20 As to Plaintiff’s first Motion for Attorneys’ Fees – Plaintiff has adequately narrated the 21 background (see Pl.’s Mot. (dkt. 112) at 7-10), and the court will only repeat those details here in 22 summary fashion. On February 16, 2024, the Parties filed their first letter brief setting forth their 23 discovery dispute through which Plaintiff sought a court order compelling Defendants to 24 supplement their initial disclosures and to produce responsive documents as to a number of 25 requests for productions (“RFP”). See Ltr. Br. (dkt. 88) at 2-4. The court heard the Parties’ 26 arguments on February 20, 2024, and granted Plaintiff’s requests to compel Defendants to produce 27 documents responsive to a number of RFPs (Nos. 1-2) and to supplement their responses to other 1 initial disclosures on or before March 5, 2024. See Order of February 21, 2024 (dkt. 91). The 2 Parties then filed another letter brief on March 14, 2024, wherein Plaintiff complained that 3 Defendants’ continued refusal to provide the previously-ordered discovery has forced it to seek the 4 information through third-party subpoenas. See Ltr. Br. (dkt. 92) at 2-3. Following a hearing on 5 March 19, 2024 (see dkt. 95), the court entered an order quashing Plaintiff’s subpoenas (without 6 prejudice) and directed Plaintiff to instead file another motion to compel. See Order (dkt. 94); see 7 also Pl.’s Mot. (dkt. 112) at 10. Plaintiff then filed a motion to compel that also sought sanctions 8 (dkt. 97), Defendants responded (dkt. 101), and Plaintiff filed a reply (dkt. 103). Following 9 another hearing (dkt. 107) – on June 11, 2024, the court granted Plaintiff’s motion to compel (but 10 denied the requests for sanctions) as follows:

11 As to RFPs 1-2, 26-30, and 32-34, Plaintiff’s request to compel is GRANTED. Defendants shall produce the materials in question (i.e., 12 all of the actual underlying loan documents and communications, rather than just a summary spreadsheet) responsive to these requests 13 within 14 days. As to RFPs 3-4 and 23, Plaintiff’s request to compel is GRANTED. Within 14 days, Defendants shall produce all 14 communications exchanged between or among the individual Defendants from September 1, 2022 to the present, in response to RFP 15 4; and (2) Defendants shall produce all communications exchanged between NAF and any Individual Defendants from September 1, 2022 16 to the present, in response to RFP 3 and 23, or alternatively, Defendants shall certify that they have produced all such 17 communications in response to RFP 3 and 23. Furthermore, as to RFPs 3-4 and 23, as well as RFPs 24-25, the Parties are ORDERED 18 to promptly meet and confer in order to work out a manner in which all text message discovery will be produced in its native format, such 19 that those native format text message files will be produced without further delay. As to RFP 12, Plaintiff’s request is GRANTED such 20 that Defendants will produce unredacted copies to the extent they have not already been produced. Defendants shall have until close of 21 business on Friday, June 14, 2024, to either identify their previous production of unredacted copies of this information, or to actually 22 produce unredacted copies. As to RFP 13, Plaintiff’s request is GRANTED, and Defendants shall have until close of business on 23 Friday, June 14, 2024, to produce this material or to certify to Plaintiff that they have produced all responsive materials in Defendants’ 24 possession, custody, or control. Plaintiff's request for sanctions is DENIED; however, Defendants should be forewarned that further 25 delays and obstruction of discovery may result in sanctions. Plaintiff’s request for an adverse jury instruction regarding missing text 26 messages and other missing evidence is DENIED without prejudice. In the event that Plaintiff is able to articulate some prejudice 27 stemming from this missing information at a later time, the court will compel the discovery described herein is GRANTED. 1 2 See Order of June 11, 2024 (dkt. 106). In essence, this was the second time that the court had 3 ordered Defendants to produce this information; following which, Plaintiff filed the first of its two 4 pending motions for attorneys’ fees (Dkt. 112). 5 Rule 37(a) provides that where a motion to compel is granted, attorneys’ fees and expenses 6 must be awarded to the prevailing party unless there was no good faith effort to resolve the 7 motion, the non-disclosure was substantially justified, or other circumstances make an award of 8 expenses otherwise unjust. See Fed. R. Civ. P. 37(a)(5). The court finds that none of these 9 exceptions apply here. Further, as to disobeying a court order to produce discovery, Rule 37(b) 10 similarly provides that “the court must order the disobedient party, the attorney advising that 11 party, or both to pay the reasonable expenses, including attorney’s fees, caused by the failure, 12 unless the failure was substantially justified or other circumstances make an award of expenses 13 unjust.” Fed. R. Civ. P. 37(b)(2)(C). Additionally, Under the Civil Local Rules for United States 14 District Court for the Northern District of California, a motion for attorneys’ fees and costs must 15 include (1) the number of hours spent on the litigation by each biller, (2) detailed billing records 16 showing how much time was spent on each task, and (3) each biller’s billable rate and justification 17 for such rate. Civ. L. R. 54-5(b). 18 A prevailing party is, however, only entitled to reasonable attorneys’ fees; and, the 19 “starting point to determining the amount of a reasonable fee is the number of hours reasonably 20 expended on the litigation multiplied by a reasonable hourly rate.” Hensley v. Eckerhart, 461 U.S. 21 424, 433 (1983) (“This calculation provides an objective basis on which to make an initial 22 estimate of the value of a lawyer's services”). The party seeking the award must submit evidence 23 supporting the hours worked and rates claimed, and where the party fails to submit adequate 24 evidence, the amount awarded may be reduced. Id. The court must then adjust this lodestar amount 25 by the degree of success obtained. Id. at 440. In awarding reasonable attorneys’ fees, the court 26 “must strike a balance between granting sufficient fees to attract qualified counsel . . . and 27 avoiding a windfall to counsel.” Moreno v. City of Sacramento, 534 F.3d 1106, 1111 (9th Cir. 1 difference between the fee request and the court’s award is relatively small, a somewhat cursory 2 explanation will suffice.” Id. In determining the reasonableness of rates, the court may compare 3 the requested rate with the prevailing rate in the community for similar work performed by 4 attorneys of comparable skill, experience, and reputation. Id. Furthermore, “[t]he quality of 5 counsel and novelty and complexity of the case[]should ordinarily be reflected in the lodestar 6 rate.” San Francisco Baykeeper v. W. Bay Sanitary Dist., 2011 U.S. Dist. LEXIS 138093, *20 7 (N.D. Cal., Dec. 1, 2011) (internal quotation marks and citation omitted). 8 As to compliance with Civ. L. R. 54-5(b), the court is satisfied that Plaintiff has 9 sufficiently specified the number of hours spent on the litigation by each biller, sufficiently 10 detailed how much time was spent on each task, and provided a sufficient a justification for each 11 biller’s hourly rate (see Ridley Decl. (dkt. 112-1 at 2-4, 7-18); see also Soldon Decl. (dkt. 112-2) 12 at 2-5, 7-58). In this regard, Plaintiff contends that Defendants’ intransigence has caused it to 13 utilize 102.7 hours in connection with the effort to compel the discovery responses in question. 14 See Ridley Decl. (dkt. 112-1) at 15. Specifically, Plaintiff provides the following breakdown: 15 analyzing Defendants’ discovery responses and productions (13.0 hours); meeting and conferring 16 with Defendants via letter, email, and phone, including researching and analyzing applicable case 17 law to support meet and confer letters (18.3 hours); drafting and revising two joint statements on 18 the discovery disputes (8.8 hours); drafting and revising the Motion to Compel, including 19 researching and analyzing applicable case law to support the Motion to Compel (37.1 hours); 20 analyzing Defendants’ Opposition to the Motion to Compel (1.8 hours); Drafting and revising the 21 Reply in support of the Motion to Compel (16.8 hours); drafting and revising two administrative 22 motions to seal (3.6 hours); appearing at hearings before the undersigned (2.4 hours); and 23 analyzing the Court’s orders (0.9 hours). See id. at 15. 24 Plaintiff’s counsel – who work at Foley & Lardner, LLP, a large full-service law firm with 25 a national footprint employing 1,100 attorneys across 25 offices – have billed Plaintiff at rates 26 ranging from as little as $405 per hour for associates, to as much $975 per hour for partners. Id. at 27 16. Further, as noted above, Plaintiff’s counsel have filed the required declarations (see dkts. 112- 1 attorneys of a similar caliber and experience; and, based on this evidence and the case citations 2 provided (see Pl.’s Mot. (dkt. 112) at 16-17), the court is satisfied that the hourly rates charged are 3 consistent with the prevailing market rates for this type of work in the San Francisco metropolitan 4 area. All that needs to be determined is whether the number of hours expended is reasonable. 5 Given that Plaintiff’s attorneys on this matter consist of one partner and two associates – the 6 instant fee request is comprised of only 9.2 hours billed at the partner hourly rate (which increased 7 from $875 in 2023, to $975 in 2024), with the balance being comprised of hours billed at the 8 associate hourly rates (which ranged from $405 to $535). See Ridley Decl. (dkt. 112-1) at 4. 9 By way of response, Defendants’ submit (1) that Plaintiff failed to meet and confer enough 10 before moving to compel; (2) that Defendants’ responses and non-production were substantially 11 justified because the documents requests in question reportedly failed to specify the form in which 12 the electronically stored information (“ESI”) should be produced; and, (3) that the fee amount 13 sought by Plaintiff is excessive in that it “seeks to recover its attorneys’ fees for all the time spent 14 on discovery,” as opposed to fees related to compelling Defendants’ production of the missing 15 documents. See Defs.’ Opp. (dkt. 114) at 6. Defendants then recite a factual background that the 16 court sees largely as deflection – essentially, Defendants contend that Plaintiff’s (repeated) 17 requests to compel were premature, and that Plaintiff should have met and conferred with 18 Defendants more (without describing, how much more, or why). See id. at 7-10. It is clear to the 19 undersigned – both from Defendants’ responsive brief (dkt. 114) and from the positions taken by 20 Defendants at the two discovery hearings and the hearing on this motion – that Defendants were 21 simply stonewalling in order to delay or avoid their discovery obligations. 22 As to Defendants’ argument that Plaintiff’s fee request should be apportioned because the 23 motion to compel was only granted in part – Defendants’ argument is unpersuasive because the 24 requests to compel were all granted, all that was denied (as premature) was Plaintiff’s requests for 25 sanctions, which included a request for adverse inference instructions. Compare Order (dkt. 106) 26 with Defs.’ Mot. (dkt 114) at 11-12. Further, Defendants’ suggestion (see id. at 12-15) that 27 Plaintiff failed to meet and confer sufficiently before requesting court interventions is meritless. 1 Defendants’ ad infinitum before seeking court intervention is unreasonable. Plaintiff’s extensive 2 meet-and-confer efforts are well documented. See Soldon Decl. (dkt. 112-2 at 1-58). The Parties 3 corresponded about how to produce certain text messages in detail in March of 2024 (see id. at 4 42). On March 22, 2024, when Defendants were clearly informed that certain text messages were 5 not produced in native format (rather than via screenshot), Defendants’ counsel responded that 6 “[w]e can provide these documents to you in its native format and will supplement as such.” Id. at 7 43. However, on April 4, 2024, Defendants’ counsel had sent another email stating that they were 8 not aware of any method of producing text messages in a native format. Id. at 42. This caused 9 Plaintiff’s counsel to respond the following day, April 5, 2024, to the effect that “[m]any 10 documents, including text messages, are still not produced in native format. Parties routinely 11 produce text messages in native format. As stated below, the screenshots prevent us from seeing 12 the phone numbers and other data associated with the text messages.” Id. at 41. Thus, when 13 Plaintiff sought court intervention several weeks later, in May of 2024, doing so was not 14 premature. See Order of June 11, 2024 (dkt. 106); see also generally Doti Decl. (dkt. 117-1) at 2- 15 22. 16 As to Defendants’ suggestion that their responses and non-production were substantially 17 justified (see Defs.’ Opp. (dkt. 114) at 15-19) – the undersigned finds those suggestions to be 18 unpersuasive because, as Plaintiff points out, “Defendants offer no explanation as to how their 19 responses and objections were substantially justified as to the withholding of any of the relevant 20 documents responsive to RFPs 1–4, 12–13, and 23–34 [and] Defendants’ failure (over the course 21 of eight months) to produce all non-privileged documents in their possession, custody, or control 22 in response to RFPs 1–4, 12–13, and 23–34 was far from substantially justified and indeed was a 23 violation of the Court’s prior February 21 Order.” Pl.’s Reply (dkt. 117) at 9. Further, Defendants 24 cannot avoid an attorneys’ fee award by pointing out the fact that they did in fact make some 25 document productions after the undersigned had granted multiple requests to compel that 26 production. See Defs. Opp. (dkt. 114) at 10. Additionally, Defendants’ suggestions that the 27 discovery in question was produced in a reasonably usable format (see id. at 15-16) ignores the 1 all communications’ and ordered Defendants to produce ‘all text message discovery . . . in its 2 native format, such that those native format text message files will be produced without further 3 delay.’” See Pl.’s Reply (dkt. 117) at 10 (quoting Order of June 11, 2024 (dkt. 106). Plaintiff 4 added that (as of July 9, 2024), “[t]o date, Defendants have not produced a single text message in 5 native format and Defendants have informed [Plaintiff] that they will not be doing so unless FBC 6 bears the cost of production associated with the text messages.” Id. Of course, the cost associated 7 with this production became the subject of yet another discovery dispute (dkt. 115), and on July 8 23, 2024, the court ordered the Parties to split the cost associated with the native format 9 production of the text messages in question. See Order (dkt. 118). But for the obstructionism of 10 Defendants, the cost-splitting issue could have been resolved by the undersigned months earlier. 11 In any event, as to the reasonableness of the fee amount (both in terms of the hourly rates 12 involved, and the number of hours spent), the court finds that both are reasonable under the 13 circumstances, and the court rejects Defendants’ argument that the fee request is related to the 14 entirety of Plaintiff’s discovery practice rather than its efforts to compel Defendants’ compliance 15 with their discovery obligations. As stated above, Plaintiff has established by competent evidence 16 that Defendants’ obstructionism caused Plaintiff to utilize 102.7 hours in connection with multiple 17 efforts to compel the discovery responses in question. See Ridley Decl. (dkt. 112-1) at 15 (giving 18 the following itemization: analyzing Defendants’ discovery responses and productions such as to 19 ferret out missing discovery (13.0 hours); meeting and conferring with Defendants regarding 20 missing discovery via letter, email, and phone, including researching and analyzing applicable 21 case law to support meet and confer letters (18.3 hours); drafting and revising two joint statements 22 on the discovery disputes (8.8 hours); drafting and revising the First Motion to Compel, including 23 researching and analyzing applicable case law to support the Motion to Compel (37.1 hours); 24 analyzing Defendants’ Opposition to the Motion to Compel (1.8 hours); Drafting and revising the 25 Reply in support of the Motion to Compel (16.8 hours); drafting and revising two administrative 26 motions to seal (3.6 hours); appearing at hearings before undersigned (2.4 hours); and analyzing 27 the Court’s orders (0.9 hours)). Thus, the number of hours underlying the fee request are clearly 1 stated above, the hourly rates involved, and the number of hours expended, have been adequately 2 || justified and are reasonable. The hourly rates themselves are reasonable in light of the rates 3 || charged by attorneys of a similar caliber and experience in the San Francisco metropolitan area. 4 || Accordingly, Plaintiffs First Motion for Attorneys’ Fees (dkt. 114) is GRANTED. Within 14 5 || days from the date of this Order, Defendants are ORDERED to tender payment to Plaintiff in the 6 || amount of $54,930.00. 7 As to Plaintiff's Second Motion to Compel (dkt. 121), it was noted at the hearing on 8 September 24, 2024, that the only matter outstanding related to that motion was Plaintiffs request 9 to compel Defendants to produce certain email correspondence that Defendants reported having 10 || certified to the fact that no such emails exist. At the hearing, Plaintiff noted that it is impossible to 11 believe that the emails it seeks do not exist — that is, that Defendants conducted the business 12 affairs at the heart of this case without discussing those matters via email. While the court is not 5 13 || unsympathetic to Plaintiff's concern — as the court informed Plaintiff during the hearing, Plaintiff 14 || is bound by Defendants’ certification that the discovery sought by Plaintiff in this regard does not 3 15 exist. If, however, Plaintiff can present a concrete, non-speculative basis that might support a 16 || conclusion that the information it seeks does in fact exist and has been wrongfully withheld, or 3 17 that it did exist and has been destroyed, Plaintiff can then present, as appropriate, a spoliation 18 motion or a motion for sanctions on that basis. However, in the meantime, Plaintiff's Second 19 Motion to Compel (dkt. 121) certain discovery, which Defendant has certified does not exist, is 20 || DENIED. Further, because the Second Motion to Compel (dkt. 121) has been denied, □□□□□□□□□□□ 21 Second Motion for Attorneys’ Fees (dkt. 122), filed in connection therewith, is similarly 22 || DENIED. 23 IT IS SO ORDERED. 24 Dated: October 9, 2024 25 Mt Z 7 26 7 ROBERT M. ILLMAN United States Magistrate Judge 28