Suntrust Mortgage, Inc. v. AIG United Guaranty Corp.

933 F. Supp. 2d 762, 2013 WL 870093, 2013 U.S. Dist. LEXIS 34922
CourtDistrict Court, E.D. Virginia
DecidedMarch 7, 2013
DocketCivil Action No. 3:09cv529
StatusPublished
Cited by23 cases

This text of 933 F. Supp. 2d 762 (Suntrust Mortgage, Inc. v. AIG United Guaranty Corp.) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Suntrust Mortgage, Inc. v. AIG United Guaranty Corp., 933 F. Supp. 2d 762, 2013 WL 870093, 2013 U.S. Dist. LEXIS 34922 (E.D. Va. 2013).

Opinion

MEMORANDUM OPINION

ROBERT E. PAYNE, Senior District Judge.

This matter is before the Court on DEFENDANT UNITED GUARANTY’S MOTION FOR AN AWARD OF ATTORNEYS’ FEES AND EXPENSES INCURRED IN CONNECTION WITH ITS MOTION FOR SANCTIONS AND RELATED MATTERS (Docket No. 480). For the reasons that follow, the motion will be granted in part and denied in part.

PROCEDURAL HISTORY

On July 16, 2009, SunTrust Mortgage, Inc. (“ST”) filed in state court a complaint against the defendant, United Guaranty Residential Insurance Company of North Carolina (“UG”), alleging breach of contract, actual fraud, and constructive fraud. UG removed - the action to this Court. ST’s Complaint was dismissed with leave to amend. (Docket No. 36.) ST then filed its FIRST AMENDED COMPLAINT (“FAC”). (Docket No. 42).

As an important aspect of the claims therein asserted, the FAC cited, inter alia, a “February 2008- email” sent'by UG officer Pam Gavin to ST Senior Vice-President Mary Pettitt. Id. ¶ 19. Specifically, ST alleged that the Gavin to Pettitt email was evidence of UG’s representation to ST that certain loans satisfied UG’s internal criteria for coverage by the Mortgage Insurance Policy.- Id. That email was not attached to the FAC, but in response to a [766]*766request from counsel, ST sent UG a copy of the February 2008 email. UG’s counsel compared the email with the version in UG’s files and discovered several discrepancies.

That discovery led to fifteen months of investigation, discovery, and a hearing into spoliation of evidence that disclosed that Pettitt had altered the February 2008 email and several others and that culminated with the issuance of a 75-page opinion finding that UG was entitled to sanctions for ST’s willful spoliation of evidence. Sanctions Opinion (Docket No. 403). As a sanction for the spoliation, the Court held that ST must pay the attorneys’ fees and costs associated with UG’s investigation of, discovery about, and litigation over ST’s spoliation of evidence. The Court denied UG’s requests for other sanctions such as dismissal, an adverse inference jury instruction, and preclusion of certain evidence. Id. at 71-75; Mar. 29 Order (Docket No. 404). In particular, the March 29 Order directed that:

[ST] shall pay as a sanction the reasonable attorney’s fees and expenses associated with [UG’s] MOTION FOR SANCTIONS (Docket No. 270) and related motions, discovery proceedings, evidentiary hearings, and briefing, spanning the period of time in which the altered nature of the February 22, 2008 email became known to [UG’s] counsel to the date of this Order [March 29, 2011].

UG thereafter filed the pending motion for attorneys’ fees with a supporting memorandum and supporting materials. ST filed its opposition and UG filed its reply.

Then, on July 1, 2011, ST filed its MOTION TO STRIKE THE DECLARATION OF PETER J. BARRETT (Docket No. 519). ST argued that UG had improperly attached the Barrett Declaration to UG’s reply in support of its motion for attorneys’ fees. A response and reply to the motion to strike were timely filed. In a separate ORDER entered this day, the motion to strike the Barrett declaration was granted.

The fee request filed by UG is ready for determination.

FACTUAL BACKGROUND RESPECTING THE SPOLIATION INVESTIGATION AND HEARINGS

UG asserts that it is entitled to an award of $3,848,879.69 in attorneys’ fees and expenses that were incurred because of the spoliation. UG explains its claim by describing the fees and costs incurred during six phases of its spoliation investigation and' the ensuing hearings on the subject. The phases and the general activities that took place during each phase are described below.

1. December 2009

In December 2009, UG discovered the discrepancies between the two versions of the Pettitt email and sought to determine the reason for the discrepancies. To that end, UG retained KPMG to analyze the metadata of the ST version of the email; UG also interviewed Gavin (the email sender); and it reviewed related documents. After concluding that ST’s version was altered, UG filed a MOTION FOR EMERGENCY RELIEF PRESERVING EVIDENCE AND GRANTING EXPEDITED DISCOVERY REGARDING SPOLIATION OF EVIDENCE BY PLAINTIFF SUNTRUST MORTGAGE, INC. (Docket No. 52). The Court granted the motion in part, ordering examination of Pettitt’s computer and hard drive, additional depositions, production of documents, responses to an interrogatory, and preservation of evidence. Dec. 29, 2009 Order (Docket No. 59).

[767]*7672. December 30, 2009 — February 3, 2010

ST asked for additional time to produce the discovery required by the December 29, 2009 Order. A status hearing was held on January 8, 2010. UG began to review discovery documents, prepared for depositions, and conducted legal research on spoliation.

3. February 4, 2010 — March 29, 2010

On February 3, 2010, ST filed a response to UG’s MOTION FOR EMERGENCY RELIEF in which it revealed the existence of two additional altered emails. (Docket No. 74). UG, with the aid of KPMG, continued its research with respect to the initial Pettitt email and into the newly identified emails. UG also took the depositions of Pettitt, Joanne Clack (Pettitt’s supervisor), and SunTrust in-house counsel, Susan Thurman. And, UG also prepared Gavin so that ST could- take her deposition. Meanwhile, during the status hearing on January 8, the Court ordered ST to file an amended complaint, omitting any reference to the Pettitt email. After ST complied with that order, filing its SECOND AMENDED COMPLAINT on February 18, UG revised its motion to dismiss and its answer. (Docket Nos. 100, 102).

Also, during the February — March 2010 time frame, ST withheld certain discovery on privilege grounds, and UG sought to compel discovery of the assertedly privileged documents. (Docket Nos. 82, 85, 90). Two motions for protective order and a motion to compel were filed and fully briefed. The parties then prepared for oral argument, which was held on March 26. The Court granted UG’s motion to compel, ordering production of the privileged documents. Mar. 26, 2010 Hrg. Tr. 41-43 (Docket No. 107).

4. March 30, 2010 — August 20, 2010

After the hearing on March 26, ST began producing documents respecting the altered emails, the use thereof, and the facts related thereto. The documents were produced on an expedited and rolling basis. UG reviewed these documents and attempted to negotiate with ST over deficiencies in its production, asking the Court to intervene with respect to one document ST refused to produce (Thurman’s September 30, 2008 notes). UG also took the depositions of Joshua Gold, Miles Dumville, Deborah Lee Hovatter, and Sterling Edmunds. UG also resumed the depositions of Mary Pettitt and Susan Thurman.

Having uncovered from the depositions and the documents clear evidence of spoliation, UG next began working on a motion for sanctions which it filed on August 20, 2010. MOTION FOR SANCTIONS (Docket No. 147).

5. August 21, 2010 — November 3, 2010

After UG’s motion was filed, ST filed a motion requesting that briefing on the sanctions motion remain Under seal. (Docket No. 152). A response and reply were filed, and the Court granted the motion. Thereafter, ST submitted its response to the MOTION FOR SANCTIONS, and UG submitted its reply.

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933 F. Supp. 2d 762, 2013 WL 870093, 2013 U.S. Dist. LEXIS 34922, Counsel Stack Legal Research, https://law.counselstack.com/opinion/suntrust-mortgage-inc-v-aig-united-guaranty-corp-vaed-2013.