Wells Fargo Bank, National Association, as Trustee for Option One Mortgage Loan Trust 2007-2, Asset-Backed Certificates, Series 2007-2 v. David B. Moskoff, Daphne M.N. Fotiades, Stewart Title Guaranty Company

2018 DNH 258

• Court: District Court, D. New Hampshire
• Decided: December 21, 2018
• Docket: 17-cv-136-JL
• Status: Published

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Wells Fargo Bank, National Association, as Trustee for Option One Mortgage Loan Trust 2007-2, Asset-Backed Certificates, Series 2007-2

v. Civil No. 17-cv-136-JL Opinion No. 2018 DNH 258

David B. Moskoff, Daphne M.N. Fotiades, Stewart Title Guaranty Company

ORDER

Through this action, plaintiff Wells Fargo seeks to

foreclose on a mortgage agreement that it alleges defendants

David B. Moskoff and Daphne M.N. Fotiades entered into in 2006.1

It alleges that these defendants defaulted on their payments due

under the mortgage loan beginning in September 2012.2 These

defendants claim, in response, that they never signed the

mortgage agreement or note, and that the mortgage is a fraud.3

Wells Fargo now seeks to compel production of copies of

these defendants’ tax returns held by non-party accounting firm

Leone, McDonnell & Roberts (LMR) and testimony from a partner of

1 Amended Compl. (doc. no. 3) ¶¶ 14-15. 2 Id. ¶ 25. 3 E.g. id. ¶ 26. that firm as a keeper of records.4 As both Wells Fargo and LMR

observe, LMR is prohibited by statute from disclosing this

information without either these defendants’ permission or a

court order.5 See 26 U.S.C. § 7216; 26 C.F.R. § 301.7216-2(f)).

These defendants have withheld their permission,6 leading Wells

Fargo to seek a court order.

Wells Fargo seeks the records for the purpose of

determining whether David B. Moskoff and Daphne M.N. Fotiades

“claimed mortgage interest deductions that coincide with

interest reported to the IRS by the mortgagee (including its

predecessors-in-interest) or by its mortgage servicer(s) on IRS

Form 1098 . . . .”7 This evidence is relevant to the question of

whether these defendants acknowledged the mortgage, despite

their disavowal of it beginning in 2012.

As LMR observes, the subpoena is unnecessarily broad

insofar as it seeks “[a]ll records for” each defendant “for tax

years 2005 to 2013.”8 Wells Fargo, however, has clarified that

4 Mot. to Compel (doc. no. 113). 5 Contrary to defendant Daphne M.N. Fotiades’s suggestion, see Fotiades Supp. Obj. (doc. no. 133) ¶¶ 5-7, it would not constitute a crime for LMR to produce these documents pursuant to a court order. See 26 U.S.C. § 7216(b)(1)(B). 6 LMR Obj. (doc. no. 116) ¶ 14. 7 Mem. in Supp. of Mot. to Compel (doc. no. 113-2) at 2. 8 LMR Obj. (doc. no. 116) ¶ 16; Subpoena Ex. 1 (doc. no. 116-1).

2 it seeks only information relevant to what mortgage interest

deduction, if any, these defendants claimed for the years 2005

through 2012 and in connection with which, if any, mortgage the

defendants claimed such a deduction.9 This limited set of

information is unquestionably relevant to the claims and

defenses raised in this action, and must be produced. The

remaining information on these defendants’ tax returns, which is

not relevant to this action, may be redacted.

Defendants Daphne M.N. Fotiades and David B. Moskoff object

to the production of this information.10 These objections make

clear that the information sought by Wells Fargo is relevant

both to Wells Fargo’s claims and these defendants’ defenses.

Specifically, these defendants argue against production on the

grounds that they are victims of synthetic identity fraud and

that they did not take out the mortgage on which Wells Fargo

seeks to foreclose.11 Whether these defendants claimed a

9 Mem. in Supp. of Mot. to Compel (doc. no. 113-2) at 8. 10Moskoff Obj. (doc. no. 123); Fotiades Obj. (doc. no. 124); Fotiades Supp. Obj. (doc. no. 133); Moskoff Supp. Obj. (doc. no. 134). David B. Moskoff and Daphne M.N. Fotiades originally objected on grounds that they were not served a copy of the motion to compel. See Fotiades Obj. (doc. no. 124) ¶¶ 1, 26. On December 10, 2018, the court afforded these defendants an opportunity to file supplemental objections to the motion after receiving a copy. 11Moskoff Obj. (doc. no. 123) ¶¶ 6-10; Fotiades Obj. (doc. no. 124) ¶¶ 5-8, 15-16; Fotiades Supp. Obj. (doc. no. 133) ¶ 20.

3 mortgage interest deduction in the same amount as appears in

Wells Fargo’s records is probative of that issue.

These defendants raise three objections that bear

addressing. First, these defendants object on the grounds that

the complaint names an individual other than Daphne M.N.

Fotiades as a mortgagor and defendant, and that LMR has no

records connected with that individual.12 On June 8, 2018, and

with Daphne M.N. Fotiades’s agreement, the court ordered the

complaint amended to name Daphne M.N. Fotiades as a defendant in

place of the individual that Daphne M.N. Fotiades refers to as

“aka-aka.”13 This forecloses any objection based on the idea

that the complaint names an individual other than Daphne M.N.

Fotiades or that Daphne M.N. Fotiades is not a defendant in this

action.

Second, these defendants contend that Wells Fargo is

improperly circumventing the discovery process established by

Federal Rule of Civil Procedure 26(b)(1) by seeking these tax

records through a subpoena instead of from its own records or

these defendants directly.14 As these defendants observe, Wells

12E.g., Fotiades Obj. (doc. no. 124) ¶¶ 5-16; Fotiades Supp. Obj. (doc. no. 133) ¶¶ 11-14, 18-20, 25-26, 34, 63. 13 June 8, 2018 Hrg. Tr. (doc. no. 92) at 5, 7-10. 14Fotiades Supp. Obj. (doc. no. 133) ¶ 36-37, 41-45; Moskoff Supp. Obj. (doc. no. 134) ¶¶ 4-7, 10-11, 14-18.

4 Fargo has moved to compel this tax information from David B.

Moskoff and Daphne M.N. Fotiades15 because they failed to produce

it in response to discovery requests. These defendants cannot

stonewall traditional discovery and then complain when the

plaintiff seeks the same information from another source.

Third, these defendants argue that production of these tax

documents would violate certain privileges afforded to

communications between a taxpayer and his or her certified

public accountant. They invoke New Hampshire state law, under

which, “[e]xcept by permission of the client,” a certified

public accountant “shall not voluntarily disclose information

communicated to [the accountant] by the client relating to and

in connection with services rendered to the client by [the

accountant].”16 N.H. Rev. Stat. Ann. § 309-B:18. That section

further provides, however, that those restrictions shall not “be

construed . . . as prohibiting disclosures in court proceedings

. . . in instances where a subpoena or summons has been issue .

. . .” Id. Thus, production of the tax documents in response

15See Mot. to Compel Fotiades to Produce Documents (doc. no. 129) (sealed); Mot. to Compel Moskoff to Produce Documents (doc. no. 131) (sealed). 16See Fotiades Supp. Obj. (doc. no. 133) ¶ 9; Moskoff Supp. Obj. (doc. no. 134) ¶ 12.

5 to a subpoena, for use in these court proceedings, would not

violate this statute.

Nor would it violate the privilege afforded to

communications between a taxpayer and a federally authorized tax

practitioner.17 See 26 U.S.C. § 7525(a)(1). That privilege is

limited to “noncriminal tax matter[s] before the Internal

Revenue Service” and “noncriminal tax proceeding[s] in Federal

court brought by or against the United States,” id § 7525(a)(2).

This proceeding falls in neither of those categories.

These defendants’ remaining objections generally concern

the attorneys representing LMR18 and Wells Fargo’s unrelated

transactions.19 The plaintiffs also suggest the subpoena is

invalid because Attorney McNicholas signed it prior to making an

appearance in this action.20 Though it would have been better

practice to appear before signing the subpoena, that procedural

wrinkle does not invalidate the subpoena. Nor do any of these

defendants’ remaining objections bar production of the requested

documents or deposition testimony.

17 See Moskoff Supp. Obj. (doc. no. 134) ¶ 13. 18Fotiades Obj. (doc. no. 124) ¶¶ 31-32; Fotiades Supp. Obj. (doc. no. 133) ¶¶ 2, 50-51; Moskoff Supp. Obj. (doc. no. 134) ¶¶ 2(i)-(j), 3, 11. 19 Fotiades Obj. (doc. no. 124) ¶¶ 31-32. 20Fotiades Obj. (doc. no. 124) ¶ 29; Moskoff Supp. Obj. (doc. no. 134) ¶ 9.

6 Accordingly, Wells Fargo’s motion to compel21 is GRANTED.

LMR shall produce copies of defendants David B. Moskoff’s and

Daphne M.N. Fotiades’s tax returns for the years 2005 through

2013, inclusive. LMR shall redact all information not relevant

to whether a mortgage interest deduction was taken, for how much

it was taken, and in connection with which mortgage loan it was

taken. These records shall be produced on or before January 7,

2019.

SO ORDERED.

Joseph N. Laplante United States District Judge

Dated: December 21, 2018

cc: John S. McNicholas, Esq. David B. Moskoff, pro se Daphne M.N. Fotiades, pro se Peter M. Solomon, Esq. Thomas Kincaid McCraw, Jr., Esq.

21 Document no. 113.