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Molina v. Gregory Funding, LLC

United States District Court, Northern District of Texas
Oct 7, 2024
Civil Action 3:23-cv-01576-B (N.D. Tex. Oct. 7, 2024)

Opinion

Civil Action 3:23-cv-01576-B

10-07-2024

JUAN MOLINA and ALICIA MOLINA, Plaintiffs, v. GREGORY FUNDING, LLC and BARCLAYS MORTGAGE TRUST 2021-NPL1, MORTGAGE BACKED SECURITIES, SERIES 2021-NPL1, BY U.S. BANK NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, Defendants.


FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

REBECCA RUTHERFORD UNITED STATES MAGISTRATE JUDGE

Defendants Gregory Funding, LLC and Barclays Mortgage Trust 2021-NPL1, Mortgage-Backed Securities, Series 2021-NPL1, by U.S. Bank National Association, as Indenture Trustee, filed a Motion for Sanctions (ECF No. 34) seeking dismissal of this removed civil action based on Plaintiffs' failure to comply with their discovery obligations and court orders. For the reasons set forth below, the District Judge should GRANT Defendants' Motion and DISMISS this case with prejudice. See Fed.R.Civ.P. 37(b)-(d), 41(b).

Background

Plaintiffs Juan and Alicia Molina filed this lawsuit in state court on June 29, 2023, to prevent Defendants from foreclosing on their Dallas home. See Notice of Removal ¶¶ 1, 3 & Ex. E (ECF No. 1). After Defendants timely removed the case to federal court, the Court granted the parties' joint request for a brief stay to allow them to pursue informal settlement negotiations. See Order (ECF No. 7). When those negotiations did not result in settlement, the Court entered a Scheduling Order establishing, among other things, deadlines for discovery and setting the case for trial. Sched. Order (ECF No. 18). The Court's Order expressly warned that:

Should any party or counsel fail to cooperate in doing anything required by this Order, the party or counsel-or both-may be subject to sanctions. If the plaintiff does not timely file the required (or other) pretrial material, then the case will be dismissed.... Fines or other sanctions, if appropriate, may also be imposed under Rule 16(f).
Id. ¶ 12.

Defendants contend-and Plaintiffs do not dispute-that Plaintiffs did not serve their initial disclosures, file their expert designations (due February 16, 2024), respond or object to Defendants' discovery requests (due April 26, 2024), or file pretrial disclosures with exhibit and witness lists (originally due July 12, 2024). Mot. ¶ 3-4. (ECF No. 34); Sched. Order (ECF No. 18); Def.'s Reply 1 (ECF No. 28) (objecting to and moving to strike Plaintiffs' summary judgment evidence based on Plaintiffs' failure to respond to Defendants' outstanding discovery requests). Accordingly, Defendants filed their Motion for Sanctions, asking the Court to dismiss Plaintiffs' case with prejudice or, in the alternative, to prohibit Plaintiffs from introducing any witnesses or exhibits at trial. Mot. ¶ 11 (ECF No. 34). Plaintiffs did not respond to Defendants' Motion.

On July 26, 2024, the Court continued the trial to October 28, 2024, and extended the deadline for filing pretrial disclosures with exhibit and witness lists to October 14, 2024. (ECF No. 35).

The Court subsequently set a hearing on the Motion for Sanctions for October 3, 2024, ordering Plaintiffs Juan and Alicia Molina to attend the hearing in-person. Order 2 (ECF No. 38). The Court warned Plaintiffs and their counsel that failure to comply with the order would result in sanctions. Id. Plaintiffs and their counsel failed to appear or file any explanation for their absence. Min. Entry (ECF No. 39).

Legal Standards

Rule 37(b)-(d)

Federal Rule of Civil Procedure 37(b) permits a court to dismiss a party's claim when that party disobeys a court's discovery order. Fed.R.Civ.P. 37(b)(2)(A)(v); see F.D.I.C. v. Conner, 20 F.3d 1376, 1380 (5th Cir. 1994); see also Jones v. AT&T Mobility Servs., LLC, 2018 WL 7117916, at *3 (N.D. Tex. Dec. 27, 2018) (Rutherford, J.), rec. accepted, 2019 WL 318181 (N.D. Tex. Jan. 23, 2019) (Fitzwater, J.). Federal Rule of Civil Procedure 37(c) permits a court to dismiss a party's claim when that party fails to provide information or identify a witness as required by Rule 26(a), unless the failure was “substantially justified or is harmless.” Fed.R.Civ.P. 37(c)(1)(C). Federal Rule of Civil Procedure 37(d)(1)(A) permits a court to dismiss a party's claim when that party fails to serve answers to written discovery requests. Fed.R.Civ.P. 37(d)(1)(A)(ii), (d)(3).

Rule 37 grants a district court considerable, but not unlimited, discretion in fashioning remedies for misconduct. Conner, 20 F.3d at 1380 (citing Chilcutt v. United States, 4 F.3d 1313, 1320 (5th Cir.1993)). Because dismissal with prejudice is a “remedy of last resort,” certain factors “must be present before a district court may dismiss a case as a sanction for violating a discovery order.” Id. (quoting Batson v. Neal Spelce Assocs., Inc., 765 F.2d 511, 515 (5th Cir. 1985)). To impose litigation-ending, “death penalty” sanctions, a court must make the following specific findings: “(1) the discovery violation was committed willfully or in bad faith; (2) the client, rather than counsel, is responsible for the violation; (3) the violation substantially prejudice[d] the opposing party; and (4) a lesser sanction would not substantially achieve the desired deterrent effect.” Law Funder, L.L.C. v. Munoz, 924 F.3d 753, 758-59 (5th Cir. 2019) (quoting Conner, 20 F.3d at 1380-81).

Rule 41(b)

Pursuant to Federal Rule of Civil Procedure 41(b), a trial court has discretionary authority to dismiss an action-either on a defendant's motion or sua sponte-for a plaintiff's failure to prosecute or comply with any order of the court. Link v. Wabash R.R. Co., 370 U.S. 626, 629-30 (1962); Renobato v. Compass Bank Corp., 480 Fed.Appx. 764, 767 (5th Cir. 2012). The power of the courts “to invoke this sanction is necessary in order to prevent undue delays in the disposition of pending cases and to avoid congestion in the calendars of the District Courts.” Link, 370 U.S. at 629-30. Courts are empowered to “clear their calendars of cases that have remained dormant because of the inaction or dilatoriness of the parties seeking relief,” in order “to achieve the orderly and expeditious disposition of cases.” Link, 370 U.S. at 629-31; Lopez v. Aransas Cty. Indep. Sch. Dist., 570 F.2d 541, 544 (5th Cir. 1978) (“Under Rule 41(b) of the Federal Rules of Civil Procedure a case may be dismissed with prejudice for failure to prosecute. Although the rule is phrased in terms of dismissal on the motion of the defendant, it is clear that the power is inherent in the court and may be exercised sua sponte.”); see also Beard v. Experian Info. Sols. Inc., 214 Fed.Appx. 459, 462 (5th Cir. 2007). A dismissal with prejudice is appropriate when:

(1) there is a clear record of delay or contumacious conduct by the plaintiff, and (2) the district court has expressly determined that lesser sanctions would not prompt diligent prosecution, or the record shows that the district court employed lesser sanctions that proved to be futile.
Campbell v. Wilkinson, 988 F.3d 798, 802 (5th Cir. 2021) (citing Berry v. CIGNA/RSI-CIGNA, 975 F.2d 1188, 1191 (5th Cir. 1992)). Additionally, in affirming dismissals with prejudice under Rule 41(b), the Fifth Circuit will usually find “at least one of three aggravating factors: “(1) delay caused by [the] plaintiff himself and not his attorney; (2) actual prejudice to the defendant; or (3) delay caused by intentional conduct.” Id. at 802.

Analysis

1. The Court should find that Defendants are entitled to litigation-ending sanctions under Rule 37 based on Plaintiffs' total failure to comply with their discovery obligations.

All the factors necessary for the Court to dismiss a case as a sanction for violating a discovery order are present here.

First, Plaintiffs do not deny that they have failed-without excuse-to comply with the Court's order establishing deadlines for discovery or to serve their initial disclosures, expert designations, and responses to Defendants' written discovery requests. Plaintiffs also failed to file pretrial disclosures with exhibit and witness lists before the original deadline expired. Plaintiffs failed to participate in discovery after having been (i) warned by the Court that failure to do so would result in dismissal (Sched. Order ¶ 12 (ECF No. 18)), (ii) reminded by Defendants of their overdue discovery responses (Mot., Ex. A, ¶ 6 (ECF No. 34)), and (iii) further put on notice of these failures in motions and filings from Defendants (ECF Nos. 28, 34 and 37). Plaintiffs presented no argument or evidence to demonstrate any inability to participate in discovery. Indeed, they failed to respond in any manner to Defendants' Motion for Sanctions and failed to comply with the Court's Order (ECF No. 38) to appear in-person at a hearing on the Motion. Thus, the Court should find Plaintiffs' complete lack of cooperation in the discovery process is willful. See Oviedo v. Lowe's Home Improvement, Inc., 184 Fed. App'x 411, 41213 (5th Cir. 2006) (finding it was “obvious to the district court that [ ] refusal to participate in discovery [for five months] was a knowing and willful delay” when plaintiff pursued her case “for a time” and then disappeared); Rickman v. Akash Hotels Int'ls, 2010 WL 3783980, at *3 (N.D. Tex. Aug. 30, 2010) (finding plaintiff's conduct willful where she failed to provide any discovery or disclosures eleven months after deadline for initial disclosures and three months after court order to answer written discovery); Yazdchi v. Am. Honda Fin. Corp., 2007 WL 464705, at *3 (5th Cir. 2007) (“the willfulness of [plaintiffs'] actions is evidenced by their continued failure to comply even after the specific inadequacies of their responses were detailed in several requests and motions from defendants and two orders from the district court.”)

Second, the Court should find that the discovery failures are attributable- at least in part-to Plaintiffs. When a party is pro se, courts easily attribute conduct to the client. See Doe v. Am. Airlines, 283 Fed. App'x 289, 292 (5th Cir.2008) (“Since Appellant is pro se, her actions are hers alone and not attributable to her counsel.”) But whether a party is represented is not the end of the inquiry. Dismissal may also be an appropriate sanction when a represented client shares “a little of the blame for the attorney's conduct.” Rickman, 2010 WL 3783980, at *4 (quoting Carter v. Dialysis Clinic, Inc., 234 F.3d 707, at *1 (5th Cir. 2000). Because it was not clear from the record whether Plaintiffs' failure to comply with their discovery obligations is attributable to Plaintiffs themselves rather than Plaintiffs' counsel, the Court ordered Plaintiffs to appear in person at a hearing on Defendants' Motion for Sanctions and address the issue. Order (ECF No. 38). Plaintiffs did not appear. (ECF No. 39). And they have not provided any reason or excuse for their failure to appear. Thus, Plaintiffs' willful disregard of the Court's order supports a finding that they share more than “a little of the blame” for their total failure to participate in discovery.

Third, the Court should find that Plaintiffs' failure substantially prejudices Defendants by depriving them of basic discovery and hampering their ability to defend the case. Although the Court extended the deadline for the pretrial disclosures of exhibits and witness lists (ECF No. 35), Plaintiffs' failure to provide any discovery up to this point has significantly impeded Defendants ability to prepare for the trial set to begin this month. See Yazdchi, 2007 WL 464705, at *304 (finding defendants were “plainly prejudiced by plaintiffs' failure to provide adequate discovery responses” when trial was two months away and they had obtained “virtually no information of any relevance after nine months of discovery attempts”).

Fourth, the Court should find that a lesser sanction lesser would not effective. The Court twice warned Plaintiffs that sanctions would be imposed for failure to comply with discovery and court orders. Sched. Order ¶ 12 (ECF No. 18); Order 2 (ECF No. 38). Defendants reminded Plaintiffs of their overdue discovery. Mot., Ex. A ¶ 6 (ECF No. 34). Plaintiffs were further reminded of their discovery failures when Defendants filed their Motion for Sanctions and the Notice of Nonresponse and when the Court ordered a hearing on the Motion for Sanctions. Plaintiffs have had ample opportunities to remedy their discovery failures, but have not complied, responded, or attempted to explain the failure-not even by responding to Defendants' Motion for Sanctions or appearing at the Court-ordered hearing on the Motion. A lesser sanction is unlikely to prompt any action from Plaintiffs. See Rickman, 2010 WL 3783980, at *4 (finding a lesser sanction than dismissal with prejudice would not “substantially achieve the necessary deterrent effect” when plaintiff demonstrated “continued blatant disregard of court orders and failure to show that she intends to comply with the orders); Doe, 283 Fed. App'x at 291-92 (affirming dismissal of claims with prejudice, explaining a “less dramatic sanction” would not suffice where plaintiff repeatedly failed to cooperate with discovery obligations after multiple warnings and indicated no intention of complying).

Additionally, the Court should find that the lesser sanction of excluding all evidence or witnesses not disclosed would not be effective in promoting participation in the lawsuit. See James Wilson v. Wells Fargo Bank, 2015 WL 4191300, at *3 (N.D. Tex. July 1, 2015) (finding that exclusion of evidence and witnesses not disclosed would likely not be an effective sanction when plaintiff had provided no discovery at all).

In sum, the District Judge should find that Plaintiffs' complete lack of cooperation in the discovery process is willful, the discovery failures are attributable to Plaintiffs, Plaintiffs' failures substantially prejudice Defendants, and a lesser sanction would not be effective. Thus, Defendants' Motion for Sanctions should be GRANTED and the case DISMISSED with prejudice.

2. Plaintiffs' claims should be dismissed under Rule 41(b).

Alternatively, the Court should dismiss Plaintiffs' claims with prejudice under Federal Rule of Civil Procedure 41(b) because they failed to comply with court orders and prosecute their case. Defendants have not heard from Plaintiffs since, at least, July 8, 2024. See Unopposed Mot. for Continuance 3. (ECF No. 32). Plaintiffs provided no initial disclosures, no expert designations, no responses or objections to Defendants' discovery requests, and no pretrial disclosures. Mot. ¶ 34. (ECF No. 34). Plaintiffs failed to appear at the October 3, 2024 hearing on Defendants' Motion for Sanctions. (ECF No. 39).

Because Plaintiffs have exhibited a clear pattern of inaction, the District Judge should conclude that they have abandoned their case, justifying dismissal with prejudice. As detailed above, the record supports that Plaintiffs' conduct was the “result of purposeful delay and contumaciousness” and that lesser sanctions would be futile. Supra at 6, 8 (first and fourth factors in Rule 37 analysis). See Walker-King v. WageWorks, Inc., 2022 WL 19518466, at *3 (N.D. Tex. Nov. 10, 2022) (Ramirez, J.), rec. accepted, 2023 WL 2525041 (N.D. Tex Mar. 14, 2023) (Starr, J.) (dismissal with prejudice when plaintiff filed nothing for sixteen months, failed to cooperate in discovery or court orders, and failed to appear for scheduled oral arguments on discovery motions after being explicitly warned of sanctions); See also Oviedo, 184 Fed. App'x at 412-13 (upholding dismissal with prejudice when plaintiff failed to participate in discovery for five months despite being given many opportunities to respond).

Additionally, the record supports a finding of at least one aggravating factor: actual prejudice to the defendant. Plaintiffs' complete failure to provide any overdue discovery up to this point has significantly impeded Defendants ability to prepare for trial. Supra at 8 (third factor in Rule 37 analysis). Accordingly, Plaintiffs' claims against Defendants should be DISMISSED with prejudice.

Attorneys' Fees

The Court should also order Plaintiffs and their attorney to pay Defendants' attorneys' fees for bringing their Motion for Sanctions.

Alternatively, or in addition to the sanctions listed in Rule 37(b)(2)(A), a court “must order the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.” Fed.R.Civ.P. 37(b)(2)(C). A party's discovery conduct is “substantially justified” under Rule 37 if it is a proportional response to a genuine dispute, or if reasonable people could differ as to the appropriateness of the challenged conduct. See S.E.C. v. Kiselak Cap. Grp., LLC, 2012 WL 369450, at *5 (N.D. Tex. Feb. 3, 2012) (first quoting Devaney v. Cont'l Am. Ins. Co., 989 F.2d 1154, 1163 (11th Cir. 1993); and then quoting Pierce v. Underwood, 487 U.S. 552, 565 (1988)). “The burden rests on the party who failed to comply with the order to show that an award of attorney's fees would be unjust or that the opposing party's position was substantially justified.” Id. at *3; see also Samsung Elecs. Am., Inc. v. Yang Kun Chung, 321 F.R.D. 250, 278 (N.D. Tex. 2017). Neither Plaintiffs nor their attorney have proffered any reason for Plaintiffs' failure to participate in the discovery process, and therefore, Defendants are entitled to attorneys' fees.

Recommendation

The District Court should GRANT Defendants' Motion for Sanctions (ECF No. 34), DISMISS Plaintiffs' claims with prejudice under Rule 37, and order Plaintiffs and their attorney to pay Defendants' attorneys' fees for bringing their Motion for Sanctions. Alternatively, the District Court should DISMISS Plaintiffs' claims with prejudice under Rule 41(b).

SO RECOMMENDED.

INSTRUCTIONS FOR SERVICE AND NOTICE OF RIGHT TO APPEAL/OBJECT

A copy of this report and recommendation shall be served on all parties in the manner provided by law. Any party who objects to any part of this report and recommendation must file specific written objections within 14 days after being served with a copy. See 28 U.S.C. § 636(b)(1); FED. R. CIV. P. 72(b). To be specific, an objection must identify the specific finding or recommendation to which objection is made, state the basis for the objection, and specify the place in the magistrate judge's report and recommendation where the disputed determination is found. An objection that merely incorporates by reference or refers to the briefing before the magistrate judge is not specific. Failure to file specific written objections will bar the aggrieved party from appealing the factual findings and legal conclusions of the magistrate judge that are accepted or adopted by the district court, except upon grounds of plain error. See Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1417 (5th Cir. 1996).


Summaries of

Molina v. Gregory Funding, LLC

United States District Court, Northern District of Texas
Oct 7, 2024
Civil Action 3:23-cv-01576-B (N.D. Tex. Oct. 7, 2024)
Case details for

Molina v. Gregory Funding, LLC

Case Details

Full title:JUAN MOLINA and ALICIA MOLINA, Plaintiffs, v. GREGORY FUNDING, LLC and…

Court:United States District Court, Northern District of Texas

Date published: Oct 7, 2024

Citations

Civil Action 3:23-cv-01576-B (N.D. Tex. Oct. 7, 2024)