United States District Court, E.D. Michigan, Southern Division
ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFF'S MOTION TO COMPEL (DKT. 32) AND GRANTING IN
PART AND DENYING IN PART DEFENDANT'S MOTION TO COMPEL
A. GOLDSMITH United States District Judge.
matter is before the Court on the Government's motion to
compel (Dkt. 32) and Defendant Quicken Loans Inc.'s
motion to compel (Dkt. 33). A hearing on these motions was
held on May 22, 2017. The Court addresses each motion in turn
and, for the reasons stated below, grants, in part, and
denies, in part, both of the parties' motions.
STANDARD OF DECISION
Rule of Civil Procedure 26 allows for broad discovery in
litigation, including “any nonprivileged matter that is
relevant to any party's claim or defense and proportional
to the needs of the case[.]” Fed.R.Civ.P. 26(b)(1).
Although Rule 26 was amended in 2015 to include a
“proportionality” requirement, the “basic
tenet that Rule 26 is to be liberally construed to permit
broad discovery” remains unaltered. State Farm
Auto. Ins. Co. v. Warren Chiropractic & Rehab Clinic,
P.C., 315 F.R.D. 220, 222 (E.D. Mich. 2016); Martin
v. Bimbo Foods Bakeries Distribution, LLC, 313 F.R.D.1,
5 (E.D. N.C. 2016) (“The rules of discovery, including
Rule 26, are to be given broad and liberal
construction.”). Relevance, in turn, “has been
broadly construed to encompass any possibility that the
information sought may be relevant to the claim or defense of
any party.” Martin, 313 F.R.D. at 5;
Tucker v. Momentive Performance Materials USA, Inc.,
2016 WL 8252929, at *2 (S.D. W.Va. Nov. 23, 2016) (same).
ruling on discovery-related motions, the district court has
broad discretion to determine the proper scope of discovery,
including whether a “discovery request is too broad and
oppressive.” Surles ex rel. Johnson v. Greyhound
Lines, Inc., 474 F.3d 288, 305 (6th Cir. 2007);
Lewis v. ACB Bus. Serv., Inc., 135 F.3d 389, 402
(6th Cir. 1998).
analyzing the parties' motions, the Court utilizes these
principles, including specifically the Rules' heightened
concern with the proportionality of discovery.
The Government's Motion to Compel (Dkt. 32)
Request for Documents Related to Appraisals
Government requests the production of documents that it
claims are specifically related to appraisals, including (i)
“communications between Quicken and any appraiser or
any appraisal management company”; (ii)
“documents concerning value appeals”; (iii)
“documents concerning any value provided to the
appraiser or appraisal management company”; and (iv)
“documents related to Quicken's policies,
procedures, and practices related to appraisals and value
appeals.” Pl. Mot. at 5 (citing Pl. 1st Set of Prod.
Requests ¶¶ 8, 59, 72-76, 101-104 (Dkt. 32-3); Pl.
2d Set of Prod. Requests ¶¶ 5, 11, 16-19 (Dkt.
487 loans identified in attachment A to the Government's
second set of requests for production, see Attach. A
at 10-20 (cm/ecf pages) (Dkt. 32-4) - which the parties refer
to as the “Loan Selection” - Quicken claims that
it has already “produced the loan files, appraisals,
loan journal notes, certain appraisal-related tracking items
on the list of 573 specific tracking items requested by the
government, and appraisal-related emails.” Def. Resp.
at 2 (Dkt. 36). In its response, as well as during the
hearing, Quicken stated that, once discovery resumes in this
case, it will produce the value appeals tracking items and
any remaining appraisal-specific policies, procedures, and
training documents. See id. at 2-3.
the hearing, the Government stated that it would wait for
Quicken's production regarding the value appeals tracking
items, as well as the policies, procedures, and training
documents, at which point the Government will determine what,
if any, documents relating to appraisals it still contends
have not been produced. Therefore, the Court denies this
portion of the Government's motion without prejudice,
except Quicken is ordered to fulfill its stated undertaking
by June 9, 2017.
Government also sought the production of documents relating
to Title Source Inc., which the Government claims “is
the company Quicken used as its appraisal management company
and both are wholly-owned subsidiaries of Rock Holdings,
Inc.” Pl. Mot. at 5. Following the hearing, counsel for
the Government informed the Court that the Government is no
longer seeking these documents. Therefore, the Court denies
this portion of the Government's motion without
Request for Loan Journal Notes and Loan-Level Emails
Government is seeking the production of loan journal notes
and loan-level emails regarding the Loan Selection, Pl. Mot.
at 6 (citing Pl. 2d Set of Prod. Requests ¶¶ 4, 6,
12), arguing that these documents “go to the very heart
of this matter as they serve as the foundational evidence of
Quicken's knowing endorsement of ineligible FHA loans,
” id. at 8.
its request for loan journal notes, the Government contends
that these documents are written by a Quicken employee about
a specific loan and are “highly relevant to whether a
loan is eligible for FHA mortgage insurance, and
Quicken's knowledge thereof.” Pl. Mot. at 7.
Because each loan at issue in this case closed during the
time period of September 1, 2007 to December 31, 2011,
Quicken objects to the production of journal notes outside of
this timeframe, arguing that such journal note entries are
irrelevant to the underwriting decisions made on the loans.
Def. Resp. at 5-6. The Government contends that this
“arbitrary” end-date “ignores the very real
possibility that notes written after the loan was
underwritten could, among other things, address defects
Quicken identified in the loan file or conversations with the
borrower concerning the borrower's financial condition at
the time the loan was underwritten.” Pl. Mot. at 7-8.
The Court agrees with the Government.
not uncommon for relevant information to be discoverable,
even if such information falls outside the timeframe of
actionable activity set out in a complaint. Parties may speak
or write about past activities or transactions in a way that
sheds relevant light on the innocent or guilty nature of
their acts - and that light is not dimmed simply because the
evidence was generated after the lapse of the period
embracing the wrongful acts. In our case, for example, a
journal note entered on January 2, 2012 relating to a subject
loan would still be relevant, regardless of the fact that it
was entered after the time period identified in the
Government's complaint. Therefore, the Court overrules
Quicken's objection, grants this portion of the
Government's motion, and orders the production of all
loan journal notes for the Loan Selection, regardless of the
time a particular note was created or entered, by June 23,
its request for loan-level emails, the Government states that
Quicken has objected to the production of emails concerning
the selection of a loan product for the borrower, the pricing
of the loan, and other email communications with the borrower
early in the lending process. Pl. Mot. at 7. The Government
argues that these “communications are highly relevant
to the ultimate question of the loan file review - whether
the loan was eligible for FHA mortgage insurance, ”
because they are evidence of (i) the decision made by Quicken
and the borrower to obtain an FHA-insured mortgage, (ii) the
support for the decision, and (iii) the representations
Quicken made to the borrower regarding the proposed
mortgage's qualification for FHA insurance. Id.
at 7. It wants all loan-level emails, except for so-called
“sales scripts” (i.e., the generic sales pitches
that are made to customers during the initial contact), which
it expressly waived at the hearing.
response, Quicken argues that the Government's request
for all emails related to the Loan Selection, regardless of
date or subject, should be denied because Judge Reggie Walton
of the U.S. District Court for the District of Columbia
previously considered and rejected the same request when this
case was still in his court. Judge Walton specifically ruled
that “information regarding mere sales tactics that did
not contribute to information being submitted by Quicken
Loans to the [FHA] need not be produced.” Def. Resp. at
5 (quoting 10/24/2016 Order, Ex. A to Pl. Mot. (Dkt. 32-2).
Instead, Quicken claims that Judge Walton “ordered only
a targeted production of emails related to mortgage bankers,
” and that Quicken has completed its production of
those emails for the Loan Selection.
Court concludes that all loan-level emails for the Loan
Selection are relevant and should be produced, except for
“sales scripts.” Because there is no transcript
of Judge Walton's ruling, or of the conference that he
conducted with counsel, this Court has only his minute order
from which to discern his intent. Unfortunately, the order is
cryptic, leaving some issues unclear. For example, Judge
Walton provides, by way of “category 2” in his
order, for the production of “representations or
promises that mortgage bankers made to potential
borrowers.” But this is apparently limited by the
phrase “but due to initial appraisals that would not
permit Quicken Loans to fulfill those promises, resulting in
Quicken Loans having property appraisals reevaluated and the
appraisal values of the properties increased so that such
representations or promises could be fulfilled.”
Looking beyond the incorrect syntax - which impedes a clear
understanding of the import of this provision - it appears
that this provision addresses promises about qualifications
for a loan that could not be kept except by way of a request
for a higher valuation of the borrower's property after
an initial lower-than-hoped-for valuation.
Judge Walton would apparently limit the discovery in this
fashion is not made clear by anything of record. And given
that the Government's case goes well beyond allegedly
improper value appeals, there is no principled basis for
allowing Quicken to refuse to turn over documents that touch
on other allegedly improper tactics, such as management
exceptions or inflation of borrower income. The requested
loan-level documents are the central repository of what