Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 1 of 12 Page ID#7955 JAMES B. HURLEY and BRANDI HURLEY, jointly and severally, UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION v. Plaintiffs, DEUTSCHE BANK TRUST COMPANY AMERICAS, f/k/a Banker s Trust Company, as Trustee and custodian by: SAXON MORTGAGE SERVICES, INC., f/k/a Meritech Mortgage Services, Inc., and DAVID C. LOHR, and ORLANS ASSOCIATES, PC, Case No. 1:08-cv-00361 Honorable Gordon J. Quist Defendants. / SAXON MORTGAGE SERVICES, INC. AND DEUTSCHE BANK TRUST COMPANY AMERICAS MOTION TO QUASH THE SUBPOENA SERVED ON GREGORY SMALLWOOD Defendants, Saxon Mortgage Services, Inc. and Deutsche Bank Trust Company Americas ( Saxon ), through counsel, respectfully request that this Court quash the unsigned subpoena served on Gregory Smallwood on March 3, 2011 because (1) the Court has ruled inadmissible any reference to the DOJ investigation for which Plaintiffs have suggested Mr. Smallwood s testimony would be probative; (2) Mr. Smallwood is not on any party s witness list; (3) Mr. Smallwood does not have any personal knowledge of any of the facts of this case because he did not join Saxon Mortgage Services, Inc. until 2008, and (4) as Saxon Mortgage Services, Inc. s general counsel, Mr. Smallwood s communications are subject to attorney-client privilege. Pursuant to Local Rule 7.1, concurrence in the relief sought was requested from Plaintiffs counsel, but denied. Accordingly, Saxon respectfully requests that its motion be granted, that the subpoena served on Mr. Smallwood be quashed, and that Plaintiffs otherwise be
Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 2 of 12 Page ID#7956 precluded from calling Mr. Smallwood as a witness in this case for any purpose. This motion is supported by the attached Brief. Respectfully submitted, KERR, RUSSELL AND WEBER, PLC By: /s/fred K. Herrmann William A. Sankbeil (P19882) Fred K. Herrmann (P49519) Matthew L. Powell (P69186) 500 Woodward Avenue, Suite 2500 Detroit, MI 48226 (313) 961-0200; (313) 961-0388 (facsimile) was@krwlaw.com; fkh@krwlaw.com; mlp@krwlaw.com Dated: March 8, 2011 Attorneys for Defendants Saxon Mortgage Services, Inc. and Deutsche Bank Trust Company Americas ii
Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 3 of 12 Page ID#7957 JAMES B. HURLEY and BRANDI HURLEY, jointly and severally, UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION v. Plaintiffs, DEUTSCHE BANK TRUST COMPANY AMERICAS, f/k/a Banker s Trust Company, as Trustee and custodian by: SAXON MORTGAGE SERVICES, INC., f/k/a Meritech Mortgage Services, Inc., and DAVID C. LOHR, and ORLANS ASSOCIATES, PC, Case No. 1:08-cv-00361 Honorable Gordon J. Quist Defendants. / BRIEF IN SUPPORT OF SAXON MORTGAGE SERVICES, INC. AND DEUTSCHE BANK TRUST COMPANY AMERICAS MOTION TO QUASH THE SUBPOENA SERVED ON GREGORY SMALLWOOD
Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 4 of 12 Page ID#7958 TABLE OF CONTENTS STATEMENT OF THE ISSUE PRESENTED... iii CONTROLLING OR MOST APPROPRIATE AUTHORITY... iv INTRODUCTION AND STATEMENT OF FACTS... 1 ARGUMENT... 1 CONCLUSION... 5 ii
Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 5 of 12 Page ID#7959 STATEMENT OF THE ISSUE PRESENTED Should the Court quash the unsigned subpoena handed to Gregory Smallwood on March 3, 2011, and preclude Plaintiffs from calling Mr. Smallwood as a witness in this case for any purpose, because (1) the Court has ruled inadmissible any reference to the DOJ investigation for which Plaintiffs have suggested Mr. Smallwood s testimony would be probative; (2) Mr. Smallwood is not on any party s witness list; (3) Mr. Smallwood does not have any personal knowledge of any of the facts of this case because he did not join Saxon Mortgage Services, Inc. until 2008, and (4) as Saxon Mortgage Services, Inc. s general counsel, Mr. Smallwood s communications are subject to attorney-client privilege? Saxon answers, Yes. iii
Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 6 of 12 Page ID#7960 CONTROLLING OR MOST APPROPRIATE AUTHORITY CASES Baxter Travenol Lab. v. Le May, 708 F.2d 721 (6th Cir. 1982) Crabb v. KFC Nat'l Management Co., No. 91-5474, 1992 U.S. App. LEXIS 38268 (6th Cir. Jan. 6, 1991) Crenshaw v. Herbert, No. 09-0348-pr, 2011 U.S. App. LEXIS 2155 (2d Cir. N.Y. Feb. 2, 2011) Dodson v. CBS Broad. Inc., 423 F. Supp. 2d 331 (S.D.N.Y. 2006) L.C. v. Cent. Pa. Youth Ballet, 2010 U.S. Dist. LEXIS 66060, 28-29 (M.D. Pa. July 2, 2010) Reynolds v. Roberts, 202 F.3d 1303 (11th Cir. 2000) Spreadsheet Automation Corp. v. Microsoft Corp., 587 F. Supp. 2d 794 (E.D. Tex. 2007) United States v. Associated Milk Producers, Inc., 534 F.2d 113 (8th Cir. 1976) United States v. Roxworthy, 457 F.3d 590 (6th Cir. 2006) RULES FED. R. CIV. P. 45 FED. R. EVID. 401, 402, 403, and 408 iv
Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 7 of 12 Page ID#7961 INTRODUCTION AND STATEMENT OF FACTS On March 3, 2011, Plaintiffs counsel handed Gregory Smallwood an unsigned 1 subpoena directing him to be present, beginning on March 3, to testify at trial. Exhibit A, Declaration of Gregory Smallwood ( Smallwood Declaration ) 5. Mr. Smallwood is Saxon Mortgage Services, Inc. s ( SMSI ) general counsel. Id. 1. He resides in Texas. Id. 2. Mr. Smallwood did not join SMSI until April 22, 2008. Id. 3. He has no personal knowledge of any of the facts underlying the allegations in this case. Id. 4. Mr. Smallwood does not appear, nor did he ever appear, on any party s witness list. When counsel for SMSI approached Plaintiffs counsel about Mr. Smallwood s subpoena, Mr. Odom stated that Mr. Smallwood would be a rebuttal witness, not subject to disclosure. On March 8, 2011, Mr. Odom stated that Mr. Smallwood was involved in negotiations with the Department of Justice ( DOJ ). The same day, March 8, the Court ruled, twice, that evidence of the DOJ investigation was inadmissible and unfairly prejudicial. ARGUMENT The Court s case management order makes clear that no witness whose name does not appear on the party s witness list will be permitted to testify for any purpose, except impeachment. Doc. #114 at 4. Mr. Smallwood does not appear on any party s witness list. Moreover, because Mr. Smallwood did not join SMSI until April 2008, he has no knowledge of the facts relevant to this case. Because he has no personal knowledge of the facts relevant to this case, he could not properly appear for any impeachment purpose. 1 Federal Rule of Civil Procedure 45(a)(3) requires that the clerk of the court or an attorney sign the subpoena as an officer of the court from which the subpoena is issue. Because the subpoena was not signed, it is a nullity. The Court may quash the subpoena for this reason alone. 1
Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 8 of 12 Page ID#7962 In addition, because he lacks personal knowledge of the facts underlying Plaintiffs allegations, the only possible reason to call Mr. Smallwood as a rebuttal witness is to explore the Department of Justice ( DOJ ) investigation. Mr. Smallwood cannot be called for this reason. The Court ruled twice on March 8, 2011 that the DOJ investigation was not relevant and would be unfairly prejudicial. And, as the Court has previously ruled, this case is about what happened between Plaintiffs and Defendants and any damages Plaintiffs may have suffered. Doc. #324 at 6, February 23, 2011 Opinion and Order. Moreover, the Court specifically prohibited Plaintiffs, including their attorneys, from suggest[ing] that damages should be imposed against [Saxon] based upon events having no connection to the facts of this case. Doc. #324 at 6, February 23, 2011 Opinion and Order. Accordingly, the Court s rulings prohibit Plaintiffs from basing their claim to damages on allegations of other alleged SCRA violations subject to DOJ inquiry, and precluded Plaintiffs from using Mr. Smallwood to explore the existence or substance of the DOJ investigation. Even if the Court s previous rulings did not already prohibit references or evidence of the DOJ investigation, it would nevertheless be inadmissible under Federal Rules of Evidence 401, 402, 403, and 408. See, e.g., Crenshaw v. Herbert, No. 09-0348-pr, 2011 U.S. App. LEXIS 2155 (2d Cir. N.Y. Feb. 2, 2011) ( even if evidence of a prior substantiated excessive force investigation existed, on the facts of the particular case before us such evidence would be inadmissible to show that Bartkowiak acted violently in this instance. ); Doc. #241, December 17, 2010 Opinion at 12 ( The existence of another case involving similar facts, without more, is insufficient to support an award of punitive damages ). Likewise, the fact that Saxon may be negotiating a settlement of the investigation is also inadmissible. See, e.g., Reynolds v. Roberts, 202 F.3d 1303, 1318 (11th Cir. 2000) 2
Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 9 of 12 Page ID#7963 (representations min the course of negotiating the terms of a DOJ consent decree were inadmissible under Federal Rule of Evidence 408); United States v. Associated Milk Producers, Inc., 534 F.2d 113, 117 (8th Cir. 1976) (a consent decree is the equivalent of a nolo contendere plea and is inadmissible in other suits involving the same alleged violations); L.C. v. Cent. Pa. Youth Ballet, 2010 U.S. Dist. LEXIS 66060, 28-29 (M.D. Pa. July 2, 2010) ( consent decrees are not adjudications of guilt. Therefore, the consent decree entered into by Karl Moll cannot materially substantiate the claims Plaintiffs have asserted against him in the action at bar, meaning that it is entirely irrelevant to those claims. ); Spreadsheet Automation Corp. v. Microsoft Corp., 587 F. Supp. 2d 794, 801 (E.D. Tex. 2007) ( evidence of consent decrees, settlements, and licenses made under the threat of litigation would not be proper evidence of Plaintiff s damages to present to the jury. ); Dodson v. CBS Broad. Inc., 423 F. Supp. 2d 331, 334 (S.D.N.Y. 2006) (The limited probative value of an EEOC suit and settlement is substantially outweighed by the burden that the admission of this evidence would place on [defendant] to explain the circumstances at issue in [the EEOC s lawsuit and its settlement], by the waste of time that would accompany such explanations, and by the danger that admission of this evidence will create unfair prejudice against [defendant]. (citations omitted)). Further, even if the DOJ investigation were relevant to the facts of this case, which they are not, any reference to the investigation, the negotiation of a consent decree, or the allegations that are the basis for that investigation, would also be unfairly prejudicial to Saxon. Under Rule 403, even relevant evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury. FED. R. EVID. 403. Thus, even if the DOJ investigation could be deemed relevant, the danger of unfair prejudice, confusion of the issues, and misleading the jury is extreme. It is difficult to imagine 3
Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 10 of 12 Page ID#7964 evidence that would be more unfairly prejudicial than putting Saxon on trial for unproven allegations by non-parties not before the Court. Plaintiffs have no justification for introducing such evidence or making such references in this case other than for the purpose of gaining an unfairly prejudicial advantage and misleading the jury. Accordingly, at a minimum, such evidence or references should be excluded as unfairly prejudicial under FRE 403. In addition to being irrelevant and unfairly prejudicial, the introduction of evidence of, or reference to, the DOJ investigation would result in a monumental waste of time. As discussed, the DOJ investigation is merely a preliminary investigation based on unproven allegations, for which no liability or wrongdoing has been found. Moreover, Plaintiffs would have to prove the factual predicate of each, unrelated allegation, leading to a waste of the Court s and the jury s time on unrelated and irrelevant matters. Even if Mr. Smallwood had any knowledge of the facts underlying the claims in this case, any communication Mr. Smallwood had with SMSI employees, or outside counsel, would be protected by the attorney-client privilege because he is SMSI s general counsel. See United States v. Roxworthy, 457 F.3d 590 (6th Cir. 2006); Crabb v. KFC Nat'l Management Co., No. 91-5474, 1992 U.S. App. LEXIS 38268 (6th Cir. Jan. 6, 1991) (and cases cited therein); Baxter Travenol Lab. v. Le May, 708 F.2d 721 (6th Cir. 1982). Pursuant to FED. R. CIV. P. 45(c)(3)(A)(iii), the issuing court must quash a subpoena that requires disclosure of privileged or other protected matter.... The unsigned subpoena requiring SMSI s general counsel to testify would require just such disclosures. Finally, FED. R. CIV. P. 45(c)(3)(A)(i) also requires the issuing court to quash a subpoena that fails to allow a reasonable time to comply. As stated above, Mr. Smallwood was handed an unsigned subpoena on March 3, which required his attendance on March 3. The utter lack of 4
Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 11 of 12 Page ID#7965 time to comply with the subpoena falls far short of the presumptive fourteen days Plaintiffs, just one and half weeks ago, argued was the required notice period before a witness could be compelled to testify. Doc. #320 at 7. Accordingly, the Court should quash the unsigned subpoena Plaintiffs counsel handed Mr. Smallwood on March 3, 2011. CONCLUSION For the reasons stated, Saxon respectfully requests that the Court quash the unsigned subpoena handed to Gregory Smallwood by Plaintiffs counsel on March 3, 2011, and preclude Plaintiffs from calling Mr. Smallwood as a witness in this case for any purpose. Respectfully submitted, KERR, RUSSELL AND WEBER, PLC By: /s/fred K. Herrmann William A. Sankbeil (P19882) Fred K. Herrmann (P49519) Matthew L. Powell (P69186) 500 Woodward Avenue, Suite 2500 Detroit, MI 48226 (313) 961-0200; (313) 961-0388 (facsimile) was@krwlaw.com; fkh@krwlaw.com; mlp@krwlaw.com Dated: March 8, 2011 Attorneys for Defendants Saxon Mortgage Services, Inc. and Deutsche Bank Trust Company Americas 5
Case 1:08-cv-00361-GJQ Doc #377 Filed 03/08/11 Page 12 of 12 Page ID#7966 CERTIFICATE OF SERVICE I hereby certify that on December March 8, 2011, I electronically filed the foregoing paper with the Clerk of the Court using the ECF system, which will send notification of such filing to Counsel of Record via the CM/ECF system. Respectfully submitted, KERR, RUSSELL AND WEBER, PLC Dated: March 8, 2011 By: /s/ Fred K. Herrmann Fred K. Herrmann (P49519) 500 Woodward Avenue, Suite 2500 Detroit, Michigan 48226 (313) 961-0200 (313) 961-0388 (Facsimile) fkh@krwlaw.com 6
Case 1:08-cv-00361-GJQ Doc #377-1 Filed 03/08/11 Page 1 of 2 Page ID#7967 EXHIBIT A
Case 1:08-cv-00361-GJQ Doc #377-1 Filed 03/08/11 Page 2 of 2 Page ID#7968