Hoskins v. Hewlett et al

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MEMORANDUM RE MOTION TO DEEM
MATTERS ADMITTED AND PRECLUDE PROOF 	-1-
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
SOPHIE H. NG,
Debtor.
JANINA M. ELDER, Chapter 11 Trustee,
Plaintiff,
vs.
PATRICIA ISABELLE HEWLETT, REGULO
CUBILLOS SIERRA, CHARLENE DELANEY
REAL ESTATE, INC., dba KELLER
WILLIAMS REALTY, and PRUDENTIAL
CALIFORNIA REALTY,
Defendants.
REGULO CUBILLOS SIERRA and
PRUDENTIAL CALIFORNIA REALTY,
Third-Party Plaintiffs,
vs.
FRED KOOPMAN, KAYE KOOPMAN,
LOMBARD STREET LOAN COMPANY, WARD
REALTY, LOMBARD STREET EMPLOYEES
PLAN, and UNITED COMMERCIAL BANK,
Third-Party Defendants.
____________________________________
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Case No. 06-30904 TEC
Chapter 11
Adv. Proc. No. 07-3071 TC
MEMORANDUM DECISION RE
TRUSTEE’S MOTION TO DEEM
MATTERS ADMITTED AND TO
PRECLUDE PROOF OF DAMAGES
Signed and Filed: September 03, 2009
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
September 04, 2009
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 07-03071 Doc# 118 Filed: 09/03/09 Entered: 09/04/09 08:17:15 Page 1 of
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28 1 On August 23, 2007, the court entered an order allowing
the parties to serve discovery immediately.
MEMORANDUM RE MOTION TO DEEM
MATTERS ADMITTED AND PRECLUDE PROOF 	-2-
FACTS
On January 19, 2007, Patricia Hewlett filed a proof of claim
in the Sophie Ng bankruptcy case. 	The claim is a secured claim in
the sum of $1,060,000, based on Debtor’s alleged breach of a May 3,
2004 option contract that entitled Hewlett to purchase from Debtor
a 24-unit apartment building in San Francisco located at 1385 Clay
Street (the Property). 	Hewlett obtained the option one year after
representing Ng as her real estate agent in purchasing the
Property.
On June 29, 2007, Trustee filed a complaint in the present
action, seeking to disallow Hewlett’s claim on the grounds of
breach of fiduciary duty, fraud, negligence, deceit, negligent
misrepresentation, undue influence, and elder abuse.
James Attridge represented Hewlett in the adversary proceeding
until April 3, 2009, when Hewlett filed a pleading substituting
herself as counsel.
Both when Hewlett was represented by counsel and when Hewlett
represented herself in pro per, Hewlett failed to respond to
discovery requests properly served upon her by Trustee. 	Hewlett
also failed to comply with an order by this court compelling her to
produce documents.
On August 24, 2007, 1 Trustee served on Hewlett a first request
for production of documents, and a first request for admissions.
Hewlett failed to respond to Trustee’s first request for production
of documents. 	Although Hewlett did serve responses to Trustee’s
Case: 07-03071 Doc# 118 Filed: 09/03/09 Entered: 09/04/09 08:17:15 Page 2 of
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MEMORANDUM RE MOTION TO DEEM
MATTERS ADMITTED AND PRECLUDE PROOF 	-3-
first request for admissions, her responses were served more than
two weeks late.
On October 19, 2007, Trustee served Hewlett with a first set
of interrogatories, and a second request for production of
documents. 	Hewlett never responded to this second set of
discovery.
Trustee brought a motion to compel Hewlett to comply with
Trustee’s first request for production of documents. 	The court
entered an order on December 12, 2007 granting that motion and
compelling Hewlett to produce without objection documents
responsive to Trustee’s first request for production of documents.
Hewlett failed to comply with that order.
Hewlett failed to serve a response to Trustee’s third request
for production of documents, second set of interrogatories, and
second request for admissions, served by Trustee on July 13, 2009.
There is nothing in the record to indicate that Hewlett sought
an extension of time to respond to any of the discovery requests
served by Trustee, or that she sought relief from the court’s
December 12, 2007 order compelling production of documents.
On June 4, 2009, the court held at a trial setting conference,
at which Hewlett appeared on her own behalf. 	At the conference,
the court severed for trial Trustee’s objection to Hewlett’s claim,
set a discovery cutoff of August 14, 2009, and set a trial date of
September 1, 2009.
On August 25, 2009, Trustee filed and served upon Hewlett a
motion to disallow Hewlett’s claim based on deemed admissions or to
bar Hewlett from introducing evidence at trial. 	Trustee’s motion
was set for hearing on the first day of trial, September 1, 2009.
Case: 07-03071 Doc# 118 Filed: 09/03/09 Entered: 09/04/09 08:17:15 Page 3 of
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MEMORANDUM RE MOTION TO DEEM
MATTERS ADMITTED AND PRECLUDE PROOF 	-4-
On August 26, 2009, Hewlett filed a Petition for Trial Extension
and Jury Selection for New Attorney to Review Case. 	In that
petition, Hewlett stated that she was in the process of retaining
an attorney to represent her.
The court heard argument from both parties on September 1,
2009. 	In response to Trustee’s motion, Hewlett stated that she
thought she had responded to Trustee’s requests for documents, but
despite the fact that Trustee’s motion clearly raised Hewlett’s
failure to produce documents, Hewlett did not bring to court copies
of the documents she claims to have produced or any other proof
that she had produced documents to Trustee.
The court denied Hewlett’s petition to continue the trial, and
granted Trustee’s motion to disallow Hewlett’s claim, for the
reasons stated on the record at the hearing and for the reasons set
forth below.
DISCUSSION
1. 	Admissions. 	It is appropriate for the purpose of
Trustee’s objection to Hewlett’s claim to deem as conclusively
established all the matters covered in Trustee’s second request for
admissions. 	I find that Trustee properly served that request for
admissions, that Hewlett did not timely respond to that request for
admissions, and that the second request for admissions was properly
limited to questions of fact and questions regarding the
application of law to fact. 	Because Hewlett did not timely respond
to the second request for admissions, the matters covered by the
second request for admissions are conclusively established, unless
the court, upon motion, permits the admissions to be withdrawn or
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2 Fed. R. Civ. Proc. 36 applies to adversary proceedings.
Fed. R. Bankr. Proc. 7036.
3 “Requesting party” means the party who requested the
admissions, not the party seeking to withdraw the
admissions.
MEMORANDUM RE MOTION TO DEEM
MATTERS ADMITTED AND PRECLUDE PROOF 	-5-
amended. 	Fed. R. Civ. P. 36. 2 	Hewlett never moved to withdraw or
amend the resulting admissions, even on the first day of trial,
despite being served with Trustee’s motion to disallow Hewlett’s
claim based on her deemed admissions.
Had Hewlett asked to withdraw her admissions on the first day
of trial, I would have denied that request. 	Rule 36(b) provides in
relevant part that: “the court may permit withdrawal or amendment
if it would promote the presentation of the merits of the action
and if the court is not persuaded that it would prejudice the
requesting party 3 in maintaining or defending the action on the
merits.” 	(emphasis added). 	For the following reasons, the
circumstances do not satisfy either of the requirements of Rule
36(b) and, in any event, withdrawal of the admissions should be
denied as a matter of discretion.
Withdrawal of the admissions would not further decision of the
controversy on the merits, because Hewlett has refused to
participate in the pursuit of the merits through her almost
complete refusal to respond to discovery. 	In addition to failing
to respond to the second request for admissions at issue here,
Hewlett failed to provide any response whatsoever to three requests
for production of documents and two sets of interrogatories. 	Those
requests for production and interrogatories asked Hewlett to
identify, inter alia, the documents and witnesses Hewlett intended
to rely upon in establishing damages. 	Hewlett failed to produce
Case: 07-03071 Doc# 118 Filed: 09/03/09 Entered: 09/04/09 08:17:15 Page 5 of
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4 Hewlett actively interfered in several ways with
Trustee’s efforts to market and sell the Property. 	First,
Hewlett refused to comply with this court’s order to
produce documents relevant to the income and expenses of
the Property. 	Second, Hewlett ignored this court’s
injunction ordering her to stay off the Property, and
allowed her brother to occupy a unit on the Property after
MEMORANDUM RE MOTION TO DEEM
MATTERS ADMITTED AND PRECLUDE PROOF 	-6-
documents responsive to Trustee’s first request for production of
documents, even after the court entered an order compelling her to
do so. 	Hewlett did respond to Trustee’s first request for
admissions, and did submit to deposition shortly before trial, but
at that deposition she failed to respond in any meaningful way to
the questions about her damages. 	In sum, to relieve Hewlett of her
admissions would require Trustee to go to trial without those
admissions and without any clue about Hewlett’s claim for damages.
Such a process would not advance the orderly and reliable
resolution of the controversy on the merits.
Withdrawal of the admissions at this date would also prejudice
Trustee, because it would have occurred on the first day of trial.
See 999 v. CIT Corp., 776 F.2d 866, 869 (9th Cir. 1985). 	Although
Trustee did not request the admissions until shortly before trial,
Trustee acted reasonably in doing so, because Hewlett had refused
to respond to all other forms of discovery.
Withdrawal of the admissions should also be denied as a matter
of discretion. 	See Conlon v. United States, 474 F.3d 616, 624-25
(9th Cir. 2007). 	First, Hewlett has acted in bad faith throughout
the litigation. 	She refused to make discovery even when ordered to
do so by the court, and she actively interfered with Trustee’s
efforts to implement a court order authorizing the sale of the
Property. 4 	Second, Hewlett is not likely to prevail on her claim
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the court approved the sale of the Property. 	The court
cites this conduct to show lack of mistake in Hewlett’s
failure to respond to discovery.
5 Fed. R. Civ. Proc. 37 applies to adversary proceedings.
Fed. R. Bankr. Proc. 7037.
MEMORANDUM RE MOTION TO DEEM
MATTERS ADMITTED AND PRECLUDE PROOF 	-7-
even if permitted to withdraw her admissions. 	There are obvious
and serious questions about the validity of the option upon which
Hewlett’s claim is based. 	Hewlett obtained the option to purchase
the Property from Ng one year after acting as Ng’s real estate
agent in the purchase of the same Property. 	Ng is elderly and has
limited command of English. 	Hewlett has produced no evidence that
she advised Ng to seek independent advice regarding the
transaction, despite Trustee’s request for such information via
discovery. 	Even if the option were found to be valid, Hewlett
would likely be unable to support any claim for damages, as any
witnesses or documentary proof she might offer would be excluded
under Fed. R. Civ. P. 37(c)(1), 5 because they were never disclosed
to Trustee. 	Thus, notwithstanding that Hewlett is currently not
represented by counsel, the facts and circumstances of the case
suggest that any request to withdraw the admissions should be
denied as an exercise of discretion.
If Hewlett’s admissions are not set aside, her claim must be
disallowed, because in those admissions Hewlett acknowledges that
the option to purchase is unenforceable and that she has suffered
no damages.
2. 	Violation of Order Compelling Discovery. 	It is also
appropriate to preclude Hewlett from introducing evidence to
support her claim for damages as a sanction for Hewlett’s failure
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6 First Request for Production of Documents, requests 9-27,
39, 44, 62, 64-65.
MEMORANDUM RE MOTION TO DEEM
MATTERS ADMITTED AND PRECLUDE PROOF 	-8-
to obey the court’s December 12, 2007 order compelling Hewlett to
produce documents responsive to Trustee’s first request for
production of documents. 	Preclusion of such evidence is
appropriate under Fed. R. Civ. P. 37(b)(2)(A)(ii), because Hewlett
failed to obey a discovery order, because no fewer than 23 of the
categories of documents requested concerned information regarding
the damages claimed by Hewlett 6, because information concerning
Hewlett’s claim for damages is uniquely within Hewlett’s knowledge,
because Hewlett was represented by counsel at the time the
discovery order was entered and violated, and because it is
apparent from Hewlett’s other conduct in this litigation that she
acted willfully and not by mistake in failing to obey the discovery
order. 	Hewlett bears the burden of proof on the question of
damages, because Trustee has shown facts “tending to defeat” one or
more elements of Hewlett’s proof of claim. 	Lundell v. Anchor
Const. Specialists, Inc., 223 F.3d 1035, 1039 (9th Cir. 2000).
Absent proof of her damages, Hewlett’s claim must be disallowed.
3. 	Entry of judgment. 	The court find there to be no just
reason for delay and that judgment should be entered immediately
disallowing Hewlett’s proof of claim. 	There is a substantial
possibility that denial of the claim, if not set aside on appeal,
would end this lawsuit. 	Counsel for the other parties have made
clear that there is a substantial possibility that once the present
claim is resolved, Trustee may drop the other claims against
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MEMORANDUM RE MOTION TO DEEM
MATTERS ADMITTED AND PRECLUDE PROOF 	-9-
Hewlett, effectively eliminating Hewlett’s related third-party
claims as well.
**END OF MEMORANDUM**
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MEMORANDUM RE MOTION TO DEEM
MATTERS ADMITTED AND PRECLUDE PROOF 	-10-
Court Service List
Patricia Isabelle Hewlett
132 Colon Ave.
San Francisco, CA 94112
Jeffrey L. Fillerup, Esq.
Luce, Forward, Hamilton and Scripps
Rincon Center II
121 Spear Street, Suite 20
San Francisco, CA 94105-1582
Jeffrey R. Brown, Esq.
P. Kurt Peterson, Esq.
Peterson, Martin and Reynolds LLP
49 Stevenson Street, 10th Floor
San Francisco, CA 94105
David M. Parker, Esq.
Parker and Crosland LLP
700 Larkspur Landing Circle
Suite 199
Larkspur, CA 94939-1754
Richard E. Roby, Esq.
Law Offices of Richard E. Roby
1218 23rd Avenue
San Francisco, CA 94122
Daniel Zamora, Esq.
Law Offices of Tobin and Tobin
500 Sansome Steet, Suite 800
San Francisco, CA 94111
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