Byron v. Litton Loan Servicing, LP

1Litton acquired the mortgage servicing rights and the mortgage itself by assignment
from Washington Mutual Bank. The problems experienced by Byron occurred at the time of,
and were perhaps occasioned by, these transfers.
2These include the Fair Debt Collection Practices Act, 15 U.S.C. 1692 and the
Massachusetts Consumer Protection Act, M.G.L. c. 93A.
In re
ANITA BYRON,
Debtor
______________________________________
ANITA BYRON,
Plaintiff
v.
LITTON LOAN SERVICING LP,
Defendant
U NITED STATES BANKRUPTCY COURT
D ISTRICT OF M ASSACHUSETTS
Chapter 13
Case No. 04-17629-RS
Adversary Proceeding
No. 05-01238
MEMORANDUM AND ORDER
Anita Byron commenced a Chapter 13 case on September 16, 2004. She sought refuge in
the bankruptcy court to forestall foreclosure of a mortgage on her residence held by Litton Loan
Servicing, LP (“Litton”).1 She contends that Litton made numerous missteps in its handling of
her mortgage account, all to her disadvantage, reflecting bad faith and comprising breaches of
federal and state consumer protection statutes.2 In furtherance of her grievances against Litton,
she commenced an adversary proceeding by filing a complaint on March 1, 2005, alleging,
among other things, Litton’s unlawful acceleration of the mortgage and its related foreclosure
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3F.R. Civ. P. 26, applicable herein by Rule 7026 of the Federal Rules of Bankruptcy
Procedure.
2
effort. Litton answered the complaint, denying the allegations and portraying itself as a
mortgagee engaged in the proper exercise of its contractual and state law rights against and in
respect of a defaulting mortgagor and her property.
The matter before the Court concerns sanctions sought by Byron against Litton for its
alleged failure to respond to discovery requests in the adversary proceeding. In deciding this
matter, I have considered the parties’ written submissions, their arguments at hearing, and
applicable law.
Background
After commencing the adversary proceeding, Byron promptly sought discovery of Litton.
She made her mandatory disclosures under Rule 26(a)3 on June 30, 2005 and repeatedly sought
reciprocal disclosures from Litton, to no avail. Thereafter, she made her first document
production request on July 28, 2005, again to no avail, and, on March 17, 2006, her second
document production request and her first request for answers to interrogatories and for
admissions (“Discovery Requests”). On April 25, 2006, nine months after Byron’s initial
request, Litton replied to the Discovery Requests but did not make the mandatory disclosures
under Rule 26(a). Litton has conceded that its April 25, 2006 reply was late and incomplete.
Byron characterizes it additionally as evasive, inadequate, and unsigned. Her characterization is
the more accurate one.
Frustrated by her unsuccessful efforts to obtain signed, complete, non-evasive and
adequate replies to the Discovery Requests, Byron filed two sanctions motions: on May 30,
2006, a motion for the conclusive establishment of her requested admissions and for reasonable
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4Through her counsel, Byron seeks $1,500 in attorney’s fees relating to the Motions.
Litton offers no rebuttal to this amount.
5Bushay involves sanctions (including default) for failure to comply with both discovery
requests and discovery orders. No discovery order is here at issue but the principles articulated
in Bushay are fully applicable to this matter and provide guidance to the Court in its resolution.
6See F.R. Civ. P. 37(a)(3), applicable here by Rule 7037 of the Federal Rules of
Bankruptcy Procedure.
3
costs incident thereto (“Admissions Motion”); and, on June 12, 2006, a motion for a default
judgment and for reasonable costs incident thereto as well (“Default Motion”).4 Presumably
energized by the Motions, Litton replied as follows: on June 5, 2006, Litton opposed the
Admissions Motion; on June 19, 2006, Litton made its second reply to the Discovery Requests;
on June 23, 2006 (and on June 26, 2006), Litton opposed the Default Motion; and on July 6,
2006, Litton made the mandatory disclosures under Rule 26(a). I conducted a hearing on the
Motions on June 29, 2006, took the matter under advisement and now render my decision.
Discussion
I have broad discretion in fashioning a remedy for discovery lapses and, in doing so, I
take into account the entirety of circumstances. See In re Bushay, 327 B.R. 695, 701 (1st Cir.
BAP 2005). 5 As a preliminary matter, I find that Litton’s second reply to the Discovery
Requests, though now signed, is no more compliant with the discovery rules than its initial reply,
and that both replies are late, inadequate, evasive, incomplete and, in the case of the second
reply, occasioned by the Motions. I further find that there is no substantial justification for such
failure. Thus, Litton’s responses to date are herein treated as a failure to disclose, answer or
respond. 6
At issue, then, is not whether sanctions should be imposed upon Litton but rather what
sanctions.
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7Litton also overlooks the damage to the litigation and bankruptcy process resulting from
its laxity.
8See F.R. Civ. P. 37(c) and (d), applicable herein by Rule 7037 of the Federal Rules of
Bankruptcy Procedure.
9See F.R. Civ. P. 36, applicable herein by Rule 7036 of the Federal Rules of Bankruptcy
Procedure.
10 I do so in part because Byron did not seek or obtain, and Litton did not violate, a court
order compelling the requested discovery. Had Litton done so, the outcome in this aspect of
Byron’s sanctions request may well have been different. In so ruling, I note that I am not
4
Litton would absolve itself of any exposure to sanctions, and excuses its discovery
failures, on three grounds: first, it intended to save legal costs for Byron as well as itself; second,
it spent time in (unsuccessful) settlement talks; and third, Byron suffered no harm. I am
unpersuaded by Litton’s argument. Rather than curtail costs, Litton’s compliance failures
increased them, necessitating Byron’s numerous informal efforts to obtain the requisite
compliance and the more formal action of the Motions. In addition, the month-long settlement
talks can hardly excuse the twelve-month interim between Byron’s first discovery action and
Litton’s final reply thereto. Lastly, Litton ignores as a harm the costs incurred by Byron in
enforcing Litton’s discovery compliance.7
If Litton had a valid reason to defer, deny or limit discovery, it could have sought
protection from the Court. It failed to do so. Rather, Litton elected to manage and regulate its
compliance obligations itself, with the predictable consequence that it effectively relieved itself
of such obligations without the inconvenience of judicial intervention.
Given that record of unjustified non-compliance, I conclude that sanctions are warranted,
as follows: (a) Byron is entitled to recover her reasonable costs against Litton in the pursuit of
Litton’s compliance with discovery rules; 8 and (b) Byron is entitled to have her requested
admissions conclusively established. 9 I further conclude that default is not presently warranted.10
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determining that discovery non-compliance itself, without court order, may not lead to default -
it may but not here, at least not yet.
5
However, should Litton’s conduct in the litigation henceforth again reflect such disregard for the
rights of Byron as litigant and such dismissive treatment of the very process intended to regulate
the litigation, the Court will not hesitate to impose that penalty.
Conclusion
Accordingly, the Court orders as follows:
1. 	Litton shall pay $1,500 to Byron by May 15, 2007 failing which an additional
sanction of $100 per day will be imposed for each day after May 31, 2007 such payment is not
made, and Byron shall report to the Court in writing regarding the payment status by May 22,
2007.
2. 	Byron’s requested admissions are conclusively established for the purpose of trial
of the underlying complaint.
3. 	Byron’s request for default judgment is denied.
A separate order will issue regarding the remaining pretrial matters including the
scheduling of trial.
So ordered.
Dated: April 23, 2007 	__________________________________________
Robert Somma
United States Bankruptcy Judge
cc: 	Kimberly Breger, Counsel to Debtor
David M. Rosen, Counsel to Litton Loan Servicing, LP
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