United States District Court, D. Nevada
U.S. BANK N.A., Plaintiffs,
SFR INVESTMENTS POOL 1, LLC, et al., Defendants.
ORDER (DOCKET NOS. 79, 84, 93)
J. KOPPE, UNITED STATES MAGISTRATE JUDGE
U.S. Bank and its attorneys at Wright, Finlay & Zak have
decided to engage in mass litigation over home foreclosures
initiated by homeowners associations. “[W]hen parties
choose to undertake mass litigation, they must make the
proper preparations for doing so.” Wells Fargo
Bank, N.A. v. SFR Invs. Pool 1, LLC, No.
2:16-cv-2726-RFB-NJK, 2017 U.S. Dist. Lexis 150715, *3 (D.
Nev. Sept. 18, 2017). That includes properly staffing cases
to ensure that deadlines are met. Id. Such was
obviously not the case here, as U.S. Bank and its attorneys
now acknowledge a “cascading series” of failures
to comply with Court-ordered deadlines.
Court herein addresses those failures in the context of the
pending order to show cause, the pending motion to reopen
discovery, and the pending motion for summary judgment.
noted above, this is one of hundreds of cases being litigated
concerning the impact of a home foreclosure initiated by an
HOA on the interest in that home by the mortgagor bank. In
this particular case, U.S. Bank sued the wrong HOA, a mistake
that was discovered with approximately 45 days remaining in
the discovery period. Docket No. 49 (motion to be excused
from settlement conference filed by the improperly named HOA
on March 16, 2017, identifying “recent”
discovery of being improperly named); Docket No. 48 at 4
(setting discovery cutoff at May 1, 2017). U.S. Bank did not
seek an extension of the discovery deadlines at that time
based on the revelation that it sued the wrong HOA.
an imminent settlement conference, however, the Court set a
hearing to discuss the issue. Docket No. 56. At that hearing
held on March 21, 2017, U.S. Bank expressed its intention to
seek amendment of its complaint to name the correct HOA.
Hearing Tr. (Mar. 21, 2017) at 9:04-9:05 a.m. On April 11,
2017, U.S. Bank filed a stipulation to allow it to file a
second amended complaint identifying the correct HOA
“within two days of approval of this stipulation”
and further that “U.S. Bank shall serve Green Valley
South Owners Association No. 1 with a summons and a copy of
the Second Amended Complaint within ten (10) days of approval
of this stipulation and order.” Docket No. 64 at 2. On
April 14, 2017, Chief United States District Judge Gloria M.
Navarro granted that stipulation, establishing the deadline
to file the second amended complaint as April 17, 2017 (as
the deadline fell on a Sunday), and establishing the deadline
for service to be completed as April 24, 2017. Docket No. 65
at 2. The stipulation did not request an extension of
discovery deadlines, and the resulting order did not provide
any such extension.
stipulating to the deadlines, U.S. Bank did not file the
second amended complaint by the deadline ordered and did not
serve the second amended complaint by the deadline ordered.
U.S. Bank also never sought an extension of those deadlines.
Moreover, U.S. Bank did not seek an extension of the
discovery cutoff and, instead, simply allowed it to lapse as
scheduled on May 1, 2017. Following the close of discovery,
on May 2, 2017, Chief Judge Navarro stayed this case pending
resolution of appeals involving relevant legal issues. Docket
November 7, 2017, Chief Judge Navarro lifted the stay and,
because discovery had already closed, ordered the filing of
dispositive motions within 21 days. Docket No. 77. Defendant
SFR filed a motion for summary judgment as ordered. Docket
No. 79. U.S. Bank did not file a dispositive motion, did not
file a request to extend that deadline, and, instead, on the
21st day after that order was issued simply filed its
untimely second amended complaint. Docket No.
Another three weeks later, on December 19, 2017
(i.e., six weeks after the stay was lifted), U.S.
Bank then filed a motion to reopen discovery and to reopen
the deadline for dispositive motions in light of its untimely
second amended complaint. Docket No. 84. Following the
filing of Defendant SFR's response to the motion to
reopen, the Court further issued an order for U.S. Bank and
its attorneys to show cause why they should not be sanctioned
in light of their violation of Court-ordered deadlines.
Docket No. 93.
IMPOSITION OF SANCTIONS
Court will first address the outstanding order to show cause.
U.S. Bank and its attorneys have created a quagmire. They
sued the wrong HOA. They failed to comply with the
Court-ordered deadlines (that they had proposed) to sue and
serve the right HOA. They allowed the discovery period to
expire without seeking relief from the discovery cutoff. They
ignored Chief Judge Navarro's order setting a deadline to
file dispositive motions without seeking relief from that
deadline, and instead filed their untimely second amended
complaint without acknowledging its untimeliness or seeking a
retroactive extension of the Court-ordered deadline. They
waited three more weeks to file a motion to reopen the
discovery cutoff and the dispositive motion deadline. They
have engaged in this course of conduct at the expense of
judicial resources and at the expense of SFR's resources,
and have threatened the integrity of the Court's orders.
result, the Court ordered U.S. Bank and its attorneys (Edgar
Smith, Dana Nitz and Patrick Davis) to show cause why they
should not be sanctioned. Docket No. 93. U.S. Bank provided a
response, supported by a declaration from Mr. Davis. Docket
Nos. 94, 94-1. No. declaration was submitted by Mr. Smith or
Mr. Nitz. For the reasons discussed below, the Court finds
the imposition of sanctions appropriate against Mr. Davis,
Mr. Smith, and Mr. Nitz.
are not suggestions or recommendations, they are directives
with which compliance is mandatory.” Gfeller v.
Doyne Med. Clinic, Inc., No. 2:14-cv-01940-JCM-VCF, 2015
WL 5210392, at *8 (D. Nev. Sept. 3, 2015) (citing Chapman
v. Pacific Tel. & Tel. Co., 613 F.2d 193, 197 (9th
Cir. 1979) and Weddell v. Stewart, 261 P.3d 1080,
1085 & n.9 (Nev. 2011)). There are several sources of
legal authority by which federal courts enforce their orders.
Most pertinent here, Rule 16(f) of the Federal Rules of Civil
Procedure requires compliance with any “scheduling or
other pretrial order.” Fed.R.Civ.P. 16(f)(1)©.
Rule 16(f) is “broadly remedial and its purpose is to
encourage forceful judicial management.” Sherman v.
United States, 801 F.2d 1133, 1135 (9th Cir. 1986)
have an “unflagging duty to comply with clearly
communicated case-management orders.” Martin Family
Trust v. Heco/Nostalgia Enters. Co., 186 F.R.D. 601, 604
(E.D. Cal. 1999). Rule 16(f) applies regardless of whether
the non-compliance with the court order was intentional.
See, e.g., Lucas Auto. Eng'g, Inc. v.
Bridgestone/Firestone, Inc., 275 F.3d 762, 769 (9th Cir.
2001). Similarly, “[i]t is firmly established that
sanctions may be imposed for a party's unexcused failure
to comply with a Rule 16 order, even if that failure was not
made in bad faith.” Hologram USA, Inc. v. Pulse
Evolution Corporation, No. 2:14-cv-0772-GMN-NJK, 2016 WL
2757377, at *2 (D. Nev. May 11, 2016) (Navarro, C.J.)
do not invoke Rule 16(f) to enforce their orders for sport.
Cf. Dela Rosa v. Scottsdale Mem'l Health Sys.,
Inc., 136 F.3d 1241, 1244 (9th Cir. 1988) (“We
prefer not to spend time lecturing and cajoling violators
into compliance through the imposition of sanctions”).
Nonetheless, violations of orders setting deadlines
“involve a matter most critical to the court itself:
management of its docket and the avoidance of unnecessary
delays in the administration of its cases.” Martin
Family Trust, 186 F.R.D. at 603 (quoting Matter of
Sanction of Baker, 744 F.2d 1440, 1441 (10th Cir. 1984)
(en banc) (internal quotations omitted)).
“Part of the purpose of the sanctioning power-the power
at issue here-is to control litigation and preserve the
integrity of the judicial process.” Nick v.
Morgan's Foods, Inc., 270 F.3d 590, 594 (8th Cir.
2001). Judges have a responsibility to enforce the directives
laid down for the case:
Rules are rules-and the parties must play by them. In the
final analysis, the judicial process depends heavily on the
judge's credibility. To ensure such credibility, a
[magistrate] judge must often be firm in managing crowded
dockets and demanding adherence to announced deadlines. If he
or she sets a reasonable due date, parties should not be
allowed casually to flout it or painlessly escape the
foreseeable consequences of noncompliance.
Legault v. Zambarano, 105 F.3d 24, 28-29 (1st Cir.
1997) (citation omitted); see also Rice v. Barnes,
201 F.R.D. 549, 551 (M.D. Ala. 2001) (“The court fully
understands the pressures of practicing law; however, the
court cannot allow attorneys to flout deadlines and escape
the foreseeable consequences of doing so”). As the
Ninth Circuit has emphasized, a court order setting deadlines
“is not a frivolous piece of paper, idly entered, which
can be cavalierly disregarded by counsel without peril . . .
. Disregard of the order would undermine the court's
ability to control its docket . . . and reward the indolent
and the cavalier.” Johnson v. Mammoth
Recreations, Inc., 975 F.2d 604, 610 (9th Cir. 1992)
(internal quotations and citations omitted).
court determines that Rule 16(f) has been violated, it has
broad discretion in fashioning an appropriate sanction.
See, e.g., Official Airline Guides, Inc. v.
Goss, 6 F.3d 1385, 1397 (9th Cir. 1993); see
also Local Rule IA 11-8 (the Court may impose
“any and all appropriate sanctions on an
attorney” who violates any order). Violations of orders
are “neither technical nor trivial, ” Martin
Family Trust, 186 F.R.D. at 603, and can have severe
ramifications. Rule 16(f) itself provides that courts may
issue “any just orders, ” including those
authorized by Rule 37(b)(2)(A)(ii)-(vii), which include the
initiation of contempt proceedings and entry of
case-dispositive sanctions. See Fed. R. Civ. P.
16(f)(1); see also Malone v. U.S. Postal Serv., 833
F.2d 128, 130-33 (9th Cir. 1987) (affirming dismissal
sanction). Rule 16(f) also authorizes the payment of the
attorneys' fees and costs incurred as a result of the
non-compliance with the Court order. See Fed. R.
Civ. P. 16(f)(2). In addition, while not expressly
enumerated, the imposition of court fines is within the scope
of the “just orders” permitted by Rule 16(f).
See, e.g., Nick, 270 F.3d at 595-96. In determining
the appropriate sanction, a primary objective is to deter
similar misconduct. See, e.g., Martin Family
Trust, 186 F.R.D. at 604. The Court also considers,
inter alia, the resources wasted by the opposing
party. See, e.g., Fed.R.Civ.P. 16(f)(2).