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Carisbrook Asset Holding Trust v. SFR Investments Pool 1, LLC

United States District Court, D. Nevada

June 6, 2019




         I. SUMMARY

         This dispute arises from the homeowners' association foreclosure sale (“HOA Sale”) of real property located at 7752 Corso Street, Reno, Nevada 89506 (“Property”) to satisfy a homeowners' association lien. (ECF No. 1 at 1, 4.) Before the Court are three motions: (1) Plaintiff Carisbrook Asset Holding Trust's motion for summary judgment, arguing that a deed of trust it owns on the Property (the “DOT”) continues to encumber the Property (the “Motion”) (ECF No. 64); (2) Defendant SFR Investments Pool 1, LLC's (“SFR”) motion to strike Plaintiff's Motion for failing to disclose witnesses and a document that Plaintiff uses to support its Motion (“Motion to Strike”) (ECF No. 70); and (3) SFR's alternative motion for relief under Fed.R.Civ.P. R. 56(d) (“Rule 56(d) Motion”), for the same reasons presented in the Motion to Strike (ECF No. 71).[1] Because the Court finds that Plaintiff's failure to disclose was not substantially justified, but mostly harmless such that exclusion would be too harsh a remedy, and as further explained below, the Court will grant SFR's Rule 56(d) Motion, deny the other two pending motions, and briefly reopen discovery in this case.


         Plaintiff filed this case on June 13, 2017. (ECF No. 1.) Plaintiff then filed a motion for summary judgment in December 2017 (“First MSJ”). (ECF No. 32; see also ECF Nos. 34, 37, 38, 39, 40, 41 (responses, reply, and briefing regarding SFR's related motion for relief under Rule 56(d)).) Plaintiff's First MSJ was based entirely on the argument that NRS § 116, et seq. was facially unconstitutional under the Ninth Circuit's Bourne Valley Court Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016) (“Bourne Valley”) opinion. (ECF No. 32 at 1-2.) Notably, Plaintiff's First MSJ did not contain the argument that Plaintiff's predecessor-in-interest's counsel tendered a check to the HOA's agent discharging the HOA's lien on the Property (a “Tender Argument”).

         The Court then stayed this case pending the Nevada Supreme Court's answer to the certified question in Nev. S.Ct. No. 72931 on May 22, 2018, and denied the First MSJ and SFR's related motion for Rule 56(d) relief without prejudice. (ECF No. 60.) At the time, the discovery deadline was set to expire about a month later-on June 25, 2018. (ECF No. 58.) The Court lifted that stay on August 9, 2018. (ECF No. 63.)

         About a month after the Court lifted the stay, Plaintiff filed the Motion, which includes both an argument based on Bourne Valley, and a Tender Argument. (ECF No. 64.) Plaintiff's Tender Argument relies on the affidavit of Doug Miles, of the law firm Miles Bauer, which in turn includes as an exhibit a screenshot from an internal database used by Miles Bauer (the “Prolaw Screenshot”)-to establish that a Miles Bauer attorney mailed a check to the HOA's agent in an amount corresponding to the HOA's lien on the Property, and the HOA rejected it. (ECF Nos. 64 (motion), 64-1 at 2-5 (affidavit), 64-1 at 7 (Prolaw Screenshot).) SFR responded, filed its Motion to Strike, and Rule 56(d) Motion. (ECF Nos. 69, 70, 71.) In relevant part, SFR argues in these documents that Plaintiff never disclosed Doug Miles, or anyone else from Miles Bauer, as a witness during discovery in this case-in violation of Rule 26(a)(1)(A)(i), meriting exclusion of ECF No. 64-1 under Rule 37(c)(1), or, alternatively, additional discovery on Plaintiffs Tender Argument under Rule 56(d). (See, e.g., ECF No. 70 at 17-18.)

         Because Plaintiffs Tender Argument may be case-dispositive, and Plaintiff did not dispute it did not disclose any witnesses from Miles Bauer (see, e.g., ECF No. 78 at 11), the Court held a hearing on these discovery deficiencies on June 3, 2019 (the “Hearing”). (ECF No. 86.) At the Hearing, Plaintiff conceded it never disclosed any witnesses from Miles Bauer, nor did it disclose the ProLaw Screenshot, though Plaintiff did disclose some other documents related to its Tender Argument. This order follows from the Hearing. (Id. (stating the Court will issue a written order).)


         Because Plaintiff conceded its discovery disclosures were inadequate at the Hearing, the Court does not herein substantially address the merits of Plaintiffs Motion. As further explained below, the Court will deny Plaintiffs Motion without prejudice.

         As an additional threshold matter, the Court notes SFRs Motion to Strike is really a motion for discovery sanctions under Rule 37(c)(1). (ECF No. 70 at 17 (arguing for an exclusion sanction).) “Under Rule 12(f) a court may strike from a pleading any redundant, immaterial, impertinent, or scandalous matter.” Herb Reed Enterprises, LLC v. Fla. Entm't Mgmt, Inc., No. 2:12-CV-00560-MMD, 2014 WL 1305144, at *6 (D. Nev. Mar. 31, 2014). “However, motions to strike apply only to pleadings, and courts are generally unwilling to construe the rule broadly and refuse to strike motions, briefs, objections, affidavits, or exhibits attached thereto.” Id. (citation omitted) (denying motion to strike declarations submitted in support of summary judgment motions). Thus, the Court construes SFRs Motion to Strike as a motion for sanctions under Rule 37(c)(1).

         Under Rule 26, a party must disclose witnesses likely to have discoverable information, and copies of the documents it intends to rely on to support its claims or defenses. See Fed. R. Civ. P. 26(a)(1)(A)(i), (ii). If a party learns its disclosures are incomplete or incorrect, it must timely supplement or correct those disclosures. See Fed.

         R. Civ. P. 26(e)(1)(A). Failure to comply with these rules triggers Rule 37(c)(1), which provides:

Failure to Disclose or Supplement. If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless. In addition to or instead of ...

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