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United States ex rel Fago v. M & T Mortgage Corp.

March 31, 2006


The opinion of the court was delivered by: John M. Facciola United States Magistrate Judge


This case was referred to me for resolution of discovery disputes. Currently pending before me for resolution is Plaintiff's Motion to Compel. For the reasons stated herein, plaintiff's motion will be granted in part and denied in part.


Relator Anne Fago ("plaintiff") brought this qui tam action on behalf of the United States against her former employer M&T Mortgage Corporation ("M&T") alleging that M&T violated the False Claims Act, 31 U.S.C. § 3729 et seq.*fn1 Amended Complaint ("Am. Compl.") at 2-4. M&T is a "Direct Endorser" of mortgages insured by the Department of Housing and Urban Development ("HUD"). Plaintiff's Memorandum in Support of Motion to Compel ("Pls. Mem.") at 7. These government-insured mortgages are typically made to low income, first time home buyers and buyers with spotty credit histories. Am. Compl. at 5. When these government-insured loans go into default, M&T presents a claim for payment of the loan to HUD, HUD pays M&T, and then HUD becomes the owner of the property. Id. at 6. Plaintiff brought this lawsuit alleging that M&T submitted applications to HUD for loan guaranties that contained forgeries, thereby fraudulently causing HUD to guarantee and subsequently pay claims for loans that it otherwise would not have insured. Id. at 3.

Plaintiff began working for M&T in July 2001 in its Buffalo, New York, Post-Closing Department. Id. at 4. After a new loan application was closed, the loan paperwork was sent to the Buffalo Post-Closing Department where it was audited for accuracy. Id. at 5. If the loan was made to a high-risk customer, a copy of the loan papers were assembled and placed into a "HUD Case Binder." Id. These HUD Case Binders were then audited for accuracy. Id. A common problem with these case binders was missing, incomplete, or unsigned documents. Id. at 5-6. Plaintiff's supervisor was Camille Bettcker and her trainer was Suzanne Palmer. Id. at 4. According to plaintiff, Bettcker and Palmer regularly forged such missing and unsigned documents and instructed plaintiff to do the same. Id. at 7-8.

When M&T received the complaint in this lawsuit, its counsel, Kip Schwartz, initiated an investigation into plaintiff's allegations. Defendant's Memorandum in Opposition to Plaintiff's Motion to Compel ("Defs. Opp'n") at 4. On June 10, 2004, M&T met with HUD to discuss plaintiff's allegations and M&T's resulting investigation. Pls. Mem. at 8. M&T also went through the process of trying to ascertain which loans could possibly fall within the universe of potentially actionable loans. Id. at 18. As a result of this review, M&T determined that there were eighty-six such potentially actionable loans. Id. Specifically, there were eighty-six loans that had been processed through M&T's Buffalo Post-Closing Department for which a subsequent claim was submitted to HUD. Id. M&T later found twenty-two additional potentially actionable loans, raising the number to 108. Id.

Plaintiff filed this motion to compel primarily for the purpose of obtaining information relating to M&T's investigation and its determination of the universe of potentially actionable loans. Specifically, plaintiff moved the Court to order M&T to do the following: (1) comply with Judge Kessler's June 10, 2005 order by answering Interrogatory Nos. 21 through 25; (2) produce documents relating to M&T's June 10, 2004 presentation to HUD; (3) provide complete answers to interrogatories and document requests relating to the identification of potentially actionable loans, who audited those loans, and monies received by HUD from the sale of the properties; and (4) produce a knowledgeable Rule 30(b)(6) corporate deponent. Plaintiff's Motion to Compel at 1-2.


A. Additional Interrogatories

Plaintiff propounded twenty-five interrogatories, the last five of which M&T refused to answer on the ground that plaintiff had exhausted her presumptive twenty-five interrogatory limit under the Local and Federal Rules of Civil Procedure. On June 10, 2005, Judge Kessler resolved that dispute by allowing plaintiff five additional interrogatories. Pls. Mem., Exh. C. Immediately after Judge Kessler's order, plaintiff sent a letter to M&T stating that she deemed Interrogatory Nos. 21 through 25 served as of the date of that order. Pls. Mem. at 5-6. M&T has, however, refused to answer these final five interrogatories. Plaintiff now moves the Court to compel M&T to answer Interrogatory Nos. 21 through 25.

In opposition, M&T argues that, because Rule 33(a) of the Federal Rules of Civil Procedure provides for the inclusion of subparts in calculating the number of interrogatories propounded, Interrogatory Nos. 21 through 25 are actually interrogatories 32 through 36 and, therefore, plaintiff is currently seeking answers to interrogatories in excess of the thirty she was allowed (i.e., twenty-five under the rules plus the additional five allowed by Judge Kessler's order). Defs. Opp'n at 3.

In initially responding to plaintiff's interrogatories, M&T only objected to the last five, Interrogatory Nos. 21 through 25, as being beyond plaintiff's presumptive limit. Pls. Mem. at 4. Indeed, it appears that M&T answered the first twenty without objecting to any of them on that ground. Accordingly, the only interrogatories that were at issue before Judge Kessler were Interrogatory Nos. 21 through 25 and she resolved that dispute by simply allowing plaintiff five additional interrogatories. Under the logic of M&T's present argument, M&T should have objected to more than just the final five interrogatories. Specifically, it should have objected to the interrogatories that, based on subparts, constituted interrogatories 26 through 31. Instead, M&T answered those interrogatories without so objecting and waited until opposing plaintiff's present motion to raise the argument. Moreover, M&T's argument would render Judge Kessler's order meaningless. It is fair to say that, at this point, the objection has been waived. Accordingly, M&T shall answer Interrogatory Nos. 21 through 25.

B. Information and Documents Relating to Defendant's Presentation to HUD

On June 10, 2004, M&T met with HUD and made a presentation regarding its investigation into plaintiff's allegations. Previously, plaintiff sought the production of a PowerPoint presentation that was used in that meeting. On April 15, 2005, Judge Kessler ruled, by minute order, that, even though the PowerPoint presentation constituted attorney work-product, M&T had waived work product protection by presenting it to HUD and, therefore, ordered it produced. Pls. Mem., Exh. C. Plaintiff now moves the Court to compel the production of documents and deposition testimony relating to M&T's investigation and underlying the PowerPoint presentation that M&T has withheld under claims of work product protection. Plaintiff argues that the work product doctrine does not shield this discovery for two reasons: (1) the investigation was not work product; and (2) that, even if it was work product, M&T waived protection by presenting the results of the investigation to HUD at the June 10, 2004 meeting. Specifically, plaintiff seeks a complete response to each of the following document requests:

DOCMENT REQUEST NO. 38: All documents referenced, mentioned, discussed or otherwise identified in the document entitled "M&T Mortgage Corporation Meeting with HUD," M&T 010853-010867 (the "HUD Presentation").

DOCUMENT REQUEST NO. 40: All documents related to or constituting the witness interviews quoted, discussed, identified or disclosed in the HUD Presentation, including without limitation the three interviews described or quoted at p. 7 of the document. DOCUMENT REQUEST NO. 41: All documents concerning, evidencing or relating to the June 10, 2004 meeting with HUD, including without limitation, any notes taken at the meeting. DOCUMENT REQUEST NO. 42: All documents concerning and evidencing or relating to M&T's representation that it "reiterated M&T policy, prohibiting such activities to all originations and post-closing staff" as stated in the HUD Presentation, including any documents that constitute or describe such "M&T policy[.]" DOCUMENT REQUEST NO. 43: All documents concerning, evidencing or relating to the investigation (including any findings and/or conclusions) conducted by Buchanan Ingersoll as referenced on page 5 of the HUD Presentation.

DOCUMENT REQUEST NO. 45: All documents that support or are related to your statement that "interview results universally confirm the non-critical nature of documents in question" as stated on page 10 of the HUD Presentation.

DOCUMENT REQUEST NO. 48: All documents identifying the three employees/ex-employees described on p. 7 of the HUD Presentation.

DOCUMENT REQUEST NO. 50: All documents related to or constituting the "reviews completed to date" or the ["i]nternal file review" described on p. 8 of the HUD Presentation. DOCUMENT REQUEST NO. 51: All "audit results for other areas" as described at p. 11 of the HUD Presentation.

Pls. Mem. at 9-11. In addition, plaintiff seeks deposition testimony regarding "the identity of the M&T employees who admitted to forging documents," as referenced in the PowerPoint presentation. Id. at 9.

1. Is the Sought After Information Work Product?

The work product doctrine is designed to balance the need of the adversary system to promote an attorney's preparation against society's general interest in revealing all facts relevant to the resolution of a dispute. In re Sealed Case, 856 F.2d 268, 273 (D.C. Cir. 1988) (citing In re Subpoenas Duces Tecum, 738 F.2d 1367, 1371 (D.C. Cir. 1984)). A lawyers's work product is reflected in "interviews, statements, memoranda, correspondence, briefs, mental impressions, personal briefs, and countless other tangible and intangible ways." Hickman v. Taylor, 329 U.S. 495, 511 (1947). "Were such materials open to opposing counsel on mere demand, much of what is now put down in writing would remain unwritten [and] [a]n attorney's thoughts, heretofore inviolate, would not be his own." Id. In furtherance of this principle, Rule 26 of the Federal Rules of Civil Procedure protects from disclosure materials prepared by or for a party, its attorney, or its representative in anticipation of litigation and allows for discovery only upon a showing of substantial need and an inability to obtain the substantial equivalent without undue hardship. Fed. R. Civ. P. 26(b)(3).

In order for documents to be protected by the work product doctrine, the proponent must show that the documents were prepared or obtained in anticipation of litigation. Id. "'In anticipation of litigation' contains two related, but nevertheless distinct, concepts. One is temporal. The other is motivational." Jinks-Ulmstead v. England, 231 F.R.D. 13, 15 (D.D.C. 2005) (quoting Edna Selan Epstein, The Attorney-Client Privilege and the Work Product Doctrine, at 314 (4th ed. 2001)). First, there must have been at least "a subjective belief that litigation was a real possibility, and that belief must have been objectively reasonable." EEOC v. Lutheran Social Services, 186 F.3d 959, 968 (D.C. Cir. 1999) (citing In re Sealed Case, 146 F.3d 881, 884 (D.C. Cir. 1998)). Second, the document must have been "prepared or obtained because of the prospect of litigation." Lutheran Social Services, 186 F.3d at 968 (quoting Senate of Puerto Rico v. United State Dep't of Justice, 823 F.2d 574, 586 n.42 (D.C. Cir. 1987)).*fn2 The operative question is whether the "documents 'would have been created in essentially similar form irrespective of the litigation.'" Willingham v. Ashcroft, 228 F.R.D. 1, 4 (D.D.C. 2005) (citing United States v. Adlman, 134 F.3d 1194, 1202-03 (2d Cir. 1998)).

In the present case, the parties take extreme positions. Plaintiff argues that the investigation was not work product because it was conducted for the business purpose of explaining the situation to HUD. Pls. Mem. at 7-8. On the other hand, M&T argues that any non-litigation purpose coincidently served by its investigation was purely collateral to the principal purpose of defending plaintiff's lawsuit. Defs. Opp'n at 4-5. In reality, it appears that M&T's investigation had dual purposes: one to gather information in preparation of this litigation, the other to reassure HUD and preserve its standing as a direct endorser of government-insured mortgages. Accordingly, the issue in this case is whether the documents surrounding M&T's investigation and referenced in its presentation to HUD were prepared or obtained "because of" the litigation and would not have been created in an essentially similar form without the litigation. As I indicate below, I will defer ruling on this issue until after I have reviewed the documents in camera.

2. Did M&T Waive Work Product Protection?

In the alternative, plaintiff argues that, even if the investigation and related documents are work product, that protection was waived when M&T disclosed its findings and conclusions to HUD. Pls. Mem. at 13. Plaintiff bases her argument on the purported rule that "once a corporate defendant makes the strategic choice to disclose the fruits of an 'internal' investigation to its regulator, it cannot keep the details of that investigation (or the underlying interviews and documents) under wraps in civil litigation." Id. at 7. In opposition, M&T argues that its limited disclosure to HUD did not constitute such a subject matter waiver because HUD was not M&T's adversary, M&T merely represented to HUD that it was providing the findings of an ongoing investigation, the disclosure was made pursuant to a Federal Housing Administration regulation, and M&T does not, as plaintiff contends, intend to use HUD's failure to take administrative action to support its defense of this lawsuit. Defs. Opp'n at 6-8.

The disclosure of a document protected by the work product doctrine typically waives work product protection for that document. See In re United Mine Workers of Am. Employee Benefit Plans Litig., 159 F.R.D. 307, 310 (D.D.C. 1994) (citing Wichita Land & Cattle Co. v. Am. Fed. Bank, 148 F.R.D. 456, 460-61 (D.D.C. 1992)). In certain circumstances, the disclosure waives protection for not only the document actually disclosed, but also for documents relating to the same subject matter. See Bowles v. Nat'l Ass'n of Home Builders, 224 F.R.D. 246, 259 (D.D.C. 2004). In the attorney work product context, subject matter waiver is only applied when ordering additional disclosure would be consistent with the purpose of the work product doctrine, which is the promotion of the adversary system by safeguarding the fruits of an attorney's trial preparations from the opponent. United Mine Workers, 159 F.R.D. at 312 (court refused to find subject matter waiver where work product was not disclosed to gain a tactical litigation advantage and such broad disclosure would result in a strategic windfall for the opponent). See also Bowles, 224 F.R.D. at 259 (where defendant only disclosed the work product documents that supported its argument and not the documents that did not support its argument, the court found that subject matter waiver would promote the adversary system by ensuring that the evidence in the record would not be one-sided). In situations where the court finds that subject matter waiver is necessary to promote the adversary system, it is within the court's "discretion to define the subject matter of the disclosed documents narrowly to prevent the scope of the subject matter waiver from being unduly broad." United Mine Workers, 159 F.R.D. at 309.

Without reviewing the documents at issue in this case, I cannot determine which, if any, of the documents should be produced as a result of M&T's disclosures in its presentation to HUD. In order to properly exercise my discretion, I need to review in camera the purportedly work product documents that are responsive to Document Request Nos. 38, 40-43, 45, 48, 50, and 51. Accordingly, I will order M&T to submit the documents for in camera review within ten days of this memorandum opinion. In addition, M&T shall provide the Court with a log providing the bates number(s), date, author, and recipient of each document submitted. I will also defer deciding whether M&T must provide deposition testimony regarding "the identity of the M&T employees who admitted to forging documents" until after I have reviewed the documents.

C. Interrogatories and Document Requests Relating to Who Possibly Committed Forgeries and Which Loans ...

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