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

April 11, 2007

UNITED STATES OF AMERICA EX REL. ANNE M. FAGO, RELATOR, BRINING THIS ACTION ON BEHALF OF THE UNITED STATES OF AMERICA, PLAINTIFFS,
v.
M&T MORTGAGE CORPORATION, DEFENDANT.



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

MEMORANDUM OPINION

This case was referred to me for resolution of discovery disputes. Currently pending before me is Relator's Motion for Reconsideration [#82] as well as an in camera review of a personnel document submitted by Defendant pursuant to my Order of August 30, 2006. For the reasons stated herein, Relator's Motion for Reconsideration will be denied, and Defendant's assertion of work product protection for the in camera document will be overruled.

I. BACKGROUND

Relator Anne Fago ("Plaintiff" or "Fago") 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"). United States ex rel. Fago v. M&T Mortgage Corp., 238 F.R.D. 3, 5-6 (D.D.C. 2006). These government-insured mortgages are typically made to low-income, first-time homebuyers 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.

Two issues are currently before the Court relating to documents in Defendant's possession requested by Plaintiff in discovery. In Relator's Motion for Reconsideration, Plaintiff asks the Court to reconsider that portion of its August 30, 2006 Order whereby Plaintiff was denied certain documents used as a basis for a presentation by M&T to HUD regarding the alleged fraud. See Fago, 238 F.R.D. at 6. In that same Order, the Court required an in camera review of certain personnel documents involving Suzanne Palmer. Id. at 12.

II. RELATOR'S MOTION FOR RECONSIDERATION

A. The Court's Order of August 30, 2006

Plaintiff previously moved the Court to compel the production of documents and certain deposition testimony relating to a presentation to HUD that M&T made on June 10, 2004. See Plaintiff's Memorandum in Support of Motion to Compel ("Pls. Mem. Comp.") at 6-7. In particular, Plaintiff sought the production of all documents that were created in the course of an internal investigation, conducted by M&T's outside counsel, into Plaintiff's allegations and subsequently discussed in the presentation to HUD. Id. M&T refused to produce the requested documents and testimony on the grounds that they were protected by the work product doctrine. Fago, 238 F.R.D. at 7. In moving to compel production, Plaintiff argued that the investigation and the documents created pursuant to that investigation were not work product because the investigation was conducted for the business purpose of explaining the situation to HUD, not in anticipation of litigation as required for work product protection. Id. Furthermore, Plaintiff argued, even if any work product protection were afforded the documents in question, that protection was waived in Defendant's presentation to a third party-namely, HUD. Pls. Mem. Comp. at 10. M&T asserted that any non-litigation purpose coincidently served by its investigation was purely collateral to the principal purpose of defending Plaintiff's lawsuit, and that the presentation of a summary of its findings to HUD in no way waived that protection. Fago, 238 F.R.D. at 7.

As stated in my Order, I found 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. See id. In order to rule appropriately as to which documents were protected as work product pursuant to the gathering of information in preparation of this litigation, I ordered an in camera review of the documents in question. United States ex rel. Fago v. M&T Mortgage Corp., 235 F.R.D. 11, 17 (D.D.C. 2006).

The documents submitted fell into five general categories: (1) attorney notes from interviews with current and former M&T employees; (2) notes and questionnaires from employee exit interviews; (3) internal audits; (4) correspondence from M&T's counsel regarding this litigation; and (5) compilations of information. Fago, 238 F.R.D. at 7. Following the in camera review, I found that some, but not all, of the documents constitute work product and that, for the documents that constitute work product, protection was not waived by M&T's presentation to HUD. Id. at 9-10.

1. Work Product Doctrine

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 lawyer's work product may be 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-Umstead 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, at the time the document was prepared or obtained, 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 Soc. Servs., 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 Soc. Servs., 186 F.3d at 968 (quoting Senate of Puerto Rico v. United States Dep't of Justice, 823 F.2d 574, 586 n.42 (D.C. Cir. 1987)) (emphasis ...


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