Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-00089/USCOURTS-casd-3_08-cv-00089-1/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1601 Truth in Lending

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

FRANCENA D. PENCE, individually

and on behalf of all others

similarly situated

Plaintiff,

v.

UNION FIDELITY MORTGAGE, INC.,

et al.

Defendants. 

 

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Case No. 08-CV-0089-WQH (JMA)

ORDER GRANTING IN PART

PLAINTIFF’S EX PARTE

APPLICATION FOR LEAVE TO TAKE

CLASS DISCOVERY

[Doc. 17] 

On November 17, 2008, Plaintiff Francena D. Pence

(“Plaintiff”) filed an ex parte application for leave to take

class discovery. Doc. 17. For the reasons set forth below, the

ex parte application is GRANTED IN PART.

I. Background

Plaintiff filed a class action complaint on January 15,

2008. Doc. 1. The Complaint alleges violations of the Truth in

Lending Act based upon Defendant Union Fidelity Mortgage, Inc.’s

(“Union Fidelity’s”) allegedly deceptive and unfair practices in

connection with the sale and servicing of its Adjustable Rate

Case 3:08-cv-00089-WQH-JMA Document 19 Filed 12/02/08 Page 1 of 5
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Mortgages (“ARM loans”). The class consists of hundreds, if not

thousands, of consumers, who are now allegedly in danger of

foreclosure. The class action is primarily based on allegations

that Union Fidelity failed to disclose important material facts

relating to the ARM loans. 

On July 25, 2008, the Honorable William Q. Hayes granted an

ex parte application permitting Plaintiff to serve process on

Union Fidelity via the California Secretary of State, pursuant to

section 1702 of the California Corporations Code. Doc. 12. 

Plaintiff filed a proof of service showing that service was

effected on Jane Castro, a person authorized to accept service of

process by the Secretary of State, on August 25, 2008. Doc. 16. 

Union Fidelity has not filed a responsive pleading as of this

date.

Plaintiff now seeks an order permitting discovery upon Union

Fidelity’s current or former officers, executives, and/or

employees, as well as discovery upon non-party Mortgage

Electronic Registration System, Inc. (“MERS”), regarding the ARM

loans sold by Union Fidelity during the putative class Liability

Period (from January 15, 2004 to the date notice is mailed to the

Class). Plaintiff contends that such discovery is needed in

order to determine: (1) the number of ARM loans Union Fidelity

sold to borrowers during the Liability Period; (2) the identity

and location of subsequent purchasers and/or assignees of the ARM

loans sold by Union Fidelity during the Liability Period; and (3)

the location of loan documents and other relevant information

concerning Union Fidelity’s loan practices during the Liability

Period. Pl.’s Appl. at 2. 

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II. Discussion

Generally, discovery may not commence until after the

parties have conferred as required by Rule 26(f) of the Federal

Rules of Civil Procedure, unless authorized by court order. See

Fed. R. Civ. P. 26(d)(1). Here, the conference required by Rule

26(f) has not yet taken place because Union Fidelity, the sole

named defendant, has not appeared in the case. 

Plaintiff is informed and believes that Union Fidelity sold

or assigned Plaintiff’s and the putative class members’ loans to

other entities or persons who have liability under Plaintiff’s

individual and class claims. See Pl.’s Appl. at 4 (citing 15

U.S.C. § 1641(d)(1) (“Any person who purchases or is otherwise

assigned a mortgage . . . shall be subject to all claims and

defenses with respect to that mortgage that the consumer could

assert against the creditor of the mortgage . . . .”)). Thus,

Plaintiff asserts that discovery related to the identity of each

subsequent purchaser or assignee of the ARM loans sold by Union

Fidelity during the Liability Period is necessary in order for

Plaintiff to join other parties to this action. Plaintiff

further asserts that Union Fidelity’s current or former officers,

executives, and/or employees are likely to have documents or

other information concerning the three topics described above. 

Id. 

With regard to the discovery sought from MERS, according to

Plaintiff,

MERS, located at 1818 Library Street, Suite 300, Reston

Virginia 20190, is a non-party company “created by the

mortgage banking industry to streamline the mortgage

process by using electronic commerce to eliminate

paper,” and its mission is “to register every mortgage

loan in the United States on the MERS® System.” BeneCase 3:08-cv-00089-WQH-JMA Document 19 Filed 12/02/08 Page 3 of 5
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ficiaries of MERS include mortgage originators,

servicers, warehouse lenders, wholesale lenders, retail

lenders, document custodians, settlement agents, title

companies, insurers, investors, county recorders and

consumers.” 

Id. at 5; Bronson Decl., Ex. 4. Plaintiff seeks discovery from

MERS regarding its relationship with Union Fidelity, the services

provided pursuant to any such relationship, the number of loans

that Union Fidelity entered into and sold and/or assigned during

the Liability Period, the identity of each subsequent purchaser

or assignee, and the number of loans that Union Fidelity registered with MERS. Pl.’s Appl. at 6. 

The Court is persuaded that Plaintiff should be permitted to

conduct discovery regarding the three topics outlined above.

Plaintiff and the putative class will not be able to move forward

with this case on a class basis unless they are permitted to

ascertain the identities of other persons or entities which may

have potential liability for Plaintiff’s individual and class

claims. Plaintiff thus requires discovery regarding the identities of subsequent purchasers and/or assignees of loans sold to

borrowers by Union Fidelity during the Liability Period. Moreover, Union Fidelity’s failure to appear in this matter should

not preclude Plaintiff from obtaining information or documents in

Union Fidelity’s possession, custody, or control, or information

concerning the location of such information or documents, which

are relevant to the claims of Plaintiff and the putative class. 

The Court, however, is reluctant to grant authorization to

Plaintiff and the putative class to conduct all the discovery

they currently seek. The Court prefers that the majority of

discovery be conducted after the appearance of other parties in

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the case, rather than on a unilateral basis by Plaintiff. In

order to ensure fairness to later-appearing parties, therefore,

the Court will place some limitations on the discovery sought,

while still permitting Plaintiff and the putative class to obtain

sufficient information to ascertain the information they require

to join other parties and move this case forward.

Plaintiff’s ex parte application is thus GRANTED IN PART. 

IT IS HEREBY ORDERED that Plaintiff and the putative class are

authorized to conduct the following discovery:

1. Deposition and records subpoenas to Randolph B. Martin

and Stephanie Martin, the owners of Union Fidelity, in connection

with the three topics described above; and

2. A subpoena duces tecum and notice of deposition to MERS,

as set forth in Exhibit 7 to the Declaration of Steven Bronson in

Support of Plaintiff’s Ex Parte Application. 

IT IS FURTHER ORDERED that:

1. No interrogatories are permitted at this time;

2. Plaintiff and the putative class may not seek discovery

from any current or former officers, directors, and/or employees

of Union Fidelity other than Randolph B. Martin and Stephanie

Martin; and

3. Any disputes regarding the scope of the subpoenas issued

by Plaintiff shall be resolved by the court out of which the

subject subpoena is issued. Fed. R. Civ. P. 45. 

DATED: December 2, 2008

Jan M. Adler

U.S. Magistrate Judge

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