IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-60864

Summary Calendar

FANNIE MAE, 

 Plaintiff - Appellee

v.

JOHN HURST; SOUTHERN HOLDINGS III, L.L.C., 

 Defendants - Appellants

Appeal from the United States District Court

for the Southern District of Mississippi

USDC No. 1:13-CV-399

Before REAVLEY, DENNIS, and SOUTHWICK, Circuit Judges.

PER CURIAM:*

Plaintiff-Appellee Fannie Mae brought this suit against John Hurst and 

Southern Holdings III, L.L.C. (collectively, “Appellants”), seeking the unpaid 

balance on a promissory note. Appellants challenge the district court’s denial 

of their motion to compel certain discovery requests, refusal to certify an

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

June 2, 2015

Lyle W. Cayce

Clerk

 

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interlocutory appeal of that denial, and grant of summary judgment for Fannie 

Mae. We AFFIRM the district court’s orders.

I.

In January 2008, Southern Holdings III, L.L.C., owner of an apartment 

complex in Pascagoula, Mississippi, signed a secured promissory note with 

Principal Life Insurance Company for $4,400,000, and used the apartment 

complex as collateral. John Hurst guaranteed Southern Holdings’s obligations 

under the promissory note. Principal Life Insurance Company later assigned 

its interests in the promissory note to Fannie Mae. Appellants subsequently 

defaulted. In September 2012, Fannie Mae had the property appraised and

the property’s fair market value was determined to be $1,800,000. In October 

2012, Fannie Mae foreclosed on the property. At the foreclosure sale, Fannie 

Mae was the only bidder and bid the appraisal price. Fannie Mae thereafter 

assigned its bid to a third party for that same price and credited that amount 

to Appellants’ balance, leaving a deficiency of $2,761,869.25.1 Fannie Mae 

then filed the instant suit, seeking that deficiency balance, as well as interest, 

late charges, attorney’s fees, and court costs.

Appellants intended to defend against the suit by arguing that Fannie 

Mae’s foreclosure sale was not commercially reasonable. During discovery, 

Appellants sent Fannie Mae interrogatories seeking detailed information on 

all other foreclosures of apartment complexes with which Fannie Mae had been 

involved from Louisiana to Florida in the previous four years. Fannie Mae 

objected to each of these interrogatories “on the grounds that the information 

requested [was] irrelevant, immaterial, and not reasonably calculated to the 

1 This sum took into account sums paid toward the promissory note prior to default, 

as well as interest, late charges, and fees that had accrued.

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discovery of admissible evidence,” as well as being “overly broad, burdensome, 

and costly.” 

Appellants filed an Amended Motion to Compel Discovery, seeking full 

responses to the above interrogatories, but the magistrate judge denied the 

motions. As to the interrogatories relevant here, the district court affirmed the 

magistrate judge’s order, concluding that the interrogatories were not likely to 

lead to discoverable information.2 Specifically, the district court concluded 

that Fannie Mae’s actions in other foreclosures would have no impact on 

whether a deficiency judgment was appropriate in the present case.

Appellants moved for interlocutory review of the district court’s decision and 

the district court denied the motion. Ultimately, the district court granted 

summary judgment for Fannie Mae. This appeal followed.

II.

A.

Appellants first argue that Fannie Mae should have been compelled to 

provide full answers to their interrogatories. “We review a district court’s

decision to limit discovery for abuse of discretion.” Green v. Life Ins. Co. of N. 

Am., 754 F.3d 324, 329 (5th Cir. 2014). To succeed on appeal when challenging 

such a discovery order, “[t]he appellant must prove both abuse of discretion 

and prejudice.” Id. As a general rule, “the deposition-discovery rules are to be 

accorded a broad and liberal treatment.” Hickman v. Taylor, 329 U.S. 495, 507 

(1947). Parties may generally obtain discovery so long as it is “relevant to any 

party’s claim or defense” and “appears reasonably calculated to lead to the 

discovery of admissible evidence.” See Fed. R. Civ. P. 26(b)(1). 

2 The magistrate judge did determine that Appellants were entitled to obtain the 

information sought from several other interrogatories that are not relevant to this appeal.

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According to Mississippi law,3 prior to granting a deficiency judgment, a 

court must ensure “that the debtor is given credit toward his obligations in an 

amount fairly reflecting the market value of the collateral, all to the end that 

he may not be saddled with an inequitable deficiency judgment.” Wansley v. 

First Nat’l Bank of Vicksburg, 566 So. 2d 1218, 1221 (Miss. 1990). Appellants 

argue that a credit of $1,800,000—the sale price of the apartment complex—

does not fairly reflect the market value of the collateral. They do not, however, 

contest Fannie Mae’s appraisal, which determined that the property’s fair 

market value did not exceed $1,800,000 at the time of the foreclosure sale. 

Instead, Appellants theorize that Fannie Mae carried out a practice of selling 

apartment complexes far below their fair market values throughout the Gulf 

Coast region of Louisiana, Mississippi, Alabama, and Florida, thereby

significantly depressing the value of such properties in the entire region. 

Appellants fault the district court for failing to compel Fannie Mae to produce 

files that may have substantiated Appellants’ theory. 

The district court determined that the discovery Appellants sought was 

not likely to lead to admissible evidence because Fannie Mae’s actions 

throughout the general region were not relevant to Appellants’ case. Even if 

Fannie Mae’s other foreclosures did in fact depress the value of Appellants’ 

property, the court noted, the only relevant question was whether the subject 

property was sold for a price that fairly reflected the value of that property in 

the real estate market. The various factors influencing the market as whole 

were simply not at issue. For the following reasons, we conclude that the 

district court’s decision was not an abuse of discretion.

3 This dispute is in federal court on the basis of diversity jurisdiction. See 28 U.S.C. 

§ 1332. “Under the Erie doctrine, federal courts sitting in diversity apply state substantive 

law and federal procedural law.” Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 

(1996).

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Evidence is relevant if “(a) it has any tendency to make a fact more or 

less probable than it would be without the evidence; and (b) the fact is of 

consequence in determining the action.” Fed. R. Evid. 401. “For deficiency 

judgment purposes[] . . . ‘[t]he legal determination of the adequacy of the 

purchase price depends upon establishment of fair market value.’” Id. at 1224 

(quoting Haygood v. First Nat’l Bank of New Albany, 517 So. 2d 553, 556 (Miss.

1987)). “Fair market value is defined as the amount at which property would 

change hands between a willing buyer and a willing seller, neither being under 

any compulsion to buy or sell and both having reasonable knowledge of the 

relevant facts.” Hartman v. McInnis, 996 So. 2d 704, 711 (Miss. 2007) 

(quotation marks and brackets omitted). Appellants do not contest that Fannie 

Mae’s appraiser accurately calculated the fair market value of the property 

and that the property was in fact sold for the fair market value. As the district 

court held, evidence regarding Fannie Mae’s other foreclosure practices 

throughout the Gulf Coast region would not impact whether the subject 

property was sold for the amount at which it would have changed hands 

between a willing buyer and seller having knowledge of the relevant facts. At 

most, such evidence might have suggested that Fannie Mae’s conduct 

throughout the region affected the fair market value of the subject property. 

So long as the property was sold for fair market value, however, evidence of 

the various market forces influencing that value is not relevant to this case. 

Cf. id. The district court thus did not abuse its discretion by declining to 

compel Fannie Mae to produce files on all of its foreclosures of apartment 

buildings in the Gulf Coast region.

B.

Appellants next argue that the district court abused its discretion by 

refusing to certify its discovery order for interlocutory appeal. “Interlocutory 

appeals are generally disfavored, and statutes permitting them must be 

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strictly construed.” Allen v. Okam Holdings, Inc., 116 F.3d 153, 154 (5th Cir. 

1997) (per curiam). Appellants rely on 28 U.S.C. § 1292(b), which authorizes 

a district judge to certify an interlocutory appeal from an order if the judge is 

“of the opinion that such order involves a controlling question of law as to 

which there is substantial ground for difference of opinion and that an 

immediate appeal from the order may materially advance the ultimate 

termination of the litigation.” Appellants’ argument amounts to a fact-specific 

dispute over the application of the discovery rules to this case. Appellants have 

not shown that the district court’s order involved a controlling question of law 

or that immediate appeal would have materially advanced ultimate 

termination of the case. See id. The district court’s refusal to certify an 

interlocutory appeal therefore was not an abuse of discretion. 

C.

Appellants lastly argue that Fannie Mae was not entitled to summary 

judgment. We review a district court’s grant of summary judgment de novo 

and apply the same standard as the district court. Dameware Dev., L.L.C. v. 

Am. Gen. Life Ins. Co., 688 F.3d 203, 206 (5th Cir. 2012). Summary judgment 

is appropriate if the movant demonstrates “that there is no genuine dispute as 

to any material fact and the movant is entitled to judgment as a matter of law.” 

Fed. R. Civ. P. 56(a). Appellants’ principal argument against summary 

judgment is that the district should have compelled answers to Appellants’

interrogatories seeking information about Fannie Mae’s other foreclosures in 

the Gulf Coast region, contending that those answers would have created a 

genuine issue of material fact. Since the district court did not abuse its 

discretion by refusing to compel Fannie Mae to produce such information, we 

will not reverse summary judgment on this ground. 

Appellants also argue briefly that summary judgment for Fannie Mae 

would be inequitable, because Fannie Mae must have conspired with a third 

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party to buy the property “at a bargain-basement price.” Appellants arrive at 

this conclusion because Fannie Mae was the sole bidder at the foreclosure sale 

and assigned its bid to a third party the same day. Appellants surmise that 

Fannie Mae and the third party must have entered into an agreement wherein 

Fannie Mae would be the sole bidder in order to ensure a minimal sale price. 

This is pure speculation and Appellants offer no evidence to support it. 

Although we must draw all reasonable inferences in Appellants’ favor, 

“[c]onclusional allegations and denials, speculation, improbable inferences, 

unsubstantiated assertions, and legalistic argumentation do not adequately 

substitute for specific facts showing a genuine issue for trial.” TIG Ins. Co. v. 

Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002). We will not 

reverse summary judgment based on Appellants’ unsubstantiated claim of a 

conspiracy to cheat them out of the full value of their property. Accordingly, 

the district court did not err in granting summary judgment for Fannie Mae. 

AFFIRMED.

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