IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

CANDACE IRON HA WK and ROBERT V Al"\J 

PELT, 

Plaintiffs, 

v. 

BANK2 and DOVENMUEHLE MORTGAGE, 

INC., 

Defendants. 

PAP AK, Magistrate Judge: 

3:15-CV-1374-PK 

FINDINGS AND 

RECOMMENDATION 

Plaintiffs Candace Iron Hawk and Robe1t Van Pelt filed this action against defendants 

Bank2 and Dovenmuehle Mortgage, Inc. ("Dovenmuehle"), on July 22, 2015. Plaintiffs amended 

their complaint effective October 15, 2015, and again effective December 16, 2015. By and 

through their second amended complaint, plaintiffs alleged that Bank2 is a bank specializing in 

mortgage lending to Native Americans, specifically in United States Depaiiment of Housing and 

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Case 3:15-cv-01374-PK Document 155 Filed 10/19/16 Page 1 of 28
Urban Development Section 184 Indian Home Loan Guarantee Program loans to Native 

Americans, and that Dovenmuehle is a subservicer of portfolio mortgages for Bank2. Plaintiffs 

further alleged that in Februaty 2010, they received a 30-year Section 184 mortgage loan on their 

Multnomah County residence from Bank2, with Dovenmuehle acting as the subservicer of the 

loan. Plaintiffs further alleged that after Van Pelt was injured in a car accident, they experienced 

financial difficulties, with the consequence that they failed to make an approximately $1,100 

monthly payment on the loan that was due and owing as of the beginning of June 2013. 

Plaintiffs futiher alleged that they subsequently offered to make up the missed payment on at 

least three occasions, only for their offers to be refused on the grounds that defendants would not 

accept any pmiial payment of plaintiffs' arrem·s until all amounts owed were paid in full, and that 

defendants improperly refused to negotiate a loan modification with them in violation of the 

provisions of Section 184 notwithstanding plaintiffs' effotis to initiate such negotiations. 

Plaintiffs futiher alleged that in March 2015, Bank2 issued a Trustee's Notice of Sale by and 

through which it sought to sell plaintiffs' residence via a non-judicial foreclosure. Arising out of 

the foregoing, plaintiffs alleged defendants' liability for the violation of the Real Estate 

Settlement Procedures Act (

11RESPA11 ), 12 U.S.C. § 2605(f), by failing to respond as required to 

plaintiffs' loss mitigation (loan modification) application, for breach of contract under Oregon 

common law by failing to accept plaintiffs' tendered late payments, for breach of the implied 

covenant of good faith and fair dealing under Oregon common law by failing to negotiate 

modification of the motigage and failing to accept plaintiffs' tendered payments, and for violation 

of Oregon's Unfair Trade Practices Act ("UTP A"), Or. Rev. Stat. § 646.605 et seq., by failing to 

negotiate modification of the mortgage, and in addition sought this court's declarations that 

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neither defendant is a beneficimy of the note securing the mortgage on plaintiffs' residence and 

that the defendants may not proceed with a non-judicial foreclosure on plaintiffs' residence, as 

well as injunctive relief to enjoin any such non-judicial foreclosure. Plaintiffs prayed for 

monetary damages in the amount of $170,000, emotional distress damages in the amount of 

$250,000, award of their fees and costs, and the declarative and iajunctive relief discussed above. 

This court has federal question jurisdiction over plaintiffs' RESP A claim and declaratmy 

judgment claim pursuant to 28 U.S.C. § 1331, and may properly exercise supplemental 

jurisdiction over plaintiffs' state-law claims pursuant to 28 U.S.C. § 1367; in addition, this court 

may properly exercise diversity jurisdiction over plaintiffs' action pursuant to 28 U.S.C. § 1332, 

based on the complete diversity of the pmiies and the amount in controversy. 

On October 29, 2015, Judge Simon entered a preliminmy injunction enjoining defendants 

from foreclosing on plaintiffs' residence during the pend ency of these proceedings. 

On April 11, 2016, these chambers recommended that the couti grant partial summmy 

judgment in plaintiffs' favor as to their claim for declaratory relief and declare that Bank2 was 

not the beneficimy of plaintiffs' home mmtgage loan and that in consequence neither defendant 

could lawfully proceed with a non-judicial foreclosure on plaintiffs' residence. On June 13, 

2016, Judge Simon adopted these chambers' recommendations with a clarification, and issued the 

recommended declaration. 

Now before the comt are plaintiffs' motion (#144) for attorney fees, by and through which 

plaintiffs seek award _of their attorney fees and costs reasonably incurred in connection with 

successfully litigating their pmtial summmy judgment motion, and plaintiffs' motion (# 145) for 

imposition of sanctions, by and through which plaintiffs seek imposition of sanctions against 

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defendants pursuant to Federal Civil Procedure Rule 1 l(c), Federal Civil Procedure Rule 37(d), 

and/or Federal Civil Procedure Rule 26(g)(3) for dilatmy performance of their discovery 

obligations and for proffering frivolous arguments in suppmt of their legal positions. I have 

considered the motions, oral argument on behalf of the parties, and all of the pleadings and 

papers on file. For the reasons set faith below, plaintiffs' motion (#144) for attorney fees should 

be denied with leave to refile after final resolution of all pending claims in this matter, and 

plaintiffs' motion (#145) for imposition of sanctions should be denied in its entirety. 

LEGAL STANDARDS 

I. Attorney Fees 

Where a federal district cou1t sits in diversity, entitlement to and calculation of award of 

attorney fees are governed by state law. See 1"1angold v. California Public Utilities Com 'n, 67 

F.3d 1470, 1478 (9th Cir. 1995). The Oregon courts enforce contractual rights to award of 

attorney fees, and moreover construe contractual provisions expressly providing for a unilateral 

right to tax a party opponent for attorney fees as providing for bilateral taxation of such fees: 

In any action or suit in which a claim is made based on a contract that specifically 

provides that attorney fees and costs incut1'ed to enforce the provisions of the 

contract shall be awarded to one of the parties, the party that prevails on the claim 

shall be entitled to reasonable attorney fees in addition to costs and disbursements, 

without regard to whether the prevailing patty is the party specified in the contract 

and without regard to whether the prevailing patty is a party to the contract. 

Or. Rev. Stat.§ 20.096(1). 

II. Sanctions 

A. Sanctions Pursuant to Federal Civil Procedure Rule ll(c) 

Federal Civil Procedure Rule 11 ( c )( 1) provides that the federal courts may impose 

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appropriate sanctions on any attorney or party who, "after notice and an opportunity to respond," 

violates any of the provisions of Federal Civil Procedure Rule 1 l(b). Fed. R. Civ. P. 1 l(c)(l). A 

party moving for sanctions under Federal Civil Procedure Rule 11 ( c) must serve the motion on 

the party against whom sanctions are sought, and then may file the motion with the court any 

time following 21 days after service if the allegedly noncompliant filing is not withdrawn or 

otherwise appropriately corrected within that period. See Fed. R. Civ. P. 1 l(c)(2). Any sanction 

imposed pursuant to Rule 11 ( c) "must be limited to what suffices to deter repetition of the 

conduct or comparable conduct by others similarly situated." Fed. R. Civ. P. 1 l(c)(4). Attorney 

fees may be awarded as a sanction under Rule l l(c) "if imposed on motion and warranted for 

effective deterrence," but must be limited to the fees and other expenses "directly resulting from 

the violation." Id Rule 11 (b) provides as follows: 

By presenting to the court a pleading, written motion, or other paper - whether 

by signing, filing, submitting, or later advocating it - an attorney or 

umepresented party certifies that to the best of the person's knowledge, 

information, and belief, formed after an inquity reasonable under the 

circumstances: 

(1) it is not being presented for any improper purpose, such as to 

harass, cause unnecessmy delay, or needlessly increase the cost of 

litigation; 

(2) the claims, defenses, and other legal contentions are warranted by 

existing law or by a nonfrivolous argument for extending, 

modifying, or reversing existing law or for establishing new law; 

(3) the factual contentions have evidentiaty support or, if specifically 

so identified, will likely have evidentiary support after a reasonable 

opportunity for fmiher investigation or discove1y; and 

( 4) the denials of factual contentions are warranted on the evidence or, 

if specifically so identified, are reasonably based on belief or a lack 

of information. 

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Case 3:15-cv-01374-PK Document 155 Filed 10/19/16 Page 5 of 28
Fed. R. Civ. P. I l(b). 

The courts have discretion to award a party prevailing on a Rule 11 ( c) motion its 

reasonable expenses, including attorney fees, incurred in connection with the motion, where such 

an award would be "wan·anted." Fed. R. Civ. P. 1 l(c)(2). The burden of establishing that 

sanctions are justified is borne by the party moving for imposition of sanctions. See Tom 

Growney Equip. v. Shelley Irrigation Dev., 834 F.2d 833, 837 (9th Cir. 1987). 

B. Sanctions Pursuant to Federal Civil Procedure Rule 37( d) 

Federal Civil Procedure Rule 37( d) permits the district cou1is, in their discretion, to 

impose sanctions (in relevant pmi) where: 

a pmiy or a party's officer, director, or managing agent-or a person designated 

under Rule 30(b)(6) or 31(a)(4)-fails, after being served with proper notice, to 

appear for that person's deposition[.] 

Fed. R. Civ. P. 37(d)(l)(A)(i). A failure under Rule 37(d)(l)(A) "is not excused on the ground 

that the discovery sought was objectionable, unless the pmiy failing to act has a pending motion 

for a protective order. ... " Fed. R. Civ. P. 37(d)(2). 

The sanctions that may be imposed pursuant to Rule 37( d) include the following: 

(i) directing that the matters embraced in the order or other designated facts 

be taken as established for purposes of the action, as the prevailing party 

claims; 

(ii) prohibiting the disobedient party from supporting or opposing designated 

claims or defenses, or from introducing designated matters in evidence; 

(iii) striking pleadings in whole or in part; 

(iv) staying fmiher proceedings until the order is obeyed; 

(v) dismissing the action or proceeding in whole or in pmi; 

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(vi) rendering a default judgment against the disobedient party; or 

(vii) treating as contempt of court the failure to obey any order except an order 

to submit to a physical or mental examination. 

Fed. R. Civ. P. 37(d)(3); see also Fed. R. Civ. P. 37(b)(2)(A)(i)-(vi). "Instead of or in addition to 

these sanctions, the court must require the party failing to act, the attomey advising that party, or 

both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the 

failure was substantially justified or other circumstances make an award of expenses unjust." 

Fed. R. Civ. P. 37(d)(3). The burden to establish that noncompliance with the requirements of 

Rule 37(d) was substantially justified, or that special circumstances would render the imposition 

of sanctions inappropriate, is on the party facing sanctions. See Hyde & Drath v. Baker, 24 F.3d 

1162, 1171 (9th Cir. 1994). 

C. Sanctions Pursuant to Federal Civil Procedure Rule 26(g)(3) 

Federal Civil Procedure Rule 26(g)(l) requires, inter alia that "every discove1y request, 

response, or objection" be signed by an attorney ofrecord or, ifumepresented, by the party 

issuing the request, response, or objection, and that by so signing, the attorney ofrecord or 

umepresented party "certifies that to the best of the person's knowledge, information, and belief 

formed after a reasonable inquiry" each of the following is true: 

(A) with respect to a disclosure, it is complete and c011'ect as of the time it is 

made; and 

(B) with respect to a discovery request, response, or objection, it is: 

(i) consistent with these rules and wal1'anted by existing law or by a 

nonfrivolous argument for extending, modifying, or reversing 

existing law, or for establishing new law; 

(ii) not interposed for any improper purpose, such as to harass, cause 

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unnecessmy delay, or needlessly increase the cost of litigation; and 

(iii) neither unreasonable nor unduly burdensome or expensive, 

considering the needs of the case, prior discovery in the case, the 

mnount in controversy, and the importance of the issues at stake in 

the action. 

Fed. R. Civ. P. 26(g)(l). Federal Civil Procedure Rule 26(g)(3) provides as follows: 

If a certification violates this rnle without substantial justification, the court, on 

motion or on its own, must impose an appropriate sanction on the signer, the party 

on whose behalf the signer was acting, or both. The sanction may include an 

order to pay the reasonable expenses, including attorney's fees, caused by the 

violation. 

Fed. R. Civ. P. 26(g)(3). 

FACTUAL BACKGROUND 

I. The Parties 

Plaintiffs Iron Hawk and Van Pelt are husband and wife. Each is a citizen and resident of 

Oregon. 

Defendant Bank2 is a bank specializing in United States Depmiment of Housing and 

Urban Development Section 184 Indian Home Loan Guarantee Program loans to Native 

Americans. Bank2 is organized under Oklahoma law and is headquartered in Oklahoma. 

Defendant Dovemnuehle is a subservicer of portfolio loans for Bank2. Dovemnuehle is 

organized under Delaware law and headquartered in Illinois. 

II. Material Factual History of the Parties' Dispute1 

On or around F ebrumy 11, 2010, plaintiffs executed a Deed of Trust - a security 

1 Except where otherwise indicated, the following recitation constitutes a construal of the 

evidentiary record as it currently stands, and is offered only in connection with the motions now 

before the court, for the purpose of clarifying and contextualizing the legal issues raised by 

plaintiffs' claims. 

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instrument memorializing a home mortgage loan in the amount of $158,950 - with plaintiffs 

named as the "Borrower," Bank2 named as the "Lender," "Fidleity [sic] National Title" named as 

the "Trustee," and Mo1igage Electronic Registration Systems, Inc. ("MERS") named as the 

"beneficiary" of the Deed of Trust. See Plaintiffs' Memorandum (#67) in Suppmi of their Motion 

for Paiiial Summe1y [sic] Judgment ("Plaintiffs' PSJ Memo"), Exh. 1 ("Deed of Trust"). The 

loan was secured by plaintiffs' Portland, Oregon, residence. See id. 

The Deed of Trust contains a provision that in the event of any legal proceeding in 

connection with which (inter alia) Bank2's interest in the plaintiffs' residence or rights under the 

Deed of Trust were challenged, Bank2 may tax the plaintiffs with ce1iain of its costs, including 

its incurred attorney fees. See Deed of Trust, Uniform CovenaIIts § 14. The paiiies agree that, 

pursuant to Or. Rev. Stat.§ 20.096(1), this provision must be construed as providing a reciprocal 

right to award of attorney fees in favor of the party prevailing in connection with any such 

proceeding. See Or. Rev. Stat. § 20.096(1). 

On or around March 5, 2010, Bank2 "securitized" the mortgage loan memorialized by the 

parties Deed of Trust through the Government National Mortgage Association ("GNiVIA" or 

"Ginnie Mae"). See Declaration of Peter J. Salmon ("Salmon PSJ Deel."), Exh. A at D001381, 

D00\387; see also Plaintiffs' PSJ Memo, Exhs. 2 ("Certification and Agreement"), 3 ("Electronic 

Pool Submission"). It is undisputed that plaintiffs mortgage loan was included in a "pool" of 

mortgages enumerated by Bank2 as "718520" and assigned "CUSIP number 36202FE69" by 

GNMA. See id. By and through the instrument by which the mortgage at issue was submitted to 

pool number 718520, Bank2 expressly "transfer[red], assign[ed], set[] over and otherwise 

convey[ ed] to Ginnie Mae all of [Bank2]'s right, title and interest in and to the pooled m01igages 

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.... " Electronic Pool Submission. In addition, the Electronic Pool Submission agreement 

expressly specified that the interest conveyed by Bank2 to GNMA included all scheduled and 

unscheduled payments due from the b01TOwers under their loan agreements. See id. Moreover, 

with respect to the mortgages in pool number 718520, Bank2 certified as follows on March 5, 

2010: 

No mortgage in the referenced pool or loan package is now subject to any security 

agreement between the issuer and any creditor, and upon the release (delivery) of 

securities backed by the pool or loan package, only Ginnie Mae will have any 

ownership interest in the pooled mo1igages. 

Certification and Agreement. It is now the law of this case that the assignment to GNMA was 

tacitly contingent, and was never given any legal effect. It is also the law of this case that MERS 

was not at any time the beneficiary of the Deed of Trust. 

Plaintiffs allege, and defendants have not disputed, that plaintiffs missed a mortgage 

payment due and owing in June 2013, that defendants thereafter refused to accept plaintiffs' 

various tenders of pmiial payment of their anears, and that in March 2015 Bank2 issued a 

Trustee's Notice of Sale by and through which it sought to sell plaintiffs' residence via a 

non-judicial foreclosure. See Second Amended Complaint,~~ 10-29. 

On January 16, 2015, MERS executed an Assignment of Deed of Trust by and through 

which MERS assigned to Bank2 its purported interest as the beneficimy of the Deed of Trust 

memorializing plaintiffs' mo1igage loan. See Plaintiffs' PSJ Memo, Exh. 8 ("Assignment of Deed 

of Trust"). On Februmy 10, 2015, Bank2 in turn appointed Clear Recon Corp.2 as the successor 

trustee in connection with plaintiffs' mo1igage loan. See Second Amended Complaint, Exh. 2 

2 It appears that Clear Recon Corp. shares its mailing address with and may be coextensive with defendmits' counsel. 

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Case 3:15-cv-01374-PK Document 155 Filed 10/19/16 Page 10 of 28
("Appointment of Successor Trustee"). It is plaintiffs' position, which defendants have not 

challenged, that both the Assignment of Deed of Trust and the Appointment of Successor Trustee 

were recorded in Multnomah County. 

It is additionally plaintiffs' position, which defendants likewise do not challenge, that on 

May 29, 2015, Clear Recon Corp. issued a Notice of Default and Election to Sell plaintiffs' 

residence via non-judicial foreclosure. 

III. Material Procedural History 

A. Material Procedural History Relating to the Federal Civil Procedure Rule 

30(b )(6) Deposition of Defendant Dovenmuehle 

On October 8, 2015, plaintiffs noticed Federal Civil Procedure Rule 30(b)(6) depositions 

ofBank2 for October 15, 2016, and ofDovenmuehlefor October 19, 2016. On October 12, 

2015, plaintiffs' counsel advised defendants that the pmiies would need to reschedule the noticed 

depositions, indicating that if he did not hear from the defendants that same day he would renotice the depositions, but without proposing alternative deposition dates. Counsel for 

defendants requested that same day that counsel for plaintiffs specify the dates to which the 

depositions would need to be rescheduled, and counsel for plaintiffs responded the same day that 

the date for the depositions would depend on the timing of defendants' document production, 

which had been dilat01y. Counsel for defendants inquired that same day whether plaintiffs' 

counsel preferred to review defendants' document production prior to rescheduling, to which 

plaintiffs' counsel responded that same day that he planned to conduct both depositions 

telephonically on October 16, 2015. Defense counsel requested clarification that same day as to 

whether plaintiffs' counsel intended to reschedule both of the two noticed depositions to October 

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16, 2015, and indicated uncertainty as to whether defendants would have representatives 

available for deposition on that date. Before plaintiffs' counsel replied to that request, defense 

counsel sent plaintiffs' counsel an email message advising that defendants did not agree to 

Dovenmuehle's deposition on October 16, 2015, and that defendants would require clarification 

of the matters to be addressed at Doverunuehle's Rule 30(b)(6) deposition. The following 

morning, plaintiffs' counsel indicated by email that he would confer with his clients regarding the 

depositions. 

On October 13, 2015, the parties conferred regarding the scope ofDovenmuehle's Rule 

30(b)(6) deposition. In the course of that conferral, defendants proposed rescheduling both 

noticed depositions to be conducted on one day, either October 19, 2015, or October 21, 2015. 

On October 14, 2015, plaintiffs' counsel advised defense counsel that plaintiffs would reschedule 

both depositions to October 19, 2015, to which defense counsel replied-notwithstanding their 

proposal of the previous day - that formal deposition notices reciting the new deposition dates 

would be required if the depositions were to go forward on that date. That same day, plaintiffs 

requested a hearing before this court to help resolve various discove1y-related issues, including 

the issue of scheduling depositions. Also that same day, the requested conference took place, 

during the course of which plaintiffs' counsel indicated that he would send new deposition 

notices reciting the new proposed deposition date. 

On October 15, 2015, plaintiffs noticed the Rule 30(b)(6) depositions of both Bank2 and 

Dovenmuehle, as well as depositions of other witnesses from each defendant, for October 19, 

2015. That same day, defense counsel responded with objections to the notices, including the 

objection that one of the specified Dovenmuehle witnesses (Toni Peinado) was no longer a 

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Dovenmuehle employee and could not be produced for deposition by the defendants. 

On October 16, 2015, plaintiffs' counsel issued an amended Rule 30(b)(6) deposition 

notice to Dovenmuehle, resetting the Rule 30(b)(6) deposition for October 20, 2015. 

The Bank2 depositions scheduled for October 19, 2015, took place via telephone. Also 

on October 19, 2015, the paiiies conferred regarding the Dovenmuehle deposition noticed for 

October 20, 2015, with defense counsel advising that only one of two corporate designees was 

available on October 20, 2015, and proposing that the deposition be rescheduled to October 21, 

2016. Plaintiffs' counsel requested that I order defendants to require the deposition to go forwai·d 

as noticed on October 20, 2015, but I declined to do so, and instead suggested that plaintiffs' 

counsel conduct the depositions according to witness availability. Plaintiffs' counsel thereafter 

advised defense counsel on that same day that he anticipated conducting the Dovenmuehle Rule 

30(b)(6) depositions on October 21, 2016, but that he expressly reserved the right to "forego the 

depositions" in favor of requesting an exclusionaiy sanction for purposes of a preliminary 

injunction hearing then scheduled for October 22, 2015. No formal notice of deposition ever 

issued as to the proposed October 21, 2015, Rule 30(b)(6) deposition ofDovenmuehle. 

On October 20, 2015, defense counsel requested via email that plaintiffs confirm whether 

plaintiffs intended that the October 21, 2015, deposition would take place as scheduled. 

Plaintiffs did not respond to this request. 

On October 21, 2015, an assistant to plaintiffs' counsel contacted defense counsel with a 

call-in number for a telephonic deposition. Defense counsel responded that, because they had 

never received confirmation that plaintiff intended the depositions to go forward, the designees 

had been released to their job duties and were no longer prepared to sit for deposition that day. 

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Defense counsel offered to reschedule the preliminary injunction hearing to permit the 

depositions to take place prior to the hearing. Plaintiffs' counsel replied that it had been clear to 

all pmiies that the depositions had been intended to go forward on that day, without addressing 

his express reservation of rights to forego the depositions in favor of requesting an evidentiary 

sanction, and without addressing his failure to confirm that he nevertheless intended the 

depositions to go forward. 

Later that same day, a court rep01ier hired by plaintiffs atTived at Dovenmuehle's offices 

for the stated purpose of transcribing the deposition of Toni Peinado. When Dovenmuehle 

advised the rep01ier that Peinado was not available for deposition because she no longer worked 

for the company, and that no one at Dovenmuehle expected any depositions to take place that day 

at their offices, the reporter left the premises. Plaintiffs incurred costs in connection with the 

comi reporter's visit to Dovenmuehle's offices. 

Also on that same day, plaintiffs filed additional documents in connection with the 

prelimina1y injunction hearing scheduled for October 22, 2015. Defendants objected to the late 

filing, and the cou1i continued the preliminmy injunction hearing to October 29, 2015. 

On October 22, 2016, defendants offered to make the Dovenmuehle corporate designees 

available for deposition on October 26, 2015, and also offered to permit plaintiffs the oppotiunity 

to file additional briefing and/or to modify the hearing schedule in connection with the pending 

motion for preliminmy injunction, in order to accommodate plaintiffs' asserted need to depose 

Dovenmuehle corporate designees. That same day, plaintiffs' counsel advised defendants that he 

would not depose Dovenmuehle's corporate designees on that date, on the assetied ground that he 

did not want to cause fmiher delay in the preliminmy injunction hearing scheduled for October 

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29, 2015. 

On December 23, 2015, plaintiffs once again noticed the Rule 30(b)(6) deposition of 

Dovenmuehle, this time for January 25, 2016. Plaintiffs' counsel deposed two Dovenmuehle 

designees on January 25, 2016. At the first of the two depositions, plaintiffs' counsel asked the 

deponent whether defendants' production of loan servicing notes of October 13 or 14, 2015 (see 

below) represented all of defendants' loan notes, collection notes, or servicing notes relating to 

plaintiffs' home mortgage loan, and the deponent responded that the production was complete. It 

is plaintiffs' asse1ied position that one of the two deponents lacked any knowledge of key issues 

in this action. 

B. Material Procedural History Relating to Defendants' Production of Loan 

Servicing Notes in Discovery and Reliance thereon in Litigation 

On or around October 1, 2015, plaintiffs issued a set of requests for production of 

documents to each defendant, including a request for production of"[ a ]ny loan notes, collection 

notes, or servicing notes relating to" plaintiffs' home mortgage loan. On or around October 13, 

2015, Bank2 produced a set of responsive documents (collectively, "loan servicing notes") to the 

plaintiffs, representing that the produced documents constituted all responsive documents in 

Bank2's possession. Dovenmuehle did not separately respond to the request. 

Defendants offer the sworn declaration of Peter J. Salmon that, in preparation for the 

January 25, 2016, depositions ofDovenmuehle's corporate designees (see supra), Dovenmuehle 

searched its records for loan servicing notes, and located no such documents that had not already 

been produced to plaintiffs in discove1y on or around October 13, 2015. It is defendants' position 

that when a Dovenmuehle corporate designee testified in deposition on Januaiy 25, 2016, that the 

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document production of approximately October 13, 2015, was complete as to loan servicing 

notes, that testimony was accurate to the best of the deponent's knowledge at the time, and that 

Dovenmuehle's unsuccessful records search constituted a good-faith basis for the deponent's 

testimony. 

Plaintiffs issued a set of inteffogatmy requests to each defendant on March 2, 2016, 

including an interrogatory regarding the names of all Dovenmuehle employees who 

communicated with the plaintiffs during specified months of2013. In the course of gathering 

information responsive to this interrogatory, Dovenmuehle located additional loan servicing 

notes that had not previously been produced to the plaintiffs. Defendants produced these 

additional loan servicing notes to plaintiffs on April 6, 2016. 

Defendants moved for summaiy judgment as to all of plaintiffs' claims against them on 

April 8, 2016. On April 11, 2016, these chambers issued a Findings and Recommendation 

recommending that the court grant plaintiffs' motion for partial summaiy judgment as to their 

declaratmy relief claim. Plaintiffs opposed defendants' summmy judgment motion on April 29, 

2016, and defendants filed a reply memorandum in support of their motion on May 24, 2016. 

At or around that same time, Dovenmuehle located still fmiher loan servicing notes that 

had not previously been produced. These additional loan servicing notes were produced to 

plaintiffs on May 26, 2016. 

Defendants offer the sworn declaration testimony of Peter J. Salmon that the 

supplemental productions of April 6 and May 26, 2016, did not include any notes reflecting 

communications in which Dovenmuehle refused to accept a partial payment of plaintiffs' affears 

or indicated that tender of paiiial payment would be rejected if offered, and did not include notes 

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reflecting the receipt of any payment tendered by plaintiffs and rejected by either defendant. 

Plaintiffs assert, without particularity or suppo1t, that the supplemental production of April 6, 

2016, contained "one entry which buth·essed the Plaintiffs['] sworn testimony." It is possible that 

the entry to which plaintiffs refer is one described with particularity by defendants as reflecting a 

communication between Iron Hawk and Dovenmuehle on July 19, 2013, in which Iron Hawk 

indicated that she would pay the full amount due on the mortgage loan by the end of that month. 

On May 26, 2016, counsel for defendants offered to meet and confer with plaintiffs' 

counsel regarding the supplemental productions of April 6 and May 26, 2016. 

On June 1, 2016, these chambers granted the patties' stipulated motion to stay fu1ther 

proceedings in connection with defendants' pending summaty judgment motion. 

On June 6, 2016, counsel for the patties confe1Ted regarding the supplemental 

productions of April 6 and May 26, 2016. At that time, defense counsel offered to reopen 

discove1y in connection with any issues raised by the supplemental productions, including 

reopening the deposition of the deponent who testified that the loan servicing notes production of 

approximately October 13, 2015, had been complete. Defendants also offered the deposition ofa 

Dovenmuehle information technology employee responsible for locating the documents produced 

on April 6 and May 26, 2016. Plaintiffs' counsel declined to pursue such additional discovery, 

demanding instead that defendants withdraw their pending summary judgment motion in its 

entirety. 

On June 13, 2016, Judge Simon adopted (with a clarification) these chambers' 

recommendation that partial summaty judgment be granted in plaintiffs' favor as to plaintiffs' 

declaratory judgment claim, and declared both that Bank2 was not the beneficiary of plaintiffs' 

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home mortgage loan and that in consequence neither defendant could lawfully proceed with a 

non-judicial foreclosure on plaintiffs' residence. 

Plaintiffs served defendants with their motion ( # 145) for imposition of sanctions on 

August 10, 2016. 

Also on August 10, 2016, and apparently before receiving service of plaintiffs' sanctions 

motion, defendants moved the court for leave to withdraw their pending motion for summary 

judgment to the extent it addressed plaintiffs' declarato1y judgment claim, to the extent the 

arguments adduced in support of summmy adjudication of plaintiffs remaining claims depended 

on premises contradicted by the comi's declaration of June 13, 2016, and to the extent the 

arguments adduced in suppo1i of summmy adjudication of plaintiffs remaining claims depended 

in any way on the loan servicing notes produced to plaintiffs in discove1y. I granted that motion 

on the same day that it was filed. Notwithstanding their voluntmy withdrawal of supporting 

arguments premised on the loan servicing notes, it is defendants' position that nothing in either 

supplemental production of loan servicing notes contradicts any assertion made by defendants in 

reliance on the loan servicing notes as produced on approximately October 13, 2015. 

Plaintiffs filed their sanctions motion on September 1, 2016. 

C. Material Procedural History Relating to Plaintiffs' Asserted Current 

Entitlement to Award of Attorney Fees 

On June 13, 2016, Judge Simon adopted (with a clarification) these chambers' 

recommendation that partial summary judgment be granted in plaintiffs' favor as to plaintiffs' 

declaratory judgment claim, and declared both that Bank2 was not the beneficimy of plaintiffs' 

home mortgage loan and that in consequence neither defendant could lawfully proceed with a 

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non-judicial foreclosure on plaintiffs' residence. 

ANALYSIS 

I. Plaintiffs' Motion (#144) for Attorney Fees 

By and through their motion, plaintiffs seek immediate award of their attorney fees 

reasonably incurred in connection with successfully litigating their pmiial summary judgment 

motion as to their declaratmy relief claim. Specifically, plaintiffs seek award of $53,520 in 

attorney fees, and $8,601.90 in costs. Defendants oppose plaintiffs' motion on the ground that it 

is premature and should not be considered prior to final resolution of all claims pending in this 

action, and in the alternative seek reduction of plaintiffs' requested award on the ground that the 

requested awat"d is excessive, and includes fees for legal services not incurred in connection with 

litigating the declarato1y judgment claim. 

As noted above, the pa1iies' Deed of Trust contains a provision pennitting Bank2 to tax 

plaintiffs with its attorney fees incurred in connection with litigating a challenge to its interest in 

plaintiffs' home mortgage or in their residence. As a preliminmy matter, I note that the Oregon 

comis enforce such provisions, and that as a matter of Oregon statutory law such provisions are 

construed as reciprocal and as providing for award of attorney fees to the prevailing pmiy. See 

Or. Rev. Stat. § 20.096(1 ). No party hereto disputes that, pursuant to the fees provision of the 

Deed of Trust as construed under Section 20.096(1 ), the prevailing pmiy in this action will be 

entitled to award of attorney fees. 

By and through their moving papers, plaintiffs argued that this comi had authority, in its 

discretion, to enter the requested interim award of attorney fees on the theo1y that plaintiffs were 

necessarily the prevailing pmiies. Defendants opposed plaintiffs' motion in part on the theory 

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that nothing in the Federal Rules of Civil Procedure expressly authorizes interim award of 

prevailing-pmiy attorney fees in the absence of entry of final judgment as to any resolved claim, 

and by and through their reply memorandum plaintiffs informally requested that this court enter 

final judgment pursuant to Federal Civil Procedure Rule 54 as to their declarat01y judgment 

claim, and thereafter issue the requested inte1:im award of prevailing-party fees in connection 

with that judgment. 

Assuming arguendo that this court either has authority to issue the requested fee award 

on an interim basis or could obtain such authority through the expedient of entering partial final 

judgment pursuant to Rule 54, considerations of judicial economy strongly mitigate against so 

doing. First, determination whether plaintiffs are the prevailing pmiy for purposes of this action 

challenging Bank2's interests in their mortgage and residence will require weighing the result 

plaintiffs sought in connection with each claim brought in the action against the result actually 

obtained, rather than consideration of the outcome of only one of the claims in isolation: 

For the purposes of making an award of attorney fees on a claim, the prevailing 

party is the pmiy who receives a favorable judgment or arbitration award on the 

claim. If more than one claim is made in an action or suit for which an award of 

attorney fees is either authorized or required, the court or arbitrator shall: 

(a) Identify each party that prevails on a claim for which attorney fees 

could be awarded; 

(b) Decide whether to award attorney fees on claims for which the 

court or arbitrator is authorized to award attorney fees, and the 

amount of the award; 

( c) Decide the amount of the award of attorney fees on claims for 

which the court or arbitrator is required to award attorney fees; and 

( d) Enter a judgment that complies with the requirements of ORS 

18.038 and 18.042. 

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Or. Rev. Stat. § 20.077(2); see also Robert Camel Contracting, Inc. v. Krautscheid, 205 Or. App. 

498, 504 (2006) ("[U]nder ORS 20.077, the 'prevailing party' is to be determined on a 

'claim-by-claim' basis") (citations omitted); Beggs v. Hart, 221 Or. App. 528, 537-538 (2008) 

("To determine who is the prevailing party on each claim, a court must weigh 'what was sought 

by each party against the result obtained"'), quoting Lawrence v. Peel, 45 Or. App. 233, 243 

(1980). As such, to grant plaintiffs' motion prior to resolution of all of the claims that must be 

considered in determining which party is the prevailing party for purposes of entitlement to 

award of fees would be improvident, in that resolution of the remaining claims in defendants' 

favor could potentially result in a dete1mination that plaintiffs did not ultimately prevail overall 

in this action. 

Second, even on the arguendo assumption that plaintiffs' success in connection with their 

declaratory judgment claim necessitates the conclusion that plaintiffs are the prevailing pmiies, it 

would be improvident to grant plaintiffs' motion at this stage of these proceedings in that it is 

unknown at this time whether plaintiffs will prevail in connection with their remaining claims. If 

plaintiffs are determined to be the prevailing parties in this action, the parties agree that they will 

be entitled to award of their attorney fees incmTed in connection with claims litigated to 

successful resolution, but not to award of fees incurred in connection with claims as to which 

they were ultimately unsuccessful. Because only the declaratory judgment claim has been 

litigated to resolution, it is not possible at this stage of these proceedings to determine the 

universe of legal services performed to date as to which plaintiffs could be entitled to award of 

fees. Moreover, while this obstacle could be avoided by litigating plaintiffs' entitlement to fees 

incurred in connection with their declaratory judgment claim at this stage of these proceedings 

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and then litigating plaintiffs' entitlement to fees incutTed in connection with other claims at a 

later stage of these proceedings, considerations of judicial economy mitigate against such 

piecemeal litigation of the fees question. 

Judicial economy will best be served by litigating the prevailing parties' entitlement to 

award of fees following resolution of all claims.pending in this action. Plaintiffs' motion (#144) 

for attorney fees should therefore be denied with leave to refile following the conclusion of 

merits litigation. 

II. Plaintiffs' Motion (#145) for Imposition of Sanctions 

By and through their motion, plaintiffs seek imposition of sanctions on defendants (i) 

pursuant to Federal Civil Procedure Rule 11 ( c ), in connection with defendants' conduct of April 

8, 2016 in moving for summary judgment partially on the basis of its production ofloan 

servicing notes of approximately October 13, 2015, notwithstanding their knowledge in late 

March and early April 2015 that that production had been incomplete, and in connection with 

defendants' conduct of May 24, 2016, in filing a reply memorandum in support of that same 

motion, notwithstanding that same knowledge, (ii) pursuant to Federal Civil Procedure Rule 

37(d), in connection with defendants' conduct in purportedly canceling the Dovenmuehle Rule 

30(b)(6) depositions and in purportedly offering a corporate designee who lacked knowledge of 

key litigation issues, and (iii) pursuant to Federal Civil Procedure Rule 26(g), in connection with 

defendants' conduct in contemporaneously asse1iing that the loan servicing notes production of 

approximately October 13, 2015, was complete and in failing to provide (prior to defendants' 

production of May 26, 2016) separate responses for each defendant to plaintiffs' request for 

production of documents of October 1, 2015. Defendants' position is that none of the identified 

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conduct is sanctionable. 

A. Sanctions Pursuant to Federal Civil Procedure Rule ll(c) 

It is plaintiffs' position that in light of defendants' initial incomplete production of loan 

servicing notes, could not have had any non-frivolous, good-faith basis either for moving for 

summary judgment on April 8, 2016, in partial reliance on the loan servicing notes or for filing a 

reply memorandum on May 24, 2016, in support of their summary judgment motion. It is further 

plaintiffs' position that defendants could not cure their improper reliance on their incomplete 

production of loan servicing notes except by withdrawing their summary judgment motion in its 

entirety. It is defendants' position that, in light of the fact that on the same day that they were 

served with plaintiffs' sanctions motion they withdrew their arguments in support of summmy 

judgment to the extent those arguments relied in any degree on any of the loan servicing notes -

including the supplemental productions of loan servicing notes - any impropriety in their reliance 

on the loan servicing notes has necessarily been cured. 

Plaintiffs' position that defendants' partial reliance on the loan servicing notes requires 

complete withdrawal of the summaiy judgment motion is untenable. Even if this court were to 

order defendants to withdraw their summmy judgment motion in its entirety, nothing would 

prevent them from immediately refiling it in precisely its current fo1m, or indeed from refiling it 

after amending it to include arguments relying in whole or in part on the complete, supplemented 

production of loan servicing notes. Because the only conduct identified by plaintiffs as 

sanctionable under Federal Civil Procedure Rule l l(c) is defendants' reliance in supp01i of 

summary judgment on their incomplete production of loan servicing notes, defendants' August 

10, 2016, withdrawal of that reliance necessarily cured the identified impropriety. Because (as 

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noted above) sanctions are available under Rule 11 ( c) only if the improper filing is noft 

withdrawn or appropriately corrected after notice and a 21-day opp01tunity to respond, see Fed. 

R. Civ. P. 11 ( c )(1 ), (2), plaintiffs are not entitled to Rule 11 sanctions here. 

For the foregoing reasons, plaintiffs' motion (#145) for imposition of sanctions should be 

denied to the extent premised on Rule 11 ( c ). 

B. Sanctions Pursuant to Federal Civil Procedure Rule 37( d) 

Plaintiffs construe the patties' negotiations and communications of October 12-21, 2015, 

as constituting failure to appear for a properly noticed deposition, warranting imposition of 

sanctions under Federal Civil Procedure Rule 37(d). Plaintiffs' construction of the events of 

October 12-21, 2015, is colorable, and their frustration is understandable. On October 8, 2015, 

plaintiffs undisputedly served defendants with proper notice ofDovenmuehle's Rule 30(b)(6) 

deposition to take place on October 19, 2015, and although plaintiffs themselves elected on 

October 12, 2015, to reschedule the depositions of October 19, 2015, they did so in response to 

defendants' dilatory performance of their obligation to produce documents material to those 

depositions. Following fmiher negotiations, and at defendants' insistence, on October 15, 2015, 

plaintiffs again served defendants with proper notice of depositions to take place on October 19, 

2015. Notwithstanding that the Rule 30(b)(6) Dovenmuehle deposition had previously been 

noticed for that same date, defendants objected to the notice of October 15, 2015, and on October 

16, 2015, plaintiffs once again served defendants with proper notice of the Rule 30(b)(6) 

Dovenmuehle deposition, this time for October 20, 2015. Defendants proposed rescheduling the 

depositions to October 21, 2015, and plaintiffs objected, seeking this cou1i's assistance in 

requiring the depositions to go forward as most recently noticed. Because defendants asserted 

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that one of the Dovenmuehle designees was unavailable on October 20, 2015, and because the 

defendants had been given short notice to make Dovenmuehle's designees available for 

deposition, I declined to issue the order plaintiffs requested, and instead suggested that plaintiffs' 

counsel work with defense counsel to depose the designees according to their asse1ied 

availability. Plaintiffs in good faith interpreted my suggestion as the court's order that the 

depositions go forward on October 21, 2015. Plaintiffs expressly asserted a right to cancel the 

depositions, but did not in fact expressly exercise or attempt to exercise that option. Plaintiffs 

learned that defendants were unprepared to go forward with the depositions only on the day they 

were scheduled to take place. 

Although plaintiffs' construction of the foredescribed events is colorable, I do not find 

that defendants' conduct wmrnnts the imposition of sanctions. First, I note that the courts of the 

Ninth Circuit strictly construe the language of Rule 37(d), see Estrada v. Rowland, 69 F.3d 405, 

406 (9th Cir. 1995), and Rule 37( d)(l )(A)(i) authorizes imposition of sanctions only for a party's 

failure to appear at a deposition after being served with proper notice thereof, and plaintiffs never 

served Dovenmuehle with formal notice of the proposed October 21, 2015, deposition date. In 

consequence, sanctions are not available to plaintiffs under Rule 37(d). See, e.g., Honey v. 

Dignity Health, Case No. 2:12-cv-00416-LRH-GWF, 2013 U.S. Dist. LEXIS 180209, *3-5 (D. 

Nev. Dec. 18, 2013) (finding imposition of sanctions unwarranted under Rule 37(d) on similar 

facts). 

Second, and perhaps more critically, defendants were justified in concluding, in the 

absence of any formal notice of the October 21, 2015, deposition date and in light of plaintiffs' 

counsel's express reservation of the right to "forego" the depositions of October 21, 2015, in lieu 

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of requesting an evidentimy sanction and subsequent failure to confirm upon request that he 

intended the depositions to go forward, that the depositions had been once again postponed or 

canceled. It would be inappropriate to impose sanctions under Rule 37(d) in connection with a 

party's failure to appear for deposition where it was objectively ambiguous whether any party 

intended the deposition to go forward. 

Additionally or in the alternative, plaintiffs argue that Rule 37( d) sanctions are wmrnnted 

in light of defendants purpo1ted failure to produce a Dovenmuehle designee with knowledge of 

the subject matter to be examined at one of the two Dovenmuehle Rule 30(b)(6) depositions. As 

a threshold matter, I cannot recommend imposition of sanctions in connection with that 

purp01ted failure because plaintiffs have not described the failure with sufficient paiticularity or 

offered sufficient supporting evidence to pennit the conclusion that the designee was in fact 

unprepared to provide useful responses. Moreover, the cou11s of the Ninth Circuit have flatly 

held that where a deponent appears for deposition but refuses to answer any questions 

whatsoever, that refusal does not constitute a failure to appear for purposes of Rule 

37(d)(l)(A)(i),with the result that sanctions are not available under Rule 37(d). See Estrada, 69 

F.3d at 406. Similarly, here, sanctions are not warranted under Rule 37(d) where a deponent may 

have been inadequately prepared to provide useful responses to some questions. 

For the foregoing reasons, plaintiffs' motion (#145) for imposition of sanctions should be 

denied to the extent premised on Rule 37(d). 

C. Sanctions Pursuant to Federal Civil Procedure Rule 26(g)(3) 

It is plaintiffs' position that defendants lacked substantial justification for certifying on or 

around October 13, 2015, that its production of loan servicing notes was at that time complete, 

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on the ground that the production ultimately proved to have been incomplete. It is further 

plaintiffs' position that defendants did not supplement their production of loan servicing notes 

sufficiently soon after determining that additional, unproduced loan servicing notes were in its 

possession. It is fu11her plaintiffs' position that defendants' inaccurate ce1tification of 

approximately October 13, 2015, and purported delay in supplementing their production of loan 

servicing notes wanant imposition of sanctions under Federal Civil Procedure Rule 26(g)(3). I 

disagree. 

Defendants have provided sworn testimony tending to establish that defendants 

contemporaneously believed in good faith and on good grounds that the production of 

approximately October 13, 2015, was complete, and have additionally provided sworn testimony 

tending to establish that defendants promptly supplemented their production ofloan servicing 

notes after determining that unproduced loan servicing notes existed. In the absence of evidence 

to the contrary, grounds do not exist for imposing Rule 26(g) sanctions in connection with the 

ce1tification of approximately October 13, 2015, or with defendants' supplemental productions of 

loan servicing notes. 

Plaintiffs additionally argue that this comt has authority, apparently under Federal Civil 

Procedure Rule 26(e), to impose sanctions against defendants in connection with defendants' 

failure to provide separate production of documents responsive to plaintiffs' discove1y requests of 

October 1, 2015, from each of the two defendants. Plaintiffs do not argue or suggest that they 

were prejudiced in any way by defendants' failure to produce responsive documents in two 

duplicative batches, and do not cite to authority for the proposition that such failure could be 

sanctioned under Rule 26( e) or any other provision of the Federal Rules of Civil Procedure. In 

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the absence of any compelling reason to sanction defendants for not providing duplicative 

discovery responses, I decline to recommend that plaintiffs' motion be granted on the ground of 

such failure. 

For the foregoing reasons, plaintiffs' motion (#145) for imposition of sanctions should be 

denied to the extent premised on Rule 26(g). 

CONCLUSION 

For the reasons set forth above, plaintiffs' motion (#144) for attorney fees should be 

denied with leave to refile after final resolution of all pending claims, and plaintiffs' motion 

(#145) for imposition of sanctions should be denied in its entirety. 

SCHEDULING ORDER 

The Findings and Recommendation will be referred to a district judge. Objections, if any, 

are due fourteen (14) days from service of the Findings and Recommendation. If no objections 

are filed, then the Findings and Recommendation will go under advisement on that date. 

If objections are filed, then a response is due fourteen (14) days after being served with a 

copy of the objections. When the response is due or filed, whichever date is earlier, the Findings 

and Recommendation will go under advisement. 

I' 

Dated this 19th day of October, 2016.( ) (~ 

, ·· 01u( \i+id? 

Honorable Paul Papak 

United States Magistrate Judge 

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