Livinglies's Weblog

The latest issue of the Florida Bar journal contains several interesting articles. One of them is entitled “Spoliation of Evidence and Non-party witnesses.” The author is Gary M Glassman, who is the attorney for Daytona Beach.

The major points of the article that I think are relevant to Foreclosure Defense litigation are that (A) spoliation has a very broad meaning and (B) the refusal to produce documents that are relevant to the case at Bar raises an inference in favor of the homeowner, and might even give rise to a cause of action for damages.

Foreclosure lawyers have long relied on the fact that they could stonewall request for information and then use fabricated documentation containing false information with impunity. But a proper document request during an open discovery period can itself be the subject of an affirmative defense or even a claim for damage to the homeowner’s ability to defend.

This enhances the relevance of having previously sent a qualified written request and a debt validation letter, together with a complaint to the CFPB and the state attorney general.

In judicial states, I think that it is possible and even probable that the court would sustain an affirmative defense consisting of both fabrication and spoliation. Combined with an action for damages under the FDCPA (potentially as a counterclaim) the homeowner could claim the inference that the missing documents would show that the exhibits to the complaint are false and fabricated. There is some pretty clear law in both Florida and California supporting this proposition.

In non-judicial states where the homeowner must initiate judicial action, one of the claim should be spoliation, along with fabrication.

The other point is the duty to preserve evidence. It is clear that a party that is used may not destroy or hide evidence and must produce such evidence when requested to do so in formal discovery.

One of the tactics employed by the banks is to hide information about the identity and last known address of relevant third parties like the “employees” or “independent contractors” who supposedly executed the documents upon which the entire foreclosure case rests.

Third parties have no absolute duty to maintain documents in their possession unless they know that the documents in their possession are relevant to pending legal claims and defenses. So the answer is that you want to give them notice and the best way to give them notice is with a subpoena duces tecum. This could include such companies as Black Knight and CoreLogic — not just individuals.

Asking for such information and not getting an answer is evidence of spoliation. Finding the “signor” with a private investigator is often very productive. In many cases, they deny ever signing anything. And they’re probably telling the truth.

The failure to provide such information is part of the doctrines utilized in claims o spoliation and the inability of the responding party to provide a satisfactory explanation for failing to produce the records raises, in and of itself, an inference that those records would show that the discovery requests establish a negative inference as to authenticity and validity of those documents — but, in my opinion, only if the discovery request is accompanied by requests for admissions that carefully track the request to produce which carefully tracks the interrogatories.

The bottom line is that spoliation is a recognized foundation for asserting that the opposing party has either acted or refused to act in a way that interferes with the ability of the homeowner to prove affirmative defenses or claims which resulted in substantial prejudice to the homeowner. This has not been previously applied to Foreclosure litigation. But I can think of no other area of litigation in which fabrication and spoliation are more relevant.

PRACTICE HINT: There is a significant difference — and  often overlooked —between the “entity” named as Plaintiff (or beneficiary in nonjudicial states) and the entity named or claimed to be a “servicer.”

In the context of this article, one should not assume that a mere request to produce is sufficient. The request to produce only has legal effect against, for example, U.S. Bank, N.A. if it is named as Plaintiff trustee in a judicial foreclosure or beneficiary trustee in a nonjudicial case. First, the request to U.S. Bank should be directed solely at records kept by U.S. Bank in its role of administering the affairs of a trust account in which there is a loan account receivable due from the homeowner. Second, the “servicer” should receive a subpoena duces tecum asking for the same records. All too often the “records” are “produced” by the “servicer” which is a response from a third party and not the claimant as plaintiff or beneficiary. 

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Filed under: burden of pleading, BURDEN OF PROOF, discovery, Discovery -Subpoena, Eviction, evidence, foreclosure, foreclosure defenses, foreclosure mill, forensic investigation, Motion Practice and Discovery, Pleading, Presumptions, prima facie case |