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Stewart Title Guaranty Co. v. Credit Suisse

United States District Court, D. Idaho

March 31, 2015

STEWART TITLE GUARANTY COMPANY, a Texas corporation, Plaintiff,
v.
CREDIT SUISSE, Cayman Islands Branch, Defendant.

MEMORANDUM DECISION AND ORDER

B. LYNN WINMILL, Chief District Judge.

INTRODUCTION

The Court has before it the following motions filed by Credit Suisse: (1) for leave to conduct reciprocal discovery; (2) for leave to seek summary judgment; and (3) to strike material in Stewart Title's supplemental pleadings. The motions are fully briefed and at issue. For the reasons explained below, the Court will (1) grant the motion to conduct reciprocal discovery; (2) grant the motion for leave to seek summary judgment; and (3) deny the motion to strike.

BACKGROUND

Defendant Credit Suisse loaned $250 million to Tamarack Resort, LLC to build a ski resort. Credit Suisse secured its loan with two mortgages on the resort property, and obtained title insurance from plaintiff Stewart Title. With the resort only partially completed, Tamarack defaulted on the loan, leaving most of the contractors unpaid. The contractors filed liens on the resort property, and those liens were later determined to be superior to Credit Suisse's two mortgages.

Credit Suisse sought to recoup its losses by making a claim on the title insurance provided by Stewart Title. Stewart Title responded by filing this action seeking a declaratory judgment that it is not required by the title insurance policy to indemnify Credit Suisse for any loss due to these superior liens.

As the litigation proceeded, the discovery deadline expired. About a month later, Stewart Title filed a motion to reopen discovery. It argued that an event occurring after the discovery deadline was especially relevant to Stewart Title's claim that Credit Suisse failed to mitigate damages. More specifically, Stewart Title argued that Credit Suisse's failure to accept its tender to redeem two properties - known as the Trillium and Village Plaza II properties - constituted a failure to mitigate.

Credit Suisse's refusal was communicated to Stewart Title by Credit Suisse official, Megan Kane. Stewart Title sought to depose her and others who directed or participated in that decision to refuse the tender. Stewart Title also sought to submit a supplemental expert report on Credit Suisse's refusal to redeem the foreclosed properties.

Stewart Title's motion to reopen discovery was referred to Judge Benson. He granted that request, and reopened discovery for 60 days for Stewart Title to (1) depose Kane; (2) depose any Credit Suisse employee(s) and individual lender(s) who directed or participated in the decisions communicated by Ms. Kane regarding Credit Suisse's refusal to redeem; (3) submit a supplemental expert report on the issue; and (4) obtain production of all correspondence related to the failure to accept the tender for the redemption of the two properties. All of this discovery is limited to the mitigation of damages issue.

Credit Suisse has now filed a motion for reciprocal discovery on the mitigation issue, and has also filed a motion to be allowed to seek summary judgment on that issue after the discovery is completed. Credit Suisse has also filed a motion to strike material in Stewart Title's supplemental pleadings. The Court will consider each motion below.

ANALYSIS

Credit Suisse's Motion for Reciprocal Discovery

Credit Suisse argues that discovery is not a one-way street, and that if Stewart Title is entitled to inquire into the mitigation of damages issue, Credit Suisse should be entitled to reciprocal discovery. The Court agrees. Credit Suisse should be allowed discovery within the same boundaries granted to Stewart Title. Stewart Title was allowed to inquire into Credit Suisse's reasons for rejecting Stewart Title's offer to redeem the two properties; Credit Suisse must be allowed discovery into Stewart Title's reasons and ability to perform its offer to redeem the two properties. For example, it would be unjust to allow Stewart Title to argue that Credit Suisse should have mitigated its damages by accepting Stewart Title's offer to redeem the two properties if in fact Stewart Title was unable to perform that offer. Stewart Title's ability to perform is hence a proper subject of discovery.

Stewart Title argues that Credit Suisse has delayed too long, and should have sought its own discovery as part of its attempt to block's Stewart Title's discovery. But Credit Suisse was entitled to contest Stewart Title's motion for additional discovery without simultaneously seeking in the alternative to obtain its own discovery. If a party must advance a fallback position in every motion, it would dilute the persuasive power of its principal argument, and so that cannot be adopted as a general rule. There was nothing illegitimate about Credit Suisse attempting to block the ...


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