CapLOC, LLC v. McCord
- Jed Rakoff
- 1:17-cv-05788
- U.S. District Court · Southern District of New York
- 5
In CapLOC v. McCord, Judge Torres denied defendants’ amendment request and overruled objections to redacted settlement-document production.
Defendants Ron McCord and First Mortgage Company, LLC were denied permission to amend their answer and lost their objections to limits on CapLOC’s production of settlement agreements. CapLOC was required to produce the agreements subject to outside-counsel-only review, with permission to redact settlement amounts.
What happened
In CapLOC, LLC v. McCord, defendants Ron McCord and First Mortgage Company, LLC sought to add a defense concerning allocation of damages from settlements with other entities. They also challenged an order requiring CapLOC to produce settlement agreements for outside-counsel review, while allowing CapLOC to redact settlement amounts.
The court found that defendants waited nearly two years past the amendment deadline and that the basis for the proposed defense existed when the case began. It also found that defendants had not shown the magistrate judge’s discovery ruling was clearly mistaken or contrary to law.
Judge Analisa Torres denied the request to amend the answer and overruled defendants’ objections to the settlement-agreement production order. The order required production with outside-counsel-only restrictions and permitted redaction of dollar figures.
The detailed version
- CapLOC, LLC v. McCord · No. 1:17-cv-05788
- Jed Rakoff
- Mar. 3, 2020
Background
This order resolved two matters. Defendants Ron McCord and First Mortgage Company, LLC asked to amend their answer to add an affirmative defense under New York General Obligations Law § 15-108, concerning apportionment of damages among alleged joint tortfeasors. They also objected to a magistrate judge’s order concerning CapLOC’s production of settlement agreements.
CapLOC had settled and dismissed with prejudice claims against SpiritBank, Citizens State Bank, American Southwest Mortgage Company, and American Southwest Funding Corp. in a related action. Magistrate Judge Robert W. Lehrburger ordered CapLOC to produce three settlement documents for review, subject to two limits: the documents were for outside-counsel eyes only, and CapLOC could redact the dollar figures representing the settlement consideration.
Amendment of the Answer
The court applied the rule that leave to amend may be denied when the request is unduly delayed, made for a dilatory purpose or in bad faith, prejudices the opposing party, or would be futile. It also considered whether defendants had good cause for seeking amendment after the deadline in the scheduling order.
The court concluded that nearly two years had passed since the amendment deadline. It further found that the basis for the proposed § 15-108 defense existed at the beginning of the litigation, when defendants were sued alongside entities they claimed were joint tortfeasors and when defendants first answered the complaint. The court therefore found the request unjustifiably late and DENIED defendants’ request to amend their answer.
Objections to the Discovery Order
Under Federal Rule of Civil Procedure 72(a), a district court may modify or set aside a magistrate judge’s order on a nondispositive matter only if the order is clearly erroneous or contrary to law. The court described this as a highly deferential standard.
The court found no clear error in permitting production of the settlement agreements with redactions. First, because defendants had forfeited their § 15-108 affirmative defense, that defense did not support discovery of the redacted settlement figures. Second, the court rejected defendants’ argument that the settlement amounts could suggest that the settling entities were solely liable for the sale of the out-of-trust loans, stating that this argument conflicted with the court’s March 3, 2020 rulings. Third, the court rejected defendants’ argument that the amounts were relevant to preventing double recovery, because CapLOC was not seeking double recovery from the same defendants.
The court concluded that defendants had not met their burden under Rule 72(a) and OVERRULED their objections to Judge Lehrburger’s order. The Clerk was directed to terminate the motions at ECF Nos. 245, 247, and 248.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.