National Credit Union Administration Board v. HSBC Bank US
- Lorna Schofield
- 1:15-cv-02144
- U.S. District Court · Southern District of New York
- 3
In National Credit Union Administration Board v. HSBC Bank US, Judge Netburn denied a motion to compel discovery because it was not proper expert discovery and was untimely fact discovery.
The plaintiffs, including the National Credit Union Administration Board, and HSBC Bank US, National Association. The ruling addressed the plaintiffs’ request for discovery from earlier lawsuits and did not decide the underlying claims.
What happened
In National Credit Union Administration Board v. HSBC Bank US, the plaintiffs asked HSBC to provide expert reports and deposition transcripts from 16 earlier lawsuits involving HSBC and Deutsche Bank Structured Products. The earlier lawsuits involved different trusts and loans, and none of their experts would testify in this case.
The plaintiffs said the materials could show HSBC’s general awareness of defects in loans supplied by Deutsche Bank Structured Products. The court said the materials were not expert discovery because the experts were not hired to testify in this case. If treated as fact discovery, the request was too late because fact discovery had closed three years earlier, and the plaintiffs had not shown good reason to reopen it. The court also found general awareness about other loans irrelevant to the specific loans and trusts at issue.
Judge Sarah Netburn denied the plaintiffs’ motion to compel and directed the Clerk of Court to terminate the motion.
The detailed version
- National Credit Union Administration Board v. HSBC Bank US · No. 1:15-cv-02144
- Lorna Schofield
- Oct. 6, 2020
Background
On July 29, 2020, the plaintiffs moved to compel HSBC to produce expert reports and deposition transcripts from 16 earlier lawsuits in which HSBC acted as trustee and sued Deutsche Bank Structured Products, identified as the warrantor. Four of the six bellwether trusts in this case had Deutsche Bank Structured Products as warrantor. None of the trusts or loans involved in the earlier lawsuits was involved in this case, and none of the experts from those lawsuits was an expert in this case.
The court had denied an earlier version of the motion without prejudice on August 11, 2020, and directed the parties to meet and confer. After the parties reached an impasse, the plaintiffs renewed the motion on September 1, 2020.
The Parties’ Positions
The plaintiffs sought the materials as expert discovery. They said the information could help establish HSBC’s awareness of pervasive defects and fundamental flaws in loans supplied by Deutsche Bank Structured Products, and could contain admissions about HSBC’s knowledge of Deutsche Bank Structured Products’ loan process.
Analysis
The court explained that expert reports are required only for experts employed to provide testimony in the case. Because the requested reports came from lawsuits involving different trusts and loans and were not prepared by experts who would testify in this case, the materials could not properly be treated as expert discovery.
The court then considered whether the materials could instead be treated as fact discovery. It found that request untimely and unwarranted. Fact discovery had closed three years earlier, and the plaintiffs had not shown good cause to reopen it.
The court also found that the requested information was immaterial to the claims at issue. It stated that, in the residential mortgage-backed securities context, the plaintiffs must show a breach on a loan-by-loan and trust-by-trust basis. General information about HSBC’s awareness of defects in other Deutsche Bank Structured Products loans did not establish information about a specific loan in the trusts involved in this case. The court further stated that events outside the covered trusts would not trigger a trustee’s duty to investigate loans within those trusts.
Disposition
United States Magistrate Judge Sarah Netburn denied the plaintiffs’ motion to compel. The Clerk of Court was directed to terminate the motion at ECF No. 408.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.