BRIAN HAVER Plaintiff, v. LVNV FUNDING, LLC. Defendant Case No. 21-CV-12893 United States District Court, E.D. Michigan, Southern Division Filed August 07, 2023 Counsel Carl Schwartz, Credit Repair Lawyers of America, Livonia, MI, for Plaintiff. Boyd William Gentry, Law Office of Boyd W. Gentry, Beavercreek, OH, Katrina Marie DeMarte, DeMarte Law, Novi, MI, for Defendant. Drain, Gershwin A., United States District Judge ORDER: (1) OVERRULING DEFENDANT'S OBJECTION TO MAGISTRATE JUDGE'S DECISION GRANTING PLAINTIFF'S MOTION TO QUASH THE SUBPEONA DIRECTED TO GARY HANSZ [ECF NO. 28]; AND (2) DENYING IN PART AND GRANTING IN PART DEFENDANT'S MOTION TO EXTEND DISCOVERY AND DISPOSITIVE MOTION DEADLINES [ECF No. 21] I. Introduction *1 Plaintiff Brian Haver brings a complaint against Defendant LVNV Funding LLC (“LVNV”) alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), Michigan Collection Practices Act (“MCPA”), and Michigan Occupational Code. [ECF No. 1]. On August 23, 2022, Haver moved to quash a subpoena Defendant filed to depose Gary Hansz, Haver's counsel. [ECF No. 14]. Former Magistrate Judge—now a District Judge—Jonathan Grey granted the motion to quash. [ECF No. 24]. LVNV filed an objection to that order on November 3, 2022. [ECF No. 28]. On April 11, 2023, this Court entered an Order: 1) Granting Plaintiff's Motion to Compel and For Sanctions [ECF NO. 22]; (2) Extending Discovery to Allow Plaintiff to Depose LVNV; (3) Ordering Plaintiff to Respond to Defendant's Objection to Order Granting Motion to Quash Subpeona [ECF NO. 28]; and (4) Taking Defendant's Motion to Extend Discovery [ECF No. 21] Under Advisement. See ECF No. 36. Now before the Court are two matters: (1) Defendant's Objection to Judge Grey's Order Granting Plaintiff's Motion to Quash; and (2) Defendant's Motion to Extend Discovery and Dispositive Motion Deadlines. On the first matter, Mr. Hansz filed his response to Defendant Objection on April 25, 2023, and Defendant replied on May 2, 2023.[1] The objection is fully briefed. On the second matter, Defendant seeks to extend discovery so that it may depose Gary Hansz. Plaintiff responded on October 21, 2022. Defendant did not reply. The Motion is fully briefed. For the reasons stated below, Defendant's objection [ECF No. 28] is OVERRULED. Defendant's motion [ECF No. 21] is DENIED IN PART AND GRANTED IN PART. It is DENIED as to Defendant's request to extend discovery deadlines and it is GRANTED as to Defendant's request to extend dispositive motion deadlines. II. Factual and Procedural Background The factual background is detailed in Judge Grey's Order Granting Plaintiff's Motion to Quash, (ECF No. 24, PageID.192–194), neither party objects to this recitation of facts, and the Court incorporates it below. According to Haver's complaint, LVNV attempted to collect a $15,503.00 debt that Haver owed Citibank NA (“account owed”). (ECF No. 1, PageID.2.) LVNV notated a dispute remark on the account owed. After reviewing his Trans Union and Equifax credit disclosure, Haver saw the dispute remark. (Id.) On October 8, 2021, Credit Repair Lawyers of America (“CRLA”), on behalf of Haver, sent LVNV a “no longer disputes” letter. (Id. at 3.) The letter notified LVNV that Haver no longer disputed the collection item and asked LVNV to remove the dispute comment from the collection item. (Id.) Gary Hansz, a CRLA attorney and Haver's Counsel, signed the “no longer disputes’’ letter. LVNV received the letter on October 20, 2021. On November 19, 2021, Haver obtained his Equifax credit disclosure which showed that LVNV continued to report the collection item and had not removed the dispute comment. (Id.) On November 22, 2021, Haver obtained his Trans Union credit disclosure which still showed the dispute comment. (Id.) *2 Haver alleges that LVNV's failure to remove the dispute notation despite receipt of the letter amounts to a violation of the FDCPA for knowingly reporting false information on Haver's credit report. Haver alleges that, because of the disputed item appearing on his credit score, his score is reporting inaccurately such that he is ineligible for mortgage financing and refinancing. (Id.) Haver seeks pecuniary and emotional damages due to LVNV's failure to remove the dispute remark from the account owed. (Id.) [ECF No. 24, PageID.193–94]. At the time the subpoena was issued, LVNV sought to depose Hansz in an effort to demonstrate, through Hansz's testimony, that the “no longer disputes letter” was untrue at the time it was received on October 20, 2021. [ECF No. 24, PageID.194]. LVNV seeks to prove that Haver never communicated with Hansz or anyone else at CRLA that Haver no longer disputed the account owed. [Id]. Specifically, LVNV represents that it seeks the following information: (1) Whether Mr. Hansz played a role in the “no longer dispute” letter (i.e., Did Mr. Hansz actually represent Plaintiff as his attorney? (2) Whether Mr. Hansz had a record which indicated that Plaintiff no longer disputed the account. (3) Whether Mr. Hansz was practicing law (or merely allowing his name and letterhead to be used for “credit repair” services) when he authorized the use of his electronic signature and letterhead on the “no longer disputes” letter. (4) Whether the “no longer disputes” letter was a part of a “credit repair” service offered by a credit repair organization (i.e., Credit Repair Lawyers of America). [ECF No. 28, PageID.223]. As stated above, after the subpoena was issued, Haver filed a motion to quash that was decided by Judge Grey. The Court will discuss below the law and analysis as applicable to Defendant's Objections to Judge Grey's Order. III. Applicable Law and Analysis 1. Legal Standards a. Fed. R. Civ. P. 72 Rule 72(a) of the Federal Rules of Civil Procedure permits a party to submit objections to a magistrate judge's ruling on non-dispositive matters, such as discovery orders. “When an objection is filed to a magistrate judge's ruling on a non-dispositive motion, the ruling remains in full force and effect unless and until it is stayed by the magistrate judge or a district judge.” E.D. Mich. LR 72.2. “The district judge in the case must consider timely objections and modify or set aside any part of an order that is clearly erroneous or is contrary to law.” Fed. R. Civ. P. 72(a); see also 28 U.S.C. § 636(b)(1)(A) (“A judge of the court may reconsider any pretrial matter under this subparagraph (A) where it has been shown that the magistrate judge's order is clearly erroneous or contrary to law” 28 U.S.C. § 636). See also Draughn v. Bouchard, No. 15-CV-14446, 2017 WL 3048667, at *2 (E.D. Mich. July 19, 2017). The United States Supreme Court and the United States Court of Appeals for the Sixth Circuit have both held that ‘a finding is “clearly erroneous” when, “ ‘although there is evidence to support a factual finding, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.’ ” United States v. Mabry, 518 F.3d 442, 449 (6th Cir. 2008) (quoting United States v. U.S. Gypsum, 333 U.S. 364, 395 (1948). “This standard does not allow a reviewing court to reverse a magistrate judge's finding merely because it would have decided the matter differently.” Sedgwick Ins. v. F.A.B.E. Custom Downstream Sys., Inc., 47 F. Supp. 3d 536, 538 (E.D. Mich. 2014). “The ‘clearly erroneous’ standard applies only to the magistrate judge's factual findings; his legal conclusions are reviewed under the plenary ‘contrary to law’ standard.” Id. (citation omitted). “The Court's review under the ‘contrary to law’ standard requires the exercise of independent judgment in determining whether the magistrate judge's legal conclusions ‘contradict or ignore applicable precepts of law, as found in the Constitution, statutes, or case precedent.’ ” Gandee v. Glaser, 785 F. Supp. 684, 686 (S.D. Ohio 1992), aff'd, 19 F.3d 1432 (6th Cir. 1994) (quoting Adolph Coors Co. v. Wallace, 570 F.Supp. 202, 205 (N.D. Cal. 1983)). b. Applicable Law: Attorney Client Privilege *3 Parties may obtain discovery on any non-privileged matter that is relevant to any party's claim or defense, and proportional to the needs of the case. Fed. R. Civ. P. 26(b)(1). Courts have broad discretion over discovery matters. Price v. Bloomfield Orchard Acquisition Co., No. 21-12493, 2022 WL 19333300, at *1 (E.D. Mich. Sept. 27, 2022) (citing Trepel v. Roadway Express, Inc., 194 F.3d 708, 716 (6th Cir. 1999). Plaintiff asserts in its complaint that the court has federal question jurisdiction. “Questions of privilege are to be determined by federal common law in federal question cases.” Reed v. Baxter, 134 F.3d 351, 355 (6th Cir. 1998) (citing Fed. R. Evid. 501). Plaintiff also asserts two state law claims pursuant to the Court's supplemental jurisdiction. Fed. R. Evid. 501 states that, “in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.” However, the committee notes of the Federal Rules of Evidence explain that “Federal law of privileges should be applied with respect to pendent State law claims when they arise in a Federal question case.” Fed. R. Evid. 501 advisory committee's note to 1974 amendment. In cases presenting a federal question, “federal privilege law applies to all claims,” including claims brought under the court's supplemental jurisdiction, “in order to avoid conflicting application in the same case.” Prudential Def. Sols., Inc. v. Graham, 517 F. Supp. 3d 696 (E.D. Mich. 2021) (citing UAW v. Honeywell Int'l, Inc., 300 F.R.D. 323, 327 (E.D. Mich. 2014) and Hancock v. Dodson, 958 F.2d 1367, 1373 (6th Cir. 1992)). Federal law applies to the questions of privilege presently before the Court. Under the Fed. R. Evid., “[a]ttorney-client privilege bars compelled disclosure of confidential communications between a lawyer and his client in matters that relate to the legal interests of society and the client.” See Fed. R. Evid. 501; Prudential, 517 F. Supp. 3d at 702 (internal quotations omitted). “The privilege's primary purpose is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and the administration of justice.” Id. (citing Ross v. City of Memphis, 423 F.3d 596, 600 (6th Cir. 2005). The Sixth Circuit has delineated eight elements of attorney-client privilege: (1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) unless the protection is waived. Price, 2022 WL 19333300, at *3 (citing Reed v. Baxter, 134 F.3d 351, 355, 356 (6th Cir. 1998)). “The burden of establishing the existence of the privilege rests with the person asserting it.” United States v. Dakota, 197 F.3d 821, 825 (6th Cir. 1999). The privilege is “narrowly construed because it reduces the amount of information discoverable during the course of a lawsuit.” Prudential, 517 F. Supp. 3d at 702 (citing Ross, 423 F.3d at 600). On motion, the court must quash a subpoena that “requires disclosure of privileged or other protected matter, if no exception or waiver applies.” Fed. R. Civ. P. 45(d)(3)(A)(iii). 2. Analysis a. Defendant's Objection to Judge Grey's Order Quashing Subpoena *4 Judge Grey's Order contained two conclusions which are challenged by Defendant's Objection: (1) Gary Hansz has no relevant information because “[a]sking Hansz questions about where he acquired the information attested to in the no longer disputes letter is irrelevant given that Haver provided the answer to those questions; and (2) Haver and CRLA established an express attorney-client relationship when they executed a retainer agreement at some point before Hansz sent the no longer disputes letter. [ECF No. 24, PageID.196, 198]. Defendant's challenge to the second conclusion is dispositive given that information, even if relevant, is not discoverable if it is subject to attorney client privilege. See Fed. R. Civ. P. 26(b)(1). Thus, the Court will not address the relevancy issue. Based on the parties briefing, and Judge Grey's analysis pertaining to the privilege question, his findings of fact were not clearly erroneous, and his legal conclusions were not contrary to law. The pertinent factual findings are described below: LVNV seeks to depose Hansz to show that the no longer disputes letter was untrue. It is clear from Haver's testimony that he no longer disputed the account owed. Moreover, Haver later testified that he called CRLA before the letter was sent to let them know that he no longer disputed the account owed. (ECF No. 16-3, PageID.104.) In assessing the truthfulness of the no longer disputes letter, the Court cannot think of anyone better to ask than Haver himself. Asking Hansz questions about where he acquired the information attested to in the no longer disputes letter is irrelevant given that Haver provided the answer to those questions. [ECF No. 24, PageID.196]. Judge Grey also found that “Haver and CRLA established an express attorney-client relationship when they executed a retainer agreement at some point before Hansz sent the no longer disputes letter.” [ECF No. 24, PageID.198]. Defendant does not point to evidence that contradicts these factual findings and the Court can find no evidence in the record that does. Defendant attempts to call these factual findings in to question by stating in its brief: “Defendant believes that Mr. Hansz will admit that he knew of no factual basis to make the letter true, except that he relied upon other persons who are not employees of CRLA to have a factual basis for the letter.” [ECF No. 38, PageID.375]. Defendant's argument continues, averring that, “Defendant has learned from other cases that Mr. Hansz permitted overseas agents of CRLA to use his name and letterhead to send ‘no longer disputes’ letters. The identity and relationship of those persons is highly relevant to learn whether that person had a basis in fact to create the ‘no longer disputes’ letter at the time it was created.” [Id]. The case Defendant refers to is Morgan v. LVNV Funding, LLC, (Dkt No: 2:21-cv-12967). Here, Judge Grey concluded that, in Morgan, the Court found that Morgan waived privilege because LVNV asked the same question [--if he informed CRLA that he no longer disputed the account owed--] and Morgan answered it without his counsel asserting a privilege objection. Here, Haver's counsel preserved his objection and Haver did not disclose what he did or did not exchange with his counsel. *5 [ECF No. 24, PageID.198]; See Dkt No. 21-cv-12967 [ECF No. 37, PageID.317]. Judge Grey found that, “Haver's counsel correctly asserted privilege. Indeed, the fact that Haver no longer disputed the account was not privileged, but inquiries into whether there was an exchange between Haver and his attorney and what that exchanged consisted of directly intruded on privileged communications.” [ECF No. 24, PageID.198]. Defendant says nothing to call this factual finding—that Haver's counsel asserted privilege—into question. And the arguments Defendants advance do not leave the Court—after reviewing the entire record—with “the definite and firm conviction that a mistake has been committed.” Mabry, 518 F.3d at 449. The Court proceeds next to Judge Grey's legal conclusions. Applying the eight elements of attorney-client-privilege annunciated in Reed, Judge Grey made two pertinent conclusions of law: (1) that Haver's counsel correctly asserted privilege, and (2) “inquiries into whether there was an exchange between Haver and his attorney and what that exchanged consisted of directly intruded on privileged communications.” [Id. at PageID.197]. As stated before, Judge Grey made factual findings that Haver had an attorney client relationship with CRLA before the letter was sent to Defendant and that—before the letter was sent—he informed CRLA that he did not dispute the debt. Based on Judge Grey's application of the proper legal standard, his well-reasoned analysis, and his factual findings, the Court finds that Judge Grey's legal conclusions are not “contrary to law.” Judge Grey properly deemed as privileged any communications from Haver to Hansz—before the letter was sent—suggesting that he did or did not continue to dispute the debt. Thus, the court was then—and is still now—required to quash the subpoena. This true because the Court is to quash any subpoena that “requires disclosure of privileged or other protected matter,” and no exception or waiver applies. Fed. R. Civ. P. 45(d)(3)(A)(iii). Defendant's objection is OVERRULED. b. LVNV's Motion to Extend Discovery and Dispositive Motion Deadlines Defendant says it seeks to extend discovery in order to take Gary Hansz's deposition and conduct other discovery. The motion does not detail with any specificity the need for additional discovery outside of Hansz's deposition. Because the Court has overruled Defendant's objection, Judge Grey's Order Quashing the Subpoena remains in effect and, as his order states, Hansz may not be deposed. For this reason, LVNV's Motion to Extend Discovery and Dispositive Motion Deadline is GRANTED IN PART AND DENIED IN PART. IV. Conclusion Defendant's objection is OVERRULED. Defendant's motion [ECF No. 21] is DENIED IN PART AND GRANTED IN PART. It is DENIED as to Defendant's request to extend discovery deadlines and it is GRANTED as to Defendant's request to extend dispositive motion deadlines. It is further ordered that: 1. the dispositive motion deadline is reset to August 25, 2023. 2. The parties must attend a facilitation to occur in October 2023. 3. The parties must conduct a settlement conference with the magistrate judge no later than November 2023. 4. Motions in Limine and the Final Pretrial Order are due on December 1, 2023. 5. The Final pretrial conference is set for December 15, 2023. 6. Trial will begin on January 1, 2024. SO ORDERED. Footnotes [1] In his response, Mr. Hansz indicated: Although the order required Plaintiff to respond to Defendant's Objection, the motion to quash was filed by Gary Hansz, not Plaintiff. (Doc #14.) Thus, this response is filed by Gary Hansz rather than Plaintiff. In any event, if Plaintiff were to have filed a response instead of Gary Hansz, Plaintiff's response would be identical to the instant response.