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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO
Civil Action No. 01-cv-1644-REB-CBS CARTEL ASSET MANAGEMENT, a Colorado corporation, Plaintiff, vs. OCWEN FINANCIAL CORPORATION, a Florida corporation; and OCWEN FEDERAL BANK FSB, a subsidiary of OCWEN FINANCIAL CORPORATION, and OCWEN LOAN SERVICING, LLC, Defendants.
REPLY IN SUPPORT OF "REVISED AND RENEWED MOTION TO CONDUCT ADDITIONAL DISCOVERY"
Cartel Asset Management ("Cartel"), through its undersigned counsel, G.W. MERRICK & ASSOCIATES, LLC, respectfully submits this Reply in support of its "Revised and Renewed Motion to Conduct Additional Discovery" (the "Renewed Motion"). Cartel advises the Court as follows: 1. In "Defendants' Response to Plaintiffs' Revised and Renewed
Motion to Conduct Additional Discovery" filed on April 4, 2008 ("Defendants' Response"), the Ocwen Defendants advance the identical opposition to the proposed limited discovery that Magistrate Judge Shaffer found unpersuasive at the hearing on March 24, 2008. Defendants' Response replicates the argument that Cartel Asset
Management ("Cartel") has not shown "manifest injustice" if the additional discovery
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sought is denied. Defendants' Response at pp. 3-8. The Ocwen Defendants again argue without support that the discovery sought by Cartel is a "post-trial attempt to plug the holes in its damages case." Defendants' Response at pp. 8-12. Finally, the Owen Defendants profess that Cartel has failed to provide any justification for conducting a Fed.R.Civ.P. 30(b)(6) examination of the Bank. Defendants' Response at pp. 12-13. 2. As Magistrate Judge Shaffer observed during the hearing on March 24,
2008, the Tenth Circuit specifically instructed on post-remand discovery in its opinion reversing the District Court's judgment: Our remand does not, however, disturb the discretion of the district court to determine the extent it would be appropriate to re-open the record ... See Cleveland v. Piper Aircraft Corp., 985 F.2d 1438, 1450 (10th Cir. 1993) ("The trial court is much more familiar with the conduct of the original trial, the needs for judicial management and the requirements of basic fairness to the parties in a new trial. ... [I]f a party makes a timely motion to produce new and material evidence which was not otherwise readily accessible or known, the court should, within the exercise of discretion, consider whether denial of the new evidence would create a manifest injustice. ... [C]ommon sense should control."). 249 Fed.App. at 82 (emphasis supplied). 3. Upon remand from the Tenth Circuit, this Court has discretion to
reopen and to permit additional discovery. Been v. O.K. Industries, Inc., 495 F.3d 1217, 1236 (10th Cir. 2007); Weahkee v. Norton, 621 P.2d 1080, 1083-84 (10th Cir. 1980). The factors that should be weighed by this Court in the exercise of its discretion were alluded to in Cleveland v. Piper Aircraft Corp., 985 F.2d 1438, 1450 (10th Cir. 1993): The trial court is much more familiar with the conduct of the original trial, the needs for judicial management and the requirements of basic fairness to the parties in a new trial. We do not feel, however, that the trial court's ruling should be inflexible. Clearly, if the trial court perceives in limiting evidentiary proof in a new trial, a manifest injustice, to one side or the other, the
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court must retain broad latitude and may with proper notice allow additional witnesses and relevant proof. In this regard, if a party makes a timely motion to produce new and material evidence which was not otherwise readily accessible or known, the court should, within the exercise of discretion, consider whether denial of the new evidence would create a manifest injustice. ... This does not mean the court should allow cumulative evidence, but it does mean that the court should allow sufficient leeway for the parties to produce new evidence, without undue prejudice to their interest. Technical rulings should never preclude new and material proofs; common sense should control. Id. at 1450 (emphasis supplied). 4. The specific information that Cartel seeks in the written discovery
submitted with the Renewed Motion is "new and material evidence which was not otherwise readily accessible or known." To decline to permit the additional discovery would conflict with the Tenth Circuit's instructions on remand because it "would create a manifest injustice." See also, Cleveland, 985 F.2d at 1450. A. The information sought is directly related to the "unjust
enrichment," "ill-gotten gains," and/or "benefit" derived by Ocwen Federal Bank and its successors from the misappropriation of Cartel's trade secret. 1 Thus it is "material" to the damage theory that has been pursued in the trial court. B. The information sought is limited to the period 2004 to the present
(immediately prior to and following the initial trial). It was information that is "new" and "was not otherwise readily accessible or known" at the time of the initial trial.
Of course, the "benefit" arising from the theft of Cartel's network of real estate professionals includes benefits that accrued to the Bank at and after the initial trial. Some of the components of that benefit include: (i) acceleration in the building of a database of real estate professionals who are willing to provide BPOs for the Bank, (ii) increased profitability of the Bank's valuation product lines, (iii) increase in value of the Bank's valuation product lines, and (iii) increased value of the Bank and/or the Bank's business. The discovery proposed by Cartel is targeted at discovering and valuing these benefits accruing to or for the benefit of the Bank.
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In light of the passage of time since the original trial (for which
Cartel is not responsible) there is no cogent reason to bar Cartel from discovering any additional, relevant information that has materialized since trial that bears upon the unjust enrichment realized by the Bank as a result of its theft of Cartel's trade secret. Such additional information will provide a more comprehensive and accurate account for the jury at the upcoming trial. 6. The Ocwen Defendants ask this Court to accept facially and
wholesale a proposition that the Tenth Circuit was unwilling to accept. The Ocwen Defendants baldly ask that the Court "trust us," and profess that further discovery will not uncover any additional evidence relating to the ill-gotten gains accruing to the Bank from its theft of Cartel's trade secret. In the face of the jury's finding -- beyond a reasonable doubt -- respecting the Bank's dishonesty that would be incredibly foolish. 7. The discovery that has been proposed by Cartel is very narrowly
drafted to capture new material and relevant information that was not readily accessible or known at the time of initial trial. The proposed Fed.R.Civ.P. 30(b)(6) deposition(s) will be similarly narrow. WHEREFORE, Cartel respectfully prays that this Court enter an Order authorizing the service of the additional discovery described in the Renewed Motion. Cartel further prays that the Court: (i) direct that the Ocwen Defendants provide their discovery responses within thirty (30) days and that the Rule 30(b)(6) deposition(s) be scheduled at a mutually convenient time shortly thereafter.
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Respectfully submitted this 21st day of April, 2008.
s/ Glenn W. Merrick Glenn W. Merrick Brian S. Emeson G.W. MERRICK & ASSOCIATES, LLC 5445 DTC Parkway, Suite 912 Greenwood Village, Colorado 80111 Telephone: (303) 831-9400 Facsimile: (303) 771-5803 ATTORNEYS FOR PLAINTIFF
CERTIFICATE OF SERVICE I hereby certify that on the 21st day of April, 2008, a true and correct copy of the foregoing REPLY IN SUPPORT OF "REVISED AND RENEWED MOTION TO CONDUCT ADDITIONAL DISCOVERY" was electronically filed with the clerk of court using the CM/ECF System: Lino S. Lipinsky de Orlov, Esq. Sandra Wick Mulvany, Esq. McKENNA LONG & ALDERIDGE LLP 1875 Lawrence Street, Suite 200 Denver, Colorado 80202
s/ Dyanna M. Spicher