SRB Servicing, LLC v. McIntyre, 1:17-cv-00665

Background

In 2002 Cynthia and Stedson McIntyre executed a $125,000 promissory note and mortgage on 650 Clinton Lane; the mortgage was assigned through several banks and ultimately to SRB Servicing, LLC.
Huntington National Bank executed a Lost Note Affidavit in 2009 and assigned the note and mortgage to SRB; SRB later used replacement documents (a 2017 allonge and a replacement lost-note affidavit) after originals were misplaced.
SRB sued for foreclosure in state court in 2010 and 2011; those actions were dismissed without prejudice. SRB filed the present federal foreclosure action in 2017.
Court previously held (June 11, 2019) that SRB could not enforce the note because neither SRB nor Huntington had possession of the instrument when loss of possession occurred under Ohio law (R.C. § 1303.38), and granted summary judgment for defendants.
Defendants moved for Rule 11 sanctions against SRB and its counsel, alleging the complaint was based on lies, misrepresentations, defective documentation, and discovery gamesmanship.
The Court denied the Rule 11 motion, finding SRB’s filings were not brought for an improper purpose, were warranted by existing foreclosure law, and had evidentiary support despite sloppy document handling.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Plaintiff’s pleadings and conduct violated Fed. R. Civ. P. 11	SRB contends its claims were legally and factually supported and not filed for improper purpose	McIntyres contend SRB filed suit based on fabricated/replacement documents, misrepresentations, and discovery misconduct	Denied — court finds filings objectively reasonable under circumstances; no Rule 11 violation
Whether replacement documents (allonge, lost-note affidavits) justified the foreclosure claim	SRB argued replacement documents reflected chain of title and supported holder status	McIntyres argued replacements were created later to manufacture standing and were unreliable	Court finds replacements were not fabricated from whole cloth and provided sufficient support for pleadings, but ultimate enforcement of the note failed on statutory grounds (separate ruling)
Whether deficient evidentiary support (partial note, missing pages) warranted sanctions	SRB maintained adequate evidentiary support existed or could be developed	McIntyres emphasized missing signatures/pages show lack of enforceability and bad faith	Court acknowledged deficiencies and carelessness but held these problems gave rise to legal failure, not Rule 11 sanctions
Whether discovery delays/noncooperation justify sanctions or dismissal	SRB did not pose improper discovery motive; discovery schedule was extended and no motion to compel was filed by McIntyres	McIntyres alleged evasive witnesses and withheld information about the lost documents	Court found conduct did not justify dismissal or Rule 11 relief; procedural remedies were available but not pursued

Key Cases Cited

International Union, United Auto., Aerospace and Agr. Implement Workers of Am. v. Aguirre, 410 F.3d 297 (6th Cir. 2005) (Rule 11 standard: objective reasonableness)
Albright v. Upjohn, 788 F.2d 1217 (6th Cir. 1986) (need for factual and legal inquiry under Rule 11)
Herron v. Jupiter Transp. Co., 858 F.2d 332 (6th Cir. 1988) (party must review and modify pleadings to conform to Rule 11)
Mann v. G & G Mfg., Inc., 900 F.2d 953 (6th Cir. 1990) (good-faith belief insufficient to avoid Rule 11 sanctions)
Westmoreland v. CBS, Inc., 770 F.2d 1168 (D.C. Cir. 1985) (Rule 11 inquiry: frivolousness, factual grounding, improper purpose)