Free Response to Motion - District Court of Colorado - Colorado

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 1 of 14

Page 1

1

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

2 3

CAMILLE MELONAKIS-KURZ, 4 INDIVI DUALL Y AND ON BEHALF OF OTHER SIMILARLY SITUATED

5 EMPLOYEES,
6 7

Plaintiffs,
-vsCIVIL ACTION NO.

03-MK-2485
8 HEARTLAND HOME FINANCE, INC.,

9 Defendant.
10 11

12 RULE 30 (b) (6) DEPOSITION OF DONALD FLYNN
13

14 The Rule 30 (b) (6) deposition upon oral examination
of DONALD FLYNN, a wi tness produced and sworn before

15 me, Victoria S. Stuart, RPR, Notary Public in and for the County of Marion, State of Indiana, taken on behalf 16 of the Plaintiffs, at the offices of Ice Miller, 3400

17 the 8th day of April, 2004, at 9:00 a.m., pursuant to
18 notice as to time and place thereof.
19 20 21 22 23
John E. Connor & Associates, Inc.

One American Square, Indianapoli s, Marion, Indiana, on

the Federal Rules of Civil Procedure wi th wri tten

24 1860 One American Square
Indianapolis, IN 46282

25 (317) 236-6022
Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 2 of 14

Page 6

1

And 30 (b) (6) is what they call a corporate

2

representa ti ve depos i tion.
these questions.
MR. LUKAS:

And as I understand it,

3
4

you're being produced today to respond to some of

5
6

And maybe I could turn to Mr. Carr

and ask him which ones he would be responding to?
MR. CARR:

7
8

Yes, Mr. Lukas, I'll be happy to
Mr. Flynn will be

answer that question for you.

9

responding to items number one; two; three; four; five; somewhat to eight, along with Ms. Schuster;

10

11
12

somewhat as to 10, along with Ms. Schuster, 11, and
12 .

13
14

Q Well, you might be in that chair for a while.
if you need to take a break, you let me know.
Let's start at the top.

So

15

Let's start with

16
17

number one.

I s Heartland Home Finance, Inc. the

proper defendant in this case?

18 A I believe so.
19 Q Is Heartland Home Finance, Inc. the plaintiff's
20

employer?

21 A Former employer.

22 Q Former employer; right?
23 A I believe that Heartland Home Finance, Inc. iS the
24
plaintiff's former employer.

25

Q Okay.

And what business is Heartland Home Finance,

Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 3 of 14

Page 7

1

Inc. in?

2 A Heartland Home Finance sells consumer mortgages,
3
4

both first and second mortgages, directly to

consumers.

We are a mortgage broker and a mortgage

5

banker.
and a banker?

6 Q And can you tell me the difference between a broker
7

8 A I believe a mortgage banker closes loans in their
9

own names and uses their funds to fund the loan,

10 11
12

where a mortgage broker may be engaged to close
loans in other lender's names, versus not using
their own name, and not using their own funds.

13 Q Roughly, what percentage of Heartland's business ls
14

broker business?

15 A Currently, Heartland is doing about 40 percent,
16
17

approximately 40 percent broker business, and
60 percent through its banking operation.

18 Q And have those percentages generally stayed the
19
same the last three years or so?

20 A No, they have not.
21 Q How have they changed?

22 A We -- over the last three years, we could have been
23
24
as high as 90 percent broker, and 10 percent

banker.

25 Q And why the change?
Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 4 of 14

Page 9

1

the sub-prime market, does Heartland broker or bank
loans in the sub-prime market?

2

3 A Yes, we do.
4 Q And what percentage currently of Heartland's
5

business would be considered in the sub-prime area?

6 A I don't have those exact numbers.

7 Q Can you give me an estimate, just generally? A I would say less than less than 30 percent 8
9

of

our business brokered or banked is the sub-prime

10

market.
there some other markets that you categorize them

11 Q And then would the rest be conforming market, or is
12

13
14

15

in? A We would consider them conforming. would incl ude j umbo loans.

Conforming also

16 Q So it is roughly 30 percent sub-prime, and about
17

70 percent conforming and jumbo right now?

18 A Yes.

19 Q And would those numbers have stayed roughly the
20
same in the last three years or so?

21 A No. 22 Q How would they have changed, or have they changed?

23 A Because of the market swinging and our flexibili ty,
24

we have gone more into the conforming market, over
the last, especially over the last two years than

25

Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 5 of 14

Page 10

1

in the past.

2 Q And wi th respect to loan officers, do the loan
3
4

officer's job -- ls the loan officer's job any
different when you're talking about jumbo or
conforming/jumbo loans versus sub-prime loans?

5

6 A They are very similar.
7 Q And how about when you're talking about whether it
8

was a broker deal versus a banker deal, do their
job duties change a tall?

9

10 A They are very similar.
11 12

Q And we will get to that.
while it was on my brain.

I just wanted to ask that

13
14

Other than the brokering and banking of loans,
is Heartland in any other business?

15 A No. 16 Q And how long has Heartland been in business?

17 A I believe 1987.
18 Q What were they called in 1987, do you remember?

19 A I was not employed with them at that time, but I
20
believe it was Heartland Mortgage.

21 Q Has Heartland always been in the name?
22 A Yes. 23 Q How long have you been wi th Heartland?

24 A Approximately eight years.
25 Q And just so I'm clear, what is your current job
Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 6 of 14

1

title?

Page 11

2 A My position at Heartland is executive vice
3

president. 4 Q And have you been an executi ve vice president the
entire eight years?

5

6 A Yes, I have been.
7 Q And to whom do you report?

8 A Jay Dunsing is the president of the corporation.
9 Q And to whom does Mr. Dunsing report?

10 A There is no other report. 11 Q Is there a board of directors?

12 A Yes, there is.
13 Q Who is on the board?
14 A Don Flynn -- Donald Flynn, Jay Dunsing, and Charles
15

Baker.

16 Q What is Mr. Baker's job title, if he has one with
17

Heartland?
Finance, Inc.

18 A He does not have a posi tion wi th Heartland Home
19

20 Q Does he have employment outside of Heartland?

21 A Yes, he does.
22 Q And wha tis tha t ?
23
24

A Ron -- Charles Baker also goes by Ron Baker.
his position is president of Active Response

And

25

Marketing.
Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 7 of 14

Page 38

1

sales group.

2 Q So what do the loan officers actually do, in order
3

to try to accomplish these individual goals?

4 A Their day-to-day responsibili ties?
5 Q Yes.

6 A Their normal day-to-day responsibili ties would
7
8

include following up leads that were initiated by

the telemarketing department, by the Internet.
That would -- part of their day is selling to those
leads and part of their day is doing the

9

10 11
12

a dm in i s t rat i v e fun c t ion to c 1 0 s e - - tog e t tho s e

loans ready to close, through ei ther brokering or
through our mortgage banking group.

13

14 Q Let's talk -- let's kind of walk through a, you say
15

they have to follow up on these telemarketing

16
17 18

leads. How do they receive the leads, first of
all? Let's talk about the telemarketing leads
first. How does the loan officer actually recei ve
a lead?

19 21 22

20 A All of the leads in the branch office are
distributed by the branch manager to the loan

officers. 23 Q And are they distributed on paper, or are they
24

distributed through the computer system?

25 A It is all on paper.
Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 8 of 14

Page 39

1 Q And so, it is up to the individual branch manager
2

to decide who gets what lead?

3 A It would be up to the indi vidual branch manager to
4

determine who gets which leads.

5 Q And are the leads ranked in any way, wi th
6 7
8

respect

I know some companies have sort of a

hot, warm, cold lead, red, blue, yellow, or -- is there any kind of coding, or is every lead just a

9

lead?
none of them are on different colored paper or...

10 A There ls really -- no, they are all on paper, and
11

12 Q So there is no differentiation, at least with
13
14

respect to how the leads come into the branch
manager, wi th respect to every lead is pretty much

15

the same at that point?

16 A The leads are broken down by the sta tes that the
17

branch is approved to do business in.
gets leads based on where those people are from, in
other words, they get the leads from the people
they can sell to, basically; right?

18 Q So that branch manager gets the leads from -- or
19

20 21

22 A Yes, that would be correct.
23 Q And then the branch manager distributes the leads
24

to the loan officers; right?

25 A Yes, he does.
Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 9 of 14

1 Q And then the loan officer takes the lead, and what
2

Page 40

does the loan officer do?

3
4

A We would hope

the loan officer really is in

total control of their day.

We would hope tha t

5
6 7
8

they would prepare the lead, to make a phone call
and call the customer, either at their home, work,

or at times, there is a cellular phone number listed, and present to them programs that may
benefi t the consumer, and wi th the end resul t being

9

10

the taking of a credit application.

11 Q When you say prepare a lead, how would a loan
12

officer prepare a lead?

13 A One of the ways that they should be taught by the
14

branch manager on how to prepare a lead is based on
the training manual that we have.

15

16 Q And this training manual, is it something that iS
17

used nationwide or system-wide?

18 A It is described to the branch managers, and each
19
branch manager utilizes it as they see fi t.
MR. LUKAS:

20
22 24

Will you mark this section.

21 Q The company does not have more than one training
manual?
than one training manual.

23 A We have not -- the company has not produced more

25 Q Does the company have a kind of an orientation
Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 10 of 14

Page 41

1

program for loan officers?

2 A Part of the orientation program for the loan
3
4

officers iS the first section of the training

manual.
training manual, then, wha t, then they make the

5 Q So they prepare the lead as directed by the
6 7
8

phone call?
MR. CARR:

Obj ection to the form of the

9

question.

You are free to answer.

10 A I have found in branch offices that in many
11
12

cases -- it is up to the loan officer to prepare
the lead, and I have found tha t they don't always

13

prepare for the phone call.

14 Q Sometimes they just pick up the phone and call, ls
15
that what you're saying?

16 A Sometimes they just pick up the phone and call, and
17

sometimes they don't pick up the phone and call.

18 Q That would really be a problem. But if they're
19

following the training manual, they would prepare
the lead, and then they would make the phone call;

20 21

correct?

22 A That is not correct.
23 Q What would they do?

24 A They follow the directions of the branch manager,
25
not -- the training manual is simply a tool that

Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 11 of 14

Page 43

1

MR. LUKAS:

Go ahead, sir.

2 A Branch managers, I believe, have been disciplined
3
4

for not utilizing the training manual

appropriately. 5 Q And do branch managers have a job description?

6 A Yes, branch managers have a job description.
7 Q And do you maintain that job description, as well?

8 A I maintain that job description, as well.
9

MR. LUKAS:

Will you mark this section.

10 Q And when is the last time you revised it?

11 A I don't believe that the branch manager's duties
12

and responsibili ties have been revised since it was
crea ted.

13

14 Q How about the training manual, has it been revised
15
in the last three years?

16 A The training manual has not been revised in the
17
last three years.

18 Q Who is responsible for maintaining the training
19

manual?

20 A Currently, that responsibili ty would rest on me. 21 Q You have got a lot to do.
22

Okay.

So let's say they do make the phone

23

call. Wha t do they do on the phone cal 1 ? 24 A We would hope that the loan officer, when they
25
would make the phone call, would present products

Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 12 of 14

Page 44

1

and programs that would benefi t the consumer.

2 Q And how would the loan officer know wha t products
3

and programs were available to offer?

4 A By having trained wi th the branch manager. 5 Q And I think you said that the next step in this 6 process would be the taking of a credi t
7

application; is that correct?

8 A We would hope the next step would be, when tal king
9

to the customer, would be to take an application,

10 11
12

yes.
Q Okay.
And is the application process in a computer
system, or is that paper, as well?

13 A Yes, it iS on the computer, as well as on paper.

14 Q So it is in both places?
15 A If you -- most applications are taken on paper. 16 Q And then they are transferred to the computer
17

system; is that right?

18 A Yes.

19 Q And would it be the loan officer's responsibili ty
20 21
to transfer the information they have taken and put
on the paper application to the computer system?

22 A It -- I would like to clarify that there ls -- the
23
24 25

computer system, it would be a computer wi th a program. It would not be necessarily a wider local
area network.

When you say system, it would be an

Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 13 of 14

Page 79

1

when they come back, and when they leave for the

2

day.

3 Q So there iS no time clock, per se? 4 A There is no time clock. 5 Q But there is a time sheet that they should be
6

filling in, as they come and go?

7 A Yes.

8 Q And that time sheet ls maintained by the manager,
9

branch manager?

10 A Loan officers and managers maintain that time
11 13
14

sheet.
sheet and give it to the branch manager, or is it all on this one, is everybody on this one sheet?

12 Q Does the loan officer fill out a separate time

15 A Every loan officer's name is on the same sheet.
16 Q And is that true nationwide?
17 A Yes.

18 Q And then, what if anything does the branch manager
19 21 22
do with that time?

20 A I'm sorry, I don't understand the question.
Q Sure.
What does the branch manager do wi th those
time records, if anything?

23
24

A They use it as a tool to moni tor
production information on it.

there's

They use it as a

25

tool to make sure that the loan officers get up to

Connor+Associates 317-236-6022

Case 1:03-cv-02485-MSK-PAC

Document 345-14
Donald Flynn April 8, 2004

Filed 02/16/2006

Page 14 of 14

Page 80

1

working 40 hours in a week, as well as a tool to

2 3

make sure that they don't work over 40 hours in a

week.
40 hours a week?

4 Q Why doesn't a manager want them working more than
5

6 A We believe tha t the minimum acceptable numbers can
7

be accomplished in a 40-hour workweek.

8 Q Are loan officers prohibi ted from working more than
9

40 hours a week?

10 A The loan officer's contract actually states that
11
they can't work any overtime wi thout preapproval.

12 Q And as I understand your testimony, preapproval has
13

never been granted?

14 A Not that I'm aware of.
15 Q Does the company maintain a policy with respect to
16
overtime hours?

17 A Yes.

18 Q What's the policy? 19 A The policy iS sta ted in our handbook.

20 Q And what does it say? I haven't seen it yet, so
21
22
I'm wondering what it says.

A Okay.

To the best of my knowledge, it states that

23
24

the employees that would work -- they're expected
to work a 40-hour workweek, and if they work
people tha t are non-exempt tha t work over 40 hours

25

Connor+Associates 317-236-6022