New Mexico ex rel. Balderas v. Real Estate Law Ctr., P.C.

405 F.Supp.3d 1233

State of NEW MEXICO, EX REL., Hector BALDERAS, Attorney General of New Mexico, Plaintiff,

v.REAL ESTATE LAW CENTER, P.C., a California professional corporation; Erikson M. Davis, an attorney and resident of California, individually, and dba Real Estate Law Center, P.C., a California professional corporation; Deepak S. Parwatikar, an attorney and resident of California, individually, and dba Balanced Legal Group, an unidentified trade name or entity, dba www.pinnaclelawcenter.com; Chad T. Pratt, an attorney and resident of California, individually, and formerly dba Real Estate Law Center, P.C.; The Balanced Legal Group, an unidentified trade name or entity located in California, and Pinnacle Law Center, P.C., a California professional corporation, Defendants.

No. CIV 17-0251 JB\LF

United States District Court, D. New Mexico.

Filed May 28, 2019

Hector H. Balderas, Attorney General of the State of New Mexico, Angelica Anaya-Allen, Assistant Attorney General of the State of New Mexico, Santa Fe, New Mexico, Attorneys for the Plaintiff.

Paul J. Kennedy, Jessica M. Hernandez, Elizabeth Harrison, Kennedy, Hernandez & Associates, P.C., Albuquerque, New Mexico, Attorneys for Defendants Pinnacle Law Center, PC, Balanced Legal Group, and Deepak S. Parwatikar.

Erikson M. Davis, Newbury Park, California, Defendant pro se.

Chad Thomas Pratt, Los Angeles, California, Defendant pro se.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court on: (i) Plaintiff's Motion to Determine Sufficiency of Defendant Pratt's Responses to Plaintiff's Requests for Admission, filed January 23, 2019 (Doc. 107)("Motion"); and (ii) Defendant Chad T. Pratt's Opposition to motion to determine sufficiency of requests for admission by state of new mexico, filed March 25, 2019 (Doc. 124)("Second Response").¹ The Court held a hearing on April 19, 2019. See Clerk's Minutes at 1, filed April 19, 2019 (Doc. 114). The primary issues are: (i) whether Mr. Pratt responds properly to Plaintiff State of New Mexico's Requests for Admission Nos. 1, 4, 5, 7, 8, 11, 12, 13, 14, and 15 when he does not admit, specifically deny, or make a reasonable inquiry into the Requests for Admission² as rule 36 of the Federal Rules of Civil Procedure requires; (ii) whether the Court should order Mr. Pratt to pay the reasonable attorney's fees and costs New Mexico incurred in pursuing the Motion; and (iii) whether the Court should sanction New Mexico for not serving Mr. Pratt a March 21, 2019, motion to compel.³ The Court deems Mr. Pratt's responses improper and will grant the Motion. The Court orders that: (i) Mr. Pratt will re-respond to the Requests Nos. 1, 4, 5, 7, 8, 11, 12, 13, 14, and 15; (ii) Mr. Pratt will review the Court's discussions of requests for admission in S.E.C. v. Goldstone, 300 F.R.D. 505 (D.N.M. 2014) (Browning, J.), Brown v. Montoya, No. CIV 10-0081 JB/ACT, 2013 WL 1010390 (D.N.M. March 8, 2013) (Browning, J.); Stark-Romero v. National Railroad Passenger (AMTRAK), 275 F.R.D. 551 (D.N.M. 2011) (Browning, J.); and Radian Asset Assurance, Inc. v. Colleges of Christian Brothers of New Mexico, No. CIV 09-0885 JB/DJS, 2010 WL 5173571 (D.N.M. Nov. 11, 2010) (Browning, J.), and respond in accordance with the Court's previous rulings; and (iii) Mr. Pratt will pay New Mexico the reasonable attorney's fees and costs it incurred in pursuing the Motion. The Court will not grant Mr. Pratt's request for sanctions against New Mexico, because New Mexico did not file a March 21, 2019, motion to compel.

FACTUAL BACKGROUND

The Court recounted the facts in its Memorandum Opinion and Order, 2019 WL 1283002, filed March 19, 2019 (Doc. 116)("MOO"). The Court incorporates those facts here:

The Court takes its facts from the Complaint for Violations of the New Mexico Mortgage Foreclosure Consultant Fraud Prevention Act (MFCFPA), Mortgage Assistance Relief Services (MARS) Rule, the New Mexico Unfair Practices Act (UPA) and Petition for Injunctive Relief, filed February 22, 2017 (Doc. 1)("Complaint"). The Court provides these facts for background. It does not adopt them as the truth, and it recognizes that these facts are largely New Mexico's version of events.

This action arises from the activities of [Mr. Pratt], and Defendants Real Estate Law Center, P.C.; Erikson M. Davis; Deepak S. Parwatikar; ... Balanced Legal Group; and Pinnacle Law Center, P.C. See Complaint ¶¶ 16-76, at 5-17. Davis, Pratt, and Parwatikar are residents of and attorneys licensed in [the State of] California. See Complaint ¶¶ 10-12, at 4-5. Neither Davis nor Pratt is licensed to practice law in New Mexico. See Complaint ¶¶ 10-11, at 4-5. Real Estate Law "is a Professional Corporation registered in California." Complaint ¶ 9, at 4. Pratt owned and managed Real Estate Law from September, 2011 to September, 2013. See Complaint ¶ 37, at 8. Davis "assumed ownership of" Real Estate Law in 2013. Complaint ¶ 20, at 6. Real Estate Law "has an operating agreement or partnership agreement with Parwatikar and Pinnacle," which Parwatikar owns, Complaint ¶ 38, at 8, and Real Estate Law provides Pinnacle Law eighty percent of the fees that Real Estate Law receives, see Complaint ¶ 21, at 6. Balanced Legal "is a California law firm owned and/or managed by Parwatikar." Complaint ¶ 14, at 5. Balanced Legal uses the same address -- 695 S. Vermont Ave., Los Angeles, California 90010 -- as Real Estate Law and Pinnacle Law. See Complaint ¶ 34, at 8.

The Defendants "created the fiction of ... mass action joinder lawsuits to disguise ... advance fees as legal fees." Complaint ¶ 23, at 6. Real Estate Law provides "legal representation, mortgage foreclosure consulting and mortgage modification services to homeowners in New Mexico." Complaint ¶ 16, at 5. "[Real Estate Law] has made direct telephone solicitations to New Mexico consumers and has advertised its services in filing mass joinder lawsuits and mortgage modifications." Complaint ¶ 17, at 5. "[Real Estate Law] has filed dozens of frivolous mass joinder lawsuits against a variety of banks, enticing hundreds of homeowners, including at least 23 New Mexico homeowners, to join these lawsuits as a way to obtain better loan terms." Complaint ¶ 18, at 5. Balanced Legal provides legal services via a website "accessible to New Mexico consumers." Complaint ¶ 33, at 7-8.

On its website, Balanced says, in close proximity to the words "LOWER YOUR MORTGAGE PAYMENTS TODAY!! " that "[w]e work with litigation firms that sue lenders in individual or mass tort cases. Potential results of lawsuits can include but not limited to the following: -- Principal reduction -- Monetary damages -- Lowered interest rates. Cancellation of the loan if severe fraud was present ".

Complaint ¶ 35, at 8 (emphasis and alteration in Complaint). Real Estate Law has had "at least twenty-three ... New Mexico consumers since 2013." Complaint ¶ 58, at 13.

MOO at 2-4, 2019 WL 1283002, at *1-2.

PROCEDURAL BACKGROUND

The Court also recited the early procedural history in the MOO. The Court incorporates that recitation below:

New Mexico alleges that: (i) Real Estate Law violated the Mortgage Assistance Relief Services Rule ("MARS"), 12 C.F.R. 1015.1 "Regulation O," by soliciting and accepting advance fees from New Mexico residents before "a mortgage modification agreement [was] finalized," Complaint ¶ 84, at 19; (ii) the Defendants violated the New Mexico Mortgage Foreclosure Consultant Fraud Prevention Act, N.M. Stat. Ann. §§ 47-15-1 to -8, by offering services to save "consumers' homes from foreclosure," requiring payment for services before completing the services, and not providing required "warnings, notices, and disclosures," Complaint ¶ 87, at 20; and (iii) the Defendants violated the New Mexico Unfair Practices Act, N.M. Stat. Ann. §§ 57-12-1 to -26 [ ("NMUPA") ], by requiring "a large up-front fee ... plus monthly maintenance fees," providing "no value to the consumers," and leading consumers to believe that the Defendants will help defend "a foreclosure lawsuit," Complaint ¶ 105, at 22.

MOO at 4, 2019 WL 1283002, at *2. On June 11, 2018, the Court entered a default judgment against Real Estate Law. See Default Judgment Against Real Estate Law Center(Doc. 75). On November 5, 2018, the Honorable Laura Fashing, United States Magistrate Judge for the United States District Court for the District of New Mexico, recommended entering a default judgment against Mr. Davis on issues of liability, reserving for litigation the issues of relief, see Proposed Findings and Recommended Disposition at 4 (Doc. 91), and, on January 18, 2019, the Court adopted Magistrate Judge Fashing's recommendation, see Memorandum Opinion and Order Adopting the Magistrate Judge's Proposed Findings and Recommended Disposition at 2, 9 (Doc. 106).

In the Motion, New Mexico argues that Mr. Pratt responds improperly to its Requests Nos. 1, 4, 5, 7, 8, 11, 12, 13, 14, and 15. See Motion ¶ 2, at 2. New Mexico represents that it made, through a letter sent on January 7, 2019, a good faith effort to resolve the dispute with Mr. Pratt. See Motion ¶ 3, at 2. Mr. Pratt responded to New Mexico's efforts with additional objections that he outlines in the Letter from Chad Pratt to Hector Balderas and Angelica Allen (dated January 18, 2019), filed January 23, 2019 (Doc. 107)("Good Faith Response"). See Motion ¶ 4, at 2. See Good Faith Response at 1-3. New Mexico received the Good Faith Response on January 23, 2019. See Motion ¶ 4, at 2.

1. The Requests for Admission, Mr. Pratt's Responses, and Mr. Pratt's Objections.

In Request No. 1, New Mexico writes: "Admit that You were the subject of disciplinary action by the State Bar of California, Case Nos. 12-O-16642-RAH, 13-O-12312-RAH, 13-O-12367, and 13-O-12757." Motion ¶ 5, at 3. Mr. Pratt responds: "OBJECTION irrelevant, harassing, vexing and annoying all such alleged State bar action concerned California cases, with California properties, and California...