Brosnan v. TRADELINE SOLUTIONS, INC.

• Decision Date: 15 January 2010
• Docket Number: No. C-08-0694 JCS.,C-08-0694 JCS.
• Citation: 681 F. Supp.2d 1094
• Parties: John BROSNAN, Plaintiff, v. TRADELINE SOLUTIONS, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of California

681 F. Supp.2d 1094

John BROSNAN, Plaintiff, v. TRADELINE SOLUTIONS, INC., et al., Defendants.

No. C-08-0694 JCS.

United States District Court, N.D. California.

January 15, 2010.

John Brosnan, Pleasant Hill, CA, pro se.

Mark A. Ozzello, Mickel Montalban Arias, Mikael Hans Stahle, Arias Ozzello & Gignac, Los Angeles, CA, Timothy H. Stearns, Attorney at Law, Mount Shasta, CA, for Defendants.

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT

Docket No. 109

JOSEPH C. SPERO, United States Magistrate Judge.

I. INTRODUCTION

Before the Court is a motion for summary judgment filed by Defendant Ted Stearns (hereafter "Defendant"). The parties have consented to the jurisdiction of this Court. A hearing was held on January 15, 2010. As explained in greater detail below, the motion for summary judgment is GRANTED.

II. BACKGROUND

Plaintiff John Brosnan ("Plaintiff) filed this action on January 30, 2008, alleging that Defendants engaged in unfair business practices in connection with the sale of "tradelines." Plaintiff filed an amended complaint on August 15, 2008, asserting a claim under the Lanham Act, 15 U.S.C. § 1125(a), as well as claims under state law. On September 12, 2008, Defendants filed a Motion to Dismiss and a Motion to Strike. In the Motion to Dismiss, Defendants asserted that all of Plaintiffs claims in the First Amended Complaint are defective and should be dismissed. Plaintiff filed no opposition to either motion. The Court granted the Motion to Dismiss and the Motion to Strike and dismissed Plaintiffs Complaint with leave to amend to address the defects cited in Defendants' Motions.

On November 17, 2008, Plaintiff filed a Second Amended Complaint. On December 1, 2008, Defendants filed a Motion to Dismiss the Complaint and a Motion to Strike Portions of Plaintiffs Second Amended Complaint. Plaintiff again, filed no opposition to Defendants' motions. On February 13, 2009, the Court held a hearing, at which Plaintiff and counsel for Defendant appeared by telephone. On February 13, 2009, the Court dismissed Plaintiffs Second Amended Complaint with leave to amend, and denied Defendants' Motion to Strike.

On February 27, 2009, Plaintiff Brosnan filed a Third Amended Complaint. On March 19, 2009, Defendants filed a Motion to Dismiss the Third Amended Complaint. Plaintiff filed an opposition on May 13, 2009. A hearing was held on May 22, 2009, after which the Court granted the motion to dismiss and provided Plaintiff one final opportunity to amend his Complaint. Thereafter, Plaintiff filed a Fourth Amended Complaint, which contains four claims: 1) a federal Lanham Act false advertising claim under 15 U.S.C. § 1125(a)(1)(B); 2) fraud; 3) violation of California Business and Professions Code § 17200; and 4) a violation of California Business and Professions Code § 17500. Defendant Ted Stearns has filed the present motion for summary judgment, or alternatively, for summary adjudication. In opposition, Plaintiff presents no evidence or facts in support of his arguments; rather, he argues that his evidence was destroyed by the alleged actions of counsel for Defendant Stearns at the deposition of Plaintiff on September 14, 2009. The Court construes Plaintiffs opposition as a motion for spoliation of evidence and will address both the Defendant's summary judgment motion and Plaintiffs spoliation motion below.

III. DISCUSSION

A. The Claims in the Fourth Amended Complaint

Plaintiff has brought this action against Defendants Tradeline Solutions Inc, Tradelinesolutions.com, and Ted Stearns, and "Does 1-99."¹ According to the Complaint, Plaintiff "works with people who have low credit scores and assists them in purchasing real estate. This is accomplished by helping them improve their credit scores through legitimate means such as negotiating with reporters of derogatory credit, negotiating deals with lenders and working to clear their credit history sic of erroneous data among other means." Fourth Amended Compl. at ¶ 10.

Defendant allegedly operates a competing business by selling what are known as "tradelines." Id. at ¶ 11. The typical "tradeline" sold by Defendant consists of "an aged assumable note that has a payment history." Id. Defendant "operates illegally by duping unsuspecting victims into believing that it's legal to purchase a seasoned tradeline and its' associated history and then represent to a credit granter, such as a bank, that the history of good payment history is theirs." Id. at ¶ 12. Plaintiff alleges that Defendants instruct their customers not to inform credit grantors that the tradelines were recently purchased for the purpose of increasing their credit scores. Id. at ¶ 13. Plaintiff further alleges that Defendants instruct their customers to lie to credit grantors by telling them that the "TRADELINES on their credit history are theirs." Id. at ¶ 21.

There are four claims in the Fourth Amended Complaint, all of which involve Defendant Ted Stearns' business of selling "tradelines." The first claim alleges violations of the Lanham Act, 15 U.S.C. § 1125(a). Claim two alleges fraud. In the third and fourth claims, Plaintiff alleges violations of the California Business and Professions Code, §§ 17200 and 17500, respectively. Finally, Plaintiff seeks injunctive relief, disgorgement of profits "estimated to be greater than $100,000.00", and an "award increased and treble damages for willful conduct pursuant to 15 U.S.C. § 1117(a)(3)" (Compl. at p. 15), restitution, attorneys' fees and costs.

B. Undisputed Facts

Defendant has filed a statement of "Admitted Facts" pursuant to Federal Rule of Civil Procedure 36(b). Many of these facts were contained in a request for admissions that was propounded on Plaintiff during the discovery process. Plaintiff failed to respond to Defendant's discovery requests, despite repeated requests and reminders of Plaintiffs discovery obligations. As set forth in greater detail in the declaration of Timothy Stearns, Plaintiff was reminded on numerous occasions about his discovery obligations, and failed to bring the responses to the scheduled deposition of Plaintiff as promised. See Declaration of Timothy Stearns filed in Support of Defendant's Motion for Summary Judgment, ¶¶ 10-21. Plaintiff repeatedly informed counsel for the Defendant that his responses would be forthcoming. Id. Plaintiff did not respond or otherwise object to Defendant's requests for admissions. By failing to respond to Defendant's Requests for Admissions, the answers to those requests are deemed admitted. Under Federal Rule of Civil Procedure 36(a)(3), "a matter is admitted unless, within thirty days after being served, the party to whom the request is directed serves a written answer or objection...." Defendant is not required to file a motion to establish the admissions because Rule 36 is "self-executing." Cook v. Allstate Ins. Co., 337 F.Supp.2d 1206, 1209-11 (C.D.Cal.2004). A matter admitted pursuant to Rule 36 is "conclusively established unless the court on motion permits withdrawal or amendment of the admission." Fed. R.Civ.P. 36(b). A court may allow withdrawal or amendment when: 1) the presentation of the merits of the action will be served; and 2) the party who obtained the admission will not be prejudiced by the withdrawal. Cook, supra at 1210, citing, Sonoda v. Cabrera, 255 F.3d 1035, 1038 (9th Cir.2001). The Court finds no circumstances here that would warrant amendment or withdrawal. Plaintiff has therefore admitted facts that this Court may consider for purposes of deciding the present motion for summary judgment.

In the present case, the facts set forth below are not disputed, based upon: 1) the unrefuted declaration of Defendant Ted Stearns; 2) the deposition testimony of Plaintiff Brosnan; and 3) other facts set forth in Defendant's requests for admissions (hereafter "Admitted Facts"), which this Court finds have been conclusively admitted by Plaintiff.

Defendants Tradeline Solutions and Ted Stearns offered a form of credit piggybacking known as "tradelines." Reporter's Transcript ("RT") at 194. Plaintiff Brosnan did not offer this product to his customers. RT 194, 297-298. In December 2007, Defendant Tradeline Solutions announced that it was offering a new product, known as "seasoned primary accounts." Stearns Decl., ¶ 3. Plaintiff did not offer seasoned primary accounts to anyone. RT 148, 297.

Plaintiff claims that he had a business known as "Apex Credit Repair Co." RT 63, 15-19. He testified at his deposition that he had seven unnamed customers for whom he provided foreclosure consulting and that he lost them to Defendant's unfair competition. RT 293:5-17. Plaintiff intended to stop or postpone the foreclosure sale for the seven unnamed customers he claims to have lost to Defendant's business. RT 291.

Other than Plaintiff's testimony regarding these unnamed customers, there is no evidence of their existence. At his deposition, Plaintiff was unable to identify any customers' names, and unable to identify anyone who would know of the existence of Apex Credit Repair Co. RT 128.² Plaintiff did not have a business license to operate Apex Credit Repair. RT 31. Plaintiff is unable to identify the name of any customer of Apex Credit Repair. RT 66. There is no evidence that any of the seven customers Plaintiff believes must have used Defendant's product instead of his product had a signed contact with Plaintiff. RT 222.

Plaintiff earned no income from his work as a foreclosure consultant in 2007 or 2008. RT 140-141. As Apex Credit Repair, Plaintiff performed his work on behalf of his customers free of charge. RT 144-145; RT: 134:17-20 ("Never charged an dime for it. Just did it to help people for free."); RT: 17-20. At his deposition, Plaintiff testified that within the preceding 12 months, he had not received any money from business, profession or any form of self-employment. RT 106. He further testified that he did not receive money from any source during the 2007-2008...