N.M. ex rel. Balderas v. Real Estate Law Ctr., P.C.
| Decision Date | 31 December 2019 |
| Docket Number | No. CIV 17-0251 JB\LF,CIV 17-0251 JB\LF |
| Parties | 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. |
| Court | U.S. District Court — District of New Mexico |
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 FOR THE DISTRICT OF NEW MEXICO
December 31, 2019
MEMORANDUM OPINION AND ORDER
THIS MATTER comes before the Court on the Defendant Chad T-W Pratt's Brief in Support of Motion to Dismiss for Improper Venue and/or In The Alternative Transfer to Los Angeles, filed, March 14, 2019 (Doc.113)("Motion"). The Court held a hearing on May 28, 2019. The primary issues are: (i) whether venue is proper in the United States District Court for the District of New Mexico, under 28 U.S.C. § 1391(b)(2), as a district in which "a substantial portion of the events and omissions giving rise to the claims" occurred; (ii) whether the Court should
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dismiss the matter for improper venue under rule 12(b)(3) of the Federal Rules of Civil Procedure; and (iii) whether, in the alternative, given that all of Defendant Real Estate Law Center, P.C.'s lawsuits were filed in California and a court will need to analyze California law to decide this matter, the Court should transfer the matter to Los Angeles County, California, under 28 U.S.C. § 1404(a) and/or § 1406(a), for convenience and in the interests of justice. The Court concludes that: (i) venue is proper in the District of New Mexico; (ii) the Court should not dismiss the matter for improper venue under rule 12(b)(3) of the Federal Rules of Civil Procedure; and (iii) the Court should not transfer the matter to Los Angeles County. Accordingly, the Court denies the motion.
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 (NMUPA) 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 Real Estate Law Center, P.C. ("Real Estate Law") and Defendants Erikson M. Davis; Deepak S. Parwatikar; Chad T. Pratt; Balanced Legal Group; and Pinnacle Law Center, P.C. See Complaint ¶¶ 16-76, at 5-17. Mr. Davis, Mr. Pratt, and Mr. Parwatikar are residents of and attorneys licensed in California. See Complaint ¶ 10-12, at 4-5. Neither Mr. Davis nor Mr. 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. Mr. Pratt owned and managed Real Estate Law from September, 2011, to September, 2013. See Complaint ¶ 37, at 8. Mr. Davis "assumed ownership of" Real Estate Law
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in 2013. Complaint ¶ 20, at 6. Real Estate Law "has an operating agreement or partnership agreement with Parwatikar and Pinnacle," which Mr. 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".
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Complaint ¶ 35, at 8 (emphasis and alteration in Complaint). Real Estate Law has "dealt with or taken payments from at least twenty-three . . . New Mexico consumers since 2013 [(the 'New Mexico residents')]." Complaint ¶ 58, at 13.
There are several factual issues in deciding the Motion. The Court makes the following findings of fact:
1. The property of the New Mexico residents mentioned in the Real Estate Law contracts is located in New Mexico. See Declaration and Affidavit of David Starrett ¶¶ 1, 3, at 1 (executed January 31, 2019), filed March 28, 2019 (Doc. 128)("Starrett Decl."); Declaration and Affidavit of Arlena F. Dickerson ¶¶1, 3, at 1 (executed February 26, 2019), filed March 28, 2019 (Doc. 129)("Dickerson Decl.").
2. Real Estate Law used radio and television ads to solicit customers, and New Mexico residents then heard and acted on the information given in the ads. See Starrett Decl. ¶ 4, at 1; Dickerson Decl. ¶ 3, at 1 .
3. The New Mexico residents retained Real Estate Law to protect their homes. See Starrett Decl. ¶ 6, at 1; Dickerson Decl. ¶¶ 3, 5-6, 20, at 1-3.
4. The payments the New Mexico residents made to Real Estate Law came from bank accounts based in New Mexico. See Dickerson Decl. ¶¶ 16-18, at 2.
5. The New Mexico residents received and signed the contracts while in the state of New Mexico. See Dickerson Decl. ¶¶ 7-17, at 2-3.
6. Several contracts between Real Estate Law and the New Mexico residents contain a forum selection clause stating: "The agreement shall be governed in accordance with the laws of the State of California. Venue shall be in Los Angeles County." Attorney-Client Fee Agreement,
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Robert Alexander ¶ 12, at 3, filed March 14, 2019 (Doc. 113); Attorney-Client Fee Agreement, Jose Cedeno ¶ 12, at 3, filed March 14, 2019 (Doc. 113); Attorney-Client Fee Agreement, Arlena F. Dickerson ¶ 12, at 3, filed March 14, 2019 (Doc. 113); Attorney-Client Fee Agreement, Larry Madrid ¶ 12, at 3, filed March 14, 2019 (Doc. 113); Attorney-Client Fee Agreement, Mike A. Maness ¶ 12, at 3, filed March 14, 2019 (Doc. 113); Attorney-Client Fee Agreement, Lloyd Trujillo ¶ 12, at 3, filed March 14, 2019 (Doc. 113); Attorney-Client Fee Agreement, Valerie Trujillo ¶ 12, at 3, filed March 14, 2019 (Doc. 113); Attorney-Client Fee Agreement, Linda Ward ¶ 12, at 3, filed March 14, 2019 (Doc. 113); Attorney-Client Fee Agreement, Creighton Maness ¶ 12, at 3, filed March 14, 2019 (Doc. 113); Attorney-Client Fee Agreement, Rachel D. Silva ¶ 12, at 3, filed March 14, 2019 (Doc. 113).
7. The contract between Real Estate Law and Vicki S. Sullivan, one of the New Mexico residents, contains a forum selection clause stating: "Client also agrees that the laws of the State of California shall govern this agreement and that any disputes arising from this agreement must be adjudicated in Los Angeles, California." Attorney-Client Fee Agreement, Vicki S. Sullivan at 2, filed March 14, 2019 (Doc. 113).
8. The contract between Real Estate Law and David Starrett, one of the New Mexico residents, contains a forum selection clause stating: "The Agreement shall be governed in accordance with the laws of the State of California and any disputes arising from this Agreement must be adjudicated in Los Angeles, California." Attorney-Client Fee Agreement, David Starrett ¶ 13, at 3, filed March 28, 2019 (Doc. 128).
New Mexico alleges that, first, Real Estate Law violated the Mortgage Assistance Relief Services (MARS) Rule, 12 C.F.R. 1015.1, by soliciting and accepting advance fees from New
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Mexico residents before "a mortgage modification agreement [was] finalized," Complaint ¶ 84, at 19. Second, New Mexico alleges that the Defendants violated the New Mexico Mortgage Foreclosure Consultant Fraud Prevention Act, N.M. Stat. Ann. §§ 47-15-1 to -8 (MFCFPA), 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. Third, New Mexico alleges that 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.
1. The Motion.
Mr. Pratt moves to dismiss this matter for improper venue. See Motion at 1. In the alternative, Mr. Pratt asks that this matter be transferred to Los Angeles County based on the contractual language between Real Estate Law and the New...
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