New Mexico ex rel. Balderas v. Real Estate Law Ctr., P.C.
| Citation | 409 F.Supp.3d 1122 |
| Decision Date | 11 July 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 |
Hector H. Balderas, Attorney General of the State of New Mexico, Angelica Anaya-Allen, Lisa Giandomenico, Assistant Attorneys General of the State of New Mexico, State of New Mexico Office of the Attorney General, Albuquerque, New Mexico, Attorneys for the Plaintiff.
Real Estate Law Center, P.C., Los Angeles, California, Defendant pro se.
Chad Thomas Pratt, Los Angeles, California, Defendant pro se.
Paul J. Kennedy, Jessica M. Hernandez, Elizabeth Harrison, Kennedy, Hernandez & Associates, P.C., Albuquerque, New Mexico, Attorneys for Defendants Deepak S. Parwatikar, Pinnacle Law Center, P.C., and Balanced Legal Group.
Erikson M. Davis, Newbury Park, California, Defendant pro se.
THIS MATTER comes before the Court on: (i) the Motion Limine #1 of Chad T-W Pratt, Sr. to Exclude Undisclosed Evidence, filed June 24, 2019 (Doc. 160)("Undisclosed Evidence MIL"); (ii) the Motion Limine #2 of Chad T-W Pratt, Sr. to Allow Practice of Law, filed June 24, 2019 (Doc. 161)("Practice of Law MIL"); (iii) the Motion Limine #3 of Chad T-W Pratt, Sr. to Exclude State Bar, filed June 24, 2019 (Doc. 162)("State Bar MIL"); and (iv) Plaintiff State of New Mexico's requests in the Plaintiff's Response to Motion Limine #3 of Chad T-W Pratt, Sr. to Exclude State Bar, filed July 1, 2019 (Doc. 174)("State Bar MIL Response"). The Court held a hearing on July 2, 2019. See Clerk's Minutes at 1, filed July 2, 2019 (Doc. 184). The primary issues are: (i) whether the Court should, pursuant to rule 37(c)(1) of the Federal Rules of Civil Procedure,1 exclude from trial evidence related to New Mexico consumers Robert Alexander, Jose Cedeno, Martha Leary, Larry Madrid, Creighton Maness, Mike Maness, Rachel Silva, Vicki Sullivan, Lloyd Trujillo, Valerie Trujillo, and Linda Ward (the "listed New Mexico consumers"), because New Mexico did not disclose these listed New Mexico consumers' "mortgage information and facts, foreclosure judgments," Undisclosed Evidence MIL at 3, documents reflecting alleged Mortgage Assistance Relief Services ("MARS") Rule, 12 C.F.R. § 1015, violations related to these listed New Mexico consumers, or any evidence of Madrid and M. Maness;2 (ii) whether the Court should, pursuant to the Due Process Clause of the Fifth Amendment to the Constitution of the United States of America, and "per the authority vested in the [State of] California legislature and California state bar," Practice of Law MIL at 1, exclude from trial testimony "that the practice of law by [Defendant Chad T.] PRATT was illegal, wrong, [sic] at any time or times," Practice of Law MIL at 2 (capitalization in Practice of Law MIL); (iii) whether the Court should, pursuant to rules 404, 405, and/or 608 of the Federal Rules of Evidence bar "testimony, inquiry, or admission," State Bar MIL at 3, into and of In re Pratt -- In the Matter of Chad Thomas Pratt, Nos. 13-O-12312, 13-O-12367, 13-O-12757 (State Bar Ct. Cal. Sept. 18, 2014), aff'd, No. S222942 (Cal. Jan. 29, 2015); and (iv) whether the Court should permit such In re Pratt evidence pursuant to rule 406 of the Federal Rules of Evidence or rule 404(b)(2) for, respectively, evidence of Real Estate Law's habit and Mr. Pratt's state of mind. The Court denies the Undisclosed Evidence MIL, denies the Practice of Law MIL, grants in part and denies in part the State Bar MIL, and denies New Mexico's requests in the State Bar MIL Response. The Court concludes that, first, New Mexico disclosed to Mr. Pratt all relevant evidence pertaining to the listed New Mexico consumers and that, as the evidence to which Mr. Pratt refers in the Undisclosed Evidence MIL is irrelevant, the Court should deny the Undisclosed Evidence MIL without prejudice to Mr. Pratt raising specific, detailed objections in the robust context of specific evidence offered at trial should New Mexico introduce such evidence at trial. Second, no right to practice law bars evidence of Mr. Pratt's lawsuits. Third, New Mexico cannot use In re Pratt to argue that Mr. Pratt has a propensity to engage in misconduct, but New Mexico can use In re Pratt for rule 608 purposes. Fourth, New Mexico may not use In re Pratt as evidence of habit pursuant to rule 406, because New Mexico does not have evidence of a sufficient number of incidents during which Real Estate Law acted pursuant to the habit. Fifth, as, in the Memorandum Opinion and Order, 401 F.Supp.3d 1229, 2019 WL 2804575, filed July 2, 2019 (Doc. 183) (" MOO"), the Court grants summary judgment for Mr. Pratt on theories that he acted recklessly, knowingly, willfully, or in bad faith, see MOO at 184, 401 F.Supp.3d at 1351, 2019 WL 2804575, at *68, evidence of Mr. Pratt's state of mind is irrelevant and the In re Pratt evidence is inadmissible as evidence for that purpose.
The Court takes its facts from the Complaint for Violations of the New Mexico Mortgage Foreclosure Consultant Fraud Prevention Act[, N.M. Stat. Ann. §§ 47-15-1 to -8 ("MFCFPA") ], Mortgage Assistance Relief Services (MARS) Rule, the New Mexico Unfair Practices Act[, §§ 57-12-1 to -26 ("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 Defendants Real Estate Law Center, P.C.; Erikson M. Davis;3 Deepak S. Parwatikar; Balanced Legal Group; and Pinnacle Law Center, P.C., and Mr. Pratt. See Complaint ¶¶ 9-15, at 4-5. Davis, Mr. Pratt, and Mr. Parwatikar are residents of the State of California, and Mr. Pratt and Mr. Parwatikar are attorneys licensed in the State of California. See Complaint ¶¶ 10-12, at 4-5. Davis has been disbarred in California. See Erikson McDonnel Davis #197841, The State Bar of California, http://members.calbar.ca.gov/fal/Licensee/Detail/197841 (last visited June 22, 2019). Neither Davis nor Mr. Pratt is licensed to practice law in New Mexico. See Complaint ¶¶ 10-11, at 4-5. Real Estate Law and Pinnacle Law are "Professional Corporation[s] registered in California." Complaint ¶¶ 9, 13 at 4-5. Balanced Legal "is a California law firm owned and/or managed by Parwatikar." Complaint ¶ 14, at 5.
Mr. 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 Mr. Parwatikar owns, Complaint ¶ 38, at 8; see id. ¶ 21, at 6, and Real Estate Law pays Pinnacle Law eighty percent of the fees that Real Estate Law receives, see Complaint ¶ 21, at 6. Balanced Legal "uses" the same address -- 695 S. Vermont Ave., Los Angeles, California 90010 -- as Real Estate Law and Pinnacle Law use. Complaint ¶ 34, at 8.
Real Estate Law provides "legal representation, mortgage foreclosure consulting and mortgage modification services to homeowners in New Mexico although RELC RELC and its attorneys are not licensed to practice law 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. The Defendants "created the fiction of ... mass action joinder lawsuits to disguise ... advance fees as legal fees." Complaint ¶ 23, at 6. Balanced Legal "offers legal services including loan modification and bankruptcy 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 ().
Mr. Pratt faced disciplinary charges from the State Bar of California in November, 2013, "for (among other things) allowing non-attorney staff to practice law, making false statements to entice clients to retain RELC, failing to return un-earned fees, and for bringing ‘meritless’ lawsuits for consumers." Complaint ¶ 39, at 8. "The charges against Pratt resulted in a Decision by the State Bar Court of California ordering one year suspension, three years' probation and restitution to certain consumers." Complaint ¶ 40, at 8.
New Mexico contends that: (i) the Defendants violated the MARS Rule by accepting advance payment for mortgage relief services, and/or Mr....
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...from harassment or undue embarrassment"). Not all prior bad acts are "probative of veracity." New Mexico ex rel. Balderas v. Real Estate Law Center, P.C., 409 F.Supp. 3d 1122, 1150 (D.N.M. 2019). Accordingly, "[c]ourts should distinguish between crimes of dishonesty and other crimes[.]" Id.......