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

• Decision Date: 02 July 2019
• Docket Number: No. CIV 17-0251 JB\LF,CIV 17-0251 JB\LF
• Citation: 401 F.Supp.3d 1229
• 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

401 F.Supp.3d 1229

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 July 2, 2019

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

Real Estate Law Center, P.C., Los Angeles, California, Defendant

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, PC, and Balanced Legal Group

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

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court on: (i) the Defendant Deepak S. Parwatikar's Motion for Summary Judgment, filed April 25, 2019 (Doc. 132)("MSJ"); (ii) the Notice of Joinder of Chad T-W Pratt, Sr. In Motion for Summary Judgment, filed May 3, 2019 (Doc. 135)("Joinder");¹ and the Defendant Parwatikar's Objections to Plaintiff's Untimely Filings and Disclosures, filed May 25, 2019 (Doc. 147)("Marked Exhibits Objections"). The Court held a hearing on May 28, 2019. See Clerk's Minutes at 1, filed May 28, 2019 (Doc. 151). The primary issues are: (i) whether Plaintiff State of New Mexico has shown a genuine issue of material fact whether Defendants Deepak S. Parwatikar,² Balanced Legal Group, and Pinnacle Law Center, P.C., (collectively, the "Parwatikar Defendants"), and Defendant Chad T. Pratt³ violated the Mortgage Assistance Relief Services ("MARS") Rule, 12 C.F.R. § 1015,⁴ by accepting advance payment for mortgage assistance relief services as alleged in Count I of the Complaint for Violations of the New Mexico Mortgage Foreclosure Consultant Fraud Prevention Act (MFCFPA),^{[5 ]} Mortgage Assistance Relief Services (MARS) Rule, the New Mexico Unfair Practices Act (UPA)^{[6 ]} and Petition for Injunctive Relief ¶¶ 77-85, at 18-19, filed February 22, 2017 (Doc. 1)("Complaint"); (ii) whether New Mexico has shown a genuine issue of material fact whether the Parwatikar Defendants and Mr. Pratt violated the New Mexico Mortgage Foreclosure Consultant Fraud Prevention Act, N.M. Stat. Ann. §§ 47-15-1 to -8 ("MFCFP"), by failing to conform to the MFCFP's requirements for foreclosure consultant contracts and by requesting advance fees for foreclosure consultant services as the Complaint's Count II alleges, see Complaint ¶¶ 86-101, at 19-22; (iii) whether New Mexico has shown a genuine issue of material fact whether the Parwatikar Defendants and Mr. Pratt violated the New Mexico Unfair Practices Act, N.M. Stat. Ann. §§ 57-12-1 to -26 ("NMUPA"), by requiring from New Mexico consumers an advance fee and monthly maintenance payments for sham lawsuits, by promising valuable legal services while filing the value of which was disproportionate to the value paid, and by promising foreclosure lawsuit defense but not providing such services, as the Complaint's Count III alleges, see Complaint ¶¶ 102-108, at 22-23; and (iv) whether New Mexico has established a genuine issue of material fact justifying injunctive relief barring the Parwatikar Defendants and Mr. Pratt from engaging in those practices enumerated in items (i) through (iii) and from engaging in the unauthorized practice of law as the Complaint's Count IV alleges, see Complaint ¶¶ 109-11, at 23. The Court grants the MSJ and the Joinder in part and denies them in part. The Court concludes that New Mexico has shown a genuine issue of material fact whether: (i) the Parwatikar Defendants and Mr. Pratt are liable for MARS Rule violations; and (ii) the Parwatikar Defendants and Mr. Pratt are liable for MFCFP violations. Specifically, genuine disputes of material fact exist whether Defendant Real Estate Law Center, P.C. violated the MARS Rule and the MFCFP; whether Real Estate Law, Balanced Legal, and Pinnacle Law operated a common enterprise such that Balanced Legal and Pinnacle Law are liable for Real Estate Law's alleged MARS Rule and MFCFP violations;⁷ whether Mr. Parwatikar and Mr. Pratt are individually liable for Real Estate Law's alleged MARS Rule and MFCFP violations;⁸ whether Mr. Parwatikar and Pinnacle Law substantially assisted the other Defendants' alleged MARS Rule violations;⁹ and what penalties the Court should assess should it find the Parwatikar Defendants and Mr. Pratt liable for the MARS Rule and the MFCFP violations.¹⁰ New Mexico has not produced, however, sufficient evidence to survive summary judgment on a theory based on Defendant Erickson Davis'¹¹ alleged MARS Rule violations; on Balanced Legal and Pinnacle Law's violation of the MARS Rule independent of Real Estate Law; on Mr. Parwatikar's and Mr. Pratt's participation in a common enterprise with Real Estate Law, Balanced Legal, and Pinnacle Law; and on Mr. Pratt's reckless or knowing violation of the MARS Rule, or willful violation of the MFCFPA, so the Court grants summary judgment in the Parwatikar Defendants' and Mr. Pratt's favor on these theories. The Court concludes, furthermore, that New Mexico has not established a genuine issue of material fact whether: (i) the Parwatikar Defendants and Mr. Pratt are liable for NMUPA violations other than the MFCFP violations;¹² and (ii) New Mexico is entitled to injunctive relief. As New Mexico has not produced evidence on which a reasonable factfinder could conclude that Real Estate Law knowingly made false or misleading misrepresentations such that New Mexico can establish its unfair or deceptive practices claims,¹³ and has not shown sufficient evidence on which a reasonable factfinder could conclude that Real Estate Law engaged in unconscionable practices, New Mexico cannot show the Parwatikar Defendant's or Mr. Pratt's liability for the non-MFCFP NMUPA violations. New Mexico has also not produced evidence of ongoing, continuous, or recent MARS Rule, MFCFP, or other NMUPA violations to survive summary judgment on its requests for injunctive relief. The Court overrules the Parwatikar Defendants' objections in the Marked Exhibits Objections, because the Marked Exhibits attached to the Plaintiff's Notice of Filing of Marked Exhibits to Response to Motion for Summary Judgment at 1, filed May 24, 2019 (Doc. 145)("Marked Exhibits Notice"), will help the Court decide the MSJ and the Joinder, and because the Marked Exhibits differ from the exhibits attached to the Plaintiff's Response to Parwatikar Motion for Summary Judgment, filed May 10, 2019 (Doc. 137)("MSJ Response"), only in that, in the Marked Exhibits, New Mexico highlights excerpts for the Court's attention.

FACTUAL BACKGROUND

The Court draws the factual background from the parties' undisputed material facts in: (i) the MSJ; (ii) the MSJ Response; (iii) the Joinder; and (iv) the Plaintiffs' Response to Pratt's Notice of Joinder in Motion for Summary Judgment, filed May 13, 2019 (Doc. 140)("Joinder Response"). Mr. Parwatikar owns Pinnacle Law and owned Balanced Legal. See MSJ Response ¶ 16, at 8 (asserting this fact)(citing Defendant Deepak Parwatikar's Answers, Responses and Objections to Plaintiff's First Set of Interrogatives and Requests for Production, Interrogatory No. 1, at 1-2, filed May 24, 2019 (Doc. 145-1)¹⁴ ("Parwatikar First Set Response"); Consulting Agreement at 1, filed May 24, 2019 (Doc. 145-1); Deposition of Deepak S. Parwatikar at 70:1-71:2 (taken May 9, 2018), filed May 25, 2019 (Doc. 145-1)("Parwatikar Depo. Doc. 145-1")¹⁵ ); Reply in Support of Defendant's Motion for Summary Judgment at 6, filed May 24, 2019 (Doc. 146)("MSJ Reply")(admitting this fact). In 2010, prior to Real Estate Law's foundation, the Attorney General for the State of Minnesota sued Mr. Parwatikar and Balanced Legal for charging advance fees for mortgage modification services. See MSJ Response ¶ 7, at 4 (asserting this fact)(citing Minnesota v. Balanced Legal Group, Case No. 27 CV 10-27052 (4th Jud. Dist. Minn. 2010)("Minn. v. Balanced Legal & Parwatikar");¹⁶ Parwatikar Depo. Doc. 145-1 at 70:1-73:25).¹⁷ After this suit, in 2011, Mr. Parwatikar and Pinnacle Law helped Adlore Clarambeau¹⁸ incorporate Real Estate Law. See MSJ Response ¶ 15, at 8 (asserting this fact)(citing Parwatikar Depo. Doc. 145-1 at 20:19-25:25).¹⁹ Clarambeau, see MSJ ¶ 1, at 2 (asserting this fact)(citing Deposition of Deepak S. Parwatikar at 25:8-9, filed April 25, 2019 (Doc. 132-1)("Parwatikar Depo. Doc. 132-1")), Mr. Pratt, see MSJ ¶ 1, at 2 (asserting this fact)(citing Parwatikar Depo. Doc. 132-1 at 26:8-13), and Davis consecutively owned Real Estate Law Center, see MSJ ¶ 1, at 2 (asserting this fact)(citing Parwatikar Depo. Doc. 132-1 at 108:12-13, id. at 108:17-19). See also MSJ Response ¶ 1, at 2 (admitting with this sentence's facts).

"Sometime between 2011 and 2013, RELC [ (Real Estate Law) ] used an attorney-client fee agreement with clients, which purported to charge a $5,000 retainer, 80% of which would be paid to Pinnacle Law Center." MSJ ¶ 2, at 2-3 (asserting this fact)(citing Complaint ¶¶ 21, 46, at 6, 10).²⁰ See MSJ Response ¶ 1, at 2 ...