United States District Court, D. New Mexico
STATE OF NEW MEXICO, ex rel., HECTOR BALDERAS, Attorney General of New Mexico, Plaintiff,
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.
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
Estate Law Center, P.C. Los Angeles, California Defendant pro
Thomas Pratt Los Angeles, California Defendant pro se.
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
MEMORANDUM OPINION AND ORDER
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,  exclude from trial
evidence related to New Mexico consumers Robert Alexander,
Jose Cedeno, Martha Leary, Larry Madrid, Creighten 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; (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), affd, 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, 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, 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.
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.
action arises from the activities of Defendants Real Estate
Law Center, PC; Erikson M. Davis; 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,
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
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.
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 (emphasis and alteration in
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.
Mexico contends that: (i) the Defendants violated the MARS
Rule by accepting advance payment for mortgage relief
services, and/or Mr. Parwatikar and Pinnacle Law
substantially assisted the violations, see Complaint
¶¶ 77-85, at 18-19; (ii) the Defendants, willfully
and in bad faith, violated the MFCFPA, by failing to provide
required warnings, notices, and disclosures, by failing to
give New Mexico homeowners twenty-four hours before signing
attorney-client agreements, and by requiring advance payment
for their services, see Complaint ¶¶
86-101, at 19-22; and (iii) the Defendants knowingly engaged
in unlawful conduct violating the NMUPA by requiring advance
fees and monthly maintenance fees while filing sham lawsuits,
by leading New Mexico consumers to believe that the
Defendants performed valuable legal services when the
Defendants filed sham lawsuits with no value for New Mexico
consumers, and by allowing New Mexico consumers to believe
that the Defendants will defend foreclosure lawsuits,
see Complaint ¶¶ 102-08, at 22-23. New
Mexico asks that the Court enjoin the Defendants from
continuing such violations, see Complaint
¶¶ 109-11, G, at 23-24, and requests restitution,
disgorgement, civil penalties, and costs as the MARS Rule,
the MFCFPA, and the NMUPA permit, see Complaint
¶¶ (A)-(F), at 24.
Parwatikar Defendants -- Mr. Parwatikar, Balanced Legal, and
Pinnacle Law -- and Mr. Pratt are the only Defendants with
liability issues remaining in this case. On June 11, 2018,
the Court entered a default judgment against Real Estate Law
on all liability issues, “reserving the issues of
relief, including disgorgement, restitution and civil
penalties.” Default Judgment Against Real Estate Law
Center at 1, filed June 11, 2018 (Doc. 75). See id.
at 1-2. 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 Davis on issues of liability,
reserving for litigation the issues of relief, see
Proposed Findings and Recommended Disposition at 4, filed
November 5, 2018 (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, 2019 WL 259121, at *1, *4, filed January
18, 2019 (Doc. 106). In the MOO, the Court granted summary
judgment in the Parwatikar Defendants and Mr. Pratt's
favor on New Mexico's NMUPA claims, injunctive relief
claims, and theories based on: (i) Davis' alleged MARS
Rule violations; (ii) Balanced Legal's and Pinnacle
Law's violation of the MARS Rule independent of Real
Estate Law; (iii) Mr. Parwatikar's and Mr. Pratt's
participation in a common enterprise with Real Estate Law,
Balanced Legal, and Pinnacle Law; and (iv) Mr. Pratt's
reckless or knowing violation of the MARS Rule, or willful
violation of the MFCFPA. See MOO at 183-84, 2019 WL
2804575, at *68.
hearing on June 18, 2109, the Court stated that it would hold
a hearing to discuss motions in limine and last-minute
pretrial details on July 2, 2019. See Draft
Transcript of Hearing at 30:14-18 (taken June 18,
2019)(Court)(“June 18 Tr.”). The Court stated
that it would set the hearing for 3:00 p.m. on Tuesday, July
2, 2019, but indicated that it had a criminal hearing
scheduled for 1:30 p.m. on Tuesday, July 2, 2019, and that
the Court and the parties would need to be flexible, and the
parties agreed to the Court's proposition. See
June 18 Tr. at 31:17-32:5 (Court, Anaya-Allen, Kennedy,
Pratt). On June 18, 2019, the Court's Courtroom Deputy
noticed the hearing for 3:00 p.m. on July 2, 2019.
See Notice of Hearing, filed June 18, 2019 (Doc.
154). On June 26, 2019, the Courtroom Deputy rescheduled the
hearing for 1:30 p.m. on July 2, 2019. See Notice of
Hearing on Motion 160 Motion in Limine, 161 Motion in Limine,
162 Motion in Limine, filed June 26, 2019 (Doc. 165); Amended
Notice of Hearing, June 27, 2019 (Doc. 167).
The Undisclosed Evidence MIL.
Pratt asks that the Court exclude, pursuant to FRCP
3017 all non-disclosed evidence.
See Undisclosed Evidence MIL at 1. Mr. Pratt writes:
As per FRCP 3017 ALL evidence NOT included in the
initial disclosure Rule 26 [of the Federal Rules of
Evidence] shall be excluded at trial. . . .
II. NMAG list of plaintiffs adverse to PRATT
1. ROBERT ALEXANDER alleged plaintiff is now DECEASED.
No. probate, no personal representative, cannot proceed
against PRATT. No. “standing” to proceed.
2. JOSE CEDENO, “in rem” judgment adverse to him
and sold his rights to an investor. As per theadverse [sic]
judgment and selling of his rights Mr. Cedeno has no claim
3. MARTHA LEARY, [sic] foreclosure judgment adverse to her so
4. LARRY MADRID, foreclosure judgment adverse to him bars
5. CREIGHTEN MANESS, foreclosure judgment adverse to him bars
6. MIKE MANESS, foreclosure judgment adverse to him bars
FULL REFUND PAID.
7. RACHEL SILVA, foreclosure judgment adverse to him bars
PRATT LEFT RELC SEP 13TH AND THIS PLAINTIFF IS NOT
HIS RESPONSIBILITY AS ALL ALLEGED MARS ACTIVIY WAS
8. VICKI SULLIVAN (DECEASED) No. [sic] standing to proceed.
No. probate, no personal representative, cannot proceed
9. LLOYD TRUJILLO. Stipulated judgment of foreclosure bars
suit here as he ADMITTED to the foreclosure per the
10. VALERIE TRUJILLO. (SAME AS LLOYD TRUJILLO)
11. LINDA WARD . [sic] no information or facts.
ALL SUCH INFORMATION IS NEWLY PROVIDED TO PRATT AND WAS NOT
DISCLOSED PRIOR. ALL SUCH INFORMATION SHOWS NO LIABILITY AS
Evidence MIL at 1-2 (emphasis, ellipses, and capitalization
in Undisclosed Evidence MIL). Pratt notes in a footnote
following the quoted list: “ALL such facts and
information is just newly provided here.” Undisclosed
Evidence MIL at 2 n.1 (capitalization in Undisclosed Evidence
MIL). Pratt proceeds to argue:
Death of ROBERT ALEXANDER was NEVER disclosed. The mortgage
information and facts, foreclosure judgments, and ALL alleged
MARS violations by PRATT, if any exist at all, were NOT
disclosed prior of persons 1-11 set forth above.
Finally, LARRY MADRID and MIKE MANESS were not disclosed
Evidence MIL at 3 (capitalization in Undisclosed Evidence
MIL). Mr. Pratt concludes: “It is submitted, that all
such information excludes and bars all such testimony of
alleged plaintiffs, 1-11, and that all shall and should be
barred at trial. Alternatively, an FRCP
403 hearing must take place to determine
the validity of their claims.” Undisclosed Evidence MIL
at 3 (emphasis in Undisclosed Evidence MIL).
Undisclosed Evidence MIL Response.
Mexico responds. See Plaintiffs Response to
Pratt's Motion Limine #1 of Chad T-W Pratt, Sr. to
Exclude Undisclosed Evidence at 1-3, filed July 1, 2019 (Doc.
173)(“Undisclosed Evidence MIL Response”). New
Mexico asks that the Court deny Mr. Pratt's Undisclosed
Evidence MIL, “as it is not well-taken and contains
errors of fact as well as failing to provide the legal basis
for its arguments.” Undisclosed Evidence MIL Response
at 1. New Mexico argues that Mr. Pratt cites no “legal
basis” for his arguments “that the foreclosure of
the consumers' homes bars the claims against him”
and that New Mexico knows of no such basis. Undisclosed
Evidence MIL Response at 1. See Undisclosed Evidence
MIL Response at 1-2. New Mexico asserts that it is the
Plaintiff in this case, that the New Mexico consumers'
standing is irrelevant, and “that these consumers lost
their homes in foreclosure is a consequence of the scam
perpetrated by Defendants and does not bar the State's
claims.” Undisclosed Evidence MIL Response at 2.
See Undisclosed Evidence MIL Response at 1-2. New
Mexico explains that it disclosed to Mr. Pratt information
about his listed New Mexico consumers:
The initial disclosures provided to Defendant Pratt included
records related to Robert Alexander (NMOAG000353-409), Jose
Cedeno (NMOAG000410-433), Martha Leary (NMOAG000746-878),
Larry Madrid (NMOAG000879-935, 002903-3204), Creighton Maness
(NMOAG000936-970), Mike Maness (NMOAG000971-1094,
002210-2351, 003205-3538), Rachel Silva (NMOAG 001175-1280,
00374-3751), Vicki Sullivan (NMOAG001319-1343), Lloyd
Trujillo (NMOAG001380-1477, 003544-3635), Valerie Trujillo
(NMOAG001478-1566, 002440-2484, 003636-3734), Linda Ward
(NMOAG001866-1933, 002252-2588). Plaintiff responded to
Defendant Pratt's First and Second Requests for
Production of Documents and identified relevant documents in
response to inquiries about Mike Maness (“Mike
M.”) and Larry Madrid (“Larry M.”).
Additional documents related to Mr. Maness
(NMOAG014838-14845) and further identification of documents
related to both Mr. Madrid and Mr. Maness were provided in
Plaintiffs First and Second Supplemental Responses to
Parwatikar and Supplemental Response to Pratt.
Evidence MIL Response at 2. New Mexico contends that it
“is not sure why Mr. Pratt is objecting with respect to
when he learned of Mr. Alexander's death. The issues
before the court relate to Mr. Pratt's actions and
whether those actions violate the laws plead [sic], not
whether the consumers are still alive.” Undisclosed
Evidence MIL Response at 2. New Mexico explains, regarding
Mr. Pratt's request for a rule 403 of the Federal Rules
of Evidence hearing, that rule 403 “provides that
relevant evidence may be excluded for prejudice, confusion,
waste of time or other reasons. Defendant does not illustrate
how any of these bases for a Rule 403 exclusion would support
barring testimony relating to any of the consumers identified
in this motion.” Undisclosed Evidence MIL Response at
The Practice of Law MIL.
Pratt writes that he “submits his Motion Limine #2 that
absolutely guarantees his right to practice law per the
5th Amendment ‘due process' clause, and
per the authority vested in the California legislature and
California state bar.” Practice of Law MIL at 1.
Mr. Pratt argues:
PRATT was duly licensed to practice law by the State of
California, and was litigating cases on behalf of the alleged
new mexico [sic] Plaintiffs at all relevant times.
The NMAG and this honorable court cannot take away or
abrogate such right of PRATT.
There is no finding, legal ruling, or other such admissible
“evidence”, and NONE has been presented here that
any lawsuit(s) filed by PRATT were “frivolous” at
any time. As such, PRATT was simply practicing law at all
of Law MIL at 2 (capitalization in Practice of Law MIL).
According to Pratt, “all such information excludes and
bars all such testimony of alleged plaintiffs, that the
practice of law by PRATT was illegal, wrong, at any time or
times.” Practice of Law MIL at 2.
The Practice of Law MIL Response.
Mexico responds, and asks “that the Court deny the
motion as it is not well-taken and contains errors of fact as
well as failing to provide the legal basis for its
arguments.” Plaintiffs Response to Defendant
Pratt's “Motion Limine #2” [Doc 161] to Allow
Practice of Law at 1, filed July 1, 2019 (Doc. 176)(brackets
added)(“Practice of Law MIL Response”). New
Mexico avers that Mr. Pratt cites no authority for his right
to practice law. See Practice of Law MIL Response at
2. New Mexico argues:
The license to practice law comes with great responsibilities
and guidelines and no “right” to practice law can
evade, for example, the Federal Rules of Civil Procedure.
Rule 11(b) requires that attorneys sign pleadings and that
their signature represents the the [sic] claims therein are
not frivolous and are warranted by existing law; and that the
factual contentions plead [sic] have evidentiary support.
of Law MIL Response at 2 (footnotes omitted)(citing
Fed.R.Civ.P. 11(b)(2)-(3)). According to New Mexico, whether
Mr. Pratt's lawsuits were “disingenuous” is
relevant and admissible, “[b]ecause Defendant Pratt is
accused of filing sham lawsuits to avoid federal and state
laws that prohibit advance fees for loan
modifications.” Practice of Law MIL Response at 2
(footnote omitted). New Mexico adds that courts have found
attorneys to have violated the MARS Rule although the
attorneys practiced law and notes that, “[a]lthough the
MARS rule does exempt attorneys practicing law in the state
where they are licensed, such exception is not applicable to
the facts presented here. Here, Defendant Pratt was licensed
to practice in California, but he purported to represent New
Mexico homeowners with New Mexico properties.” Practice
of Law MIL Response at 2. In New Mexico's view, the MARS
Rule's attorney exemption cannot, therefore, provide a
basis for the Practice of Law MIL. See Practice of
Law MIL Response at 3.
The State Bar MIL.
State Bar MIL, Mr. Pratt requests that the Court exclude
“the adverse state bar ruling against him of Michelle
Pickerell, Jesse Rivera, and Tracy Torme.” State Bar
MIL at 1. Mr. Pratt argues:
It must be further noted that the state bar did NOT impose
the “death penalty” and “disbar”
PRATT, nor did it “shut down” RELC. Rather it
limited its findings to the three persons set forth above and
their alleged claims. [In RE: Romano, 64 Cal.2d
826, [(415 P.3d 798 (Cal. 1966)] (PRATT has been
disciplined by the California state bar and cannot be
punished again here.)
Bar MIL at 2. Mr. Pratt cites rule 608 for the
proposition that specific instances of bad conduct cannot be
shown with extrinsic evidence to prove bad conduct in another
circumstance. See State Bar MIL at 2. Mr. Pratt
As per Federal rule of evidence 608(b) NMAG
may cross-examine on “[s]pecific instances of . . .
conduct” only if the instances are probative of
truthfulness or untruthfulness”, and only “in the
discretion of the court”. NMAG cannot argue that PRATT
was wrong in state bar cases so he is wrong here. Before NMAG
may impeach a witness about specific acts of misconduct they
Must [sic] have a good faith belief such bad conduct
occurred. [US vs Whitmore, 359 F.3d 609, 622 (D.C.
Cir.2004)(uthe general rule . . . is that the
questioner must be in possession of some facts which support
a genuine belief that the witness committed the offense or
the degrading act to which the question relates”) [sic]
Here, not only does NMAG NOT have such belief or facts, it
does NOT even have any evidence of MARS
“violations” by PRATT. (NO documents of PRATT
MARS violations . . . .).
Bar MIL at 2-3 (emphasis, capitalization, and ellipsis in
State Bar MIL). Mr. Pratt adds that, pursuant to rules 404
and 405, New Mexico cannot use such prior bad act evidence to
prove his later acts. See State Bar MIL at 3. Mr.
Pratt asks, accordingly, that the Court exclude all
“testimony, inquiry, or admission of the adverse state
bar action to PRATT at trial of this matter.” State Bar
MIL at 3 (capitalization in State Bar MIL).
State Bar MIL Response.
Mexico responds and “suggests that Pratt's motion
must be denied because the evidence demonstrates a routine
practice of Real Estate Law Center (RELC) under Pratt,
admissible under Rule 406 and constitutes an exception to
Rule 404(b).” State Bar MIL Response at 1. New Mexico
summarizes its purpose for introducing the evidence:
[T]he [In the Matter of Chad Thomas Pratt, No.
13-O-12312, Decision (State Bar Ct. Cal. Sept. 18, 2014),
filed July 1, 2019 (Doc. 174)(“In re Pratt
Decision”)] is offered to demonstrate that Pratt, the
lead attorney for RELC, operated an organization that
consistently conducted itself in a routine manner: RELC
solicited clients, claiming to be experts in bank litigation,
had them sign a retainer agreement, charged an upfront fee of
thousands of dollars, and promised to assist clients in
renegotiating their mortgages. The earlier, 2013, Stipulation
entered by the California State Bar Court[, see In the
Matter of Chad T. Pratt, No. 12-O-16642, Stipulation re
Facts, Conclusions of Law and Disposition and Order Approving
(State Bar Ct. Cal. Oct. 18, 2013),
visited July 3, 2019)(“In re Pratt
Stipulation”), ] demonstrates a practice of failing to
use a client trust account. Evidence demonstrating a routine
practice is admissible under Federal Rule of Evidence 406.
Additionally, the [(In re Pratt] Decision is offered
to prove Defendants' state of mind in order to
demonstrate willfulness under the New Mexico Unfair Practices
Act (“UPA”)”), and therefore also
admissible under Federal Rule of Evidence 404(b)(2).
Bar MIL Response at 2.
New Mexico describes that the United States Court of Appeals
for the Tenth Circuit “has ruled that for evidence of
an organization's practice to be admissible under Rule
406, it ‘must be reasonably regular and
uniform.'” State Bar MIL Response at 3 (quoting
United States v. Oldbear, 568 F.3d 814, 822 (10th
Cir. 2009)). New Mexico argues that the In re Pratt
Decision, which shows three instances of Real Estate Law
requiring advance fees, see State Bar MIL Response
at 3 (citing In re Pratt Decision at 6, 9, 13), and
the New Mexico consumers attorney-client fee agreements,
see State Bar MIL Response at 3-4 (citing
Attorney-Client Fee Agreement, Linda Ward, filed July 1, 2019
(Doc. 174)), which require advance fees, show such a custom,
and that this “procedure, entering a retainer agreement
with and accepting advance fees from clients is relevant to
establish a violation of the Mortgage Assistance Relief
Services rule, ” State Bar MIL Response at 4. New
Mexico cites Guidance Endodontics, LLC v. Dentsply
Int'l Inc., 705 F.Supp.2d 1265 (D.N.M.
Endodontics”), to show that “[t]his Court
has examined the applicability of Rule 406 to the use of
court cases of tangential matters offered as evidence to
prove a routine practice, ” and explains that
“this Court granted in part and denied in part the
proponent's arguments that litigation in tangential
matters constituted sufficient ‘reasonably regular and
uniform' conduct to be admissible under Rule 406.”
State Bar MIL Response at 4 (citing Guidance
Endodontics, 705 F.Supp.2d at 1272). According to New
Mexico, “[w]hile the Court did not find sufficient
regularity to admit prior litigation under Rule 406, the
Court did find that the evidence demonstrated the
defendants' state of mind for the action at issue and
declined to exclude under Rule 404.” State Bar MIL
Response at 4 (citing Guidance Endodontics,
705 F.Supp.2d at 1272). New Mexico argues that the behavior
here “is the normal procedure by which RELC inducted
every new client into their practice, ” and not
“something as infrequent or individualized as”
the litigation that Guidance Endodontics discusses.
State Bar MIL Response at 5. According to New Mexico, the
Court should, therefore, allow the In re Pratt
evidence's introduction. See State Bar MIL
Response at 5.
Mexico further contends that the Court should admit the
In re Pratt evidence as evidence of the
Defendants' state of mind. See State Bar MIL
Response at 5. According to New Mexico, the Tenth Circuit has
a test for rule 404(b) evidence:
“(1) the evidence must be offered for a proper purpose;
(2) the evidence must be relevant; (3) the trial court must
make a Rule 403 determination of whether the probative value
of the similar acts is substantially outweighed by its
potential for unfair prejudice; and (4) pursuant to
Fed.R.Evid. 105, the trial court shall, upon request,
instruct the jury that evidence of similar acts is to be
considered only for the proper purpose for which it was
Bar MIL Response at 5 (quoting Peshlakai v. Ruiz, 39
F.Supp.3d 1264, 1321 (D.N.M. 2014)(Browning, J.)). New Mexico
explains that Mr. Pratt willfully and in bad faith violated
the MFCFPA; that New Mexico must, therefore, establish Mr.
Pratt's willfulness; and that “[t]his Court in
Guidance Endodontics concluded that a ‘prior
course of similar conduct, if believed by the jury, makes it
more likely that the Defendants' acts in this case were
willful and not merely coincidental or
reactionary.'” State Bar MIL Response at 6 (citing
Guidance Endodontics, 705 F.Supp.2d at 1271). New
Mexico explains that the In re Pratt evidence meets
the first two requirements of the Tenth Circuit's test:
The evidence here, as in Guidance Endodontics,
establishes a “prior course of similar conduct.”
[Guidance Endodontics, 705 F.Supp.2d at 1271.] The
ongoing scheme in which Real Estate Law Center induced
clients to execute a retainer agreement, pay advance fees,
join as plaintiffs in sham litigation against lenders, and
nominally offering mortgage modification services is well
detailed in the decision of the Bar Court. See
[In re Pratt Decision] at 4-14. This explication, if
admitted, would tend to lessen the probability that
Defendants' actions in regard to New Mexico consumers
were coincidental or non-willful. Therefore, such evidence
meets the requirements that evidence must be offered for a
proper purpose and relevant.
Bar MIL Response at 6. New Mexico avers that the Court should
treat the third and fourth factors “as moot, ”
because the Court has previously concluded that rule 403
exclusions are improper at bench trials, see State
Bar MIL Response at 7 (citing Coffey v. United
States, No. CIV 08-0588 JB/LFG, 2012 WL 1698289, at *3-4
(D.N.M. May 8, 2012)(Browning, J.)), and, because the
prejudicial effect against which rule 403 protects is
irrelevant, the Court does not need to instruct the jury to
consider the evidence only for the purposes for which the
proponent offers it, see State Bar MIL at 7.
Pratt did not attend the July 2, 2019, hearing in person or
call the telephone conference number for the hearing,
see Draft Transcript of Hearing at 3:8-20 (taken
July 2, 2019)(Court)(“ July 2 Tr.”), so the Court
called Mr. Pratt's telephone number to reach him,
see July 2 Tr. at 2:4-8 (Court); id at 3:10
(Court). Mr. Pratt conveyed to the Court's Courtroom
Deputy that he was unaware of the hearing. See July
2 Tr. at 2:9-10 (Clerk). Mr. Pratt indicated that he was in
court and would not join the hearing, and he did not call the
telephone conference number before the Court began the
hearing. See July 2 Tr. at 3:20-24 (Court). Mr.
Pratt later joined the hearing through the telephone
conference number. See July 2 Tr. at 6:4 (Pratt).
the Court invited Mr. Pratt to begin discussing his motions,
see July 2 Tr. at 10:20-22 (Court), Mr. Pratt
admitted: “I'm at a handicap Your Honor, I do not
have [them in] front of me. . . . I was not aware the hearing
was today, ” July 2 Tr. at 10:23-25 (Pratt). The Court
asked Mr. Pratt to begin with the Undisclosed Evidence MIL.
See July 2 Tr. at 11:15-21 (Court). Mr. Pratt
argued: “[I would] submit on the motions. I don't
have [anything] from the foreclosure judgment against that
plaintiffs. I don't have the mortgage [notices] against
the plaintiffs. And I don't have any documents showing
any [MARS] violations [committed] by me.” July 2 Tr. at
12:8-13 (Pratt). Multiple times during Mr. Pratt's
argument, the Court alerted him that the telephone connection
was not good and that the people in the courtroom could not
hear him, and requested that Mr. Pratt move to a location or
to a telephone with better reception. See July 2 Tr.
at 11:25-12:5 (Court); id at 12:14-18 (Court);
id at 12:25-13:2 (Court). Mr. Pratt eventually
responded that he was “in the federal bankruptcy
[c]ourt in Los Angeles[, ] California, ” July 2 Tr. at
12:23-24 (Pratt), and that he would submit on his motions,
see July 2 Tr. at 13:3-4 (Pratt). The Court stated
that, because it could not understand what Mr. Pratt said, it
would judge Mr. Pratt not in attendance at the hearing.
See July 2 Tr. at 13:5-7 (Court). The Court invited
Mr. Pratt to listen to the hearing, or to find a position
from which to speak to the Court and to the other parties
where they could hear his statements. See July 2 Tr.
at 13:7-13 (Court). Mr. Pratt responded: “I'll find
a better phone, thank you, your Honor, ” and left the
telephone conference. July 2 Tr. at 13:14-15 (Pratt).
Parwatikar Defendants added to Mr. Pratt's arguments that
New Mexico disclosed considerable discovery late in the case
and after discovery closed. See July 2 Tr. at
13:19-14:7 (Kennedy). The Court responded that it understood
Mr. Pratt to be asking for the exclusion of all evidence not
included in the initial disclosures, but that, because such
an exclusion would exclude all evidence obtained through
discovery, Mr. Pratt's request was too broad as stated.
See July 2 Tr. at 14:18-15:1 (Court). The Court
summarized that Mr. Pratt discussed foreclosure judgments,
people being dead, and lack of probate, but indicated that
the Court did not understand that New Mexico would attempt to
introduce such evidence. See July 2 Tr. at 15:4-11
(Court). New Mexico responded that it included in its initial
disclosure information related to the listed New Mexico
consumers. See July 2 Tr. at 15:14-20 (Anaya-Allen).
The Court asked New Mexico whether it planned to introduce
any of the material that Mr. Pratt complained that he lacked
regarding the listed New Mexico consumers. See July
2 Tr. at 15:21-24 (Court). New Mexico responded that it is
the Plaintiff, that the listed New Mexico consumers might
serve as witnesses, and that it disclosed these individuals
in the initial disclosures. See July 2 Tr. at
16:4-11 (Anaya-Allen). New Mexico explained that it did not
understand Mr. Pratt's argument regarding the foreclosure
judgments' relevance, because this case involves New
Mexico's claims and not those claims of the listed New
Mexico consumers. See July 2 Tr. at 16:11-15
(Anaya-Allen). New Mexico added that the foreclosure
judgments also might strengthen individual claims ...