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 SANTA FE, NEW MEXICO
ATTORNEYS FOR THE PLAINTIFF
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 the Defendants' Motion
for Protective Order and to Quash Subpeonoas Duces
Tecum, filed June 13, 2019 (Doc.
153)(“Motion”). The Court held a hearing on June
18, 2019. See Clerk's Minutes Before the
Honorable James O. Browning, filed June 18, 2019, (Doc. 155).
The primary issues are whether: (i) the Court should allow
Plaintiff State of New Mexico to take trial depositions
outside the discovery period; and (ii) the Court should award
attorneys' fees to Defendants Deepak S. Parwatikar,
Balanced Legal Group, and Pinnacle Law Center (collectively,
the “Parwatikar Defendants”) for having to file
the Motion. Because the Parwatikar Defendants seek to enforce
the existing discovery deadline, which has passed, and
because the federal rules do not distinguish between trial
depositions and regular discovery depositions, the Court will
grant the Parwatikar Defendants' Motion.
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 (UPA) 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, P.C. (“Real Estate Law”), Erikson M.
Davis, Chad T. Pratt, and the Parwatikar Defendants.
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 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.
Defendants “created the fiction of . . . mass action
joinder lawsuits to disguise . . . advance fees as legal
fees.” Complaint ¶ 23, at 6. Real Estate Law
“ offerslegal 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”.
Complaint ¶ 35, at 8 (emphasis and alteration in
Complaint). Real Estate Law has had “at least
twenty-three . . . New Mexico consumers since 2013.”
Complaint ¶ 58, at 13.
Mexico alleges that: (i) Real Estate Law violated the
Mortgage Assistance Relief Services Rule, 12 C.F.R. 1015.1,
“Regulation O, ” by soliciting and accepting
advance fees from New Mexico residents before “a
mortgage modification agreement [was] finalized, ”
Complaint ¶ 84, at 19; (ii) the Defendants violated the
New Mexico Mortgage Foreclosure Consultant Fraud Prevention
Act, N.M. Stat. Ann. §§ 47-15-1 to -8, 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; and (iii) the Defendants violated the New
Mexico Unfair Practices Act, N.M. Stat. Ann. §§
57-12-1 to -26, 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. The
Court held a scheduling conference on June 28, 2018.
See Order Setting Case Management Deadlines and
Discovery Parameters at 1, filed June 28, 2018 (Doc.
78)(“Scheduling Order”). The Court filed the
Scheduling Order, indicating that discovery would close on
January 4, 2019. See Scheduling Order at 2. New
Mexico sought to extend the discovery period to close on May
24, 2019, see Plaintiff's Motion for Extension
of Deadlines, at 1 filed December 3, 2018 (Doc. 95), but the
Court denied the request to extend the discovery deadline,
see Memorandum Opinion and Order, March 19, 2019, at
2 (Doc. 116)(“MOO”).
Parwatikar Defendants ask that the Court grant a protective
order to preclude New Mexico from taking out-of-state
depositions duces tecum less than three weeks before the
trial's anticipated start date. See Motion at 1.
The Parwatikar Defendants also ask that the Court quash the
related subpoenas. See Motion at 1. The Parwatikar
Defendants explain that, under rule 26(c)(1) of the Federal
Rules of Civil Procedure, they conferred with New Mexico on
June 13, 2019, and that the parties were unable to reach a
resolution before the submission of this Motion. See
Motion at 1 (citing D.N.M.LR-Civ. 30.2). The Parwatikar
Defendants note, however, that the parties can continue to
confer about issues related to document authenticity.
See Motion at 1.
Parwatikar Defendants state that discovery closed on January
4, 2019. See Motion at 1 (citing Scheduling Order at
2; MOO at 19). The Parwatikar Defendants also state that the
trial is set for July 8, 2019, just over three weeks from the
date of filing for this Motion. See Motion at 2. The
Parwatikar Defendants state that, on June 6, 2019, New Mexico
contacted them to set up trial depositions for June 19 and
20, 2019, to be taken by telephone. See Motion at 2.
The Parwatikar Defendants assert that New Mexico did not
provide the proposed times, places, or witnesses for the
proposed depositions and, further, that New Mexico did not
obtain consent from the Parwatikar Defendants before noticing
three depositions duces tecum at 5:46 pm, June 12, 2019.
See Motion at 2 (citing Email from Mary Krebbs to
Paul Kennedy, Jessica Hernandez, and Elizabeth Harrison (sent
June 12, 2019), filed June 13, 2019 (Doc. 153-2)(“June
12 Email”); Notices to Take Trial Depositions Duces
Tecum at 1, 3, 5, filed June 13, 2019 (Doc.
153-3)(“Deposition Notices”)). The Parwatikar
Defendants assert that the notices for these depositions
indicate that New Mexico “intends to take three
depositions duces tecum telephonically, with deponents in the
following locations: Minneapolis, Minnesota; San Francisco,
California; and Los Angeles, California.” Motion at 2.
The Parwatikar Defendants state that the depositions are
scheduled for June 20, 2019, at 8:00 am, 10:00 am, and 2:00
pm. See Motion at 2. The Parwatikar Defendants also
assert that New Mexico provides three subpoenas related to
the documents requested in these notices. See Motion
at 2 (citing Subpeonas to Testify at a Trial Deposition
Decus Tecum in a Civil Action at 1, 6, 10, filed
June 13, 2019 (Doc. 153-4)(“Subpoenas”)).
Parwatikar Defendants assert that the notices refer, in part,
to rules 803(6) and 902(11) of the Federal Rules of Evidence,
related to foundation, and that New Mexico suggested on June
13, 2019, that disagreement about two of the three deposition
notices may be resolved in part if the Parwatikar Defendants
will waive their objections to authenticity. See
Motion at 2. The Parwatikar Defendants assert that New Mexico
seeks extensive documentation through the notices and
subpoenas, including bank statements, canceled checks,
agreements, emails, invoices and “many other records
going back several years.” Motion at 2 (citing
Deposition Notices; Subpoenas). The Parwatikar Defendants
assert that nothing has been filed to show the date or time
that the subpoenas were served, but that the subpoenas
themselves appear to have a service date of June 12, 2019.
See Motion at 3 (citing Fed.R.Civ.P. 45(b)(4);
Subpoenas). The Parwatikar Defendants assert that New
Mexico's email concerning the depositions states only
that New Mexico forwarded copies to the Parwatikar Defendants
“for [their] information and files.” Motion at 3
(citing June 12 Email at 1).
Parwatikar Defendants argue that the June 12, 2019, notices
of depositions duces tecum and subpoenas duces tecum do not
comply with the Federal Rules of Civil Procedure requirements
regarding adequate notice and out-of-time discovery.
See Motion at 3. The Parwatikar Defendants state
that they have previously objected to New Mexico's
untimely filings and late disclosures in this case.
See Motion at 3 (citing Defendants Parwatikar's
Objections, filed May 25, 2019 (Doc. 147); Fed.R.Civ.P.
37(c)(1)). The Parwatikar Defendants ask for expenses and
sanctions under rule 26(c)(3) and rule 37(a)(5) of the
Federal Rules of Civil Procedure. See Motion at 3.
Parwatikar Defendants argue that notice of deposition must be
served to the other party at least fourteen days before the
scheduled deposition and that notice must: (i) be in writing;
(ii) state the time and place of the deposition; and (iii)
state the name of the deponent and his, her, or its address
or a general description sufficiently identifying the person
or class/group to which the person belongs. See
Motion at 3 (citing Fed.R.Civ.P. 30(b)(1); D.N.M.LR-Civ.
30.1). The Parwatikar Defendants further assert that
depositions “by remote means, ” including the
telephone, can be taken only upon stipulation of all parties
or with a court order. Motion at 3 (citing Fed.R.Civ.P.
Parwatikar Defendants also argue that subpoenas have notice
requirements requiring that if a “subpoena commands the
production of documents . . . then before it is served on the
person to whom it is directed, a notice and a copy of the
subpoena must be served on each party.” Motion at 3-4
(citing Fed.R.Civ.P. 45(a)(4)). The Parwatikar Defendants
assert that fourteen days are typically allowed to serve
objections. See Motion at 4 (citing Fed.R.Civ.P.
45(d)(2)(B)). The Parwatikar Defendants argue that New Mexico
provides notice less than eight days before the depositions
and that New Mexico does not provide any notice under rule
45(a)(4) of the Federal Rules of Civil Procedure before
serving its subpoenas. See Motion at 4 (citing
Subpoenas). The Parwatikar Defendants argue that the short
notice, rapid consecutive timing, locations, and manner of
the depositions will “make it all but impossible for
[the Parwatikar Defendants'] counsel to attend these
depositions in-person to cross-examine the witness.”
Motion at 4.
Parwatikar Defendants assert that depositions may proceed
after discovery closes but argue that the depositions can
only proceed for good cause and with the judge's consent.
See Motion at 4 (citing Fed.R.Civ.P. 16(b)(4)). The
Parwatikar Defendants argue that good cause “means that
scheduling deadlines cannot be met despite a party's
diligent efforts.” Motion at 4 (quoting Street v.
Curry Bd. of Cty. Comm'rs, No. CIV 06-0776 JB/KBM,
2008 WL 2397671, at *6 (D.N.M. Jan 30, 2008)(Browning, J.)).
The Parwatikar Defendants argue that the “party seeking
an extension must show that despite due diligence it could
not have reasonably met the scheduled deadlines. Carelessness
is not compatible with a finding of diligence and offers no
reason for a grant of relief.” Motion at 4 (quoting
Mann v. Fernandez, 615 F.Supp.2d 1277, 1285 (D.N.M.
2009)(Browning, J.)). The Parwatikar Defendants argue that,
similarly, parties should not be allowed to use a subpoena to
obtain material from third parties after the discovery
deadline when the materials could have been produced before
the deadline. See Motion at 4 (citing 9A Charles
Alan Wright et al., Federal Practice and Procedure Civil
§ 2452 (3d ed. 2019)). The Parwatikar Defendants argue
that this Court may exercise its discretion to quash
subpoenas duces tecum issued to third parties outside the
discovery period on a party's motion. See Motion
at 4-5 (citing E.E.O.C. v. BOK Fin. Corp., No. CIV
11-1132 RB/LAM, 2014 WL 11829321, at *2 (D.N.M. Feb. 4,
2014)(Brack, J.); Peterbilt of Great Bend, LLC v.
Doonan, 2006 WL 3193371, at *2 (D. Kan. Nov. 1,
2006)(Marten, J.); Revander v. Denman, 2004 WL
97693, at *1 (S.D.N.Y. Jan. 21, 2004)(Holwell, J.)).
Parwatikar Defendants assert that, in Hartnett v. Papa
John's Pizza, Inc., the Court considered a
party's request to depose a witness whose existence was
not kept secret, but whose significance the party had not
appreciated until the end of discovery. See Motion
at 5 (citing Hartnett v. Papa John's Pizza,
Inc., No. CR 11-2860 JB, 2012 WL 6962985, at *4 (D.N.M.
Oct. 10, 2012)(Browning,
J.)(“Hartnett”). The Parwatikar
Defendants draw on this Court's analysis of the
party's request to take the witness' deposition out
of time as a request to reopen discovery, asserting that the
Court considered Rule 16's diligence requirements as well
as the factors that the United States Court of Appeals for
the Tenth Circuit established in Smith v. United
States, 834 F.2d 166 (10th Cir.
1987)(“Smith”). See Motion at 5
(citing Hartnett, 2012 WL 6962985, at *5-6). The
Parwatikar Defendants argue that the Smith factors
include: “1) whether trial is imminent, 2) whether the
request is opposed, 3) whether the non-moving party would be
prejudiced, [and] 4) whether the moving party was diligent in
obtaining discovery within the guidelines established by the
court.” Motion at 5 (citing Smith, 834 F.2d at
169). The Parwatikar Defendants assert that the Court refused
to permit the deposition in Hartnett after weighing
these factors, based in part on: (i) the trial being less
than one month away; (ii) a party's opposition to the
deposition; and (iii) a lack of demonstrated diligence to the
Court's discovery deadlines on part of the party seeking
the deposition. See Motion at 5 (citing
Hartnett, 2012 WL 6962985, at *7).
Parwatikar Defendants assert that the Court also analyzed a
request for out-of-time depositions in Skyline Potato
Co., Inc. v. Tan-O-On Mktg. Inc., 285 F.R.D. 617, 629
(D.N.M. 2012)(Browning, J.)(“Skyline Potato
Co.”). See Motion at 5. The Parwatikar
Defendants argue that the Court's findings in Skyline
Potato Co. are as follows: (i) trial was imminent
because it was set for less than four months from the
issuance of the opinion; (ii) the motion was opposed,
weighing against reopening discovery; (iii) the opposing
parties would be prejudiced by the additional travel costs
and because they also had to forgo some discovery to comply
with the discovery deadlines; and (iv) the parties seeking
the deposition had not been diligent in obtaining the
discovery within the deadlines imposed by the Court as the
parties had notice of the potential need for the requested
deposition long before the close of discovery. See
Motion at 5-6 (citing 285 F.R.D. at 629-30).
Parwatikar Defendants argue that, in the present case, New
Mexico has not asked for the Court's leave to take
depositions duces tecum or to issue subpoenas duces tecum
outside the discovery period and, subsequently, that New
Mexico has not shown good cause for their untimeliness.
See Motion at 6 (citing Mann v. Fernandez,
615 F.Supp.2d at 1285; 9A Charles Alan Wright et al., Federal
Practice and Procedure Civil § 2452 (3d ed.)). The
Parwatikar Defendants also argue that the Smith
factors weigh against permitting depositions duces tecum and
further subpoenas for obtaining records. See Motion
at 6 (citing Smith, 834 F.2d at 169). The Parwatikar
Defendants argue that, like in Hartnett, trial is
less than one month away in the present case. See
Motion at 6 (citing Hartnett, 2012 WL 6962985, at
*7). The Parwatikar Defendants further argue that, like in
Hartnett, the Parwatikar Defendants have established
their opposition to moving the discovery deadline and have
shown an “eagerness to go to trial.” Motion at 6
(citing Hartnett, 2012 WL 6962985, ...