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

United States District Court, D. New Mexico

December 16, 2019

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.

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

          Paul J. Kennedy Jessica M. Hernandez Elizabeth Harrison Kennedy, Hernandez & Associates, P.C. Albuquerque, New Mexico Attorneys for Defendants Pinnacle Law Center, PC, Balanced Legal Group, and Deepak S. Parwatikar.

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

          Chad Thomas Pratt Los Angeles, California Defendant pro se.

          Real Estate Law Center, PC California Defendant pro se.

          MEMORANDUM OPINION AND ORDER

         THIS MATTER comes before the Court on the Motion to Continue Trial by Pro Per Chad T-W Pratt, Sr. to Exclude All, filed July 8, 2019 (Doc. 189)(“Motion”). The Court held a hearing on July 10, 2019. See Transcript of Trial Proceedings at 489:1-498:13 (dated July 10, 2019), filed July 15, 2019 (Doc. 195)(“July 10 Tr.”). The primary issues are whether the Court should continue the trial because: (i) Plaintiff State of New Mexico filed late its Plaintiff's Trial Exhibit List, filed June 28, 2019 (Doc. 169)(“Exhibit List”); (ii) Defendant Chad T. Pratt will receive the Plaintiff's Amended Trial Exhibit List, filed June 28, 2019 (Doc. 172), by mail after the trial commences; (iii) New Mexico has not provided Mr. Pratt requested information on mortgage files, foreclosure judgments, and evidence of the alleged Mortgage Assistance Relief Services (MARS) Rule, 12 C.F.R. 1015.1 “Regulation O, ” violations; (iv) New Mexico has not responded to Mr. Pratt's settlement offers; (v) Mr. Pratt is waiting for telephone call responses from the Court's Courtroom Deputy; and (vi) Mr. Pratt does not have copies of the Court's rulings on the Defendant Deepak S. Parwatikar's Motion for Summary Judgment, filed April 25, 2019 (Doc. 132)(“MSJ”), or 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, 142019 (Doc.113)(“Venue Motion”). As none of Mr. Pratt's arguments provide sound grounds for continuing the trial, the Court denies the Motion.

         FACTUAL BACKGROUND

         The Court takes its facts from the Complaint for Violations of the New Mexico Mortgage Foreclosure Consultant Fraud Prevention Act (MFCFPA), 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 Defendants Real Estate Law Center, P.C.; Erikson M. Davis;[1] Deepak S. Parwatikar; Balanced Legal Group; and Pinnacle Law Center, P.C., and Mr. Pratt. See Complaint ¶¶ 9-15, at 4-5. Mr. 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. Neither Mr. 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. 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; 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 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 Complaint).

         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 State Bar Court of California decision ordering one year suspension, three years' probation and restitution to certain consumers.” Complaint ¶ 40, at 8.

         PROCEDURAL BACKGROUND

         New 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 New Mexico Mortgage Foreclosure Consultant Fraud Prevention Act, N.M. Stat. Ann. §§ 47-15-1 to -8 (“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 NMPUA, N.M. Stat. Ann. §§ 57-12-1 to -26, 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.

         The 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 Mr. 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 Memorandum Opinion and Order, filed July 2, 2019 (Doc. 183)(“MSJ MOO”), the Court granted summary judgment for the Parwatikar Defendants and Mr. Pratt on New Mexico's NMUPA claims, injunctive relief claims, and theories based on: (i) Mr. 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 MSJ MOO at 183-84, 2019 WL 2804575, at *68.

         1. The Motion.

         Mr. Pratt filed the Motion on July 8, 2019. See Motion at 1. Mr. Pratt complains in the Motion: “New Mexico filed their exhibit list LATE and was allowed relief per motion Without notice.” Motion at 1 (capitalization in original). Mr. Pratt then argues:

New Mexico now files amended exhibit list with NEW exhibits 200-231 NEVER SEEN BEFORE by Pratt. The mail service of such amended exhibit list Shall be received by PRATT after trial commences . . . This is the ultimate in “sandbagging” and Prejudice to PRATT. The “strike zone” seems to be very wide for new mexico, and the “goal posts” keep getting moved so that PRATT cannot prepare for trial.
Indeed, it is impossible for PRATT to prepare for trial given this “discovery dump” of new evidence!

         Motion at 1 (quoting Balanced Legal Group, http://www.balancedlegalgroup.com (no longer available as of December 1, 2019)(capitalization in original)). Mr. Pratt continues: “Most importantly, New Mexico has failed to provide ALL of the following, despite Repeated requests: (i) mortgage files on all plaintiffs adverse to PRATT; (ii) foreclosure judgments on all plaintiffs adverse to PRATT; (iii) documentary evidence of ‘MARS' acts by PRATT as to plaintiffs.” Motion at 2 (capitalization in original). Mr. Pratt then lists several more complaints regarding the Court and New Mexico:

PRATT has made settlement offer(s) to New Mexico, without reply.
PRATT phoned and left TWO MESSAGES with court scheduling motion clerk in NOVEMBER 2018, and is awaiting “call-back” on setting of motion(s).
PRATT does NOT have copy of any ruling(s) on defense MSJ (motion for summary judgment) or ...

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