Northern District of California Blog Previews Upcoming Trials

In a new feature on this blog, here is a preview of some upcoming trials:

Del Campo v. American Corrective Counseling Services Inc, is a massive class action headed to trial soon, so this blog wants to pregame the trial a bit by reflecting on the June motion for summary judgment. Elena Del Campo and others claim that ACCS implemented the Santa Clara County Bad Check Restitution Program (“Bad Check Program”) by sending demand letters purporting to be from a California District Attorney’s office attempting to collect a dishonored check in violation of the Fair Debt Collection Practices Act (FDCPA). In that motion, Judge Jeffery White found that Mealing and Hansey as officers for ACCS were liable as debt collectors under FDCPA, though it noted, that the Ninth Circuit has yet to rule on the issue. The defendants are liable under California’s Unfair Competition Law for that reason. However, the liability of Inc. Company, who had a restitution partnership arrangement with ACCS, remains and issue for trial. Similarly, one of the largest unresolved issues is damages. The plaintiffs claim damages of $47,497,386.50, however the defendants claim they were entitled to those fees by statute and they cannot be recovered. It should be an interesting trial.

First National Insurance Co. v. Geo Grout is an insurance indemnity matter. Geo Grout entered in a series of private and public works contracts, which required it to furnish the respective project owners with a performance bond, and a labor and materials bond. First National issued the bonds on behalf of Geo Grout, and Geo Grout failed to meet various contract obligations resulting in claims against the bonds. Geo Grout failed to indemnify, exonerate and hold First National harmless from the damage incurred because of the bonds under an indemnity agreement between the parties which gives rise to the current suit. This case has an added complication.

Geo Grout is currently working as a subcontractor on the Sukut Construction, Inc. on the San Pablo Dam Seismic Upgrade project. For the East Bay Municipal Water District. For a variety of reasons, Sukut has not paid Geo Grout $1.37 million. Sukut’s payment bond surety is Safeco Insurance Company. First National is a wholly owned subsidiary of Safeco (which is itself a wholly owned subsidiary of Liberty Mutual). Geo Grout is suing Sukut for that amount in Contra Costa County Superior Court. As a result of this, First National owes Geo Grout more than Geo Grout owns First National. Magistrate James Larson noted there was too much to sort out at this point:

The Court finds too many disputed issues of fact, including the amounts owed and by whom to whom, the relationship between First National and Safeco, the contractual obligations between the parties and non-parties, and the rights of the other creditors and sureties, to conclude that First National has established a likelihood of prevailing on its motion for summary judgment.

He denied summary judgment and a writ of attachment for that reason.

This blog has dubbed Oracle v. Santa Cruz County Planning Department, “The Hedge Case” because it is a million dollar lawsuit over administrative bungling over a permit to build a fence because of a hedge in Aptos, California.  Judge Jeremy Fogel has recently ruled on a motion in limine which forms some of the contentious issues in this rapidly approaching trial.

The Oracles plan to introduce evidence about the Santa Cruz County Code regulating the height of fences and hedges, not to show that it is determinative, but to show the parties motivations. The Oracles (perhaps strategically) have not yet identified a property they plan to compare with their own to show that similarly situated properties were subject to different treatment. However, Judge Fogel plans to allow evidence of this on a case-by-case basis. The Oracles want to call Laughlin, a former code supervisor as an expert witness, but have not, a of yet, explained why he is an expert. Lyng is expected to testify that people would have purchased the property had their not been a NOV on it, though at her deposition she could not identify who that could be. The Orcacles plan to introduce an email chain where different employees at the County said nasty things about them.

The order also notes that the defendants recently made a settlement offer to the Oracles., but contains no details on what that arrangement was.

Northern California Courts rule in Mortgage and Default Cases

Northern California Judges have recently released orders in a mortgage fraud, trademark infringement and ERISA case.

In Marks v. Green Tree Mortgage the plaintiff complains that she bought a home in Oakland, California in 1998 for $149,000.  Now, she has no idea who owns the mortgage or how much she owes.  According to her credit report, the figure is around $1,000,000.  However, others tell her the amount is $2,000,000.  Proceeding pro se, Ms. Marks argues that an entity who purchases a mortgage in default cannot foreclose upon it because that action violates the Fair Debt Collection Practices Act (FDCPA).  Judge Susan Illston was not onboard:

The Court knows of no such prohibition in the FDCPA, in another statute, or in the case law. Therefore, to the extent that plaintiff’s theories of fraud and wrongful foreclosure are premised on the idea that defendant Green Tree does not have the power to foreclose, plaintiff has failed to state a claim against either defendant.

She dismissed the complaint with leave to proceed under a separate legal theory.

Dr. JKL Ltd. v. HPC IT Education Center is a trademark and copyright infringement matter arising from a business venture gone awry.  HPC had agreed to sell Dr. JKL's software, but it never gave any license revenue back to the plaintiff.  Instead it produced the software for free download on the internet.  HPC has its headquarters in Hong Kong, its CEO, Sam. Yuen, proceeding pro se wrote a letter in the case stating that the Northern  District of California was an inconvenient forum. He has not appeared in the case since that time and the plaintiffs moved for a default judgment.  Judge Richard Seeborg granted the default judgment, but was confused as to seemingly contradictory information submitted as to the damages in the case.

Plaintiff presents it request for damages in a confusing and inconsistent manner. In the body of the motion for default judgment, it requests damages consistent with the summary above. In the concluding paragraph of the motion, however, it requests "$150,000 in actual damages and profits on the copyright and trademark infringement claims, $64,623.14 in breach of contract claims, treble damages on the Lanham Act claim, and plaintiff’s attorneys and costs (sic), in an amount to be fixed by the Court pursuant to Local Rule 5-3." [] In an affidavit filed with the motion for default judgment, Poon represents that the misappropriated security deposit for the HPC Storefront totaled $3,994.82 and that the financial injuries sustained as a result of defendants’ breach of the 2007 Agreement and the 2009 Agreement totaled $60,628.32, for combined breach of contract damages of $64,623.14. In the motion itself, however, plaintiff omits any discussion of the amount of the security deposit, stating instead that the contract damages for lost profits amounted to $60,628.32 but then listing a total of $64,623.14 for breach of contract damages in the motion’s conclusion. Additionally, despite the fact that plaintiff maintains in its motion for default judgment that it has "prove[d] defendants' revenue" and has pled copyright infringement damages of $150,000, nothing in the complaint, the motion for default judgment or any of the attached affidavits actually establishes the basis for this amount. Lastly, counsel for plaintiff includes an affidavit stating that it incurred $17,442.50 in attorney’s fees and $440.52 in costs. The billing statement attached to this affidavit, however, consists of a summary of the fees and fails to apportion any of the billing or to provide a narrative explaining any of the expenses.

Judge Seeborg granted the default judgment, "As to damages, plaintiff’s request shall be reduced to $64,623.14, its attorney’s fees shall be reduced to $7,899.50, and it shall be awarded costs of $440.52."

Board of Trustees of the Carpenters Pension Trust Fund for Northern California v. GDT Builders is another motion for a default judgment.  GDT Builders entered into a collective bargaining agreement (CBA) with the Carpenters Union which specified contributions to the Trust fund based on the hours its employees worked.  Around July 14, 2009 GDT withdrew from the Trust.  The Trust informed GDT it owed $15,348.  GDT never paid giving rise to the current action.  Judge Samuel Conti noted that under ERISA, an employer that withdraws from a trust fund must pay the pro rata share of its unfunded liabilities.  Judge Conti granted the motion for a default judgment but noted that the Trust failed to provide information on liquidated damages or interest.  He asked it to brief the matter and declined to enter a damages judgment on the current pleadings.

Northern California Judge finds check collector and attorney personally liable for predatory practices

Richard Carrizosa and Mary Pea are the lead plaintiffs in a class action against Legal Recovery Services (LRS), its owner Alan Mecham and its attorney Paul Stassinos for violating the Fair Debt Collection Practices Act (FDCPA) and California's Unfair Competition Law (UCL).

The plaintiffs allege that LRS received returned checks from merchants and wrote a series of letters to the plaintiffs.  The first letter, was under the stationary of the merchant stating that the consumer's bank returned the check and it now sought payment.  The second was a more stern version of the first.  The third was the 30-day notice required by Cal. Civ. Code Section 1719.  The fourth informed the debtor that he or she was now liable for treble damages and prejudgment interest.  Mr. Stassinos then sued the defendants in superior court, frequently obtaining default judgments.

In January 2009, the plaintiffs and Mr. Stassinos both sought summary judgment.  The plaintiff's claimed that sending letters under the header of another is a violation of FDCPA.  Further, in the case of joint checking accounts asking for treble damages from both parties instead of the person who signed the check is a violation of law.  Similarly, prejudgment interest and treble damages are available in the alternative, not in conjunction with one another.  As the court explained, all of these allegations were founded.

Mr. Stassinos defended by stating that he made a "bona-fide error" by asking for both prejudgment interest and treble damages and that he should be held harmless for the mistake.  Judge Ronald M. Whyte explained that a Circuit split exists as to whether a legal error alone can be a "bona-fide error." Compare  Baker v. G.C. Servies Corp. (9th Cir. 1982) (holding it is) with Johnson v. Riddle (10th Cir. 2002) (holding it isn't).  Notwithstanding criticism of Baker, Judge Whyte found that Mr. Stassinos violated FDCPA for these three reasons and ruled for the plaintiffs.  In June 2010, the Court stayed the proceeding against Mr. Stassinos because he filed for bankruptcy.

In the current motion the plaintiffs seek summary judgment against Mr. Mecham, which Mr. Mecham did not oppose.  The plaintiffs argue that Mr. Mecham is a debt collector because he is actively involved in LRS's business - debt collection.  Judge Whyte agreed:

LRS and Mecham are jointly and severally liable to the class for $150,154.08 in actual damages and restitution and $73,499.27 in prejudgment interest, for a total of $223,653.35.

The case is Carrizosa v Stassinos No. C 05-2280 and the summary judgment motions are below the jump.

Northern California Courts Rule in Banking Cases

Several judges have recently released opinions on mortgage law.

In Geist v. OneWest Bank Mortgage, John and Becky Geist sued OneWest Bank Mortgage for foreclosing on their property which they allege violates the Fair Debt Collection Practices Act (FDCPA).  OneWest defends stating that foreclosing on a house is not a debt collection within the meaning of the statute.  Judge Susan Illston noted that the Ninth Circuit has not yet ruled on whether a mortgage foreclosure is a debt collection within the meaning of FDCPA, but numerous district courts have, each of them finding it was not.  See e.g., Aniel v. T.D.
Service Co. (N.D. Cal. Aug. 9 2010) (White, J.).  She dismissed the action with prejudice.
 
George v. New Century Mortgage invovles a homeowner proceeding pro se who claims she was a victim of predatory lending in violation of the Truth in Lending Act (TILA) and related California state law claims.   Upon receiving service, New Country Mortgage moved to dismiss the action stating that Ms. George never made a tender offer and an allegation of one is necessary to plead a claim to rescind the loan.  Further, it asked for the lis pendens upon the property to be lifted.  Magistrate Harold R. Lloyd recommended that the case be dismissed.

Gutierrez v. Wells Fargo is a consumer class action based on Wells Fargo's method of posting debit card fees.  In the present order Judge William H. Alsup dealt with a number of pending issues in the case.  He found that Wells Fargo's new posting method conformed to his August order.  He found that pre-judgment interest and post judgment interest were inappropriate and he found that punitive damages did not apply because the plaintiffs did not prove fraud by clear and convincing evidence.

Mira v. American Home Mortgage Service involves Alfonso and Carla Mira who this blog previously covered here.  This case appears similar, in that there is a lis pendens on the property that American Home Mortgage would like lifted.  Judge Saundra Brown Armstrong had an excellent explanation of lis pendens:
Federal courts look to state law regarding in matters pertaining to lis pendens.

See 28 U.S.C. § 1964. "A lis pendens is recorded by someone asserting a real property claim, to give notice that a lawsuit has been filed which may, if that person prevails, affect title to or possession of the real property described in the notice." Federal Deposit Ins. Corp. v. Charlton,  (Cal. App. 1993) (citing Cal.Code Civ. Pro. §§ 405.2, 405.4, 405.20). "Its effect is that anyone acquiring an interest in the property after the action was filed will be bound by the judgment.... Once a lis pendens is filed, it clouds the title and effectively prevents the property's transfer until the litigation is resolved or the lis pendens is expunged." BGJ Assocs., LLC v. Superior Court of Los Angeles, (Cal. App. 1999).

Judge Armstrong granted the motion to expunge the lis pendens and dismissed the lawsuit for failure to prosecute.