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Gonzalez v. Department (Bureau) Of Real Estate

United States District Court, E.D. California

June 6, 2017

DANIEL E. GONZALEZ, Plaintiff,
v.
DEPARTMENT (BUREAU) OF REAL ESTATE., et al, Defendants.

          ORDER AND FINDINGS AND RECOMMENDATIONS

          GREGORY G. HOLLOWS UNITED STATES MAGISTRATE JUDGE

         PROCEDURAL BACKGROUND

         This matter, originally filed on November 24, 2015, has a long and complicated procedural history. Plaintiff's initial complaint named seventeen defendants including the Department of Real Estate [“DRE”], an agency of the State, seven (7) employees of the DRE in both their personal and professional capacities, four (4) financial entities engaged in mortgage services, and two (2) law firms. The claims included the Sherman Act, the Americans with Disabilities Act [“ADA”], civil rights violations, and negligent and intentional infliction of emotional distress, all arising out of action taken to revoke plaintiff's professional license on December 16, 2010, for which he sought declaratory and injunctive relief as well as damages. ECF No. 1.

         On February 1, 2016, the court granted plaintiff's motion to proceed in forma pauperis, but dismissed his initial complaint without prejudice for, inter alia, failure to contain factual allegations sufficient to raise a right to relief above the speculative level citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), ECF No. 3 at 2 and expressing concern that the action could be barred pursuant to the Rooker-Feldman doctrine which prohibits lower federal courts from exercising jurisdiction where any such action could interfere with a state court decision, id. at 5 as well as other bars to elements of the litigation such exercise. Id. at 7.

         On April 1, 2016 plaintiff filed his First Amended Complaint against a reduced number of defendants, dropping all of the mortgage investment companies and many of the individual defendants alleging only civil rights violations, falsification of records and perjury, anti-trust violations, and a new claim for violations of California's Bane Act. ECF No. 6.

         On June 14, 2016, again acting on its own, the court recommended dismissal of the First Amended Complaint for failure to cure the deficiencies identified in its original Order, but after reviewing objections filed by the plaintiff, vacated the findings and recommendations to allow the defendants to make an appearance and directed that the defendants be served. ECF No. 11.

         On October 12, 2016 the court issued an Order and Findings and Recommendations responding to plaintiff's ex parte application for permission to conduct limited discovery, for a stay or temporary injunction on a pending state action, and for extended pages for a memorandum in support of a preliminary injunction motion. The court noted that only two defendants have been served with process. In its ruling the court required additional information regarding the need for limited early discovery based upon the health of a potential witness, denied the injunction request for lack of notice and failure to provide other support required, and indicated plaintiff's unlikelihood of success on this issue given the Anti-Injunction Act, 28 U.S.C. section 2283, and denied the request for extended page limits. ECF No. 22.

         On October 27, 2016 the court ordered that plaintiff to serve declarations regarding the need for early discovery on the previously served defendants. ECF No. 24.

         On November 15, 2016 the court issued an order granting early discovery on the basis of written questions to be posed to witness Robert Schaldach. ECF No. 28.[1]

         On November 22, 2016 defendant employees of the DRE moved to dismiss the action, ECF No. 30, and on November 29, 2016 defendant Narine Stepanyan also filed such a motion. ECF No. 33. On January 17, 2017 the court issued a minute order rescheduling the hearing on these motions from January 19, 2017 to February 2, 2017. ECF No. 36. That hearing was held, the parties discussed the pending motions with the court, and the matters were submitted. ECF No. 42.[2]

         On February 6, 2017, the court issued Findings and Recommendations that the motions to dismiss should be denied except that the DRE should be dismissed on Eleventh Amendment immunity grounds. ECF No. 43. The District Court adopted the Recommendations on March 8, 2017. ECF No. 46.

         The DRE employee defendants answered the Complaint on March 9, 2017. ECF No. 47.

         On March 22, 2017 private defendant Narine Stepanyan filed a new motion to dismiss which was set for hearing on May 4, 2016. ECF No. 49. Plaintiff followed with a Motion to Strike defenses submitted by the DRE defendants to be heard on the same date as his earlier motion. ECF No. 50.

         On April 3, 2017 plaintiff filed a Motion to Strike DRE's defenses to be heard together with the earlier pending motions. ECF No. 51.

         On April 6, 2017 plaintiff filed a motion for extended time to answer interrogatories propounded by the DRE defendants, ECF No. 53, to which the state defendants filed a Statement of Non-Opposition on April 19, 2017 thereby granting plaintiff an additional 28 days to respond to this discovery. ECF No. 58.

         On April 12, 2017 plaintiff filed a Motion for Leave to File an Amended Complaint noticed for hearing on May 19, 2017. ECF No. 56.

         The two Motions to Dismiss, plaintiff's Motions to Strike the DRE defendants' Answer and its Affirmative Defenses, and plaintiff's Motion to file another Amended Complaint, all of which were vacated from the court's calendar and taken under submission. These are the subjects of this Order.

         FACTUAL BACKGROUND[3]

         Plaintiff engaged in a real estate action with defendant Stepanyan. ECF No. 6 at ¶ 18. A dispute arose between them concerning payment of a 10% auction fee from funds deposited by Stepanyan, “over and above” the sales price of the property in which Stepanyan accused plaintiff of fraud and breach of fiduciary duties insofar as she alleged a wrongful taking/appropriation of the deposited escrow fee. Id. at ¶ 30.

         Several actions were filed in Sacramento Superior Court regarding this dispute. Plaintiff prevailed in a small claims action in which the presiding judge found that Stepanyan had wrongfully backed out of the real estate deal at issue, and that plaintiff had not engaged in wrongdoing. Id. at ¶¶ 39, 40. A later small claims action filed by Stepanyan was adjudicated in plaintiff's favor due to the judgment in the earlier small claims action. Id. at 64.

         Of more importance here, the DRE instituted license revocation proceedings against plaintiff Gonzalez and “coerced” Stepanyan into providing a false recorded statement in support. Id. at ¶ 43. The Complaint seems to allege, sub silentio, that the claims resemble, or perhaps are identical to, the ones filed in small claims court by Stepanyan, and apparenty recommended suspending or revoking plaintiff's license. The accusation was mailed to plaintiff, but having suffered an injury that left him disabled, he had closed his office and did not receive the document. Id. at ¶¶ 47, 48, 51, and when he did not respond within the time permitted, default was entered against him on December 16, 2010. Id. at ¶ 52. A final decision revoking his license resulted, based on accusations of fraud, misrepresentation, dishonesty and “other disparagements” Id. at ¶ 58. Plaintiff filed an appeal (administrative mandamus) in the Superior Court, on February 22, 2011. Id. at ¶ 57. The Superior Court denied plaintiff's petition on the basis of untimeliness, Id. at ¶ 67 and plaintiff appealed to the Third District Court of Appel, which affirmed the Superior Court on February 27, 2014 in Gonzalez v. Bell, 2014 WL 787356 (Cal.Ct.App. Feb. 27, 2014), and added that the outcome of the civil suits did not control the administrative license revocation process. Id. at ¶ 72.

         Plaintiff also filed a civil claim under the State Tort Claims Act against the DRE on April 11, 2011. Id. at ¶ 61, and a law suit against Stepanyan, her attorneys Hickman Wyatt, HSBC Financial and investigator Jones in which he asserted claims similar to, but not identical with, the claims in this federal lawsuit. Id. at ¶ 68. That Superior Court action is denoted S.C. No. 34-2011-112097, and the amended complaint on file in that action appears as attachment 1 to ECF No. 31 in this action.

         At the hearing before this court it was revealed that Stepanyan was the only defendant remaining in that state litigation but the parties were unclear as to whether the action had been stayed, or trial had just been continued.

         PENDING MOTIONS

         A. DEFENDANT STEPANYAN'S MOTION TO DISMISS THE ...


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