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Jonathan Weiss, SBN 143895
LAW OFFICE OF JONATHAN WEISS
10576 Troon Avenue
Los Angeles, California 90064-4436
Phone: (310) 558-0404
Email: jw@lojw.com
Tavy A. Dumont, SBN 244946
LAW OFFICE OF TAVY A. DUMONT
51 East Campbell Avenue, Suite 106-K
Campbell, California 95008-2054
Telephone: (408) 866-4460
Email: tavy.dumont@dumontlaw.com
Attorneys for Plaintiffs and the Class
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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FOR THE COUNTY OF SANTA CLARA
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GARRY A. BAILEY et al, individually and on
behalf of others similarly situated,
CLASS ACTION
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Plaintiffs,
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v.
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Case No.: 1-10-CV-179515
HAFFAR & ASSOCIATES et al,
Defendants.
[PROPOSED] ORDER GRANTING AS TO
DEFENDANTS GLENN HINTON, DAYLIGHT
TECHNOLOGIES AND AMWEST CAPITAL
MORTGAGE, AND DENYING AS TO
DEFENDANT MICHAEL NAZARINIA,
PLAINTIFFS’ MOTIONS UNDER CIVIL
CODE § 1781(c)(3) FOR A DETERMINATION
THAT THERE IS NO DEFENSE TO
PLAINTIFFS’ CLRA CLAIMS
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[Hon. James P. Kleinberg]
Hearing Date: June 21, 2013
Hearing Time: 9:00 a.m.
Dept. 1
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[PROPOSED] ORDER ON PLAINTIFFS’ MOTIONS FOR DETERMINATION UNDER CIV. CODE § 1781(C)(3)
ORDER
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This is a putative class action brought by plaintiffs Garry A. Bailey and Brooke T. Bailey (the
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“Baileys”) individually and on behalf of approximately eleven hundred individuals (collectively
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“Plaintiffs”) who paid about $3.8 million in advance fees for “loan modification” services to defendants
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Daylight Technologies, Inc. (“Daylight Technologies”), Charles Everette Rose (“Rose”), Amwest
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Capital Mortgage (“Amwest”), Glenn Hinton (“Hinton”) and Michael Nazarinia (“Nazarinia”)
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(collectively “Defendants”). These defendants allegedly created a mortgage loan modification scheme
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and recruited then-inactive attorney Mohamed Fouzi Haffar (“Haffar”) to lend his name to the operation.
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Plaintiffs allege that under the name Haffar & Associates, Defendants used “robo-dialers” to solicit
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hundreds of thousands of homeowners throughout California, collected advance “legal” fees from them
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purportedly for loan modification services, provided services of little or no value, and refused to refund
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the unearned fees.
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The operative Second Amended Complaint (“SAC”) asserts eight class claims for: (1) violations
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of the Consumer Legal Remedies Act (“CLRA”) (against all Defendants); (2) breach of fiduciary duty
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(against Haffar); (3) conspiracy to breach fiduciary duty (against Daylight Technologies, Rose, Amwest,
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Hinton and Nazarinia); (4) violations of Business and Professions Code section 6150, et seq. (against all
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Defendants); (5) violations of the Civil RICO Statute, 18 U.S.C. § 1962(c) (against Haffar, Nazarinia,
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Daylight Technologies, Rose, Amwest and Hinton); (6) conspiracy to violate the Civil RICO Statute, 18
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U.S.C. § 1962(d)) (against Haffar, Nazarinia, Daylight Technologies, Rose, Amwest and Hinton); (7)
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violations of the Unfair Competition Law (against all Defendants); and (8) negligence (against Daylight
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Technologies, Amwest and Hinton); The SAC asserts three individual claims by the Baileys for: (9)
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professional negligence (against Haffar); (10) interference with contractual relations (against all
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Defendants); and (11) fraud (against all Defendants).
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On or about January 13, 2012, Plaintiffs’ motion for class certification was granted.
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On March 27, 2012, default was entered against Haffar and Haffar & Associates. On May 21,
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2012, default was entered against Rose.
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[PROPOSED] ORDER ON PLAINTIFFS’ MOTIONS FOR DETERMINATION UNDER CIV. CODE § 1781(C)(3)
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Plaintiffs now move for a determination that there is no defense to the CLRA claims against
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Hinton, Daylight Technologies, Amwest, and Capital Mortgage. Plaintiffs separately move for a
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determination that there is no defense to the CLRA claims against Nazarinia.
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Judicial Notice
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Plaintiffs request judicial notice of: (1) “Stipulation Re Facts, Conclusions of Law and
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Disposition and Order Approving: Order of Involuntary Inactive Enrollment, in the Matter of
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MOHAMED FOUZI HAFFAR, Bar # 235731”; (2) the fact of Haffar’s disbarment, as evidenced by the
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State Bar of California’s website page (Exhs. A, B to RJN); (3) First Amended Complaint (“FAC”) in
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this action (docket no. 66); (4) Verified Answer of Hinton, Daylight Technologies, and Amwest to the
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FAC (docket no. 89); (5) General Denial of Hinton, Daylight Technologies, and Amwest to the SAC
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(docket no. 160); (6) Verified Answer of Nazarinia to the FAC (docket no. 83); and (7) Verified Answer
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of Nazarinia to the SAC (docket no. 215).
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The request is GRANTED. Judicial notice of the fact of Haffar’s disbarment and the official
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records of the State Bar of California reflecting this is proper under Evidence Code section 452,
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subdivisions (c) and (h). Judicial notice of court records filed in this case is proper under Evidence Code
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section 452, subdivision (d).
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CLRA
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The CLRA prohibits any person from engaging in unlawful or deceptive acts or practices
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intended to result in the sale or lease of goods or services to any consumer. (Civ. Code § 1770, subd.
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(a).) “‘Services’ means work, labor, and services for other than a commercial or business use, including
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services furnished in connection with the sale or repair of goods.” (Civ. Code, § 1761, subd. (b).)
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“‘Consumer’ means an individual who seeks or acquires, by purchase or lease, any goods or services for
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personal, family, or household purposes.” (Id., subd. (d).) “‘Transaction’ means an agreement between a
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consumer and another person, whether or not the agreement is a contract enforceable by action, and
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includes the making of, and the performance pursuant to, that agreement.” (Id., subd. (e).) The CLRA is
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to be liberally construed, and the remedies it provides are cumulative to any other procedures or
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remedies for any violation or conduct provided for in any other law. (Civ. Code, §§ 1752, 1760.)
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[PROPOSED] ORDER ON PLAINTIFFS’ MOTIONS FOR DETERMINATION UNDER CIV. CODE § 1781(C)(3)
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“Any consumer who suffers any damage as a result of the use or employment by any person of a
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method, act, or practice declared to be unlawful by Section 1770 may bring an action against that person
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to recover or obtain any of the following: [¶] (1) Actual damages, but in no case shall the total award of
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damages in a class action be less than one thousand dollars ($1,000). [¶] (2) An order enjoining the
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methods, acts, or practices. [¶] (3) Restitution of property. [¶] (4) Punitive damages. [¶] (5) Any other
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relief that the court deems proper.” (Civ. Code, § 1680, subd. (a).)
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“Any consumer entitled to bring an action under Section 1780 may, if the unlawful method, act,
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or practice has caused damage to other consumers similarly situated, bring an action on behalf of himself
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and such other consumers to recover damages or obtain other relief as provided for in Section 1780.”
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(Civ. Code, § 1781, subd. (a).) “If notice of the time and place of the hearing is served upon the other
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parties at least 10 days prior thereto, the court shall hold a hearing, upon motion of any party to the
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action which is supported by affidavit of any person or persons having knowledge of the facts, to
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determine if any of the following apply to the action: . . . .(3) The action is without merit or there is no
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defense to the action.” (Civ. Code, § 1781, subd. (c)(3).)
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Although section 1781 subdivision (c) provides that “[a] motion based upon Section 437c of the
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Code of Civil Procedure shall not be granted in any action commenced as a class action pursuant to
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subdivision (a)[,]” “[i]n practice, courts nevertheless have applied the standards applicable to motions for
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summary judgment and summary adjudication in deciding motions for no-merit determinations.
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[Citations.] (Smith v. Wells Fargo Bank, N.A. (2005) 135 Cal.App.4th 1463, 1474–1475.) On summary
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judgment, the moving party “bears an initial burden of production to make a prima facie showing of the
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nonexistence of any triable issue of material fact.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826,
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850.) Where a plaintiff seeks summary judgment, the burden is to produce admissible evidence on each
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element of a cause of action entitling it to judgment. (See Code Civ. Proc., § 437c, subd. (p)(1); Hunter
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v. Pacific Mechanical Corp. (1995) 37 Cal.App.4th 1282, 1287.) The Court must liberally construe
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evidence in support of the party opposing summary judgment and resolve all doubts concerning the
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evidence in favor of that party. (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)
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[PROPOSED] ORDER ON PLAINTIFFS’ MOTIONS FOR DETERMINATION UNDER CIV. CODE § 1781(C)(3)
Plaintiffs’ Motion for Determination of No Defense against Hinton, Daylight Technologies, and
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Amwest
In the SAC, Plaintiffs allege that Defendants violated the CLRA by: (1) falsely representing that
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services would be performed by an attorney, in violation of Civil Code section 1770, subdivisions (a)(1),
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(2), (3) and (5);1 (2) falsely representing that Defendants would perform a forensic loan audit, that
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Defendants operate at a 98% success rate and that cases would be in the hands of professional attorneys,
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in violation of section 1770, subdivisions (a)(3), (5), (9);2 and (3) falsely representing that advance fees
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may be charged for loan modification services, that the fees are earned up-front and need not be
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deposited into an Attorney-Client Trust Account, that Defendants may refuse to refund unearned fees,
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and that the consumer waives any right of action arising out of the contract, even if the right of action
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arose by reason of the consumer following Defendants’ recommendations, and by requiring a power of
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attorney as part of the contract, in violation of section 1770, subdivisions (a)(14), (19).3
Plaintiffs submit that:
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Daylight Technologies violated the CLRA’s prohibitions against passing off services as those of
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another (§ 1770, subd. (a)(1)) and misrepresenting the source and approval of services as well as
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the affiliation, connection and association of persons (§ 1770, subd. (a)(2), (3), and (5)) by
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training and paying telemarketers to falsely represent that for a $3,500 advance, loan
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modification services would be performed by an attorney and the case would be “in the hands of
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professional attorneys.” (Pltfs’ Sep. St. of Material Facts [“MF”] 1-2.)
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No attorneys performed any services. (Pltfs’ MF 3.) While Haffar was an attorney, he did not
perform loan modification services. (Pltfs’ MF 4.)
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Daylight Technologies violated the CLRA’s prohibition against representing that transactions
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involved rights and obligations which were prohibited by law (§ 1770, subd. (a)(14)) because it
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trained and paid telemarketers to falsely represent that collecting advance fees was legal. (Pltfs’
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MF 11.) According to Plaintiffs, before October 11, 2009, when the Legislature enacted Civil
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Code section 2944.7 prohibiting everyone from charging advance fees for loan modification
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SAC ¶¶ 55-56.
SAC ¶¶ 57-58.
SAC ¶¶ 59-60.
Page 5
[PROPOSED] ORDER ON PLAINTIFFS’ MOTIONS FOR DETERMINATION UNDER CIV. CODE § 1781(C)(3)
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services, the only groups that could charge advance fees for loan modification services were (1) a
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Department of Real estate (“DRE”) licensee with written approval (e.g., a DRE “No-Objection
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Letter”), and (2) an attorney rendering legal services to a client, but in the Defendants’ loan
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modification scheme, Hinton, Amwest and Haffar did not possess a DRE “No-Objection Letter”,
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and Haffar did not perform loan modification services (Pltfs’ MF 4).
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Nazarinia was neither a DRE licensee nor an attorney (Pltfs’ MF 6-7).
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A group of non-attorneys led by Nazarinia performed what loan modification services were
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provided, and all information and legal advice that clients received from Haffar’s office was
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given by the non-attorney staff (Pltfs’ MF 5). An attorney did not supervise the services. (Pltfs’
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MF 8). The arrangement gave Nazarinia the right to control and determine the methods and
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means of performing the loan modification services (Pltfs’ MF 9).
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Throughout the class period, Haffar & Associates charged clients advance fees to be paid by
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either a cashier’s check directly into Haffar & Associates’ Wells Fargo bank account or by
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charging their credit cards (Pltfs’ MF 10).
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Daylight Technologies violated the CLRA’s prohibition against representing that transactions
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involved rights and obligations which they do not have or which were prohibited by law and
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inserting unconscionable provisions in a contract (§ 1770, subd. (a)(14), (19)) by representing in
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form contracts sent to the Class Members that fees collected in advance were “earned as up front
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fees and need not be deposited into an Attorney-Client Trust Account” (Pltfs’ MF 13). Plaintiffs
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submit that this violated California Rules of Professional Conduct, Rule 4-100(A).
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Plaintiffs argue that when Daylight Technologies obtained the Class Members’ agreement to
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retain Haffar & Associates (Pltfs’ MF 14), there was a CLRA “transaction” (e.g., an agreement between
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a consumer and another person, § 1761, subd. (e)), and this transaction resulted in the sale of “services”
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for purposes of section 1761 subdivision (b), because Haffar & Associates was retained for home
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mortgage loan modification services. Plaintiffs contend that the Class Members are “consumers” for
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purposes of section 1761 subdivision (d) because they are individuals who sought to acquire services for
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personal, family, or household purposes (Pltfs’ MF 15, 17).
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[PROPOSED] ORDER ON PLAINTIFFS’ MOTIONS FOR DETERMINATION UNDER CIV. CODE § 1781(C)(3)
Plaintiffs argue they actually relied on Daylight Technologies’ misrepresentations in that they
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would not have paid Haffar & Associates advance fees had they not been solicited to make advance fees
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and led to believe that Haffar & Associates’ attorneys could successfully obtain a loan modification, and
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that the advance fees were legal (Pltfs’ MF 18). Plaintiffs argue they and the Class Members were
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harmed in that they paid for attorney services they did not receive (Pltfs’ MF 19).
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Plaintiffs argue the circumstantial evidence demonstrates that Hinton, Amwest, Daylight
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Technologies, and Nazarinia are co-conspirators. Plaintiffs submit the following evidence in support of
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the alleged conspiracy:
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A group of 35 telemarketers were instructed to phone prospective clients and tell them that for a
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$3,500 fee, deposited directly into Haffar & Associates’ bank account (the “9714 account”),
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mortgage loan modification was guaranteed (Pltfs’ MF 20-24);
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The telemarketers worked in office space leased by Amwest (Pltfs’ MF 25) and were paid
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commissions via checks drawn on Daylight Technologies’ bank account (the “1013 account”),
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signed by Hinton (Pltfs’ MF 25-27);
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The telemarketers were instructed to make false representations (Pltfs’ MF 28);
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After the homeowner paid the fee, the homeowner was transferred to Nazarinia, who held
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himself out as Haffar & Associates’ “Operations Manager” and “Director of Operations” and
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managed the non-attorney group that provided the loan modification services (Pltfs’ MF 30-32);
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Haffar allowed the non-attorney defendants to use his name to charge advance fees both before
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and after October 11, 2009 (Pltfs’ MF 33-34) and allowed them to represent that Haffar &
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Associates was exempt from the new law.
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services (Pltfs’ MF 35);
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Rose trained and supervised the telemarketers and solicited clients himself by telephone coldcalling (Pltfs’ MF 36, 37);
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Haffar was disbarred on June 21, 2012 due to his acts related to the offer of loan modification
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Nazarinia provided the loan modification services and did so not as an employee of Haffar &
Associates nor as an independent contractor, as he received neither a W-2 nor 1099 forms from
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[PROPOSED] ORDER ON PLAINTIFFS’ MOTIONS FOR DETERMINATION UNDER CIV. CODE § 1781(C)(3)
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Haffar & Associates (Pltfs’ MF 38-40); rather, he worked for a percentage of the fee (Pltfs’ MF
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41);
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against their lender (Pltfs’ MF 42);
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Nazarinia also gave legal advice, advising Class Members regarding bankruptcy and litigation
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After the telemarketing conspiracy began in November 2008, monthly deposits in the 9714
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account jumped sharply (Pltfs’ MF 43-47), and Daylight Technologies’ deposits also rose sharply
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in the same months (Pltfs’ MF 48); transfers from Haffar’s account to Daylight Technologies’
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account rose sharply as well (Pltfs’ MF 49-52);
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About 22% of Haffar & Associates’ receipts went to Nazarinia each month (Pltfs’ MF 53). As of
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mid-August 2009, the weekly checks from Haffar & Associates to Daylight stopped, and Haffar
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& Associates started writing large weekly checks on the 9714 account to Nazarinia (Pltfs’ MF
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56), who endorsed the checks bearing the memo “DT” to Daylight Technologies (Pltfs’ MF 57-
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61), and this continued until September 2010 when the Hinton-Rose-Nazarinia-Haffar
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partnership broke up (Pltfs’ MF 62). The payments from Haffar & Associates to Daylight
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Technologies were not pursuant to any legitimate contract for services, as Hinton stated under
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penalty of perjury that neither he nor his companies provided any services to or received
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payments for services from any other Defendant (Pltfs’ MF 63, 64).
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Plaintiffs submit that Hinton’s wrongful acts in furtherance of the conspiracy include: controlling
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Daylight Technologies and Amwest (Pltfs’ MF 65); signing checks that paid the telemarketers their split
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of advance fees (Pltfs’ MF 26-27); guaranteeing Amwest’s lease of office space where the telemarketers
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operated (Pltfs’ MF 25, 66); approving Nazarinia’s proposal to renege on Haffar & Associates’ refund
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policy by telling clients that “the full fee has been earned for the plan developed and refund is off the
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table completely…” (Pltfs’ MF 67); and participating in an email conversation with Nazarinia where the
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percentage split of fees between the Defendants was discussed (Pltfs’ MF 68). Plaintiffs submit that
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Daylight Technologies’ wrongful acts in furtherance of the conspiracy include: paying a $600
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commission to cappers who succeeded in convincing a homeowner to pay $3,500 in advance legal fees
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(Pltfs’ MF 69, 70). Plaintiffs submit that Amwest’s wrongful acts in furtherance of the conspiracy
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[PROPOSED] ORDER ON PLAINTIFFS’ MOTIONS FOR DETERMINATION UNDER CIV. CODE § 1781(C)(3)
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include: furnishing the premises where cappers operated (Pltfs’ MF 25); and leasing the premises on
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November 1, 2009 immediately before telemarketers moved in (Pltfs’ MF 71-72).
Plaintiffs submit that Hinton, Daylight Technologies and Amwest cannot show a defense to the
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action because they filed a joint verified Answer to the First Amended Complaint (“FAC”) admitting the
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FAC’s allegation regarding payment to salespersons of commissions for convincing them to pay advance
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fees.4 Plaintiffs contend that while Hinton, Daylight Technologies and Amwest denied the allegations
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regarding CLRA violations on lack of information and belief and asserted 26 affirmative defenses to the
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complaints (Pltfs’ MF 75-77), their discovery responses were factually devoid. Circumstantial evidence
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supporting a summary judgment motion can consist of “factually devoid” discovery responses from
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which an absence of evidence can be inferred. (See Andrews v. Foster Wheeler LLC (2006) 138
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Cal.App.4th 96, 101.) Plaintiffs submit that in response to Form Interrogatory 15.1 asking Hinton to state
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all facts and identify all witnesses and documents supporting the denials of material allegations and
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affirmative defenses asserted (Pltfs’ MF 78), Hinton responded that the denials and affirmative defenses
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were based upon his lack of knowledge sufficient to answer the allegations of the complaints. (Pltfs’ MF
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79.) In responses to Plaintiffs’ supplemental interrogatory, Hinton still did not provide any facts
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supporting his denials and defenses (Pltfs’ MF 80-81).
The Court finds that Plaintiffs carry their burden of showing that Hinton, Daylight Technologies
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and Amwest engaged in unlawful or deceptive acts or practices in “transactions” and in the sale of
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“services” to “consumers” for purposes of the CLRA. (See Civ. Code, §§ 1761, subds. (b), (d), (e); 1770,
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subd. (a).) Plaintiffs demonstrate that Hinton, Daylight Technologies and Amwest made
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misrepresentations that loan modification services would be performed by an attorney, that advance fees
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could be charged, and that fees were earned up-front and did not need to be deposited into an Attorney-
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Client Trust Account, and they inserted an unconscionable provision in the contracts.
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Plaintiffs also demonstrate that Hinton, Daylight Technologies, and Amwest were engaged in a
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conspiracy. “To state a cause of action for conspiracy, the complaint must allege (1) the formation and
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operation of the conspiracy, (2) the wrongful act or acts done pursuant thereto, and (3) the damage
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resulting from such act or acts. [Citations.]” (Wise v. Southern Pacific Co. (1963) 223 Cal.App.2d 50,
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See FAC ¶¶ 39-40; Answer ¶¶ 39-40; Pltfs’ MF 69-70.
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[PROPOSED] ORDER ON PLAINTIFFS’ MOTIONS FOR DETERMINATION UNDER CIV. CODE § 1781(C)(3)
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64-65.) “As long as two or more persons agree to perform a wrongful act, the law places civil liability
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for the resulting damage on all of them, regardless of whether they actually commit the tort
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themselves.…Therefore a plaintiff is entitled to damages from those defendants who concurred in the
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tortious scheme with knowledge of its unlawful purpose. Furthermore, the requisite concurrence and
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knowledge may be inferred from the nature of the acts done, the relation of the parties, the interests of
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the alleged conspirators, and other circumstances. Tacit consent as well as express approval will suffice
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to hold a person liable as a coconspirator.” (Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 785,
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original emphasis, internal citations and quotation marks omitted.) Plaintiffs submit circumstantial
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evidence showing monetary transactions between the bank accounts of Haffar & Associates and
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Daylight Technologies, as well as Hinton’s and Amwest’s wrongful acts done in furtherance of the
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telemarketing scheme in order to infer their tacit consent.
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The motion is not opposed by Hinton, Daylight Technologies and Amwest and is therefore
GRANTED as to Hinton, Daylight Technologies, and Amwest.
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Motion for Determination of No Defense Against Nazarinia
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Plaintiffs’ motion against Nazarina repeats many of the material facts and arguments made in the
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prior motion. With regard to Nazarinia, Plaintiffs submit that he was neither a DRE licensee nor an
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attorney (Pltfs’ MF 6-7), and thus, he could only perform loan modification services under attorney
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supervision, but an attorney did not supervise him (MF 8). Plaintiffs submit that the arrangement under
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the loan modification scheme gave Nazarinia “the right to control and determine the methods and means
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of performing the [loan modification] services.” (Pltfs’ MF 9.) Plaintiffs submit that when prospective
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clients had concerns about eligibility, telemarketers referred them to Nazarinia and his group (Pltfs’ MF
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14), and Nazarinia advised the prospective clients that Haffar & Associates’ services would make them
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excellent candidates to get loan modifications (Pltfs’ MF 15). Plaintiffs argue Nazarinia thus
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misrepresented that the services have benefits which they do not have in violation of Civil Code section
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1770, subdivision (a)(5).
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Plaintiffs further submit that Nazarinia assisted Daylight Technologies’ telemarketers by helping
develop the form contract requiring up-front fees (Pltfs’ MF 13, 65) and giving legal advice to Class
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[PROPOSED] ORDER ON PLAINTIFFS’ MOTIONS FOR DETERMINATION UNDER CIV. CODE § 1781(C)(3)
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Members regarding bankruptcy and litigation against the clients’ lenders (Pltfs’ MF 63). Plaintiffs
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submit that after homeowners paid the advance fee, they were transferred to Nazarinia who held himself
3
out as Operations Manager and Director of Operations (Pltfs’ MF 34), and that he managed the non-
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attorney group that ostensibly provided the loan modification services (Pltfs’ MF 35). Plaintiffs submit
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that Nazarinia told clients it was legal after October 11, 2009 for Defendants to collect up-front fees
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because the fees were charged for the first part of the loan modification process, and the latter part was
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performed at no charge (Pltfs’ MF 64).
Plaintiffs argue Nazarinia furthered the conspiracy by providing false assurances to prospective
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9
loan modification clients, maintaining the illusion that attorneys were involved, assisting in the
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development of Haffar & Associates’ contract, providing loan modification services as a non-attorney
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for a percentage of the fee (Pltfs’ MF 68), and acting as the “bag man presenting weekly checks to Wells
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Fargo for payment and giving his co-conspirators their cut (Pltfs’ MF 58-59).
Plaintiffs submit that Nazarinia filed a verified Answer denying the CLRA allegations on lack of
13
14
information and belief and asserting 19 affirmative defenses (Pltfs’ MF 72). In response to Form
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Interrogatory 15.1, Nazarinia responded by incorporating his Answer and reserving the right to
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supplement his response (Pltfs’ MF 74). In response to supplemental interrogatories, Nazarinia still did
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not provide any facts (Pltfs’ MF 75-76.)
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Procedural Issues
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In opposition, Nazarinia raises two procedural challenges to the motion. First, Nazarinia argues
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that service of the motion was defective because Plaintiffs did not follow the notice requirements for
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motions for summary judgment (Cal. Code Civ. Proc., § 437c, subd. (a) [75 days’ notice before
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hearing].)
Nazarinia’s argument is based on the incorrect premise that “the CLRA does not provide
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information regarding service that must accompany the filing of a section 1781(c)(3)
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motion[.]”5However, Civil Code section 1781 subdivision (c) of the CLRA requires only 10 days’ notice
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prior to the hearing on a motion for determination of no defense. Here, Plaintiffs served Nazarinia with
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5
Nazarinia’s Memo. in Opp. to Pltfs’ Mot. for Det. of No Def. at p. 7.
Page 11
[PROPOSED] ORDER ON PLAINTIFFS’ MOTIONS FOR DETERMINATION UNDER CIV. CODE § 1781(C)(3)
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the notice of motion through the Court’s e-filing system on April 11, 2013, which was 22 days before the
2
original May 3, 2013 hearing date.6 The Court finds that the motion was properly noticed.
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Next, Nazarinia argues Plaintiffs failed to provide notice of the CLRA claims prior to filing suit.
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Nazarinia argues that any CLRA notice to Haffar & Associates was insufficient because Nazarinia filed
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a declaration in this case on February 25, 2011 saying he was no longer represented by Haffar &
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Associates as of February 2, 2011.
Civil Code section 1782 provides in relevant part:
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8
Thirty days or more prior to the commencement of an action for damages pursuant to this
title, the consumer shall do the following:
(1) Notify the person alleged to have employed or committed methods, acts, or practices
declared unlawful by Section 1770 of the particular alleged violations of Section 1770.
(2) Demand that the person correct, repair, replace, or otherwise rectify the goods or
services alleged to be in violation of Section 1770.
The notice shall be in writing and shall be sent by certified or registered mail, return
receipt requested, to the place where the transaction occurred or to the person’s principal
place of business within California.
9
10
11
12
13
14
(Cal. Civ. Code, § 1782, subd. (a).)
15
In reply, Plaintiffs submit that they mailed their CLRA notice on August 6, 2010 to Nazarinia at
16
Haffar & Associates by certified mail, and it was delivered and signed for on August 9, 2010.7 Thus,
17
Plaintiffs mailed the CLRA notice to Nazarinia at the place where the transaction occurred and/or his
18
principal place of business before February 2, 2011 when his association with Haffar & Associates
19
purportedly ended. The Court finds that Plaintiffs provided the required CLRA notice to Nazarinia.8
20
CLRA “Services”
21
Nazarinia argues that loan modification does not fall within the definition of “services” for
22
purposes of the CLRA. Nazarinia cites a number of cases holding that mortgages and their related
23
6
The motion was thereafter continued to June 21, 2013.
See Decl. Tavy A. Dumont ISO Pltfs’ Reply Re Mot. for Det. of No Def. ¶ 6.
8
Nazarinia also seems to raise an issue regarding the 30-day requirement under section 1782. While the August 9, 2010
delivery of the CLRA notice was not 30 days before commencement of the action on August 13, 2010, Plaintiffs did not seek
damages in their original CLRA claim, only injunctive relief. (See Compl. ¶ 64, prayer at ¶ 4.) “An action for injunctive relief
brought under the specific provisions of Section 1770 may be commenced without compliance with subdivision (a).” (Civ.
Code, § 1782, subd. (d).) The operative SAC now asserts a claim for CLRA damages, but the SAC was filed more than 30
days after commencement of the action for injunctive relief. (See Civ. Code, § 1782, subd. (d) [“Not less than 30 days after
the commencement of an action for injunctive relief, and after compliance with subdivision (a), the consumer may amend his
or her complaint without leave of court to include a request for damages.].) The Court finds no noncompliance with the notice
requirements of Civil Code section 1782.
7
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services are not goods or services within the meaning of the CLRA: Consumer Solutions Reo, LLC v.
2
Hilery (N.D. Cal. 2009) 658 F.Supp.2d 1002, 1016; Becker v. Wells Fargo Bank, N.A., Inc., 2011 U.S.
3
Dist. LEXIS 29687 at *38-40; Barajas v. Countrywide Home Loans, Inc., 2012 U.S. Dist. LEXIS 24237
4
at *7; Sonoda v. Amerisave Mortg. Corp., 2011 U.S. Dist. LEXIS 73940 at *8-10. Nazarinia argues these
5
cases are based on Fairbanks v. Superior Court (2009) 46 Cal.4th 56, in which the California Supreme
6
Court held that life insurance policies and ancillary services are not “services” within the meaning of the
7
CLRA.
8
In Berry v. Am. Express Publishing, Inc. (2007) 147 Cal.App.4th 224, the Court of Appeal held
9
that the extension of credit, such as issuing a credit card, separate and apart from the sale or lease of any
10
specific goods or services, does not fall within CLRA’s scope. (Berry, supra, 147 Cal.App.4th at p. 227.)
11
The U.S. District Court in Consumer Solutions cited Berry and found that the CLRA did not apply
12
because the plaintiff “has challenged only the validity of the mortgage loan and not any nonancillary
13
services related to the loan[.]” (Consumer Solutions, supra, 658 F.Supp.2d at p. 1016.) The court
14
distinguished cases cited by the plaintiff as involving creditors who “provided additional services over
15
and above the extension of credit”, while in the subject case, the plaintiff was “not challenging services
16
related to the mortgage loan but rather the validity of the mortgage loan itself.” (Ibid.)
17
However, the instant case does not involve transactions over the mortgage loans themselves or
18
ancillary services to those loans against the original lenders. Rather, the case involves contracts for legal
19
services to assist homeowners in dealing with their mortgage lenders to prevent foreclosures. (See Pltfs’
20
MF 1, in which telemarketers advertised that once the homeowner pays fees, Haffar & Associates would
21
“unleash” the attorney on the bank to prevent foreclosures.) The “ancillary services” discussed in
22
Fairbanks were services provided by the insurers to prospective customers to assist them in selecting
23
suitable products, and to give additional customer services related to the maintenance, value, use,
24
redemption, resale, or repayment of the intangible item.” (Fairbanks, supra, 46 Cal.4th p. 65.) Here,
25
Haffar & Associates’ advertised loan modification services were not providing ancillary work for
26
mortgage lenders. Instead, Haffar & Associates promised to provide work or labor to protect against the
27
bank’s foreclosure. Such services do not fall within the Berry and Fairbanks line of cases cited by
28
Plaintiffs. The U.S. District Court in Sonoda made this distinction clear in dicta: “To be sure, if
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Amerisave was not loaning money but instead acted only as a broker for other third-party lenders, then
2
arguably what Amerisave was selling was its work or labor in finding a loan for Plaintiffs (rather than
3
negotiating terms of it own loans). Such brokerage services might well qualify as ‘services’ under the
4
CLRA.” (Sonoda, supra, at *10.) The Court finds that the advertised loan modification services meet the
5
CLRA’s definition of “services” under section 1761 subdivision (b).
6
Nazarinia’s Liability as Co-Conspirator
7
Despite his attempts to dispute many of Plaintiffs’ material facts or evidence of wrongdoing by
8
the other defendants, he does not actually do so. Nazarinia does dispute that Haffar performed some loan
9
modification services, but this would not raise a triable issue on other alleged misrepresentations (e.g.,
10
that fees were earned up front and fees need not be deposited into an attorney client trust account).
Nazarinia submits that he is not Haffar & Associates, Daylight Technologies or Hinton, and he
11
12
did not personally make misrepresentations to Class members. Nazarinia further submits that he had no
13
control over Daylight Technologies’ practices, and he contends that he took instruction, supervision and
14
direction from Haffar. (See Nazarinia’s MF 9.) Nazarinia disputes that he provided legal advice to Class
15
Members, saying he was trained by Haffar regarding what to say (Nazarinia’s MF 63). Nazarinia also
16
disputes that that he advised Plaintiffs after October 11, 2009 that it was legal for Defendants to collect
17
upfront fees (Nazarinia’s MF 64) and that he assisted in developing Haffar & Associates’ contract
18
(Nazarinia’s MF 65), arguing instead that he was only asked by Haffar to tell Rose and Hinton to use the
19
new contracts after discussions with David Carr and Martin Andelman regarding the October 11, 2009
20
law.
21
Plaintiffs argue that Nazarinia’s liability is based on his participation in a conspiracy with his
22
employer and his financial gain therefrom. However, Nazarinia raises triable disputes as to whether he
23
simply took instruction from Haffar, and whether he took a percentage of the fees generated by the
24
alleged conspiracy. Nazarinia disputes that homeowners were transferred to him personally, as opposed
25
to the downtown office at Haffar’s instruction. (See Nazarinia’s MF 33.) Nazarinia disputes that he
26
managed a non-attorney group that provided loan modification services, stating that he was supervised
27
by Haffar. (Nazarinia’s MF 35.) Nazarinia denies that he ever used Haffar’s name to charge advance
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fees, and he contends his role was simply to help manage difficult cases and speak with difficult clients
2
at the downtown office, under Haffar’s supervision and control. (Nazarinia’s MF 36.)
3
Nazarinia further contends that he was not aware of any monetary transactions between the bank
4
accounts of Haffar & Associates and Daylight Technologies (Nazarinia’s MF 41-50, 52-53, 55).
5
Nazarinia also disputes receiving a percentage of the fees generated by the conspiracy by contending the
6
evidence does not show any agreement to pay him a percentage of the fee. Nazarinia submits that he
7
received 22% of Haffar & Associates’ receipts because he was responsible for paying the downtown
8
staff and Daylight Technologies’ invoices (Nazarinia’s MF 51, 54, 58-59). Nazarinia disputes that he
9
was a partner with Rose, Haffar and Hinton (Nazarinia’s MF 60).
10
The Court finds that Nazarinia’s evidence is sufficient to raise a triable issue on his knowledge
11
and furtherance of the alleged conspiracy. “[A] cause of action for civil conspiracy may not arise ‘if the
12
alleged conspirator, though a participant in the agreement underlying the injury, was not personally
13
bound by the duty violated by the wrongdoing and was acting only as the agent or employee of the party
14
who did have that duty.’” However, “[c]onspiracy liability may properly be imposed on nonfiduciary
15
agents or attorneys for conduct which they carry out not simply as agents or employees of fiduciary
16
defendants, but in furtherance of their own financial gain. [Citations.]” (Skarbrevik v. Cohen, England &
17
Whitfield (1991) 231 Cal.App.3d 692, 709-710.) Here, Nazarinia sufficiently raises a triable dispute as to
18
whether he was acting only as an agent of Haffar & Associates rather than as a co-conspirator. Nazarinia
19
also disputes the evidence that he acted in furtherance of his own financial gain, arguing that he received
20
portions of Haffar & Associates’ receipts for payroll and other payment purposes.
21
For these reasons, Plaintiffs’ motion for a determination of no defense to the CLRA claims
22
against Nazarinia is DENIED.
23
IT IS SO ORDERED.
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Dated: ______________, 2013
_______________________________________
THE HONORABLE JAMES P. KLEINBERG
JUDGE OF THE SUPERIOR COURT
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