Garvin et al v. Ramirez et al

Filing 253

ORDER GRANTING 228 Plaintiffs' Motion for Adverse Inferences against Defendant Jesus Chavez. See order for details. Signed by Magistrate Judge Howard R. Lloyd on 3/8/2011. (hrllc1, COURT STAFF) (Filed on 3/8/2011)

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Garvin et al v. Tran, et al Doc. 253 1 2 3 4 5 6 7 8 9 10 ** E-filed March 8, 2011 ** NOT FOR CITATION IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION MARIA A. GARVIN, et al., Plaintiffs, v. LINDA TRAN, et al., No. C07-01571 HRL ORDER GRANTING PLAINTIFFS' MOTION FOR ORDER FOR ADVERSE INFERENCES AGAINST DEFENDANT JESUS CHAVEZ [Re: Docket No. 228] United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 For the Northern District of California Defendants. ____________________________________/ BACKGROUND In this predatory home mortgage loan action, Plaintiffs allege numerous claims against Jesus Chavez ("Chavez") and many other defendants (collectively "Defendants"). Docket No. 50. Plaintiffs allege that Defendants preyed upon them through predatory and abusive lending practices, which included making misrepresentations about essential terms of loans, using bait-and-switch tactics and duress, charging unreasonable and unearned fees, falsifying information on loan applications, failing to translate important loan documents from English to Spanish, and including unexpected terms allowing for balloon payments, prepayment penalties, and negative amortization. Accordingly, Plaintiffs have sued Chavez, a real estate agent, for violation of (1) the Fair Housing Amendments Act, 42 U.S.C. 3601, et seq.; (2) the Real Estate Settlement Procedures Act, 12 U.S.C. 2601, et seq.; (3) the Fair Employment and Housing Act, Cal. Government Code 12955, et seq.; (4) the Consumers Legal Remedies Act, Cal. Civ. Code 1760, et seq.; and for (5) breach of fiduciary duty; (6) civil conspiracy to defraud; (7) unfair competition; and (8) negligence. 1 2 3 4 5 6 7 8 9 10 Thus, in proving their case against him, Plaintiffs say that they will need to show that Chavez targeted Plaintiffs for predatory loans and discriminated against Plaintiffs because of their race and national origins; received kickbacks and unearned fees in connection with settlement services; breached his fiduciary duty to Plaintiffs; made false statements and omitted material information; misrepresented material information; was involved in a conspiracy to defraud Plaintiffs; engaged in deceptive business practices; and did not act like a reasonably prudent real estate agent. To that end, Plaintiffs deposed Chavez on January 10, 2011. During the deposition, Chavez asserted his Fifth Amendment privilege against self-incrimination 341 times and refused to answer most of Plaintiffs' questions. As a result, Plaintiffs now move for an order granting them an adverse inference instruction with respect to the information about which Chavez refused to testify. Docket No. 231 ("Motion"). Chavez opposes Plaintiffs' motion (Docket No. 245 ("Opp'n")), and oral argument was heard on March 8, 2011. LEGAL STANDARD Under the Fifth Amendment to the United States Constitution, "[n]o person . . . shall be compelled in any criminal case to be a witness against himself . . . ." U.S. CONST. amend. V. "[T]he Fifth Amendment's protections against self-incrimination can be asserted in any proceeding, be it civil, criminal, administrative, judicial, investigative or adjudicatory." Doe v. Glanzer, 232 F.3d 1258, 1263 (9th Cir. 2000) (citing Kastigar v. United States, 406 U.S. 441, 444 (1972)). "The privilege afforded not only extends to answers that would in themselves support a conviction under a federal criminal statute but likewise embraces those which would furnish a link in the chain of evidence needed to prosecute the claimant for a federal crime." Hoffman v. United States, 341 U.S. 479, 486 (1951); see also Doe, 232 F.3d at 1263 (same). "Indeed, it is enough if the responses would merely `provide a lead or clue' to evidence having a tendency to incriminate.'" United States v. Neff, 615 F.2d 1235, 1239 (9th Cir. 1980). "[T]he `privilege against self-incrimination does not depend upon the likelihood, but upon the possibility of prosecution.'" Doe, 232 F.3d at 1263 (quoting United Liquor Co. v. Gard (In re Seper), 705 F2d 1499, 1501 (9th Cir. 1983) (emphasis in original)). "But this protection must be United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 For the Northern District of California 2 1 2 3 4 5 6 7 8 9 10 confined to instances where the witness has reasonable cause to apprehend danger from a direct answer." Hoffman, 341 U.S. at 486; see also Neff, 615 F.2d at 1239. "If the threat is remote, unlikely, or speculative, the privilege does not apply . . . ." McCoy v. Comm'r., 696 F.2d 1234, 1236 (9th Cir. 1983). But while "[p]arties are free to invoke the Fifth Amendment in civil cases, but the court is equally free to draw adverse inferences from their failure of proof." SEC v. Colello, 139 F.3d 674, 677 (9th Cir. 1998). Such adverse inferences may be drawn only when "independent evidence exists of the fact to which the party refuses to answer." Doe, 232 F.3d at 1264. Such inferences may also only be drawn when "there is a substantial need for the information and there is not another less burdensome way of obtaining the information." Id. at 1265. DISCUSSION Chavez has reasonable cause to apprehend prosecution in relation to Defendants' mortgage activities, as prosecutors in this District have already alerted his counsel that he is a target of a federal investigation relating to mortgage fraud. See Opp'n, Ex. A (letter from Grant P. Fondo, Assistant United States Attorney, United States Attorney's Office for the Northern District of California, to Lou Doyle, counsel for Chavez, dated October 28, 2010.). Thus, Chavez's assertion of his Fifth Amendment right against self-incrimination is well-taken. However, this being a civil action, the Court equally free to draw adverse inferences against him in relation to information he failed to provide as a result of this assertion, as long as Plaintiffs show that independent evidence exists to support those inferences. SEC v. Colello, 139 F.3d at 677; Doe, 232 F.3d at 1264. Here, Plaintiffs have a substantial need for the information sought because Chavez was directly involved with certain Plaintiffs' home purchases and possesses unique information about those purchases. Plaintiffs have adequately shown that they cannot obtain such unique information in other less burdensome ways. Therefore, upon review of Plaintiffs' motion and the supporting declarations and documents, the Court has determined that sufficient independent evidence exists to support drawing adverse inferences against Chavez as to the following: Chavez is familiar with plaintiff Propero Torralba ("Torralba") United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 For the Northern District of California 3 1 2 3 4 5 6 7 8 9 10 Chavez acted as Torralba's real estate agent and had called Torralba on the telephone Chavez acted as a "cooperative agent" Chavez asked Torralba about his income and Torralba told Chavez how much he could afford to pay each month toward a home mortgage Chavez showed homes to Torralba and his wife Chavez is familiar with plaintiff Juan Ramirez ("Ramirez") Chavez acted as Ramirez's real estate agent Ramirez told Chavez that he was interested in purchasing a home and sought Chavez's assistance for that purpose Chavez ran a credit report with respect to Ramirez Chavez referred Ramirez to defendant Linda Tran ("Tran") for financing Chavez made representations to Ramirez about his ability to purchase a home Chavez showed homes to Ramirez and his wife Chavez was familiar with a property at 2788 Cramer Circle, San Jose, California and recommended that Ramirez offer to purchase the property for more than its listed sale price and that Ramirez did so United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 For the Northern District of California Chavez was present when Ramirez executed loan documents Chavez helped Torralba and Ramirez to obtain down payment assistance through defendant Palacio Mortgage and knew that Tran referred clients to Palacio Mortgage in this regard Chavez did not provide either Torralba and Ramirez with Spanish-language copies or English-to-Spanish translations of loan documents, and his meetings with them were conducted in Spanish Chavez is familiar with and referred business to Palacio Mortgage and Tran Chavez asked for preapproval letters and loan terms from Tran As to all of Plaintiffs' other requested adverse inferences, the Court finds that sufficient independent evidence does not exist to support such inferences being taken. 4 1 2 3 4 5 6 7 8 9 10 IT IS SO ORDERED. Dated: March 8, 2011 CONCLUSION Based on the foregoing, the Court GRANTS Plaintiffs' motion. Adverse inferences may be drawn against Chavez as to the above-listed information only. HOWARD R. LLOYD UNITED STATES MAGISTRATE JUDGE United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 For the Northern District of California 5 1 2 3 4 5 6 7 C07-01571 HRL Notice will be electronically mailed to: Alisha Mei Yuk Louie Annette D. Kirkham Cindy Hamilton Jessica Lynn Fry Karen Rosenthal Kimberly Pederson Kyra Ann Kazantzis Shawn Robert Parr William Cornelius Last , Jr William J. Goines,,,,,,,,,, Notice will be provided by other means to: 8 9 10 Jesus Chavez 2825 Dryden Ave. Gilroy, CA 95020 Pablo Curiel 2633 Glen Hancock Court San Jose, CA 95148 Raya Ghajar 1101 Salerno Drive Campbell, CA 95008 Counsel are responsible for distributing copies of this document to co-counsel who have not registered for e-filing under the court's CM/ECF program. United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 For the Northern District of California 6

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