Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Cal.: Real estate broker fails to state conspiracy claims against licensing board, (Feb 2, 2016)

By Linda O’Brien, J.D., LL.M.

A real estate broker failed to sufficiently plead facts to pursue conspiracy claims against a state real estate licensing board and various individuals for allegedly conspiring to revoke his real estate license without cause, a magistrate judge in the federal district court in Sacramento, California, has ruled. Thus, the broker’s complaint was dismissed (Gonzalez v. Department (Bureau) of Real Estate, February 1, 2016, Hollows, G.).

The California Department of Real Estate (DRE) is a state agency that licenses and regulates real estate brokers and salespersons in the state. Daniel Gonzalez was a real estate broker licensed in California. Gonzalez represented a buyer in the purchase of a home which later fell through. The buyer sued Gonzalez to recover a deposit she paid to him. Although Gonzalez prevailed at trial, the court having found the sum to be a nonrefundable deposit, DRE initiated disciplinary proceedings against him for his actions in disposing of the deposit without the buyer’s knowledge or consent. After Gonzalez failed to respond to the charge, a default was entered as well as a final decision revoking his license. The determination was upheld on appeal.

Gonzalez filed suit against DRE and various individuals, alleging, in part, that they engaged in a conspiracy to revoke his license in violation of the Sherman Act. Specifically, Gonzalez asserted that the trial court decision in his favor should have been followed in the administrative proceeding and the defendants conspired to disregard the trial court judgment and filed a “false accusation” which caused his license to be revoked. In allowing Gonzalez to proceed in forma pauperis, the court evaluated whether the action was frivolous or failed to state a claim.

Rooker-Feldman doctrine. The court determined that the plaintiff’s claims complaining of the state court judgments were jurisdictionally barred by the Rooker-Feldman doctrine. The Rooker-Feldman doctrine bars subject matter jurisdiction in federal district court to exercise appellate review over a final state court judgment. Although the plaintiff did not seek to overturn the state court judgment affirming the disciplinary action against him, his claims were clearly “inextricably intertwined” with that judgment since a decision in this case favorable to the plaintiff would require findings inconsistent with the state court’s judgment. The state administrative tribunal found that Gonzalez was in default and that the fraud and negligence allegations were proven by clear and convincing evidence. The trial court’s refusal to review the administrative decision, which was affirmed on appeal will not be disturbed, the court noted.

Conspiracy claim. The complaint also did not have a proper jurisdictional basis since it did not plausibly assert a substantial federal right. According to the court, the plaintiff’s claims pertaining to the previous state court lawsuits and revocation of his realtor’s license mentioned the Sherman Act in only a conclusory manner. He failed to allege any federal statutory violations in the complaint or set forth how each defendant violated the Act. A mere reference to the statute did not establish the necessary elements and was insufficient to state a claim, the court concluded.

Although the complaint was dismissed, the court granted leave to the plaintiff to amend his complaint, in which he must allege specific facts of the conspiracy.

The case is No. 2:15-cv-02448-GEB-GGH.

Companies: California Department of Real Estate

Cases: Antitrust CaliforniaNews