Opinion
SA-23-CV-1232-DAE
02-13-2024
ANGEL G. DOMINGUEZ, Plaintiff, v. MUNICIPAL CREDIT SERVICE CORP., Defendant.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
HENRY J. BEMPORAD, UNITED STATES MAGISTRATE JUDGE
To the Honorable Senior United States District Judge David A. Ezra:
This Report and Recommendation concerns Plaintiff Angel G. Dominguez's Motion for Default Judgment Against Municipal Credit Service Corp. (Docket Entry 11.) This motion was referred to me for a report and recommendation (see Text Order dated December 7, 2023), and a hearing on the issue of default judgment was held on February 12, 2024 (see Docket Entry 15). For the reasons set out below, I recommend that Plaintiff's motion (Docket Entry 11) be GRANTED and that default judgment be entered against Defendant as indicated below.
I. Jurisdiction.
Plaintiff brought this suit pursuant to the Credit Repair Organizations Act (“CROA”), 15 U.S.C. §§ 1679, et seq., and the Texas Credit Services Organizations Act (“TCSOA”), TEX. FIN. CODE §§ 393.101, et seq. (Docket Entry 1, at 1.) The Court may exercise jurisdiction over federal law claims pursuant to 28 U.S.C. § 1331, and over pendent state law claims pursuant to 28 U.S.C. § 1367. I have authority to make this Report and Recommendation pursuant to 28 U.S.C. § 636(b).
II. Background.
As this case is before the Court after a default by Defendant (see Docket Entry 10), the well-pleaded allegations against it in Plaintiff's Complaint are taken as true. See Nishimatsu Constr. Co. Ltd. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).
In February of 2023, Plaintiff, looking to improve and clean up his credit, contacted a representative of Defendant, who explicitly represented to Plaintiff that Defendant would be able to get Plaintiff's desired information removed from his credit, including late payments and other information that was otherwise accurately being reported. (Docket Entry 1, at 2.) Defendant affirmatively represented it could get the desired information removed from Plaintiff's credit report regardless of whether it was inaccurate or otherwise properly subject to removal. (Id. at 3.)
Plaintiff subsequently entered into a contract with Defendant for the provision of its services, and Defendant charged Plaintiff a series of upfront payments, including $599 in set up fees and an additional payments of $300. (Docket Entry 1, at 3.) Defendant represented that these payments would cover all credit repair services Plaintiff would need from Defendant-for life. (Id.) After receiving Plaintiff's payments, however, Defendant failed to perform any of the promised services, or even respond to Plaintiff's requests for updates. (Id.)
Plaintiff filed this lawsuit on September 29, 2023. (Docket Entry 1.) Defendant, purporting to act pro se, responded with an answer to the complaint and a request for production. (See Docket Entry 8.) Because a business association cannot appear in court except through a licensed attorney, see, e.g., Precision Builders, Inc. v. Olympic Grp. LLC, 642 Fed.Appx. 395, 397 (5th Cir. 2016), Plaintiff filed a motion for entry of default. (See Docket Entry 9.) Default was entered on November 21, 2023. (Docket Entry 10.)
Plaintiff subsequently filed a motion for default judgment, which was served on Defendant at the same address as the complaint. (See Docket Entry 11.) Defendant did not respond to the motion. The undersigned held a hearing on the motion on February 12, 2024; Defendant did not appear at the hearing either. At the hearing, counsel for Plaintiff attested to the accuracy of the damages for Plaintiff, totaling $899, as well as a chart showing attorney's fees of $2,831.65, and costs of $506.65. (See Docket Entries 11-1 through 11-3.)
III. Analysis.
The Fifth Circuit has established a three-step process for securing a default judgment. New York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). First, a default occurs when a defendant has failed to plead or otherwise respond to the complaint within the time required by Rule 12 of the Federal Rules of Civil Procedure. FED. R. CIV. P. 55(A); New York Life Ins., 84 F.3d at 141. Next, an entry of default may be entered by the clerk when the default is established by affidavit or otherwise. Id. Third, after the clerk enters default, a party may move for default judgment. Id. As noted above, each of these steps have occurred in this case. (See Docket Entries 9, 10, and 11.) Accordingly, the Court may consider entering default judgment at this time. This Report and Recommendation first considers the propriety of default judgment, and then turns to the question of damages.
A. The Propriety of Default Judgment.
A court may enter default judgment only if there is “a sufficient basis in the pleading for the judgment entered.” Nishimatsu Constr., 515 F.2d at 1206. To obtain a default judgment, Plaintiff must establish that (1) a default was entered against Defendant; (2) Defendant is neither a minor nor incompetent; (3) Defendant is not in military service; and (4) Defendant was served with notice of the motion for default judgment. See Henderson v. Fenwick Protective Inc., No. 3:14-CV-505-M-BN, 2015 WL 9582755, at *3 (N.D. Tex. Nov. 23, 2015). Plaintiff must also make a prima facie showing of jurisdiction. Id.
Each of the above factors have been met in this case. Default was entered against Defendant on November 21, 2023. (Docket Entry 10.) As a corporation, Defendant is not incompetent, a minor, or in military service. As for notice, Plaintiff's motion includes a certificate service showing the same address as the returned summons in this case (Docket Entry 11, at 3), and this Court sent notice of the hearing on the motion for default judgment to Defendant by certified mail to that same address (see Docket Entry 13). Service by mail is “complete upon mailing.” FED. R. CIV. P. 5(b)(1)(C).
Finally, Plaintiff has made a prima facie showing of jurisdiction under 28 U.S.C. §§ 1331 and 1367 based on the allegations in his complaint. (See Docket Entry 1, at 1.) These allegations are admitted by Defendant's default, and therefore taken as true. See Nishimatsu Constr. Co., 515 F.2d at 1206; see also Jackson v. FIE Corp., 302 F.3d 515, 525 n. 29 (5th Cir. 2002) (noting that upon default, factual allegations in a complaint are taken as true, except regarding damages). Plaintiff's well-pleaded allegations support his claims both for violations of CROA and the TCSOA. (Docket Entry 1, at 2-8.) For all these reasons, Plaintiff is entitled to default judgment.
B. Damages .
Admissions on default do not apply to damages. Jackson, 302 F.3d at 525 n. 29. Plaintiff has the burden “to bring forth competent evidence in support of the damages that [he] seeks.” Henderson, 2015 WL 9582755, at *3. To meet this burden, Plaintiff “may submit affidavits and declarations to provide an evidentiary basis for the damages” sought. Id.
Rule 55 gives the Court discretion to convene an evidentiary hearing on the issue of damages. FED. R. CIV. P. 55(b). “A court may enter default judgment against a party and determine damages without the benefit of an evidentiary hearing ‘where the amount claimed is a liquidated sum or one capable of mathematical calculation.'” Henderson, 2015 WL 9582755, at *3 (quoting Leedo Cabinetry v. James Sales & Distrib., Inc., 157 F.3d 410, 414 (5th Cir. 1998)). “A sum capable of mathematical calculation is one that can be ‘computed with certainty by reference to the pleadings and supporting documents alone.'” Id. (quoting James v. Frame, 6 F.3d 307, 311 (5th Cir. 1993)). However, “[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” FED. R. CIV. P. 54(c). Accordingly, the relief requested in a plaintiff's complaint limits the relief available in a default judgment. See Sapp v. Renfroe, 511 F.2d 172, 176 n.3 (5th Cir. 1975).
In this case, the complaint seeks (a) declaratory relief; (b) actual damages; (c) punitive damages: (d)injunctive relief; and (e) attorney's fees and costs. (Docket Entry 1, at 8-9.) In the motion for default judgment, however, Plaintiff has withdrawn his requests for injunctive and declaratory relief and for punitive damages. (See Docket Entry 11, at 3.) With regard to actual damages, Plaintiff merely seeks the $899 that he paid to Defendant. (Id.)With regard to costs and fees, Plaintiff's counsel submitted an affidavit and chart supporting an award of $2,325 in attorney's fees and $506.65 in costs. (See Docket Entries 11-2 and 11-3.) Actual damages in this case are authorized by 15 U.S.C. § 1679g(a)(1)(A), and costs and attorney's fees are authorized by 15 U.S.C. § 1679g(a)(3). All the requested damages should accordingly be awarded to Plaintiff.Plaintiff is also entitled to post-judgment interest pursuant to 28 U.S.C. § 1961(a).
The Court notes that the invoices attached to Plaintiff's motion total only $499.00. But the complaint alleges that the total paid was $899 (Docket Entry 1, at 3), and the affidavit of Plaintiff's counsel indicates the total award should be of $3730.65, which, minus the claimed attorney's fees and costs, would be $899. (Docket Entry 11-3, at 2.)
The fees requested include billing at $375 per hour for attorney time and $125 per hour for paralegal time. (Docket Entry 11-2.) The undersigned finds these rates to be reasonable.
Because CROA supports all the claimed damages, the Court need not independently assess damages under the TCSOA.
IV. Conclusion.
Based on the foregoing, I recommend that Plaintiff's Motion for Default Judgment (Docket Entry 11) be GRANTED, and judgment be awarded against Defendant as follows:
a. Judgment on Plaintiff's claims in the amount of $ 899.00;
b. Costs in the amount of $ 506.65, and attorney's fees in the amount of $ 2,325.00; and
c. Post-judgment interest pursuant to 28 U.S.C. § 1961(a).
V. Instructions for Service and Notice of Right to Object.
The United States District Clerk shall serve a copy of this Report and Recommendation on all parties by either (1) electronic transmittal to all parties represented by attorneys registered as a “filing user” with the Clerk of Court, or (2) by mailing a copy to those not registered by certified mail, return receipt requested. Written objections to this Report and Recommendation must be filed within fourteen (14) days after being served with a copy of the same, unless this time period is modified by the District Court. 28 U.S.C. § 636(b)(1); FED. R. CIV. P. 72(B).
The parties shall file any objections with the Clerk of the Court and serve the objections on all other parties. Absent leave of Court, objections are limited to twenty (20) pages in length. An objecting party must specifically identify those findings, conclusions, or recommendations to which objections are being made and the basis for such objections; the district court need not consider frivolous, conclusory, or general objections. Battle v. U.S. Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings, conclusions, and recommendations contained in this Report and Recommendation shall bar the party from a de novo review by the District Court. Thomas v. Arn, 474 U.S. 140, 149-52 (1985); Acuna v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). Additionally, failure to file timely written objections to the proposed findings, conclusions, and recommendations contained in this Report and Recommendation shall bar the aggrieved party, except upon grounds of plain error, from attacking on appeal the unobjected-to, proposed findings and conclusions accepted by the district court. Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).