Opinion
CV 20-1474-RSWL-SPx
03-24-2022
TIMOTHY RAYMO, Plaintiff, v. DEFINITIVE CONSULTING SERVICES LLC, et al., Defendants.
ORDER RE: PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT [37]
HONORABLE RONALD S.W. LEW, Senior U.S. District Judge.
Plaintiff Timothy Raymo (“Plaintiff”) brings this Action [1] against Defendants Definitive Consulting Services LLC and Justin Laurer (collectively, “Defendants”) for alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”).
Plaintiff also brought this Action against Defendant Nicholas Engle. See generally First Am. Compl. (“FAC”), ECF No. 23. On October 13, 2021, Plaintiff voluntarily dismissed Defendant Engle from this Action such that only Defendants Definitive Consulting LLC and Justin Laurer remain. See Notice of Dismissal, ECF No. 29.
Currently before the Court is Plaintiff's Motion for Default Judgment (“Motion”) [37]. Having reviewed all papers submitted pertaining to the Motions, the Court NOW FINDS AND RULES AS FOLLOWS: the Court GRANTS the Motion.
I. BACKGROUND
A. Factual Background
Plaintiff alleges the following in his First Amended Complaint (“FAC”):
On or about August 1, 2019, Defendants began calling Plaintiff to collect a consumer debt allegedly owed by Plaintiff, a resident of Texas. First Am. Compl. (“FAC”) ¶ 7, ECF No. 23. Defendants left a prerecorded message for Plaintiff, which stated: “There is currently a court order being filed to suspend all activity with your social security number and name. To review all immediate rights and actions, contact us at 888-970-1217. Once again, 888-970-1217.” Id. ¶ 8.
Plaintiff, harassed and concerned by Defendants' message, retained counsel. Id. ¶ 10. Plaintiff's counsel determined that Defendants had been attempting to collect a consumer debt allegedly owed by Plaintiff. Id. ¶ 11. Defendants admitted that no litigation was pending against Plaintiff. Id. Public records also show that there is no litigation pending against Plaintiff. Id. ¶ 13.
Defendants failed to provide Plaintiff with the requisite debt validation information pursuant to 15 U.S.C. § 1692g(a) within five days of their initial communication with Plaintiff on August 1, 2019. Id. ¶ 12. Defendants also failed to register as debt collectors in Texas, which they were required to do before engaging in debt collection in Texas. Id. ¶ 14.
B. Procedural Background
Plaintiff filed the initial Complaint [1] on July 24, 2020. On April 19, 2021, the Court granted [17] Plaintiff's request [14] to engage in discovery prior to the Federal Rule of Civil Procedure (“Rule”) 26(f) conference to identify and serve Defendants.
On August 16, 2021, Plaintiff filed [23] his FAC against Defendants. On October 13, 2021, Plaintiff voluntarily dismissed [29] Defendant Nicholas Engle from this Action. On October 19, 2021, Plaintiff requested [31, 33] the Clerk to enter default against Defendants, which the Clerk did on October 20, 2021 [34, 35].
On March 4, 2022, Plaintiff filed the present Motion for Default Judgment. Defendants did not reply.
II. DISCUSSION
A. Legal Standard
Federal Rule of Civil Procedure (“Rule”) 55(b) authorizes a district court to grant default judgment. Pursuant to Local Rule 55-1, the party moving for default judgment must submit a declaration establishing: (1) when and against which party default was entered; (2) on which pleading default was entered; (3) whether the defaulting party is a minor, incompetent person, or active service member; and (4) proper service. Upon entry of default, all factual allegations in the complaint, except those relating to damages, are assumed to be true. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (quoting Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)). Additionally, if the defaulting party fails to plead or otherwise defend, the court must determine that it has subject matter and personal jurisdiction. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999).
In exercising its discretion to grant default judgment, the court must consider the following factors: (1) possibility of prejudice to the plaintiff; (2) merits of the substantive claim; (3) sufficiency of the complaint; (4) sum of money at stake; (5) possibility of disputes regarding material facts; (6) whether excusable neglect caused the default; and (7) the strong policy favoring decisions on the merits. NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016) (quoting Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986)).
B. Discussion
1. Jurisdiction
Because Defendants have failed to appear or defend in this Action, the Court must first determine if it has jurisdiction over the subject matter and the parties. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). Here, the Court has subject matter jurisdiction over this Action for violations of the FDCPA under 28 U.S.C. § 1331. The Court has general personal jurisdiction over Defendants because they allegedly reside in California. See FAC ¶ 2.
2. Procedural Requirements
Plaintiff has satisfied the procedural requirements for default judgment pursuant to Rule 55. Under Rule 55(a), the Court Clerk properly entered default against Defendants on October 20, 2021. See Default by Clerk, ECF Nos. 34, 35. Plaintiff then properly moved pursuant to Rule 55(b) for entry of default judgment.
Plaintiff has also met the procedural requirements under Local Rule 55-1. See Mot. 2:19-3:4, ECF No. 37. In compliance with Local Rule 55-1, Plaintiff states that: (1) default was entered against Defendants on October 20, 2021 for failure to respond to the Complaint; (2) Defendants are not minors or incompetent persons; (3) Defendants are not service members; and (4) Defendants were served with the Request for Entry of Default. Id.
Local Rule 55-1 states that an application for default judgment “shall be accompanied by a declaration in compliance” with Rule 55. L.R. 55-1. Plaintiff did not submit a declaration but rather, provided in his Motion the requisite information to satisfy Local Rule 55-1. See Mot. 2:19-3:4. Because no prejudice resulted from this deviation, the Court overlooks this deficiency.
3. Eitel Factors
a. Factor 1: Possibility of Prejudice to Plaintiff
The first Eitel factor concerns whether a plaintiff will suffer prejudice if default judgment is not entered. See Eitel, 782 F.2d at 1471 (citation omitted). The first factor weighs in Plaintiff's favor here. Defendants have failed to appear and defend, thus prejudicing Plaintiff as he would have no recourse to recover on his claims if default judgment is not entered. Valentin v. Grant Mercantile Agency, Inc., 2017 WL 6604410, at *2 (E.D. Cal. Dec. 27, 2017) (finding sufficient prejudice where a defendant did not appear and defend itself).
b. Factors 2 and 3: Sufficiency of the Complaint and Merits of the Claim
The second and third Eitel factors call for analysis of the causes of action. See Eitel, 782 F.2d at 1471 (citation omitted). When considered together, these factors “require that a plaintiff state a claim on which [he] may recover.” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1175 (C.D. Cal. 2002). Because default has been entered, all factual allegations in the FAC, except those relating to damages, are taken as true. See TeleVideo, 826 F.2d at 917-18.
To state a claim under the FDCPA, a plaintiff must show: (1) the plaintiff is a “consumer” as defined under the FDCPA; (2) the defendant is a “debt collector” under the FDCPA; and (3) the defendant committed some act or omission outlined in the FDCPA. Valentin, 2017 WL 6604410, at *3 (citations omitted). The first two elements are met here. While the FAC does not affirmatively plead Plaintiff's status as a “consumer, ” it does state that Plaintiff owed a consumer debt that Defendants were attempting to collect. See FAC ¶ 7. This is sufficient to meet the first element under the FDCPA. See 15 U.S.C. 1692a(3) (defining “consumer” as “any natural person obligated or allegedly obligated to pay any debt.”). As for the second element, Plaintiff adequately pleads that Defendants “regularly operate as third-party debt collectors. . . .” See 15 U.S.C. 1692a(6) (defining “debt collector” as “any person who uses any instrumentality of interstate commerce . . . the principal purposes of which is the collection of any debts, or who regularly collects . . . debts owed . . . .”). Having found the first two elements of an FDCPA claim satisfied, the Court now turns to the third element and assesses whether Plaintiff has sufficiently alleged a violation of the FDCPA.
Plaintiff alleges five violations of the FDCPA, but proof of only one violation is sufficient to recover statutory damages. 15 U.S.C. § 1692k(a)(2)(A); see also Greene v. The Rosenberg Grp., LLC, 2019 WL 7900267, at *2 (C.D. Cal. Sept. 30, 2019) (granting default judgment upon a single violation of the FDCPA where there had been several alleged FDCPA violations). Looking only at Plaintiff's first cause of action, the Court finds that Plaintiff has sufficiently alleged a violation of § 1692d(6).
Section 1692d of the FDCPA protects consumers from harassment or abuse by debt collectors. See 15 U.S.C. § 1692d. Subsection 1692d(6) specifically states that a violation of the FDCPA occurs when debt collectors do not meaningfully disclose their identity during a telephone call. 15 U.S.C. § 1692d(6). This district has stated that “meaningful disclosure presumably requires that the caller must state his or her name and capacity, and disclose enough information so as not to mislead the recipient as to the purpose of the call or the reason the questions are being asked.” Hosseinzadeh v. M.R.S. Assocs., Inc., 387 F.Supp.2d 1104, 1112 (C.D. Cal. 2005) (internal quotation marks and citations omitted).
Here, Plaintiff sufficiently alleges that Defendants violated § 1692d(6) by failing to meaningfully disclose their status as debt collectors attempting to collect a debt. FAC ¶ 16; Mot. 5:11-19. As evidenced by the voicemail that Defendants left Plaintiff, Defendants failed to disclose any identifying information and failed to give information as to the purpose of the call. See FAC ¶ 8. Accordingly, Eitel factors two and three weigh in favor of default judgment here and the Court need not analyze Plaintiff's remaining FDCPA violations.
c. Factor 4: Sum of Money at Stake
Under the fourth Eitel factor, “the court must consider the amount of money at stake in relation to the seriousness of Defendant's conduct.” PepsiCo, 238 F.Supp.2d at 1176. “Default judgment is disfavored where the sum of money at stake is too large or unreasonable in relation to defendant's conduct.” Vogel v. Rite Aid Corp., 992 F.Supp.2d 998, 1012 (C.D. Cal. 2014) (citations omitted).
Here, Plaintiff seeks $1,000 in statutory damages, $126.65 in costs, and $13,612 in attorneys' fees for a total of $14,738.65. Mot. 4:12-13. The Court finds that this amount is neither too large nor unreasonable and concludes that the fourth Eitel factor weighs in favor of default judgment. See Cunningham v. Meridian Credit Grp., LLC, 2019 WL 643966, at *5 (C.D. Cal. Feb. 11, 2019) (finding the fourth Eitel factor to weigh in favor of default judgment where plaintiff sought $16,355 for FDCPA violations).
d. Factor 5: Dispute of Material Fact
The fifth Eitel factor is the likelihood of a dispute as to material facts. Eitel, 782 F.2d at 1471-72 (citation omitted). To date, Defendants have not answered or otherwise appeared. Since Plaintiff's factual allegations are presumed true in this context and Defendants failed to move to set aside the default, no factual dispute exists that would preclude the entry of default judgment. See Vogel, 992 F.Supp.2d at 1013; see also Cunningham, 2019 WL 643966, at *6 (“Since Defendant failed to answer the Complaint, the Court finds it unlikely that disputes as to material facts will arise.”). Thus, this factor weighs in favor of default judgment.
e. Factor 6: Excusable Neglect
“The sixth Eitel factor considers the possibility that the default resulted from excusable neglect.” PepsiCo, 238 F.Supp.2d at 1177. This factor favors a default judgment when the defendant has been properly served or the plaintiff demonstrates that the defendant is aware of the lawsuit. See id. Here, Defendants were personally served with notice of this action. See Proof of Service, ECF Nos. 30, 32. Therefore, the possibility of excusable neglect here is remote and, accordingly, the sixth Eitel factor weighs in favor of default judgment. See Magbanua v. Evans, 2020 WL 2332168, at *7 (C.D. Cal. Feb. 20, 2020) (weighing the sixth Eitel factor in favor of default judgment where a defendant was properly served with the complaint); Cunningham, 2019 WL 643966, at *6 (same); Vogel 992 F.Supp.2d at 1013 (same).
f. Factor 7: Public Policy
The seventh Eitel factor considers the strong policy favoring rulings on the merits. Eitel, 782 F.2d at 1472 (“Cases should be decided upon their merits whenever reasonably possible.”). Defendants' choice not to defend themselves renders a decision on the merits “impractical, if not impossible.” PepsiCo, 238 F.Supp.2d at 1177. Therefore, this factor does not preclude the Court from entering default judgment against Defendants.
Thus, on balance, the Eitel factors weigh in favor of granting default judgment against Defendants and the Court GRANTS Plaintiff's Motion. 4. Relief
“Once a court concludes that default judgment is appropriate, it must determine what damages or other relief is warranted.” Viet Huynh v. Alliant Cap. Mgmt. LLC, 2018 WL 6137145, at *4 (C.D. Cal. Apr. 4, 2018). “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). The party seeking default judgment “must ‘prove up' the amount of damages.” PepsiCo, Inc., 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002).
In his Motion for Default Judgment, Plaintiff seeks: (1) $1,000 in statutory damages; and (2) $13,738.65 in attorneys' fees and costs. Mot. 16:22-28. Each request for relief is examined in turn below.
a. Statutory Damages
“The FDCPA provides that any debt collector who violates any provision of the FDCPA is liable for statutory damages of up to $1,000, in addition to any actual damages sustained.” Cunningham, 2019 WL 643966, at *6; 15 U.S.C. § 1692k(a). In determining these damages, a court must consider “the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional.” 15 U.S.C. § 1692k(b)(1).
Plaintiff alleges that Defendants “began calling” him on August 1, 2019, but the FAC is silent as to any other communications outside of the August 1, 2019 voicemail that gave rise to this action. See FAC ¶ 7. Thus, it appears that the August 1, 2019 voicemail was the only communication from Defendants to Plaintiff. However, taking Plaintiff's factual allegations as true, Defendants intentionally misled Plaintiff into believing that there was a pending court order against him that would have suspended all activity with his social security number and name. See id. ¶ 8. Given these facts, the Court finds it appropriate to award Plaintiff the maximum of $1,000 in statutory damages. See Cunningham, 2019 WL 643966, at *6 (awarding maximum statutory damages in an FDCPA action even though defendant's communications to plaintiff were infrequent because defendant had misled plaintiff into believing there was a pending lawsuit against her).
b. Attorneys' Fees
Local Rule 55-3 states that where attorneys' fees are sought under a statute in a motion for default judgment, fees are calculated according to the schedule provided under Local Rule 55-3. L.R. 55-3. Where a party seeks attorneys' fees in excess of the provided schedule, however, they may request the court to fix the attorneys' fees. Id. Here, Plaintiff has requested that the Court calculate attorneys' fees using the lodestar method. Mot. 13:18-14:12. Because attorneys' fees awards under the FDCPA are generally calculated using the lodestar method, the Court finds that the lodestar method provides for a reasonable basis of calculation here. Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 978 (9th Cir. 2008) (noting that attorneys' fees under the FDCPA are generally calculated using the lodestar method).
Attorneys' fees under the lodestar method are calculated by multiplying the hours reasonably spent on the litigation by a reasonable hourly rate. See, e.g., Gonzalez v. City of Maywood, 729 F.3d 1196, 1202 (9th Cir. 2013). “[R]easonable hourly rates are . . . calculated according to the prevailing market rates in the relevant legal community for similar services by lawyers of reasonably comparable skill, experience, and reputation.” Valentin v. Grant Mercantile Agency, Inc., 2017 WL 6604410, at *9 (E.D. Cal. Dec. 27, 2017) (citing Blum v. Stenson, 465 U.S. 886, 895 (1984)). The relevant legal community is the forum in which the district court sits. Carson v. Billings Police Dep't, 470 F.3d 889, 891 (9th Cir. 2006).
i. Reasonable Hours
According to Plaintiff's billing summary, Plaintiff's counsel, Mr. Amador, spent 32.56 hours on this Action and his paralegal spent 7.84 hours. See generally Mot., Ex. C (“Billing Summary”), ECF No. 37-3. The Court notes that in other similar actions, Mr. Amador has spent roughly half the amount of time preparing his case than compared to here. See Magbanua, 2020 WL 2332168, at *8 (noting that Mr. Amador spent 13.22 hours working on an FDCPA case); Huynh, 2018 WL 6137145, at *5 (noting that Mr. Amador spent 12.11 hours working on an FDCPA case). Still, the Court finds that the hours spent here were largely necessary given that Defendants allegedly operated under a fictitious business name and avoided service of process through other means. See Mot. 14:13-15:16. However, the Court concludes that the present Motion could have been effectively drafted in 3.5 hours rather than the 6.5 hours that Mr. Amador purportedly spent. See Cunningham, 2019 WL 643966, at *8 (reducing attorneys' fee award based on belief that a motion for default judgment could have been drafted in 3.5 hours instead of 4.7); see also Billing Summary. The Court reduces Mr. Amador's expended hours to 29.56 (32.56-3) and finds reasonable that his paralegal spent 7.84 hours on this Action.
ii. Reasonable Rate
Plaintiff seeks to recover attorneys' fees billed at $400/hour for attorney time and $75/hour for paralegal time. Mot. 13:3-6. Plaintiff cites previous cases where Mr. Amador has been awarded attorneys' fees of $300/hour for attorney work and $50/hour for paralegal work in arguing that the $400/hour and $75/hour billing rates are reasonable. Id. at 13:14-17. Plaintiff explains that Mr. Amador's rate increased because Mr. Amador has been practicing for eleven years but does not explain the increase in paralegal billing. Id. at 13:13-16.
The Court finds that the $400/hour rate for attorney time is proper because it falls within the range of those deemed reasonable in the FDCPA context. See, e.g., Salazar v. Midwest Servicing Grp., Inc., 2018 WL 4802139, at *6 (C.D. Cal. Oct. 2, 2018) (finding reasonable hourly rates ranging from $450 to $495 in FDCPA case); Yang v. Assisted Credit Servs., Inc., 2017 WL 9939710, at *3 (C.D. Cal. Nov. 7, 2017) (finding reasonable hourly rates of $400 in FDCPA case). The Court reduces the paralegal rate to $50/hour, however, because Plaintiff does not provide support for the paralegal billing increase.
In light of the adjusted hours worked and rates billed, the Court calculates the lodestar figure as $12,216 ((29.56 x 400) + (7.84 x 50)) and awards attorneys' fees in this amount. c. Costs Plaintiff requests $126.65 for the cost of service of process. See Billing Summary. The Court finds that this cost was reasonably incurred and GRANTS Plaintiff's request to recover the costs of this Action. See Smith v. Ferguson Grp., 2019 WL 850685, at *2 (C.D. Cal. Feb. 21, 2019) (granting costs of FDCPA action where plaintiff sought to recover only the costs of filing and serving the complaint).
III. CONCLUSION
Based on the foregoing, the Court GRANTS Plaintiff's Motion for Default Judgment against Defendants Definitive Consulting Services LLC and Justin Laurer who are the remaining Defendants in this Action. The Court enters a total judgment of $13,342.65 ($1,000 in statutory damages for FDCPA violation, $12,216 in attorneys' fees, and $126.65 in costs) against Defendants. Plaintiff shall submit a proposed judgment within seven (7) days of the date of this Order, in conformance with the Court's procedures.
IT IS SO ORDERED.