Cain v. Consumers Solutions Group, LLC et al
Filing
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MEMORANDUM OPINION AND ORDER DENYING WITHOUT PREJUDICE 11 & 21 MOTIONS for Default Judgment as to Consumer Solutions Group, LLC and Jonathan C. Frank & Associates, PLLC. Furthermore, Plaintiff is hereby ORDERED to SHOW CAUSE within fourteen (14) days of the date of this Order, whether he still intends to pursue the class action allegations in the Amended Complaint against Defendant CSG. Signed by Judge Virginia Emerson Hopkins on 7/24/2017. (JLC)
FILED
2017 Jul-24 PM 02:14
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
ADRIAN CAIN, and all those
similarly situated,
Plaintiff,
v.
CONSUMERS SOLUTIONS
GROUP, LLC and JONATHAN C.
FRANK & ASSOCIATES, LLC,
Defendants.
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) Case No.: 2:16-CV-2031-VEH
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MEMORANDUM OPINION AND ORDER
I.
INTRODUCTION AND PROCEDURAL HISTORY
This is a civil action filed by Plaintiff Adrian Cain (“Mr. Cain”) against
Defendants Consumer Solutions Group, LLC (“CSG”) and Jonathan C. Frank &
Associates, LLC (“JCF”) for violations of the Fair Debt Collection Practices Act
(“FDCPA”).
Defendant CSG was served on December 27, 2016. (Doc. 6). On January
24, 2017, Mr. Cain moved for entry of default against CSG, and the Clerk entered
default against CSG on January 25, 2017. (Docs. 10, 12). On January 24, 2017,
Mr. Cain also filed a Motion for Default Judgment as to CSG. (Doc. 11).
Defendant JCF was served on May 8, 2017. (Doc. 19). On May 24, 2017,
Mr. Cain moved for entry of default against JCF, and the Clerk entered default
against JCF on May 26, 2017. (Docs. 20, 22).1 On May 24, 2017, Mr. Cain also
filed a Motion for Default Judgment as to JCF. (Doc. 21).
For the following reasons, the two pending Motions for Default Judgment
are due to be DENIED without prejudice.
II.
STANDARD
Rule 55, FED. R. CIV. P., provides in pertinent part:
(a) Entering a Default. When a party against whom a judgment for
affirmative relief is sought has failed to plead or otherwise defend, and
that failure is shown by affidavit or otherwise, the clerk must enter the
party’s default.
(b) Entering a Default Judgment.
*****
(2) By the Court. In all other cases2, the party must apply to the court
for a default judgment. A default judgment may be entered against a
minor or incompetent person only if represented by a general guardian,
conservator, or other like fiduciary who has appeared. If the party
against whom a default judgment is sought has appeared personally or
by a representative, that party or its representative must be served with
written notice of the application at least 3 days before the hearing. The
court may conduct hearings or make referrals — preserving any federal
statutory right to a jury trial — when, to enter or effectuate judgment, it
1
The record reflects that the Clerk of Court has provided Defendants CSG and JCF with
the notice provided for in Section II.B of the Court’s “Plan for Pro Bono Counsel for Qualified
Unrepresented Parties in Civil Cases.” (Docs. 14, 23).
2
Rule 55(b)(1) provides a procedure, not applicable here, for the issuance of a default
judgment by the Clerk of Court.
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needs to:
(A) conduct an accounting;
(B) determine the amount of damages;
(C) establish the truth of any allegation by evidence; or
(D) investigate any other matter.
FED. R. CIV. P. 55.
Because default has been entered against CSG and JCF, the allegations of
Mr. Cain’s Complaint are taken as true. See, e.g., AutoTec, L.L.C. v. Auction
Access Auto, Inc., 2:12-cv-00896-RDP, 2012 WL 2357951, at *2 (N.D. Ala. June
18, 2012) (“Upon default, the well-pleaded allegations of a complaint are taken as
true.”) (internal citations omitted); see also 10A Charles Alan Wright, Arthur R.
Miller & Mary Kay Kane, Federal Practice and Procedure § 2688 (3d ed. 1998)
(“If the court determines that defendant is in default, the factual allegations of the
complaint, except those relating to the amount of damages, will be taken as true.”).
III.
ANALYSIS
The Court’s analysis of a Motion for Default Judgment involves a two-step
process. First, the Court must satisfy itself that it has jurisdiction over the parties
and the subject matter of the lawsuit. See Kelly v. Harris, 331 F.3d 817, 819 (11th
Cir. 2003) (holding that district courts “always have an obligation to examine sua
sponte their jurisdiction before reaching the merits of any claim”). Second, the
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Court must ensure that Mr. Cain has satisfied the elements of Rule 55, FED. R.
CIV. P., and is entitled to the default judgment he seeks. See Nishimatsu Constr.
Co., Ltd. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)3 (explaining
that “a defendant’s default does not in itself warrant the court entering a default
judgment” and that “[t]here must be a sufficient basis in the pleadings for the
judgment entered”).
“Besides the pleadings, a court may also consider evidence presented in the
form of an affidavit or declaration.” Frazier v. Absolute Collection Serv., Inc.,
767 F. Supp. 2d 1354, 1362 (N.D. Ga. 2011) (Thrash, J.) (citing Antoine v. Atlas
Turner, Inc., 66 F.3d 105, 111 (6th Cir. 1995)); FHL, Inc. v. Walker, No.
2:13CV555--MHT, 2016 WL 3353944, at *1 (M.D. Ala. June 9, 2016)
(Thompson, J.) (same). Rule 55 does not require this Court to conduct an
evidentiary hearing prior to entering a default judgment. “However, when it seems
advantageous, a court may conduct a hearing to determine whether to enter a
judgment by default.” 10A Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 2688 (4th ed. 2016).
In this Circuit, “there is a strong policy of determining cases on their merits
3
All decisions of the former Fifth Circuit handed down prior to September 30, 1981,
constitute binding precedent on this Circuit. Bonner v. City of Prichard, 661 F.2d 1206, 1209
(11th Cir. 1981).
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and we therefore view defaults with disfavor.” In re Worldwide Web Systems, Inc.,
328 F.3d 1291, 1295 (11th Cir. 2003); see also Varnes v. Local 91, Glass Blowers
Ass’n of U.S. and Canada, 674 F.2d 1365, 1369 (11th Cir. 1982) (“Since this case
involves a default judgment there must be strict compliance with the legal
prerequisites establishing the court’s power to render the judgment.”).
Nonetheless, it is well established that a “district court has the authority to enter
default judgment for failure . . . to comply with its orders or rules of procedure.”
Wahl v. McIver, 773 F.2d 1169, 1174 (11th Cir. 1985).
A.
Jurisdiction
It is an elementary requirement that jurisdiction must be established in every
case before a court has power to render any judgment. Insurance Corp. of Ireland,
Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099,
2104, 72 L.Ed.2d 492 (1982). A court obtains personal jurisdiction over the parties
when the complaint and summons are properly served upon the defendant. Royal
Lace Paper Works v. Pest-Guard Prods., 240 F.2d 814, 816 (5th Cir. 1957). As
noted above, the record establishes that both of the Defendants in this case have
been served, have waived service, or otherwise have filed an Answer without
contesting service or personal jurisdiction. Accordingly, the Court finds that it has
personal jurisdiction over the parties in this case.
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Further, Mr. Cain alleges that this Court has subject matter jurisdiction over
this FDCPA action pursuant to 28 U.S.C. § 1331, which states that this Court has
jurisdiction over claims “arising under the Constitution, laws, or treaties of the
United States.” As this action relates to the enforcement of rights of action created
by federal statute, the Court is satisfied that it has subject matter jurisdiction over
the action.
C.
Motions for Default Judgment
Federal Rule of Civil Procedure 55(b)(2) allows a court to enter a default
judgment when the Clerk has entered default and the party seeking judgment has
applied to the court for a default judgment. To determine whether the moving
party is actually entitled to a default judgment, a court must review the sufficiency
of the complaint and its underlying merits. See Stegeman v. Georgia, 290 Fed.
App’x 320, 323 (11th Cir. 2008) (citing Nishimatsu, 515 F.2d at 1206).
The law is well-settled that “a defaulted defendant is deemed to admit the
plaintiff’s well-pleaded allegations of fact.” Tyco Fire & Sec., LLC v. Alocer, 218
F. App’x 860, 863 (11th Cir. 2007) (internal citation and quotation omitted).
However, the Court has “an obligation to assure that there is a legitimate basis for
any damage award it enters[.]” Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264,
1266 (11th Cir. 2007).
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The Court has identified several issues with the pending Motions for
Default Judgment. First, both Motions have failed to adequately establish that Mr.
Cain is entitled to default judgments in his favor because they do not present a
sufficient basis to assure this Court that he has a legitimate claim to the relief
requested. A default is not an “absolute confession by the defendant of his liability
and of the plaintiff’s rights to recover”; instead, it is merely “an admission of the
facts cited in the Complaint, which by themselves may or may not be sufficient to
establish a defendant’s liability.” Pitts ex rel. Pitts v. Seneca Sports, Inc., 321 F.
Supp. 2d 1353, 1357 (S.D. Ga. 2004). A default judgment “cannot stand on a
complaint that fails to state a claim.” Chudasama v. Mazda Motor Corp., 123 F.3d
1353, 1370 n.41 (11th Cir. 1997).
Mr. Cain has not identified with specific detail which facts, deemed
admitted by virtue of Defendants’ default, give rise to cognizable claims for relief.
Both Motions (docs. 11 and 21) are a mere two pages in length, and Defendants’
failure to appear is not in and of itself sufficient for the Court to enter judgment
against them. Mr. Cain must make a clear showing to this Court that the elements
of each and every claim for relief are satisfied.
Second, Mr. Cain’s Complaint seeks relief in the form of “actual,
compensatory, and/or punitive damages”; attorneys’ fees; an injunction; and other
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equitable relief. (Doc. 1 at 8, 9, 10, 14, 15). He specifies that he suffered actual
damages in the form of “anger, anxiety, emotional distress, fear, frustration, upset,
embarrassment, [and] humiliation.” (Id. at 6, 8, 9). Even though well-pleaded facts
in the complaint are deemed admitted,
plaintiffs’ allegations relating to the amount of damages are not admitted
by virtue of default; rather, the court must determine both the amount
and character of damages. Miller v. Paradise of Port Richey, Inc., 75 F.
Supp. 2d 1342, 1346 (M.D. Fla. 1999); see also Anheuser Busch, Inc. v.
Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003) (federal law requires
judicial determination of damages absent factual basis in record); Credit
Lyonnais Securities (USA) Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir.
1999) (even where default judgment is warranted based on failure to
defend, allegations in complaint with respect to damages are not deemed
true, and district court must conduct inquiry in order to ascertain
damages with reasonable certainty); Patray v. Northwest Pub., Inc., 931
F. Supp. 865, 869-70 (S.D. Ga. 1996) (explaining that it is proper
exercise of judicial power for court upon default to take evidence, fix
amount which prevailing party should recover, and then give judgment).
“The trial judge, sitting without a jury, has considerable latitude in
determining the amount of the damages.” Patray, 931 F. Supp. at 870.
Atlantic Recording Corp. v. Carter, 508 F. Supp. 2d 1019, 1024 n.4 (S.D. Ala.
2007) (Steele, J.).
If a debt collector is found to violate the FDCPA, a court may award “any
actual damages sustained by such person as a result of such failure” and “in the
case of any action by an individual, such additional damages as the court may
allow, but not exceeding $1,000[.]” 15 U.S.C. §§ 1692k(a)(1) and 1692k(a)(2)(a).
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This award, however, is subject to §1692k(b), which states:
Factors considered by court. In determining the amount of liability in
any action under subsection (a), the court4 shall consider, among other
relevant factors–
(1)
in any individual action under subsection (a)(2)(A), the
frequency and persistence of noncompliance by the debt
collector, the nature of such noncompliance, and the extent
to which noncompliance was intentional[.]
15 U.S.C. § 1692k(b). As to attorneys’ fees, a successful plaintiff is entitled to
“the costs of the action” and a “reasonable attorney’s fee as determined by the
court.” 15 U.S.C. § 1692k(a)(3).
In both Motions for Default Judgment, Mr. Cain has failed to demonstrate
the plausibility under the FDCPA of each form of relief he requests. Mr. Cain is
hereby PUT ON NOTICE that any re-filed Motion for Default Judgment against
either defendant must (1) make a clear showing that each element of each claim in
the Amended Complaint has been satisfied; and (2) include evidence, supported by
authority, as to the amount and type of damages he seeks.
Third, Mr. Cain’s Complaint asserts two class claims against Defendant
CSG, but not Defendant JCF, for violations of the FDCPA. Mr. Cain’s requested
4
Although § 1692k(b) refers to the court’s consideration of these factors, the Eleventh
Circuit has held that the term “court” refers to either the judge or the jury where a party has
demanded a jury trial. See Sibley v. Fulton Dekalb Collection Serv., 677 F.2d 830, 834 (11th Cir.
1982). In this case, Mr. Cain has made a jury demand. (Doc. 1 at 1).
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relief includes an order certifying a class, an injunction requiring CSG to cease all
allegedly illegal activity described in the class claims, and an award of actual
damages to him and to the members of the class.
For a district court to certify a class action, “the named plaintiffs must have
standing, and the putative class must meet each of the [four] requirements
specified in Federal Rule of Civil Procedure 23(a), as well as at least one of the
requirements set forth in Rule 23(b).” Vega v. T-Mobile USA, Inc., 564 F.3d 1256,
1265 (11th Cir. 2009) (quoting Klay v. Humana, Inc., 382 F.3d 1241, 1250 (11th
Cir. 2004)). The Supreme Court has made clear that “Rule 23 does not set forth a
mere pleading standard. A party seeking class certification must affirmatively
demonstrate his compliance with the Rule–that is, he must be prepared to prove
that there are in fact sufficiently numerous parties, common questions of law or
fact, etc.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350, 131 S. Ct. 2541,
2551, 180 L. Ed. 2d 374 (2011) (emphasis in original).
Mr. Cain has not indicated to this Court whether he still intends to pursue
his class action allegations. Further, as the movant, Mr. Cain has not shown how
awarding class-wide relief in an FDCPA action in the context of a default is ever
appropriate under Federal Rules of Civil Procedure 23 and 55. Accordingly, the
Court declines to enter any type of judgment regarding his class allegations due to
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the underdeveloped nature of the record and Mr. Cain’s failure to establish
satisfaction of Rule 23's preliminary and procedural requirements.
III.
CONCLUSION
Based on the foregoing, the Court determines that both Motions for Default
Judgment (docs. 11 and 21) are hereby DENIED WITHOUT PREJUDICE to
refiling in a manner that satisfies the deficiencies identified in this Order.
Furthermore, Plaintiff is hereby ORDERED to show cause, within fourteen
(14) days of the date of this Order, whether he still intends to pursue the class
action allegations in the Amended Complaint against Defendant CSG.
DONE and ORDERED this the 24th day of July, 2017.
VIRGINIA EMERSON HOPKINS
United States District Judge
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