Gwinn v. Safeguard Recovery LLC et al

Filing 17

ORDER AND DEFAULT JUDGMENT re: Plaintiff's motion for default judgment (Doc. 13 ) is granted. Default judgment is entered in favor of Plaintiff and against Defendants Safeguard Recovery, LLC and Eckity Capital Markets, LLC in the amount of $1,000. Plaintiffs request for attorney's fees and costs is granted in the amount of $2,110. The Clerk is directed to terminate this action and enter judgment accordingly. Signed by Judge David G Campbell on 6/15/15. (KGM)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Marion Gwinn,
Plaintiff,

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No. CV14-1923 PHX DGC
ORDER AND DEFAULT
JUDGMENT

v.
Safeguard Recovery LLC, Eckity Capital
Markets, LLC,

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Defendants.

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This case is a civil action brought under the Fair Debt Collections Practices Act

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(“FDCPA”). Doc. 1 (citing 15 U.S.C. § 1692 et seq.). Plaintiff filed his complaint on

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August 29, 2014. The substance of his claim is that Defendants sent him a letter trying to

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collect a debt that had already been settled. Defendants have not answered or otherwise

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responded to the complaint. On October 6, 2014, the Clerk entered default. Doc. 10. On

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March 13, 2015, Plaintiff filed a motion for default judgment against Defendants

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Safeguard Recovery LLC and Eckity Capital Markets, LLC. Doc. 13. The Court ordered

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Plaintiff and Plaintiff’s attorney to file affidavits in support of the claimed damages and

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attorney’s fees. Doc. 14. Having received the affidavits, the Court will grant Plaintiff’s

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motion.

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I.

The Motion for Default Judgment.

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Once a party’s default has been entered, the district court has discretion to grant

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default judgment against that party. See Fed. R. Civ. P. 55(b)(2); Aldabe v. Aldabe, 616

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F.2d 1089, 1092 (9th Cir. 1980). Factors the court may consider in deciding whether to

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grant default judgment include (1) the possibility of prejudice to the plaintiff, (2) the

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merits of the claim, (3) the sufficiency of the complaint, (4) the amount of money at

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stake, (5) the possibility of a dispute concerning material facts, (6) whether default was

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due to excusable neglect, and (7) the policy favoring a decision on the merits. See Eitel v.

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McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). In applying the Eitel factors, “the

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factual allegations of the complaint, except those relating to the amount of damages, will

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be taken as true.” Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977).

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A.

Possible Prejudice to Plaintiff.

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The first Eitel factor weighs in favor of granting Plaintiff’s motion. Plaintiff

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served process on Defendants on September 3, 2014 and September 8, 2014. Docs. 6, 7.

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Defendants have not answered the complaint or otherwise appeared in this action. If

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Plaintiff’s motion for default judgment is not granted, Plaintiff “will likely be without

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other recourse for recovery.” PepsiCo, Inc. v. Cal. Security Cans, 238 F. Supp. 2d 1172,

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1177 (C.D. Cal. 2002).

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B.

The Merits of Plaintiff’s Claims and the Sufficiency of the Complaint.

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The second and third Eitel factors favor a default judgment where the complaint

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sufficiently states a claim for relief. See PepsiCo, Inc., 238 F. Supp. 2d at 1175; Danning

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v. Lavine, 572 F.2d 1386, 1388-89 (9th Cir. 1978). A review of Plaintiff’s complaint

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shows that Plaintiff has stated valid claims against Defendants. See Doc. 1 at 2-4.

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Plaintiff alleges that he was indebted to Bank of America and that he and Bank of

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America settled the debt. After this settlement, Defendant Safeguard Recovery, LLC, on

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behalf of Defendant Eckity Capital Markets, LLC, sent Plaintiff a letter attempting to

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collect this same debt. An attempt by Defendants to collect a debt that had already been

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paid off or settled is a violation of the Fair Debt Collection Practices Act. See 15 U.S.C.

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§ 1692e(2) (a debt collector may not misrepresent “the character, amount, or legal status

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of any debt”); id. § 1692f(1) (a debt collector may not collect an amount “unless such

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amount is expressly authorized by the agreement creating the debt or permitted by law”).
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C.

The Amount of Money at Stake.

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Under the fourth Eitel factor, the court considers the amount of money at stake in

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relation to the seriousness of the defendants’ conduct. See PepsiCo, Inc., 238 F. Supp. 2d

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at 1176. Plaintiff seeks a total of $1,500 in damages, as well as attorney’s fees and costs

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in the amount of $2,110. Doc. 13 at 2. These relatively small amounts – although

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adjusted somewhat by the Court below – are proportional to the violation alleged and the

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effort invested by Plaintiffs’ counsel in this case.

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D.

Possible Dispute Concerning Material Facts.

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Given the sufficiency of the complaint and Defendant’s default, “no genuine

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dispute of material facts would preclude granting [Plaintiff’s] motion.”

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PepsiCo, Inc.,

238 F. Supp. 2d at 1177; see Geddes, 559 F.2d at 560.

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E.

Whether Default Was Due to Excusable Neglect.

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Defendants appear to have been properly served with the summons and complaint

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pursuant to Rule 4 of the Federal Rules of Civil Procedure. Docs. 6, 7. It is therefore

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“unlikely that [Defendants’] failure to answer and the resulting default was the result of

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excusable neglect.” Gemmel v. Systemhouse, Inc., No. CIV 04-187-TUC-CKJ, 2008 WL

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65604, at *5 (D. Ariz. Jan. 3, 2008).

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F.

The Policy Favoring a Decision on the Merits.

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“Cases should be decided upon their merits whenever reasonably possible.” Eitel,

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782 F.2d at 1472. But the mere existence of Rule 55(b) “indicates that this preference,

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standing alone, is not dispositive.” PepsiCo, Inc., 238 F. Supp. at 1177 (citation omitted).

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Moreover, Defendants’ failure to answer or otherwise respond to the complaint “makes a

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decision on the merits impractical, if not impossible.” Id.

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G.

Damages.

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“A default judgment may be entered without a hearing on damages when the

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amount claimed is capable of ascertainment from definite figures contained in the

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documentary evidence or in detailed affidavits.” Taylor Made Golf Co. v. Carsten

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Sports, Ltd., 175 F.R.D. 658, 661 (S.D. Cal. 1997). Plaintiff requests actual damages of
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$500 and prejudgment interest thereon. In an affidavit, Plaintiff states that receiving

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Defendants’ debt-collection letter was upsetting and caused him to lose sleep and suffer

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anxiety. Doc. 15-1. Although district courts in this circuit are split on the issue, the

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Court concludes that a Plaintiff may recover damages for emotional distress under the

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FDCPA. The Court finds the reasoning in Riley v. Giguiere, 631 F. Supp. 2d 1295, 1314

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(E.D. Cal. 2009), to be persuasive. See also Healey v. Trans Union LLC, No. C09-

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0956JLR, 2011 WL 1900149, at *11 (W.D. Wash. May 18, 2011) (“The court is

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persuaded by the Riley court’s analysis, and, like Riley, holds that ‘actual damages’ under

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the FDCPA includes emotional distress damages.”).

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Given the relatively isolated

instance of emotional distress in this case, $500 in damages is appropriate.

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The FDCPA does not explicitly allow for prejudgment interest on actual damages.

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Courts may, however, “allow prejudgment interest even though the governing statute is

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silent.” Frank Music Corp. v. Metro-Goldwyn-Mayer Inc., 886 F.2d 1545, 1550 (9th Cir.

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1989). “Whether [prejudgment] interest will be awarded is a question of fairness, lying

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within the court's sound discretion, to be answered by balancing the equities.” Wessel v.

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Buhler, 437 F.2d 279, 284 (9th Cir. 1971). Plaintiff has not explained why he is entitled

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to prejudgment interest. Because Defendants’ violation of the FDCPA was relatively

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minor and Plaintiff will receive an award of statutory damages, prejudgment interest is

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unnecessary here.

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Plaintiff also requests statutory damages of $1,000. The FDCPA permits “such

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additional damages as the court may allow, but not exceeding $1,000.” 15 U.S.C.

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§1692k(a)(2)(A). In deciding the appropriate amount of statutory damages, the Court

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must consider “the frequency and persistence of noncompliance by the debt collector, the

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nature of such noncompliance, and the extent to which such noncompliance was

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intentional.” Id., § 1692k(b)(1). The Court finds an award of $500 to be appropriate.

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Plaintiff’s complaint alleges only one violation of the FDCPA, namely, the sending of a

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letter to collect a debt that had already been settled. This is not an egregious violation of

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the FDCPA and there is no evidence that it was intentional. The only factor weighing in
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favor of statutory damages is the frequency of noncompliance by Defendants. Plaintiff

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has pointed to several previous judgments against Defendants for violations of the

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FDCPA. This history of noncompliance supports an award of $500. Finally, Plaintiff

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emphasizes that Congress has not updated the cap on statutory damages and therefore

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maximum damages are necessary to deter misconduct in today’s marketplace. While this

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may be true, the Court must abide by the statute as written.

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Finally, Plaintiff requests compensation for his attorney’s fees and costs. Under

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the FDCPA, the Court may award a successful Plaintiff “the costs of the action, together

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with a reasonable attorney’s fee as determined by the Court.” 15 U.S.C. § 1692k(a)(3).

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Having reviewed the submitted documents, the Court finds the requested attorney’s fees

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of $1,650 and costs of $460 to be reasonable.

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IT IS ORDERED:

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Plaintiff’s motion for default judgment (Doc. 13) is granted.

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2.

Default judgment is entered in favor of Plaintiff and against Defendants

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Safeguard Recovery, LLC and Eckity Capital Markets, LLC in the amount

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of $1,000.

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3.

$2,110.

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Plaintiff’s request for attorney’s fees and costs is granted in the amount of

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The Clerk is directed to terminate this action and enter judgment
accordingly.

Dated this 15th day of June, 2015.

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