Shockley v. Portfolio Recovery Associates, LLC et al
Filing
17
MEMORANDUM OPINION & ORDER: (1) GRANTING IN PART & DENYING IN PART pla's 15 MOTION for Default Judgment; (2) Shockley's motion for default judgment against United Adjustment Corporation for violating the FDCPA is GRANTED; (3) Shockle y's motion for default judgment against United Adjustment Corporation for violating the FCRA is GRANTED; (4) pla's request for a total award of $2,000 is statutory damages is DENIED; an evidentiary hrg will be scheduled to determine th e appropriate amt of statutory damages; (5) at least 2 weeks before the hrg parties SHALL (a) file list of exhibits; (b) Premark exhibits; (c) file a witness list; (d) file a pre-hrg memo; (6) at least 1 week before hrg parties shall raise any object ions or make any motions related to evidence to be presented; (7) Evidentiary Hearing set for 12/10/2018 01:30 PM in LEXINGTON before Judge Joseph M. Hood; (8) clerk SHALL send dft United Adjustment Corporation a copy of this order at the address were United was previously served. Signed by Judge Joseph M. Hood on 11/1/18.(KJR)cc: COR, D, United Adjustment Corporation (US Mail)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
CHARLES SHOCKLEY,
Plaintiff,
v.
PORTFOLIO RECOVERY ASSOICATES,
LLC, et. al.
Defendants.
This
matter
is
before
)
)
)
)
)
)
)
)
)
)
)
Case No.
5:18-cv-010-JMH
MEMORANDUM OPINION
AND ORDER
***
the Court
upon
Plaintiff
Charles
Shockley’s motion for default judgment against Defendant United
Adjustment
Corporation
(“UAC”).
[DE
15].
Plaintiff
has
demonstrated that Defendant is liable for violations of the Fair
Debt
Collection
Reporting
Act
Practices
(“FCRA”),
Act
{“FDCPA”)
but
Plaintiff
and
has
the
not
Fair
Credit
adequately
established the appropriate amount of statutory damages.
As a
result, Plaintiff’s motion for default judgment is GRANTED IN PART
and DENIED IN PART.
I.
Procedural History
On January 10, 2018, Shockley filed the Complaint in this
matter against Defendants Portfolio Recovery Associates, LLC and
UAC alleging violations of the FDCPA and the FCRA.
[DE 1].
On
February 8, 2018, Shockley moved to dismiss Defendant Portfolio
1
Recovery Associates but wished to continue this action against
UAC.
[DE 7].
Plaintiff’s Motion to Dismiss Portfolio Recovery
Associates was granted on February 13, 2018.
[DE 8].
Subsequently, Shockley moved for entry of default against
UAC.
[DE 11].
The Clerk entered default because the record
indicated that a Summons and Copy of the Complaint was served upon
UAC and UAC had failed to plead or otherwise defend the action.
[DE 13].
Now, Shockley moves for default judgment pursuant to Fed. R.
Civ. P. 55(b)(1) or, in the alternative, pursuant to Fed. R. Civ.
P. 55(b)(2).
[DE 15].
Shockley is only pursuing statutory
damages, costs of the action, and attorneys’ fees.
II.
Standard for Default Judgment
In a motion for default under Rule 55, “the well pleaded
factual allegations in the Complaint, except those relating to
damages, are taken as true.”
Ford Motor Co. v. Cross, 441 F. Supp.
2d 837, 847 (E.D. Mich. 2006) (citing Thomson v. Wooster, 114 U.S.
104 (1885); Antoine v. Atlas Turner, Inc., 66 F.3d 105, 110–11
(6th
Cir.
1995)).
If
the
allegations
in
the
Complaint
are
sufficient to support a finding that the Defendant violated the
provisions of the FDCPA or FCRA, judgment should be entered for
the Plaintiff.
2
A default judgment may be entered either by the Clerk or by
the
Court.
The
Clerk
may
enter
default
judgment
“[i]f
the
plaintiff’s claim is for a sum certain or a sum that can be made
certain by computation.” Fed. R. Civ. P. 55(b)(1). Alternatively,
“[i]n all other cases, the party must apply to the court for a
default judgment.”
Fed. R. Civ. P. 55(b)(2).
Here, Shockley’s motion for default judgment is made pursuant
to Fed. R. Civ. P. 55(b)(2).
The maximum amount of statutory
damages that may be recovered under the FDCPA and the FCRA is
$1,000 but the actual amount of statutory damages to which the
plaintiff is entitled is within the discretion of the court.
U.S.C. § 1692(a)(2)(A); 15 U.S.C. § 1681(a)(1)(A).
15
Thus, where
statutory language sets out a minimum and maximum amount for an
award of statutory damages, the motion for default must be directed
to the court.
See, e.g., Charvat v. NMP, LLC, No. 2:09-CV-209,
2012 WL 2577489, at *2 (S.D. Ohio July 3, 2012).
Additionally, the Court may conduct an evidentiary hearing on
damages or to establish the truth of any allegation by evidence.
Fed. R. Civ. P. 55(b)(2).
Damages that are unliquidated or not
susceptible to mathematical computation must be proven by the
Plaintiff.
Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp.,
973 F.2d 155, 158 (2d Cir. 1992).
“A party who has been found
liable by default judgment ‘still has the opportunity to respond
to the issue of damages.’”
New London Tobacco Market, Inc. v.
3
Kentucky Fuel Corp., No. 12-CV-91-GFVT, 2017 WL 1227926, at *2
(E.D.
Ky.
Mar.
“Ordinarily,
31,
the
2017)
(citing
District
Court
Antoine,
must
66
hold
F.3d
an
at
110).
evidentiary
proceeding in which the defendant has the opportunity to contest
the amount of damages.”
Antoine v. Atlas Turner, Inc., 66 F.3d
105, 110–11 (6th Cir. 1995) (quoting Greyhound, 973 F.2d at 158).
III.
A.
Analysis
Default Judgment Under the FDCPA
The FDCPA prohibits a wide range of specific conduct, but it
also prohibits any harassing, unfair, or deceptive debt collection
practices. S. Rep. No. 95–382, at 4, 1977 U.S.C.C.A.N. 1695, 1698;
see generally 15 U.S.C. §§ 1692d–1692f.
“extraordinarily broad.”
As a result, the Act is
Barany–Snyder v. Weiner, 539 F.3d 327,
333 (6th Cir. 2008) (quoting Frey v. Gangwish, 970 F.2d 1516, 1521
(6th Cir. 1992)).
“To determine whether conduct fits within the
broad scope of the FDCPA, the conduct is viewed through the eyes
of
the
‘least
sophisticated
consumer.’”
Currier
v.
First
Resolution Inv. Corp., 762 F.3d 529, 533 (6th Cir. 2014) (quoting
Barany-Snyder, 539 F.3d at 333).
(1) Liability
15
U.S.C.
§
1692e(8)
prohibits
“[c]ommunicating
or
threatening to communicate to any person credit information which
is known or which should be known to be false, including the
4
failure to communicate that a disputed debt is disputed.”
To
establish a violation under § 1692e(8):
1) The plaintiff must be a “consumer” as defined by the FDCPA;
2) The “debt” must arise out of transactions that are
“primarily for personal, family, or household purposes”;
3) The defendant must be a “debt collector” as defined by the
FDCPA; and
4)
Plaintiff
must
present
facts
demonstrating
that
the
defendant communicated information that it either knew or
should have known was false to a third party.
See Wallace v. Washington Mut. Bank, F.A., 683 F.3d 323, 326 (6th
Cir. 2012); Whittiker v. Deutsche Bank Nat. Trust Co., 605 F. Supp.
2d 914, 926 (N.D. Ohio 2009); Stephens v. Premiere Credit of N.
Am., LLC, No. 3:16-CV-007-GNS-CHL, 2018 WL 505593, at *3 (W.D. Ky.
Jan. 22, 2018).
First, under the FDCPA, a “‘consumer’ means any natural person
obligated or allegedly obligated to pay any debt.”
15 U.S.C. §
1692a(3). Shockley is a natural person who was allegedly obligated
to pay a debt as reflected by the UAC tradeline.
The second element is also satisfied.
Paragraph 35 of the
Complaint says, “Upon information and belief, the UAC tradeline
constitutes a ‘debt’ within the meaning [of] the FDCPA.”
5, Page ID # 5].
Since UAC has failed to respond to this
5
[DE 1 at
allegation,
for
the
purposes
of
default
judgment,
the
Court
construes this factual allegation as true.
Third, paragraphs 6 and 7 of the Complaint confirm that “UAC
is an Indiana Corporation . . . [whose] primary purpose is the
collection of debts as defined by the FDCPA.”
# 2].
[Id. at 2, Page ID
Accepted as true, this factual allegation satisfies the
third element of a violation of the FDCPA.
Fourth, and finally, Shockley alleges that UAC transmitted
his credit information to one or more consumer reporting agencies.
[DE 1 at 4, Page ID # 4].
Even so, Shockley maintains that he had
disputed the debt reflected on the UAC tradeline because he thought
that the debt had been discharged in a Chapter 7 bankruptcy
proceeding.
[See id. at 5, Page ID # 5].
At paragraph 12 of the
Complaint, Shockley claims that he “sent dispute letters to the
furnishers of this erroneous information . . . .”
ID # 2].
[Id. at 2, Page
Additionally, Shockley alleges that after he disputed
the debt on the UAC credit line, the consumer reporting agencies
“sent UAC notice of Mr. Shockley’s disputes . . . .”
Page ID # 5].
[Id. at 5,
These facts, accepted as true, demonstrate that UAC
violated 15 U.S.C. § 1692e(8) when UAC failed to notify consumer
reporting agencies that Shockley’s debt reflected on the UAC credit
line had been disputed.
[Id.].
6
Ultimately, accepting the well pleaded factual allegations in
Shockley’s Complaint as true, Shockley has demonstrated that UAC
is liable for violation of 15 U.S.C. § 1692e(8).
(2) Damages
A debt collector who violates the FDCPA is liable to the
aggrieved person for: (1) actual damages sustained; (2) statutory
damages not to exceed $1,000; and (3) costs of the action and
reasonable attorney fees.
15 U.S.C. § 1692k(a).
The maximum
amount of statutory damages that may be awarded under the FDCPA is
$1,000 per proceeding.
See Wright v. Finance Service of Norwalk,
Inc., 22 F.3d 647, 651 (6th Cir. 1994).
The plaintiff must only
demonstrate a single violation of the FDCPA to recover damages.
Cirkot v. Diversified Systems, 839 F. Supp. 941 (D. Conn. 1993).
Shockley seeks to recover only statutory damages, costs, and
fees.
[See DE 15].
The FDCPA requires the Court to consider three
factors in determining the amount of statutory damages: (1) “the
frequency and persistence of noncompliance by the debt collector,”
(2) “the nature of such noncompliance, and [(3)] the extent to
which
such
noncompliance
was
intentional.”
15
U.S.C.
§
1692k(b)(1); Mann v. Acclaim Financial Services, Inc., 348 F. Supp.
2d 923, 926 (S.D. Ohio 2004).
Here, UAC is still entitled to respond on the issue of damages
even though the Court had found UAC liable for violations of the
FDCPA.
New London Tobacco Market, Inc., 2017 WL 1227926, at *2
7
(citing Antoine, 66 F.3d at 110).
Additionally, Shockley has not
provided sufficient information for the Court to consider the three
factors in § 1692k(b)(1) for determining the amount of statutory
damages.
Finally, statutory damages do not constitute a sum
certain because the amount of statutory damages awarded is within
the discretion of the Court.
at *2.
See, e.g., Charvat, 2012 WL 2577489,
Thus, an evidentiary hearing is required to determine the
appropriate amount of statutory damages.
B.
Default Judgment Under the FCRA
The FCRA exists “to ensure fair and accurate credit reporting,
promote efficiency in the banking system, and protect consumer
privacy.”
Safeco Ins. Co. v. Burr, 551 U.S. 47, 52 (2007).
15
§
U.S.C.
1681s-2
seeks
to
prevent
furnishers
of
credit
information from spreading inaccurate consumer-credit information.
See Boggio v. USAA Fed. Sav. Bank, 696 F.3d 611, 614 (6th Cir.
2012).
To that end, the FCRA requires furnishers of credit
information to provide consumer reporting agencies with accurate
credit information.
§ 1681s-2(a).
Additionally, the FCRA imposes
certain duties upon furnishers of consumer-credit information when
they receive notice of a dispute from a consumer reporting agency.
§ 1681s-2(b); see Boggio, 696 F.3d at 614-15.
Finally, the FCRA
expressly creates a private right of action against a furnisher of
information who fails to comply with one of the statutory duties
identified in § 1681.
Boggio, 696 F.3d at 618.
8
(1) Liability
To
establish
a
willful
violation
of
the
FCRA
under
§ 1681s-2(b) the Plaintiff must show:
1) That the furnisher of consumer-credit information received
notice from a consumer reporting agency, not the plaintiff,
that the credit information is disputed; and
2) That after receiving notice of the dispute, the furnisher
of information acted with reckless disregard in performing
its duties under § 1681s-2(b).
Ogle v. BAC Home Loans Servicing LP, 924 F. Supp. 2d 902, 912 (S.D.
Ohio 2013); see Safeco, 551 U.S. at 57; Downs v. Clayton Homes,
Inc., 88 F. App’x 851, 853–54 (6th Cir. 2004); Boggio, 696 F.3d at
614-20.
Here, Shockley alleges that UAC violated the FCRA by willfully
failing to conduct a proper investigation after being informed of
Shockley’s dispute with the UAC tradeline by consumer reporting
agencies.
[DE 1 at 7, Page ID # 7].
First,
accepting
the
factual
allegations
in
Shockley’s
complaint as true, Shockley has satisfied the first element of an
FCRA
violation.
Shockley
alleges
that
UAC
furnished
credit
information to consumer reporting agencies for the purpose of
collecting a debt. [Id. at 5, Page ID # 5]. Subsequently, Shockley
disputed this debt with the consumer reporting agencies because he
believed the debt was discharged in a bankruptcy proceeding.
9
[Id.].
Additionally, Shockley alleges that the consumer reporting
agencies sent UAC notice of Shockley’s disputes regarding the UAC
tradeline, triggering UAC’s statutory duty to investigate under
the § 1681s-2(b).
Second,
[Id.].
Shockley
claims
that,
after
receiving
notice
of
Shockley’s dispute with the UAC tradeline, UAC acted in reckless
disregard of its duties under the FCRA.
After receiving notice of a credit dispute, the FCRA requires
a furnisher of information to “conduct an investigation with
respect
to
2(b)(1)(A).
the
disputed
information.”
15
U.S.C.
696 F.3d at 616.
all
1681s-
The investigation undertaken must be a reasonable
investigation that is more than a merely cursory review.
“review
§
Boggio,
Additionally, a furnisher of information must
relevant
information
provided
by
the
consumer
reporting agency” and then “report the results of its investigation
to the consumer reporting agency.”
Boggio, 696 F.3d at 616-17.
§ 1681a-2(b)(1)(B), (C),
Finally, if the investigation finds
that the credit information is incomplete or inaccurate, the
furnisher
must
“report
those
results
to
all
other
consumer
reporting agencies” and “modify,” “delete,” or “permanently block
reporting of” information that it found to be inaccurate or
incomplete.
§ 1681s-2(b)(1)(D), (E); Boggio, 696 F.3d at 617-19.
Here, Shockley alleges that UAC failed to note Shockley’s
dispute of the UAC tradeline when it sent information to consumer
10
reporting agencies.
[DE 1 at 5, Page ID # 5].
Additionally,
Shockley claims that UAC failed to report the results of its
investigation to consumer reporting agencies.
[Id.].
Accepting these factual allegations as true, Shockley has
satisfied the second and final element to demonstrate a violation
of the FCRA. UAC received notice of Shockley’s dispute from credit
reporting
agencies
and
failed
to
report
the
results
of
its
investigation to consumer reporting agencies, violating its duty
under § 1681s-2(b)(1)(D).
UAC’s duty to report the findings of
its investigation is both clear under the statute and compliance
with the duty requires the expense of minimal time or effort.
As
a result, accepting Shockley’s factual allegations as true, UAC’s
failure to report the findings of its investigation to consumer
reporting agencies reflects more than a merely careless reading or
its duties and rises to the level of a willful violation of the
FCRA.
See Safeco, 551 U.S. at 57, 69.
(2) Damages
A
consumer
that
establishes
that
a
furnisher
of
credit
information willfully violated one of the duties outlined in the
FCRA may recover actual or statutory damages, punitive damages,
costs of the action, and reasonable attorney fees.
1681n.
Statutory damages may be awarded in an amount between $100
and $1000.
§ 1681n(a)(1)(A).
11
15 U.S.C. §
Here, Shockley is only pursuing statutory damages, costs, and
attorneys’ fees.
Since the amount of statutory damages is within
the discretion of the Court, an evidentiary hearing is required to
allow the Defendant to respond on the issue of damages.
New London
Tobacco Market, Inc., 2017 WL 1227926, at *2 (citing Antoine, 66
F.3d at 110).
IV.
Conclusion
In sum, after accepting the factual allegations in Shockley’s
Complaint as true, Shockley has demonstrated that UAC is liable
for violating the FDCPA and the FCRA.
Even so, statutory damages
do not constitute a sum certain since the amount of statutory
damages awarded is within discretion of the Court subject to
statutory limits. As a result, an evidentiary hearing to determine
the appropriate amount of statutory damages is required.
Accordingly, IT IS ORDERED as follows:
(1)
Shockley’s
motion
for
default
judgment
and
damages
against Defendant United Adjustment Corporation [DE 15] is GRANTED
IN PART and DENIED IN PART;
(2)
Shockley’s motion for default judgment against Defendant
United Adjustment Corporation for violating the FDCPA, 15 U.S.C.
§ 1692e(8), is GRANTED;
12
(3)
Shockley’s motion for default judgment against Defendant
United Adjustment Corporation for violating the FCRA, 15 U.S.C. §
1681s-2(b), is GRANTED;
(4)
statutory
Plaintiff’s request for a total award of $2,000 in
damages
is
DENIED.
Pursuant
to
Fed.
55(b)(2)(B), an evidentiary hearing will be scheduled
R.
Civ.
by
P.
Court
order to determine the appropriate amount of statutory damages;
(5)
At least two weeks before the evidentiary hearing on
damages, the parties SHALL:
(a)
file a list of exhibits intended to be used at the
hearing;
(b)
premark and display to opposing counsel or the
opposing party all exhibits intended to be used at
the hearing;
(c)
file a witness list, if applicable, with a brief
summary of the expected testimony of each witness;
(d)
file a pre-hearing memorandum brief containing a
succinct statement of facts and law as related to
the damages sought in this case
(6)
At least one week before the hearing on damages, the
parties shall, if applicable, raise any objections or
motions related to the evidence to be presented
on damages;
13
make
any
at the hearing
(7)
That this matter is set for an evidentiary hearing on
the issue of damages on Monday, December 10, 2018, at
1:30 p.m.,
pending further orders of the Court. The parties shall be prepared
to
address
the
relevant
legal
standards
pertaining
to
the
appropriate amount of statutory damages; and
(8)
The
Clerk
SHALL
send
Defendant
United
Adjustment
Corporation a copy of this Memorandum Order and Opinion at the
same address where United Adjustment Corporation
served in this matter.
This the 1st day of November, 2018.
14
was
previously
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