Liversage et al v. Nationwide Debt Management Solutions, LLC

Filing 12

REPORT AND RECOMMENDATIONS re 8 MOTION for Default Judgment as to Nationwide Debt Management Solutions, LLC filed by Thomas Liversage, Patricia Liversage. Signed by Magistrate Judge Stephanie A Gallagher on 1/11/2016. (hmls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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THOMAS LIVERSAGE, et al.,
Plaintiff,
v.
NATIONWIDE DEBT MANAGEMENT
SOLUTIONS, LLC,
Defendant.
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Case No.: ELH-15-1266

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REPORT AND RECOMMENDATIONS
This Report and Recommendations addresses the Motion for Default Judgment that
Plaintiffs Thomas Liversage and Patricia Liversage (“Plaintiffs”) filed against Defendant
Nationwide Debt Management Solutions, LLC (“Defendant”). See [ECF No. 8]. On October 6,
2015, Judge Hollander referred this case to me to review Plaintiffs’ motion and make
recommendations concerning damages. For the reasons discussed herein, I recommend that
Plaintiffs’ motion be GRANTED, and that damages be awarded as recommended below.
I.

BACKGROUND
Plaintiffs, two Maryland residents and “consumers,” as defined in 15 U.S.C. § 1692a(3),

filed a Class Action Complaint on behalf of themselves and all similarly situated persons on May
1, 2015. See [ECF No. 1]; 15 U.S.C. § 1692a(3) (“The term ‘consumer’ means any natural
person obligated or allegedly obligated to pay a debt.”); Md. Code Ann. Com. L. § 14-201(b).
Defendant is, and at all relevant times was, a “debt collector” as defined in 15 U.S.C. § 1692a(6)
and Md. Code Ann. Com. L. § 14-201(b). Plaintiffs allege that Defendant’s collection practices
violate certain portions of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692

et seq., the Maryland Consumer Debt Collection Act (“MCDCA”), Md. Code Ann. Com. L. §
14-200 et seq., and the Maryland Consumer Protection Act (“MCPA”), Md. Code Ann. Com. L.
§ 13-100 et seq. Pls.’ Compl. ¶¶ 2, 12-23. According to Plaintiffs’ Complaint, the putative class
in this case is “all Maryland residents who subjected [sic] to any collection activity by Defendant
Nationwide within three years before the date of the filing of this Complaint.” Id. at ¶ 24.
Plaintiffs purport that they meet the numerosity, common question, typicality, and adequacy
requirements mandated by Federal Rule of Civil Procedure 23. See Pls.’ Compl. ¶¶ 24-28.
Defendant failed to respond to Plaintiffs’ Complaint. On June 9, 2015, Plaintiffs filed a Request
for Entry of Default with the Clerk’s Office, which was granted on August 25, 2015. See [ECF
No. 6]. The instant motion followed. See [ECF No. 8]. The two named plaintiffs, Thomas and
Patricia Liversage, seek statutory damages of $1000.00 each, as well as attorneys’ fees of
$3,264.50, and filing fees of $400.00, for a total damages award of $5,664.50. See [ECF No. 8].
II.

STANDARD OF REVIEW
In reviewing a motion for default judgment, the Court accepts as true the well-pleaded

facts of the complaint as to liability. See Ryan v. Homecomings Fin. Network, 253 F.3d 778,
780-81 (4th Cir. 2001). The Court may, however, still require “some proof of the facts that must
be established in order to determine liability.” See id.; 10A Charles A. Wright, Arthur R. Miller
& Mary Kay Kane, Federal Practice and Procedure § 2688 (3d ed.). Moreover, despite the
Fourth Circuit’s policy preference that cases “be decided on the merits,” see United States v.
Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), default judgment is “appropriate when the
adversary process has been halted because of an essentially unresponsive party.” See S.E.C. v.
Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005).

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If the Court deems that liability has been established, it shall make an independent
determination regarding damages and “cannot accept as true factual allegations of damages.”
Lawbaugh, 359 F. Supp. 2d at 433. Pursuant to Federal Rule of Civil Procedure 54(c), 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). If a complaint does not specify the amount of damages
sought, the Court must “make an independent determination of the sum to be awarded,” by
“taking evidence when necessary or by computation of facts from a record.” Pope v. United
States, 323 U.S. 1, 12 (1944). The Court is not required to conduct an evidentiary hearing to
determine damages, and may instead rely on affidavits or documentary evidence in the record to
determine the appropriate sum. See Monge v. Portofino Ristorante, 751 F. Supp. 2d 789, 794-95
(D. Md. 2010); Trustees of the Nat’l Asbestos Workers Pension Fund v. Ideal Insulation, Inc.,
Civ. No. ELH-11-832, 2011 WL 5151067, at *4 (D. Md. Oct. 27, 2011). In the instant case, the
Court must first determine whether facts contained in Plaintiffs’ Complaint constitute a
cognizable cause of action, and, if they do, must then make an independent determination
regarding the appropriate amount of damages.
III.

ANALYSIS
Plaintiffs’ Complaint claims that Defendant acted as a “debt collector” within the

meaning of the FDCPA’s section 1692a(6), in that it used U.S. Mail and telephones to collect a
consumer debt allegedly owed by Plaintiffs, and that at all relevant times, in collecting or
attempting to collect the Plaintiffs’ alleged debts, which rose out of consumer transactions,
Defendant acted as a “collector” and “person” as defined in the Maryland Consumer Debt
Collection Act’s section 14-201(b). See 15 U.S.C. § 1692a(6); Md. Code Ann. Com. L. § 14-

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201(b). Because Defendant is subject to the FDCPA and MCDCA, Defendant’s actions in
violation of these two statutes give rise to the Defendant’s liability thereunder.
Plaintiffs allege that Defendant made phone calls to Plaintiffs’ home, and to Plaintiff
Thomas Liversage’s work, during which Defendant made “false, deceptive, or misleading
representation[s] in connection with the collection” of Plaintiffs’ consumer debt, including
“threat[ening] to take any action that cannot legally be taken,” and used “unfair or
unconscionable means to collect or attempt to collect any debt” in violation of the FDCPA’s
sections 1692e and 1692f. See 15 U.S.C. §§ 1692e, 1692f. Specifically, Plaintiffs contend that
Defendant’s failure to maintain a valid collection agency license in Maryland in violation of
section 7-301 of the Maryland Collection Agency Licensing Act (“MCALA”) triggers
Defendant’s liability under FDCPA section 1692e’s proscription against “threat[ening] to take
any action that cannot legally be taken.” Without a valid Maryland collection license, Defendant
is unable to file suit legally against the Plaintiffs in Maryland. See 15 U.S.C. § 1692e(5); Md.
Code Ann. Bus. Reg. § 7-301; Pls.’ Mot. ¶ 8(c); Pls.’ Compl. ¶ 21.
Plaintiffs further assert that Defendant “willfully and knowingly” acted as a debt
collection agency in Maryland without a license because Defendant is “deemed to know the law
of the jurisdictions where it conducts business.” Pls.’ Compl. ¶ 23. Finally, Plaintiffs argue that
in its attempts to collect Plaintiffs’ consumer debts with the knowledge that it does not have a
valid Maryland debt collection license, Defendant “knowingly and willfully violated § 14-202(8)
of the MCDCA,” which prohibits debt collectors from “claim[ing], attempt[ing], or threaten[ing]
to enforce a right with knowledge that the right does not exist,” and that, in violating the
MCDCA, Defendant in turn violated section 13-301(14)(iii) of the MCPA, which designates as

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an “unfair or deceptive trade practice” any violation of the MCDCA. See Pls.’ Compl. ¶¶ 34-40;
Md. Code Ann. Com. L. § 13-301(14)(iii).
A. Plaintiffs’ FDCPA Claims
As precedent instructs, this Court accepts all of Plaintiffs’ factual allegations regarding
Defendant’s conduct 1 as true. See Ryan, 253 F.3d at 778. As to Plaintiffs’ FDCPA claims, the
Fourth Circuit has established that “the threshold requirement for application of the [FDCPA] is
that prohibited practices are used in attempt to collect a debt.” Mabe v. G.C. Servs. Ltd. P’ship,
32 F.3d 86, 87-88 (4th Cir. 1994); see also Carroll v. Paul Law Office PLLC, No. Civ. A. DKC12-2041, 2013 WL 4008873, at *2 (D. Md. Aug. 2, 2013); United States v. Nat’l Fin. Services,

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While Plaintiffs’ factual allegations are accepted as true, it is significant to note that the Complaint
contains a crucial error that could have undermined the claims contained therein if this case had
proceeded under different circumstances. Specifically, Plaintiffs state that venue is proper because “the
Defendant transacts business in this District and a substantial portion of the acts that give rise to the claim
occurred within this District,” and because “[a]dditionally, Plaintiffs reside within the District of
Maryland.” Yet, Plaintiffs fail to state whether they resided in the District at all times during the alleged
events. Plaintiffs would need to have resided in Maryland during the period in which they allege they
were harassed by Defendants to lay proper venue here. See 28 U.S.C. § 1391(b)(2) (“A civil action may
be brought in . . . a judicial district in which a substantial part of the events or omissions giving rise to the
claim occurred.”).
Moreover, the Complaint contains no additional facts to indicate that the home and work phone
numbers at which Defendant placed calls to Plaintiffs belong to addresses in Maryland. See, e.g., Pls.’
Compl. ¶¶ 11, 20 (stating only that “On or about February 27, 2015, Defendant began making telephone
collection calls to the Plaintiffs’ home phone number and Plaintiff Thomas Liversage’s work phone
number” without explaining where Plaintiffs’ home and work were located). While the Fourth Circuit has
not yet addressed the issue, many federal circuits hold that district courts may not raise the issue of
improper venue sua sponte. See Buchanan v. Manley, 145 F.3d 386 (D.C. Cir. 1998) (finding that
personal jurisdiction and venue are “matter[s] to be raised by motion or responsive pleading, not by the
court sua sponte”) (citing Anger v. Revco Drug Co., 791 F.2d 956 (D.C. Cir. 1986)); Gomez v. USAA Fed.
Sav. Bank, 171 F.3d 794, 796 (2d Cir. 1999) (“A district court may not dismiss a case sua sponte for
improper venue absent extraordinary circumstances.”); Sinwell v. Shapp, 536 F.2d 15, 19 (3d Cir. 1976)
(“[I]t is inappropriate for the trial court to dispose of the case sua sponte on an objection to the complaint
which would be waived if not raised by the defendant(s) in a timely manner.”). As such, I recommend
that the Court decline to contemplate dismissal or denial of Plaintiffs’ motion due to improper venue, but
note the issue as it is relevant to the attorneys’ fee calculation below.

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Inc., 98 F.3d 131 (4th Cir. 1996) (noting that whether a debt collector’s conduct violates the
FDCPA is judged from the viewpoint of the “least sophisticated consumer”). Moreover, the
FDCPA is a strict liability statute, which means that a consumer need only prove one violation of
the FDCPA to collect statutory or actual damages. See 15 U.S.C. § 1692k(a); Spencer v.
Hendersen-Webb, 81 F. Supp. 2d 581, 590-91 (D. Md. 1999). Here, Plaintiffs allege that
Defendant knowingly attempted to collect Plaintiffs’ consumer debt in Maryland without
obtaining a valid license to do so, in violation of FDCPA section 1692e(5). See Pls.’ Compl. ¶¶
20-23. Therefore, construing Plaintiffs’ allegations as true, Plaintiffs plausibly state a claim for
relief under the FDCPA, and the liability prong of the default judgment standard is satisfied.
B. Plaintiffs’ Damages
1. Statutory Damages
Section 1692k of the FDCPA provides that any debt collector who fails to comply with
any FDCPA provision is liable to the person to whom the violation has been directed “in an
amount equal to the sum of [either] (1) any actual damage sustained by such person as a result of
such failure; or (2)(A) in the case of any action by an individual, 2 such additional damages as the
court may allow, but not exceeding $1,000.” Here, Plaintiffs have alleged that Defendant failed
to comply with the relevant FDCPA provisions, and they seek the maximum award of statutory

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Although Plaintiffs in the instant case are the named plaintiffs in a putative class action that has not
been certified by the Court, they seek default judgment only in their individual capacities. See Pls.’
Compl. ¶¶ 24-28. See Partington v. Am. Int’l Specialty Lines Ins. Co., 443 F.3d 334, 340 (4th Cir. 2006)
(noting that in cases in which the district court has entered a default judgment against a defendant and no
class has been certified, only named plaintiffs can recover damages). Because the Court will be able to
revisit certification if a putative class member who cannot and will not recover following the resolution of
the Plaintiffs’ instant motion seeks such certification, see Leider v. Ralfe, No. 1:01-CV-3137 HB FM,
2003 WL 24571746, at *8-13 (S.D.N.Y. Mar. 4, 2003) (conducting class certification analysis following
defendant’s default and denying certification), it is not necessary for the Court to contemplate certifying
the Complaint’s putative class at this time.

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damages. See Wright v. Finance Serv. of Norwalk, Inc., 22 F.3d 647, 651 (6th Cir. 1994)
(“Congress intended to limit ‘other damages’ to $1,000 per proceeding, not to $1,000 per
violation.”). In determining the appropriate amount of statutory damages to be awarded in a
particular case, a court shall consider, among other factors, “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). Other courts have noted that
“the maximum statutory damage award is only assessed in cases where there [have] been
repetitive, egregious FDCPA violations and even in such cases, the statutory awards are often
less than $1000.” Ford v. Consigned Debts & Collections, Inc., 2010 WL 5392643 at *5 (D.N.J.
Dec. 21, 2010).
The allegations in the Complaint establish that Defendant engaged in unlicensed
collections activity, but the extent of that activity is far from clear. The Complaint alleges only
that on a single day, on or about February 27, 2015, “Defendant began making telephone
collection calls to the Plaintiffs’ home phone number and to Plaintiff Thomas Liversage’s work
phone number.” Pls.’ Compl. ¶ 20. The Complaint does not allege any conduct after February
27, 2015. Thus, Plaintiffs’ case is much closer to the heartland of FDCPA cases which result in
significantly lower awards for statutory damages for relatively minimal collection activity. See,
e.g., Marchman v. Credit Solutions Corp., 2011 WL 1560647 (M.D. Fla. April 5, 2011)
(recommending an award of $100.00 in statutory damages and no actual damages where plaintiff
received two telephone calls including a threat to contact Plaintiff's employer, and claimed loss
of sleep, worry, withdrawal, and depression); Ford, 2010 WL 5392643 (D.N.J. Dec. 21, 2010)
(awarding $350.00 in statutory damages and $200.00 in actual damages where plaintiff received
one message that failed to identify the caller and one call threatening to sue the plaintiff, inform

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the plaintiff’s parole officer, and have plaintiff thrown back in jail, causing anxiety and
exasperation for a few weeks, lack of sleep, and depression); Mostiller v. Chase Asset Recovery
Corp., 2010 WL 335023 (W.D.N.Y. Jan. 22, 2010) (awarding actual damages of $250.00 and
statutory damages of $150.00 where defendant left one voice message saying it was “gonna take
action against” Plaintiff which was overheard by fiancé who was not aware of debt, causing
stress and emotional distress). In this case, the conduct in question is alleged to have occurred
only on a single date, with no other aggravating factual allegations.

Pls.’ Compl. ¶ 20.

Accordingly, I recommend a reduced award of statutory damages in the amount of $200.00 per
Plaintiff.
2. Attorneys’ Fees and Costs
First, Plaintiffs seek costs in the amount of the $400.00 filing fee. That request is
reasonable and I recommend that the full amount be awarded.
Second, Plaintiffs seek attorneys’ fees in the amount of $3,264.50. A prevailing plaintiff
is entitled to a mandatory award of reasonable attorney’s fees under the FDCPA, but the amount
of the award is left to the district court’s discretion. Carroll v. Wolpoff & Abramson, 53 F.3d
626, 628 (4th Cir. 1995) (upholding a fee award of only $500.00 in fees where claimed lodestar
amount was almost $10,000.00). In calculating the appropriate award of attorney’s fees, the
Court must first determine the lodestar amount, defined as a “reasonable hourly rate multiplied
by hours reasonably expended.” Grissom v. The Mills Corp., 549 F.3d 313, 320-21 (4th Cir.
2008); see Plyler v. Evatt, 902 F.2d 273, 277 (4th Cir. 1990) (stating that “[i]n addition to the
attorney’s own affidavits, the fee applicant must produce satisfactory specific evidence of the
prevailing market rates in the relevant community for the type of work for which he seeks an
award”) (internal citations omitted). A trial court may exercise its discretion in determining the

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lodestar amount because it possesses “superior understanding of the litigation,” and the matter is
“essentially” factual. Thompson v. HUD, No. MJG–95–309, 2002 WL 31777631, at *6 n. 18 (D.
Md. Nov. 21, 2002) (quoting Daly v. Hill, 790 F.2d 1071, 1078-79 (4th Cir. 1986) (internal
quotation marks omitted)). Once the lodestar amount has been determined, the Court determines
whether or not it constitutes a reasonable fee, and makes any necessary adjustments. See Carroll,
53 F.3d at 629. In evaluating both the lodestar calculations and the overall reasonable fee, this
Court uses “the twelve well-known factors articulated in Johnson v. Georgia Highway Express,
Inc., 488 F.2d 714, 717-19 (5th Cir. 1974) and adopted by the Fourth Circuit in Barber v.
Kimbrell’s, Inc., 577 F.2d 216, 226 (4th Cir. 1978).” Thompson, 2002 WL 31777631, at *6
(footnotes omitted). Those factors are:
(1) the time and labor required; (2) the novelty and difficulty of the
questions; (3) the skill requisite to properly perform the legal service; (4) the
preclusion of other employment by the attorney due to acceptance of the
case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7)
time limitations imposed by the client or the circumstances; (8) the amount
involved and the results obtained; (9) the experience, reputation, and ability
of the attorneys; (10) the “undesirability” of the case; (11) the nature and
length of the professional relationship with the client; and (12) awards in
similar cases.
Id. at *6 n. 19 (citing Johnson, 488 F.2d at 717-19). What is reasonable depends on the facts and
circumstances of the case and “§ 1692k does not mandate a fee award in the lodestar amount.”
Carroll, 53 F.3d at 629.
The Declaration in Support of Award of Attorneys’ Fees and Costs in this case is
deficient in some respects and erroneous in others. The Declaration suggests that the appropriate
hourly rate is $400.00 per hour for work performed by attorney E. David Hoskins, who
according to the declaration has practiced law for twenty-nine years and bills $400.00 per hour as
his “customary fee for statutory damage cases.” [ECF No. 8-1]. The billing statement attached

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to the Declaration, however, bills Mr. Hoskins’s work at a rate of $475.00 per hour, not $400.00.
In addition, the billing statement contains entries reflecting work performed by another attorney,
Max Brauer. Mr. Brauer’s work appears to have been billed at two different rates: sometimes
$195.00 per hour and sometimes $475.00 per hour. The Declaration provides no information
about Mr. Brauer’s background or years of legal experience, in order to permit an assessment of
an appropriate hourly rate.
The entries in the billing statement raise other significant issues. First, there are three
entries pre-dating February 27, 2015, which, according to the Complaint, is the date when
Defendant “began” making calls in violation of the FDCPA. Thus, either the billing statement
contains entries that are not properly attributed to this matter, or the Complaint erroneously
reflected the facts of the case. Second, one of the billing entries from Mr. Brauer, on April 30,
2015, states that Mr. Brauer spent time “discussing new Liversage matter with Mr. Hoskins.”
The reference to a “new matter” again suggests that this entry is not properly attributed to this
case. Finally, the billing statement reflects that Mr. Hoskins spent an hour drafting the Motion
for Default Judgment in this case. In addition to the errors reflected above, Paragraph 8 of the
Motion for Default Judgment, which purports to recite the ways in which Defendant violated the
FDCPA, appears to be entirely copied from a like motion in another case. It contains factual
allegations that do not exist in this Complaint, and cites to Paragraphs 45-48 of the Complaint to
support those allegations, even though the Complaint in this case contains only 41 numbered
paragraphs. Since the remainder of the Motion for Default Judgment contains little case-specific
information or analysis, an hour of billing for its preparation appears excessive.
Turning, then, to calculation of a lodestar rate, I recommend that Mr. Hoskins be awarded
fees in the hourly amount of $400.00, as he requested, and that Mr. Brauer’s fees be awarded in

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the amount of $150.00, which is the baseline amount under this Court’s guidelines for lawyers
admitted to the bar for less than five (5) years. The total time expended by Mr. Brauer (after
eliminating the entries pre-dating February 27, 2015 and the entry for the “new matter”) is 2.2
hours, resulting in a lodestar calculation of $330.00. The total time expended by Mr. Hoskins
according to the billing statement is 4.9 hours. However, in light of the dearth of case-specific
information in the Complaint, the number of like cases filed by Mr. Hoskins, and the errors
outlined above, I recommend that half of that number of hours be awarded as the lodestar
calculation in this case. Thus, the lodestar calculation for Mr. Hoskins would be $980.00, which
represents 2.45 hours at $400.00 per hour. The total lodestar fee is therefore $1,310.00.
I recommend that the lodestar amount be awarded as a reasonable fee in this matter.
Considering the Johnson factors, and with the reductions taken above to address what appears to
be excessive billing as suggested by the quality of the Court filings, $1310.00 represents a
reasonable fee assessment in light of the fact that counsel has extensive experience in these
cases, the fact that this case involved little novel work, the fact that the results represented a
reduced award of statutory damages in light of the minimal allegations of violations in the
Complaint, and the fact that this case was not undesirable, time consuming, or challenging.
IV.

CONCLUSION
For the reasons set forth above, I recommend that:
1.

The Court GRANT Plaintiffs’ Motion for Default Judgment, [ECF No. 8]; and

2.

The Court award each Plaintiff $200.00 in statutory damages, plus a total of

$1310.00 in legal fees and $400.00 in costs, for a total judgment of $2,110.00.

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I also direct the Clerk to mail a copy of this Report and Recommendations to Defendant
at the addresses (for the Defendant and its registered agent) listed on Plaintiffs’ Complaint, [ECF
No. 1].
Any objections to this Report and Recommendations must be served and filed within
fourteen (14) days, pursuant to Fed. R. Civ. P. 72(b) and Local Rule 301.5.b.
V.

NOTICE TO PARTIES
Failure to file written objections to the proposed findings, conclusions, and

recommendations of the Magistrate Judge contained in the foregoing report within fourteen (14)
days after being served with a copy of this report may result in the waiver of any right to a de
novo review of the determinations contained in the report, and such failure shall bar you from
challenging on appeal the findings and conclusions accepted and adopted by the District Judge,
except upon grounds of plain error.

Dated:

January 11, 2016

/s/
Stephanie A. Gallagher
United States Magistrate Judge

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