Link v. Recovery Solutions Group LLC

Filing 18

OPINION AND ORDER granting 15 Motion for Default Judgment. Signed by District Judge Paul D. Borman. (DTof)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
TERESA LINK,
Plaintiff,

Case No. 17-cv-10844

v.

Paul D. Borman
United States District Judge

RECOVERY SOLUTIONS
GROUP, L.L.C.,
Defendant.
___________________________/
OPINION AND ORDER GRANTING PLAINTIFF’S RENEWED
MOTION FOR DEFAULT JUDGMENT (ECF NO. 15)
Plaintiff in this action claims that Defendant Recovery Solutions Group, LLC,
attempted to collect a debt from her through threatening and intimidating phone calls
in violation of the Fair Debt Collections Practices Act, 15 U.S.C. § 1692 et seq. (“the
FDCPA”) and the Michigan Occupational Code, Mich Comp. Laws § 339.901 et seq.
(“the MOC”). Defendant has failed to appear and defend this action, resulting in the
Clerk of the Court entering a default on September 29, 2017. Plaintiff now moves for
a default judgment under Fed. R. Civ. P. 55(b). Defendant has not responded to the
motion for default judgment. The Court held a hearing on February 27, 2018, which
was attended only by counsel for the Plaintiff. For the reasons that follow, the Court
GRANTS the motion for default judgment and awards Plaintiff the full amount of her
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requested damages of $27,057.00.
I.

FACTUAL BACKGROUND
Plaintiff sought and obtained a Clerk’s entry of default against Defendant on

September 29, 2017. (ECF No. 14, Clerk’s Entry of Default.) Once a default has
been entered by the clerk’s office, all of a plaintiff’s well-pleaded allegations, except
those relating to damages, are deemed admitted. Antoine v. Atlas Turner, Inc., 66 F.3d
105, 110 (6th Cir. 1995). See also Ford Motor Co. v. Cross, 441 F. Supp. 2d 837, 846
(E.D. Mich. 2006). The Court may either enter a default judgment in a certain
amount, or conduct a hearing to determine the appropriate amount of damages. “Fed.
R. Civ. P. 55 does not require a presentation of evidence as a prerequisite to the entry
of a default judgment, although it empowers the court to conduct such hearings as it
deems necessary and proper to enable it to enter judgment or carry it into effect.”
Cross, 441 F. Supp. 2d at 848.
Here, the Court deems the allegations of Plaintiff’s Complaint admitted and
additionally considers the Affidavits filed by Plaintiff in support of the motion for
default judgment. Plaintiff is a “consumer” as that term is defined under the FDCPA.
(ECF No. 1, Compl. ¶ 4.) Defendant is a “debt collector” as that term is defined under
the FDCPA and a “collection agency” as that term is defined under the MOC.
(Compl. ¶ 5.) Plaintiff incurred a financial obligation that was primarily for personal,
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family, or household purposes based upon an alleged debt to Serv-Pro that went into
default and is therefore a “debt” as that term is defined under the FDCPA. (Compl.
¶ 6; Pl.’s Mot. Ex. 1.)
Plaintiff and her live-in boyfriend, Robert Norton, have two phones, one of
which is linked to Mr. Norton’s cell phone and one of which is linked to their house
phone. When an important call comes in, Plaintiff and Mr. Norton have worked out
a system where Mr. Norton, who drives trucks for a living, can hear the call as well.
To accomplish this, Plaintiff turns on the speaker phone on the house phone land line
and the speaker phone on the cell phone, enabling Mr. Norton to hear the call. (Pl.’s
Mot. Ex. 2, Aug. 3, 2017 Affidavit of Robert Norton ¶¶ 3, 6-8; Pl.’ Mot. Ex. 3, Aug.
18, 2017 Affidavit of Teresa Link ¶¶ 3-8.) In October 2016, while on the road driving
his truck, Mr. Norton received a call from an agent of the Defendant alleging that he
was a “private investigator” trying to track down the Plaintiff because she had
received an inheritance. (Compl. ¶ 7; Norton Aff. ¶ 9.) Mr. Norton pulled over and
called Plaintiff to give her the number that the “investigator” had given him, asking
that Plaintiff call him. Plaintiff called the number while Mr. Norton listened in, and
the “investigator” told Plaintiff that he was hired by a collection agency and that he
would be driving by her property to see what property Plaintiff had to sell. (Compl.
¶¶ 8-9.) The investigator stated that there was a woman who needed to get in touch
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with Plaintiff and gave Plaintiff the woman’s number.
Plaintiff called the woman but she did not answer the phone. (Compl. ¶ 11;
Norton Aff. ¶¶ 11-13; Link Aff. ¶¶ 9-12.) The woman, a representative of the
Defendant, called Plaintiff back and Mr. Norton heard the conversation. The woman
told Plaintiff that she was a lawyer and that Plaintiff had 24 hours to pay a debt related
to an insurance claim on a fire at Plaintiff’s former residence. (Compl. ¶¶ 13; Norton
Aff. ¶¶14-16; Link Aff. ¶¶ 13-16.) The woman represented that she was going to have
people come to Plaintiff’s home to seize property. Plaintiff did not know she owed
the debt to Serv-Pro and asked if she could have time to investigate the alleged debt.
The woman insisted that Plaintiff had 24 hours to pay the debt and stated that she
would contact the State insurance commissioner and that Plaintiff would go to prison
for insurance fraud if she did not pay in that time frame. (Compl. ¶¶ 13-16; Norton
Aff. ¶¶ 17-24; Link Aff. ¶¶ 16-25.)
Plaintiff became hysterical crying as a result of the call, her arms became numb
and her head hurt. She thought she would be going to jail because she had no idea
how she would come up with the money in 24 hours. (Compl. ¶ 19; Norton Aff. ¶¶
21-27; Link Aff. ¶¶ 28-29.) She asked Mr. Norton what she should do and he called
a friend, Carolyn Norton (no relation) and asked her to call Plaintiff to try to calm her
down. (Compl. ¶ 20; Norton Aff. ¶¶ 28-29; Link Aff. ¶ 30.) Ms. Norton did call
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Plaintiff and they spoke for one and a half to two hours. Plaintiff reiterated to Ms.
Norton the events that had transpired and Plaintiff was worried, scared and crying
during the call. (Pl.’s Mot. Ex. 4, Aug. 18, 2017 Affidavit of Carolyn Norton 1-16.)
Plaintiff eventually did calm down after speaking with Ms. Norton but the collector
continued to call her, again and again. (C. Norton Aff. ¶¶ 18; Link Aff. 32.) Every
time the phone rang, Plaintiff feared it was the collector calling again and she would
mumble to herself, “it’s them again, I’m not answering.” (Norton Aff. ¶¶ 30-31; Link
Aff. ¶¶ 32-33.) Ms. Norton suggested that Plaintiff contact a lawyer, which Plaintiff
did. (Link Aff. ¶ 34-35; C. Norton Aff. ¶¶ 17-18.)
Plaintiff requests a default judgment in the amount of $27,057.00, representing:
(1) statutory damages under the FDCPA of $1,000.00; (2) actual damages under the
FDCPA of $5,000.00; (3) three times actual damages under the MOC of $15,000.00;
(4) costs for service of process of $267.00; and (5) attorneys’ fees of $5,790.00.
II.

LEGAL STANDARD
Pursuant to Federal Rule of Civil Procedure 55(b) a judgment by default may

be entered against a defendant who has failed to plead or otherwise defend against an
action. In order to obtain judgment by default, the proponent must first request the
clerk’s entry of default pursuant to Rule 55(a). See Hanner v. City of Dearborn
Heights, No. 07–15251, 2008 WL 2744860, at *1 (E.D. Mich. July 14, 2008). Once
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a default has been entered by the clerk’s office, all of a plaintiff's well-pleaded
allegations are deemed admitted. Ford Motor Co. v. Cross, 441 F. Supp. 2d at 846
(citation omitted).
Once a default is obtained, the party may then file for a default judgment by the
clerk or by the court. Fed. R. Civ. P. 55(b). When the plaintiff’s complaint alleges
damages for a sum certain a default judgment by the clerk is appropriate. Fed. R. Civ.
P. 55(b)(1). “In all other cases, the party must apply to the court for a default
judgment.” Fed. R. Civ. P. 55(b)(2). Although Rule 55(b)(2) does not provide a
standard to determine when a party is entitled to a judgment by default, the court must
exercise “sound judicial discretion” when determining whether to enter the judgment.
Wright & Miller, 10A Federal Practice & Procedure, § 2685 (3d ed. 1998) (collecting
cases). After a court determines that a default judgment should be entered, it will
determine the amount and character of the recovery awarded. See id. § 2688
(collecting cases).
Where damages are for an uncertain amount, a party must apply to the Court
for a default judgment. Entry of default judgment by the Court is governed by Federal
Rule of Civil Procedure 55(b)(2). The rule states that, in entering a default judgment:
[t]he court may conduct hearings or make referrals—preserving any
federal statutory right to a jury trial—when, to enter or effectuate
judgment, it needs to:
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(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.
Under 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.”
III.

ANALYSIS
A.

Jurisdiction and Service of Process are Proper

This Court has subject matter jurisdiction over this action, which presents a
federal question under the FDCPA, under 15 U.S.C. § 1331. Further, the Court has
personal jurisdiction over the parties, Plaintiff having filed her action here and
Defendant, according to the admitted allegations of the Complaint and Affidavits filed
in support of Plaintiff’s motion, having caused Plaintiff to suffer emotional harm in
this district by communicating false, deceptive and misleading information to Plaintiff
concerning an alleged debt to Serv-Pro. See Southern Machine Co. v. Mohasco Ind.,
Inc., 401 F.2d 374, 380 (6th Cir. 1968) (establishing a three-part test for satisfying the
requirements of due process in the exercise of personal jurisdiction, each of which is
satisfied here); Vlach v. Yaple, 670 F. Supp. 2d 644, 648-49 (S.D. Ohio 2009) (finding
Southern Machine three-part test satisfied by a letter and two emails attempting to
collect a debt in violation of provisions of the FDCPA). The exercise of personal
jurisdiction over the Defendant comports with due process.
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Service of process is also proper here. “Because a party has no duty to plead
until properly served, sufficient service of process is a prerequisite to entry of
default.” Russell v. Tribley, No. 10–14824, 2011 WL 4387589, at *8 (E.D. Mich.
Aug. 10, 2011) (collecting cases). See also O.J. Distrib., Inc. v. Hornell Brewing Co.,
Inc., 340 F.3d 345, 353–55 (6th Cir. 2004) (“Due process requires proper service of
process for a court to have jurisdiction to adjudicate the rights of the parties....
Therefore, if service of process was not proper, the court must set aside an entry of
default.”) (citations omitted).
In this case, Plaintiff made several unsuccessful attempts to serve the
Defendant, ultimately applying to this Court for permission to attempt service through
alternate means. (ECF No. 5, Ex Parte Motion for Alternate Service.) On June 29,
2017, this Court did grant Plaintiff’s motion for alternate service, instructing that
alternate service could be effected by:
•

Tacking or affixing, by a process server, of the summons,
complaint, and this order at 16819 S. Dupont Hwy. Ste, 300,
Harrington, Delaware 19952;

•

Mailing the same documents via certified mail return receipt to
16819 S. Dupont Hwy. Ste 300, Harrington, Delaware 19952; and

•

Mailing the same documents via first-cla[ss] mail return receipt to
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16819 S. Dupont Hwy., Ste 300, Harrington, Delaware 19952 and
to 164 Mayor Lane, Felton, Delaware 19943 to the attention of
Robert Sowers.
(ECF No. 7, Order Granting Plaintiff’s Ex-Parte Motion for Alternate Service 2-3,
PgID51-52.) Plaintiff has provided proofs of service confirming that Plaintiff has
complied with the Court’s instructions for alternate service. (ECF Nos. 8, 9.) Plaintiff
has also provided proof of service of its Motion for Default Judgment and Notice of
Hearing on the Motion for Default Judgment via first class mail on Defendant at the
addresses approved by the Court in its Order granting the motion for alternate service
of the Complaint. (ECF Nos. 13, 17.) Accordingly, the Court finds that service was
proper.
B.

Plaintiff’s Claims Under the FDCPA

Plaintiff has, by its default, admitted all of the allegations of Plaintiff’s
Complaint and has also failed to contest the factual statements made in the affidavits
of Mr. Norton, Ms. Link, and Ms. Norton.

Plaintiff avers that the female

representative of the Defendant made several threats to the Plaintiff that were false,
deceptive, and misleading and thus illegal under several provisions of the FDCPA.
Defendant’s representations or threats that (1) the investigator would be driving by
Plaintiff’s house looking to seize personal property, and (2) that non-payment of the
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debt would result in imprisonment and prosecution for insurance fraud, were false.
Defendant had no intention of, and did not, drive by Plaintiff’s residence in search of
property to seize in satisfaction of the debt.

The threats that the insurance

commissioner would have Plaintiff arrested for insurance fraud if she did not pay the
debt within 24 hours and that her personal property would be seized were (1) never
intended to be and never were acted upon, and (2) were false and misleading because
there was no evidence of a claim made by Serv Pro that Plaintiff had committed fraud.
Specifically, Plaintiff alleges that Defendant’s conduct violated the following
provisions of Section 1692e of the FDCPA:
A debt collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of any debt.
Without limiting the general application of the foregoing, the following
conduct is a violation of this section:
(3) The false representation or implication that any individual is an
attorney or that any communication is from an attorney.
(4) The representation or implication that nonpayment of any debt will
result in the arrest or imprisonment of any person or the seizure,
garnishment, attachment, or sale of any property or wages of any person
unless such action is lawful and the debt collector or creditor intends to
take such action.
(5) The threat to take any action that cannot legally be taken or that is not
intended to be taken.
(7) The false representation or implication that the consumer committed
any crime or other conduct in order to disgrace the consumer.
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(10) The use of any false representation or deceptive means to collect or
attempt to collect any debt or to obtain information concerning a
consumer.
15 U.S.C. §§ 1962e(3), (4), (5), (7), (10).
The Court finds that Plaintiff has demonstrated a valid claim under the FDCPA
based on Defendant’s baseless threats and intimidation tactics.

See Rohn v.

Commercial Recovery Systems, Inc., No. 13-cv-10780, 2013 WL 6195578, at *5-6
(E.D. Mich. Nov. 26, 2013) (finding liability on a motion for default judgment where
plaintiff alleged that defendant’s representative engaged in a telephone conversation
in an attempt to collect a debt and (1) threatened legal action against the plaintiff with
no intention or authority to take such action and (2) never took such action).
Under section 1692k of the FDCPA, a debt collector who violates any provision
of the statute is entitled to recover: “(1) any actual damage sustained by such person
as a result of such failure; (2)(A) in the case of any action by an individual, such
additional damages as the court may allow, but not exceeding $1,000;” and “(3) in the
case of any successful action to enforce the foregoing liability, the costs of the action,
together with a reasonable attorney's fee as determined by the court.” 15 U.S.C. §
1692k(a)(1), (2)(A), and (3).
The Court concludes that Plaintiff is entitled to statutory damages of $1,000
under § 1692k(a)(2)(A) because of the repeated calls that the Defendant’s
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representative placed to Plaintiff seeking to collect on the debt. It is irrelevant that
Plaintiff did not answer all of the calls when she knew who was calling.
Further, the Court finds that Plaintiff has established sufficient facts to support
her claim for actual damages for emotional distress in the amount of $5,000.00.
Plaintiff was threatened with immediate seizure of her personal property by someone
claiming to be in the vicinity of her home and was threatened with the specter of being
prosecuted for fraud by the state commissioner of insurance and going to jail if she did
not come up with the money to pay the debt within 24 hours. This would be enough
to make any individual extremely frightened, distraught, and humiliated. See Lodge
v. Cred X Debt Recovery, LLC, No. 13-cv-11785, 2013 WL 5934628, at *2 (E.D.
Mich. Nov. 5, 2013) (finding actual damages in the amount of $3,000.00 for plaintiff’s
“mental anguish and embarrassment” appropriate) (citing Harding v. Check
Processing, LLC, No. 10-cv-2359, 2011 WL 1097642, at * 2-3 (N.D. Ohio March 22,
2011) (“holding that where the record is limited as to support for non-economic
damages, $5,000 sufficiently compensates a plaintiff for emotional distress suffered
as a result of improper debt collection under the FDCPA”)).

This Court noted in

Hett v. Bryant Lafayette and Assoc., LLC, No. 10-cv-12479, 2011 WL 740460, at *3
(E.D. Mich. Feb. 24, 2011), that where the plaintiff fails to submit “any medical
records, telephone records, witness affidavits of other evidence to substantiate claims
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[mental distress] damages,” the court must be circumspect in awarding such damages.
In Hett, where there was no such substantiating evidence, this Court awarded mental
distress damages but limited them to $2,000.00. Here, however, Plaintiff has
introduced her own Affidavit testimony and the Affidavit testimony of two individuals
who testify to Plaintiff’s extremely (and uncharacteristically) distraught condition
following the threats made by Defendant’s representative.
The Court also concludes that Plaintiff is entitled to recover costs of $267.00
related to service of the Complaint and attorneys’ fees of $5,790.00. Plaintiff’s
counsel claims to have spent 19.7 hours on this case at the rate of $300 per hour.
Plaintiff’s counsel has been licensed to practice law since 2005 and focused on
consumer law since 2008. According to the State Bar of Michigan 2014 Economics
of Law Practice tables, $300 per hour is a very average hourly rate for an attorney in
Michigan practicing consumer law. (Pl.’s Mot. Ex. 8, 2014 Economics of Law
Practice, 2013 Attorney Hourly Billing Rates by Field of Practice p. 6, PgID 180.)
Plaintiff’s counsel kept contemporaneous time records, which he attaches to the
motion for default judgment. These time records demonstrate reasonable amounts of
time efficiently spent on the listed tasks: (1) approximately 3-1/2 hours meeting with
his client, drafting the Complaint and arranging for initial attempts at service in the
State of Delaware; (2) approximately 5-1/2 hours researching and drafting the motion
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for alternate service, reviewing and taking steps to comply with the Court’s Order
granting the motion for alternate service; (3) and approximately 10-1/2 hours
obtaining clerk’s entry of default, meeting with clients to prepare affidavits submitted
in support of motion for default judgment and preparing the motion for default
judgment. These are reasonable charges for reasonable amounts of time spent on
necessary matters. The Court awards Plaintiff the full amount of attorneys’ fees
requested.

Thus, the Court awards Plaintiff the full amount of damages claimed

under the FDCPA: $12,057.00.
C.

Plaintiff’s Claim Under the MOC

Plaintiff claims in her Complaint that Defendant violated the MOC, which
mirrors many of the provisions of the FDCPA listed above. Plaintiff alleges that
Defendant conveyed information regarding a debt in violation of the MOC, and
specifically Mich. Comp. Laws § 339.915(e), which prohibits a debt collector from
“making an inaccurate, misleading, untrue, or deceptive statement or claim in a
communication to collect a debt or concealing or not revealing the purpose of a
communication when it is made in connection with collecting a debt.” Here,
according to the allegations of Plaintiff’s Complaint which are deemed admitted by
default, the Defendant’s agent represented that she was an attorney when she was not
and represented that she would contact the insurance commissioner to have plaintiff
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arrested and criminally charged with fraud, when she could not and did not do so.
Plaintiff further alleges, which is deemed admitted, that these violations were wilful.
(Compl. ¶¶ 37-42.)
The MOC provides for a private action for damages as follows:
(1) A person who suffers injury, loss, or damage, or from whom money
was collected by the use of a method, act, or practice in violation of this
article or rules promulgated under this article, may bring an action for
damages or other equitable relief.
(2) If the court finds for the petitioner, recovery shall be in the amount
of actual damages or $50.00, whichever is greater. If the court finds that
the method, act, or practice was a wilful violation, it may award a civil
penalty of not less than 3 times the actual damages, or $150.00,
whichever is greater and shall award reasonable attorney's fees and court
costs incurred in connection with the action.
Mich. Comp. Laws § 339.916. Damages for emotional distress and mental anguish
are generally recoverable as an element of actual damages under Michigan law.
Christie v. Fick, No. 285924, 2010 WL 716097, at *3 (Mich. Ct. App. March 2, 2010)
(“damages for mental distress are allowable as part of a plaintiff's actual damages”).
Regarding Plaintiff’s treble damage claim under the MOC, United States
Magistrate Judge Grand of this district did award such damages in a case asserting
claims under both the FDCPA and the MOC. In Croft v. ALD, LLC, No. 15-cv-10077,
2017 WL 762255 (E.D. Mich. Jan. 23, 2017), Magistrate Judge Grand, on a motion
for default judgment on plaintiff’s claims under the FDCPA and MOC, awarded
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$1,000.00 in statutory damages under the FDCPA, $10,000.00 in actual damages
under the FDCPA for emotional harm, and treble actual damages under the MOC of
$30,000.00. The court in Croft did reduce plaintiff’s actual damages from a claimed
$25,000.00 to $10,000, finding that the lesser amount adequately compensated the
plaintiff for any emotional harm suffered as a result of the defaulted party’s conduct.
Id. at *3. The court found this reduction particularly appropriate in light of the award
of treble damages under the MOC. Id.
The Court finds, on the particularly egregious threatening conduct of the
Defendant’s representative here, that an award of $5,000.00, trebled under the MOC
to an award of $15,000.00, is appropriate to compensate Plaintiff for the emotional
harm she suffered and to deter future occurrences of this type of obnoxious and
threatening behavior.
IV.

CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiff’s motion for default

judgment and awards damages in the amount of $27,057.00.
IT IS SO ORDERED.

s/Paul D. Borman
PAUL D. BORMAN
UNITED STATES DISTRICT JUDGE
Dated: April 27, 2018
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CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing order was served upon each
attorney or party of record herein by electronic means or first class U.S. mail on April
27, 2018.

s/Deborah Tofil
Case Manager

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