Cetak v. National Credit Adjusters, LLC
MEMORANDUM AND ORDER - The plaintiff shall show cause on or before May 1, 2017, why her FDCPA claim should not be dismissed. Absent a showing of good cause, the Court shall dismiss the plaintiff's FDCPA claim and enter default judgment on her EFTA claim, as set forth in this memorandum and order. The Clerk of the Court shall set a show cause deadline of May 1, 2017. Ordered by Judge John M. Gerrard. (Copy mailed to pro se party)(GJG)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
MELISSA L. CETAK,
MEMORANDUM AND ORDER
NATIONAL CREDIT ADJUSTERS,
This matter is before the Court on the plaintiff's motion for default
judgment (filing 8). The Court finds that the plaintiff has stated a claim for
relief under the Electronic Fund Transfer Act, 15 U.S.C. § 1693 et seq.
(EFTA), but not under the Fair Debt Collection Practices Act, 15 U.S.C. §
1692 et seq. (FDCPA). The Court will give the plaintiff an opportunity to
support her FDCPA claim.
The plaintiff, Melissa Cetak, defaulted on a debt that was transferred
to defendant National Credit Adjusters for collection. Filing 1 at 2. The
defendant contacted the plaintiff and obtained her personal financial account
information in order to initiate a series of electronic fund transfers aimed at
satisfying the debt. Filing 1 at 3. But the defendant failed to obtain written
authorization from the plaintiff for electronic fund transfers, and therefore
could not provide her with a written copy of such an authorization. Filing 1 at
3. Nonetheless, the defendant made several electronic fund transfers from the
plaintiff's bank account between May 1 and August 31, 2015. Filing 1 at 3.
The plaintiff sued the defendant for violation of the EFTA and FDCPA.
Filing 1. Service was had on the defendant's registered agent. Filing 5. On
the plaintiff's motion, the Clerk of the Court entered the defendant's default.
The present motion for default judgment followed. Filing 8.
When a default judgment is entered, facts alleged in the complaint—
except as to damages—may not be later contested. Marshall v. Baggett, 616
F.3d 849, 852 (8th Cir. 2010); Murray v. Lene, 595 F.3d 868, 871 (8th Cir.
2010). It remains for the Court to consider whether the unchallenged facts
constitute a legitimate cause of action, since a party in default does not admit
mere conclusions of law. Id. Therefore, it is incumbent upon the Court to
ensure that the unchallenged facts constitute a legitimate cause of action
before entering final judgment. Marshall, 616 F.3d at 852-53. And then, even
though the allegations of the plaintiff's complaint are admitted, see id., it is
still necessary for the Court to determine the plaintiff's damages based upon
the evidence. See, Fed. R. Civ. P. 55(b)(2)(B); Brown v. Kenron Aluminum &
Glass Corp., 477 F.2d 526, 531 (8th Cir. 1973).
So, the task for the Court is, first, to consider the allegations of the
complaint to ensure that the plaintiff has stated a legitimate cause of action
with respect to each of her claims for relief. Then, the Court must consider
whether the plaintiff's damages can be determined based on the evidence
that has been presented in support of its motion.
ELECTRONIC FUND TRANSFER ACT
The EFTA provides that "[a] preauthorized electronic fund transfer
from a consumer's account may be authorized by the consumer only in
writing, and a copy of such authorization shall be provided to the consumer
when made." § 1693e. An electronic fund transfer is
any transfer of funds, other than a transaction originated by
check, draft, or similar paper instrument, which is initiated
through an electronic terminal, telephonic instrument, or
computer or magnetic tape so as to order, instruct, or authorize a
financial institution to debit or credit an account. Such term
includes, but is not limited to, point-of-sale transfers, automated
teller machine transactions, direct deposits or withdrawals of
funds, and transfers initiated by telephone.
§ 1693a(7). And a "preauthorized electronic fund transfer" is an electronic
fund transfer "authorized in advance to recur at substantially regular
intervals[.]" § 1693a(10). Any person who fails to comply with the EFTA's
requirements with respect to any consumer is liable for the consumer's actual
damage and statutory damages of $100 to $1000, in addition to costs and
attorney's fees. § 1693m(a).
The Court finds the plaintiff's allegations sufficient to state a claim for
relief under the EFTA. She specifically alleged the defendant's failure to
obtain her written authorization, or to provide her with a copy of her written
authorization, for preauthorized electronic fund transfers. See filing 1 at 2-3.
The Court has given some consideration to whether the plaintiff sufficiently
alleged a preauthorized electronic fund transfer, which requires a recurring
payment schedule. See, e.g., In re DirecTV Early Cancellation Litigation, 738
F. Supp. 2d 1062, 1091 (C.D. Cal. 2010); see also Gillette v. Gaming Entm't,
No. 1:15-CV-1040, 2016 WL 4919992, at *4 (S.D. Ind. Sept. 14, 2016). But the
plaintiff alleged that the purpose of obtaining her account information was to
"initiate a series of electronic funds transfers" and that multiple transfers
were made. Filing 1 at 3. This, the Court concludes, was sufficient. See
Coover v. Immediate Credit Recovery, Inc., No. 2:14-CV-395, 2014 WL
5823166, at *5 (M.D. Fla. Nov. 10, 2014).
As noted above, the EFTA authorizes statutory damages, and costs and
attorney's fees, to a successful plaintiff. § 1693m(a). The Court finds, in the
absence of any mitigating evidence or argument from the defendant, that the
plaintiff's request for statutory damages of $1,000 is appropriate. The Court
has also reviewed the plaintiff's evidence of costs and attorney's fees, and
finds that the amounts sought are fair and reasonable. See, Blum v. Stenson,
465 U.S. 886, 889 (1984); Shrader v. OMC Aluminum Boat Grp., Inc., 128
F.3d 1218, 1220 (8th Cir. 1997). The Court will award costs and attorney fees
in the amount of $4,045.50.1 See filing 10-1.
FAIR DEBT COLLECTION PRACTICES ACT
The FDCPA generally prohibits a debt collector from using "any false,
deceptive, or misleading representation or means in connection with the
collection of any debt." § 1692e. Nor may a debt collector "use unfair or
unconscionable means to collect or attempt to collect any debt." § 1692f. But
the plaintiff's allegations do not establish anything "false, deceptive, or
misleading" or "unfair or unconscionable."
The plaintiff's complaint directs the Court's attention to some specific
provisions of §§ 1692e and 1692f. Filing 1 at 3; see also filing 9 at 4. It is, to
begin with, unlawful for a debt collector to make a "threat to take any action
that cannot legally be taken or that is not intended to be taken." § 1692e(5).
But the plaintiff alleges no threat, nor any action that could not legally be
taken. (The defendant could have lawfully arranged for electronic fund
transfers, even if it failed to obtain the necessary authorization in this case.)
The complaint does not allege the sort of empty threat that § 1692e(5) is
intended to proscribe. Compare Berndt v. Fairfield Resorts, Inc., 337 F. Supp.
2d 1120, 1131-32 (W.D. Wis. 2004).2 Nor does the plaintiff allege a "false
representation or deceptive means" within the meaning of § 1692e(10).
The Court notes that even if the plaintiff's FDCPA claim is ultimately dismissed, the
amount of costs and attorney's fees would remain the same: although some of those
expenses may be attributable to the FDCPA claim, the two claims were legally and
factually intertwined so as to warrant awarding the full amount.
The Court is aware of the Eighth Circuit's decision in Volden v. Innovative Fin. Sys., Inc.,
440 F.3d 947, 954-55 (8th Cir. 2006), but finds Volden to be clearly distinguishable, insofar
The closest the plaintiff comes is the provision barring "[t]he collection
of any amount . . . unless such amount is expressly authorized by the
agreement creating the debt or permitted by law." § 1692f(1). But the Court
is persuaded by the weight of authority holding that the focus of § 1692f(1) "is
on the amount of the debt to be collected, rather than the collector's
authorization to collect any debt, whatever its amount." Gaetano v. Payco of
Wisconsin, Inc., 774 F. Supp. 1404, 1415-16 (D. Conn. 1990); see, Michael v.
HOVG, LLC, No. 16-CV-62651, 2017 WL 129111, at *5 (S.D. Fla. Jan. 10,
2017); Marcotte v. Bank of Am., No. 4:14-CV-2773, 2015 WL 2184369, at *14
(S.D. Tex. May 11, 2015); Thompson v. CACH, LLC, No. 14-CV-313, 2014 WL
5420137, at *6 (N.D. Ill. Oct. 24, 2014); Wilson v. Asset Acceptance, LLC, 864
F. Supp. 2d 642, 645 (E.D. Ky. 2012); Chulsky v. Hudson Law Offices, P.C.,
777 F. Supp. 2d 823, 832 (D.N.J. 2011); McCorriston v. L.W.T., Inc., No. 8:07CV-160, 2008 WL 3243865, at *7 (M.D. Fla. Aug. 7, 2008); Taylor v. Midland
Credit Mgmt., Inc., No. 1:07-CV-582, 2008 WL 544548, at *4 (W.D. Mich. Feb.
26, 2008); Beattie v. D.M. Collections, Inc., 754 F. Supp. 383, 392 (D. Del.
1991). The plaintiff does not allege that the defendant collected an amount
greater than was actually owed, and as a result has not stated a claim for
relief under § 1692f(1).
In sum, the Court finds that the plaintiff's allegations, even when
admitted, do not allege a "false, deceptive, or misleading misrepresentation or
means" or "unfair or unconscionable means" within the meaning of the
FDCPA. But, because this is the first notice that the plaintiff has been given
that her allegations may be insufficient, the Court will provide her with an
opportunity to remedy the deficiency. The Court will direct the plaintiff to
show cause, by providing supplemental evidence or argument, why her
FDCPA claim should not be dismissed. In the absence of such a showing, the
Court will enter a default judgment in the amount of $5,045.50 on the
plaintiff's EFTA claim, and dismiss her FDCPA claim without prejudice.
IT IS ORDERED:
The plaintiff shall show cause on or before May 1, 2017,
why her FDCPA claim should not be dismissed.
Absent a showing of good cause, the Court shall dismiss the
plaintiff's FDCPA claim and enter default judgment on her
EFTA claim, as set forth in this memorandum and order.
as Volden involved a notice sent to a consumer who had written dishonored checks: it was
clearly a "threat" to take unilateral action to collect the debt.
The Clerk of the Court shall set a show cause deadline of
May 1, 2017.
Dated this 4th day of April, 2017.
BY THE COURT:
John M. Gerrard
United States District Judge
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