Southwood v. The Credit Card Solution et al
Filing
72
ORDER granting in part and denying in part 60 Motion for Default Judgment; adopting Report and Recommendations regarding 69 Memorandum and Recommendations. The Clerk of Court is DIRECTED to reopen the Taylor Action, No. 7:09-CV-183-F. Plaintiffs Southwood, Taylor, Harrison and Hunt shall each submit a Notice of Election of Remedy no later than April 22, 2016. The court will direct the Clerk of Court to enter judgment accordingly pending the filing of the notice of the election of remedies. Counsel is reminded to read the order in its entirety for critical deadlines and information. Signed by Senior Judge James C. Fox on 4/7/2016. (Edwards, S.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
)
)
)
Plaintiffs,
)
)
vs.
)
)
CCDN, LLC, a Nevada limited liability
)
company; R.K. LOCK & ASSOCIATES , an )
)
Illinois general partnership d/b/a Credit
Collections Defense Network or CCDN;
)
ROBERT K. LOCK, JR., ESQ.; COLLEEN )
LOCK; and PHILIP M. MANGER, ESQ.,
)
)
Defendants.
)
)
)
CHRIS TAYLOR; WILLIAM G.
)
HARRISON, SR.; LINDA SHERYL
)
LUCAS; CATHY HORTON HUNT;
)
SHARON SOUTHWOOD; and DORMAN )
and BRENDA BEASLEY, for themselves
)
and all others similarly situated,
)
)
Plaintiffs,
)
)
vs.
)
)
CCDN, LLC; LEGAL DEBT CURE, LLC, )
a Nevada limited liability company;
)
BARRISTER LEGAL SERVICES, P.C.;
)
DEBT JURISPRUDENCE, INC. ; AEGIS
)
CORPORATION; RICHARD JUDE
)
WASIK; RODNEY EMIL BRISCO; M.
)
DAVID KRAMER; MARCIA M.
)
MURPHY; and PHILIP M. MANGER,
)
)
Defendants.
)
)
SHARON SOUTHWOOD, for herself and
all others similarly situated,
No. 7:09-CV-81-F
No. 7:09-CV-183-F
Southwood v. The Credit Card Solution, et a!.
Taylor, et al. v. Bettis, et al.
Nos. 7:09-CV-81-F; 7: 09-CV-183-F
Page 2
ORDER
Before the court is the motion [DE 60] for default judgment of Sharon Southwood and
others similarly situated and Chris Taylor and others similarly situated (collectively,
"Plaintiffs"). On February 26, 2016, Magistrate Judge Numbers issued a Memorandum and
Recommendation ("M&R") [DE 69] recommending the court grant in part and deny in part
Plaintiffs' motion. On March 11 , 2016, Plaintiffs objected in part to the M&R. For the reasons
that follow, the court adopts the M&R as its own and grants in part and denies in part Plaintiffs'
motion.
I.
BACKGROUND
The relevant factual allegations, procedural history and applicable law have been
exhaustively recounted in the court's October 23 , 2012 Order [DE 46] in Southwood v. The
Credit Card Solution, No. 7:09-CV-81-F (the "Southwood Action"), the court's March 27, 2014
Order [DE 120] in Taylor v. Bettis, No. 7:09-CV-183-F (the "Taylor Action") and in the M&R.
This court presumes the parties' familiarity with those opinions and summarizes here only the
background essential to the resolution of the pending motion.
This consolidated action 1 was brought against, inter alia, the credit repair business
CCDN, LLC ("CCDN"), its owners Robert K. Lock, Jr. and Colleen Lock ("the Locks"), its
manager Philip M. Manger, and numerous associated entities and individuals, including
marketing companies, attorneys and law firms. Plaintiffs allege CCDN, the Locks, Manger and
the entities and individuals that CCDN contracted with to market its "product" engaged in
The Southwood and Taylor Actions were initiated on May 14, 2009 and November 10, 2009, respectively.
The two actions were consolidated on March 27, 2014. [DE 54, Southwood Action].
Southwood v. Th e Credit Card Solution, et a!.
Taylor, et a!. v. Bettis, eta!.
Nos. 7:09-CV -81-F; 7:09-CV -183-F
Page 3
fraudulent debt invalidation schemes that purported to eliminate the debt of CCDN's customers
and restore their credit ratings. As alleged by Plaintiffs, CCDN and its associated entities and
individuals instructed Plaintiffs to stop repaying credit card debt and claimed in so doing, debt
collectors would undoubtedly undertake actions in violation of the Fair Debt Collection Practices
Act ("FDCPA"). The scheme falsely promoted the idea that simply filing lawsuits based on
these numerous violations would allow customers to erase their debts and win court-awarded
damages from debt collectors.
In the Southwood Action, Southwood initially alleged eight claims for relief2 for herself
and others and named seven defendants. After motion practice, six claims and five defendants
remain. The remaining claims are as follows: (1) unfair and deceptive trade practices under the
North Carolina Unfair and Deceptive Trade Practices Act ("UDTPA"), N.C. Gen. Stat. § 75-1.1,
et seq .; (2) fraud; (3) violation of 15 U.S.C. § 1679b(a)(3)-(4) and (b) of the Credit Repair
Organizations Act ("CROA"); (4) violation of 18 U.S.C. § 1962(c) ofthe Racketeer and Corrupt
Organizations Act ("RICO"), (5) civil conspiracl and (6) piercing the corporate veil.
The
remaining defendants are CCDN, the Locks, R.K. Lock & Associates ("RKLA") and Manger.
In the court's October 23, 2012 Order, it stated that Southwood alleged seven claims for relief and that she
also "seeks to pierce the corporate veil of any entity defendants in an effort to hold the individual defendants
personally liable for the alleged corporate misdeeds." [DE 46 at 2, Southwood Action]. In that same order, the court
"assume[d] ... that the claims [for civil conspiracy and piercing the corporate veil] are adequate." Jd. at 34. For
clarity purposes, the court identifies piercing the corporate veil as one of the eight claims for relief brought by
Southwood.
"Under North Carolina law, there is no separate cause of action, per se, for civil conspiracy." Spirax Sarco,
Inc. v. SSI Eng'g, Inc., 122 F. Supp. 3d 408 , 420 (E.D.N.C. 20 15). "Rather, it is a theory of liability, such that once
the elements of a civil conspiracy are established, all conspirators are jointly and severally liable for damages
resulting from an act performed by any one of them in furtherance of the conspiracy." !d. (internal quotation marks
and alteration omitted).
Southwood v. The Credit Card Solution, et al.
Taylor, eta!. v. Bettis, eta!.
Nos . 7:09-CV-81-F; 7:09-CV-183-F
Page4
In the Taylor Action, plaintiffs brought twelve claims for relief for themselves and
others and named 32 defendants. After motion practice, ten claims and ten defendants remain.
The remaining claims are as follows: (1) unjust enrichment; (2) conversion; (3) violation of the
North Carolina Racketeer Influence and Corruption Organizations Act, N.C. Gen. Stat.§ 75D-1 ,
et seq. ("NC RICO") ; (4) violation of 15 U.S.C. § 1679b(a)(3)-(4) and (b) of CROA; (5)
violation of 18 U.S.C. § 1962(c)-(d) of RICO ; (6) civil conspiracy; (7) piercing the corporate
veil; (8) violation of UDTP A; (9) fraud ; and (1 0) legal malpractice. 5 The remaining defendants
are Marcia M. Murphy, M. David Kramer, Debt Jurisprudence, Inc. ("Debt Jurisprudence"),
Aegis Corporation ("Aegis"), Rodney Emil Brisco, Legal Debt Cure, LLC ("LDC"), CCDN,
Barrister Legal Services, P.C. ("BLS"), Richard Jude Wasik and Manger.
On March 4, 2010, the Clerk of Court entered defaults against Tay lor defendants
Murphy, Kramer, Debt Jurisprudence, Aegis and Brisco.
[DEs 72-76, Tay lor Action].
On
March 23 , 2010, the Clerk of Court entered defaults against Tay lor defendants LDC, CCDN,
BLS and Wasik.6 [DEs 84-87, Taylor Action]. On September 30, 2013, the court directed the
Clerk of Court to enter default as to Southwood defendants Robert Lock, Colleen Lock, RKLA
4
The Taylor plaintiffs' amended complaint lists thirteen counts. However, count one - imposition of a
constructive trust- "is an equitable remedy, not a cause of action in and of itself." Lyon v. Campbell, 33 F. App'x
659, 663 (4th Cir. 2002); cf Bell v. Kaplan, No.3: 14-CV-352, 20 16 U.S. Dist. LEXIS 24408, at *15 (W.D.N.C.
Feb. 29, 2016) (noting "North Carolina law holds that a constructive trust may be requested as a claim or in the
prayer for relief') (citation omitted).
The Taylor amended complaint names each defendant as to all twelve counts. See [DE 23, Taylor Action].
In their memorandum, however, they clarify that two of the twelve counts (tortious interference and negligence)
were "aimed only" at defendants previously dismissed from thi s action. See Pis.' Mem. Supp. Mot. Default J. at 5
[DE 61 , Southwood Action].
6
In the Taylor Action, the Clerk of Court entered default against Richard D. Russ on April 13 , 201 l.
[DE 1 14]. Subsequently, however, the court dismissed Russ for failure to show service. [DE 120].
Southwood v. The Credit Card Solution, eta!.
Taylor, eta!. v. Bettis, eta!.
Nos. 7:09-CV-81-F; 7:09-CV-183-F
Page 5
and CCDN. [DE 53 , Southwood Action] . Following consolidation of the Southwood and Taylor
Actions, the Clerk of Court entered default against Southwood and Taylor defendant Manger on
March 28, 2014. [DE 55 , Southwood Action]. On March 30, 2016, the Clerk of Court entered
defaults against Taylor defendants Robert Lock, Colleen Lock, RK.LA and CCDN. [DE 71,
Southwood Action].
II.
A.
APPLICABLE LAW
Judicial Review ofM&R-28 U.S.C. § 636(b)
"The Federal Magistrates Act requires a district court to make a de novo determination of
those portions of the magistrate judge's report or specified proposed findings or
recommendations to which objection is made." Diamond v. Colonial Life & Accident Ins. Co.,
416 F.3d 310, 315 (4th Cir. 2005) (alteration, emphasis, and quotation omitted); see 28 U.S.C.
§ 636(b). The court does not perform a de novo review where a party makes only "general and
conclusory objections that do not direct the court to a specific error in the magistrate's proposed
findings and recommendations." Orpiano v. Johnson, 687 F.2d 44, 47 (4th Cir. 1982). Absent a
specific and timely objection, the court reviews only for "clear error," and need not give any
explanation for adopting the M&R. Diamond, 416 F.3d at 315; Camby v. Davis, 718 F.2d 198,
200 (4th Cir. 1983). Upon careful review of the record, "the court may accept, reject, or modify,
in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C.
§ 636(b)(l).
B.
Standard for Entry of Default Judgment
Federal Rule of Civil Procedure 55 governs default and default judgment. As noted,
default has been entered by the clerk against defendants Murphy, Kramer, Debt Jurisprudence,
Southwood v. The Credit Card Solution, et al.
Taylor, et al. v. Bettis, et al.
Nos. 7:09-CV -81-F; 7:09-CV -183-F
Page 6
Aegis, Brisco, LDC, CCDN, BLS, Wasik, Manger, Robert Lock, Colleen Lock and RKLA
(collectively, "Defendants") pursuant to Rule 55(a). After default has been entered, the Court
may enter default judgment against a defendant with or without a hearing. FED. R. Crv. P. 55(b).
Based on the well-pleaded factual allegations in the Southwood complaint and the Taylor
amended complaint and the affidavits and documentary evidence submitted by Plaintiffs in
support of the instant motion, the court concludes a sufficient basis exists for determining
Defendants' liability without the need for a hearing. 7
Upon the entry of default, the defaulted party is deemed to have admitted all well-pleaded
allegations of fact contained in the complaint. Ryan v. Homecomings Fin. Network, 253 F.3d
778, 780-81 (4th Cir. 2001); FED. R. Crv. P. 8(b) ("An allegation- other than one relating to the
amount of damages - is admitted if a responsive pleading is required and the allegation is not
denied."). However, a non-answering defendant is not held to admit conclusions of law. Ryan,
253 F.3d at 780. That is, liability is not deemed established simply because of default. !d.
Rather, the court still must determine whether the alleged facts are sufficient to state a claim for
relief as to each cause of action for which a plaintiff seeks default judgment. !d. at 780-81 ;
DIRECTV, Inc. v. Pernites, 200 F. App'x 257, 258 (4th Cir. 2006).
If the court determines that liability is established, it must then determine the appropriate
amount of damages. Ryan, 253 F.3d at 780-81. Well-pleaded allegations in the complaint as to
liability are taken as true when a defendant is in default, but not as to damages. Where the
damages sought are not for a sum certain, the court must determine the propriety and amount of
On December 18, 2015, Judge Numbers held a hearing in this matter, which included testimony by
Harrison. [DE 66, Southwood Action] .
Southwood v. The Credit Card Solution, et a!.
Taylor, eta!. v. Bettis, et a!.
Nos . 7:09-CV-81-F; 7:09-CV-183-F
Page 7
the default judgment. See FED. R. CIV. P. 55(b). Rule 55(b)(2) permits, but does not require, the
court to conduct an evidentiary hearing to determine damages. !d. The court may also make a
determination of damages without a hearing, so long as damages are contained in documentary
evidence or detailed affidavits and can be ascertained by computation on the record before the
court. See, e.g, Adkins v. Teseo, 180 F. Supp. 2d 15, 17 (D.D.C. 2001) (explaining a court may
rely on detailed affidavits or documentary evidence - in lieu of a hearing - to determine the
appropriate sum) (citing United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979)).
Finally, "[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).
In sum, the court must (1) determine whether the unchallenged facts in the Southwood
complaint and the Taylor amended complaint constitute legitimate causes of action, and, if so,
(2) make an independent determination regarding the appropriate amount of damages.
III.
A.
Defendants' Liability
1.
DISCUSSION
Southwood Action
Southwood argues she has established liability as to the following claims: (1) vicarious
liability for UDTP A violations against CCDN and RK.LA; (2) fraud claim against CCDN and
RKLA; (3) § 1679b(a)(3)-(4) and § 1679b(b) CROA claims against CCDN, RKLA, the Locks
and Manger; (4) § 1962(c) RICO claim against Robert Lock and Manger; (5) civil conspiracy
claim against CCDN, RKLA, the Locks and Manger; and (6) piercing the corporate veil claim
against the Locks and Manger.
Southwood v. The Credit Card Solution, et a!.
Taylor, eta!. v. Bettis, et a!.
Nos . 7:09-CV-81-F; 7:09-CV-183-F
Page 8
The court previously found that Southwood alleged sufficient facts as to the UDTP A,
fraud and § 1679b(a)(3)-(4) and § 1679b(b) CROA claims against CCDN and RKLA. See [DE
46 at 14, 17, 21, 27, 32, Southwood Action]. As to the remaining claims, Judge Numbers found
that Southwood sufficiently pled a§ 1679b(a)(4) CROA claim against the Locks and Manger, a
§ 1962(c) RICO claim against Robert Lock and Manger, and a civil conspiracy claim against
CCDN, RKLA, the Locks and Manger. 8
Taylor Action
11.
In Taylor, plaintiffs argue they have established liability against Murphy, Kramer, Debt
Jurisprudence, Aegis, Brisco, LDC, CCDN, BLS, Wasik and Manger as to each of the following
claims: (1) unjust enrichment; (2) conversion; (3) violation of NC RICO; (4) violation of§
1679b(a)(3)-(4) and§ 1679b(b) ofCROA; (5) violation of 18 U.S.C. § 1962(c)-(d) of RICO; (6)
civil conspiracy; (7) piercing the corporate veil; (8) violation of UDTP A; (9) fraud; and
(1 0) legal malpractice. 9
After considering these claims, Judge Numbers found the Taylor
plaintiffs alleged sufficient facts only as to some claims. In particular, Judge Numbers found as
follows:
•
Taylor successfully alleged claims for (1) conversion against CCDN; (2) violations of
§ 1679b(a)(3)-(4) and § 1679b(b) of CROA against CCDN; (3) § 1679b(a)(4) CROA
violation against Manger; (4) § 1962(c) RICO violation against Manger; and (5) fraud
against CCDN.
In particular, Judge Numbers found defendants CCDN, RKLA, the Locks and Manger conspired to commit
fraud and violate UDTPA, CROA and RICO . See M&R at 25 .
9
The amended complaint indicates that each of the defendants was named as to all twelve counts. However,
in their memorandum, the Taylor plaintiffs clarify that two (tortious interference and negligence) of the twelve
counts were "aimed only" at defendants previously dismissed from this action. See Pis.' Mem. Supp. Mot. Default J.
at 5 [DE 61 , Southwood Action].
Southwood v. The Credit Card Solution, et al.
Taylor, et al. v. Bettis, et al.
Nos. 7:09-CV-81-F; 7:09-CV-183-F
Page 9
•
•
Lucas successfully alleged claims for (1) § 1679b(a)(4) CROA violation against Manger;
and (2) § 1679b(b) CROA violation against CCDN.
•
Hunt successfully alleged claims for (1) § 1679b(a)(4) CROA violation against Manger;
(2) § 1679b(b) CROA violation against CCDN; and (3) § 1962(c) RICO violation against
Manger.
•
Southwood successfully alleged a claim for conversion against CCDN.
•
111.
Harrison successfully alleged claims for (1) unjust enrichment against Aegis;
(2) conversion against Aegis; (3) violations of § 1679b(a)(3)-(4) and § 1679b(b) of
CROA against Aegis; (4) § 1679b(b) CROA violation against CCDN; (5) § 1679b(a)(4)
CROA violation against Manger; ( 6) § 1962(c) RICO violation against Manger; (7)
violation ofUDTPA against Aegis and CCDN; (8) and civil conspiracy to violate CROA
against CCDN and Aegis.
The Beasleys successfully alleged claims for (1) § 1679b(a)(3)-(4) CROA violation
against CCDN; and (2) § 1679b(a)(4) CROA violation against Manger.
Adoption of M&R Liability Findings
Upon careful review of the M&R and of the record generally, the court is satisfied that
there is no clear error on the face of the record.
Plaintiffs lodged no objections to Judge
Numbers' liability findings. Accordingly, the court adopts the liability findings of the M&R as
its own. Given Plaintiffs sufficiently established Defendants' liability as to the claims identified
above, Plaintiffs are entitled to default judgment against Defendants with respect to said claims.
B.
Remedies Sought
Although the court finds that Plaintiffs have alleged facts supporting the elements of
some of their claims, the court must now determine whether it can properly provide the relief
that Plaintiffs seek. Plaintiffs request compensatory damages, treble damages for violations of
RICO pursuant to 18 U .S.C. § 1964(c), treble damages for violations ofUDTPA pursuant to
Southwood v. The Credit Card Solution, et al.
Taylor, et al. v. Bettis, et al.
Nos. 7:09-CV-81-F; 7:09-CV-183-F
Page 10
N.C. Gen. Stat. § 75-16, 80 to 1 punitive damages, 10 imposition of a constructive trust, attorney's
. ._
1ees an d 1' . . costs. II
1t1gat10n
Based on the affidavits and evidence submitted by Plaintiffs,
12
Judge Numbers found the
valid statutory and state law claims allow for damages as follows:
Plaintiff
Punitive
Damages
Compensatory
Damages
Claim
Fees&
Costs
Defendant Liable
for Damages
UDTPA
$ 19,800.00
$
Fraud
$
5,600.00
$ 16,800.00
No
CROA
$
6,600.00
$ 19,800.00
Yes
RICO
$ 16,800.00
$
Conversion
$
5,600.00
$ 16,800.00
No
CCDN, RKLA, the
Locks and Manger
jointly/severally
CCDN, RKLA, the
Locks and Manger
jointly/severally
CCDN, RKLA, the
Locks and Manger
jointly/severally
CCDN, RKLA, the
Locks and Manger
jointly/severally
CCDN
Conversion
CROA
RICO
Fraud
$ 4,500.00
$ 4,500.00
$ 13,500.00
$ 4,500.00
$ 13,500.00
$ 13,500.00
$
$ 13,500.00
No
Yes
Yes
No
CCDN
CCDN or Manager
Manger
CCDN
-
No
Southwood
Taylor
-
Yes
10
Punitive damages are available for violations of CROA pursuant to 15 U.S.C. 1679g(a)(2) and for North
Carolina state law claims pursuant to N.C. Gen. Stat. § I D-15 . Punitive damages are not available under RICO .
See M&R at 85 .
II
Liti gation costs and attorney's fees are available under 18 U.S.C. § 1964(c) (RICO), N .C. Gen. Stat. § 7516.1 (UDTPA) and 15 U.S.C. § 1679g(a)(3) (CROA). !d.
12
n
See Southwood Aff.
16, 28-30 [DE 93-2, Taylor Action] ; Taylor Aff. ~ 3 [DE 60-1 at 8, Southwood
Action] ; Harrison Aff. ~54 [DE 96-2 at 16, Taylor Action] ; Hunt's Cashier's Check [DE 96-3 at 6, Taylor Action] ;
Brenda Beasley Aff. ~ 4 [DE 60-1 at 7, Southwood Action] .
Southwood v. The Credit Card Solution, et a!.
Taylor, et a!. v. Bettis, et a!.
Nos. 7:09-CV-81-F; 7:09-CV-183-F
Page II
Unjust
enrichment
Conversion
$
4,200.00
$ 12,600.00
No
Aegis
$
4,200.00
$ 12,600.00
No
CROA
$
4,200.00
$ 12,600.00
Yes
RIC0 15
Harrison 13
$
$ 12,600.00
$ 4,200.00
$
$
$ 12,600.00
No
Yes
Yes
Aegis
Aegis andCCDN
jointly/severally or
Manger
Manger
UDTPA 16
Lucas 17
I CROA
I$
CROA
RICO
$
$
$
2,500.00
7,500.00
~---------+-----
~--------~-----
$
$
- I
7,500.00
Aegis
No
I CCDN and Manger
Yes
Yes
CCDN or Manger
Manger
13
Judge Numbers found also that Harrison is entitled to a constructive trust for his claims of unjust
enrichment and conversion against Aegis. See M&R at 75-77.
14
Judge Numbers found that Aegis's violations of CROA do not warrant punitive damages given the lack of
allegations indicating Aegis's violation was intentional. See M&R at 88-89. The punitive damages award against
Aegis is by virtue of the allegations supporting the existence of a civil conspiracy between Aegis and CCDN to
violate CROA. See Jackson v. Blue Dolphin Communs. of N.C. , L.L.C., 226 F. Supp. 2d 785, 791 (W.D.N.C. 2002)
("Once the elements of a civil conspiracy are established, all conspirators are jointly and severally liable for
damages resulting from an act performed by any one of them in furtherance of the conspiracy.") (citing Fox v.
Wilson, 85 N.C. App . 292, 301, 354 S.E.2d 737, 743 (1987)).
15
Harrison failed to submit an affidavit or documentary evidence or to testify as to his damages attributed to
the RICO claim. The court must abide by its obligation to on ly award damages adequately supported by the record.
Accordingly, Harrison is not entitled to a damages award from Manager as to the RICO claim.
16
A plaintiff may choose between either (I) trebled compensatory damages and fees and costs for UDTPA
violations pursuant to N.C.G.S . § 75-16 or (2) untrebled compensatory damages and fees and costs under UDTPA
and punitive damages for a state law claim pursuant to N .C.G.S . § ID-15 . See M&R at 83 n.25, 85 (citing United
Labs. , Inc. v. Kuykendall, 335 N.C. 183, 195, 437 S.E.2d 374, 38 1 (1983) (explaining because compensatory
damages and punitive damages "serve completely different purposes," there is "no double redress for a single wrong
and no inconsistency when a plaintiff recovers untrebled compensatory damages [pursuant to N.C.G.S. § 75-16] and
punitive damages under a tortious interference claim")). Accordingly, Judge Numbers found that Harrison may
elect to recover either (I) trebled compensatory damages ($12 ,600) plus fees and costs under UDTPA, or (2)
untrebled compensatory damages ($4,200.00) and fees and costs under UDTPA plus punitive damages ($12,600.00)
for the conversion or unjust enrichment claims.
17
Lucas failed to submit an affidavit or documentary evidence or to testify as to her damages. Accordingly,
Lucas is not entitled to recover damages from CCDN or Manager.
Southwood v. The Credit Card Solution, et a!.
Taylor, eta!. v. Bettis, et a!.
Nos. 7:09-CV-81-F; 7:09-CV-183-F
Page 12
Beasleys
lcROA
I$
5,000.00
I$
15,000.00
I Yes
I CCDN or Manger
Plaintiffs lodge only one objection to Judge Numbers' findings as to damages.
Specifically, Plaintiffs object to the recommendation of a three-to-one ratio of punitive damages
to compensatory damages. Plaintiffs argue that this ratio "does not adequately reflect the nature
and severity of Defendants' misconduct." Pls.' Objections M&R at 1 [DE 70]. According to
Plaintiffs, they are entitled to at least a seven-to-one ratio of punitive damages to compensatory
damages. Id. The court reviewed Plaintiffs' objection de novo. For the reasons given in the
M&R, including its analysis of relevant case law, this objection is overruled.
Plaintiffs Southwood, Taylor, Harrison and Hunt properly pursued alternative theories for
relief based on the same facts. A party is prohibited, however, from double redress based on the
same wrongful conduct. Homeland Training Ctr., LLC v. Summit Point Auto. Research Ctr., 594
F.3d 285, 293 (4th Cir. 2010) (explaining a plaintiff is prevented "from obtaining a windfall
recovery, either by recovering two forms of relief that are premised on legal or factual theories
that contradict one another or by recovering overlapping remedies for the same legal injury");
see United Labs., Inc. v. Kuykendall, 335 N.C. 183, 437 S.E.2d 374, 379 (1993) (explaining the
election of remedies "prevent[s] double redress for a single wrong"). Accordingly, plaintiffs
Southwood, Taylor, Harrison and Hunt must each elect one remedy to prevent double recovery.
Southwood v. The Credit Card Solution, et a/.
Taylor, eta/. v. Bettis, et a/.
Nos. 7:09-CV-81-F; 7:09-CV-183-F
Page 13
IV.
CONCLUSION
For the foregoing reasons, it is hereby ORDERED as follows:
(1)
The Memorandum and Recommendation [DE 69] is ADOPTED.
(2)
Plaintiffs' objection [DE 70] is OVERRULED.
(3)
Plaintiffs' motion for default judgment [DE 60] is DENIED IN PART and GRANTED
IN PART.
(4)
Southwood is entitled to default judgment against the following defendants:
a. CCDN and R.K. Lock & Associates on the UDTPA claim for monetary damages in
the amount of $19,800, recoverable jointly and severally from CCDN, R.K. Lock &
Associates, the Locks and Manger.
b. CCDN and R.K. Lock & Associates on the fraud claim for compensatory damages
of $5 ,600 and punitive damages of $16,800, recoverable jointly and severally from
CCDN, R.K. Lock & Associates, the Locks and Manger.
c. Manger, CCDN, and R.K. Lock & Associates on the CROA claim for
compensatory damages of $6,600, punitive damages of $19,800, plus litigation costs,
including reasonable attorney's fees, recoverable jointly and severally from CCDN,
R.K. Lock & Associates, the Locks and Manger.
d. Robert Lock and Manger on the RICO claim for monetary damages of $16,800,
plus litigation costs, including reasonable attorney's fees, recoverable jointly and
severally from CCDN, R.K. Lock & Associates, the Locks and Manger.
e. CCDN on the conversion claim for compensatory damages of $5,600 and punitive
damages of$16,800, recoverable from CCDN.
(5)
Taylor is entitled to default judgment against the following defendants:
a. CCDN on the conversion claim for compensatory damages of $4,500 and
punitive damages of$13 ,500, recoverable from CCDN.
b. CCDN and Manger on the CROA claim for compensatory damages of $4,500,
punitive damages of $13 ,500, plus the costs of litigation, including reasonable
attorney's fees, recoverable from CCDN or Manger.
c. Manger on the RICO claim for monetary damages of $13 ,500, plus costs of
litigation, including reasonable attorney's fees, recoverable from Manger.
Southwood v. The Credit Card Solution, et a!.
Taylor, et a!. v. Bettis, et a!.
Nos . 7:09-CV-81-F; 7:09-CV-183-F
Page 14
d. CCDN on the fraud claim for compensatory damages of $4,500 and punitive
damages of$13 ,500 of, recoverable from CCDN.
(6)
Harrison is entitled to a default judgment against the following defendants:
a. Aegis on the unjust enrichment claim for compensatory damages of $4,200,
punitive damages of $12,600 in constructive trust, recoverable from Aegis.
b. Aegis on the conversion claim for compensatory damages of $4,200 and punitive
damages of $12,600 in constructive trust, recoverable from Aegis.
c. Manger, Aegis, and CCDN on the CROA claim for compensatory damages of
$4,200, punitive damages of $12,600, the costs of litigation, including reasonable
attorney's fees, recoverable either jointly and severally from Aegis and CCDN or
from Manger.
d. Manger on the RICO claim; however, Harrison is not entitled to a damages
award.
e. Aegis and CCDN on the UDTP A claims for
1.
monetary damages of $12,600 of monetary damages plus reasonable
attorney's fees, recoverable from Aegis; or
11.
compensatory damages of $4,200, punitive damages of $12,600 and
reasonable attorney's fees, recoverable from Aegis.
(7)
Lucas is entitled to a default judgment against CCDN and Manger on the CROA
claim; however, Lucas is not entitled to a damages award.
(8)
Hunt is entitled to a default judgment against the following defendants:
a. CCDN and Manger on the CROA claim for compensatory damages of $2,500,
punitive damages of $7,500 and litigations costs, including reasonable attorney's
fees, recoverable from CCDN or Manger.
b. Manger on the RICO claim for monetary damages of $7,500 plus litigation
costs, including reasonable attorney's fees, recoverable from Manger.
Southwood v. The Credit Card Solution, eta!.
Taylor, et al. v. Bettis, eta!.
Nos. 7:09-CV-81-F; 7:09-CV-183-F
Page 15
(9)
The Beasleys are entitled to a default judgment against CCDN and Manger on the
CROA claim for compensatory damages of $5,000, punitive damages of $15 ,000 and
the costs of litigation, including reasonable attorney's fees, recoverable from CCDN or
Manger.
(10) The Clerk ofCourt is DIRECTED to reopen the Taylor Action, No. 7:09-CV-183-F. 18
(11) Plaintiffs Southwood, Taylor, Harrison and Hunt shall each submit a Notice of Election
ofRemedy no later than April22, 2016.
(12) The court will direct the Clerk of Court to enter judgment accordingly pending the
filing of the notice of the election of remedies.
SO ORDERED.
This the 7th day of April, 2016.
enior United States District Judge
18
See [DE 120, Taylor Action] (directing the Clerk of Court to administratively close the case and advising
"[a]t the appropriate time, the [case] shall be reopened so that judgment or other proceedings may be entered
therein").
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