Leto v. World Recovery Service, LLC

Filing 10

ORDER AND DEFAULT JUDGMENT. Signed by District Judge Max O. Cogburn, Jr on 4/27/2015. (eef)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
DOCKET NO. 3:14-cv-00489-FDW-DCK
GARY R. LETO,
Plaintiff,
vs.
WORLD RECOVERY SERVICE, LLC,
Defendant.

)
)
)
)
)
)
)
)
)
)
)

ORDER AND DEFAULT
JUDGMENT

THIS MATTER is before the Court on plaintiff Gary Leto’s, (“plaintiff”) Motion for
Default Judgment pursuant to Fed. R. Civ. P. 55(b)(2) (Doc. No. 8). For the reasons set forth
below, plaintiff’s motion will be granted.
FINDINGS AND CONCLUSIONS
I.

Background

On September 5, 2014, Plaintiff filed suit against World Recovery Service, LLC,
(“defendant”) alleging violations of the Fair Debt Collection Practices Act (“FDCPA”) and the
North Carolina Collection Agency Act (“NCCAA”). 15 U.S.C. § 1692, et seq.; N.C. Gen. Stat. §
58-70-90, et seq. Based on affidavit of service, the court finds that defendant was properly served
with the summons and complaint in this action on September 15, 2014. (Doc. No. 5). Further, this
court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1331 and 28 U.S.C.
§ 1267, and personal jurisdiction over defendant because a substantial part of the events and
omissions giving rise to this claim occurred in Charlotte, North Carolina. (Doc. No. 1, exhibit 29). Defendant is a corporation and as such is not an infant or incompetent person. Despite being

lawfully served, defendant has nonetheless failed to answer or otherwise defend the action within
the time permitted by the Federal Rules of Civil Procedure. Pursuant to Fed. R. Civ. P. 55(a), the
Clerk of Court properly entered defendant’s default on January 14, 2015. (Doc. No. 6). Plaintiff
now requests default judgment on its claims, plus an award of attorney’s fees. (Doc. No. 8).
II.

Applicable Standard

The award of default judgment is governed by Rule 55, which provides in relevant part that
“[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or
otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the
party's default.” Fed. R. Civ. P. 55(a). The Fourth Circuit has “repeatedly expressed a strong
preference that, as a general matter, defaults be avoided and that claims and defenses be disposed
of on their merits.” Colleton Preparatory Acad., Inc. v. Hoover Univ., Inc., 616 F.3d 413, 417 (4th
Cir. 2010) (citations omitted). Nonetheless, default judgment “may be appropriate when the
adversary process has been halted because of an essentially unresponsive party.”
Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005).

SEC v.

Here, defendant has been totally

unresponsive, even to the Clerk’s Notice of Default.
Where default is propose and liability is established, the court must then determine
damages. Carter Behavior Health, 2011 WL 5325485, at *4 (citing Ryan, 253 F.3d at 780-81;
Gaines, 635 F. Supp. 2d at 416-17). The court must make an independent determination regarding
damages and cannot accept as true factual allegations of damages. Id. (citing Lawbaugh, 359 F.
Supp.2d at 422). While the court may conduct an evidentiary hearing to determine damages, it is
not required to do so but may rely instead on affidavits or documentary evidence in the record to
determine the appropriate sum. See E.E.O.C. v. North Am. Land Corp., No. 1:08–cv–501, 2010

2

WL 2723727, at *2 (W.D.N.C. Jul.8, 2010). Here, the court has relied on the record before it in
determining an appropriate award of damages.
III.

Discussion

To determine damages on these two claims the court relies on affidavits and documentary
evidence in the record. (Doc. No. 1 and Doc. No. 8, Attachments 1-5). Plaintiff requests judgment
against Defendant as follows:
FDCPA1 Statutory Damages
NCCAA2 Statutory Damages
FDCPA Actual Damages
NCCAA Actual Damages
Attorneys’ Fees
Court Costs

$1,000.00
$112,000.00
$10,000.00
$10,000.00
$3,235.00
$400.00

TOTAL

$136,635

In determining whether to enter default judgment, the court must determine whether the
well-pleaded allegations of the complaint support the relief sought. Ryan v. Homecomings
Financial Network, 253 F.3d 778, 780 (4th Cir. 2001). The court finds that the allegations in the
complaint establish violations of the FDCPA and the NCCAA. Plaintiff alleged that defendant
called the plaintiff on two separate occasions with threats of lawsuits and false representations of
an alleged debt, patent violations of the FDCPA. (Doc. No. 1). Furthermore, this same conduct
violated the applicable state statute as well, the NCCAA. Id. Therefore, the court finds sufficient
allegations that support the relief sought, so default judgment is proper.
Plaintiff requests this Court to award statutory damages in the amount of $1,000 for
violations of the FDCPA, and $112,000 for violations of the NCCAA, and actual damages of

1

2

15 U.S.C. § 1692, et seq.
N.C. Gen. Stat. § 58-70-90, et seq.

3

$10,000 for violation of the FDCPA and the NCCAA. Plaintiff explains that he is entitled to this
award because defendant’s threats to sue plaintiff caused him personal humiliation,
embarrassment, mental anguish, and emotional distress.
A.

Damages for Violation of Federal Law

The FDPCA provides for both actual damages and statutory damages up to $1,000 per
lawsuit. 15 U.S.C. § 169(k). FDCPA actual damages include damages for emotional distress and
relational injuries. Ademiluki v. Pennymac Mortg. Inv. Trust Holdings I, LLC, F. Supp. 2d 502,
536 (D. Md. 2013). However, courts have been reluctant to award damages for emotional distress
from violations of the FDCPA absent an aggrieved plaintiff receiving mental health treatment or
evidence that emotional distress concretely affected a plaintiff’s personal or professional life. See
Crass v. Marval & Associates LLC, 2010 WL 2104174, *1 (E.D. Wis. 2010) (plaintiff's request
for $3,500 in actual damages was denied because "she failed to provide a reasonably detailed
explanation of the emotional injuries suffered”). Here, plaintiff requests $1,000 in statutory
damages under the FDPCA, which is the maximum amount which can be awarded under the
FDCPA, but which is reasonable under the allegations of this Complaint.
Plaintiff also requests $10,000 in actual damages under the FDCPA, citing personal
humiliation, embarrassment, mental anguish, and emotional distress.

In support, plaintiff

submitted a declaration stating that he experienced frustration, stress, and anxiety due to
defendant’s conduct on two separate occasions. (Doc. No. 8, Attachment 2). Specifically, plaintiff
states that these conversations caused him to lose sleep, to fear that he would be denied the
opportunity to sit for the North Carolina Bar examination, and to have tension in his relationship
with his girlfriend. Id. Plaintiff also had to change his telephone number. Id. The court notes

4

that despite such trepidation, he was able to sit for the North Carolina bar examination. Id.
From what the court discerns from the pleadings, defendant unlawfully attempted to collect
from plaintiff a debt that had been lawfully discharged in bankruptcy, a clear violation of federal
and state law. In doing so, defendant harassed and threatened plaintiff. As far as plaintiff’s
damages, defendant’s illegal conduct consisted of two threatening phone calls that caused plaintiff
an expected amount of stress and anxiety that apparently abated over time, without need for mental
health treatment, and in such a manner as to allow completion of his studies and sitting for the
state bar exam. Plaintiff’s declaration does not indicate how long he suffered from this emotional
distress, though it can be assumed he suffered during the span of the two phone calls and several
weeks beyond, for a total of five months. However, five months of modest anxiety and stress does
not, without more, support an award of $10,000. Accordingly, the court will award Plaintiff $1,000
in statutory damages and $1,000 in actual damages under the FDCPA.
B. Damages for State Law Violations
Plaintiff further requests $112,000 in statutory damages and $10,000 in actual damages
under the NCCAA. While a party may typically recover only once for his injuries, “[d]amages
under the FDCPA do not preclude damages under relevant state law,” here the NCCAA. Baie v.
Prime West Mgmt. Recovery, LLC, 2011 WL 1257148, at *9 (E.D.N.C. 2011).
The NCCAA provides for actual damages and statutory damages of between $500 and
$4,000 per violation. N.C. Gen. Stat. § 58-70-130(b) (emphasis added). “Violation” does not
correlate to the number of counts alleged, but to the number of separate instances the defendant
violated the state statute. See Baie, 2011 WL 1257148 at *10-11 (awarding $2,000 for each of the
five occasions where the defendant contacted the plaintiff); In re Kirkbride, 2010 WL 4809334, at

5

*14 (E.D.N.C 2010) (awarding monetary damages per call, not per count of the NCCAA violated).
Here, the court has found two violations based on the allegations of the Complaint.
In Baie v. Prime West Mgmt. Recovery, the court held that the defendant’s conduct of
making four threatening phone calls and one in-person visit was “sufficiently egregious to justify
an award of a $2,000 penalty per violation . . . for a total of $10,000.” Baie, 2011 WL 1257148 at
*11. In In re Kirkbride, the court awarded $200 per answered call, totaling in a $35,000 award,
where plaintiffs received threatening phone calls stating that their loans were in default. In re
Kirkbride 2010 WL 4809334 at *14. This court finds the alleged egregiousness of the calls at
issue here to fall between those in Baie and Kirkbride and finds that $1,000.00 per unlawful call
is an appropriate award of statutory damages based on the alleged egregiousness of the calls at
issue here. Further, the court finds that only two calls were made, not three, based on the
allegations of the Complaint. Analysis of actual damages under the NCCAA is the same as the
FDCPA, so for the reasons set forth above, the court will award actual damages for violation of
the NCCAA in the amount of $1,000
C. Attorney’s Fees
Under the FDCPA, a plaintiff can recover from a debt collector “the costs of the action,
together with a reasonable attorney's fee as determined by the court.” 15 U.S.C. § 169(k)(a)(3).
“This determination is within the sound discretion of the court.” Barnett v. Creditors Specialty
Serv., 2013 WL 1629090, at *8 (W.D.N.C. 2013) (citing Beasley v. Sessoms & Rogers, P.A., 2011
WL 5402883 **2 (E.D.N.C. 2011)). To calculate a reasonable attorney’s fee, the court calculates
the Lodestar amount: the number of hours reasonably expended times reasonable hourly rate.
Barnett, 2013 WL 1629090 at *8 (citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)).

6

However, the Court "is not required to engage in a lengthy discussion concerning what portion of
the award is attributable to each factor." Barnett, 2013 WL 1629090 at *9 (citing Arnold v. Burger
King Corp., 719 F.2d 63, 67 n.4 (4th Cir.), cert. denied 469 U.S. 826, 105 S. Ct. 108, 83 L. Ed. 2d
51 (1984)).
The court first considers the reasonable hours expended, by reviewing the records
submitted in support of the motion and excluding any hours that are redundant. Barnett, 2013 WL
1629090 at *10 (citing Hensley, 461 U.S. at 434). This court has reviewed the records in support
of the motion and finds that the hours billed are reasonable and not redundant.
Next, the Court considers the reasonably hourly rate at which those hours are billed. The
plaintiff bears the “burden of proof that the hourly rates sought for counsel and the paralegal are
reasonable.” Barnett, 2013 WL 1629090 at *11 (citing Robinson v. Equifax Information Serv.,
LLC, 560 F.3d 235, 244 (4th Cir. 2009)).
[The] determination of the hourly rate will generally be the critical inquiry in setting
the reasonable fee, and the burden rests with the fee applicant to establish the
reasonableness of a requested rate. In 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.
Id. at *11-12 (emphasis added). Here, plaintiff’s attorney did not submit any evidence concerning
the prevailing rates of attorneys and paralegals within this community. The sole evidence provided
was the attorney’s affidavit, which only states the rates at which members of his law firm are billed.
While the court would have preferred an affidavit as to prevailing rates, this court is very aware of
prevailing rates for both attorneys and paralegals providing legal and legal support services in the
Charlotte Division and finds that such rates are not only reasonable, but well within the range of
prevailing rates typically charged in the Charlotte Division of this court for similar litigation. In

7

Farbotko v. Clinton County of New York, 433 F.3d 204 (2nd Cir. 2005), the Court of Appeals for
the Second Circuit held, as follows:
the equation in the caselaw of a “reasonable hourly fee” with the “prevailing market
rate” contemplates a case-specific inquiry into the prevailing market rates for
counsel of similar experience and skill to the fee applicant's counsel. This may, of
course, include judicial notice of the rates awarded in prior cases and the court's
own familiarity with the rates prevailing in the district.
Id. at 209 (citations omitted). The court will grant a total fee award of $3235.00 and award $400
in costs for the filing fee and service of process.
ORDER
IT IS, THEREFORE, ORDERED that plaintiff’s Motion for Default Judgment (Doc.
No. 8) is GRANTED.
DEFAULT JUDGMENT
IT IS ORDERED that JUDGMENT be and hereby is entered in favor of plaintiff and
against defendant, providing that plaintiff have and take of defendant a total award of $8,635.00
with interest thereupon accruing at the lawful federal judgment rate.

Signed: April 27, 2015

8