Ozmun v. Portfolio Recovery Associates LLC et al

Filing 91

ORDER GRANTING IN PART Defendants' 81 Motion to Dismiss with Prejudice or, in the Alternative,for an Order in Limine, and to Hold Plaintiff and His Lead Attorneys in Contempt. ORDER that the Plaintiff Joseph Ozmun and his attorneys are HELD IN CONTEMPT of this Court's Amended Scheduling Order entered September 28,2017. Signed by Judge Sam Sparks. (lt)

I

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION

3:33

JOSEPH OZMUN,
Plaintiff,
Case No. A-16-CA-940-SS

-vs-

PORTFOLIO RECOVERY ASSOCIATES, LLC;
RAUSCH, STRUM, ISRAEL, ENERSON &

HORNIK

LLC;

WESTERN SURETY

COMPANY; and TRAVELERS CASUALTY
AND SURETY COMPANY OF AMERICA,
Defendants.

ORDER
BE IT REMEMBERED on the 23rd day of January 2018, the Court held a hearing in the

above-styled cause and the parties appeared through counsel. Before the Court are Defendants

Rausch, Sturm, Israel, Emerson, & Hornik LLC (RSIEH) and Portfolio Recovery Associates (PRA)
(collectively, Defendants)' Motion to Dismiss with Prejudice or, in the Alternative, for an Order in
Limine, and to Hold Plaintiff and His Lead Attorneys in Contempt [#8 1], Plaintiff Joseph Ozmun

(Plaintiff)'s Response [#82] in opposition, and Defendants' Reply [#84] in support. Having reviewed
the documents, the arguments of counsel made at the hearing, the relevant law, and the file as a
whole, the Court now enters the following opinion and orders.

Background
On August 3, 2016, Plaintiff filed the initial lawsuit in this action, alleging Defendants

violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C.

§

Debt Collection Act (TDCA), Tex. Fin. Code

Compi. [#1]. After Plaintiff

§

392.001

et seq.

1692

et seq.,

and the Texas

submitted proposed scheduling recommendations, the Court entered a scheduling order on

October 26, 2016. Scheduling Order [#28]. The scheduling order required Plaintiff to submit a
written settlement offer by November 2, 2016, and designate potential witnesses, testifying experts,
and proposed exhibits by February 17, 2017. Id. ¶ 2, 5. It is undisputed Plaintiff did not designate

witnesses, experts, or exhibits by February 17, 2017.
On July 24, 2017, the Court granted in part and denied in part Defendants' motion for

summary judgment. Order of July 24, 2017 [#791. Although the Court granted summary judgment
for Defendants on Plaintiffs TDCA claims, the Court found fact issues precluded summary

judgment on Plaintiffs FDCPA claims. Id.
Shortly before this Court entered its summary judgment order, Plaintiff filed two additional

lawsuits against PRA. On September 28, 2017, the Court consolidated the two-later filed cases into
this action. On the same day, the Court issued an amended scheduling order. Am. Scheduling Order
[#80]. The amended scheduling order required Plaintiff to submit a written settlement offer by

November

1,

2017. Id. ¶ 2. The amended scheduling order also mandated Plaintiff serve his

designation of potential witnesses, testifying experts, and proposed exhibits on Defendants by

November 1, 2017. Jd. ¶ 5.
It is undisputed Plaintiff missed the November 1, 2017 deadline to designate potential

witnesses, testifying experts, and proposed exhibits. See Resp. [#82] ¶ 6. After notifying Plaintiffs
counsel they had violated the Court's amended scheduling order, Defendants filed the instant

contempt motion on December 20, 2017, more than a month after Plaintiff missed the
November 1, 2017 deadline. Defendants asked the Court to dismiss this lawsuit for failure to
prosecute, enter an order in limine prohibiting Plaintiff from calling any witnesses or offering any
exhibits at trial, or compensate Defendants for Plaintiffs noncompliance. Plaintiff responded,
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arguing Defendants' requested sanctions were too extreme. However, concurrent with his response,

Plaintiff served Defendants with his designations. Resp. [#82] ¶ 6 & n.2.
On January 23, 2018, the Court held a hearing to review the pending motion for contempt.

Plaintiff's primary attorneys, Ms. Chatman and Michael Jacob Wood, did not

attend.1

Instead, an

attorney who entered an appearance in the case only the day before the hearing responded to

Defendants' motion and the Court's questions. At the conclusion ofthe hearing, the Court requested
Defendants submit affidavits itemizing expenses necessitated by Plaintiff's failure to comply with
the November 1, 2017 deadlines. Defendants have done so.

Analysis
I.

Legal

StandardCivil Contempt

"[C]ourts have inherent power to enforce compliance with their lawful orders through civil

contempt." Spa/lone v. United States, 493 U.S. 265, 276 (1990) (citations omitted); In re Bradley,
588 F.3d 254, 265 (5th Cir. 2009) (noting that "while the criminal contempt power is limited by 18

U.S.C.

§

401, civil contempt remains a creature of inherent power"). Civil contempt is intended to

"coerce the contemnor into compliance with a court order or to compensate another party for the

contemnor's violation.

. .

." Id. at 263. However, "in selecting contempt sanctions, a court is obliged

to use the least possible power adequate to the end proposed." Spallone, 493 U.S. at 276 (citation

and internal quotation marks omitted).
To establish civil contempt, "[a] movant in a civil contempt proceeding bears the burden of

establishing by clear and convincing evidence

1)

that a court order was in effect, 2) that the order

required certain conduct by the respondent, and 3) that the respondent failed to comply with the
'Mr. Wood did appear via phone, but he did not offer any comment or explanation for the missed deadlines.

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court's order." Whitcraft v. Brown, 570 F.3d 268,271-72(5th Cir. 2009). "To determine compliance
with an order, the court simply asks whether the respondent has [complied]. If he has not, the burden
shifts to the respondent to rebut this conclusion, demonstrate an inability to comply, or present other

relevant defenses." F.D.J.C.

II.

v.

LeGrand, 43 F.3d 163, 170 (5th Cir.1993) (citations omitted).

Application
Here, it is undisputed scheduling orders were in effect. The original scheduling order required

Plaintiff to submit a written settlement offer by November 2,2016, and designate witnesses, experts,
and exhibits by February 17, 2017. Likewise, the amended scheduling order required Plaintiff to

submit a written settlement offer and designate witnesses, experts, and exhibits by

November

1,

2017.

Plaintiff does not dispute he failed to designate witnesses, experts, and exhibits by the
deadline established by the original scheduling order and by the deadline required by the amended
scheduling order. Instead, Plaintiff served Defendants with his designations only after Defendants
filed their motion for contempt. Plaintiff offers no defense or apology for the failure to comply with
the Court's scheduling order, merely attributing the missed deadlines to a calendaring error.
However, Plaintiff does dispute the allegation he failed to provide Defendants a written

settlement offer. Plaintiff offers evidence he extended a settlement offer via email on July 10, 2017.
See Resp. [#82-1] Ex. A (Offer Email). But Plaintiff sent that offer to a PRA employee2 rather than

PRA's attorney of record in this case. Id. Thus, it appears Plaintiff's counsel violated Rule 4.02 of
the Texas Disciplinary Rules of Conduct, which prohibits a lawyer from communicating with an

2

Although the PRA employee is in-house counsel for PRA, she is not admitted to practice before this Court and is
licensed to practice law in Missouri rather than Texas. See Reply [#84] at 4 n.2. Moreover, the PRA employee emailed is not
the PRA point-of-contact or corporate representative for this case. Id. at 5.

organization where the lawyer knows the organization is represented by another lawyer.3 In addition,

Plaintiff offers no evidence he attempted to extend a settlement offer as required under the amended
scheduling order.
Consequently, Plaintiff, at minimum, violated the amended scheduling order by violating

failing to extend a settlement offer and failing to designate witnesses, experts, and exhibits by

November

1,

2017. The Court therefore holds Plaintiff and his attorneys in contempt.

The Court turns to evaluate the appropriate sanctions. Here, the Court finds an award of

Defendants' expenses incurred in filing the motion for contempt is appropriate. See McComb

v.

Jacksonville Paper Co., 336 U.S. 187, 191(1949) (noting the civil contempt power includes the
ability "to compensate innocent parties] for losses or damages sustained by reason of
noncompliance"); see also Anthony v. Marion Cty. Gen. Hosp., 617 F.2d 1164, 1167 (5th Cir. 1980)
("Dismissal with prejudice, however, is an extreme sanction which is warranted only where a clear
record of delay or contumacious conduct by the plaintiff exists." (citation and internal quotation

marks omitted)).

Not only did Defendants notify Plaintiff of his overdue

obligations,4

Defendants spent a

sizable amount of time and effort to bring Plaintiffs failure to comply to the Court's attention.

Counsel for both Defendants attended the January 23rd hearing in person. In total, counsel for PRA
Specifically, Rule 4.02(a) provides "a lawyer shall not communicate or cause or encourage another to communicate
about the subject of the representation with a person, organization or entity of government the lawyer knows to be represented
by another lawyer regarding that subject, unless the lawyer has the consent of the other lawyer or is authorized by law to do
so." TEX. DISCIPLINARY R. PR0F'L CONDUCT 1.09, reprinted in TEx. Gov'T CODE ANN., tit. 2, subtit. G, app. A, art. 10, § 9
(Vernon 2005). The Local Rules of the Western District of Texas, in a section titled "Discipline of Attorneys," provide
"[m]embers of the bar of this court and any attorney permitted to practice before this court must comply with the standards
of professional conduct set out in the Texas Disciplinary Rules of Professional Conduct ...... Local Rule AT-7(a).
only did Defendants notify Plaintiff of his failure to comply with the amended scheduling order in advance
of filing the contempt motion, counsel for RSIEH noted Plaintiff failed to designate witnesses, experts, and exhibits under

the original scheduling order in a hearing before this Court on June 6, 2017.

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states it incurred $8,852.00 in attorneys' fees and $266.92 in expenses. Likewise, counsel for RSIEH

claims it incurred $8,821.00 in attorneys' fees and $435.92 in expenses. The Court finds Defendants'

accounting of the time and expense devoted to prosecuting this motion is reasonable but a total

award of $18,375.84 is excessive. In light of Defendants' duplicative work in bringing a joint
contempt motion, the Court awards Defendants a total of $9,187.92 in legal fees to be apportioned
among Defendants as they see fit.
In addition, Defendants provided evidence of their clients' non-legal expenses in attending

the January 23rd hearing. Specifically, RSIEH's representative spent $70.40 to attend the hearing.
Likewise, the PRA employee who received Plaintiffs July settlement offer in error and was prepared
to testify at the hearing spent $806.68 attending the hearing because she traveled from St. Louis,

Missouri. Therefore, the Court awards RSIEH $70.40 and PRA $806.68 for their travel expenses.

Conclusion
Accordingly,
IT IS ORDERED that Defendants Rausch, Sturm, Israel, Emerson, & Hornik LLC

and Portfolio Recovery Associates' Motion to Dismiss with Prejudice or, in the Alternative,

for an Order in Limine, and to Hold Plaintiff and His Lead Attorneys in Contempt [#81] is
GRANTED IN PART;
IT IS FURTHER ORDERED that the Plaintiff Joseph Ozmun and his attorneys are

HELD IN CONTEMPT of this Court's Amended Scheduling Order entered September 28,

2017 and in order to purge that contempt,

IT iS ORDERED that Plaintiff Joseph Ozmun and his attorneys shall (1) pay a total

of NINE THOUSAND ONE HUNDRED EIGHTY-SEVEN AND 92/100 DOLLARS
($9,187.92) to Defendants for the legal fees incurred as a result of Plaintiff's failure to
comply with this Court's scheduling order; (2) pay Rausch, Sturm, Israel, Emerson, &

Hornik LLC SEVENTY AND 40/100 DOLLARS ($70.40) and pay Portfolio Recovery
Associates EIGHT HUNDRED SIX AND 68/100 DOLLARS ($806.68) for expenses
incurred in attending the hearing before this Court on January 23, 2018.
SIGNED this the

76iy of February 2018.
SAM
UNITED STATES DISTRICT JUDGE

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