Harmon v. Virtuoso Sourcing Group, LLC

Filing 9

MEMORANDUM OPINION AND ORDER granting in part and denying in part Plaintiff's 8 MOTION for Default Judgment Pursuant to Rule 55(b)(2), FRCivP; granting Plaintiff's motion for default judgment insofar as it alleges a violation of 15 U.S. C. §1695d, and denying Plaintiff's motion insofar as it asserts a violation of 15 U.S.C. 1692e(10); Plaintiff is awarded $250 in statutory damages, $2,411 in attorney fees, and $410 in costs against Defendant, for a total of $3,071; dismissing this case from the Court's active docket. Signed by Judge Thomas E. Johnston on 9/12/2012. (cc: attys; any unrepresented party) (tmh)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION

EDWARD HARMON,
Plaintiff,
v.

CIVIL ACTION NO. 2:11-cv-00334

VIRTUOSO SOURCING GROUP LLC,
Defendant.

MEMORANDUM OPINION AND ORDER
Pending is Plaintiff’s motion for default judgment [Docket 8]. For the reasons that follow,
the Court GRANTS IN PART and DENIES IN PART Plaintiff’s motion.
I. BACKGROUND
According to the Complaint, in the spring of 2011, Defendant, a Colorado-based debt
collection agency, through its agents, telephoned Plaintiff at his Charleston, West Virginia home two
to three times a day demanding payment of a debt. (Docket 1, ¶¶ 6, 8, 9-11.) On April 9, 2011,
Plaintiff telephoned Defendant, asked it to stop calling, instructed it to communicate with him only
in writing, and advised Defendant that he could not afford to make any payments at that time. (Id.,
¶12.) Defendant’s agent allegedly informed Plaintiff that additional fees would be charged for the
debt collection efforts, that Defendant would continue to telephone Plaintiff, and that Plaintiff would
be taken to the “next tier.” (Id., ¶ 13.)

On May 12, 2011, Plaintiff filed his Complaint seeking relief under 15 U.S.C. § 1692, et seq.
(Fair Debt Collection Practices Act (“FDCPA”)). (Id.) Plaintiff seeks $1,000 in statutory damages,
costs, and reasonable attorney fees as permitted by 15 U.S.C. § 1692k. (Id. ¶¶ 15-16.)
Defendant was served with a copy of Plaintiff’s Complaint on May 26, 2011. (Docket 4.)
Pursuant to Federal Rule of Civil Procedure 12(a)(1)(a), Defendant had twenty-one days to answer
Plaintiff’s Complaint or file an appropriate Rule 12(b) motion. Thus, Defendant’s answer or Rule
12(b) motion was due on or before June 17, 2011. To date, Defendant has filed no answer or
responsive motion in this case.
On August 4, 2011, at Plaintiff’s request, the Court’s Clerk entered default against
Defendant. (Docket 5, 6.) The Clerk’s default stated that Plaintiff “shall have and recover of
Virtuoso Sourcing Group, LLC such sum or sums as the Plaintiff shall prove to the Court.” (Id.)
On August 8, 2011, the Clerk filed on the Docket a certified mail return receipt card addressed to
Defendant and signed by a Sonja M. Smith, presumably Defendant’s agent, evidencing Defendant’s
receipt of the Clerk’s default. (Docket 7.) On December 16, 2011, Plaintiff filed his motion for
default judgment seeking $1,000 in statutory damages, $3,310 in attorney fees, and $410 for costs.
(Docket 8.)
II. LEGAL STANDARDS
A.

Federal Rule of Civil Procedure 55—Default Judgements

Federal Rule of Civil Procedure 55 governs default judgments. The Rule provides in
pertinent part:
(a)

Entering a Default. When 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.
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(b)

Entering a Default Judgment.
(1)

By the Clerk. If the plaintiff’s claim is for a sum certain or a sum that can be
made certain by computation, the clerk--on the plaintiff’s request, with an
affidavit showing the amount due--must enter judgment for that amount and
costs against a defendant who has been defaulted for not appearing and who
is neither a minor nor an incompetent person.

(2)

By the Court. In all other cases, the party must apply to the court for a default
judgment . . . If the party against whom a default judgment is sought has
appeared personally or by a representative, that party or its representative
must be served with written notice of the application at least 7 days before the
hearing. The 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:
(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.

Fed. R. Civ. P. 55.
An action to enforce any liability under the FDCPA “may be brought in any appropriate
United States district court without regard to the amount in controversy, or in any other court of
competent jurisdiction, within one year from the date on which the violation occurs.” 15 U.S.C. §
1692k(d). The illegal debt collection practices are alleged to have occurred in Charleston, West
Virginia in March and April 2011. Plaintiff’s Complaint was filed on May 12, 2011. Accordingly,
jurisdiction and venue are established.
“[T]rial judges are vested with discretion, which must be liberally exercised, in entering . . .
[default] judgments and in providing relief therefrom.” United States v. Moradi, 673 F.2d 725, 727
(4th Cir.1982). However, default judgment is available “when the adversary process has been halted

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because of an essentially unresponsive party.” S.E.C. v. Lawbaugh, 359 F. Supp.2d 418, 421 (D.
Md. 2005) (citing Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir.1980)).
A defaulting party admits the plaintiff’s well-pleaded factual allegations in the complaint,
in contrast to the allegations regarding damages. Ryan v. Homecomings Fin. Network, 253 F.3d 778,
780 (4th Cir.2001). The party in default, however, is not held to admit conclusions of law. Id.
B.

Fair Debt Collection Practices Act—15 U.S.C. §§ 1692d & 1692e

Harassing and abusive debt collection practices are prohibited under 15 U.S.C. § 1692d.
That statute provides in pertinent part:
A debt collector may not engage in any conduct the natural consequence of
which is to harass, oppress, or abuse any person in connection with the collection of
a debt. Without limiting the general application of the foregoing, the following
conduct is a violation of this section:
...
(5)
Causing a telephone to ring or engaging any person in telephone
conversation repeatedly or continuously with intent to annoy, abuse, or harass any
person at the called number.
15 U.S.C. § 1692d(5).
Likewise, false and misleading debt collection practices are actionable under 15 U.S.C. §
1692e. That statute provides in pertinent part:
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:
...
(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. § 1692e(10).

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Generally, a debt collector may not communicate with a consumer at any unusual time or
place. 15 U.S.C. § 1692c. The time period of 8:00 a.m. through 9:00 p.m. is presumptively a
convenient time. Id.
Pursuant to 15 U.S.C. § 1692k(b), the court shall consider when determining the amount of
liability the frequency and persistence of noncompliance by the debt collector, the nature of such
noncompliance, the extent to which such noncompliance was intentional, among other relevant
factors. Courts analyzing the FDCPA have held that “[w]hether there is actionable harassment or
annoyance turns not only on the volume of calls made, but also on the pattern of calls.” Akalwadi
v. Risk Mgmt. Alts, Inc., 336 F. Supp.2d 492 (D. Md. 2004); see Udell v. Kansas Counselors, Inc.,
313 F. Supp.2d 1135, 1143 (D. Kan. 2004) (finding that four calls over seven days by a debt
collector without leaving a message did not amount to harassment); Kuhn v. Account Control Tech.,
Inc. 865 F. Supp. 1443, 1453 (D. Nev. 1994) (finding that six phone calls in a span of twenty-four
minutes constituted harassment); Bingham v. Collection Bureau, Inc. 505 F. Supp. 864, 873
(D.N.D.1981) (holding that when a call was terminated and the collection agency called back
immediately, that subsequent call alone could constitute harassment); see also Kerr v. Dubowsky,
71 F. App’x. 656, 657 (9th Cir. 2003) (affirming district court’s dismissal of claim where complaint
alleged calls from debt collector were “unwanted” but failed to allege facts that the calls were
intended to harass, oppress, or abuse).
This Court, analyzing an analogous West Virginia debt collection practices statute [W. Va.
Code § 46A-2-128(e)], found that the Defendant was liable where it, among other actions, called the
Plaintiffs’ home and cell numbers between the hours of 8:00 a.m. and 9:00 p.m. 861 times over a

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period of 235 days. Clements v. HSBC Auto Finance, Inc., 2011 WL 2976558 *4 (S.D. W. Va. July
21, 2011) (Berger, J.).
III. DISCUSSION
Plaintiff’s Complaint alleges that Defendant “constantly and continuously places calls to the
Plaintiff seeking to collect an alleged debt.” (Docket 1, ¶ 9.) Defendant placed calls two to three
times a day to Plaintiff’s home beginning March 31, 2011, and continuing through April 13, 2011.
(Id., “Exhibit A.”) On April 9, 2011, Plaintiff called Defendant, asked it to stop calling, and advised
Defendant’s agent that he could not afford to make payments at that time. (Id., ¶ 12.) Defendant’s
agent told Plaintiff the calls would continue and collection efforts would escalate. (Id., ¶ 13.)
Defendant telephoned Plaintiff five more times over the next few days. (Id., “Exhibit A.”) The last
call occurred on April 13, 2011. (Id.)
Based on these allegations, which are taken as true in light of Defendant’s failure to defend
these claims in any way, the Court FINDS that Plaintiff’s Complaint sufficiently states a claim that
Defendant violated 15 U.S.C. § 1692d by making harassing phone calls. The Court, however,
further FINDS that Plaintiff fails to sufficiently state a claim that Defendant violated 15 U.S.C. §
1692e by using false and deceptive means in attempting to collect a debt.
A.

Harassing Telephone Calls Claim—15 U.S.C. § 1692d

Based on the call log that is attached to Plaintiff’s Complaint, Defendant first telephoned
Plaintiff on March 31, 2011, and continued to make another nineteen telephone calls over the course
of nine days, the last day being April 13, 2011. (Docket 1, “Exhibit A”.) Defendant did not call
Plaintiff at inconvenient times as all the calls were made well after 8:00 a.m. or well before 9:00 p.m.
(Id.) On April 9, 2011, Plaintiff called Defendant and asked them to stop calling, to communicate
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with him only in writing, and advised Defendant’s agent that he could not afford to make payments
on the debt that he owed. (Docket 1, ¶ 12.) Defendant continued to telephone Plaintiff five more
times over the next three days. (Id.) Plaintiff alleges that Defendant acted with the intent to annoy,
abuse, and harass Plaintiff.
Based on the foregoing allegations, Plaintiff’s claim satisfies the elements of a cause of
action under 15 U.S.C. § 1692d. First, the allegations in the Complaint permit the Court to fairly
conclude that Plaintiff is a consumer who owed a debt to a debt collector as those terms are defined
within the FDCPA. 15 U.S.C. §§ 1692a(3), (5) & (6). Second, by telephoning Plaintiff twenty times
over the course of ten days and with the intent to harass, annoy, and abuse Plaintiff establishes a
prima facie violation of 15 U.S.C. § 1692d.
B.

False and Misleading Conduct Claim—15 U.S.C. § 1692e

Plaintiff states that during the conversation on April 9, 2011, when Plaintiff asked Defendant
to stop calling him, Defendant’s agent advised him that: 1) the original creditor would charge
Plaintiff additional fees for using a collection agency; and 2) that Plaintiff would be “taken to the
next tier.” Plaintiff states in conclusory fashion that these two assertions violate § 1692e(10).
Absent from the Complaint are any facts demonstrating that these statements were false or deceptive.
Accordingly, Plaintiff fails to state a claim upon which relief may be granted and this claim is
DISMISSED.

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C.

Damages and Attorney Fees—15 U.S.C. § 1692k

Damages for actions brought by an individual are authorized for actual damage sustained and
“such additional damages as the court may allow, but not exceeding $1,000.” 15 U.S.C. § 1692k.1
The Court’s determination of the amount of liability is guided by, “among other relevant factors,”
the following: the frequency and persistence of noncompliance by the debt collector, the nature of
such noncompliance, and the extent to which such noncompliance was intentional. 15 U.S.C. §
1692k(b).
Section 1692k allows a plaintiff “in the case of any successful action” under the FDCPA to
recover “the costs of the action, together with a reasonable attorney’s fee as determined by the
court.” 15 U.S.C. § 1692k(a)(3). The FDCPA provides for an award of a reasonable attorney fees
“in all but the most unusual circumstances,” and the determination of a “reasonable attorney’s fee”
is within the sound discretion of the district court. See, e.g., Carroll v. Wolpoff & Abramson, 53 F.3d
626, 628–29 (4th Cir. 1995). “The most useful starting point for determining the amount of a
reasonable fee is the number of hours reasonably expended on the litigation multiplied by a
reasonable hourly rate.” Hensley v. Eckerhart, 461 U.S. 424, 436–37 (1983). The product of these
variables is the lodestar figure. See Grissom v. The Mills Corp., 549 F.3d 313, 320 (4th Cir. 2008)
(stating that the lodestar figure provides an objective basis on which to make an initial estimate of
the value of a lawyer’s services.).
1

The unit of additional damages under the FDCPA is $1,000 per action, not $1,000 per
violation. Wright v. Finance Service of Norwalk, Inc., 22 F.3d 647, 650 (6th Cir. 1994); Harper v.
Better Business Services, Inc., 961 F.2d 1561, 1563 (11th Cir. 1992). In contrast, under the West
Virginia Consumer Credit Protection Act, this Court has held that W. Va. Code§ 46A-5-101(1)
allows for multiple civil penalties for each telephone call made by a debt collector in violation of the
statute. Stover v. Fingerhut Direct Mktg., Inc., Civil Action No. 5:09-CV-00152, 2010 WL 1050426
(S.D.W. Va. Mar. 17, 2010) (Berger, J.).
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In calculating this lodestar figure, a district court must apply the factors enumerated in
Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), as modified by Hensley,
461 U.S. 436-37; see Barber v. Kimbrell’s Inc., 577 F.2d 216, 226 (4th Cir. 1978) (adopting Johnson
factors). The Johnson factors include: (1) the time and labor required to litigate the suit; (2) the
novelty and difficulty of the questions presented by the lawsuit; (3) the skill required properly to
perform the legal services; (4) the attorney’s opportunity costs in pursuing the litigation; (5) the
customary fee for such services; (6) whether the fee is fixed or contingent; (7) time limitations
imposed by the client or the circumstances; (8) the amount in controversy and the results obtained;
(9) the experience, reputation, and ability of the attorney; (10) the undesirability of the case; (11) the
nature and length of the attorney’s professional relationship with the client; and (12) awards in
similar cases. See Daly v. Hill, 790 F.2d 1071, 1075 n. 2 (4th Cir.1985).
Section 1692k does not, however, “mandate a fee award in the lodestar amount.” Carroll,
53 F.3d at 629 (stating that when a plaintiff has achieved only partial or limited success, the district
court, in calculating an appropriate fee award, may simply reduce the award to account for the
limited success.) In assessing the reasonableness of fees and costs in the context of § 1692k, courts
look to “the substantial Supreme Court precedent pertaining to the calculation of reasonable
attorney’s fees” under the civil rights statutes. Carroll, 53 F.3d at 629 (quoting Graziano v.
Harrison, 950 F.2d 107, 113–14 (3d Cir. 1991).

A district court should consider amount of

damages awarded as compared to amount sought in determining appropriate fee award. Id. (quoting
Farrar v. Hobby, 506 U.S. 103, 114 (1992) (civil rights case)).

If “a plaintiff has achieved only

partial or limited success, the product of hours reasonably expended on the litigation as a whole
times a reasonable hourly rate may be an excessive amount.” Hensley, 461 U.S. at 436.
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1.

Statutory Damages

Plaintiff has established that Defendant violated 15 U.S.C. § 1692d . Plaintiff has not alleged
actual damages, but rather requests the maximum amount of damages permitted under the statute.
(Docket 8 at 5.) Pursuant to 15 U.S.C. § 1692k(a)(2)(A), statutory damages up to $1,000 are
permitted. Plaintiff has established that Defendant’s agents telephoned him twenty times over the
course of nine days. None of these calls, however, were made during inappropriate times. On three
of these days, Defendant’s agents placed three calls a day to Plaintiff; on the remaining seventeen
days, Defendant called no more than once or twice. Plaintiff fails to state whether he answered the
telephone when Defendant’s agents called so it is impossible for the Court to infer whether
Defendant called Plaintiff back after speaking with him or just attempted to contact him again after
placing a call that was not answered. There are no allegations that Defendant’s agents used obscene
or abusive language. While Plaintiff’s call log demonstrates that Defendant telephoned him five
more times after Plaintiff instructed Defendant to stop telephoning him, Defendant’s continued
contacts, as alleged, are not particularly egregious. Accordingly, having considered the factors set
forth in 15 U.S.C. § 1692k(b), the Court FINDS Plaintiff is entitled to statutory damages of $250.
2.

Attorney Fees & Costs

Plaintiff seeks $3,310 in attorney fees and $410 in costs of filing and serving the Complaint.
In support of his claims for attorney fees, Plaintiff tenders affidavits from and biographies of three
attorneys who worked on Plaintiff’s case. (Docket 8-4.) Plaintiff also tenders a detailed time sheet
in support of the attorney fees request. (Docket 8-3.) Finally, Plaintiff directs the Court’s attention
to the United States Consumer Law Attorney Fee Survey Report, 2010-2011, a national survey of
attorney fees charged by consumer law attorneys. (Docket 8-2.)
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The Court will utilize the Johnson factors to determine (1) the reasonable amount of hours
and (2) the reasonable rate to be used in this case.
Based on Plaintiff’s submissions, Plaintiff was represented by three attorneys who spent a
total of 11.1 hours on the case. (Docket 8-3, 8-4.) An additional 4.2 hours are attributed to the work
of a paralegal billed at an hourly rate of $125. (Id.) The most experienced attorney, Adam Krohn,
has been practicing consumer law since 1995. (Docket 8-3, 8-4.) Mr. Krohn charged $350 per hour
for his work in this case. (Id.) His bill for his services in this case is $35, representing his six-minute
review of the file and discussion of the case with his co-counsel, Nicholas Bontrager. (Id.) Mr.
Bontrager, who graduated from law school in 2007, claims extensive experience in FDCPA law. (Id.)
Mr. Bontrager’s stated hourly rate is $250. (Id.) Mr. Bontrager asserts he spent 9.9 hours on this
case. (Id.) Finally, Michael Bailey, an attorney who was admitted to practice law in 2000, has
maintained a general practice of law (which includes consumer law) for eleven years. Mr. Bailey
billed 1.1 hour at a $250 hourly rate . (Id.) All told, the stated attorney fees sought are $3,310. (Id.)
Based the time log Plaintiff submitted, the amount of time attributed to the tasks performed appears
reasonable. Accordingly, considering the simplicity of the facts and applicable law, as well as the
experience of counsel and the level of skill required to appropriately represent Plaintiff in this case,
the Court FINDS that 15.30 hours of legal work to be a fair and reasonable amount.2
With regard to the reasonableness of the hourly rates charged, Plaintiff relies on the 20102011 United States Consumer Law Attorney Fee Survey Report.3 (Docket 8-2.) West Virginia,

2

Plaintiff’s time log incorrectly states that the total amount of time spent is 13.50. The actual
tally of all time entries, as noted in Plaintiff’s motion for default judgment, is 15.30 hours.
3

Plaintiff also directs the Court’s attention to the “Laffey Matrix,”a legal fee schedule that
(continued...)
11

along with Delaware, North Carolina, New Jersey, Pennsylvania, Virginia and the District of
Columbia, are included in the Atlantic Region for this survey. (Id. at 12.) Based on this report, the
average consumer law attorney hourly rate for an attorney with 3-5 years’ experience is $234; with
6-10 years’ experience is $338; with 11-15 years’ experience is $329; and with 16-20 years’
experience is $373. (Id.)
Multiplying the stated attorney work hours by the above-referenced hourly rates per level of
experience, the Court concludes that the reasonable fee for: (1) Mr. Krohn’s legal work is $37; (2)
Mr. Bontrager’s legal work is $2,317; (3) Mr. Bailey’s legal work is $362; and (4) paralegal work
is $525, for a total of $3,241.4 The Court further finds that it is appropriate to reduce the amount
of attorney fees in light of the Court’s award of $250 damages, rather than the $1,000 Plaintiff
requested. The Court FINDS that a strict proportional reduction of 50% is too great a reduction
under the facts of this case; however, the Court FINDS that a reduction of 33%, or $1,080, is
reasonable.

This decision is also based in part on counsels’ failure to adequately support the

assertion that Defendant used false and deceptive means to collect a debt as well as the
unexceptional quality of the drafting of what appears to be a partially boilerplate Complaint.
Consequently, the attorney fees award is reduced to $2,411. The Court awards Plaintiff his costs of

3

(...continued)
is prepared by the Civil Division of the United States Attorney’s Office for the District of Columbia.
The Laffey Matrix sets forth suggested hourly rates for legal work done in the Washington D.C. area.
The Court declines to use this source because the nation’s capitol’s legal market is not fairly
comparable to the Charleston, West Virginia legal market.
4

The Court finds these rates generous for the Charleston, West Virginia legal market, but in
light of Defendant’s failure to defend Plaintiff’s claims, the Court does not find that they are
unreasonable in this particular case. Also, aside from the Laffey Matrix, which states that the
average hourly rate for a paralegal in 2011 was $161, Plaintiff offers no justification for the $125 fee
charged for paralegal services. However, the Court does not find the $125 fee unreasonable.
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filing and service of the Complaint in the amount of $410. Thus, the total amount awarded in
statutory damages, attorney fees, and costs is $3,071.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS IN PART Plaintiff’s motion for default
judgment insofar as it alleges a violation of 15 U.S.C. § 1692d and DENIES IN PART the motion
insofar as it asserts a violation of 15 U.S.C. § 1692e(10) [Docket 8.] The Court awards Plaintiff
$250 in statutory damages; $2,411 in attorney fees; and $410 in costs against Defendant, for a total
of $3,071.
The Court DISMISSES this case from the Court’s active docket. A separate Judgement
Order is filed contemporaneous with this Memorandum Opinion.
IT IS SO ORDERED.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and any
unrepresented party.
ENTER:

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September 12, 2012