Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-00724/USCOURTS-casd-3_10-cv-00724-1/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 15:1692 Fair Debt Collection Act

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1 10CV724 

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

ROSS HUNTER;

Plaintiff,

v.

OASIS FINANCIAL SOLUTIONS, LLC;

and DOES 1-10;

Defendants.

 

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No. 10-CV-724-L(WVG)

REPORT AND RECOMMENDATION ON

PLAINTIFF’S MOTION FOR DEFAULT

JUDGMENT (DOC. NO. 12)

On April 6, 2010, Plaintiff Ross Hunter filed suit against

Defendant Oasis Financial Solutions, LLC (“Oasis”). (Doc. No. 1.)

Service of process on Oasis was completed on August 10, 2010. (Doc.

No. 6.) After Oasis failed to respond to the Complaint, the Clerk

entered default on September 16, 2010. (Doc. No. 11.) On October

18, 2010, Plaintiff filed a motion for default judgment against

Oasis. (Doc. No. 12.) District Judge Lorenz referred the motion to

the undersigned for a Report and Recommendation. For the reasons

below, the Court RECOMMENDS that Plaintiff’s motion for default

judgment be GRANTED.

/ / /

/ / /

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I. BACKGROUND

Oasis is a Florida-based company engaged in the debt

collection business. (Compl. ¶ 5.) Mr. Hunter is an individual.

(Id. ¶ 4.) This suit arose from a series of collection calls Oasis

placed to Mr. Hunter to collect an unpaid debt which Mr. Hunter

admits he incurred. (Id. ¶¶ 8-9.) After Mr. Hunter failed to pay,

the debt was assigned to Oasis for collection. ( Id. ¶ 10.) When

Oasis initially contacted Mr. Hunter, he informed the company that

the statute of limitations for collection of the debt had run.

(Doc. No. 12 at 5-6.) Oasis thereafter began to call Mr. Hunter

“ten (10) times per day,” threatened him with arrest, and failed to

send Mr. Hunter verification of the debt upon his request. ( Id.;

Compl. ¶¶ 12, 14.) Oasis continued to call Mr. Hunter even after

Mr. Hunter retained legal counsel and advised Oasis to direct all

future calls to counsel. (Compl. ¶¶ 16-17; Doc. No. 12 at 6.) Mr.

Hunter alleges additional harassing or illegal conduct against

Oasis, including threatening legal action without intending to

follow through (Compl. ¶ 27), accusing him of committing a crime

(Id. ¶ 28), continuing collection efforts despite lack of debt

validation (Id. ¶ 35), using obscene and profane language during the

course of collection calls (Id. ¶ 43), and falsely representing that

Oasis was an attorney or law firm (Id. ¶ 47). As a result of this

conduct, Mr. Hunter claims he suffered “humiliation, anger, anxiety,

emotional distress, fear, frustration[,] and embarrassment.” (Id.

¶ 20.) Further, “his life was disrupted” by Oasis’s conduct. (Doc.

No. 12 at 7.)

Mr. Hunter’s Complaint claims violations of the Fair Debt

Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (“Fair Debt

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Act”) and the Rosenthal Fair Debt Collections Act, Cal. Civ. Code

§§ 1788 et seq. (“Rosenthal Act”). To date, Oasis has not appeared

in this action or responded to the litigation.

Mr. Hunter requests a $75,000 judgment against Oasis as

follows: (1) $73,000 in “actual” damages, (2) $1,000 in statutory

damages pursuant to the Fair Debt Act, and (3) $1,000 statutory

damages pursuant to the Rosenthal Act. He does not request

attorneys’ fees or costs.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 55(b) provides that default

judgment may be entered upon the application of a party. Factors

which the Court may consider in exercising discretion as to the

entry of a default judgment include: (1) the possibility of

prejudice to the plaintiff, (2) the merits of a plaintiff's

substantive claim, (3) the sufficiency of the complaint, (4) the sum

of money at stake in the action, (5) the possibility of a dispute

concerning material facts, (6) whether the default was due to

excusable neglect, and (7) the strong policy underlying the Federal

Rules of Civil Procedure favoring decisions on the merits. Eitel v.

McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). “The general rule

of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be

taken as true.” TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915,

917-18 (9th Cir. 1987) (quotation marks and citations omitted).

III. DISCUSSION

A. Default Judgement is Proper

Considering the factors established in Eitel, a grant of

default judgment is appropriate in this case. First, a strong

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possibility exists that Mr. Hunter will be prejudiced if he is

unable to seek judgment, as this suit is his only means of recourse

against Oasis for its conduct. Further, if Mr. Hunter’s motion is

not granted, Oasis essentially successfully defends against suit

without ever appearing or expending any resources. That inequitable

result, in light of Oasis’s alleged conduct, will both prejudice

Mr. Hunter and subvert the purpose of both statutory schemes.

Moreover, Mr. Hunter’s claims have merit. Taken as true, as

the Court must do, all of the allegations contained in paragraphs

23-35 of Mr. Hunter’s Complaint establish a violation of the Fair

Debt Act. Each paragraph contains citations to specific provisions

in the United States Code. The undersigned reviewed each provision

and found that each allegation would constitute a violation of each

cited provision. Similarly, the undersigned reviewed the allegations in paragraphs 41-45 and 47 and found that Mr. Hunter’s

allegations constitute violations of the Rosenthal Act. The only

questionable violation appears in paragraph 30: “The Defendants

failed to send the Plaintiff a validation notice stating the amount

of the debt, in violation of 15 U.S.C. § 1692g(a)(1).” The cited

section provides that a mailed notice must include this information

if Oasis did not inform Mr. Hunter of the same at the time of the

call. Mr. Hunter’s Complaint contains no information regarding

whether he was or was not verbally told the amount he owed. In any

event, this allegation remains viable if in fact he was not verbally

told the amount he owed. This questionable allegation notwithstanding, Mr. Hunter’s two claims are meritorious.

Next, there is no evidence that Oasis’s failure to appear

thus far is a result of excusable neglect. And although the

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undersigned recognizes the strong policy favoring resolution of

cases on their merits, proceeding with the instant litigation would

be futile given Oasis’s failure to appear. Thus, entry of default

judgment is necessary to ensure Mr. Hunter is not left without

recourse.

B. The Judgement Should Be Set at $75,000 Plus Attorneys’ Fees

The undersigned next recommends that actual damages be fixed

at $73,000; statutory damages be fixed at $2,000; and attorneys’

fees and costs be awarded according to proof.

1. Actual Damages: $73,000

Actual damages are available to any person injured by a

violation of the Fair Debt Act. 15 U.S.C. § 1692k(a)(1). Moreover,

Fair Debt Act “actual damages encompass damages for emotional

distress and relational injuries.” Nelson v. Equifax Info. Servs.

LLC, 522 F. Supp. 2d 1222, 1239 (C.D. Cal. 2007) (citing cases); see

generally Panahiasl v. Gurney, 2007 U.S. Dist. LEXIS 17269, *3-6

(N.D. Cal. Mar. 7, 2007) (surveying cases on damages for emotional

distress). Further, “[p]roof of physical injury is not necessary to

obtain an award of emotional distress damages under the [Fair Debt

Act].” Id. The District Court in Nelson upheld the jury’s award of

$85,000 in actual damages despite the lack of any physical injuries.

Mr. Hunter next cites Panahiasl, in which the District Court

awarded $50,000 and $10,000 in damages to the two plaintiffs. In

that case, the Court generally described the violative conduct as

“repeated telephone abuse.” Panahiasl, 2007 U.S. Dist. LEXIS at *5.

The plaintiff who received $50,000 suffered “embarrassment, fear,

anger, panic, humiliation, nervousness, crying fits, difficulty

eating and sleeping, and diarrhea.” Id. The plaintiff who received

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$10,000 suffered “emotional distress in the form of embarrassment,

humiliation, harassment, anger, anxiety, lack of concentration and

stress.” Id.

Mr. Hunter also cites Robertson v. Horton Bros. Recovery,

Inc., 2007 U.S. Dist. LEXIS 48602 (D. Del. July 3, 2007), in which

the Court awarded $75,000 in actual damages. Robertson involved the

repossession of a car, where the repossessors initially visited the

plaintiff’s home and then followed up with repeated calls “laced

with profanity and physical threats.” Id. at *4. The plaintiff was

so frightened that she took the day off work and called her husband,

who came home from work and took the rest of the day off as well.

Id. at *4-5.

Although the plaintiffs’ emotional reactions varied slightly

in the cases above, they are qualitatively similar to Mr. Hunter’s

emotional distress allegations: “humiliation, anger, anxiety,

emotional distress, fear, frustration[,] and embarrassment.”

(Compl. ¶ 20.) Further, Oasis’s conduct here was similar to the

defendants in the cases above. Oasis’s alleged threats, repeated

telephone calls, failure to validate the debt, and continued contact

despite Mr. Hunter’s request to direct further contact to his

attorney are consistent with the type of conduct in the above cases.

Ultimately, Mr. Hunter’s request for $73,000 in damages is reasonable and is consistent with damages awarded in similar cases.

2. Statutory Damages: $2,000

The Fair Debt Act allows for a statutory damages award up to

$1,000 in addition to the above actual damages award. Nelson, 522

F. Supp. 2d at 1238-39. California’s Rosenthal Act allows for the

same statutory damages.

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Although both Acts are highly similar, the Court may fix two

$1,000 awards. Accord Panahiasl, 2007 U.S. Dist. LEXIS at *9 n.4;

but see Silva v. Jason Head, PLC, 2010 U.S. Dist. LEXIS 121557, *17-

19 (N.D. Cal. Nov. 4, 2010) (finding, and citing N.D. Cal. cases, to

the contrary). Civil Code Section 1788.32 specifically provides:

“The remedies provided herein are intended to be cumulative and are

in addition to any other procedures, rights, or remedies under any

other provision of law.” (emphasis added). Furthermore, 15 U.S.C.

Section 1692n states that the federal law does not exempt or affect

any person, who is subject to the Fair Debt Act, from complying with

the law of any State with respect to debt collection practices,

unless those laws are inconsistent with the federal Act, and then

only to the extent of the inconsistency.

The Silva line of cases notwithstanding, dual statutory

damages are proper here because Mr. Hunter alleges Oasis violated

provisions that are specific to each Act. For example, in paragraph

33 of his Complaint, Mr. Hunter alleges Oasis “failed to send [him]

a validation notice informing [him] of a right to have verification

and judgment mailed to [him], in violation of 15 U.S.C.

§ 1692g(a)(4).” This allegation appears only under Mr. Hunter’s

Fair Debt Act claim. Similarly, in paragraph 47, Mr. Hunter alleges

Oasis “falsely represented that it was an attorney or a law firm, in

violation of Cal. Civ. Code § 1788.13(b).” This allegation appears

in Mr. Hunter’s Rosenthal Act claim only. Thus, even if the Court

is disinclined to award what was characterized in Silva as “repetitive” statutory damages, two statutory damage awards in this case

would not be repetitive since Mr. Hunter alleges violations of

provisions that are exclusive to each Act.

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The undersigned therefore recommends that Mr. Hunter be

awarded $1,000 in statutory damages for Oasis’s violation of the

Fair Debt Act and $1,000 in statutory damages for Oasis’s violation

of the Rosenthal Act.

3. Attorneys’ Fees and Costs

Although Mr. Hunter has not requested attorneys’ fees and

costs, both the Fair Debt Act and Rosenthal Act direct courts to

award these items to a prevailing consumer. 15 U.S.C. § 1692k(a)(3)

(providing that damages include the “sum” of actual damages,

statutory damages, and attorneys fees and costs); Cal. Civ. Code

§ 1788.30(c) (“[T]he prevailing party shall be entitled to costs of

the action. Reasonable attorney’s fees . . . shall be awarded to a

prevailing debtor.”) (emphasis added). A number of cases decided

under 15 U.S.C. Section 1692k have held that an attorney fee award

is required if the plaintiff prevails. See, e.g., Zagorski v.

Midwest Billing Servs., 128 F.3d 1164, 1166 & n.3 (7th Cir. 1997);

Myers v. LHR, Inc., 543 F. Supp. 2d 1215, 1219 (S.D. Cal. 2008)

(Miller, J.). The undersigned therefore recommends that Mr. Hunter

be awarded attorneys’ fees and costs in an amount subject to proof.

See generally Ferland v. Conrad Credit Corp., 244 F.3d 1145, 1149

n.4 (9th Cir. 2001) (“District courts must calculate awards for

attorneys’ fees using the ‘lodestar’ method.”); see also Myers, 543

F. Supp. 2d at 1218-19 (citing Ferland and applying lodestar method

in Fair Debt Act case).

IV. CONCLUSION

Based on the foregoing, the undersigned RECOMMENDS that

Mr. Hunter’s Motion be GRANTED in the amount of $75,000 plus

attorneys’ fees and costs.

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This report and recommendation of the undersigned Magistrate

Judge is submitted to the United States District Judge assigned to

this case, pursuant to the provision of 28 U.S.C. Section 636(b)(1).

IT IS ORDERED that no later than January 21, 2011, any party

to this action may file written objections with the Court and serve

a copy on all parties. The document should be captioned “Objections

to Report and Recommendation.”

IT IS FURTHER ORDERED that any reply to the objections shall

be filed with the Court and served on all parties no later than

February 4, 2011. The parties are advised that failure to file

objections within the specified time may waive the right to raise

those objections on appeal of the Court’s order. Martinez v. Ylst,

951 F.2d 1153 (9th Cir. 1991).

DATED: December 21, 2010

 Hon. William V. Gallo

 U.S. Magistrate Judge

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