Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-00627/USCOURTS-caed-2_07-cv-00627-1/pdf.json

Parties Involved:
Elite Recovery Solutions L.P.
Defendant
Legal Recovery Law Offices, Inc.
Defendant
Travis Lowe
Plaintiff

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1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

TRAVIS LOWE, 

No. CIV S- 07-0627 RRB GGH

 Plaintiff, 

 vs. 

ELITE RECOVERY SOLUTIONS 

L.P., et al.,, FINDINGS AND RECOMMENDATIONS

 Defendants. 

___________________________/

Plaintiff’s motion for entry of default judgment against defendants Elite Recovery

Solutions L.P. and Legal Recovery Law Offices, Inc. (“defendants”), filed July 20, 2007, was

submitted on the record. Local Rule 78-230(h). Upon review of the motion and the supporting

documents, and good cause appearing, the court issues the following findings and

recommendations.

BACKGROUND

On March 30, 2007, plaintiff filed the underlying complaint in this action against

defendants, alleging defendants violated the Fair Debt Collection Practices Act (“FDCPA”) (15

U.S.C. § 1692) and state law through a previous lawsuit against him wherein they sued to collect

a debt barred by the statute of limitations, based on an incorrect principal balance, an

unauthorized amount of interest, and unauthorized attorneys’ fees. The summons and complaint

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 For defendants' information, entry of default, which precludes a party from contesting 1

liability, is different from entry of default judgment, which decides all aspects of a litigation. 

 The substantive arguments raised in defendants’ opposition would have been proper in

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a motion to dismiss.

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were served on April 5, 2007, by leaving them with an employee and agent of defendants. Fed.

R. Civ. P. 4(h)(1). (Leand Bantados, Administrative Clerk for both defendants). Pacific Atlantic

Trading Co. v. M/V Main Express, 758 F.2d 1325, 1331 (9th Cir. 1985) (default judgment void

without personal jurisdiction). Defendants have failed to file an answer or otherwise appear in

this action. On June 6, 2007, the clerk entered default against defendant Legal Recovery Law

Offices, Inc. On June 27, 2007, the clerk entered default against defendant Elite Recovery

Solutions L.P.

Notice of entry of default and the instant motion for default judgment and

supporting papers were served by mail on defendants at their last known address. Defendants

filed an opposition to the motion for entry of default judgment. Plaintiff seeks an entry of default

judgment in the amount of $15,107.50 against defendants jointly and severally. 

DISCUSSION

As a preliminary matter, a defaulting defendant who has made an appearance is

generally allowed to contest damages only. Dundee Cement Company v. Howard Pipe &

Concrete Products, 722 F.2d 1319, 1323 (7th Cir. 1983). Therefore, defendants’ opposition to 1

the motion for default judgment will be considered only to the extent that it contests the

requested damages.2

Entry of default effects an admission of all well-pleaded allegations of the

complaint by the defaulted party. Geddes v. United Financial Group, 559 F.2d 557 (9th Cir.

1977). The court finds the well pleaded allegations of the complaint state a claim for which

relief can be granted. Anderson v. Air West, 542 F.2d 1090, 1093 (9th Cir. 1976). The

memorandum of points and authorities and affidavits filed in support of the motion for entry of

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 Factors include: (1) possible prejudice to plaintiff; (2) the merits of plaintiff’s 3

substantive claim; (3) the complaint’s sufficiency; (4) the sum at stake; (5) possible disputes

about material facts; (6) whether the default was due to excusable neglect; and (7) the strong

policy favoring decisions on the merits. Eitel, 782 F.2d at 1471-72.

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default judgment also support the finding that plaintiff is entitled to the relief requested. There

are no policy considerations which preclude the entry of default judgment of the type requested. 

See Eitel v. McCool, 782 F.2d 1470, 1471-1472 (9th Cir. 1986). 

Courts generally disfavor default judgments, however, especially those involving

large sums. See In Re Roxford Foods, Inc., 12 F.3d 875, 879 (9th Cir.1993);10A C. Wright, A.

Miller & M. Kane, Federal Practice & Procedure: Civil 3d § 2681. “The general rule of law is

that upon default factual allegations of the complaint, except those relating to amount of

damages, will be taken as true.” Geddes, 559 F.2d at 560 (citing Fed. R. Civ. P. Rules 8(d),

55(b)) (emphasis added); see also Fair Housing of Marin v. Combs, 285 F.3d 899 (9th Cir.2002)

(same). 

Granting or denying default judgment is discretionary. See Draper v. Coombs,

792 F.2d 915, 924-25 (9th Cir.1986). Several factors may be relevant. See Eitel, 782 F.2d at

1471-72 (9th Cir.1986).3

“A judgment by default may not be entered without a hearing on damages unless

... the amount claimed is liquidated or capable of ascertainment from definite figures contained in

the documentary evidence or in detailed affidavits.” Dundee Cement, 722 F.2d at 1323 (citing

Geddes); Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir.1981) (no hearing necessary when

documents show judgment amount based on a definite figure); see also Fed. R. Civ. P. 55(b)(2)

(the district court has the discretion to conduct or refuse a hearing on default judgment). A

hearing on the issue of damages is not required as long as the court finds there is a basis for the

damages specified. Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d

105, 111 (2d Cir. 1997). Affidavits or other documentary evidence is sufficient to evaluate the

fairness of the amount requested. Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993). 

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A. Statutory Damages

Plaintiff seeks $1,000 against each defendant pursuant to § 1692k(a)(2)(A) of the

FDCPA, and $1,000 against each defendant under the Rosenthal Act (Cal. Civ. Code §

1788.30(c)), for a total of $4,000.

1. FDCPA

The FDCPA provides for damages of up to $1,000, and provides for factors to be

considered by the court, including “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(a)(2)(A); (b)(1). 

Defendants argue that there is no evidence that they were frequently or

persistently non-compliant, or that they intentionally violated the FDCPA. They further argue

that the $1,000 cap applies to each action, not to each defendant. Defendants have submitted

evidence claimed to have been sold by the original purchaser of the charged-off credit card

account, Alternative Debt Portfolios, to Elite, as purchaser of the information. Exhibit C to the

Davis Declaration is indecipherable, and contains almost no information. The fact that Elite

proceeded to use this information to file an action against plaintiff in state court is evidence of its

level of intent. Elite even concedes in its opposition that it was unable to obtain or produce

discovery requested by Mr. Lowe in the collection action. Oppo. at 3:12-15; Walsh Decl. at ¶ 6. 

Pursuant to § 1692(c), the debt collector must show that its violation was not intentional. 

Defendants have failed to do so in this case. 

Defendants are correct in their claim that statutory damages is limited to $1,000

per action, not $1,000 per defendant. Clark v. Capital Credit & Collection Services, Inc., 460

F.3d 1162, 1178 (9 Cir. 2006) (limiting statutory damages to “one set of circumstances”); th

Nelson v. Equifax Information Services, LLC, 522 F. Supp.2d 1222 (C.D. Cal. 2007) (limiting

statutory damages to “$1,000 per lawsuit, not $1,000 per violation”). The statute itself provides

that “in the case of any action by an individual, such additional damages as the court may allow,

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 The remedies under the Rosenthal Act ”are intended to be cumulative and are in 4

addition to any other procedures, rights, or remedies under any other provision of law.” Cal. Civ.

Code § 1788.32.

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but not exceeding $1,000 ...” 15 U.S.C. § 1692k(a)(2)(A).

Therefore, plaintiff should be awarded $1,000 in statutory damages.

2. Rosenthal Act

Plaintiff also seeks $1,000 per defendant under Cal. Civ. Code § 1788.30(b). The 4

Rosenthal Act also requires an intent that is knowing and wilful. The court finds for the same

reasons stated above in regard to the FDCPA, that plaintiff has made a sufficient showing, and

that defendants have failed to show their violation was not intentional. 

As to the requested amount of $1,000 per defendant, California’s Rosenthal Act

provides in part:

b) Any debt collector who willfully and knowingly violates this

title with respect to any debtor shall, in addition to actual damages

sustained by the debtor as a result of the violation, also be liable to

the debtor only in an individual action, and his additional liability

therein to that debtor shall be for a penalty in such amount as the

court may allow, which shall not be less than one hundred dollars

($100) nor greater than one thousand dollars ($1,000).

Unlike the FDCPA, the California Act provides that “any debt collector” shall be

liable for up to $1,000. Defendants do not contend that these statutory damages are limited by

action, as they argue with respect to the FDCPA. The court did not locate case law on this issue,

and therefore must rely on the plain wording of the Act which provides for penalties against each

debt collector. Plaintiff should recover from each debt collector $1,000 in statutory damages

under the Rosenthal Act, for a total of $2,000.

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B. Actual Damages

Section 1692k(a)(1) also provides for actual damages. 

1. Attorneys’ Fees

“Actual damages” are not defined in the FDCPA. Nevertheless, courts have

awarded attorneys’ fees incurred in defending the underlying collection action as actual damages

under § 1692k. Owens v. Howe, 365 F. Supp. 2d 942, 948 (N. D. Ind. 2005). 

Plaintiff’s declaration states that he had to pay $2,560 to defend the underlying

collection action, along with a filing fee of $180. Low Decl., ¶ 8. He has submitted no other

evidence in support of this amount. Nevertheless, defendants concede that Elite filed a complaint

against Lowe on June 1, 2006, that Lowe, through counsel Fagan, filed an answer on October 27,

2006, that Lowe served discovery requests on Elite about a week after filing his answer, that Elite

was not able to retrieve certain discovery, such as the original account agreement, Lowe’s

payments on the account, and date of last payment, and that Elite dismissed the action on January

19, 2007. Walsh Decl., ¶¶ 4-6. All of these proceedings in the prior action, along with its over

seven months duration, lead the court to conclude that attorneys’ fees of $2,560 were reasonably

incurred. The declarations of Lowe and Walsh are sufficient to document the fees, and further

evidence such as attorney’s bills or cancelled checks is not necessary. Lowe will also be awarded

the filing fee of $180.00.

2. Emotion Distress Damages

Defendants claim that Lowe’s declaration contains only conclusory statements

about stress and worry, and is insufficient to support an award of $1,980 for emotional distress

damages. Defendants cite the California standards which include “extreme and outrageous

conduct” as one factor; however, the Ninth Circuit has not decided whether the state law of

intentional infliction of emotional distress should apply or whether some lower standard akin to

that used under the Fair Credit Reporting Act (“FCRA”) should apply. See Costa v. National

Action Financial Services, 2007 WL 4526510, *7 (E.D. Cal. 2007). Under either standard,

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plaintiff has not made a sufficient showing. California requires a showing of: “(1) extreme and

outrageous conduct by the defendant; (2) with intent to cause plaintiff emotional distress; (3)

severe emotional distress suffered by plaintiff; and (4) defendant’s conduct actually and

proximately caused plaintiff’s severe emotional distress.” Id. at *8, citing Davidson v. City of

Westminster, 32 Cal.3d 197, 209, 185 Cal.Rptr. 252, 649 P.2d 894 (1982). The lesser standard

as utilized under the FCRA does not require proof of state law elements of IIED; however, “a

plaintiff must demonstrate more than transitory symptoms of emotional distress and unsupported

self-serving testimony by a plaintiff is not sufficient.” Id. at *7, citing Wantz v. Experian Info.

Systems, 386 F.3d 829, 834 (7th Cir.2004) (finding that plaintiff cannot rely solely on

uncorroborated testimony). 

Plaintiff’s declaration states only that defendants, whom he had never heard of

previously, filed the collection against him, causing him “a great deal of stress and worry.” He

states that he felt helpless as he knew little about the legal system, but learned that if he lost the

lawsuit he could have his “bank account cleaned out, [his] wages garnished or even property

repossessed.” Lowe Decl. at ¶¶ 5, 6. As a result, plaintiff states that he lost sleep, and suffered

from irritability, and could not get the lawsuit out of his mind. Id. at ¶ 7. As a result, he seeks

$10 per day for each day that he was a defendant in the collection action which spanned 198

days. Even under the lower standard, plaintiff has not shown more than transitory symptoms, as

evidenced by his request for damages only until the action against him was dismissed. Emotional

distress damages should not be awarded.

C. Attorneys’ Fees and Costs

Plaintiff seeks $5,993.50 in attorneys’ fees and $394 in costs incurred in the

instant action.

Attorneys’ fees are to be awarded to a prevailing plaintiff under both the FDCPA

and the Rosenthal Act. 15 U.S.C. 1692k(a)(3); Cal. Civil Code 1788.30(c). In particular, under

the FDCPA, some courts have ruled that an attorney fee award is mandatory in such cases. See,

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e.g. Zagorski v. Midwest Billing Services, Inc., 128 F.3d 1164 (7th Cir.1997). First, the court

calculates the “lodestar figure” by taking the number of hours reasonably expended on the

litigation and multiplying it by a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424,

433, 103 S.Ct.1933 (1983). Second, the court must decide whether to enhance or reduce the

lodestar figure based on an evaluation of the Kerr factors that are not already subsumed in the

initial lodestar calculation. Fischer v. SJB-P.D. Inc., 214 F.3d 1115 (9th Cir. 2000); Kerr v.

Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir.1975). 

Plaintiff’s attorneys request fees for a total of 24.8 hours of work, consisting of

4.6 hours for Mr. Fagan at a rate of $325 per hour, 13.8 hours for Mr. Golden at a rate of $275

per hour, and 6.4 hours of work by other staff members at a rate of $115 per hour for paralegal

Hudson and $90 per hour for legal assistant Lizarraga. Fagan Decl., ¶ 8.

Defendants object to the hourly rates charged by Fagan and Golden, that no fees

be awarded support staff as they are unsupported, and that the number of hours claimed is

excessive and unreasonable. The court will address each objection in turn.

1. Attorneys’ Hourly Rates

 “A court is justified in relying on a requesting counsel’s recently awarded fees

when setting that counsel’s reasonable hourly rate.” Abad v. Williams, Cohen & Gray, Inc.,

2007 WL 1839914, *4 (N.D. Cal. 2007), citing Widrig v. Apfel, 140 F.3d 1207, 1210 (9th

Cir.1998). In a recent case cited by the parties, attorney Fagan requested $325 per hour but the

Northern District reduced the hourly fee to $300 per hour. Schueneman v. 1 Credit of America, st

2007 WL 1969708 (N. D. Cal. 2007). Attorney Golden had requested $275 per hour, but the

court reduced the award to $250 per hour. The court reasoned that the reduced rates were

consistent with rates awarded to the attorneys’ peers based on level of overall litigation

experience. Id. at *3. Defendants object to the use of the Schueneman case as guidance since it

was a hotly contested action that went to the eve of trial before settling. The court fails to find a

distinction in hourly rates based on whether a case was heavily litigated or not. Therefore, the

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Schueneman case will be used for guidance because it was decided within the past year, and

involves the same attorneys. Attorney Fagan will be awarded $300 per hour and attorney Golden

will be awarded $250 per hour. The court will, however, review the number of hours billed with

a discerning eye, based on the level of experience of these attorneys.

2. Fees for Support Staff

Defendants also object to the claimed award of $683.50 for 6.4 hours of work

done by paralegal Hudson at $115 per hour and legal assistant Lizarraga at $90 per hour, because

plaintiff has not submitted evidence of the experience or qualifications of these individuals. In

Schueneman v. 1 Credit of America, 2007 WL 1969708 (N. D. Cal. 2007), the court found st

appropriate paralegal Hudson’s claimed fees of $110 per hour where she had also billed $115 per

hour on the same case, and there was no explanation for the difference. Here, Hudson has

consistently billed $115 per hour throughout most of the case, so that amount will be awarded. 

The Schueneman court also found reasonable a rate of $90 per hour for Fagan’s legal secretary. 

The court finds no reason not to apply that court’s recently awarded fees to this case. The

question of whether these fees were properly claimed for legal work will be discussed in the next

section.

3. Hours Claimed

Defendants contend that plaintiff has claimed fees for time spent by counsel

performing non-legal tasks, inadequate documentation of time, and unnecessary, duplicative or

excessive time. Defendants request that the fee award be reduced to .9 hours for attorney

Fagan’s time, 7.6 hours for attorney Golden’s time, and that no fees be awarded for time spent by

paralegal Hudson or legal assistant Lizarraga.

Defendants are informed that claimed fees for non-legal or clerical tasks may not

be billed as attorneys’ fees, regardless of whether they are performed by a paralegal or an

attorney. Missouri v. Jenkins, 491 U.S. 274, 288, n. 10, 109 S. Ct. 2463 (1989). They may,

however, be billed at a lesser rate. Id. Work that might be done by paralegals and billed as such

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include “factual investigation, including locating and interviewing witnesses; assistance with

deposition, interrogatories, and document production; compilation of statistical and financial

data; checking legal citations; and drafting correspondence.” Id. at 288, n. 10. This work may

also be done by attorneys and billed at a higher rate. Work which is purely clerical in nature

includes “investigation, clerical work, compilation of facts and statistics” and other work which

can be done by non-lawyers. Id. at 288. 

With these guidelines in mind, the court has now reviewed plaintiff’s billing

records and defendants’ table with requested reductions. Ex. 1 to Fagan Decl.; Narita Decl., ¶

15. Only the following entries should be changed.

3/19/07 - EFF - Reviewed Client worksheet. This task may be performed by a paralegal. Time

should be billed at the paralegal rate.

3/22 through 3/27/07 - by various staff - Work done in preparation of complaint which amounts

to 7.6 hours. This amount of time to prepare and finalize a seven page boilerplate complaint is

excessive, especially in light of counsels’ numerous years of experience with this particular type

of action. See Schueneman, 2007 WL 1969708, *2-3. Although the time billed for the paralegal

and clerical preparation of the complaint seems reasonable (2.6 hours total), the attorneys’ time

will be reduced to one hour at Fagan’s hourly rate.

3/28/07, 4/2/07, 5/3/07, 5/3/07 - DH - Preparation of documents for filing and service, including

proof of service and mailing are clerical tasks which should be billed at that rate. The first four

of these entries will therefore be reduced. The last entry on 5/3/07, for revision of proof of

service by paralegal Hudson, will not be reduced.

6/28/07 - JG - Research federal and local rules for filing default judgment. This work (.9 hours)

appears to be repetitious of work previously done on June 5, 2007 (.8 hours). Therefore, .9 hour

billed for June 28 will be eliminated. 

Work by attorneys which include phone messages to opposing counsel or research

of local rules are appropriately attorney work, and are permissible to be billed in this way. 

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Defendants’ objections based on inadequate description of services is found to be

without merit. These entries are explained by looking at other entries immediately preceding or

following these entries which are close in time and relate to the same task. Discussions between

attorneys are not required to be further described, for obvious reasons.

4. Costs

Section 1692k(a)(3) also provides for recovery of “costs of the action.” “Even

though not normally taxable as costs, out-of-pocket expenses incurred by an attorney which

would normally be charged to a fee paying client are recoverable as attorney’s fees.” Chalmers v.

City of Los Angeles, 796 F.2d 1205, 1216 n. 7 (9th Cir.1986). The non-taxable costs of serving

the complaint and the filing fee fit this description. Therefore, plaintiff will be awarded $394 in

costs.

CONCLUSION

In view of the foregoing findings, it is the recommendation of this court that

plaintiffs’ motion for entry of default judgment be GRANTED. Judgment should be rendered in

the amount of $10,234.50.

These findings and recommendations are submitted to the honorable Ralph

Beistline, United States District Judge, pursuant to the provisions of Title 28 U.S.C. § 636(b)(l). 

Within ten days after being served with these findings and recommendations, any party may file

written objections with the court and serve a copy on all parties. Such a document should be

captioned “Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the

objections shall be served and filed within ten days after service of the objections. The parties

are advised that failure to file objections within the specified time may waive the right to appeal

the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

DATED: 02/04/08 /s/ Gregory G. Hollows

___________________________________

UNITED STATES MAGISTRATE JUDGE

GGH:076 - Lowe0627.def.wpd

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