Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-00702/USCOURTS-cand-4_05-cv-00702-3/pdf.json

Parties Involved:
Commercial Recovery Systems, Inc.
Defendant
Rose Smith
Defendant
Joanne Wan
Plaintiff

Document Text:

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JOANNE WAN, an individual on

behalf of herself and all

others similarly situated,

Plaintiff(s),

v.

COMMERCIAL RECOVERY SYSTEMS,

INC.; ROSE SMITH, an

individual,

Defendant(s).

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. C05-0702 SBA (BZ)

REPORT AND RECOMMENDATION

RE: DEFENDANTS’ MOTION FOR 

ATTORNEYS’ FEES AND COSTS

Pursuant to Judge Armstrong's order dated June 21, 2005,

this matter was referred to me to prepare a report and

recommendation on defendants' Motion for Attorneys’ Fees and

Costs. Having reviewed the papers, I find no need for oral

argument.

 On February 16, 2005, plaintiff, on behalf of herself and

all others similarly situated, filed a claim pursuant to the

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

§1692 et seq. On April 1, 2005, defendants moved to dismiss

for failure to state a claim upon which relief may be granted. 

Case 4:05-cv-00702-SBA Document 33 Filed 08/25/05 Page 1 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

On April 22, 2005, plaintiff moved for class certification. 

On May 19, 2005, Judge Armstrong granted defendants’ motion to

dismiss with leave to amend and dismissed plaintiff’s motion

for class certification as moot. Plaintiff elected to stand

on her complaint and final judgment was entered against her on

May 25, 2005. On June 2, 2005, plaintiff filed a notice of

appeal. Defendants subsequently filed this motion for

attorneys’ fees and costs.

The FDCPA provides that “on a finding by the court that

an action under this section was brought in bad faith and for

the purpose of harassment, the court may award to the

defendant attorney’s fees reasonable in relation to the work

expended and costs.” 15 U.S.C. §1692k(a)(3). To receive an

attorney fee award under §1692k(a)(3), a “prevailing defendant

must show affirmatively that the plaintiff brought the FDCPA

claim in bad faith and for the purposes of harassment.”

Johnson v. Easton, 80 F.3d 148, 153 (5th Cir. 1996) (citing

Perry v. Stewart Title Co., 756 F.2d 1197, 1211 (5th Cir.

1985)). I find that the defendants have not met that burden. 

Defendants contend that they informed plaintiff’s counsel

early in the litigation that plaintiff’s claims lacked merit. 

Because plaintiff did not voluntarily dismiss her claims, they

request that I find that plaintiff brought her claims in bad

faith. Specifically, defendants argues that plaintiff’s

claims were precluded by the Ninth Circuit’s holdings in

Terran v. Kaplan, 109 F.3d 1428 (9th Cir. 1997) and Renick v.

Dun & Bradstreet Receivable Mgmt. Serv., 290 F.3d 1055 (9th

Cir. 2002). See Decl. of Tomito B. Narita in Supp. of Defs.’

Case 4:05-cv-00702-SBA Document 33 Filed 08/25/05 Page 2 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1 As further evidence of plaintiff’s bad faith,

defendants contend that plaintiff prematurely filed a motion

for class certification while defendants’ motion to dismiss was

pending. However, plaintiff’s counsel apparently agreed to

continue the motion for class certification until after the

court heard defendants’ motion to dismiss. See Narita Decl. ¶5. 

Plaintiff’s filing of such a motion early in the litigation is

not evidence of bad faith in light of Rule 23's requirement

that the court determine whether to certify the class at “an

early practicable time.” Fed.R.Civ.P. 23(c)(1)(A).

3

Mot. for Attorneys’ Fees and Costs (“Narita Decl.”) ¶2. The

decisions in Terran and Renick do not squarely establish that

plaintiff’s claims were without merit as neither case

discussed whether attorney consultation language similar to

the language at issue in this case overshadowed the language

required to be in a debt validation notice pursuant to

§1692g(a)(3). See Juras v. Aman Collection Services, Inc.,

829 F.2d 739, 145 (9th Cir. 1987) (finding pro se plaintiff

not to have brought the action in bad faith where “no decision

squarely established that his claim was without merit”). 

Nothing in Judge Armstrong’s ten page order analyzing the

motion to dismiss suggests the complaint was squarely without

merit. Indeed, the order dismissing plaintiff’s complaint

granted plaintiff leave to amend her claims. Although this

case was ultimately unsuccessful, plaintiff’s claims were not

so frivolous as to amount to bad faith. See Fraenkel v.

Messerli & Kramer, P.A., No. Civ. 04-1072, 2004 WL 1765309, at

*4 (D. Minn. July 29, 2004).1

Even if defendants could show that plaintiff’s claims

were frivolous, they have not established that plaintiff

brought her claims for purposes of harassment. See 15 U.S.C.

§1692k(a)(3); Johnson, 80 F.3d at 153. The only evidence

Case 4:05-cv-00702-SBA Document 33 Filed 08/25/05 Page 3 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

presented by defendants is that plaintiff’s counsel has filed

a number of other cases in this district, and that plaintiff

has one other action proceeding in this district that involves

claims under the FDCPA. Counsel’s other actions in this

district do not appear to relate to plaintiff, and defendants

offer no reason to attribute the actions of counsel to

plaintiff. See Kahen Kashani v. National Action Financial

Services, No. CV03-828, 2004 WL 1040384, at *7 (W.D.N.Y. April

12, 2004). The mere fact that plaintiff has filed one other

FDCPA action in this district is insufficient to show that she

filed this case for the purpose of harassment. As defendants

have not demonstrated that plaintiff brought her FDCPA claims

in bad faith and for the purpose of harassment, I RECOMMEND

that defendants’ motion be DENIED.

Dated: August 25, 2005

 Bernard Zimmerman 

 United States Magistrate Judge

G:\BZALL\-REFS\WAN\R&R2.WPD

Case 4:05-cv-00702-SBA Document 33 Filed 08/25/05 Page 4 of 4