Source: https://utahlawyerliability.com/bad-faith/bad-faith-motion-for-attorney-fees-denied-in-lauer-v-credit-control-services/
Timestamp: 2019-04-18 12:40:36+00:00

Document:
In a recent decision, a Utah federal district judge denied a defendant’s bad faith motion for attorney fees arising out of claims brought by the plaintiff. In Lauer v. Credit Control Services, the court was asked to determine whether the plaintiff filed his claims in bad faith, as well as whether defendant was entitled to attorney fees under either 15 U.S.C. § 1692k(a)(3) or 28 U.S.C. § 1927. Ultimately, the court ruled that “[b]ecause the entirety of [plaintiff’s] action was not brought or pursued in bad faith, and because [plaintiff’s attorney] did not unreasonably an vexatiously multiple the proceedings in pursuing [plaintiff’s] claims, [defendant’s] Bad Faith Motion is denied.
In October 2014, the defendant filed a motion for summary judgment seeking dismissal of the plaintiff’s FDCPA claim. However, prior to resolving defendant’s motion for summary judgment, the plaintiff was granted leave to file an amended complaint. The amended complaint reasserted the initial FDCPA claim, but also raised two additional FDCPA claims against the defendant: 1) a claim for defendant’s failure to disclose its representatives’ identities and corporate identity in four phone calls; and 2) a claim for defendant’s failure to notify plaintiff that each call was from a debt collector and made for the purpose of collecting a debt. In light of the amended complaint, the defendant filed a subsequent motion for summary judgment.
As a result of plaintiff filing his amended complaint, the defendant’s initial motion for summary judgment was construed as a motion for partial summary judgment, which was eventually granted. The court’s order stated that the defendant was entitled to rely on AT&T’s representations regarding the debt’s validity as a matter of law. Accordingly, the order concluded that defendant had not violated the FDCPA. Defendant’s second motion for summary judgment was also granted, with the court concluding that as a matter of law the transcripts of the four calls from defendant to plaintiff demonstrated that defendant’s representative complied with the FDCPA by stating the caller’s name and that the call was on behalf of defendant.
Following the court’s granting of defendant’s two motions for summary judgment, the defendant claimed that plaintiff and his counsel “pursued plaintiff’s claims without evidence or legal authority and that their conduct should be viewed as nothing less than bad faith, done for the purpose of harassing [defendant].” Defendant claimed that on account of the aforementioned behavior, defendant was entitled to attorney fees under 15 U.S.C. § 1692k(a)(3) and 28 U.S.C. § 1927.
Alternatively, under 28 U.S.C. § 1927, “[a]ny attorney or other person admitted to conduct cases in any court … who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” However, unlike the all or nothing approach of § 1692k(a)(3), § 1927 allows for the recovery of attorneys’ fees on individual claims. More importantly, § 1927 only allows sanctions against counsel and not against his or her client(s).
[Plaintiff] therefore had colorable, though unsuccessful, arguments in the pursuit of his § 1692e(2)(A) Claim until the determination on the Motion of the Debt. Without binding precedent and a definitive ruling on the admissibility of the AT&T representative’s declaration, neither [plaintiff’s] nor [his counsel’s] conduct in pursuing [plaintiff’s] § 1692e(2)(A) Claim rise to the level of bad faith. Nor did their conduct unreasonably and vexatiously multiply the proceedings. Accordingly, [defendant] is not entitled to an award of attorneys’ fees under either of its theories for relief with regard to [plaintiff’s] § 1692e(2)(A) Claim.
Additionally, given that [plaintiff’] § 1692e(2)(A) Claim was not pursued in bad faith, [defendant] may not recover attorneys’ fees under § 1692k(a)(3) for [plaintiff’s] § 1692d(6) Claim or [plaintiff’s] § 1692e(11) Claim, as [plaintiff’s] entire action was not brought and pursued in bad faith. Consequently, there is no need to discuss [plaintiff’s] § 1692d(6) Claim and [plaintiff’s] § 1692e(11) Claim under the § 1692k(a)(3) standard.
[H]e should have known that [defendant] strictly complied with § 1692d(6) on each of its four calls to [plaintiff] and withdrawn [plaintiff’s] § 1692d(6) Claim. [Plaintiff’s counsel] therefore should have withdrawn [plaintiff’s] § 1692d(6) Claim after his receipt of the recordings, before the filing of [defendant’s] Motion on the Collection Calls, or in his response to the motion, but he did not. [Plaintiff’s counsel] acknowledges this, but points out that he “made no attempt to argue liability for [§ 1692d(6)] in his response to the [Motion on the Collection Calls].” Though accurate, [plaintiff’s counsel’s] failure to withdraw [plaintiff’s] § 1692d(6) Claim necessitated [defendant’s] discussion of the claim in its Motion on the Collection Calls and in its reply memorandum. [Plaintiff counsel’s] conduct also consumed court resources by requiring the meritless claim to be addressed in the Order Granting Motion on the Collection Calls.
[U]nder the circumstances, [plaintiff’s counsel’s] failure to withdraw [plaintiff’s] § 1692d(6) Claim did not unreasonably and vexatiously multiply the proceedings. [Plaintiff’s] § 1692d(6) Claim and [plaintiff’s] § 1692e(11) Claim became procedurally married with the filing of [defendant’s] Motion on the Collection Calls. No separate filings or proceedings occurred in the adjudication of [plaintiff’s] § 1692d(6) Claim independent of [plaintiff’s] § 1692e(11) Claim. As discussed below, [plaintiff’s]§ 1692e(11) Claim was not brought and pursued in bad faith. Moreover,[defendant’s] discussion and arguments relating to [plaintiff’s] § 1692d(6) Claim in its Motion on the Collection Calls and its reply on the motion were minor in relation to that of [plaintiff’s] § 1692e(11) Claim.
Finally, the court addressed plaintiff’s third FDCPA claim. As with the second FDCPA claim, the court found that plaintiff’s counsel did not possess the recorded phone calls at the time he filed the amended complaint. However, the question remained whether plaintiff’s counsel’s continued pursuit of the third FDCPA claim after he received the phone calls from the defendant amounted to “bad faith or an unreasonable and vexatious multiplication of the proceedings,” the court said.
Though it was ultimately determined that [defendant] did provide sufficient undisputed evidence to demonstrate that it did not violate § 1692e(11), [plaintiff’s counsel’s] reliance on Riddle was a colorable defense to [defendant’s] Motion on the Collection Calls. Therefore, [plaintiff’s counsel’s] continued pursuit of [plaintiff’s] § 1692e(11) Claim was not in bad faith and the opposition to [defendant’s] Motion on the Collection Calls did not unreasonably and vexatiously multiply the proceedings. Accordingly, [defendant] is not entitled to an award of attorneys’ fees under § 1927 on Lauer’s § 1692e(11) Claim.

References: v. 
 § 1692
 § 1927
 § 1692
 § 1927
 § 1927
 § 1692
 § 1927
 § 1927
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1692
 § 1927
 § 1692