Source: https://www.severson.com/consumer-finance/district-court-cal-awards-reverse-attorneys-fees-under-rosenthal-act-but-not-fdcpa/
Timestamp: 2020-01-26 08:00:34
Document Index: 370708093

Matched Legal Cases: ['§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1788', '§ 1788', '§ 1693', '§ 1788']

District Court (Cal.) Awards "Reverse" Attorneys' Fees Under Rosenthal Act, But Not FDCPA | Severson & Werson
In Forto v. Capital One Bank, N.A., No. 14-cv-05611-JD (MEJ), 2017 WL 4168529 (N.D. Cal. Sept. 20, 2017), Magistrate Judge James noted the different standards applicable to “reverse” attorneys fees under the FDCPA and the Rosenthal Act, finding that “reverse” attorneys’ fees were not due a debt collector under the FDCPA but were due the debt collector under the Rosenthal Act. The Court found that, under the FDCPA, the action was brought in bad faith, but was not also for the purposes of harassment.
As is relevant here, the FDCPA provides that “[o]n 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); see Guerrero v. RJM Acquisitions LLC, 499 F.3d 926, 940 (9th Cir. 2007) (“When defending against a claim under the Act, a debt collector may recover attorneys« ?fees and costs upon a district court’s finding that the consumer brought the action in bad faith and for purposes of harassment.”). “[T]he context of § 1692k(a)(3) indicates that Congress was simply confirming the background rule that courts may award to defendants attorney’s fees and costs when the plaintiff brings an action in bad faith. The statute speaks to one type of case—the case of the bad-faith and harassing plaintiff.” Marx v. Gen. Revenue Corp., 568 U.S. 371, 387 (2013). 2. Analysis In order to award URS attorneys« ?fees, the undersigned must find Plaintiff brought this action in bad faith and for purposes of harassment. See Marx, 568 U.S. at 382 (“The second sentence of § 1692k(a)(3)…provides that plaintiffs who bring an action in bad faith and for the purpose of harassment may be liable for the defendant’s fees and costs.”). . . . But there is nothing in the record that suggests Plaintiff brought this lawsuit to harass URS. . . .URS argues “Plaintiff was hoping to leverage a swift settlement in this matter and persisted simply in the hopes that the costs of defending the suit would leverage into such a settlement.” Mot. at 10; see Reply at 9-10. URS bases this conclusion on the fact that the parties were unable to reach a settlement. See Mot. at 10 (“Plaintiff’s attorneys sought amounts approaching $200,000.00 for the resolution of this case at the outset, even before URS had filed an answer. [ ] It was not until the day of Plaintiff’s deposition, March 4, 2016…that Plaintiff’s counsel offered to settle the suit for $15,000.00.”). Without more, the fact that the parties could not settle this matter does not demonstrate that Plaintiff intended to harass URS. Cf. Scroggin v. Credit Bureau of Jonesboro, Inc., 973 F. Supp. 2d 961, 968-69 (E.D. Ark. 2013), aff’d, 576 F. App, 632 (8th Cir. 2014) (finding plaintiff brought FDCPA claims to harass defendant where plaintiff publicly “stated that he wanted to maximize the retaliation to [defendant], do some damage, and hopefully goad or force [defendant] to an actual trial”; “stated he forced [defendant] to abide by his schedule and discussed his intention to turn the deposition into a circus”; “stat[ed] that he was willing to sacrifice his actual damages in order to turn his deposition into a circus, [and] acknowledged that his claim for actual damages was not sincere”; and “boasted that the FDCPA essentially allowed him to continue this action for his entertainment and to harass [defendant] and its counsel”). URS offers evidence that Plaintiff’s counsel did not communicate URS« ?settlement offer to Plaintiff. See Carnes Decl., Ex. D (Pl.s? Dep.) at 99:5-9 (“Q: Are you aware that the defendants in this case have made an offer to settle your case? A: I was told there was no offer. Q: At any point? A: Yeah.”), id. at 99:22-25 (“Q: As you sit here today, you«r?e not aware that either URS or Capital One has offered to pay you any money to resolve this lawsuit? A: I«m? not aware.”). Assuming, arguendo, counsel did not in fact inform Plaintiff of URS« ?settlement offer, this is not evidence of Plaintiff’s bad faith or intent to haras.5 The undersigned sees no reason to hold Plaintiff accountable for her counsel’s alleged conduct. See also Hyde v. Midland Credit Mgmt., Inc., 567 F.3d 1137, 1140-41 (9th Cir. 2009) (because “Congress in the FDCPA failed to indicate any intention to authorize the award of attorney’s fees and costs against attorneys representing debtors”, “§ 1692k(a)(3) does not authorize the award of attorney’s fees and costs against a plaintiff’s attorneys”). In short, while the undersigned finds Plaintiff brought this action in bad faith, there is no evidence that Plaintiff sought to harass URS. Accordingly, URS is not entitled to attorneys« ?fees under the FDCPA.
Magistrate Judge James found, however, that the Rosenthal Act does not require that the credit prove that the claim also was brought for purposes of harassment under the Rosenthal Act’s “reverse” attorneys’ fee provision. Accordingly, Magistrate Judge James found that the debt collector was entitled to “reverse” fees under the Rosenthal Act.
The Rosenthal Act provides that “the prevailing party shall be entitled to costs of the action….[R]easonable attorney’s fees may be awarded to a prevailing creditor upon a finding by the court that the debtor’s prosecution or defense of the action was not in good faith.” Cal. Civ. Code § 1788.30(c). An award of attorneys« ?fees under the Rosenthal Act is “unquestionably” discretionary. Gouskos v. Aptos Vill. Garage, Inc., 94 Cal. App. 4th 754, 764 (2001).2. Analysis Unlike the FDCPA, the Rosenthal Act does not require a finding of intent to harass in order to award attorneys« ?fees to a prevailing creditor. Compare Cal. Civ. Code § 1788.30(c) with 15 U.S.C. § 1693(k). Rather, a creditor need only show that the plaintiff did not bring her action in good faith. See Cal. Civ. Code § 1788.30(c). As discussed above, the undersigned finds Plaintiff brought this action in bad faith. This suffices to justify an award of attorneys« ?fees to URS under the Rosenthal Act.