Court Opinion

ID: 801265
Source: CourtListenerOpinion
Date Created: 2012-05-30 20:09:35+00
Date Added: 2024-06-11T13:05:11.320849
License: Public Domain

NOT FOR PUBLICATION

                     UNITED STATES COURT OF APPEALS                           FILED
                            FOR THE NINTH CIRCUIT                             MAY 30 2012

                                                                          MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

CHRISTOPHER CERESKO,                             No. 11-15456

               Plaintiff-counter-defendant -     D.C. No. 2:09-cv-00483-ECV
Appellant,

  v.                                             MEMORANDUM*

LVNV FUNDING, LLC; GURSTEL,
STALOCH & CHARGO, PA; RUTH A.
FISCHETTI,

               Defendants-counter-claimants
- Appellees.

                    Appeal from the United States District Court
                             for the District of Arizona
                    Edward C. Voss, Magistrate Judge, Presiding

                       Argued and Submitted May 15, 2012
                            San Francisco, California

Before: REINHARDT, CLIFTON, and N.R. SMITH, Circuit Judges.

       Christopher Ceresko appeals the district court’s award of attorneys’ fees and

costs, pursuant to 15 U.S.C. § 1692k(a)(3) of the Fair Debt Collection Practices

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Act (FDCPA), to LVNV Funding, LLC; Gurstel, Staloch & Chargo, P.A.; and

Ruth A. Fischetti (Defendants). We have jurisdiction under 28 U.S.C. § 1291, and

we affirm.

      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). We review the district court’s

finding of bad faith and harassment for clear error and the court’s grant of

attorneys’ fees for abuse of discretion. Guerrero v. RJM Acquisitions LLC, 499

F.3d 926, 933 (9th Cir. 2007).

      The district court found that Ceresko’s underlying FDCPA action was

brought in bad faith and for the purpose of harassment, because (1) the district

court had previously concluded that Ceresko’s allegations failed to establish a

violation of the FDCPA in the underlying action; (2) Ceresko’s counsel “suffered

the same result in three previous lawsuits . . . involving different plaintiffs making

the same claim: that an allegation or prayer for relief for costs and fees in a state

court collection action is a false statement in violation of the FDCPA”; and (3)

Ceresko “failed to provide a single citation to a case anywhere in the country

where this particular claim had been successful.”

                                           2
      1. The district court did not clearly err in finding that Ceresko’s underlying

FDCPA action was brought in bad faith and for the purpose of harassment.

      A. The district court had previously concluded that Ceresko had failed to

establish a violation of the FDCPA in the underlying action. Ceresko did not

appeal or otherwise dispute the district court’s conclusion that his underlying

action was meritless.1

      B. Ceresko’s counsel had unsuccessfully made similar arguments in two

prior cases in the District of Arizona. In those cases, the court decided that an

allegation or prayer for relief for costs and attorneys’ fees in a state court collection

complaint did not violate the FDCPA.2

      1
          Ceresko’s handling of the underlying action also shows its lack of merit.
After Defendants answered Ceresko’s complaint, Ceresko did not serve discovery
or otherwise pursue the case. Ceresko did not dispute Paragraph 9 of Defendants’
state court collection complaint. Nor did Ceresko dispute the debt or the amount of
the debt. When Defendants moved for summary judgment, Ceresko missed the
deadline to file for summary judgment and was granted an extension.
        Additionally, two earlier lawsuits filed by Ceresko’s counsel further
illustrate Ceresko’s knowledge of these claims. Ceresko’s counsel filed an FDCPA
action on behalf of Mrs. Ceresko, but Mrs. Ceresko voluntarily dismissed her
action a week later. Ceresko’s counsel also filed an FDCPA action on behalf of
Ceresko, but that action was dismissed pursuant to stipulation by the parties.
      2
       See Cisneros v. Neuheisel Law Firm, P.C., No. CV06-1467-PHX-DGC,
2008 WL 65608 (D. Ariz. Jan. 3, 2008); Winn v. Unifund CCR Partners, No. CV
06-447-TUC-FRZ, 2007 WL 974099 (D. Ariz. Mar. 30, 2007).

                                           3
      In this case, Paragraph 9 of Defendants’ state court collection complaint

stated: “Pursuant to the terms and conditions and A.R.S. § 12-341 the prevailing

party will be entitled to an award of all costs and, pursuant to A.R.S. § 12-341.01,

reasonable attorneys’ fees incurred in pursuing this action.” Paragraph 10, the part

of Defendants’ complaint challenged by Ceresko in the underlying action, stated:

“Court costs as actually incurred are chargeable to [Ceresko].” Read with

Paragraph 9, Paragraph 10 constituted an allegation for costs and attorneys’ fees in

a state court collection complaint. Thus, the underlying action centered on

essentially the same argument Ceresko’s counsel had unsuccessfully made in two

prior cases.

      C. Ceresko did not identify any favorable legal authorities applicable to his

claim. Ceresko’s precedent instead involved cases where attorneys’ fees and costs

demands were sent to the plaintiffs before the start of judicial proceedings.3

      Even if we were to disagree with the district court, we cannot conclude that

the district court’s findings were “illogical, implausible, or without support in the

      3
        See Reichert v. Nat. Credit Sys., Inc., No. CV-03-1740, 2005 WL
5549677, at *3 (D. Ariz. Mar. 31, 2005); Gostony v. Diem Corp., 320 F. Supp. 2d
932, 937 (D. Ariz. 2003); Axtell v. Collections USA, Inc., No. CIV 02-0536-PHX-
DKD, 2002 WL 32595276 (D. Ariz. Oct. 22, 2002).

                                           4
record.” See United States v. Spangle, 626 F.3d 488, 497 (9th Cir. 2010);

Guerrero, 499 F.3d at 933.

      2. The district court did not abuse its discretion in awarding attorneys’ fees.

The district court identified and applied the correct legal rule from § 1692k(a)(3).

Furthermore, the district court’s decision did not result “from a factual finding that

was illogical, implausible, or without support in inferences that may be drawn from

the facts in the record.” See United States v. Hinkson, 585 F.3d 1247, 1263 (9th

Cir. 2009) (en banc).

      AFFIRMED.4

      4
        We grant the motion of the National Association of Retail Collection
Attorneys for leave to file an amicus curiae brief in support of Defendants.

                                          5
                                                                               FILED
Ceresko v. LVNV Funding LLC, No. 11-15456                                       MAY 30 2012

                                                                            MOLLY C. DWYER, CLERK
REINHARDT, Circuit Judge, dissenting:                                        U.S. COURT OF APPEALS

      I dissent. The “least sophisticated debtor,” the standard for establishing a

violation of the Fair Debt Collection Practices Act (“FDCPA”), see Guerrero v.

RJM Aquisitions LLC, 499 F.3d 926, 934 (9th Cir. 2007), would likely have been

misled by the inclusion of two separate paragraphs in the collection complaint, one

(Paragraph 9) stating that “the prevailing party will be entitled to an award of all

costs” and the second (Paragraph 10) stating that “Court costs as actually incurred

are chargeable to [the debtor].” The collection complaint provided no information

that the second paragraph was true only if the creditor was the “prevailing party.”

Ceresko therefore presented a “minimally colorable” claim, and the district court

clearly erred in finding that his FDCPA action was brought in bad faith and for the

purpose of harassment. See id. at 940-41.

      Moreover, the district court clearly erred in finding that Ceresko’s counsel

“suffered the same result in three previous lawsuits involving different plaintiffs

making the same claim.” Two of the cases cited by the district court to support its

holding, Cisneros v. Neuheisel Law Firm, 2008 WL 65608 (D. Ariz. Jan. 3, 2008),

and Winn v. Unifund CCR Partners, 2007 WL 974099 (D. Ariz. Mar. 30, 2007),

involved claims that a request for a specific sum of attorneys’ fees in the prayer for

                                           1
relief was a request for liquidated attorneys’ fees, which plaintiffs alleged violated

the FDCPA because only reasonable attorneys’ fees, not liquidated fees, were

recoverable under the agreements. The district courts rejected the FDCPA claims,

holding that the “least sophisticated debtor” would understand that “the prayer for

relief is aspirational—it describes what the collection agency seeks if it prevails.”

Cisneros, 2008 WL 65608, at *3; see also Winn, 2007 WL 974099, at *3. Here,

Ceresko claimed that the statement in the body of the complaint regarding court

costs being allocated to the debtor was misleading because it was represented as a

fact although there had been no determination that the creditor was the prevailing

party. Cisneros and Winn, therefore, presented entirely different claims than the

one presented by Ceresko here. The third case cited by the district court, Thompson

v. Crown Asset Management, LLC, 2009 WL 3059123 (D. Ariz. Sept. 23, 2009),

presented the same claim as the claim here, but it was not decided until six months

after the complaint in this case was filed. Neither Ceresko nor his counsel could

have known that the claim would be rejected at the time the instant claim was

brought.

      Finally, the district court ignored the cases cited by Ceresko in support of his

FDCPA claim. In Reichert v. National Credit Systems, Inc., 2005 WL 5549677 (D.

Ariz. Mar. 31, 2005), Gostony v. Diem Corporation, 320 F. Supp. 2d 932 (D. Ariz.

                                           2
2003), and Axtell v. Collections USA, 2002 WL 32595276 (D. Ariz. Oct. 22, 2002),

the district courts held that a request for attorneys’ fees or costs in a demand letter

was misleading because no judicial proceedings had been initiated and there had

been no determination that the creditor was the prevailing party, as required for the

recovery of such fees. Although those cases involved demand letters rather than a

complaint in a collection case, the underlying claims are similar to the one here:

that a demand for fees or costs by a creditor when there has been no determination

that the creditor is the prevailing party, is misleading.

      Because the district court’s findings were based on clear errors and its

analysis of the controlling cases consisted of repeated errors of law, its award of

attorneys’ fees and costs against Ceresko was clearly erroneous and constituted an

abuse of discretion. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405

(1990).

                                           3