Summary
awarding punitive damages where it was "reasonable to infer that the defendants' actions in allowing a collection agency to use its letterhead, contacting the plaintiff after being informed that she was represented by an attorney, and misrepresenting that a simple collection action was a `federal matter,' were reckless, intentional and/or malicious"
Summary of this case from Denis v. New Horizon Credit, Inc.Opinion
Civil Action No. 3:03CV1810 (RNC).
August 20, 2004
RECOMMENDED RULING AFTER HEARING ON DAMAGES
I. PROCEDURAL HISTORY
On October 21, 2003, the plaintiff commenced this action alleging violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. § 42-110a.
Neither defendant filed an appearance or answered the complaint. On January 9, 2004, pursuant to Federal Rule of Civil Procedure 55(a), the Clerk of the Court granted the plaintiff's motion for default. (Doc. #5.) On February 10, 2004, the court (Chatigny, C.J.) granted the plaintiff's motion for default judgment as to liability only. (Doc. #7.) This case was then referred to the undersigned for a hearing on damages and attorney's fees. (Doc. #10.)
Fed.R.Civ.P. 55(a) provides:
When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk shall enter the party's default.
A damages hearing was held on July 14, 2004. The plaintiff's counsel, Joanne Faulkner, appeared in court on behalf of her client. The defendants did not appear.
The following is the court's recommended ruling regarding damages and entry of final judgment.
II. FACTS
The plaintiff relied upon the allegations in the Complaint (which are deemed admitted by virtue of the default), upon affidavits, and upon one exhibit introduced at the damages hearing. Based upon those submissions, the court finds the following facts.
Upon failure to plead or otherwise defend against a complaint, the plaintiff's well pled allegations are deemed admitted, except those relating to the amount of damages. Au Bon Pain Corp. V. Artect, Inc., 653 F.2d 61, 65 (2d. Cir. 1981);Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 69-70 (2d Cir. 1971), rev'd on other grounds, 409 U.S. 363, 93 S.Ct. 647, 34 L.Ed.2d 577 (1973).
The plaintiff received a letter on July 3, 2003 from the defendants seeking to collect on a personal credit card bill. The defendants were not licensed to collect a debt in the State of Connecticut. Although the letter contained the defendants' law office letterhead, it was not in fact sent by the defendants. Instead, it was sent by a collection agency that was authorized to use the defendants' letterhead in an effort to collect debts.
The plaintiff responded to the letter on July 17, 2003 with a letter of her own, seeking an accounting for the credit card debt at issue. The plaintiff sought the accounting because the amount requested in the July 3, 2003 letter seemed excessive to her. The plaintiff received no response to her July 17, 2003 request for an accounting.
On August 13, 2003, an attorney sent a letter on behalf of the plaintiff notifying the defendants that the plaintiff was represented by counsel. Thereafter, on October 1, 2003, a man named Mr. Peyton, who identified himself as an employee of the defendant Lenehan Law Office, called the plaintiff directly and told her that paperwork would be submitted to the "New London County Court" if she did not enter into a payment agreement by 5:00 p.m. that day. He also indicated to her that "this is a federal matter." As a result of these demands, the plaintiff paid $530 to the defendants.
III. DISCUSSION
A. DEFENDANTS' VIOLATIONS
The court finds that the defendants' acts violated the FDCPA in a number of ways. First, the defendants sought to collect a debt in the State of Connecticut without being properly licensed to do so. The FDCPA prohibits the use of debt collection practices that violate state law. 15 U.S.C. § 1692e(5); see also Picht v. Jon R. Hawks, Ltd., 236 F.3d 446, 448 (8th Cir. 2001). Connecticut state law forbids a debt collector from acting as a collection agency without first being licensed by proper state authorities. Gaetano v. Payco, 774 F. Supp. 1404, 1414-15 (D. Conn. 1990). As a result, defendants' efforts to collect a debt in Connecticut without being licensed in Connecticut as a collection agency violated the FDCPA. See Gaetano, 774 F. Supp. at 1414-15.
Defendants also violated the FDCPA by allowing a collection agency use their law office letterhead to collect a debt. When an attorney allows a collection agency to send a letter on an attorney's letterhead, he violates the FDCPA as well as ethics rules. Clomon v. Jackson, 988 F.2d 1314, 1320 (2d Cir. 1993);Nielsen v. Dickerson, 307 F.3d 623 (7th Cir. 2002).
Defendants also failed to cease collection actions against the plaintiff once the plaintiff disputed the debt and requested an accounting. 15 U.S.C. § 1692g requires that, once a debtor disputes any portion of the debt, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector receives verification of the amount due and forwards a copy of same to the debtor. Because the defendants failed to cease collection efforts in this case after the plaintiff's July 17, 2003 letter, the defendants violated the FDCPA.
Defendants also communicated with the plaintiff knowing that she was represented by counsel. Under 15 U.S.C. § 1692c(2), a debt collector may not communicate with a consumer in connection with the collection of any debt "if the debt collector knows the consumer is represented by an attorney with respect to such debt. . . ." Consequently, the defendants' October 1, 2003 communication with the plaintiff violated the FDCPA.
Lastly, defendants made misrepresentations to the plaintiff about the status of the debt. 15 U.S.C. § 1692e states that "[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." By threatening to file suit, and referring to a simple collection case as a "federal matter," the defendants violated the FDCPA.
B. DAMAGES
The plaintiff seeks several categories of recovery, and the court will discuss them each in turn.
1. ACTUAL DAMAGES
The plaintiff seeks actual damages in the amount of $530. This represents money that the plaintiff paid to the defendants as a result of their violations of the FDCPA. Both the FDCPA and CUTPA allow a successful plaintiff to recover actual damages. See 15 U.S.C. § 1692k(a)(1); Conn. Gen. Stat. § 42-110g(a).
The court finds that actual damages in the amount of $530 are appropriate. See, e.g., Gervais v. O'Connell, Harris Associates, Inc., 297 F. Supp. 2d 435, 439-40 (D. Conn. 2003) (awarding, as a component of actual damages, money paid to debt collector as a result of violations of the FDCPA).
2. STATUTORY DAMAGES UNDER THE FDCPA
Plaintiff also seeks $1,000 in statutory damages under the FDCPA. The FDCPA limits statutory damages for a successful plaintiff to $1,000 for each proceeding. See 15 U.S.C. § 1692k(a)(2)(A). Damages are awarded at the discretion of the court. Id. (allowing a successful plaintiff to recover "such additional damages as the court may allow, but not exceeding $1,000").
Under the FDCPA, an award of statutory damages does not require proof of actual damages. Cacace v. Lucas, 775 F. Supp. 502, 506-07 (D. Conn. 1990). In determining the amount of the award, "the court shall consider, among other relevant factors . . . 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(b).
In the present case, the plaintiff has demonstrated a number of different violations of the FDCPA. Specifically, plaintiff has demonstrated that the defendants violated 15 U.S.C. § 1692e(3) and (10) by allowing third parties to use the law firm's letterhead to collect a debt; 15 U.S.C. § 1692g by refusing to cease collection practices after the debt was disputed; 15 U.S.C. § 1692c by communicating with the plaintiff knowing that she was represented by an attorney; and 15 U.S.C. § 1692e by making false representations regarding the nature of the debt. Based on the number and type of violations demonstrated by the plaintiff, the court recommends an award of $1,000 in statutory damages, for which the defendants should be jointly and severally liable.See, e.g., Clomon v. Jackson, 988 F.2d 1314, 1322-23 (2d Cir. 1993) (affirming award of $1,000 in statutory damages for violation of 15 U.S.C. § 1692e where attorney allowed debt collector to use his letterhead for mass mailing).
3. PUNITIVE DAMAGES UNDER CUTPA
In her second count, the plaintiff seeks punitive damages under CUTPA. The court recommends that punitive damages be awarded. The defendant's liability under CUTPA is deemed admitted; this court need only assess the proper amount of damages. The plaintiff has sought $5,000 in punitive damages.
Punitive damages are not authorized under the FDCPA. See 15 U.S.C. § 1692k.
The court has discretion to award punitive damages for a violation of CUTPA. See Conn. Gen. Stat. § 42-110g(a). Such an award is proper when the court finds that the defendant's conduct was recklessly indifferent, intentional and wanton, malicious, violent or motivated by evil. See Sir Speedy, Inc. v. L P, 957 F.2d 1033 (2d Cir. 1992); See also Collens v. New Canaan Water Co., 155 Conn. 477, 489 (1967) (in order to award punitive damages, evidence must reveal a reckless indifference to the right of others or an intentional and wanton violation of those rights).
It is reasonable to infer that the defendants' actions in (1) allowing a collection agency to use its letterhead, (2) contacting the plaintiff after being informed that she was represented by an attorney, and (3) misrepresenting that a simple collection action was a "federal matter", were reckless, intentional and/or malicious. Therefore, punitive damages are appropriate. See e.g. Gervais, 297 F. Supp. 2d at 440 (awarding $8,000 in punitive damages under CUTPA for actions that also violated the FDCPA). The court finds that punitive damages are appropriate in the amount of $5,000.
At the hearing in damages, plaintiff's counsel argued that punitive damages should also be awarded because a number of other similar cases have been filed against the same defendants in this and other jurisdictions. Plaintiff's counsel submitted a document from the Maine Office of Consumer Credit Regulation demonstrating that the defendants were punished for similar conduct in Maine. Plaintiffs also cited other cases in this district where the same defendants have been sued. The court notes that these allegations are not included in the complaint or in any affidavit supporting the plaintiff's claim for damages in this case. Nor has the plaintiff provided any law indicating that it is proper for a court to consider other, unrelated actions against the same defendant for purposes of assessing punitive damages. Regardless, because the court has decided that the merits of this particular case justify the requested amount of punitive damages, the court need not consider the issue.
4. ATTORNEY'S FEES AND COSTS
The plaintiff seeks $1,350 in attorney's fees for work performed in connection with this case, plus an additional $600 for time spent in preparing a memorandum and attending the hearing in damages. The court recommends that $1,718.50 in attorney's fees be awarded.
The court has the discretion to award attorney's fees where a defendant has been found to violate either the FDCPA or CUTPA.See 15 U.S.C. § 1692k(a)(3); Gebbi v. Cadle Co., 49 Conn. App. 265, 714 A.2d 678 (1998). In making such an award, the court should consider factors such as the time and labor required, the novelty and difficulty of the legal and factual questions at issue, the skill required to properly perform the legal service, whether the attorney was precluded from other employment, the customary fee for similar work in the community, whether the fee was fixed or contingent, time limitations imposed by the circumstances of the case, the amount involved and the results obtained, the undesirability of the case, the nature and length of the relationship between the attorney and the client, and the amount of awards made in similar cases. See Thames River Recycling, Inc. v. Gallo, 50 Conn. App. 767, 801 n. 19 (1998).
Plaintiff's counsel, Joanne Faulkner, has requested that an hourly rate of $300 be awarded for her time expended on this matter. In support of this request, Attorney Faulkner states that she has "extensive experience for over thirty years in consumer matters, including litigation, conducting seminars and publication in the field." Faulkner also states that she believes that her hourly rate of $300 "is reasonable and reflects the lowest current market rate in the community of [her] peers for federal litigation" — and has been awarded to her in at least one other case.
Counsel cites Rivers-Barnes v. JK Financial Services, Inc., Civil No. 3:01CV1939 (CFD) (D. Conn. June 28, 2002) as a case in which she was awarded $300 per hour.
Where an attorney has submitted only his or her own affidavit to establish the prevailing rate for similar services, the court looks to fees awarded in this district. See Evans v. State of Conn., 967 F. Supp. 673, 691 (D. Conn. 1997). The court also may rely upon its own knowledge of the prevailing rates in the community. See Miele v. New York State Teamsters Conference Pension Retirement Fund, 831 F.2d 407, 409 (2d Cir. 1987) (trial judge may rely on his or her knowledge of prevailing community rates). Based on its familiarity with the file, the complexity of the case and the law involved, the court finds that $275 is a reasonable hourly fee under the circumstances. See Evanauskas v. Strumpf, No. Civ. A. 300CV1106 (JCH), 2001 WL 777477 (D. Conn. June 27, 2001) (awarding Attorney Faulkner $275 per hour).
With all these factors in mind, the court determines that the plaintiff should receive $1,237.50 for her work on this case, which is comprised of 4.5 hours at $275/hour. In addition, plaintiff should receive an additional $275 for one hour spent by counsel at the hearing in damages, as well as an additional hourand-a-half at half rate for travel. See Thompson, 289 F. Supp. At 209 (awarding travel time at half the otherwise applicable billing rate); see also Patterson v. Julian, 250 F. Supp. 2d 36, 45 (N.D.N.Y. 2003) ("[t]ravel time is generally reimbursed at half the hourly prevailing rate") rev'd in part on other grounds 370 F.3d 322 (2d Cir. 2004). In total, therefore, the plaintiff should be awarded $1,718.50 for attorney's fees.
Finally, the plaintiff also seeks costs in the amount of $259.44. This represents the court filing fee of $150 plus $109.44 for service of process on the defendants. The court recommends that these costs be awarded.
III. CONCLUSION
Based on the foregoing, the undersigned recommends that judgment enter against the defendant in the amount of $8,507.94 ($1,000 in statutory damages, $530 in actual damages, $1,718.50 in attorney's fees, $259.44 in costs and $5,000 in punitive damages).
Any party may seek the district court's review of this recommendation. See 28 U.S.C. § 636(b) (written objections to proposed findings and recommendations must be filed within ten days after service of same); Fed.R.Civ.P. 6(a), 6(e) 72; Rule 2 of the Local Rules for United States Magistrate Judges, United States District Court for the District of Connecticut;Thomas v. Arn, 474 U.S. 140, 155 (1985); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992) (failure to file timely objections to Magistrate Judge's recommended ruling waives further review of the ruling).