From Casetext: Smarter Legal Research

Denis v. New Horizon Credit, Inc.

United States District Court, D. Connecticut
Jul 12, 2006
Case No. 3:05cv1952 (JBA) (D. Conn. Jul. 12, 2006)

Summary

granting default judgment on a § 1692e claim for engaging in unlicensed debt collection

Summary of this case from Nero v. Law Office of Sam Streeter, P.L.L.C.

Opinion

Case No. 3:05cv1952 (JBA).

July 12, 2006


RULING ON PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT [DOC. # 7]


Plaintiff David St. Denis brought this action against defendant New Horizon Credit, Inc. ("NHC") alleging violations of, inter alia, 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. § 42-100a et seq. See Complaint [Doc. # 1]. The Court having granted plaintiff's Motion for Default for defendant's failure to appear, plead, or answer the complaint (see [Doc. # 6]), plaintiff now moves for default judgment pursuant to Fed.R.Civ.P. 55 seeking actual damages of $1,500, statutory damages of $1,000, punitive damages of $5,000, plus attorney's fees of $2,100 and costs of $317.05.See Motion for Default Judgment [Doc. # 7]. For the reasons that follow, plaintiff's motion will be granted with modification and judgment shall be entered against defendant in the amount of $3,417.05.

I. Factual Background and Statutory Violations

Because default has entered against NHC, the Court accepts as true all of the factual allegations of the complaint, except those relating to damages. See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). Plaintiff's complaint alleges that defendant has an office in Indianapolis, Indiana which was "not licensed pursuant to chapter 669 Part XII of the Connecticut General Statutes when communicating in an effort to collect the plaintiff's purported account with Providian," and that defendant "did not identify the current creditor in its initial collection letter." Complaint [Doc. # 1] ¶¶ 5-6; accord St. Denis Aff. [Doc. # 7, Attachment] ¶ 3. Plaintiff's affidavit attaches the letter from defendant to plaintiff in which defendant purports to be a debt collector seeking to collect on plaintiff's Providian account as well as a letter from the Connecticut Department of Banking confirming that NHC "is not licensed to act as a consumer collection agency in Connecticut." St. Denis Aff. at pages 3-4. Plaintiff's affidavit also states that he knows the current creditor was not Providian "because Providian sold [his] account to Unifund in February 2002, and [he] ha[s] since heard from others claiming to own the account, including River Capital Management as of October 13, 2005, and First American Investment Company as of November 29, 2005. Id. ¶ 4. Plaintiff seeks statutory damages, actual/compensatory damages, punitive damages, attorney's fees and costs, and injunctive relief "ordering the defendant to cease any collection communications with Connecticut residents unless and until properly licensed in Connecticut." Motion for Default Judgment at 1; Complaint, Prayer for Relief.

On the basis of plaintiff's allegations, the Court finds a violation of the FDCPA, 15 U.S.C. § 1692g(a)(2), for failure to disclose the current creditor on the debt, and a violation of the FDCPA, 15 U.S.C. § 1692e(5) for failure to comply with Connecticut licensing law, Conn. Gen. Stat. § 36a-801(a). The Court also finds that defendant's conduct violated CUTPA, Conn. Gen. Stat. § 42-110b(a), prohibiting any person from engaging in "unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce."

See Jomarron v. Nasco Enter., Inc., 05cv94 (MRK) (WIG), 2005 WL 2231863, at *1 (D. Conn. Aug. 4, 2005) ("The Court finds that Defendant violated the FDCPA, which prohibits the use of debt collection practices in violation of state law, 15 U.S.C. § 1692e(5), by attempting to collect a debt in Connecticut without being properly licensed to do so.") (citing Conn. Gen. Stat. § 36a-801(a), Goins v. JBC Associates, P.C., 352 F. Supp. 2d 262, 270 (D. Conn. 2005), Gaetano v. Payco of Wisconsin, Inc., 774 F. Supp. 1404, 1415 (D. Conn. 1990) (holding that unlicensed debt collection agency that demanded payment of the debt and stated that it would use all means to enforce collection violated FDCPA by threatening to take action that legally could not be taken)).

Being the victim of an unlawful debt collection practice is sufficient to show ascertainable loss under CUTPA. See St. Denis Aff. ¶ 7 ("I did not bargain for illegal collection efforts when opening any Providian account that might be involved.");Gervais v. Riddle Associates, P.C., 363 F. Supp. 2d 345, 356-58 (D. Conn. 2005) (ascertainable loss established for CUTPA purposes by allegation that defendant's conduct, which violated the FDCPA, deprived him of the benefit of his bargain with MBNA,i.e., that any attempt by MBNA or its successor in interest to collect upon his consumer credit account would be in accordance with federal and state law).

II. Damages

A. Actual Damages

Plaintiff seeks actual damages in the amount of $1,500. While the Court finds that defendant violated the FDCPA, plaintiff has neither pleaded in his complaint nor specified in his affidavit any actual damages suffered as the result of defendant's violation, other than to state generally that "he did not bargain for illegal collection efforts when opening [his] Providian account" and that he "expended time, paper and postage disputing the account which [he] believe[s] was beyond the statute of limitations." St. Denis Aff. ¶¶ 7-8. Thus, plaintiff is not entitled to actual damages. See Pipiles v. Credit Bureau of Lockport, Inc., 886 F.2d 22, 27-28 (2d Cir. 1989) (plaintiff not entitled to actual damages where she did not establish any injury flowing from defendant's violation); Emanuel v. Am. Credit Exch., 870 F.2d 805, 809 (2d Cir. 1989) (plaintiff not deserving of actual damages where he did not plead or prove that he suffered any specific loss). B. Statutory Damages

The cases cited by plaintiff in which actual damages were awarded involved circumstances where plaintiff had shown injury of some kind (e.g. personal humiliation, embarrassment, mental anguish, or emotional distress). See Millstone v. O'Hanlon Reports, Inc., 528 F.2d 829, 834 (8th Cir. 1976); Boyce v. Attorney's Dispatch Serv., No. C-39-94-347, 1999 WL 33495605, at *1 (S.D. Ohio Apr. 27, 1999); Smith v. Law Offices of Mitchell N. Kay, 124 B.R. 182, 185 (D. Del. 1991).

Plaintiff also seeks statutory damages in the amount of $1,000 pursuant to 15 U.S.C. § 1692k(a)(2)(A). Section 1692k(a)(2)(A) provides for an award of "additional damages as the court may allow, but not exceeding $1,000" against any debt collector who violates the FDCPA. "The decision whether to award statutory damages under the FDCPA and the size of the award are matters committed to the sound discretion of the district court." See Savino v. Computer Credit, Inc., 164 F.3d 81, 86 (2d Cir. 1998). "All that is required for an award of statutory damages is proof that the statute is violated, although a court must then exercise its discretion to determine how much to award up to the $1,000 ceiling," by considering "the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the extent to which such noncompliance was intentional, and other relevant factors in deciding the amount of any `additional damages' awarded." Id. (citing 15 U.S.C. § 1692k(b)(1)).

Although there are no allegations in the record concerning the frequency or persistence of defendant's unlawful debt collection activities, the nature of part of defendant's statutory violation — attempting to collect a debt in Connecticut while not being licensed to do so — carries the potential for much wider spread illegality and concomitant injury than a violation related solely to one individual debtor. Additionally, while there are no allegations regarding defendant's intent, defendant, as a member of a regulated industry, must or should have known that it was not a Connecticut-licensed debt collector and yet sought to collect plaintiff's debt anyway, evincing either intentional disregard of or reckless indifference to Connecticut's licensing requirements. Thus, the Court determines that an award of the maximum amount of statutory "additional damages" — $1,000 — is warranted by defendant's violation. See Jomarron, 2005 WL 2231863, at *2 (awarding statutory damages where court found that defendant "intentionally undertook collection activities in the state of Connecticut without obtaining the required license and in reckless disregard of the law and the rights of [p]laintiff").

C. Punitive Damages

Plaintiff also seeks punitive damages in the amount of $5,000 for defendant's allegedly "intentional" actions taken "in reckless disregard of [plaintiff's] rights." St. Denis Aff. ¶ 6. While a CUTPA violation provides the basis for a punitive damages award, see Conn. Gen. Stat. § 42-110g(a), the Court has discretion to award punitive damages and such an award is appropriate only "if the court finds that the defendant's conduct was recklessly indifferent, intentional and wanton, malicious, violent, or motivated by evil." Sir Speedy, Inc. v. L P Graphics, Inc., 957 F.2d 1033, 1040 (2d Cir. 1992). Because a default judgment entered precluding development of the factual record, and even accepting as true all factual allegations in plaintiff's complaint (and his affidavit), except for those relating to damages, the Court cannot determine whether defendant's conduct involved violations beyond this plaintiff so as to give context to the violation here and permit assessment of whether defendant's conduct reflects a sufficiently flagrant disregard of the rights of plaintiff and/or the Connecticut licensing scheme to warrant punitive damages. Thus plaintiff's motion is denied as to punitive damages.

Compare Jomarron, 2005 WL 2231863, at *2 (awarding punitive damages upon finding that "[d]efendant intentionally undertook collection activities in the state of Connecticut without obtaining the required license and in reckless disregard of the law and the rights of [p]laintiff"); Spicer v. Lenehan, 03cv1810 (RNC), 2004 WL 3112554, at *3 (D. Conn. Sept. 14, 2004) (awarding punitive damages where it was "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"); Gervais v. O'Connell, Harris Associates, Inc., 297 F. Supp. 2d 435, 440 (D. Conn. 2003) (awarding punitive damages where plaintiff established that "defendants did act willfully, knowingly and fraudulently in an effort to deceive plaintiff").

D. Attorney's Fees and Costs

Plaintiff is entitled to be awarded costs and attorney's fees as "the [FDCPA] mandates such an award `in the case of any successful action.'" Emanuel, 870 F.2d at 809 (citing 15 U.S.C. § 1692k(a)(3)). The Court finds plaintiff incurred reasonable costs of $317.05 for filing and service. The Court also finds reasonable the fee of plaintiff's attorney at the hourly rate of $320 for 6 hours. See Faulkner Aff. [Doc. # 7, Attachment] ¶ 4. Attorney Faulkner, who has over thirty years of experience in litigating consumer matters and who received the Vern Countryman Award from the National Consumer Law Center "for excellence and dedication in the practice of consumer law on behalf of low-income consumers," states that the rate "reflects the lowest current market rate in the community of [her] peers for federal litigation." Id. ¶¶ 2, 5. Additionally, as Attorney Faulker notes, she has been awarded this or similar rates in other cases in this District. See, e.g., Sylvia v. Ellis, Crosby Assocs., Inc., 3:05cv1468 (JCH) [Doc. # 14] (D. Conn. Dec. 12, 2005); Petrolito v. Arrow Fin. Servs., 3:02cv484 (JCH) [Doc. # 148] (D. Conn. July 28, 2005); Goins v. JBC Assocs., P.C., 03cv636 (JBA), 2006 WL 540332 (D. Conn. Mar. 6, 2006). Thus, applying the lodestar test, the Court finds that a fee award of $2,100 is reasonable and appropriate in this case.

The traditional lodestar method for determining reasonable attorney's fees calculates a figure "based upon the number of hours reasonably expended by counsel on the litigation multiplied by a reasonable hourly rate." Luciano v. Olsten Corp., 109 F.3d 111, 115 (2d Cir. 1997) (citing Blanchard v. Bergeron, 489 U.S. 87, 94 (1989)). "The `lodestar' figure should be in line with those [rates] prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Id. (citation and internal quotation marks omitted). The "prevailing community" used to determine the lodestar figure is typically, with few exceptions, "the district in which the court sits," in this case, the District of Connecticut. See id. (citation and internal quotation marks omitted). "[T]here is . . . a strong presumption that the lodestar figure represents a reasonable fee." A.R. ex rel. R.V. v. N.Y. City Dep't of Educ., 407 F.3d 65, 79 (2d Cir. 2005) (citations and internal quotation marks omitted).

III. Conclusion

For the foregoing reasons and as detailed above, plaintiff's Motion for Default Judgment [Doc. # 7] is GRANTED as modified and judgment shall enter in favor of plaintiff in the amount of $3,417.05.

The Court further permanently enjoins defendant from engaging in any debt collection communications with Connecticut residents unless and until properly licensed in Connecticut pursuant to Conn. Gen. Stat. § 36a-801(a).

IT IS SO ORDERED.


Summaries of

Denis v. New Horizon Credit, Inc.

United States District Court, D. Connecticut
Jul 12, 2006
Case No. 3:05cv1952 (JBA) (D. Conn. Jul. 12, 2006)

granting default judgment on a § 1692e claim for engaging in unlicensed debt collection

Summary of this case from Nero v. Law Office of Sam Streeter, P.L.L.C.
Case details for

Denis v. New Horizon Credit, Inc.

Case Details

Full title:David St. Denis, Plaintiff, v. New Horizon Credit, Inc., Defendant

Court:United States District Court, D. Connecticut

Date published: Jul 12, 2006

Citations

Case No. 3:05cv1952 (JBA) (D. Conn. Jul. 12, 2006)

Citing Cases

Smith v. LVNV Funding, LLC.

District courts have likewise split on the issue. Compare Fiorenzano v. LVNV Funding, LLC, 2012 WL 2562415…

Ross v. Vakulskas Law Firm, PC

This Court is well aware that Plaintiff has cited a number of other cases which hold that where the debt…