Buchannon v. Associated Credit Servs.

ORDER GRANTING PLAINTD7F'S MOTION FOR DEFAULT JUDGMENT AND ATTORNEY'S FEES AND COSTS [ECF NO. 28]

HON. TROGER T. BENITEZ, UNITED STATES DISTRICT JUDGE.

I. INTRODUCTION

Plaintiff NOBLE T. BUCHANNON ("Plaintiff) brings this action, alleging one claim for relief for violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (the "FDCPA") against Defendant ASSOCIATED CREDIT SERVICES, INC. ("Defendant"). Complaint, ECF No. 1 ("Compl."); see also First Amended Complaint, ECF No. 9 ("FAC").

Before the Court are Plaintiff s Motions for Default Judgment against Defendant and Motion for Attorney Fees and Costs (the "Motions"). ECF No. 28. The Motions were submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 32. After considering the papers submitted, supporting documentation, and applicable law, the Court GRANTS both Motions but reduces the amount of damages Plaintiff may recover.

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II. BACKGROUND

A. Statement of Facts

Plaintiff alleges that on March 30, 2020, he received a letter to him stating he owed a debt. Compl. at 7, ¶ 60.^[1]He further pleads that on or about April 2020, he checked his consumer credit report and noticed a collection tradeline furnished by Defendant with a balance of $180.00 allegedly owed to TD Ameritrade, Inc. (the "Alleged Debt"). Id. at 7, ¶56.

On or about April 29, 2020, Plaintiff sent a letter to Defendant disputing the Alleged Debt and requesting verification thereof pursuant to 15 U.S.C. § l692g(b). Compl. at 7, ¶ 59; see also Exhibit 2 to Declaration of Lauren B. Veggian, ECF No. 28-3 ("Veggian Decl.") at 7 (attaching the April 29, 2020 letter from Plaintiff to Defendant disputing the debt discussed in March 30, 2020 letter).

On June 16, 2020, Defendant responded to Plaintiffs letter providing "verification of the debt as per your request." See Exhibit 3 to Veggian Decl., ECF No. 28-3 at 9-10 (attaching a June 16, 2020 letter providing verification of the debt along with a TD Ameritrade Statement for Account No. 490-207581 showing a margin loan in the amount of $183.47 with a balance of $179.77 owed). On June 26, 2020, Plaintiffs Trans Union Credit Report shows that Defendant re-reported the debt and failed to report that the debt was disputed. Exhibit 4 to Veggian Decl., ECF No. 28-3 at 12. As of August 1, 2020, Defendant had also failed to communicate to Equifax, a consumer reporting agency, that the Alleged Debt was disputed by Plaintiff. Compl. at 7, ¶ 61. Plaintiff alleges that Defendant materially lowered his credit score by failing to note Plaintiffs dispute of the Alleged Debt. Id. at 8, ¶ 64.

B. Procedural History

On August 7, 2020, Plaintiff filed his complaint in the United States District Court for the Northern District of Florida (the "Florida District Court") against Defendant,

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alleging one claim for relief for violation of the FDCPA. FAC; see also Motion, ECF No. 28-1 ("Mot") at 6:9-12.

On September 1, 2020, Defendant timely filed a Motion to Dismiss Plaintiffs Complaint for Lack of Personal Jurisdiction Pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure and Request for Judicial Notice. ECF Nos. 5, 6.

On September 18, 2020, the Florida District Court noted that Plaintiff had failed to file a response to Defendant's motion and ordered Plaintiff to do so. ECF No. 7. Rather than filing a response, on September 26, 2020, Plaintiff filed an Amended Complaint. ECF No. 9. That same day, Plaintiff also consented to Defendant's Request for Judicial Notice, ECF No. 8, and filed an objection to Defendant's Motion to Dismiss, claiming the motion was moot due to Plaintiffs filing of an amended complaint, ECF No. 10.

On September 28, 2020, however, the Florida District Court issued an order (1) granting Defendant's Request for Judicial Notice; (2) striking Plaintiffs amended complaint, noting Plaintiff had not only failed to timely respond to Defendant's motion to dismiss for lack of personal jurisdiction but had also filed an amended complaint without seeking leave of Court, in violation of Rule 15 of the Federal Rules of Civil Procedure; and (3) requiring Plaintiff to file a response to Defendant's Motion to Dismiss by October 2, 2020. ECF No. 11.

On October 2, 2020, Plaintiff opposed Defendant's Motion to Dismiss, arguing that the Florida District Court had personal jurisdiction over Defendant. ECF No. 12. On October 19, 2020, however, the Court issued an order granting Defendant's Motion to Dismiss for Lack of Personal Jurisdiction, dismissing the complaint, and ordering Plaintiff to move for leave to amend the complaint or move to transfer the case to another district. ECF No. 16.

On November 9, 2020, Plaintiff filed a Motion to Transfer the case to the United States District Court for the Southern District of California, "where the events giving rise to Plaintiffs claim occurred." ECF No. 17. On November 10, 2020, Defendant filed a response, indicating it did not oppose Plaintiffs request to transfer the case. ECF No. 18.

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As a result, on November 16, 2020, the Florida District Court rescinded its previous order dismissing the complaint but granted the parties' request to transfer the case to the United States District Court for the Southern District of California. ECF No. 19.

On November 18, 2020, the case was transferred from the Florida District Court to the Southern District of California. ECF No. 19.

On March 24, 2021, Plaintiffs counsel filed a Request for Entry of Default. ECF No. 26. On April 5, 2021, the Clerk entered Defendant's default. ECF No. 27.

On May 5, 2021, Plaintiff filed the instant Motion for Default Judgment and Motion for Attorneys' Fees and Costs. ECF No. 28. On May 24, 2021, Defendant opposed. Opposition, ECF No. 30 ("Oppo.")· On May 28, 2021, Plaintiff replied. Reply, ECF No. 31 ("Reply"). III. LEGAL STANDARD

Rule 12(a)(4)(A) of the Federal Rules of Civil Procedure provides that where "the court denies the motion [to dismiss]..., the responsive pleading must be served within 14 days after notice of the court's action." "When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default." Fed. R. Civ. P. 55(a).

A. Motion for Default Judgment

"When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default." Fed.R.Civ.P. 55(a). Upon entry of default, Federal Rule of Civil Procedure 55(b)(2) provides for the entry of default judgment by the Court. Courts considering a motion for default judgment begin their analysis by deferring to "the general rule that default judgments are ordinarily disfavored" because "[c]ases should be decided upon their merits whenever reasonably possible." NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016) (quoting Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986)). Consequently, "[a] defendant's default does not automatically entitle the plaintiff to a court-ordered judgment." DFSB Kollective Co. v. Bourne, 897 F.Supp.2d 871, 877

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(N.D. Cal. 2012) (quoting PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1174 (CD. Cal. 2002)). However, courts have discretion to grant a default judgment were appropriate. See Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988). The Ninth Circuit has set forth seven factors, known as the Eitel factors, that a district court should consider when evaluating a motion for default judgment:

(1) the possibility of prejudice to plaintiff, (2) the merits of plaintiff s substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning the material facts (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits

Eitel, 782 F.2d at 1471-72. "None of the factors is dispositive in itself; instead, [courts] must balance all seven." Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1488 (9th Cir. 1993), holding modified on other grounds by Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199 (9th Cir. 2006).

In determining the merits of a motion for default judgment, the well-pleaded factual allegations are taken as true, except as to allegations regarding the amount of damages. See Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002); TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987).

B. Motion for Attorney's Fees and Costs

"Once a party is found eligible for fees, the district court must then determine what fees are reasonable." Klein v. City of Laguna Beach, 810 F.3d 693, 698 (9th Cir. 2016) (citation omitted). "To determine the amount of a reasonable fee, district courts typically proceed in two steps: first, courts generally apply the lodestar method to determine what constitutes a reasonable attorney fee; and second, the district court may then adjust the lodestar upward or downward based on a variety of factors, including the degree of success obtained by the plaintiffs." Bravo v. City of Santa Maria, 810 F.3d 659, 665-66 (9th Cir. 2016). The Supreme Court has indicated that the degree of success obtained is "'the most

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critical factor' in determining the reasonableness of a fee award." Farrar v. Hobby, 506 U.S. 103, 114 (1992) (quoting Hensley v. Eckerhart, 461 U.S. 424, 436 (1983)). "It is an...