Feggins v. LVNV Funding, LLC (In re Feggins)

In re WILLIAM HENRY FEGGINS, Debtor

WILLIAM HENRY FEGGINS, Plaintiff v. LVNV FUNDING, LLC, AND RESURGENT CAPITAL SERVICING, L.P., Defendants

Case No. 13-11319-WRS

Adv. Pro. No. 14-1049-WRS

UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF ALABAMA

March 17, 2016

MEMORANDUM DECISION

These consolidated adversary proceedings¹ are before the Court on the Plaintiffs' motion for award of attorney's fees and costs.² (Doc. 90). The Court previously entered judgment for the Plaintiffs on their claims under the Fair Debt Collection Practices Act, but has not yet determined the extent of the Defendants' liability for attorney's fees and costs. Feggins v.LVNV Funding, LLC, 540 B.R. 895, 911 (Bankr. M.D. Ala. 2015) ("Feggins III"); see 15 U.S.C. § 1692k(a)(3). The Defendants filed an objection to the amount of the fees. (Doc. 95). For the reasons set forth below, the Defendants' objection is SUSTAINED IN PART and the Plaintiffs' motion for attorney's fees and costs is GRANTED IN PART.

I. FACTS & PROCEDURAL HISTORY

The Plaintiffs are all debtors with Chapter 13 bankruptcy cases currently pending in this Court. The Defendants are debt collectors who filed proofs of claim on facially time-barred debts in each of the Plaintiffs' underlying bankruptcy cases. Four of the Plaintiffs objected to the Defendants' claims on the ground that the statute of limitations had run on the underlying debts, and the Court sustained each of the objections.³ The parties do not dispute that the underlying debts were time-barred. (Doc. 52).

On July 10, 2014, the Eleventh Circuit held as a matter of law that the filing of a stale proof of claim in bankruptcy - i.e., a claim for a debt on which the applicable statute of limitations has run - by a debt collector violates §§ 1692e and 1692f of the Fair Debt Collection Practices Act ("FDCPA"). Crawford v. LVNV Funding, LLC, 758 F.3d 1254, 1261 (11^th Cir. 2014). Each of these adversary proceedings were filed soon after in late July of 2014, assertingFDCPA violations against the Defendants on the basis of their stale proofs of claim in the Plaintiffs' bankruptcies.⁴

A. The Motions to Dismiss and to Reconsider

The Defendants promptly moved to dismiss the adversary proceedings, contending that the Court was obligated to dismiss or stay the proceedings under the first-filed rule. (Doc. 5).⁵ The Defendants contended that the Plaintiffs were barred from pursuing their claims independently in this Court because a prior Crawford-type FDCPA suit asserting a putative (but uncertified) nationwide class had been filed against the Defendants in the Southern District of Alabama ("the Brock class action"); the Defendants argued that the Plaintiffs were members of the Brock class action and could not pursue two suits at once. (Doc. 5). The Defendants also argued that the cases should be stayed pending disposition of a petition for certiorari to the Supreme Court in Crawford.⁶ The Plaintiffs filed a response in opposition, to which the Defendants filed a reply. (Docs. 11 and 16). The Court heard oral arguments from counsel at a hearing on September 30, 2014, and denied the Defendants' motion without a written opinion. (Doc. 17).

The Defendants moved to reconsider the denial of their motion, but offered no new evidence or intervening change in the law,⁷ and the parties engaged in another round of briefing. (Docs. 21, 25, 32). The Court denied the Defendants' motion to reconsider in a written opinion on December 16, 2014, explaining that the Plaintiffs were not members of the Brock class action because no class had been certified in Brock. Feggins v. LVNV Funding, LLC, 2014 WL 7185376 (Bankr. M.D. Ala. Dec. 16, 2014) (hereafter "Feggins I").

The Defendants filed answers in October 2014 and then amended them, substantively denying all factual allegations and asserting roughly forty affirmative defenses. (Docs. 22, 23, 27, 28).

B. Motion for Judgment on the Pleadings

On April 30, 2015, the Defendants filed a fifty-eight page motion for judgment on the pleadings. (Doc. 39). Their primary argument was that the Bankruptcy Code precluded the Plaintiffs' FDCPA claims, and relied almost entirely on a holding to that effect in Johnson v. Midland Funding, LLC, 528 B.R. 462 (S.D. Ala. 2015).⁸ However, the Defendants also raised five alternative arguments in support of their motion that, upon close inspection, asserted nothing more than that Crawford was wrongly decided by the Eleventh Circuit and was not binding on this Court - notwithstanding the well-established rule that published decisions by the Eleventh Circuit are binding on this Court. (Doc. 39). The Plaintiffs filed a response in opposition to themotion, and the Defendants filed a reply to that. (Docs. 50 and 51). On August 25, 2015, the Court issued a written opinion in which it rejected the preclusion holding in Johnson, rejected the Defendants' other arguments, and denied the Defendants' motion for judgment on the pleadings.⁹ Feggins v. LVNV Funding, LLC, 535 B.R. 862 (Bankr. M.D. Ala. 2015 (hereafter "Feggins II").

C. The Trial

In advance of the trial, the Plaintiffs moved to quash subpoenas that the Defendants had served on Feggins's bankruptcy attorneys, Michael Brock and Christopher Stanfield, arguing that the subpoenas were intended solely to inconvenience them and that compliance would be unduly burdensome. (Docs. 55). The Defendants filed a response in opposition. (Doc. 59). At a telephonic hearing on August 6, 2015, the Court heard oral argument from counsel and granted the motion to quash as to Brock but denied it as to Stanfield.

The Court held a six-hour trial on August 10, 2015. The Plaintiffs' presentation of their case-in-chief lasted roughly two minutes, as they established prima facie violations of the FDCPA with the parties' pre-trial stipulation of facts (Doc. 52), requested statutory damages, and declined to seek actual damages.¹⁰ (Doc. 74, pp. 6-7, 11). At that point, the only issue leftfor the Court to hear factual evidence on was whether the Defendants could assert that their FDCPA violations were the result of a bona fide error.¹¹

The Defendants prefaced their own case-in-chief with two motions. First, they moved to dismiss Plaintiff Balcom's case because he failed to appear at the trial, despite having been served by the Defendants with a subpoena. The Court denied the motion because Balcom's testimony was unnecessary to either prove his own case-in-chief or to enable the Defendants to establish a bona fide error. Second, the Defendants filed a motion for judgment on partial findings that mostly rehashed the same legal arguments the Court had rejected in Feggins I and Feggins II. The Court likewise denied this motion.

Even with Balcom's absence, the Defendants called eight witnesses, seven of whom were not in any position to offer testimony that could possibly help the Defendants establish that their violations were the result of a bona fide error. First, the Defendants called Chapter 13 Trustee Curtis C. Reding, who offered general testimony as to the purposes of bankruptcy and the claims allowance process. (Doc. 74, pp. 19-46). Next, the Defendants called Plaintiffs Feggins, Henson, Chandler, and Grant, and elicited testimony from each of them about whether they were misled by the Defendants' proofs of claims or thought they were unfair. (Doc. 74, pp. 46-108). None of this testimony disproved the Plaintiffs' prima facie showings of FDCPA violations because the FDCPA is a strict-liability statute, and the testimony was wholly irrelevant towhether the Defendants' violations were the result of a bona fide error on the part of the Defendants. After that, the Defendants called Stanfield and Rafael Gil, who was the bankruptcy attorney for Balcom, Grant, Henson, and Chandler. (Doc. 74, pp. 108-145). Again, the testimony offered by the bankruptcy attorneys neither disproved the Plaintiffs' FDCPA cases nor provided any evidence that could support a bona fide error defense for the Defendants. Throughout this entire portion of the trial the Defendants did nothing more than use their case-in-chief as a soapbox to re-argue the merits of Crawford, ignoring the elementary point that this Court lacks authority to overrule decisions handed down by the Eleventh Circuit.

Finally, the Defendants called Lisa Landreth, a claims manager for Defendant Resurgent Capital Services, who testified about Resurgent's internal procedures for filing proofs of claim and for complying with the FDCPA and the Bankruptcy Code. (Doc. 74, pp. 145-157). At the close of their case-in-chief, the Defendants offered a second motion for judgment on partial findings that mirrored the legal arguments of their first motion.

In its third written opinion of this litigation, the Court denied the Defendants' motion for judgment on partial findings, found that the Defendants had violated the FDCPA and had failed to establish a bona fide error defense, and awarded the Plaintiffs statutory damages of $1,000 each and costs and attorney's fees to be determined. Feggins v. LVNV Funding, LLC, 540 B.R. 895 (Bankr. M.D. Ala. 2015) (hereafter "Feggins III"), appeal docketed 1:15-cv-00893-WKW (M.D. Ala. Dec. 3, 2015).

D. The Motion for Attorney's Fees

The Plaintiffs have moved for an award of attorney's fees and costs in the amount of $46,458.55 for the consolidated adversary proceedings. (Doc. 90). Plaintiffs' counsel NickWooten ("Wooten") avers he has spent a total of 119.8 hours on this litigation and asserts a reasonable billing rate of $350 per hour. (Doc. 90). Wooten also claims that his paralegal has spent 34.3 hours on this litigation and requests compensation of $125 per hour for her work. (Doc. 90). Plaintiffs support their motion with a declaration of Wooten's experience and billing rate and with itemized bills from Wooten for each of their cases, with the lion's share of the billing occurring in Feggins. (Doc. 90).

The Defendants have filed a lengthy response in opposition, attacking both the...