Woodward v. Credit Serv. Int'l Corp.

1

Lisa Woodward and Peter Woodward, Plaintiffs, v. Credit Service International Corporation and Richard Muske, Defendants.

No. 23-cv-632 (KMM/ECW)

United States District Court, D. Minnesota

January 22, 2024

ORDER ON PLAINTIFFS' MOTION FOR ATTORNEY FEES AND COSTS

Katherine Menendez United States District Judge.

Plaintiffs Lisa and Peter Woodward brought this lawsuit asserting that Defendants Credit Service International Corporation (“CSIC”) and attorney Richard Muske violated the Fair Debt Collection Practices Act and Minnesota's statutes governing efforts to garnish a debtor's wages. After the Defendants removed the case to federal court and answered, they made an Offer of Judgment to the Plaintiffs pursuant to Rule 68 of the Federal Rules of Civil Procedure. The Woodwards accepted the offer of judgment in the total amount of $2,002.00 to resolve all claims against CSIC and Mr. Muske. They also agreed that their reasonable attorney's fees and costs would be added to the judgment and the parties would either agree to the amount of those fees and costs, “or if they are unable to agree, as determined by the Court upon motion....” [Rule 68 Offer ¶ 2, Dkt. 9.] The parties failed to resolve the issue of fees and costs on their own, and the matter is now before the Court on the Plaintiffs' Motion for Attorney Fees and Costs. [Dkt. 19.] For the reasons that follow, the motion is granted in part.

BACKGROUND

Plaintiffs Lisa Woodward and Peter Woodward allege that in May 2016 they obtained dental care for one of their children at Southhill Dental Group in Stillwater, Minnesota. They incurred an approximately $2,400 debt, and in May 2017, the Dental Group retained CSIC to collect it. Before they incurred the Dental Group debt, the Plaintiffs lived in a Stillwater home located on Pine Street West. But at the time they obtained dental care for their child from the Dental Group, the Plaintiffs were living at an address on Swenson Street in Stillwater. That is the address Ms. Woodward gave to the Dental Group in connection with the service obtained in May 2016.

When the Defendants attempted to collect the debt, they used the Pine Street Address in several court filings. In February 2022, CSIC filed a statement of claim in Washington County conciliation court against the Woodwards. To establish jurisdiction for that action, CSIC alleged that the Woodwards lived at the Pine Street Address, and Defendants allegedly used the Pine Street Address in other court filings in the collection case. The Woodwards allege that Defendants knew or should have known those were false statements when they were filed because documents available to them showed that the Plaintiffs did not, in fact, live at the Pine Street Address. Further, the Plaintiffs allege that Defendants attempted to serve the conciliation court summons and complaint by U.S Mail at the Pine Street Address, so they never received service of the complaint. According to the Plaintiffs, the regular mail envelopes attempting service were returned to the Defendants as undelivered. And CSIC allegedly violated the FDCPA by seeking a judgment for $589.41 more than the debt reported to CSIC by the Dental Group.

Despite knowing that they had used the wrong address and had not properly served their papers, the Defendants allegedly moved forward with having the Pine Street Address entered in the conciliation court record so that the matter was scheduled for a hearing and a judgment could be obtained. The Plaintiffs alleged that throughout the conciliation court proceeding, the Defendants had information available to them showing that the Woodwards were living at the Swenson Street Address, but they ignored that information and pursued the action anyway.

Ultimately, the Defendants obtained a judgment in the conciliation court matter, and afterward, they attempted to collect the judgment through garnishment of the Plaintiffs' wages. In late August 2022, Mr. Muske, acting as a debt collector and counsel for CSIC, sent the Woodwards two notices of intent to garnish their wages. Because the Plaintiffs had not received service of the conciliation court filings at the Swenson Street Address, this was allegedly the first time they were ever made aware of the conciliation court action and the judgment. Concerned about the garnishment notices, the Woodwards sought legal representation and hired Plaintiffs' counsel, Kevin Giebel.

On September 21, 2022, around a month after he mailed the notice of intent to garnish, and not having heard from the Plaintiffs or Mr. Giebel, Mr. Muske sent a garnishment summons to Lisa Woodward's employer. In doing so, the Defendants allegedly provided her employer with an inaccurate total ($2,920.81) as the unpaid amount that was subject to garnishment. Thereafter, Mr. Giebel contacted Mr. Muske. As a result of their conversations, Mr. Muske agreed to withdraw the garnishment summons and stipulated to having the conciliation court void the conciliation court judgment against the Woodwards and having it declared void ab initio, as though the judgment had never been entered.

In February 2023, the Plaintiffs initiated their state court proceeding alleging violations of the FDCPA and Minnesota's garnishment statutes. Defendants eventually removed the case to the District of Minnesota on March 15, 2023, and filed their answers shortly thereafter. On April 12th, Magistrate Judge Elizabeth Cowan Wright issued an

Order for a Rule 16 conference to be held on May 23rd. Shortly thereafter, Mr. Giebel asked defense counsel for dates when they could conduct a Rule 26(f) planning meeting, but he did not receive a response. Before any Rule 26 meeting took place, Defendants served the Plaintiffs with their Rule 68 offer of judgment, and Plaintiffs accepted.

On May 4, 2023, with the permission of Mr. Giebel, defense counsel filed a Notice of Acceptance with Offer of Judgment, and the Rule 16 conference was canceled. As a result, the Clerk of Court entered a judgment in favor of the Plaintiffs in the amount of $2,002.00. [Dkt. 11.] With respect to the issue of attorney's fees, The Offer of Judgment provided the following:

2. In addition, Plaintiffs Lisa and Peter Woodward's reasonable attorneys' fees and costs in connection with Plaintiffs Lisa and Peter Woodward's claims against Defendants Credit Service International Corporation and Richard Muske in the above-referenced suit are to be added to said judgment; said attorneys' fees and costs as are agreed to between the parties, or if they are unable to agree, as determined by the Court upon motion and any responses thereto[.]

[Rule 68 Offer ¶ 2.]

DISCUSSION

Mr Giebel and defense counsel discussed the issue of fees on several occasions but were unable to resolve their disagreements. The motion now before the Court was filed on May 25, 2023,^[1] the Defendants responded on June 8th, the Plaintiffs obtained permission to file a reply, and the matter was fully briefed on June 23, 2023. [Dkt. 1931.]^[2] The Plaintiffs seek $164.00 in costs, which Defendants do not dispute, and the Court will award. 15 U.S.C. § 1692k(a)(3) (costs of the action may be awarded in an FDCPA case). However, the parties do not agree on the amount of reasonable attorney's fees that should be awarded.^[3] The Plaintiffs request an award of $29,139.00 in attorney's fees. [Dkt. 31 ¶ 31.] The Defendants contend that this request is unreasonably inflated because it is based on (1) an hourly rate that is higher than reasonable for this type of case, and (2) a total number of hours that is unreasonably excessive for a variety of reasons. Having considered the parties' arguments and the entire record in this proceeding, the Court concludes that an award of $12,239.00 in attorney's fees and costs is reasonable under these circumstances.

I. Legal Standards

District courts have “broad discretion” in awarding attorney's fees. Hanig v. Lee, 415 F.3d 822, 825 (8th Cir. 2005). Courts typically begin their analysis of determining a reasonable fee award by using the “lodestar” approach-the number of hours reasonably expended multiplied by a reasonable hourly rate. Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 478 U.S. 546, 564 (1986), supplemented, 483 U.S. 711 (1987); Hensley v. Eckerhart, 461 U.S. 424 (1983); Paris Sch. Dist. v. Harter, 894 F.3d 885, 889 (8th Cir. 2018). A dispute over fees generally “should not result in a second major litigation,” and district courts “need not, and indeed should not, become green-eyeshade accountants.” Fox v. Vice, 563 U.S. 826, 838 (2011). When awarding fees, a court should aim to “do rough justice, not to achieve auditing perfection,” and may resort to “estimates in calculating and allocating an attorney's time.” Id.

“A reasonable hourly rate is usually the ordinary rate for similar work in the community where the case has been litigated.” Emery v. Hunt, 272 F.3d 1042, 1048 (8th Cir. 2001). In determining a reasonable hourly rate, district courts are permitted “to rely on their own experience and knowledge of prevailing market rates.” Hanig, 415 F.3d at 825. The party seeking fees has the burden to produce “satisfactory evidence-in addition to the attorney's own affidavits-that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation.” Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984); see also Moysis v. DTG Datanet, 278 F.3d 819, 828 (8th Cir. 2002).

In addition to having the burden of showing the reasonableness of the requested rate, the party applying for an award of attorney's fees has the burden of “documenting the appropriate hours expended....” Fish v. St. Cloud State Univ., 295 F.3d 849, 851 (8th Cir. 2002)...