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Ward v. Secure Asset Recovery, Inc.

United States District Court, M.D. Louisiana

April 26, 2018




         This matter is before the Court on the Motion for Default Judgment [1] by Plaintiff, Camila Ward (“Plaintiff”). Defendants, Secure Asset Recovery, Inc. (“SAR”) and Alan Alvarez (“Alvarez”)(or collectively “Defendants”)[2] have never appeared in this matter nor filed an Opposition to this motion. For the following reasons, the Court finds that Plaintiff's motion should be granted.

         I. BACKGROUND

         Prior to the institution of this lawsuit, Plaintiff incurred a financial obligation used primarily for personal, family or household purposes (“the Account”).[3] The Account subsequently allegedly went into default.[4] Plaintiff contends the Account constitutes a “debt” pursuant to the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692a(5), and Plaintiff is a “consumer” as defined by 15 U.S.C. § 1692a(3).

         Plaintiff alleges the Defendants violated the FDCPA and the Florida Consumer Collection Practices Act (“FCCPA”) when an employee of Defendants left Plaintiff a voicemail stating that the call was from the “civil procedures division of SAR & Associates” and that “[i]t's very important that I speak to you in order to stop this from moving forward … This is a time sensitive matter. Please call us.”[5] Plaintiff contends there is no “civil procedures division” of “SAR & Associates.”[6] Plaintiff alleges this message was left to give her the false sense that the issue had escalated and would soon go beyond just an attempt to collect a debt, i.e., that Plaintiff would be sued by Defendants.[7] Plaintiff claims that the voicemail identification of Defendants as “SAR & Associates” was intentionally misleading to give Plaintiff the impression that it was a law firm.

         Plaintiff alleges SAR is a “debt collector” as defined by 15 U.S.C. § 1692a(6) and a “third-party debt collector” as defined by Fla. Stat. § 559.55(6). Plaintiff also alleges Alvarez is a “debt collector” as defined by 15 U.S.C. § 1692a(6) and a “third-party debt collector” as defined by Fla. Stat. § 559.55(6). SAR is a Florida corporation with its principal place of business in Florida. Alvarez is listed as President of SAR and also resides in the State of Florida.

         Plaintiff claims Alvarez actively managed SAR and directed the policies of the company and either directly or indirectly participated in the debt collection efforts against Plaintiff.[8] Plaintiff alleges that the purpose of the voicemail was to falsely and deceptively represent to Plaintiff that she was about to be sued on the Account, [9] that the purpose of the voicemail was an attempt to collect the debt, [10] that the voicemail conveyed information to Plaintiff, directly or indirectly, regarding the Account[11] and constituted “communication[s]” as defined by the FDCPA, [12] and that these statements and actions by Defendants and/or their employees constitute illegal communication in connection with debt collection and were done knowingly, willfully, and purposely.[13]

         Plaintiff filed this lawsuit on January 5, 2017. Plaintiff alleges that the acts or omissions committed by the Defendants or their agents/employees violated 15 U.S.C. § 1692d(6) and § 1692e(2), (3), (5), (10), & (11)[14] and also violated Fla. Stat. § 559.72(9), (10) & (12).[15] The record reflects that SAR was served on January 12, 2017, [16] and Alvarez was served on March 25, 2017.[17] To date, neither Defendant has answered Plaintiff's Complaint or otherwise appeared. The Clerk of Court entered a preliminary default against Defendants on May 5, 2017.[18] Plaintiff now moves for a judgment of default to be entered against Defendants, and she seeks statutory and punitive damages under federal and Florida law along with attorney's fees and costs.


         A. Default Judgment

         The United States Court of Appeals for the Fifth Circuit has outlined a three step process to obtain a default judgment: (1) a defendant's default; (2) a clerk's entry of default; and (3) a plaintiff's application for a default judgment.[19] The service of summons or lawful process triggers the duty to respond to a complaint.[20] A defendant's failure to timely plead or otherwise respond to the complaint triggers a default.[21] Accordingly, Rule 55 provides that the clerk must enter a party's default “[w]hen 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....”[22]

         After the Clerk of Court has found a defendant to be in default, the Court may, upon motion by a plaintiff, enter a default judgment against the defaulting defendant.[23]Default judgments are “generally disfavored in the law” in favor of a trial upon the merits.[24]Indeed, default judgments are considered “a drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations.... [T]hey are ‘available only when the adversary process has been halted because of an essentially unresponsive party.'”[25] Even so, this policy is “counterbalanced by considerations of social goals, justice and expediency, a weighing process [that] lies largely within the domain of the trial judge's discretion.”[26] In accordance with these guidelines, “[a] party is not entitled to a default judgment as a matter of right, even where the defendant is technically in default.”[27] While “the defendant, by his default, admits the plaintiff's well-pleaded allegations of fact, ” the Court retains the obligation to determine whether those facts state a claim upon which relief may be granted.[28]

         Courts have developed a two-part analysis to determine whether a default judgment should be entered against a defendant.[29] First, a court must consider whether the entry of default judgment is appropriate under the circumstances.[30] The factors relevant to this inquiry include: (1) whether material issues of fact are at issue; (2) whether there has been substantial prejudice; (3) whether the grounds for default are clearly established; (4) whether the default was caused by good faith mistake or excusable neglect; (5) the harshness of a default judgment; and (6) whether the court would think itself obliged to set aside the default on the defendant's motion.[31] Second, a court must assess the merits of the plaintiff's claims and find sufficient basis in the pleadings for the judgment.[32]

         B. Jurisdiction to Enter Default Judgment

         As Plaintiff asserts claims under the FDCPA, the Court has subject matter jurisdiction over this case under 28 U.S.C. § 1331, which provides that: “district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” The Court has supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367. Nevertheless, the Court must determine if it has personal jurisdiction over the Defendants who are citizens of the State of Florida.

         To comport with constitutional due process, a plaintiff must show that: (1) Defendants purposefully availed themselves of the benefits and protections of Louisiana law, thereby establishing “minimum contacts” with Louisiana such that Defendants could reasonably have anticipated being haled into court there; and (2) under the circumstances, the exercise of personal jurisdiction “does not offend traditional notions of fair play and substantial justice.”[33] The minimum contacts requirement can be met through contacts sufficient to confer either general or specific jurisdiction.[34] General jurisdiction can be exercised when a defendant's contacts with the forum state are substantial, continuous, and systematic, though unrelated to the litigation.[35] Specific jurisdiction exists “[w]hen a nonresident defendant has purposefully directed its activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities.”[36]

         In this case, Plaintiff has alleged that Alvarez created the collection policies and procedures employed by SAR, managed or otherwise controlled the daily collections operations of SAR, oversaw the application of collection policies and procedures, “drafted, created, approved, and ratified the tactics and scripts used by … SAR and their employees and agents” in debt collection, and “had knowledge of, approved, participated in, ratified and benefitted financially from the unlawful debt collection practices” used against Plaintiff.[37] Based on these uncontroverted allegations, the Court finds (1) that SAR and Alvarez purposefully availed themselves of the benefits and protections of Louisiana law, thereby establishing “minimum contacts” with Louisiana such that they could reasonably have anticipated being haled into court there; and (2) under the circumstances, the exercise of personal jurisdiction against them “does not offend traditional notions of fair play and substantial justice.”[38] As the Fifth Circuit has explained:

When a nonresident defendant commits a tort within the state, or an act outside the state that causes tortious injury within the state, that tortious conduct amounts to sufficient minimum contacts with the state by the defendant to constitutionally permit courts within that state, including federal courts, to exercise personal adjudicative jurisdiction over the tortfeasor and the causes of actions arising from its offenses or quasi-offenses. Even an act done outside the state that has consequences or effects within the state will suffice as a basis for jurisdiction in a suit arising from those consequences if the effects are seriously harmful and were intended or highly likely to follow from the nonresident defendant's conduct.[39]

         Here, Plaintiff has alleged with sufficient detail that Alvarez and SAR took actions outside of Louisiana that were highly likely to result in serious harm within the state. The alleged acts were aimed at no other state but Louisiana, and were aimed at Plaintiff specifically. Plaintiff alleges that serious harm resulted from that conduct; thus, she has made a prima facie showing of personal jurisdiction.[40] Further, Defendants have failed to appear and/or offer anything to rebut this showing.

         Finally, exercising personal jurisdiction over SAR and Alvarez would not “offend traditional notions of fair play and substantial justice” based on “the burden on the defendant, the interests of the forum State, ... the plaintiff's interest in obtaining relief ... the interstate judicial system's interest in obtaining the most efficient resolution of controversies[, ] and the shared interest of the several States in furthering fundamental substantive social policies.”[41] The burden on Defendants does not appear to be particularly burdensome. Several of the other factors mentioned in Asahi support a finding that exercise of personal jurisdiction in Louisiana is fair and just. The alleged misconduct took place in Louisiana, and Plaintiff may not have recourse to seek relief in any other forum. Nothing before the Court suggests that it would be more efficient to resolve the claims in another state or that any other state has an interest in resolving the claims. Therefore, the Court may constitutionally exercise personal jurisdiction over SAR and Alvarez.

         C. Entitlement to Default Judgment

         As set forth above, the Court must determine whether the entry of default judgment is appropriate under the circumstances by considering the Lindsey factors. As reflected by the record, the Defendants have failed to file an Answer or a motion under Rule 12 in response to the Complaint. As such, there are no material facts in dispute. Further, the grounds for granting a default judgment against Defendants are clearly established, as evidenced by the action's procedural history and the Clerk's entry of default, outlined above. Nothing before the Court suggests that the Defendants' failure to respond or appear was the result of either good faith mistake or excusable neglect. Finally, Defendants' failure to file any responsive pleading or motion mitigates the harshness of a default judgment.[42] The Court is not aware of any facts that would lead it to set aside the default judgment if challenged by the Defendants. Thus, the Court finds that the Lindsey factors weigh in favor of default.

         The Court must also decide if Plaintiff's pleadings provide a sufficient basis for a default judgment against Defendants. Plaintiff brings this action under the FDCPA and the FCCPA § 599.77(2). The FDCPA, 15 U.S.C. § 1692 et seq., imposes civil liability on “debt collector[s]” for certain prohibited debt collection practices. The Act regulates interactions between consumer debtors and “debt collector[s], ” defined to include any person who “regularly collects ... debts owed or due or asserted to be owed or due another.”[43] The Court agrees, and no argument has been submitted to the contrary, that Defendants satisfy the FDCPA definition of “debt collectors.” 15 U.S.C. § 1692(e) provides, in pertinent part, as follows:

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
(2) The false representation of-
(A) the character, amount, or legal status of any debt; or
(B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.
(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.
*** (5) The threat to take any action that cannot legally be taken or that is not intended to be taken.
(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.
(11) The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.

         The Florida Consumer Collection Practices Act, F.S.A. § 599.72 states, in pertinent part, as follows:

In collecting consumer debts, no person shall:
(9) Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knows that the right does not exist.
(11) Communicate with a debtor under the guise of an attorney by using the stationery of an attorney or forms or instruments that only attorneys are authorized to prepare.
(12) Orally communicate with a debtor in a manner that gives the false impression or appearance that such person is or is associated with an attorney.

         Plaintiff alleges, and the Court must take as true, that the representations by Defendants that they were calling regarding the “civil procedures division” and that it was “very important that I speak to you, ” and “to stop this from moving forward” because “this is a time sensitive matter, ” were made for the purpose of causing Plaintiff to believe that legal action was being taken against her on the Account.

         Plaintiff further alleges that Defendants have no civil procedures division, never intended to sue, never did sue, and failed to inform Plaintiff via voicemail that the caller was a debt collector. Finally, Plaintiff alleges that this false information was communicated knowingly, willfully, and to be purposely deceptive. Plaintiff maintains these uncontroverted facts sufficiently support ...

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