United States District Court, D. Nevada
PLAINTIFF'S MOTION FOR ENTRY OF CLERKS DEFAULT [DOC. 46], MOTION TO STRIKE
DEFENDANT'S MOTION TO DISMISS [DOC. 52], AND MOTION TO SHORTEN TIME [DOC. 53];
GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS [DOC.48];,
AND DENYING DEFENDANT'S MOTION TO STRIKE [DOC. 49].
JENNIFER A. DORSEY, District Judge.
In this abusive-debt-collection-practices case, the Court is asked to determine whether a defendant that has appeared and actively defended this case through a successful venue-transfer motion should be defaulted because its response to plaintiff's amended complaint was filed several days after the due date. The Court answers this question with a resounding no in light of the facts of this case and denies the plaintiff's motions for default, to shorten time, and to strike the defendants' response to the amended complaint. The Court also denies the defendant's motion to strike portions of the amended complaint but finds that the plaintiff's claims for deceptive trade practices and negligence per se fail to state a cognizable claim for relief and dismisses them with prejudice.
Defendant Persolve is a debt-collection law firm conducting business in California and Nevada. On December 29, 2011, Persolve's agent called Plaintiff Judy Peatrowsky from its California office and, while purporting to be an attorney, attempted to collect a debt Peatrowsky allegedly owed on a Chase Disney Credit Card. The agent represented the amount Peatrowsky owed was $10, 653.56; however, the actual charge-off balance was $8, 077.23. The agent then asked Peatrowsky to cash out her 401k account or borrow money from family to pay the alleged debt.
The agent then induced Peatrowsky to provide personal information by representing that she might be eligible for a "hardship waiver." The agent placed the Plaintiff on hold to determine her eligibility but, upon returning to the line, the agent stated that a legal complaint had already been drawn up and Persolve needed $7, 000.00 that day to settle the account or the lawsuit would be filed the following day. However, Persolve did not file-or intend to file-the lawsuit the following day.
The agent then offered a repayment plan and suggested that Peatrowsky use her tax refund, year-end bonuses, or inheritance money to meet the lump-sum settlement obligation. The agent informed Peatrowsky that Persolve had pulled her credit and was pursuing her because it knew that she had good credit; however, as a general practice, Defendant pursues people with all types of credit. The agent also informed Peatrowsky that Persolve could obtain a judgment against her and garnish 25% of her wages, adding, "how would you like that?"
At this point, Peatrowsky offered to pay $500 up-front and to attempt to make $400 monthly payments. The agent stated "the attorney" wanted higher monthly payments if the up-front payment was lower. Peatrowsky complained about the harsh repayment demands and the agent stated that Peatrowsky should have thought about that before she stopped paying her debt. The agent further informed Peatrowsky that Chase had the right to seek any repayment terms it wanted. Peatrowsky then requested verification of the debt and explained she was uncomfortable paying anything before receiving verification. The agent insisted on immediate payment, saying that many people ultimately fail to pay even after Persolve wasted "man hours" on obtaining verification. Peatrowsky expressed that she was flustered by the threat of suit and the agent reiterated that Persolve had the right to sue her.
Persolve placed eight telephone calls to Peatrowsky on December 30, 2011, five of which were made to her cell phone. On Peatrowsky's cell phone voicemail, Persolve left a message without the disclosures required under federal and state law. In conversation, Peatrowsky asked if the call was being recorded and the agent stated that it was not. But Persolve recorded the call. Persolve also called Peatrowsky at work on December 28, 2011, claiming to be calling from "Speedee Delivery Service." Persolve verified Peatrowsky's address under the guise that Speedee Delivery Service was delivering a package. The number on Peatrowsky's work caller ID was the same number eventually used to call her home and cell phones in attempt to collect the debt. Peatrowsky contends she experienced emotional distress as a result of the calls.
Peatrowsky's attorney called Persolve and spoke with its general counsel, Alaine Patti-Jelsvik on January 4, 2012. Peatrowsky's attorney informed Ms. Patti-Jelsvik of Peatrowsky's intent to bring suit and the basis for suit, offering to enter into pre-filing settlement talks. Peatrowsky's attorney also inquired as to why Defendant claimed the debt to be in excess of $10, 000.00 when the actual outstanding balance was approximately $8, 000.00. Ms. Patti-Jelsvik informed Peatrowsky's attorney that the increased amount represented "interest from the day of charge off." Peatrowsky's attorney inquired as to the authority to charge interest, and Ms. Patti-Jelsvik informed Peatrowsky's attorney that Nevada law allows debt collectors to charge 5.25% interest on debt.
Peatrowsky originally filed this suit in the Central District of California. Doc. 1. Persolve appeared and responded with various motions to dismiss. Docs. 4, 5, 7, 8, 10. In May 2012, the California District Court granted Persolve's motions in part and transferred the case to Nevada. Doc. 22. Peatrowsky successfully moved to amend her complaint, Docs. 37, 42, and filed her First Amended Complaint ("FAC") on March 12, 2013. Doc. 43. Persolve did not file a timely answer, and on April 10, 2013, Peatrowsky moved for entry of a clerk's default. Doc. 46. That same day, Persolve filed a motion to dismiss counts four through eight of the FAC, Doc. 48, and to strike various paragraphs of the new pleading as "immaterial, impertinent, and scandalous." Doc. 49. Peatrowsky responded with her own motion to strike Persolve's motions and a request to shorten the time for hearing her motion. Docs. 52, 53. For the reasons set forth below, the Court denies Peatrowsky's motions and Persolve's motion to strike, grants Persolve's motion to dismiss in part, and dismisses Peatrowsky's fifth and sixth claims for relief with prejudice.
The instant motions present two basic issues for resolution: (1) are Persolve and its motions properly before the Court in light of Persolve's failure to timely respond to the FAC, and (2) if so, is Persolve entitled to dismissal of Peatrowsky's fourth through eighth claims for relief and an order striking her allegations as immaterial, impertinent, and scandalous? The Court finds that Persolve did not default on its defense, grants the motion to dismiss claims five and six only, and denies all other requested relief.
A. Persolve has appeared and defended, precluding entry of default.
Peatrowsky argues that because Persolve failed to respond to the FAC within Rule 15(a)(3)'s 14-day deadline,  the Clerk of the Court must enter default. Peatrowsky further argues that Persolve's motions are not properly before the Court because Persolve was in default when so moving and the motions are untimely. Plaintiff requests the Court enter default against Persolve and strike its motions. Plaintiff's request is not supported by the law.
1. Default is not appropriate once a party has appeared.
Generally, "[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, the clerk must enter the party's default." However, where a party has "appeared" before the Court, the party is generally considered to have "otherwise defend[ed]" the suit. Thus, where a party defended against an initial complaint, but later failed to timely file a response to an amended complaint, entry of clerk's default is inappropriate.
Additionally, when determining whether to reach the merits of an untimely defense, courts consider factors including the culpability of the defendant, any prejudice to the plaintiff, and the existence of a meritorious defense. A defendant is culpable when its delay resulted from a wilfully and intentionally failure to comply with the applicable rules. A plaintiff is prejudiced when consideration of the delayed defense would in some way hinder plaintiff's ability to prosecute the action. ...