United States District Court, D. Nevada
REPORT OF FINDINGS & RECOMMENDATION
PEGGY A. LEEN, Magistrate Judge.
This matter is before the court on Plaintiff Charles Eckenrode's Motion for a Default Judgment and Request for Attorney's Fees (Dkt. #9), filed September 9, 2013, which was referred to the undersigned for a Report of Findings and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B) and Local Rule IB 1-4. The court has considered the Motion. No response to the Motion was filed, and the time for filing one has now run.
Eckenrode filed his Complaint (Dkt. #1) on February 26, 2013, naming Rubin & Yates as Defendant. Count I alleges Rubin & Yates violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et. seq., in attempting to collect a debt from Eckenrode. Eckenrode seeks emotional distress damages pursuant to 15 U.S.C. § 1692k(a)(1), statutory damages under 15 U.S.C. § 1692k(a)(2)(A), punitive damages, and an award of attorney's fees and costs under 15 U.S.C. § 1692(k). Count II alleges a tort claim under Nevada law for intrusion upon seclusion and revelation of private financial facts to a third party against Rubin & Yates. For this claim, Eckenrode seeks "an award of actual damages from Defendant for the emotional stress suffered in an amount to be determined at trial." Complaint (Dkt. #1) at ¶¶ 8-9.
Eckenrode alleges that Rubin & Yates committed "numerous violations of the FDCPA as well as invasions of privacy" by committing "the following illegal acts giving rise to this action; (1) continually harassing Plaintiff; (2) engaging in a series of deceptive practices; (3) misrepresenting the amount of Eckenrode's debt, (4) threatening to garnish Eckenrode's wages without the legal ability or intent to do so; (5) demanding a sum of payment higher than the original contract amount, (6) threatening to sue Eckenrode for an amount higher than the original debt without the legal ability or intent to do so, and (7) intruding upon Eckenrode's seclusion." Complaint at ¶¶ 4-6.
The Clerk of Court issued Summons (Dkt. #4) on February 26, 2013 The Summons was returned executed on April 29, 2013, indicating service of process was made on Rubin & Yates on March 25, 2013. See Summons Returned Executed (Dkt. #6). Rubin & Yates did not file a responsive pleading, and the Clerk of Court entered default against it on August 16, 2013, at Eckenrode's request. See Clerk's Entry of Default (Dkt. #8). Eckenrode now seeks entry of default judgment against Rubin & Yates and requests statutory, punitive, actual damages, and attorney's fees and costs.
I. Applicable Law & Analysis.
A. Adequacy of Service of Process.
As a preliminary matter, the court must determine whether the service of process was adequate. A federal court does not have jurisdiction over a defendant unless the defendant has been properly served. See Direct Mail Specialists, Inc. v. Eclat Computerized Tech., Inc., 840 F.2d 685, 688 (9th Cir. 1988). Federal Rule of Civil Procedure 4 governs service of process in a federal action. According to the rule, an individual may be served by "following state law for serving summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made." Fed.R.Civ.P. 4(e)(1). In addition, an individual may be served by delivering a copy of the summons and complaint to the individual personally, leaving a copy of each at the individual's home, or delivering a copy of each to an agent authorized to receive service of process. Fed.R.Civ.P. 4(e)(2). Here, the executed summons indicates that a process server served the complaint and summons on Rubin & Yates on March 25, 2013, by personal service on its owner, Cedirck Jordan, the person designated by law to accept service on Rubin & Yates' behalf. Thus, service of process was adequate.
B. Default Judgment.
Obtaining a default judgment is a two-step process under Rule 55. See Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986); see also Fed.R.Civ.P. 55. First, the clerk must enter the party's default. Fed.R.Civ.P. 55(a). The Clerk entered a default against Rubin & Yates on August 16, 2013. See Clerk's Entry of Default (Dkt. #8). Second, the party seeking default judgment must then petition the court for a default judgment. See Fed.R.Civ.P. 55(b)(2). The grant or denial of a motion for the entry of default judgment is within the discretion of the court. See Lau Ah Yew v. Dulles, 236 F.2d 415, 416 (9th Cir. 1956); Warner Bros. Entm't Inc. v. Caridi, 346 F.Supp.2d 1068, 107 (C.D. Cal. 2004). In determining whether to exercise its discretion to enter a default judgment, the court considers the following factors: (1) the possibility of prejudice to Plaintiff, (2) the merits of Plaintiff's substantive claim and the sufficiency of the complaint, (3) the sum of money at stake in the action, (4) the possibility of a dispute concerning material facts, (5) whether the default was due to excusable neglect, and (6) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel, 782 F.2d at 1471-72.
1. Possibility of Prejudice to the Plaintiff.
The first factor favors default judgment where the plaintiff will suffer prejudice if default judgment is not entered. See McMillen v. J.C. Penney Co., 205 F.R.D. 558 (D. Nev. 2002). Simply delaying the resolution of the case is not prejudicial under this standard. See TCI Grp. Life Ins. Plan v. Knoebber, 244 F.3d 691, 701 (9th Cir. 2001). The standard is whether plaintiff's ability to pursue the claim will be hindered. Id. (quoting Falk v. Allen, 739 F.2d 461, 462 (9th Cir. 1984)). Rubin & Yates has failed to appear since being served on March 25, 2013. As a result, Eckenrode is left without a remedy if default judgment is not entered in his favor. Therefore, this factor weighs in favor of entry of a default judgment.
2. Merits of the Plaintiff's Substantive Claim & Sufficiency of the Complaint.
The second and third factors favor default judgment if Plaintiff makes enough factual allegations to state a claim upon which relief can be granted, in accordance with Rule 8(a). See Eitel, 782 F.2d at 1471; Danning v. Lavine, 572 F.2d 1386, 1389 (9th Cir. 1978). All factual allegations in the complaint should be taken as true when evaluating this standard. See Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). The Complaint alleges that on February 8, 2013, Rubin & Yates told Eckenrode it was going to file papers to garnish his wages without the intent to do so. Complaint at ¶ 13. Eckenrode claims that Rubin & Yates told him if he did not pay the alleged $12, 000 debt, it would sue him for $15, 000-the amount of the debt plus costs and attorney's fees. Id.
A creditor's statement that a consumer is liable for attorney's fees is a material misrepresentation when such an outcome is a legal impossibility. Tourgeman v. Collins Financial Services, ___ F.3d ___, 2014 WL 2870174 at *9 (9th Cir. Jun. 25, 2014) (citing Lox v. CDA, Ltd., 689 F.3d 818 (7th Cir. 2012)). The so-called American Rule disallows an award of attorney fees absent a contractual or statutory exception. See Hardt v. Reliance Std. Life Ins. Co., 560 U.S. 242, 251 (2010). The Complaint alleges Rubin & Yates' conduct violated 15 U.S.C. § 1692(f)(1) because it attempted to collect an amount not authorized by the agreement between it and Eckenrode. Complaint at ¶ 27. Accepting Eckenrode's allegations as true, he has stated a claim for a violation of the FDCPA because debt collectors are prohibited from threatening to take any action that cannot legally be taken or that is not intended to be taken. See 15 U.S.C. § 1692(e)(5). Because Eckenrode has pled sufficient factual allegations to support his claim for violation of the FDCPA, the second and third Eitel factors weigh in favor of entering default judgment.
3. Sum of Money at Stake in the Action.
The fourth factor weighs against a default judgment when there is a substantial amount of money involved. See Eitel, 782 F.2d at 1472. In evaluating this factor, the court must compare the amount of money at stake to the seriousness of the defendant's conduct. See PepsiCo, Inc. v. Cal. Sec'y Cans, 238 F.Supp.2d 1172, 1176 (C.D. Cal. 2002). Eckenrode seeks $211, 995.00. a substantial amount of money. See Motion for Default Judgment (Dkt. #9) at 12:16-18. Specifically, Eckenrode seeks statutory damages pursuant to 15 U.S.C. § 1692k(a)(2)(A) in the amount of $1, 000.00; punitive damages in the amount of $100, 000.00 for Rubin & Yates's illegal invasion of his privacy; actual damages pursuant to 15 U.S.C. § 1692(a)(1) in the amount of $100, 000 for emotional distress; and attorney's fees and costs in the amount of $10, 995.00. Id.. Eckenrode provided a complaint and affidavit attesting to his emotional distress, but neither document cites specific and articulable facts that would ...