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Geraldo v. Richland Holdings, Inc.

United States District Court, D. Nevada

March 30, 2018

RICHLAND HOLDINGS, INC., et al., Defendants.


         Presently before the court is defendants Richland Holdings, Inc. d/b/a AcctCorp of Southern Nevada (“AcctCorp”) and RC Willey aka RC Willey Financial Services (“RC Willey”, collectively “defendants”) motion for attorney's fees. (ECF No. 28). Plaintiffs Dany Geraldo and Wendoly Guzman filed a response (ECF No. 35), to which defendants replied (ECF No. 38).

         I. Facts

         This motion arises out of the court's grant of dismissal of plaintiff's claims based on a finding of claim preclusion.

         Around January 19, 2001, plaintiffs entered into a valid and binding contract for the procurement of retail merchandise with RC Willey and began incurring charges related to the contract. (ECF Nos. 1 & 28). Plaintiffs became delinquent by failing to make regular payments as owed under the terms of their contract. Id. In August 2010, pursuant to the RC Willey revolving charge security agreement, plaintiffs agreed that “the laws of the state in which I reside will govern the interpretation or enforcement of this Agreement.”[1] (ECF No. 28).

         RC Willey served plaintiffs in the underlying state court action to collect the unpaid balance on plaintiffs' RC Willey account. Id. Plaintiffs did not participate in that action, resulting in a default judgment in favor of RC Willey. Id.

         Plaintiffs allege that defendants, in favor of their application for default judgment, filed a “Confidential Legal Authorization” assigning plaintiffs' debt of $8, 080.38 from RC Willey to AcctCorp. (ECF No. 1). Plaintiffs also allege that, included with document filings, defendants filed an affidavit/declaration of custodian records that includes a contractual fee of $4, 040.19, which equals fifty percent of the entire principal balance assigned to AcctCorp. Id. Plaintiffs also claim that defendants unlawfully charged plaintiffs twenty-four percent interest on the total amount due, including the contractual collection fee. Id.

         On or about November 19, 2014, plaintiffs filed a voluntary petition for Chapter 13 bankruptcy. (ECF No. 28). Defendants allege that during the bankruptcy proceedings, plaintiffs made no attempt to include the causes of action they raise in the instant litigation. Id. On November 17, 2015, plaintiffs' debt was discharged. Id.

         On January 3, 2017, plaintiffs filed their complaint, alleging that defendants committed several violations of the Fair Debt Collection Practices Act (FDCPA). (ECF No. 1). Additionally, plaintiffs alleged that defendants' violations caused plaintiffs to suffer substantial damages, including economic damages, emotional damages, damages to their credit history and reputation, as well as substantial attorney's fees. Id.

         On January 30, 2017, defendants filed a motion to dismiss plaintiffs' complaint. (ECF No. 7). On July 26, 2017, the court granted defendants' motion to dismiss. (ECF No. 23). The court held that plaintiffs' claims are precluded because plaintiffs failed to bring their current claims as compulsory counterclaims in the underlying state court case. Id.

         II. Legal Standard

         a. 15 U.S.C. § 1692k(a)(3)

         Under the FDCPA, if the court finds that a plaintiff brought an action in bad faith and for the purpose of harassment, a prevailing defendant is entitled to “attorney's fees reasonable in relation to the work expended and costs.” 15 U.S.C. § 1692k(a)(3). Such an award is mandatory under the FDCPA. Graziano v. Harrison, 950 F.2d 107, 113 (3d Cir. 1991); see also De Jesus v. Banco Popular de Puerto Rico, 918 F.2d 232, 234 (1st Cir. 1990).

         In the Ninth Circuit, the starting point for determining reasonable fees is the calculation of the “lodestar, ” which is obtained by multiplying the number of hours reasonably expended on litigation by a reasonable hourly rate. See Jordan v. Multnomah County, 815 F.2d 1258, 1262 (9th Cir. 1987). “The ‘lodestar' is calculated by multiplying the number of hours the prevailing party reasonably expended on the litigation by a reasonable hourly rate.” Camacho v. Bridgeport Financial, Inc., 523 F.3d 973, 978 (9th Cir. 2008) (internal quotations and citation omitted). In calculating the lodestar, the court must determine a reasonable rate and a reasonable number of hours for each attorney. Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986), reh'g denied, amended on other grounds, 808 F.2d 1373 (9th Cir. 1987). The lodestar is deemed to be presumptively reasonable, though the district court has the discretion to consider and upward or downward adjustment.

         b. 28 U.S.C. § 1927

         Under 28 U.S.C. § 1927:

Any attorney or other person admitted to conduct cases in any court of the United States . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.


         “Section 1927 authorizes federal courts to punish barratry by requiring offending lawyers personally to satisfy their opponents' litigation debts. It applies in any proceeding in federal court, operates solely upon attorneys, rather than their clients, and applies with equal force against winners ...

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