United States District Court, E.D. Virginia, Norfolk Division
JENNY D. BICKLEY, Plaintiff,
EVE GREGORY, Individually and trading as AMC COLLECTIONS and DEBT RECOVERY, and CHARLES GREGORY, Defendants.
UNITED STATES MAGISTRATE JUDGE'S REPORT AND
J. KRASK, UNITED STATES MAGISTRATE JUDGE
matter is before the Court on plaintiff Jenny D.
Bickley's motion for default judgment as to defendant Eve
Gregory, individually and trading as AMC Collections and Debt
Recovery, and defendant Charles Gregory. ECF No. 8. This
matter was referred to the undersigned United States
Magistrate Judge pursuant to a Referral Order from the Chief
United States District Judge. ECF No. 13; see also
28 U.S.C. § 636(b)(1)(B) and (C); Fed.R.Civ.P. 72(b);
E.D. Va. Local Civ. R. 72. For the reasons discussed below,
the undersigned recommends that the Court GRANT plaintiffs
motion for default judgment, ECF No. 8.
March 21, 2016, plaintiff Jenny D. Bickley filed a complaint
against Eve Gregory ("Eve") and Charles Gregory
("Charles"), seeking relief for violations of the
Fair Debt Collections Practices Act ("FDCPA"), 15
U.S.C. § 1692 et seq. ECF No. 1. At the time of
the conduct alleged, Eve was the owner and sole proprietor of
AMC Collections and Debt Recovery ("AMC"), a debt
collection business located in Suffolk, Virginia. Compl.
¶ 3. Charles was an employee of AMC. Compl. ¶ 5.
The defendants were served with process on April 1, 2016.
See ECF No. 3. The defendants attempted to file
answers to the complaint on April 22, 2016. ECF Nos. 4-5.
Each answer, however, lacked a certificate of service and the
Court, accordingly, struck the answers on April 27, 2016. ECF
Nos. 6-7. The Court granted the defendants leave to file
corrected answers within 30 days. Id. The defendants
did not file corrected answers. On June 10, 2016, plaintiff
requested, and the Clerk entered, default against the
defendants. ECF Nos. 9-10. Also on June 10, 2016, plaintiff
moved for entry of a default judgment. ECF No. 8. The
defendants did not respond to the motion, and the time do so
evidentiary hearing was held on August 25, 2016, at which the
plaintiff appeared with counsel. ECF No. 15. The plaintiff
testified and submitted additional evidence to substantiate
her claims and damages. Id. The defendants did not
complaint alleges seven separate violations of the FDCPA. The
plaintiff voluntarily dismissed count V at the evidentiary
hearing. Pursuant to 15 U.S.C. § 1629k, the plaintiff
seeks: $15, 000.00 in actual damages for emotional distress;
$1, 500.00 in actual damages for out-of-pocket expenses for
the defense of a related lawsuit; $1, 000.00 in statutory
damages; $12, 281.25 in attorney's fees; $424.00 in
costs; and pre- and post-judgment interest.
case concerns the defendants' attempts, in 2015 and 2016,
to collect a debt from Ms. Bickley that she allegedly owed as
a result of medical services she received in 2010 and 2011.
Compl. ¶¶ 7-20. The debts were not legally
collectable during the time that defendants were attempting
to collect. Compl. ¶¶ 7, 29.
to the complaint, Ms. Bickley received medical services from
a provider, Specialists for Women, in May 2010 and August
2011. Compl. ¶ 7. Ms. Bickley believed that her medical
insurance company, Harvard Pilgrim, processed the claims for
payment for those services. Id. In October 2013 and
December 2013, however, Specialists for Women billed her for
the services. Compl. ¶ 8; Specialists for Women
Statements, ECF Nos. 15-2, 15-3. At that time, Eve was
working as office manager at Specialists for Women, and Ms.
Bickley and Eve spoke over the phone about the bills. Compl.
¶¶ 3, 8.
year and a half later, on May 6, 2015, defendant Eve filed a
Certificate of Assumed or Fictitious Name with the Circuit
Court Clerk's Office in Suffolk, Virginia, in order to
conduct business under the fictitious name of "AMC
Collections and Debt Recovery." Compl. ¶ 9. The
certificate listed Eve as owner of the sole proprietorship.
Id. The following day, Ms. Bickley received a
telephone call from defendant Charles, an employee of AMC.
Compl. ¶ 10. Charles demanded payment "for
unspecified medical bills and collection fees totaling $5,
800.00." Compl. ¶ 10.
January 14, 2016, over eight months after the May 2015 call,
Charles again called Ms. Bickley to demand payment. Compl.
¶ 13. During this call, Ms. Bickley told Charles
"that the debt had not been timely filed with the
insurance company and that [she] was not responsible for
payment." Compl. ¶ 14. Charles told Ms. Bickley
that he would confer with Eve regarding the account.
Id. Ms. Bickley then called Charles on January 20,
2016 "to determine if AMC had resolved the question of
insurance submittal of the bills." Compl. ¶ 15.
Charles told Ms. Bickley that he was trying to avoid taking
the matter to court and that he would continue to communicate
with Eve about the account. Compl. ¶ 16.
January 28, 2016, AMC Collections and Debt Recovery filed
suit against Ms. Bickley in General District Court for the
City of Suffolk, Virginia. Compl. ¶ 17, 29. Ms. Bickley
was served on January 29, 2016, when she received a copy of
the Warrant in Debt by mail. Compl. ¶ 17. The return
address listed on the envelope was: AMC Collections and Debt
Recovery, PO Box 4288, Suffolk, VA 23439. Id. The
envelope was received in evidence at the hearing on August
25, 2016. Ex. 7. Upon receipt of the Warrant in Debt on
January 29, 2016, Ms. Bickley called Charles to find out why
AMC had sued her. Compl. ¶ 18. Charles told Ms. Bickley
that Eve had instructed him to turn the account over to
"Corporate." Id. Charles further stated
that he was the owner of "Corporate" and that his
lawyer instructed him to file the case. Id. Charles
did not provide additional information about his attorney.
Id. In March 2016, Charles appeared in General
District Court on behalf of AMC in the case against Ms.
Bickley, AMC Collections and Debt Recovery v. Jenny
Bickley, Case No. GV16-602. Compl. ¶ 20. Charles
advised the court that he was co-owner of AMC. Id.
The General District Court ultimately dismissed the case with
Bickley's complaint also alleges that on February 17 and
25, 2016, after Eve formed AMC, Ms. Bickley and Eve spoke
over the phone about the insurance filings for the
outstanding bills. Compl. ¶ 19.
JURISDICTION AND VENUE
render a default judgment, the Court must have subject matter
jurisdiction over the case and personal jurisdiction over the
defaulting parties. Venue must also be proper. Here, the
Court has subject matter jurisdiction over Ms. Bickley's
FDCPA claims pursuant to 15 U.S.C. § 1692k(d), which
provides that "[a]n action to enforce any liability
created by this subchapter may be brought in any appropriate
United States district court without regard to the amount in
controversy . . . within one year from the date on which the
violation occurs." Because the alleged FDCPA violations
began in May 2015, less than one year before Ms. Bickley
filed suit in March 2016, this Court has subject matter
jurisdiction over this case. This Court has personal
jurisdiction over the defendants pursuant to Federal Rule of
Civil Procedure 4(k)(1)(A) and Va. Code §
8.01-328.1(A)(1). Venue is proper pursuant to 28 U.S.C.
§ 1391(b)(1) and (2), as defendants reside in the
Norfolk Division of the Eastern District of Virginia and
"a substantial part of the events or omissions giving
rise to the claim occurred" in this judicial district.
of the Federal Rules of Civil Procedure governs entries of
default and default judgments. Pursuant to Rule 55(a), the
Clerk must enter default against a party that "has
failed to plead or otherwise defend" against an action.
After the Clerk has entered default, a plaintiff may seek a
default judgment against a defendant pursuant to Rule 55(b).
A court must "exercise sound judicial discretion"
when considering whether to enter default judgment, "and
the moving party is not entitled to default judgment as a
matter of right." EMI Apr. Music, Inc. v.
White, 618 F.Supp.2d 497, 505 (E.D. Va. 2009) (citing
Sentry Select Ins. Co. v. LBL Skysystems (U.S.A.)
Inc., 486 F.Supp.2d 496, 502 (E.D. Pa. 2007)). The
United States Court of Appeals for the Fourth Circuit has
expressed "a strong preference that, as a general
matter, defaults be avoided and that claims and defenses be
disposed of on their merits." Colleton Preparatory
Acad., Inc. v. Hoover Universal, Inc., 616 F.3d 413, 417
(4th Cir. 2010). Default judgment may be appropriate,
however, "when the adversary process has been halted
because of an essentially unresponsive party." S.E.C
v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005).
a defaulting party admits the factual allegations in the
complaint, a court must evaluate the sufficiency of the
allegations to determine if the complaint states a cause of
action. See GlobalSantaFe Corp. v.
Globalsantafe.com, 250 F.Supp.2d 610, 612 n.3 (E.D. Va.
2003) ("Upon default, facts alleged in the complaint are
deemed admitted and the appropriate inquiry is whether the
facts as alleged state a claim."). See also Ryan v.
Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir.
2001) ("The court must . . . determine whether the
well-pleaded allegations in [the] complaint support the
relief sought in th[e] action."); Anderson v. Found,
for Advancement, Educ. & Emp't of Am. Indians,
155 F.3d 500, 506 (4th Cir. 1998) (holding that the district
court erred in granting default judgment to plaintiff where
plaintiff failed to state a valid claim).
ANALYSIS OF PLAINTIFF'S CLAIMS
prevail on a claim under the FDCPA, a plaintiff must
demonstrate that "(1) the plaintiff is a
'consumer' within the meaning of the statute; (2) the
defendant collecting the debt is a 'debt collector'
within the meaning of the statute, [and]; (3) the defendant
has violated by act or omission a provision of the
FDCPA." Creighton v. Emporia Credit Serv.,
Inc., 981 F.Supp. 411, 414 (E.D. Va. 1997). The Court
accepts the well-pleaded allegations in the complaint
regarding liability as true and finds that the plaintiff
sufficiently alleges the elements necessary to assert an
FDCPA claim against the defendants. With respect to the first
element, the FDCPA defines "consumer" as "any
natural person obligated or allegedly obligated to pay any
debt." 15 U.S.C. § 1692a(3). The FDCPA further
defines "debt" as an obligation to pay money
arising out of a transaction which is "primarily for
personal, family, or household purposes." 15 U.S.C.
§ 1692a(5). The complaint shows that Ms. Bickley is a
natural person who allegedly incurred a debt for medical
services. Ms. Bickley, therefore, is a "consumer"
within the meaning of the statute. Second, the statute
defines "debt collector, " in pertinent part, as
"any person who uses any instrumentality of interstate
commerce or the mails in any business the principal purpose
of which is the collection of any debts." 15 U.S.C.
§ 1692a(6). Eve and Charles, as owner and employee,
respectively, of AMC Collections and Debt Recovery, a debt
collection business, communicated with Ms. Bickley via
telephone and mail in an attempt to collect a debt allegedly
owed. The defendants, therefore, are "debt
collectors" under the FDCPA. Third, the complaint
alleges that the defendants' acts or omissions resulted
in numerous violations of the FDCPA. For the reasons
discussed below, the Court finds that the defendants'
acts and omissions violated the FDCPA.
Sufficiency of Allegations in Count I
alleges that the defendants violated 15 U.S.C. § 1692e,
which generally prohibits debt collectors from using
"any false, deceptive, or misleading representation or
means in connection with the collection of any debt."
The Fourth Circuit has established that "[w]hether a
communication is false, misleading, or deceptive in violation
of section 1692e is determined from the vantage of the
'least sophisticated consumer.'" Russell v.
Absolute Collection Servs., Inc., 763 F.3d 385, 394 (4th
Cir. 2014) (citing United States v. Nat'l Fin.
Servs., Inc., 98 F.3d 131, 136 (4th Cir. 1996)). That
is, to determine whether a debt collector has violated the
FDCPA, the Court considers "how the least sophisticated
consumer would interpret the notice from the debt
collector." Dikun v. Stretch, 369 F.Supp.2d
781, 785 (E.D. Va. 2005) (citing Talbott v. GC Servs.
Ltd. P'ship, 53 F.Supp.2d 846 (W.D. Va. 1999)).
support the claim that Charles violated section 1692e, the
complaint incorporates all of the defendants' conduct
alleged in the complaint, but also specifically alleges that
Charles falsely represented himself as the owner of
"Corporate, " a debt collection business different
than AMC, when, in fact, he was an employee of AMC. Compl.
¶¶ 18, 21, 24. Taking the allegations of the
complaint as true, this representation was false and
misleading, and could have created confusion about who was
seeking, or who was entitled to seek, collection of the debt.
See Vitullo v. Mancini, 684 F.Supp.2d 747, 757-58
(E.D. Va. 2010) ("[T]he Fourth Circuit has held that
'the test is the capacity of the statement to mislead;
evidence of actual deception is unnecessary.'"
(quoting Nat'l Fin. Servs., Inc., 98 F.3d at
139)). In addition, the representation could have affected
how Ms. Bickley chose to respond to AMC or "Corporate,
" the newly-revealed and largely unexplained entity.
See Conteh v. Shamrock Cmty. Ass'n, Inc., 648
F.App'x 377, 379 (4th Cir. May 19, 2016) (per curiam)
(noting that "[a] misstatement that 'would have been
important to the consumer in deciding how to
respond to efforts to collect the debt'" will
sustain a claim under section 1692e (quoting Powell v.
Palisades Acquisition XVI, LLC, 782 F.3d 119, 127 (4th
Cir. 2014))). Accordingly, Count I sufficiently states a
claim against Charles for violation of 15 U.S.C. §
also states a claim against Eve for a violation of 15 U.S.C.
§ 1692e. A principal may be held vicariously liable for
the FDCPA violations of an agent, if the principal
"exercise[d] control over the conduct and activities of
the agent." Nash v. Green Tree Servicing, LLC,943 F.Supp.2d 640, 654 (E.D. Va. 2013) (citing Clark, v.
Capital Credit & Collection Services, Inc., 460 F.3d
1162, 1173 (9th Cir. 2006)). With respect to Eve's
control over Charles, the complaint alleges the following:
Eve, the owner and sole proprietor of AMC, employed Charles,
Compl. ¶¶ 3, 5; Charles contacted Ms. Bickley the
day after Eve began conducting business as AMC, Compl.
¶¶ 9-10; Eve and Charles communicated with each
other regarding Ms. Bickley's debt, Compl. ¶ 16;
and, according to Charles, Eve "instructed him to turn
[Ms. Bickley's] account ...