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Bickley v. Gregory

United States District Court, E.D. Virginia, Norfolk Division

October 7, 2016

JENNY D. BICKLEY, Plaintiff,
v.
EVE GREGORY, Individually and trading as AMC COLLECTIONS and DEBT RECOVERY, and CHARLES GREGORY, Defendants.

          UNITED STATES MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

          ROBERT J. KRASK, UNITED STATES MAGISTRATE JUDGE

         This 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.

         I. PROCEDURAL HISTORY

         On 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 has expired.

         An 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 appear.[1] Id.

         Plaintiffs 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.

         II. FACTUAL BACKGROUND

         This 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.

         According 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.

         Over a 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.

         On 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.

         On 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 prejudice. Id.

         Ms. 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.

         III. JURISDICTION AND VENUE

         To 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.

         IV. LEGAL STANDARD

         Rule 55 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).

         Although 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).

         V. ANALYSIS OF PLAINTIFF'S CLAIMS

         To 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.

         A. Sufficiency of Allegations in Count I

         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)).

         To 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. § 1692e.

         Count I 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 ...


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