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Omar Wong v. American Credit and Collections

November 27, 2012


The opinion of the court was delivered by: Wolfson, United States District Judge:


Presently before the Court is Plaintiff's motion requesting default judgment and attorney's fees and costs on Plaintiff's Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1962, et seq., claim. For the reasons expressed below, Plaintiff's motions will be granted.


Plaintiff Omar Wong claims that Defendant American Credit and Collections, LLC, violated the Fair Debt Collection Practices Act through its communications with Plaintiff regarding an unpaid debt. (Compl. ¶ 7.) Plaintiff claims that Defendant engaged in debt collection activities from March 2011 until June 2011, continuously calling her*fn1 cellular phone number during this period. Id. at 4. Plaintiff further claims that Defendant sought payment for an alleged debt that he owed to Penn Foster, a school that Plaintiff never attended. Id. at 4-5. Because Plaintiff never attended this school, she sent a letter to the Defendant on March 21, 2011, disputing the alleged debt and asking for verification. Id. at 5. Defendant did not respond to Plaintiff's March 21st letter, but sent another letter to her on April 20, 2011. Id. Defendant's April 20th letter again attempted to collect the Penn Foster debt, but did not provide verification of the alleged debt or acknowledge that Plaintiff had even requested this information. Id. On April 22, 2011, Plaintiff sent a final letter to the Defendant that disputed and sought validation of the alleged debt. (Compl. 5.) Instead of responding to this letter, however, the Defendant reported the debt on the Plaintiff's credit report. Id.

Based on the above factual allegations, Plaintiff filed a complaint on August 1, 2011, and effected service on defendant on October 28, 2011. (Docket No. 1, 3.) Defendant failed to answer or otherwise appear in the action within the time prescribed by the federal rules, and Plaintiff thus requested a Clerk's entry of default pursuant to Fed. R. Civ. P. 55(a). The Clerk entered default against the Defendant on February 16, 2012. On June 15, 2012, Plaintiff filed motions for default judgment, pursuant to Fed. R. Civ. P. 55(b), and for attorney's fees and costs. As of today, Defendant has not responded to nor opposed Plaintiff's motions.


Federal Rule of Civil Procedure 55 governs the entry of default judgment. First, in order to obtain a default judgment pursuant to Fed. R. Civ. P. 55(b)(2), a litigant must obtain an entry of default from the Clerk of the Court pursuant to Fed. R. Civ. P. 55(a). Second, after the clerk of the court enters a default, the Court must then "ascertain 'whether the unchallenged facts constitute a legitimate cause of action.'" Eastern Constr. & Elec., Inc. v. Universe Techs., Inc., No. 10-1238, 2011 U.S. Dist. LEXIS 1600, at *7 (D.N.J. Jan. 6, 2011) (quoting DirecTV, Inc. v. Asher, No. 03-1969, 2006 U.S. Dist. LEXIS 14027, at *1 (D.N.J. Mar. 14, 2006)). "Default judgment is permissible only if the plaintiff's factual allegations establish a right to the requested relief." Id. (citing Berman v. Nationsbank of Del., No. 97-6445, 1998 U.S. Dist. LEXIS 2221, at *1 (E.D. Pa Mar. 2, 1998)). Further, the Court should accept as true the well-pleaded factual allegations of a plaintiff's complaint, but need not accept the party's legal conclusions. Id. (citing Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990)). Third, the Court should consider: (1) whether the defendant has a litigable defense; (2) whether the defendant's delay is a result of his misconduct; and (3) if plaintiff would be prejudiced by the denial of default judgment." Piquante Brands Int'l, Ltd. v. Chloe Foods Corp., Civil Action No. 3:08-cv-4248, 2009 U.S. Dist. LEXIS 50557, 2009 WL 1687484, at *2 (D.N.J. Jun. 16, 2009) (internal quotation marks omitted) (citing Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000)). Some courts further consider the effectiveness of alternative sanctions. See, e.g., National Specialty Ins. Co. v. Papa, No. 11-2798, 2012 U.S. Dist. LEXIS 34047, 2012 WL 868944, *2 (D.N.J. Mar. 14, 2012) (citing Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 73 (3d Cir. 1987)).

In weighing these factors, district courts must remain mindful that, like dismissal with prejudice, default is a sanction of last resort. See Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863, 867 (3d Cir. 1984) ("We reiterate what we have said on numerous occasions: that dismissals with prejudice or defaults are drastic sanctions"). While courts should consider each of the pertinent factors, the meritorious defense factor is a "threshold" inquiry; the absence of a meritorious defense is dispositive. U.S. v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195 (3d Cir.1984). Overall, in considering all the factors, district courts are directed to resolve all doubt in favor of proceeding on the merits. Zawadski de Bueno v. Bueno Castro, 822 F.2d 416, 420 (3d Cir. 1987); $55,518.05 in U.S. Currency, 728 F.2d at 194 ("We require doubtful cases to be resolved in favor of the party moving to set aside the default judgment so that cases may be decided on their merits.") (internal quotation marks omitted). After a court finds an entry of default judgment is appropriate, it should conduct an inquiry in order to determine the amount of damages to be awarded. Id. (citing Bank of Am., N.A. v. Hewitt, No. 07-4536, 2009 U.S. Dist. LEXIS 48695, at *4 (D.N.J. June 9, 2009)).

A. Whether Plaintiff has Stated a Cause of Action

The FDCPA is a strict liability statute that was enacted to 'eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). Specifically, the FDCPA prohibits the acquisition of location information by wrongful means, 15 U.S.C. § 1692b, the use of wrongful communications in connection with debt collection, 15 U.S.C. § 1692c, the use ofany conduct the natural consequences of which is to harass, oppress, or abuse any person, 15 U.S.C. § 1692d, any false, deceptive, or misleading representations or means, 15 U.S.C. § 1692e, and any unfair or unconscionable means, 15 U.S.C. § 1692f, to collect or attempt to collect any debt. Pertinent here is 15 U.S.C. § 1692(g)(b), which provides:

. . . the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor is mailed to the consumer by the debt collector.

The FDCPA creates a private cause of action against debt collectors who violate this and any other of its provisions. Brown v. Card Service Center, 464 F.3d 450, 453 (3d Cir. 2006) (citing 15 U.S.C. § 1692k).

In determining whether a communication from a debt collector violates the FDCPA, a court must analyze the debt collector's statements from the perspective of the "least sophisticated debtor," id. at 454; Campuzano-Burgos v. Midland Credit Mgmt., 550 F.3d 294, 301 (3d Cir. 2008), in order to protect "all consumers, the gullible as well as the shrewd." Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008) (quoting Brown, 464 F.3d at 454). Although the "least sophisticated consumer" standard is a low standard, it nonetheless "'prevents liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of reasonableness and ...

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