Frazier v. American Credit Resolution, Inc.

Background

Joshua M. Frazier alleged that American Credit Resolution, Inc. (ACR) violated the Fair Debt Collection Practices Act (FDCPA) and California’s Rosenthal Fair Debt Collection Practices Act through its efforts to collect a payday-loan debt. ACR sent Frazier two identical text messages stating that his account remained delinquent and identifying ACR as a debt-collection agency. The messages did not disclose that information obtained would be used for debt collection.

Frazier alleged that, when he contacted ACR, the company falsely stated that he had agreed to a payment plan, even though he had not agreed to one. He also alleged that ACR said it could continue contacting him after he demanded that the communications stop. Frazier claimed harm including aggravation, invasion of privacy, and emotional distress.

The parties initially reported that they had reached a settlement. ACR later stopped participating, its counsel withdrew, and the Clerk entered ACR’s default. Frazier then moved for default judgment under Federal Rule of Civil Procedure 55(b)(2). ACR did not oppose the motion.

Jurisdiction, Service, and Default Judgment Standard

The court found subject-matter jurisdiction under the FDCPA and supplemental jurisdiction over the Rosenthal Act claim. It also found personal jurisdiction because ACR contacted Frazier in California about the debt and Frazier’s claims arose from those contacts. The court found that ACR had been properly served with the complaint and summons and had initially appeared in the case.

For default judgment, the court treated well-pleaded factual allegations about liability as admitted, but not legal conclusions or unsupported damages allegations. Applying the seven factors identified in Eitel v. McCool, the court found that each factor favored entering default judgment. In particular, denying judgment could leave Frazier without a remedy, ACR had not challenged the allegations, and ACR’s failure to defend made a decision after a normal adversarial process impracticable.

Liability

The court found that Frazier established ACR’s liability under FDCPA section 1692e. That provision prohibits false, deceptive, or misleading representations or methods used in connection with debt collection. The court concluded that ACR’s communications were connected to debt collection and that Frazier’s allegations established violations based on the missing disclosure, the alleged false statement about a payment plan, and ACR’s statement that it could continue contacting him.

Because the Rosenthal Act generally incorporates the FDCPA’s requirements and remedies, the court also found that the same conduct violated the Rosenthal Act.

The court did not find a violation of FDCPA section 1692f, which prohibits unfair or unconscionable collection methods. It reasoned that Frazier did not specifically explain how ACR violated that provision and did not separately address the section in his motion.

Relief

Frazier requested $1,000 in statutory damages under each statute. The court awarded $400 under the FDCPA and $400 under the Rosenthal Act, for $800 total in statutory damages. It reasoned that Frazier received only two text messages and had only one later communication with ACR, and that the communications did not include threats or intimidation. The court therefore found that the circumstances did not justify the maximum statutory damages.

The court granted $5,731.25 in attorney’s fees after finding counsel’s hourly rates and reported hours reasonable. It also granted $839.70 in costs, consisting of filing, service, mailing, and pro hac vice fees.

Disposition

The court granted Frazier’s motion for default judgment and entered judgment against ACR. The award was $800 in statutory damages, $5,731.25 in attorney’s fees, and $839.70 in costs.