Vera v. FlexShopper, LLC

Background

Elias Antonio Vera alleged that he fell behind on payments on a consumer loan from FlexShopper, LLC. FlexShopper hired Mark A. Nestor, a Georgia-licensed attorney, to collect the debt. Nestor’s office emailed Vera demanding $577.06. Vera responded that he refused to pay, but defendants sent additional emails on February 25, March 1, and March 3, 2022, stating that “failure to communicate will only result in further collection attempts.” Vera alleged that the emails did not contain notices required by California’s Rosenthal Fair Debt Collection Practices Act (RFDCPA).

Vera asserted claims under sections 1692c, 1692d, and 1692e of the federal Fair Debt Collection Practices Act (FDCPA) against Nestor. He also asserted RFDCPA claims against Nestor and FlexShopper under sections 1788.13(b), 1788.13(j), 1812.700, and 1788.17.

Defendants did not appear or defend the case, and the Clerk entered default. Nestor later objected to the default, partly because he could not locate the case under the incorrect case number. The court directed defendants to file a formal motion to set aside the default if they wished to challenge it, but no such motion or stipulation was filed. Defendants later opposed Vera’s requested relief but did not argue that the default should be set aside or that default judgment should not be entered.

Jurisdiction and service

The court found federal-question jurisdiction over the FDCPA claims and supplemental jurisdiction over the RFDCPA claims. It also found specific personal jurisdiction because defendants directed debt-collection activity at Vera while he was a California resident. The court found that Nestor and FlexShopper had been properly served.

Default judgment and claims

The court applied the factors used to decide whether default judgment is appropriate, including prejudice, the strength of the claims, the sufficiency of the complaint, the amount at stake, the possibility of factual disputes, whether the default resulted from excusable neglect, and the policy favoring decisions on the merits. The court concluded that the factors supported default judgment on some, but not all, claims.

Against Nestor, the court found that Vera adequately pleaded the FDCPA section 1692c claim because Nestor continued communicating about the debt after Vera stated in writing that he refused to pay. The court found the allegations insufficient for the FDCPA section 1692d claim because the three additional emails, without more, did not amount to harassment, oppression, or abuse. The court also found the FDCPA section 1692e claim insufficient because Vera did not adequately allege that Nestor’s communications were false, deceptive, or misleading.

Under the RFDCPA, the court found that Vera adequately alleged that both Nestor and FlexShopper were debt collectors under that law. But it found the allegations insufficient for the section 1788.13(b) claim concerning a false representation that someone is an attorney and the section 1788.13(j) claim concerning a false representation that legal proceedings would be brought. The court explained that the statement about “further collection attempts” did not adequately show either representation.

The court found that Vera adequately pleaded the RFDCPA section 1812.700 claim against Nestor because Nestor, as someone subject to the FDCPA, allegedly failed to provide the required notice in his first email. The claim did not succeed against FlexShopper because the court found FlexShopper was not subject to the FDCPA. The court also found that Vera adequately pleaded the RFDCPA section 1788.17 claim against Nestor, but not against FlexShopper, because section 1788.17 generally requires debt collectors to comply with the FDCPA.

Damages, fees, and costs

The court awarded $500 in FDCPA statutory damages. It found that Nestor’s three emails after Vera’s refusal to pay suggested intentional noncompliance, but that Vera had not shown a broader pattern of violations. The court awarded $100 in RFDCPA statutory damages because the communications provided some basis to infer a knowing or willful violation, but the volume of communications was limited.

Vera requested $8,585 in attorneys’ fees and $767.04 in costs. The court reduced the fee request by $2,411.25 because Vera succeeded on only some claims and did not succeed against FlexShopper, resulting in an attorneys’ fee award of $6,173.75. The court reduced the costs to $602.32 by excluding the cost of serving FlexShopper, against which Vera did not prevail.

Disposition

The court granted Vera’s motion for default judgment, attorneys’ fees, and costs in part. It ordered that judgment be entered on the FDCPA section 1692c claim against Nestor, the RFDCPA section 1812.700 claim against Nestor, and the RFDCPA section 1788.17 claim against Nestor. It awarded $500 in FDCPA statutory damages, $100 in RFDCPA statutory damages, $6,173.75 in reasonable attorneys’ fees, and $602.32 in costs. The order disposed of the motion identified as Docket No. 17.