United States District Court, S.D. California
January 29, 2004.
Plaintiff, THOMAS E. JENSEN, Defendant
The opinion of the court was delivered by: RUDI BREWSTER, Senior District Judge
ORDER: DENYING DEFENDANT'S
MOTION FOR ATTORNEY FEES
On January 16, 2004, Defendant's Motion for Attorney's Fees came on for
regular hearing. Joshua Swigart, Esq. appeared on behalf of Plaintiff and
John O. Clune, Esq. appeared on behalf of Defendant. Thomas E. Jensen,
Esq. was also present.
Having reviewed the record, heard oral argument and for the reasons
here below, the Court hereby DENIES Plaintiffs Motion for
On August 20, 2003, Heather Lemieux filed a complaint against Thomas E.
Jensen ("Defendant") alleging violations of the Fair Debt Collections
Practices Act, 15 U.S.C. § 1692 et seq., ("FDCPA") and the Rosenthal
Fair Debt Collections Practices Act, C AL. CIV. §§ 1788-1788.32
Defendant is an attorney who provides legal services for Atlantic
Credit, Inc., a debt settlement company.
On August 21, 2003, Defendant wrote a letter to Plaintiff advising
Plaintiff of his intention to file a motion to dismiss pursuant to FRCP
12(b)(6) and a motion for sanctions
pursuant to FRCP 11(b). Defendant asserted in the letter a variety
of reasons why neither the FDCPA nor the RFDCPA was applicable, including
the fact that he was not a "debt collector" as defined by the FDCPA and
On August 22, 2003, Plaintiff filed a first amended complaint, deleting
the cause of action under the RFDCPA.
On August 28, 2003, Defendant apparently telephoned Plaintiff and asked
if he intended to dismiss the action. Plaintiff alleges that during that
telephone conversation, Defendant attempted to pressure him into
dismissing the case stating an intention to file a motion for
Rule 11 sanctions and reporting Plaintiff's behavior to the State Bar of
On September 2, 2003, Defendant faxed a letter to Plaintiff reiterating
his intention to file a motion for Rule 11 sanctions and stating that he
had not received a copy of the amended complaint.
On September 9, 2003, John O. Clune, Esq., informed Plaintiff that he
would be representing Defendant in all further matters. Also on September
9, 2003, Defendant filed a motion to dismiss pursuant to FRCP 12(b)(6).
Defendant's motion included several sworn declarations, including one by
Defendant. The hearing was originally noticed for October 14, 2003.
On September 16, 2003, Plaintiff dismissed the case with prejudice.
On September 19, 2003, Defendant again wrote Plaintiff. In that letter,
Defendant made a series of allegations that Plaintiff had violated
numerous ethical rules.
III. STANDARDS OF LAW
It is well established that under the "American rule" courts ordinarily
will not award the prevailing party attorneys' fees absent statutory
authority to do so. See, e.g., Hensley v. Eckerhart,
461 U.S. 424, 429 (1983). When a statute provides for such fees, it is
termed a "fee-shifting" statute. Under a fee-shifting statute, the court
"must calculate awards for attorneys' fees using the `lodestar' method,"
Ferland v. Conrad Credit Corp., 244 F.3d 1145,
1149 n. 4 (9th Cir. 2001).
Plaintiff argues that he is entitled to attorney's fees pursuant to
section 1692k(a)(3) of the Fair Debt Collection Act ("FDCPA").
15 U.S.C. § 1692, et seq. Section 1692k(a)(3) provides, in pertinent part,
. . . [o]n a finding by the court that an
action under this section was brought in bad faith
and for the purpose of harassment, the court may
award to the defendant attorney's fees reasonable
in relation to the work expended and costs.
Accordingly, for the Court to award Defendant attorney's fees, the
Court must find that the action was brought "in bad faith" and "for the
purpose of harassment."
First, Defendant offers as evidence the fact that Plaintiff did not
name Atlantic Credit, Inc. as a co-defendant, "[notwithstanding] the
obvious agency relationship inferred from assignment of a debt for
collection." Def's Mem. of P&A, at 1, 4. Defendant argues that this
fact demonstrates Plaintiffs attorney was not interested in obtaining
"full relief for his client, but merely to impose economic harm upon
Defendant." Id. at 4. This fact, however, is without
significance for the simple reason that Plaintiff is under no obligation
to name a principal as a co-defendant in a suit against an agent. This is
especially true in the present case where the suit is brought under a
statute that applies only to the debt collector and not the creditor, the
suit is for a relatively small monetary amount, and where the Defendant
is a solvent attorney who likely has sufficient assets to cover an
adverse judgment. Consequently, a negative inference cannot reasonably be
drawn from Plaintiffs failure to name Atlantic Credit as a co-defendant
in this case.
Second, Defendant alleges that Plaintiff filed suit without any prior
investigation or research as required under FRCP Rule 11. In support,
Defendant alleges Plaintiff made no allegation in the complaint that
Defendant "regularly engaged" in debt collection, arguing that the FDCPA
clearly defines a debt collector as one who regularly engages in the
collection of debts. Def's Reply, at 1. Also in support, Defendant cites
the fact that Plaintiff did not amend the federal cause of action after
receiving Defendant's letter of August 21, 2003, explaining
to Plaintiff that Defendant was not a debt collector under the
statutory definition. Def's Mem. of P&A, at 2. Further in support,
Defendant points to the fact that Civil Code § 1788.2(c) of the
RFDCPA (the state version of the FDCPA) specifically provides that the
term debt collector "does not include an attorney or counselor at law."
Def's Reply, at 4, 8.
Defendant's claim that Plaintiff did not allege that Defendant was
regularly engaged in the collection of debts is incorrect. Plaintiff
alleged that Defendant is "a `debt collector' as that term is defined by
15 U.S.C. § 1692 a(6)." Complaint at ¶ 6. However, it is true
that Plaintiff pled no evidence in support of the allegation. Plaintiff
believed that through subsequent discovery, it could be shown that
Defendant was "regularly engaged" in the collection debts. Id.
It is difficult to imagine how Plaintiff could have determined whether
Defendant was regularly engaged in debt collection without filing suit.
The only two entities that would have such information would be Atlantic
Credit and the Defendant.
Defendant's argument that Plaintiffs failure to amend the federal cause
of action after receiving Defendant's August 21, 2003 letter supports a
finding of bad faith and purposeful harassment is unpersuasive. Plaintiff
is under no obligation to accept Defendant's letter as true. As opposing
party in a lawsuit, Plaintiff had every right to expect that Defendant
would be protective in his statements. Plaintiffs position was that
Atlantic Credit was an organization that took advantage of persons in
financial difficulties and "engaged in questionable business practices
with many unsatisfied clients." Pl's Opposition, at 5. Plaintiffs theory
of the case was that when a client was unsatisfied and made a demand for
a refund, Defendant then tried to collect the debt allegedly owed to
Atlantic Credit. Id. Notably, after Plaintiff received
Defendant's 12(b)(6) motion with an attached sworn affidavit by
Defendant stating that Defendant was not regularly engaged in the
collection of debts, Plaintiff dismissed the suit.
Defendant argues that Plaintiff must not have done any investigation or
research in bringing the state cause of action because its very terms
exclude attorneys. Plaintiff asserts that § 6077.5 of the California
Business and Professions Code removes the exclusion for attorneys under
the state statute. Pl's Opp, at 4. Plaintiff is incorrect. Section 6077.5
in part, "[a]n attorney . . . employed primarily to assist in
the collection of a consumer debt owed to another," as defined in the
RFDCPA, "shall comply with all of the following: (a) The obligations
imposed on debt collectors pursuant to" the RFDCPA. While Defendant is
correct that Plaintiff should have brought suit under Section 6077.5 of
the California Business and Professional Code and not directly under the
RFDCPA, the Court is not overly persuaded that Plaintiff did not conduct
any investigation prior to bringing suit or that Plaintiff acted in bad
faith and for purposes of harassment. Although Plaintiff brought suit
under the wrong statutory section, it does not follow that Plaintiffs
suit was brought for an improper purpose. At some point, Defendant could
have pointed out Plaintiff's deficiency and Plaintiff could have amended
the complaint to state the proper statutory section.
While there are certainly inferences that can be made to support
Defendant's assertion that Plaintiff acted in bad faith, they are not
compelling. More importantly, even if the Court were to accept all of
Defendant's arguments as true, the Court would still be unconvinced that
Plaintiff acted "for purposes of harassment." Defendant does not provide
sufficient evidence of bad faith and purposeful harassment to support an
award of attorney's fees. Consequently, Defendant's Motion for Attorney's
Fees is DENIED.
IT IS SO ORDERED.
© 1992-2004 VersusLaw Inc.