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Hakob Ayvazian, An Individual v. the Moore Law Group

June 26, 2012

HAKOB AYVAZIAN, AN INDIVIDUAL, PLAINTIFFS,
v.
THE MOORE LAW GROUP, A CALIFORNIA COMPANY; NELSON & KENNARD, A CALIFORNIA PROFESSIONAL COMPANY; ENCORE RECEIVABLE MANAGEMENT, INC., A KANSAS CORPORATION; REDLINE RECOVERY SERVICES, LLC, A NEW YORK LIMITED LIABILITY COMPANY; ASSET ACCEPTANCE, LLC, A DELAWARE LIMITED LIABILITY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Otis D. Wright, II United States District Judge

ORDER GRANTING SANCTIONS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE RULE 11 [23]

I.INTRODUCTION

Before the Court is Defendant The Moore Law Group's ("TMLG") Motion for Sanctions against Plaintiff Hakob Ayvazian pursuant to Federal Rule of Civil Procedure 11. (ECF No. 23.) For the reasons discussed below, TMLG's Motion is GRANTED.*fn1

II.BACKGROUND

Plaintiff filed this action on February 28, 2012, claiming TMLG (and myriad other Defendants) violated the Fair Credit Reporting Act ("FCRA"), the Fair Debt Collection Practices Act ("FDCPA"), California's Rosenthal Fair Debt Collection Practices Act ("Rosenthal Act"), and California's Consumer Credit Reporting Agencies Act ("CCRAA"), and committed the intentional torts of invasion of privacy and defamation-all by allegedly running Plaintiff's credit report without a permissible purpose. But Plaintiff's Complaint pleads no facts supporting these allegations, save for alleging the specific dates Plaintiff alleges TMLG ran Plaintiff's credit report (March 24, 2011, and March 25, 2011). (Compl. 8:21.) Plaintiff then broadly alleges on information and belief that "at some point Defendants must have tried to purchase debts alleged to be owed by Plaintiff, considered purchasing debts alleged to be owed by Plaintiff, or looked into Plaintiff's history as a potential debtor for overdue and unsatisfied account balances to collect on." (Compl. 8:26--9:1.) Plaintiff offers no other facts tied specifically to her or any of the Defendants named in this case.

TMLG, on the other hand, maintains that it ran Plaintiff's credit report only once-on March 25, 2011-in direct relation to collection on Plaintiff's account. (Mot. 6.) TMLG further contends that it initially mailed Plaintiff a demand letter on April 26, 2011, giving Plaintiff notice of the debt and Plaintiff's right to request verification of the debt within 30 days. (Id.)

In light of the factual deficiencies in Plaintiff's Complaint, TMLG contends it served Plaintiff a "safe harbor" letter pursuant to Rule 11(c)(2) on May 11, 2012, which was at least 21 days prior to the date TMLG filed its Motion for Sanctions. (Mot. 2 n.1 & Lazo Decl. ¶ 7.) The letter contained TMLG's proposed Notice of Motion and Motion for Rule 11 Sanctions, the Memorandum of Points and Authorities in support of the Motion, and the declaration of Terri Lazo in support of the Motion.

(Mot. 2 n.1 & Lazo Decl. ¶ 7.) Following Plaintiff's failure to act on TMLG's notice, TMLG filed the instant Motion on June 4, 2012. (ECF No. 23.)

TMLG now seeks sanctions in the amount of $2,750.00 for attorney's fees for the nine hours spent investigating account history notes, preparing the safe harbor letter and drafting the instant Motion, preparing TMLG's concurrently filed motion for summary judgment (ECF No. 14), plus an estimated additional one hour for traveling to and attending the hearing on the Motion. (Lazo Decl. ¶¶ 7--10.) TMLG's Counsel, Terri Lazo's hourly rate is $275.00 per hour. (Lazo Decl. ¶ 8.)

III.LEGAL STANDARD

The Ninth Circuit has held that Rule 11*fn1 is designed to deter the filing of frivolous pleadings. Riverhead Sav. Bank v. Nat'l Mortg.Equity Corp., 893 F.2d 1109, 1115 (9th Cir. 1990). Because Rule 11 "is not intended to chill an attorney's enthusiasm or creativity in pursuing factual or legal theories," Riverhead, 893 F.2d at 1115), courts have interpreted the rule to "prescribe sanctions, including fees, only in the 'exceptional circumstance,' where a claim or motion is patently unmeritorious or frivolous." Riverhead, 893 F.2d at 1115 (quoting Doering v. Union Cnty. Bd. of Chosen Freeholders, 857 F.2d 191, 194 (3rd. Cir. 1988)).

The Ninth Circuit defines a frivolous claim or pleading for Rule 11 purposes as one that is "legally or factually 'baseless' from an objective perspective . . . and made without a reasonable and competent inquiry." Q-Pharma v. Andrew Jergens Co., 360 F.3d 1295, 1299 (Fed. Cir. 2004) (quoting Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002)). Furthermore, in assessing a case for frivolousness, "[t]he key question . . . is whether a complaint states an arguable claim-not whether the pleader is correct in his perception of the law." Riverhead, 893 F.2d at 1115 (quoting Hudson v. Moore Bus. Forms, Inc., 827 F.2d 450, 453 (9th Cir. 1987)).

Sanctions "may be composed of either or both a penalty payable to the court, and/or an award of reasonable attorneys' fees to the opposing party for those fees and other expenses incurred as a direct result of the violation," Truesdell v. S. Cal. Permanente Med. Grp., 209 F.R.D. 169, 175 (C.D. Cal. 2002) (citing Fed. R. Civ. P. 11(c)(2)), provided the amount of such sanctions "is limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated," Fed.R.Civ.P. 11(c)(4).

An award of attorney's fees may only be made "on motion and [if] warranted for effective deterrence." Id. "Whenever the district court imposes sanctions on an attorney, it must . . . afford the attorney notice and an opportunity to be heard." ...


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