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Tourgeman v. Collins Financial Services Inc.

United States District Court, S.D. California

July 15, 2016

COLLINS FINANCIAL SERVICES, INC., d/b/a/ Precision Recovery Analytics, Inc., a Texas corporation; COLLINS FINANCIAL SERVICES USA, INC. d/b/a Precision Recovery Analytics International Inc.; PARAGON WAY, INC., a Texas corporation; NELSON & KENNARD, a California partnership, DELL FINANCIAL SEVICES, L.P., a Delaware limited partnership, Defendants.


          Hon. Cathy Ann Bencivengo United States District Judge.

         The matter before the Court is a class action alleging a violation of the Fair Debt Collection Practices Act (“FDCPA”). Plaintiff David Tourgeman represents the class. The law firm of Nelson & Kennard is the Defendant debt collector. On June 30, 2016, the Court held a hearing on the parties’ motions in limine. At the hearing, the parties disputed whether Plaintiff or the Defendant bears the burden of proof at trial to establish the Defendant’s net worth for the purpose of awarding statutory damages to the class under FDCPA. Having considered the submissions of the parties, [1] the arguments of counsel and the pleadings in this case, the Court finds that it is Plaintiff’s burden, on behalf of the class, to present competent evidence of the Defendant’s current net worth to establish the first element necessary for a determination of class statutory damages. Plaintiff has no competent evidence to offer to establish the proper amount of damages the finder of fact may consider in the award of statutory damages, and therefore cannot prove this necessary element of the class claim. The class claim is therefore DISMISSED.

         I. FDCPA Statutory Damages for a Class Claim

         There are 31 identified members of the certified class in this action, including the Plaintiff. These individuals were each individually served with a complaint prepared and filed by Defendant on behalf of its client Collins Financial Services to collect an alleged debt. The complaint erroneously identified the original creditor as American Investment Bank, N.A., when, in actuality, CIT Online Bank originated the loans at issue in the complaints.

         The Ninth Circuit found this misidentification of the loan originator in the complaint to be a material misrepresentation, subjecting the Defendant to strict liability. See Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109, 1116 (9th Cir. 2014). Consequently, the remaining focus of Plaintiff’s case-in-chief for trial is the presentation of evidence to support the damage award for the named plaintiff and the other 30 class members.[2] In civil cases, the plaintiff generally has the burden of proving damages by a preponderance of the evidence and the award must be based on evidence and not upon speculation, guesswork or conjecture. See e.g., Ninth Circuit Model Civil Jury Instructions §5.1.

         The Plaintiff acknowledges that, individually and on behalf of the class, he is solely seeking statutory damages. There is no claim for actual damages in this case. The award of statutory damages for the class requires two factual determinations by the finder of fact. First, there must be a determination of the potential ceiling for class recovery.

         [A]ny debtor collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of -

[I]n the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A) [i.e., an amount not exceeding $1, 000], and (ii) such amount . . . for other class members, . . ., not to exceed the lesser of $500, 000 or 1 per centum of the net worth of the debt collector.

15 U.S.C. §1692k(a)(2)(B)(emphasis added).

         Second, once the damages ceiling is established, the jury determines the amount to be awarded within that limit based on a non-exhaustive list of factors.

         In determining the amount of liability in any action under subdivision (a), the court shall consider, among other relevant factors -

[I]n any class action . . ., the frequency and persistence of the noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector’s noncompliance was intentional.

Id., §1692k(b)(2).

         The parties dispute which party bears the burden of proving the maximum amount of recovery the jury must consider in assessing class damages. Plaintiff conceded at the motion hearing that there is no evidence upon which he could reasonably assert that Defendant’s net worth exceeds $50 million, therefore the potential amount of damages the class may recover must be something less than $500, 000. Plaintiff, however, can proffer no evidence as to what one percent of the Defendant’s current net worth is. ...

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