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Frazier v. American Credit Resolution, Inc.

United States District Court, N.D. California

October 21, 2019



          Thomas S. Hixson United States Magistrate Judge.


         Plaintiff Joshua M. Frazier brings this complaint against Defendant American Credit Resolution (“ACR”) alleging that it violated both the Fair Debt Collection Practices Act (“FDCPA”) and the Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”) through its debt collection activities. After the parties initially reached a settlement, ACR stopped participating, its counsel withdrew, and the Clerk entered its default. Frazier now moves for default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). ECF No 45. No opposition has been filed. The Court finds this matter suitable for disposition without oral argument and VACATES the November 7, 2019 hearing. Fed.R.Civ.P. 78(b); Civ. L.R. 7-(1)(b). After carefully reviewing Frazier's motion and controlling authorities, the undersigned GRANTS the motion for the following reasons.


         In November 2017, Frazier obtained a payday loan from Check n' Go. Compl. ¶ 9, ECF No. 1. Due to financial hardship, he fell behind on his scheduled payments. Id. ¶ 10. On December 14, 2018, Frazier received a text message from ACR attempting to collect upon the debt. Id. ¶ 11. He received a second identical text message from ACR on December 17, 2018. Id. ¶ 12. ACR's entire text messages contained the following language: “YOUR ACCOUNT REMAINS DELINQUENT IN OUR OFFICE. PLEASE CALL 844-864-3236 TODAY. THIS IS FROM ACR, A DEBT COLLECTION AGENCY.” Id. ¶ 13. ACR failed to disclose that any information obtained would be used for the purpose of debt collection. Id. ¶ 14. Concerned, Frazier contacted ACR on December 17, 2018 and learned that it was attempting to collect upon the debt. Id. ¶¶ 15-16. ACR represented that Frazier agreed to a payment plan but never fully executed the agreement. Id. ¶ 17. Frazier was confused by ACR's representation because he had not previously communicated with ACR and did not agree to a payment plan with ACR or Check n' Go. Id. ¶ 18. When he demanded ACR stop contacting him, ACR stated it could continue to contact him regardless of his demands. Id. ¶¶ 19-20.

         Frazier filed this case on December 26, 2018, alleging he “has suffered concrete harm due to [ACR's] conduct, including but not limited to, aggravation, invasion of privacy, and emotional distress.” Id. ¶ 23.[1] On April 8, 2019, Frazier filed a Notice of Settlement indication the parties were “in the process of completing the final closing documents and filing the dismissal” and that the process would take no more than 60 days. ECF No. 21. However, on June 25, 2019, ACR's counsel filed a motion to withdraw as counsel on the grounds that ACR breached its contractual obligations and otherwise made it unreasonably difficult for counsel to carry out its representation effectively. ECF No. 26. ACR did not oppose the motion. On August 5, 2019, the Court granted the motion on the condition that counsel continue to serve all papers from the Court and Frazier on ACR for forwarding purposes. ECF No. 35.

         Frazier filed the present motion on September 30, 2019. He seeks statutory damages of $1, 000 under the FDCPA, statutory damages of $1, 000 under the Rosenthal Act, and attorney's fees and costs $6, 560.95. Mot. at 11.


         Federal Rule of Civil Procedure 55(b)(2) permits a court, following default by a defendant, to enter default judgment in a case. “The district court's decision whether to enter default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980).

         At the default judgment stage, the factual allegations of the complaint, except those concerning damages, “together with other competent evidence submitted” are deemed admitted by the non-responding parties. Shanghai Automation Instrument Co. v. Kuei, 194 F.Supp.2d 995, 1000 (N.D. Cal. 2001); see also Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002) (“With respect to the determination of liability and the default judgment itself, the general rule is that well-pled allegations in the complaint regarding liability are deemed true.”). “However, a defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (citation and quotation omitted)). Therefore, “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)); accord DIRECTV, 503 F.3d at 854. Further, the scope of relief is limited by Federal Rule of Civil Procedure 54(c), which states that a “default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.”

         In determining whether default judgment is appropriate, the Ninth Circuit has enumerated the following factors for courts to consider:

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).


         A. Jurisdiction and Service of Process

         In considering whether to enter default judgment, a district court must first determine whether it has jurisdiction over the subject matter and the parties to the case. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). “[T]he district court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction.” McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988) (considering subject matter jurisdiction on a 12(b)(1) motion).

         1. Subject Matter Jurisdiction

         Federal courts are courts of limited jurisdiction and are presumptively without jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A federal court may dismiss an action on its own motion if it finds that it lacks subject matter jurisdiction. Fiedler v. Clark, 714 F.2d 77, 78-79 (9th Cir. 1983); see also Fed. R. Civ. P. 12(h)(3) (“If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”).

         Jurisdiction in this case arises pursuant to § 1692k(d) of the FDCPA, which states that such actions may be brought and heard before “any appropriate United States district court without regard to the amount of controversy.” Additionally, 28 U.S.C. § 1387 grants the Court supplemental jurisdiction over Frazier's Rosenthal Act claim.

         2. Personal Jurisdiction

         a. Basis for Personal Jurisdiction

         To enter default judgment, the Court must have a basis for the exercise of personal jurisdiction over the defendants in default. In re Tuli, 172 F.3d at 712. “Without a proper basis for [personal] jurisdiction, or in the absence of proper service of process, the district court has no power to render any judgment against the defendant's person or property unless the defendant has consented to jurisdiction or waived the lack of process.” S.E.C. v. Ross, 504 F.3d 1130, 1138-39 (9th Cir. 2007). Traditional bases for conferring a court with personal jurisdiction include a defendant's consent to jurisdiction, personal service of the defendant within the forum state, or a defendant's citizenship or domicile in the forum state. J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 880 (2011). Absent one of the traditional bases for jurisdiction, the Due Process Clause requires that the defendant have “certain minimum contacts with the forum ‘such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'” Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945) (citations and quotation marks omitted). The party seeking to invoke jurisdiction has the burden of establishing that jurisdiction is proper. Flynt Distrib. Co. v. Harvey, 734 F.2d 1389, 1392 (9th Cir. 1984). “[M]ere ‘bare bones' assertions of minimum contacts with the forum or legal conclusions unsupported by specific factual allegations will not satisfy a plaintiff's pleading burden.” Swartz v. KPMG LLP, 476 F.3d 756, 766 (9th Cir. 2007).

         According to Frazier's complaint, ACR is a corporation organized under the laws of the state of Georgia with its principal place of business at 270 Carpenter Drive, Suite 575, Sandy Springs, Georgia 30328. Compl. ¶ 6. ACR regularly collects upon consumers located in the state of California. Id. “Personal jurisdiction over a nonresident defendant is tested by a two-part analysis. First, the exercise of jurisdiction must satisfy the requirements of the applicable long-arm statute. Second, the exercise of jurisdiction must comport with federal due process.” Dow Chem. Co. v. Calderon, 422 F.3d 827, 830 (9th Cir. 2005). Where there is no applicable federal statute governing personal jurisdiction, courts apply the law of the state in which the court sits. Fed.R.Civ.P. 4(k)(1)(A); Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998). In California, a court “may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States.” Cal. Civ. Proc. Code § 410.10; Daimler AG v. Bauman, 571 U.S. 117, 125 (2014) (“California's long-arm statute allows the exercise of personal jurisdiction to the full extent permissible under the U.S. Constitution.”). As such, “the jurisdictional analyses under state law and federal due process are the same.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir. 2004).

         The Fourteenth Amendment Due Process Clause requires that an out-of-state defendant have “minimum contacts” with the forum state such that the exercise of jurisdiction “does not offend traditional notions of fair play and substantial justice.” Int'l Shoe, 326 U.S. at 316 (quotation marks omitted). “In judging minimum contacts, a court properly focuses on ‘the relationship among the defendant, the forum, and the litigation.'” Calder v. Jones, 465 U.S. 783, 788 (1984) (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)).

         A court may exercise either general or specific jurisdiction over a nonresident defendant. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984). General jurisdiction exists where a defendant has “substantial” or “continuous and systematic” contacts with the forum. Id. at 415. If general jurisdiction exists, the forum has jurisdiction over the defendant regardless of where the events giving rise to the litigation occurred. Id. Here, there is no indication ...

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