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Clarke v. National Payment Relief, LLC

United States District Court, District of Colorado

January 2, 2015




This matter comes before the Court on plaintiffs’ Motion for Default Judgment against defendant National Payment Relief, LLC (“National”). [Docket No. 14]. The Court has jurisdiction pursuant to 15 U.S.C. § 1692k(d) and 28 U.S.C. § 1337.


Because of the Clerk of Court’s entry of default, Docket No. 12, the allegations in plaintiffs’ complaint, Docket No. 1, are deemed admitted. Olcott v. Del. Flood Co., 327 F.3d 1115, 1125 (10th Cir. 2003).

Plaintiffs bring a claim for relief for violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq.[1] Though served with the complaint and summons, National did not answer or otherwise respond to plaintiff’s complaint. Accordingly, the Clerk of Court entered default against National on July 22, 2014. Docket No. 12.

In 2005, plaintiffs refinanced their home via two sub-prime mortgages (the “first mortgage” and “second mortgage”). Docket No. 1 at 3, ¶ 17. Plaintiffs became unable to make payments on their mortgages and reached a modification agreement with their mortgage servicer. Id. Under the agreement, plaintiffs made modified payments on the first mortgage and were no longer responsible for making payments on the second mortgage. Id.

In September 2012, the second mortgage was assigned to Partners. Docket No. 1 at 3, ¶ 20. According to plaintiff, both National and Partners (collectively referred to in the complaint as the “Debt Collectors”) then engaged in a “shock-and-awe” campaign to attempt to collect on plaintiffs’ second mortgage. Id. at 5, ¶ 34. This campaign involved a mail notice, phone calls every two to three days, an unannounced personal visit from a private investigator, and a threat of foreclosure on plaintiffs’ home. Id. As part of this campaign, the Debt Collectors discussed the mortgage with plaintiffs’ daughters. Id. ¶ 38. Neither debt collector was registered as a licensed collection agency with the state of Colorado. Id. ¶ 41.

On an unspecified date, National hand-delivered a notice to plaintiffs. Docket No. 1 at 5, ¶ 42; see also Docket No. 1-2. The notice provided that, unless plaintiffs notified National within 15 days, National would assume that plaintiffs’ debt was valid. Docket No. 1-2 at 2. Plaintiffs allege that the individual who hand-delivered the notice was “threatening, rude, oppressive, and abusive” and spoke to plaintiffs’ teenage daughters about plaintiffs’ debt. Docket No. 1 at 6, ¶¶ 46-47. The actions of the debt collector working on behalf of National caused plaintiffs to contact the police and attorney general. Id. ¶ 48.


A. Default Judgment

In order to obtain a judgment by default, a party must follow the two-step process described in Fed.R.Civ.P. 55. First, the party must seek an entry of default from the Clerk of the Court under Rule 55(a). Second, after default has been entered by the Clerk, the party must seek judgment under the strictures of Rule 55(b). See Williams v. Smithson, 1995 WL 365988, at *1 (10th Cir. June 20, 1995) (citing Meehan v. Snow, 652 F.2d 274, 276 (2d Cir. 1981)).

The decision to enter default judgment is “‘committed to the district court’s sound discretion.” Olcott, 327 F.3d at 1124 (citation omitted). In exercising that discretion, the Court considers that “[s]trong policies favor resolution of disputes on their merits.” Ruplinger v. Rains, 946 F.2d 731, 732 (10th Cir. 1991) (quotation and citations omitted). “The default judgment must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party.” Id. It serves to protect plaintiffs against “interminable delay and continued uncertainty as to his rights.” Id. at 733. When “ruling on a motion for default judgment, the court may rely on detailed affidavits or documentary evidence to determine the appropriate sum for the default judgment.” Seme v. E&H Prof’l Sec. Co., Inc., No. 08-cv-01569-RPM-KMT, 2010 WL 1553786, at *11 (D. Colo. Mar. 19, 2010).

A party may not simply sit out the litigation without consequence. See Cessna Fin. Corp. v. Bielenberg Masonry Contracting, Inc., 715 F.2d 1442, 1444-45 (10th Cir. 1983) (“[A] workable system of justice requires that litigants not be free to appear at their pleasure. We therefore must hold parties and their attorneys to a reasonably high standard of diligence in observing the courts’ rules of procedure. The threat of judgment by default serves as an incentive to meet this standard”). One such consequence is that, upon the entry of default against a defendant, the well-pleaded allegations in the complaint are deemed admitted. See Charles Wright, Arthur Miller & Mary Kane, Fed. Prac. & Proc. § 2688 (3d ed. 2010). “Even after default, however, it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law.” Id. at 63. A court need not accept conclusory allegations. Moffett v. Halliburton Energy Servs., Inc. 291 F.3d 1227, 1232 (10th Cir. 2002). Although “[s]pecific facts are not necessary” in order to state a claim, Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)), the well-pleaded facts must “permit the court to infer more than the mere possibility of misconduct.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal quotation and ...

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