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Hughs v. Oxford Law, LLC

United States District Court, D. Colorado

September 6, 2018

OXFORD LAW, LLC, Defendant.



         This matter comes before the Court on plaintiff's Motion for Default Judgment [Docket No. 16] and Response to Order to Show Cause [Docket No. 21]. The Court has jurisdiction pursuant to 15 U.S.C. § 1692k(d) and 28 U.S.C. § 1331.

         I. BACKGROUND

         Because of the Clerk of Court's entry of default, Docket No. 12, the allegations in plaintiff's complaint, Docket No. 1, are deemed admitted. Olcott v. Del. Flood Co., 327 F.3d 1115, 1125 (10th Cir. 2003). This case concerns defendant's attempt to collect on a “2006 Drive Financial automobile loan, ” which debt arose out of transactions that were primarily for personal, family, or household purposes. Docket No. 1 at 3, ¶ 12. Beginning in April 2014, defendant repeatedly called plaintiff seeking payment of the alleged debt. Id. ¶ 14. Plaintiff alleges that the debt is barred by Colorado's six-year statute of limitations for actions based upon the rights set forth in an instrument securing the repayment of a loan. Id. at 3, ¶ 13; see also Colo. Rev. Stat. § 13-80- 103.5(1)(a). Additionally, defendant failed to timely inform plaintiff that the debt would be assumed to be valid unless disputed within thirty days, that defendant would obtain verification of the debt if plaintiff notified the collector in writing that he disputed the debt, or that defendant would provide plaintiff with the name and address of the company to which plaintiff originally owed the debt if plaintiff notified defendant within thirty days. Id. at 4, ¶ 19.

         Plaintiff brings four claims for relief under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. Plaintiff's first three claims each rely on the allegation that the debt at issue was barred by the applicable statute of limitations. See Docket No. 1 at 4-6. Plaintiff's fourth claim alleges that defendant failed to provide the required notice within five days of defendant's initial communication with plaintiff, in violation of 15 U.S.C. § 1692g(a). Id. at 6-7, ¶ 26.[1]

         On July 27, 2016, the Court granted plaintiff's motion for default judgment as to his fourth claim for relief, finding that plaintiff's complaint sufficiently alleged a violation of the FDCPA. See Docket No. 19 at 5. In contrast, the Court found that default judgment was not appropriate on plaintiff's remaining claims, all of which depended on a finding that plaintiff's debt was barred by a six-year statute of limitations, because plaintiff had failed to establish that his cause of action accrued before April 2008. Id. at 6. Because the Court granted plaintiff's request for default judgment only in part, it deferred resolution of plaintiff's statutory damages and attorney's fees until such time as all of plaintiff's claims had been resolved. Id. at 7-8.

         Following entry of the Court's order, plaintiff took no action in the case for over a year. On November 29, 2017, the Court directed plaintiff to show cause why the case should not be dismissed for failure to prosecute. Docket No. 20. On December 18, 2017, plaintiff filed a response to the Court's show cause order. Docket No. 21. Plaintiff requests that the case not be dismissed and provides additional information regarding the accrual dates of his first, second, and third claims for relief. See id.

         II. ANALYSIS

         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 alteration marks omitted). Thus, even though modern rules of pleading are somewhat forgiving, “a complaint still must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory.” Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (quotation and citation omitted).

         Plaintiff seeks default judgment on claims brought under the FDCPA. To establish a claim under the FDCPA, a plaintiff must show that (1) he is a “consumer” within the meaning of 15 U.S.C. § 1692a(3), [2] (2) his debt arises out of a transaction entered into primarily for personal, family, or household purposes, 15 U.S.C. § 1692a(5), (3) defendant is a “debt collector” within the meaning of 15 U.S.C. § 1692a(6), [3] and (4) defendant, through its acts or omissions, violated a provision of the FDCPA. See Nikkel v. Wakefield & Assoc., Inc., No. 10-cv-02411-PAB-CBS, 2012 WL 5571058 at *10 (D. Colo. Nov. 15, 2012). As this Court found in its earlier order, plaintiff has established the first three elements of an FDCPA claim by alleging that he is a consumer who incurred a debut for personal, family, or household purposes, Docket No. 1 at 2-3, ¶¶ 5, 12, and that defendant is a “debt collector” as defined by the FDCPA. Id. at 2, ¶ 8; see also Docket No. 19 at 5. In his first, second, and third claims for relief, plaintiff further alleges that defendant violated §§ 1692d, 1692e, and 1692f of the FDCPA by improperly attempting to collect a time-barred debt. Section 1692d prohibits a debt collector from “engag[ing] in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.” 15 U.S.C. § 1692d. The provision lists, as an example of such conduct, “[c]ausing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.” Id. Section 1692e provides that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt, ” such as a false representation regarding “the character, amount, or legal status of any debt.” 15 U.S.C. § 1692e. Finally, § 1692f prohibits a debt collector from using “unfair or unconscionable means to collect or to attempt to collect any debt.” 15 U.S.C. § 1692f.

         Plaintiff alleges that defendant violated these provisions by repeatedly contacting plaintiff after plaintiff told defendant that he did not intend to pay the time-barred debt, Docket No. 1 at 3-4, ¶¶ 14-15, 17-18, and by attempting to revive the time-barred debt through offers of settlement. Id. at 3, ¶ 16; see also Docket No. 21 at 4-5, ¶¶ 14-17 (summarizing allegations pertinent to remaining claims). Assuming plaintiff's debt was time-barred in 2014, plaintiff's allegations are sufficient to establish violations of §§ 1692d, 1692e, and 1692f. See Mazza v. Verizon Washington DC, Inc., 852 F.Supp.2d 28, 38 (D.D.C. 2012) (finding that plaintiff had stated a claim under § 1692d where he alleged that defendant had (1) made repeated phone calls and written requests for payment after plaintiff had denied owing the money and offered proof of payment, and (2) made plaintiff a “settlement offer” under which defendant agreed to accept payment of half of the “current amount due”); Gilroy v. Ameriquest Mortg. Co., 632 F.Supp.2d 132, 136-137 (D.N.H. 2009) (noting that an intent to harass may be inferred for purposes of § 1692d where “the debt collector continue[s] to call the debtor after the debtor ha[s] asked not to be called and ha[s] repeatedly refused to pay the alleged debt”); Smothers v. Midland Credit Mgmt., Inc., 2016 WL 7485686, at *3-5 (D. Kan. Dec. 29, 2016) (finding that defendant violated § 1692e by attempting to “lure” plaintiff into making a payment on a time-barred debt and by detailing “the benefits of paying stale debt” but not the risks that such payment would revive the statute of limitations); Daugherty v. Convergent Outsourcing, Inc., 836 F.3d 507, 513 (5th Cir. 2016) (holding that a “collection letter seeking payment on a time-barred debt (without disclosing its unenforceability) but offering a ‘settlement' and inviting partial payment (without disclosing the possible pitfalls) could constitute a violation of the FDCPA”).

         The Court previously denied plaintiff's request for default judgment as to these claims because plaintiff had failed to establish that the debt was time-barred under Colo. Rev. Stat. § 13-80-103.5(1)(a). Docket No. 19 at 6-7. The Court noted that, in order for plaintiff to establish that defendant's phone calls began when the debt was already time-barred, he would have to show that defendant's cause of action accrued before April 2008. Id. at 7. In response to the Court's show cause order, plaintiff asserts that his car was repossessed in 2007 after he stopped making payments on the car loan. Docket No. 21-1 at 2, ΒΆΒΆ 5-6. He further alleges that sometime after the ...

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