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Rodriguez v. IC System

United States District Court, W.D. Texas, El Paso Division

May 12, 2017

IC SYSTEM, Defendant



         Presently before the Court are Plaintiff Salvador Rodriguez's ("Plaintiff) "Motion to Voluntarily Dismiss His Complaint Pursuant to F.R.C.P. 41(a)(2)" (ECF No. 23) ("Motion to Dismiss") and "Memorandum of Law/Brief in Support of His Motion to Voluntarily Dismiss His Complaint Pursuant to F.R.C.P. 41(a)(2)" (ECF No. 23-6) ("Brief in Support of Motion to Dismiss") filed on March 7, 2017. Plaintiff brought this lawsuit alleging that Defendant IC System[1] ("Defendant") violated the Fair Debt Collection Practices Act ("FDCPA"). In his Motion to Dismiss, Plaintiff requests the Court to dismiss this case with prejudice, each side bearing its own costs and fees. Mot. to Dismiss at 1, ECF No. 23.

         Plaintiff filed the Motion to Dismiss shortly after Defendant filed its "Motion for Summary Judgment" (ECF No. 19) on February 21, which is also pending. Defendant filed a "Response to Plaintiffs Motion to Voluntarily Dismiss His Complaint" (ECF No. 26) ("Response to Motion to Dismiss"); therein, Defendant requests the Court to deny Plaintiffs Motion to Dismiss, grant its Motion for Summary Judgment, and allow it to seek its costs and expenses. Resp. to Mot. to Dismiss at 12. Plaintiff followed by filing a "Reply in Support of His Motion to Voluntarily Dismiss His Complaint Pursuant to F.R.C.P. 41(a)(2)" (ECF No. 29) ("Reply in Support of Motion to Dismiss"). For the reasons that follow, the Court GRANTS IN PART and DENIES IN PART Plaintiffs Motion to Dismiss, and consequently, DENIES AS MOOT Defendant's Motion for Summary Judgment.

         I. DISCUSSION

         Federal Rule of Civil Procedure 41(a)(2) provides, in relevant part, that after a defendant files an answer or a motion for summary judgment "an action may be dismissed at the plaintiffs request only by court order, on terms that the court considers proper. ... Unless the order states otherwise, a dismissal under this paragraph (2) is without prejudice." Fed.R.Civ.P. 41(a)(2). The purpose of authorizing the court to condition a voluntary dismissal on proper terms is "to prevent unfair prejudice to the other side in the case." In re FEMA Trailer Formaldahyde Prod. Liab. Litig., 628 F.3d 157, 162 (5th Cir. 2010). "Voluntary dismissal under Rule 41(a)(2) is a matter within the sound discretion of the district court." Templeton v. Nedlloyd Lines, 901 F.2d 1273, 1274 (5th Cir. 1990).

         Courts have taken different approaches depending on whether the voluntary dismissal is sought with or without prejudice. Motions for voluntary dismissal without prejudice "should be freely granted unless the non-moving party will suffer some plain legal prejudice other than the mere prospect of a second lawsuit." Elbaor v. Tripath Imaging, Inc., 279 F.3d 314, 317 (5th Cir. 2002); see also, e.g., United States ex rel. McLain v. Fluor Enters., Inc., No. 06-11229, 2016 WL 1031324, at *3 (E.D. La. Mar. 15, 2016) ("[M]any courts have taken the position that dismissals without prejudice generally should be granted by the district court if no prejudicial effects would result for the opposing party."). "Typical examples of such prejudice occur when a party proposes to dismiss the case at a late stage of pretrial proceedings, or seeks to avoid an imminent adverse ruling, or may on refiling deprive the defendant of a limitations defense." In re FEMA Trailer Formaldahyde Prod. Liab. Litig, 628 F.3d at 162-63. Moreover, where a dismissal without prejudice would have caused plain legal prejudice, it is within the discretion of the district court to either deny the motion outright or grant the motion and attach conditions that cure the prejudice. Elbaor, 279 F.3d at 317-18; see also Harris v. Devon Energy Prod. Co., L.P., 500 F.App'x 267, 269 (5th Cir. 2012) (finding plain legal prejudice, where the dismissal without prejudice of the suit was intended to avoid an imminent adverse result on summary judgment, and "modify[ing] the district court's judgment to dismiss the suit with prejudice").

         However, where a plaintiff seeks dismissal with prejudice, courts generally take a different position. In re Upd Glob. Res., Inc., Nos. H-15-2488, H-15-2717, 2016 WL 3964362, at *23 (S.D. Tex. July 21, 2016); see also Schwarz v. Folloder, 767 F.2d 125, 129 (5th Cir. 1985) ("The situation is different in the case of a dismissal with prejudice."). "Where ... a plaintiffs Rule 41(a)(2) motion 'specifically request[s] dismissal with prejudice, it has been held that the district court must grant that request."' United States ex rel McLain, 2016 WL 1031324, at *3 (emphasis and alternation in original) (quoting 9 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2367 (3d ed. 2008)); see also Degussa Admixtures, Inc. v. Burnett, 471 F.Supp.2d 848, 851 (W.D. Mich. 2007) ("It generally is considered an abuse of discretion for a court to deny a plaintiffs request for voluntary dismissal with prejudice." (citing Smoot v. Fox, 340 F.2d 301, 303 (6th Cir. 1964), cited with approval in Schwarz, 767 F.2d at 129 & n.5)). This is because "no matter when a dismissal with prejudice is granted, it does not harm the defendant: The defendant receives all that he would have received had the case been completed." Schwarz, 767 F.2d at 129.

         Here, Plaintiff moves for dismissal with prejudice. Plaintiff states that while there is a reasonable legal argument that Defendant violated the FDCPA, given that district courts are divided on the issue of whether a particular pattern of calls evidences intent to harass, the potential recovery, and the difficulty of winning at trial, Plaintiff decided not to pursue these claims. Br. in Supp. of Mot. to Dismiss at 2, ECF No. 23-6; Reply in Supp. of Mot. to Dismiss at 5-6, ECF No. 29. He further argues that dismissal with prejudice will terminate his FDCPA claims permanently, and therefore, it will not cause "plain legal prejudice" to defendant. Reply in Supp. of Mot. to Dismiss at 3.

         Defendant counters that it has incurred costs and fees in defending the case and would be prejudiced if dismissal is granted. Resp. to Mot. to Dismiss at 5-6. Specifically, it claims that it has colorable "bad faith" claims 15 U.S.C. § 1692k(a)(3), the FDCPA's fee-shifting provision, and further under 28 U.S.C. § 1927. Id. at 6. It argues that "it would not be able to assert [these claims] if the voluntary dismissal is granted." Id. In the following, the Court addresses each of these claims in turn, and finds Defendant's claims unavailing.

         1. Defendant's Claims for Fees and Costs under 15 U.S.C. § 1692k(a)(3)

         Section 1692k(a)(3) provides, in relevant part: "On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs." 15 U.S.C. § 1692k(a)(3) (emphasis added). Thus, in order to receive an award of attorney's fees, a "prevailing defendant must show affirmatively that the plaintiff brought the FDCPA claim in bad faith and for the purposes of harassment." Perry v. Stewart Title Co., 756 F.2d 1197, 1211 (5th Cir.), modified on other grounds, 761 F.2d 237 (5th Cir. 1985). The terms "bad faith" and "harassment" connote "more than simply bad judgment or negligence"; they imply "the conscious doing of a wrong because of a dishonest purpose or moral obliquity." Cunningham v. Credit Mgmt., L.P., No. 3:09-CV-1497-G, 2010 WL 3791049, at *2 (N.D. Tex. Sept. 27, 2010) (internal quotation marks and citation omitted); Grant v. Barro, No. 07-194-JJB-DLD, 2007 WL 3244986, at *1 (M.D. La. Nov. 1, 2007) (same). The Court's authority to award attorney's fees and costs under § 1692k is discretionary. See Thompson v. S &S Recovery, Inc., No. 1:12CV77-LG-JMR, 2013 WL 5278022, at *3 (S.D.Miss. Sept. 18, 2013).

         Plaintiff states that he brought this case in good faith based on his personal knowledge of the calls he received and on the pattern of repeated calls over a period of months to his telephone, which continued after he told Defendant to stop. Mot. to Dismiss at 1-2. Plaintiff brought this lawsuit on June 3, 2016, alleging that Defendant violated § 1692d, [2] § 1692d(5), [3] and § 16291[4] of the FDCPA "[w]ithin the one year period preceding the filing of this Complaint, and continuing through August 2015." Compl. ¶¶ 13, 22-26, ECF No. 1; see also First Am. Compl. ¶¶ 22-26, ECF No. 13. In a written discovery response served on September 13, 2016, Plaintiff explained that he received two sets of calls from Defendant: (1) calls to collect a debt from a Jose Rodriguez, a third party whom Plaintiff does not know; and (2) calls to collect a separate debt from Plaintiff, asking for him by name, Salvador Rodriguez. Def.'s Exs.[5] at 50, ECF No. 19-2. At the time, Plaintiffs debt was in the amount of $401, which he owed to AT&T for Internet and phone services. Id. at 9, 30. Prior to bringing this lawsuit, on November 19, 2015, Plaintiff called Defendant to settle, and did settle, that debt by making a payment of $300. Id. at 3-6, 9, 33. Plaintiffs Complaint, reasonably read, alleges facts regarding the two sets of calls. Compl. ¶¶ 11-12 (calls regarding Plaintiffs own debt); id. ¶¶ 14-16 (calls regarding the third-party debt). However, Count I (asserting violations of §§ 1692d and 1692d(5)) and Count II (asserting violations of § 1692f)-the only claims stated in the Complaint-are premised on the third-party calls only. Id. ¶¶ 22-26.

         Plaintiffs case, however, began to unravel during discovery. On August 9, 2016, Defendant served its Initial disclosures, as part of which it produced its "account history" regarding Plaintiffs debt; the "account history" included a log of the calls Defendant made to Plaintiff regarding that debt. Mot. to Dismiss, Ex. B, ECF No. 23-3. The log shows that Defendant made several calls to Plaintiff at three different phone numbers, including one for his cell phone, between July and August 2015. Id. Critically, at his deposition taken on October 12, 2016, Plaintiff testified that he received calls seeking to collect the third-party debt, but that these calls took place earlier than alleged in his Complaint:

Q. Okay. So, you said besides the call that we went over with I.C. System, you state that they still called you on this ...

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