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Alvarado v. Eltman Law P.C.

United States District Court, N.D. Texas, Dallas Division

May 24, 2019

ALEX ALVARADO, Plaintiff,
v.
ELTMAN LAW, P.C., Defendant.

          MEMORANDUM OPINION AND ORDER

         Before the Court is Plaintiff Alex Alvarado's Motion for Default Judgment (Doc. 10), filed January 22, 2019. For the reasons discussed below, the Court DENIES Alvarado's Motion, and declines to award him damages at this time.

         I. BACKGROUND

         This is a Fair Debt Collection Practices Act (FDCPA) suit.[1] On September 13, 2018, Alex Alvarado (Alvarado) filed a complaint against Eltman Law, P.C. (Eltman). Alvarado alleged that Eltman violated the FDCPA when it obtained a state-court default judgment for approximately $2, 400 plus $400 in attorneys' fees through the false, misleading, or deceptive representation to the court that Alvarado was properly served in that lawsuit about a debt owed to Conn's Electronics. Doc. 1, Compl., ¶¶ 23, 27, 29. Specifically, Alvarado says Eltman served notice to Alvarado's prior address and not the address that he resided at the time of service. Id. ¶ 26. Alvarado only became aware of the default judgment regarding his debt when he noticed his wages were garnished by his bank. Id. ¶ 24. He inquired to his bank about the garnishment and learned that the garnishment occurred due to a lawsuit filed by Eltman at some prior date. Id. ¶ 25.

         Alvarado now sues under the FDCPA alleging Eltman used a false, deceptive, or misleading representation to collect the debt in violation of 15 U.S.C. § 1692e.[2] Id. ¶¶ 30-33. Alvarado also sues alleging Eltman's actions violate the Texas Debt Collection Practices Act by making unlawful representations to collect the debt, namely using unfair or unconscionable means to collect a debt. Id. ¶ 34-36 (citing Tex. Fin. Code § 392.303). Alvarado seeks punitive damages,[3] actual damages, statutory damages under 15 U.S.C. § 1692k(a) and Tex. Fin. Code § 392.403(e), costs and attorneys' fees under 15 U.S.C. § 1692k(a)(3) and Tex. Fin. Code § 392.403(b), and any other relief the Court deems just. Id. at 8. The Court notes that Alvarado does not seek to reverse or modify the state-court judgment. Id. ¶ 10. The only injury he identifies as actionable is Eltman's failure to serve him at his proper address.

         On September 14, 2018, Alvarado served Eltman a copy of his Complaint on Amanda Holt who is alleged to be designated by law to accept service of process for Eltman. Doc. 7-1, Return of Summons, 3. To date, Eltman has neither answered nor otherwise made an appearance in this case. Consequently, Alvarado requested the Clerk enter default on January 22, 2019 (Doc. 9), which it did that same day (Doc. 11). On January 22, 2019, Alvarado moved the Court for a default judgment against Eltman (Doc. 10), supported by an affidavit from his attorney (Doc. 12). The Court now considers that Motion.

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 55 provides for the entry of default judgments in federal court. According to the Rule, “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, . . . the clerk must enter the party's default.” Fed.R.Civ.P. 55(a). Once default has been entered, the court may enter a default judgment against the defaulting defendant upon motion of the plaintiff. Fed.R.Civ.P. 55(b).

         That being said, “[d]efault judgments are a drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations.” Sun Bank of Ocala v. Pelican Homestead & Sav. Ass'n, 874 F.2d 274, 276 (5th Cir. 1989). A party is not entitled to a default judgment merely because the defendant is technically in default. Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996). “Rather, a default judgment is generally committed to the discretion of the district court.” United States v. 1998 Freightliner Vin #: 1FUYCZYB3WP886986, 548 F.Supp.2d 381, 384 (W.D. Tex. 2008) (citing Mason v. Lister, 562 F.2d 343, 345 (5th Cir. 1977)).

         In determining whether a default judgment should be entered against a defendant, courts have developed a three-part analysis. See, e.g., 1998 Freightliner Vin #: 1FUYCZYB3WP886986, 548 F.Supp.2d at 384. First, courts consider whether the entry of default judgment is procedurally warranted. See Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998). The factors relevant to this inquiry include: (1) whether material issues of fact exist; (2) whether there has been substantial prejudice; (3) whether the grounds for default are clearly established; (4) whether the default was caused by a good faith mistake or excusable neglect; (5) the harshness of a default judgment; and (6) whether the court would think itself obliged to set aside the default on the defendant's motion. Id.

         Second, courts assess the substantive merits of the plaintiff's claims and determine whether there is a sufficient basis in the pleadings for the judgment. See Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (noting that “default is not treated as an absolute confession by the defendant of his liability and of the plaintiff's right to recover.”). In doing so, the Court is to assume that due to its default, defendant admits all well-pleaded facts in the plaintiff's complaint. Id. However, “defendant is not held to admit facts that are not-well pleaded or to admit conclusions of law.” Id.

         Third, courts determine what form of relief, if any, the plaintiff should receive. Ins. Co. of the W. v. H & G Contractors, Inc., No. C-10-390, 2011 WL 4738197, at *4 (S.D. Tex. Oct. 5, 2011) (“A defendant's default concedes the truth of the allegations of the Complaint concerning the defendant's liability, but not damages.” (citing Jackson v. FIE Corp., 302 F.3d 515, 524-25 (5th Cir. 2002))). Normally damages are not to be awarded without a hearing or a demonstration by detailed affidavits establishing the necessary facts. See United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979). However, if the amount of damages can be determined with mathematical calculation by reference to the pleadings and supporting documents, a hearing is unnecessary. James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993).

         III. ANALYSIS

         In this case, after reviewing Alvarado's Motion in light of the six Lindsey factors, the Court concludes that a default judgment is procedurally warranted, but unsupported by sufficient factual basis in Alvarado's Complaint. Additionally, even if default were supported by sufficient factual basis, the Court cannot determine the amount of damages with mathematical calculation by reference to information in the pleadings and supporting documents to award damages. See James, 6 F.3d at 310.

         A. Whether An Entry of Default Judgment Is ...


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