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Williams-Lester v. Vision Financial Corp.

United States District Court, E.D. Pennsylvania

February 1, 2017



          Schiller, J.

         Lauren Williams-Lester sued Vision Financial Corporation ("VFC") for contacting her to collect an alleged consumer debt in violation of the Fair Debt Collection Practices Act ("FDCPA"). VFC answered the Complaint through counsel, but the Court subsequently granted a motion by VFC's counsel to withdraw. Despite two orders of the Court, VFC has not appointed new counsel. The Clerk of Court entered VFC's default, and Williams-Lester moved for default judgment. Because Williams-Lester has made out claims for four violations of the FDCPA and because default judgment is proper, the Court will grant the motion and enter judgment against VFC in the amount of $4, 595.50.

         I. BACKGROUND

         A. Factual Allegations

         In her complaint, Williams-Lester alleged that debt collection company VFC contacted her repeatedly to collect a consumer debt that she owed to Comenity Bank. (Compl. ¶¶ 5, 8-9, 12-14, ECF No. 1.) Between December 2014 and April 2015, VFC called her home and cellular phones two to three times per day, on average. (Id. ¶¶ 15-16.) She received some calls before 8:00 a.m. and after 9:00 p.m. (Id. ¶¶ 17-18.) VFC continued to call her home and cell phones even after she told the company to only contact her by mail. (Id. ¶¶ 19-21.) VFC threatened legal action when she did not pay the debt, and Williams-Lester claimed that VFC's failure to actually take legal action indicated that this threat was made solely to force her to make payment. (Id. ¶¶ 22-23.) Finally, she alleged that VFC failed to send her written notification, "within five days of its initial communication with her, of her rights to dispute the debt and/or to request verification of the debt, as well as the name of the original creditor and the amount of the debt." (Id. ¶ 24.) Williams-Lester claimed that VFC's actions were "taken with the intent to annoy and harass" her. (M¶ 25.)

         B. Procedural History

         Williams-Lester sued VFC on December 17, 2015, alleging five violations of the FDCPA, 15 U.S.C. §§ 1692-1692p. Through counsel, VFC filed its answer one day late, admitting that part of its business is debt collection, and that when it operates as a debt collector as defined by the FDCPA, "certain of its activities may be regulated by the FDCPA." (Answer ¶¶9-10, ECF No. 4.) VFC also admitted that it was retained to collect a debt that Williams-Lester owed to Comenity Bank, and that it contacted Williams-Lester between March and May 2015. (Id. ¶¶ 12-13, 15.)

         Two months before the scheduled arbitration hearing, counsel for VFC filed a motion to withdraw as attorney, which the Court granted. The Court postponed the scheduled arbitration hearing and ordered VFC to retain new counsel by July 30, 2016.[1] Arbitration was rescheduled for October 4, 2016, but VFC never retained new counsel or otherwise responded to the Court's Order. On September 8, 2016, the Court ordered VFC to show cause as to why it had not complied with the Court's Order and warned that failure to appoint counsel could result in sanctions. VFC never responded. The Court cancelled the arbitration hearing, and the Clerk of Court entered default on October 12, 2016. Williams-Lester filed for default judgment two months later.

         Because VFC is not represented by counsel, the Clerk of Court mailed paper copies of the order to show cause, the notice canceling the arbitration hearing, and the order entering default to VFC's mailing address, 11960 Westline Industrial Drive, Suite 330, Maryland Heights, Missouri, 63146. The copies have been returned by the U.S. Postal Service as undeliverable.[2] Williams-Lester certified that she served a copy of the motion for default judgment on VFC at the same address. (Mot. Default J., ECF No. 18.)


         Federal Rule of Civil Procedure 55 sets out a two-step process for obtaining a default judgment. First, when a party has "failed to plead or otherwise defend" an action, the Clerk of Court must enter the party's default. Fed.R.Civ.P. 55(a). Failure to "otherwise defend" includes failure to comply with a Court order to "obtain substitute counsel." Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 918 (3d Cir. 1992). Second, upon application by the party not in default, a district court may enter default judgment. Fed.R.Civ.P. 55(b)(2). If the party in default "has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 7 days before the hearing." Id. The court "has discretion to determine whether a hearing is necessary" prior to entry of default judgment. 10A Charles Alan Wright, Arthur R. Miller, et al, Federal Practice and Procedure § 2688 (4th ed. Supp. 2016). The entry of default judgment is likewise left primarily to the discretion of the Court. Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984).

         Before entering default judgment, the court must make two determinations. First, the Court must determine that the facts set forth in the complaint establish a legitimate cause of action, because a party in default does not admit mere conclusions of law. Carroll v. Stettler, Civ. A. No. 10-2262, 2012 WL 3279213, at *2 (E.D. Pa. Aug. 10, 2012); Bricklayers & Allied Craftworkers Local 1 v. WaterControl Servs., Inc., Civ. A. No. 09-3935, 2012 WL 3104437, at *3 (E.D. Pa. July 30, 2012). Second, the Court must determine that default judgment is proper. When a defendant in default has initially filed an answer or responsive pleading, default judgment functions as a sanction. Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1148 (3d Cir. 1990); Jimenez v. Rosenbaum-Cunningham, Inc., Civ. A. No. 07-1066, 2010 WL 1303449, at *3 (E.D. Pa. Mar. 31, 2010). Before entering default judgment as a sanction, the district court must consider the Poulis factors (see infra Part III.B). Knoll v. City of Allentown, 707 F.3d 406, 409 (3d Cir. 2013) (citing Poulis v. State Farm Fire and Casualty Co., 747 F.2d 863, 868 (3d Cir. 1984)); Comdyne I, Inc., 908 F.2d at 1148. A court can enter default judgment even if it lacks sufficient information to evaluate a factor or if not all factors favor the entry of default judgment. Jimenez, 2010 WL 1303449, at *3.


         The Clerk of Court properly entered VFC's default because VFC failed to comply with the Court's order to retain new counsel. Mendelsohn, Drucker, & Assocs., P.C. v. Titan Atlas Mfg., Inc., Civ. A. No. 12-0453, 2013 WL 1842124, at *5 (E.D. Pa. May 2, 2013) ("Because a corporation cannot represent itself pro se in federal court, a corporate defendant's failure to retain counsel after being ordered to do so is a failure to 'otherwise defend' under Rule 55 that justifies a default." (internal citation omitted)). Williams-Lester properly notified VFC of its motion for default judgment, Fed.R.Civ.P. 55(b)(2), and more than a month has passed without a ...

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