Johnson v. Eaton, 95-30613

• Decision Date: 11 April 1996
• Docket Number: No. 95-30613,95-30613
• Citation: 80 F.3d 148
• Parties: Ruth E. JOHNSON, Plaintiff-Appellee, v. Gregory M. EATON and Kay White, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 148

80 F.3d 148

Ruth E. JOHNSON, Plaintiff-Appellee, v. Gregory M. EATON and Kay White, Defendants-Appellants.

No. 95-30613.

United States Court of Appeals Fifth Circuit.

April 11, 1996.

Garth Jonathan Ridge, Baton Rouge, LA, for Ruth E. Johnson, plaintiff-appellee.

David C. Sander, David Robert Opperman, Scott Holland Crawford, Crawford and Lewis, Baton Rouge, LA, Robert Elton Arceneaux, Mack E. Barham, Julia C. Symon, Barham & Arceneaux, New Orleans, LA, for defendants-appellants.

Appeal from the United States District Court for the Middle District of Louisiana.

Before KING, DAVIS and BARKSDALE, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

Defendants Eaton and White assert that the district court erred by (1) awarding "additional" damages under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692k, where no actual damages were found, (2) requiring White to pay plaintiff Johnson's attorney's fees and costs even though no damages were assessed against her, (3) awarding an unreasonably high attorney's fee in light of the nominal damages received by Johnson and (4) failing to assess attorney's fees against Johnson because Johnson brought the action in bad faith. We AFFIRM in part, REVERSE in part and REMAND.

I.

Ruth Johnson purchased furniture on credit from Kornmeyer's Furniture Company. When she defaulted on payment, Kornmeyer's enlisted the help of attorney Greg Eaton to collect the remaining principal balance--approximately $3,500. Through his legal assistant, Kay White, Eaton sent a demand letter to Johnson in March 1993. Eaton also sent Johnson a second letter that included a questionnaire and a proposed consent judgment.

On December 16, 1993, Johnson filed a complaint against Eaton and White in district court. She alleged that the two letters violated various provisions of the Fair Debt Collection Practices Act (the "FDCPA"), 15 U.S.C. §§ 1692-1692o. Johnson alleged that the two letters caused her actual damages and injury, including stress, humiliation, extreme mental anguish and suffering, and emotional distress, and that, therefore, Eaton and White were liable for actual and additional damages, as well as attorney's fees and costs under § 1692k(a).

The district court denied a motion for summary judgment filed by Eaton and White on the issue of their status as debt collectors under the FDCPA. The district court granted Johnson's motion for partial summary judgment, finding that Eaton had violated four provisions of the FDCPA and White had violated two provisions, ¹ and reserved the issue of damages for determination by the jury. The pretrial order noted a stipulation by Johnson that she had suffered no actual damages as a result of receiving the demand letter--the only communication to which White was a party.

A jury trial was held on March 8, 1995. The jury returned a verdict finding that the conduct of Eaton was not a legal cause of any actual damage to Johnson. The jury further determined that Johnson was not entitled to an award of additional damages against White, but that she was entitled to additional damages against Eaton in the amount of $125 for each of his violations--a total of $500.

After the verdict, Eaton and White moved for attorney's fees and costs under § 1692k(a)(3), claiming that Johnson brought this action in bad faith and for the purpose of harassment. The district court denied all of defendants' post-trial motions. After reducing the number of hours claimed by Johnson's attorney from 146.3 to 106.3, the district court granted Johnson attorney's fees in the amount of $10,830 and costs in the amount of $556.56, to be assessed against both defendants. Johnson v. Eaton, 884 F.Supp. 1068, 1073 (M.D.La.1995). This appeal followed.

II.

Eaton and White argue first that the court erred by allowing the jury to award "additional" damages under the FDCPA in the absence of a finding that the plaintiff suffered actual damage. We do not decide this issue because neither defendant preserved this issue for appeal by objecting to the jury charge. See Fed.R.Civ.P. 51 ("No party may assign as error the giving or the failure to give an instruction unless that party objects thereto before the jury retires to consider its verdict....").

III.

White next complains that she should not be liable to Johnson for attorney's fees and costs because Johnson won no damages from her. According to White, a judgment without damages is not a "successful" action which would support the award of attorney's fees under the FDCPA. Johnson responds that she won a partial summary judgment stating that White had violated the FDCPA in two instances and that this success entitles her to attorney's fees.

The relevant portion of the FDCPA reads:

Amount of damages

(a) Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of--

(1) any actual damage sustained by such person as a result of such failure;

(2)(A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

....

(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney's fee as determined by the court. 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 (emphasis added).

Johnson demonstrated that White had violated the FDCPA but failed to enforce any liability for actual or additional damages against White. As a result, Johnson does not meet the explicit requirement of § 1692k(a)(3) that she bring a "successful action to enforce the foregoing liability," in order to receive attorney's fees and costs. Johnson's argument that her success in establishing that White violated the FDCPA is enough ignores the plain language of the FDCPA.

Johnson responds by citing cases from other circuits which allowed attorney's fees even though plaintiffs failed to prove actual or additional damages or received only nominal damages. See Emanuel v. American Credit Exchange, 870 F.2d 805, 809 (2d Cir.1989); Graziano v. Harrison, 950 F.2d 107 (3d Cir.1991). In Emanuel, the Second Circuit, noted that the plaintiff had proven no actual damages and was not entitled to any additional damages and then stated "... Emanuel should be awarded costs and attorney's fees; the statute mandates such an award 'in the case of any successful action.' " 870 F.2d at 809. The court found that any plaintiff who proves a violation of the FDCPA is "successful" even if that plaintiff is unable to prevail on his claims for actual and additional damages and fails to prove an essential element of a claim for damages: injury. This approach takes the language of the statute out of context and fails to give any meaning to the limiting phrase "to enforce the foregoing liability."

In Graziano, the Third Circuit found an additional violation of the FDCPA and reversed an award of nominal damages for reconsideration in light of the additional violation. It then noted that the district court had declined to award any attorney's fees and stated "[b]ecause we have determined that Graziano has demonstrated two violations of the Act, rather than the one identified by the district court, we vacate the denial of attorney's fees and remand for reconsideration." In dicta, the court then interpreted the FDCPA as requiring that any debt collector who violates the act is liable for (1) actual damages (2) additional damages and (3) attorney's fees. The court reasoned that the structure of § 1692k(a) suggested that any violation of the Act makes the offender liable for all three of these items. However, the court, by focusing exclusively on the structure of § 1692k(a) failed to give meaning to the language in § 1692k(a)(3) which requires success in enforcing liability for actual or additional damages before a plaintiff may be cast for attorney's fees. A more plausible reading of the FDCPA which accounts for the statute's structure and its language is that the most a plaintiff can win is actual damages, additional damages and attorney's fees and costs. However, this does not mean that every time a violation occurs, a plaintiff will win all three. The language of the statute places explicit conditions on an award of additional damages which must be approved by the court and attorney's fees which are only available where the plaintiff has succeeded in establishing that the defendant is liable for actual and/or additional...