Tallon v. Lloyd & McDaniel

• Decision Date: 20 July 2007
• Docket Number: Civil Action No. 3:06CV-314-H.
• Citation: 497 F.Supp.2d 847
• Court: U.S. District Court — Western District of Kentucky
• Parties: Larry TALLON, Plaintiff v. LLOYD & McDANIEL et al., Defendants.

497 F.Supp.2d 847

Larry TALLON, Plaintiff v. LLOYD & McDANIEL et al., Defendants.

Civil Action No. 3:06CV-314-H.

United States District Court, W.D. Kentucky, Louisville Division.

July 20, 2007.

Ellen G. Friedman, Louisville, KY, Stephen R. Felson, Cincinnati, OH, Steven C. Shane, Bellevue, KY, for Plaintiff.

Mark S. Fenzel, Middleton Reutlinger, Louisville, KY, for Defendants.

Rebecca Grady Jennings, Middleton Reutlinger, Louisville, KY, for Plaintiff/Defendants.

MEMORANDUM OPINION

HEYBURN, Chief Judge.

Defendants Richard Alphin, Drayer Bott, and Lloyd & McDaniel (collectively "Defendants") attempted to collect a credit card debt from Plaintiff, Larry Talon. Tallon alleges that in doing so, they violated the Fair Debt Collection Practices Act ("FDCPA") and the Kentucky Consumer Protection Act ("KCPA"), and filed this suit on behalf of himself and others similarly situated.

Defendants have moved for summary judgment based upon a Rule 68 offer of judgment which they contend satisfies all Tallon's claims and potential damages. These circumstances raise some unusual procedural issues concerning the ability of a defendant to end litigation by offering judgment. For the reasons explained below, the Court finds that Defendants may do so here by an appropriate offer of judgment.

I.

Tallon owed an outstanding credit card debt of $8,895.15. Black Acre Enterprises LLC purchased that debt from Direct Merchants Bank, which had issued Plaintiffs credit card. As counsel for Black Acre Enterprises, Defendants sent an initial collection letter to Plaintiff. After several more attempts to collect the debt, Defendant Richard Alphin filed suit in state court, eventually resulting in a judgment against Talon. On August 26, 2005, Defendant Bott swore an affidavit of nonwage garnishment for twelve financial institutions known to be in close proximity to debtor's residence. Defendants state that they had a "good faith belief' that these banks were indebted to the Plaintiff, "as it is common practice for individuals to bank at institutions in close proximity to their residence." Defendants apparently had no other information to lead them to believe that Plaintiff banked at any of these twelve banks in particular. Each attempted garnishment cost the Defendants five dollars in fees and postage, for a total of sixty dollars. Plaintiff characterizes these attempted garnishments as "blind garnishments."

Only one bank — Fifth Third Bank — responded to the Defendants that Talon had an account with that institution, and Fifth Third promptly garnished those funds. Tallon had $235.19 in his Fifth Third account, but stated that those funds were exempt from garnishment as they were Social Security benefits. After some proceedings in state court, those funds were returned to Talon. Their brief garnishment is not at dispute here.

Tallon filed this suit on June 23, 2006, on behalf of himself and a class of similarly situated individuals. He claims that the "blind garnishments" that Defendants conducted violate the FDCPA and the KCPA. No motion for class certification has been filed to date. Though Defendants have denied violating these statutes, on March 12, 2007, they made a Rule 68 offer of judgment to Talon. Under the FDCPA, individual damages are limited to actual damages, "additional damages" capped at $1000, and reasonable attorneys' fees and costs. See 15 U.S.C. § 1692k(a). Defendants offered Tallon reasonable attorneys' fees and costs and $1,055, the latter of which they say constitutes the maximum permissible "additional damages," plus the actual cost incurred by the "blind garnishments" (eleven unsuccessful "blind garnishments" at five dollars per attempt). Tallon did not accept or deny their offer within the ten-day period prescribed by Rule 68, and thus that offer is deemed withdrawn.

Defendants have now filed this motion for summary judgment, claiming (1) that Tallon's claims under the FDCPA are moot because he has no damages beyond those enumerated in the Rule 68 offer of judgment; (2) that Tallon lacks standing to make his claims under the FDCPA because he lacks actual damages; and (3) that Tallon lacks standing to make his claims under the KCPA. Tallon responds that the offer of judgment does not moot his claims because (1) the class action claims are unaffected, (2) it does not resolve his claims for emotional distress, and (3) he can still maintain an action under the KCPA. The Court will address Defendants' first and third arguments in sequence and Tallon's responses.

II.

Summary judgment should be granted by the Court where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "The central issue is `whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Barnes v. Kerr Corp., 418 F.3d 583, 588 (6th Cir.2005) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). "A dispute over a material fact cannot be `genuine' unless a reasonable jury could return a verdict for the nonmoving party." R.S.W.W., Inc. v. City of Keego Harbor, 397 F.3d 427, 433 (6th Cir.2005) (internal citation omitted).

III.

The FDCPA strictly regulates the damages recoverable under the statute as follows:

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

(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

(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.

15 U.S.C. § 1692k(a). "Actual damages" can include damages for emotional distress as well as out-of-pocket expenses. See, e.g., Chiverton v. Federal Financial Group, Inc., 399 F.Supp.2d 96 (D.Conn. 2005) ("Damages for emotional distress caused by defendant's FDCPA violations are recoverable as a part of actual damages under the FDCPA").

Therefore, this Court must first determine whether the offer of judgment does actually resolve all Tallon's potential claims.

A.

At this time, Tallon has no out-of-pocket damages due to the collection efforts of Defendant. Assuming, arguendo, that Tallon eventually did pay back his credit card debt plus the costs of the "blind garnishments," his maximum financial damage would be fifty-five dollars (the cost of the eleven unsuccessful "blind garnishments"), plus the statutory maximum of $1,000 in "additional damages." Indeed, Tallon concedes that he was adequately compensated by the offer of judgment for these fees and "additional damages."

Tallon argues, however, that he also suffered emotional damages as a result of the "blind garnishments." His only evidence is an affidavit stating that the experience was "extremely stressful, embarrassing, and humiliating for him" and that "as a result of such embarrassment and humiliation he has been and remains anxious which has further resulted, from time to time, in a loss of sleep and appetite." This Court has recently reviewed the evidence required to prove emotional damages under the FDCPA:

There is a strict standard for a finding of emotional damage "because they are so easy to manufacture." Sarver v. Experian Info. Solutions, 390 F.3d 969, 971 (7th Cir.2004) (quoting Aiello v. Providian Fin. Corp., 239 F.3d 876, 880 (7th Cir.2001)). When the injured party's own testimony is the only proof of emotional damages, he must explain the circumstances of his injury in reasonable detail and cannot simply rely on conclusory statements. Bach v. First Union Nat'l Bank, 149 Fed.Appx. 354, 361-62 (6th Cir.2005) (citing Sarver, 390 F.3d at 971). Plaintiff must produce actual evidence of distress and injury, not merely conclusory statements about it.

Breed v. Nationwide Ins. Co., No. 05-547, 2007 WL 1231558, at *3 (W.D.Ky. April 24, 2007).

Tallon's affidavit, standing alone, presents the very type of "conclusory statements" that are deemed an insufficient basis to recover emotional damages under the FDCPA and this Court so finds.¹ Therefore, Tallon's maximum recovery for "actual damages" under section 1692k(a)(1) is fifty-five dollars. It follows that Tallon's maximum recovery under the statute in toto would be $1,055 plus costs and reasonable attorneys' fees.

B.

The question then becomes whether Defendants' offer of judgment in that exact amount forecloses further litigation by mooting Plaintiffs claim. This is a question which has several dimensions. A plaintiff is under no obligation to accept a Rule 68 offer of judgment. Thus, in a situation such as this, the Court could allow Tallon to proceed, even though he could recover no more than $1,055 plus costs and reasonable attorneys' fees, with the understanding that Tallon's counsel could recover no more attorneys' fees than those accumulated up to the offer of judgment. However, this approach disregards the other costs that would accumulate, such as Defendants' own attorneys' fees and the Court's time. More importantly, such an approach disregards the important jurisdictional doctrine of mootness.

Generally, a case is moot when...