Campbell v. Carruthers (In re Campbell)Campbell v. Carruthers (In re Campbell)
MEMORANDUM DECISION
This аdversary proceeding came before the Court for a damages hearing on May 25, 2016. Plaintiff Angela Campbell alleges that Defendants Dennis Scott Carruth-ers and his law firm have committed multiple violations of the automatic stay and the Fair Debt Collection Practices Act. The Defendants have not answered and the Court has entered default against them. Plaintiff appeared at the damages hearing in person and through her counsel. The Defеndants did not appear. For the reasons set forth below, the Court enters JUDGMENT FOR THE PLAINTIFF.
I. FACTS & PROCEDURAL HISTORY
Plaintiff Angela Campbell (“Campbell”) filed Chapter 13 bankruptcy on November 12, 2015. (Case No. 15-12342, Doc. 1). On her Schedule F, she listed roughly $10,000 in student loan debt owed to the United States Department of Education and Navient, and Navient filed a proof of claim for $10,223.59. (Case No. 15-12342, Doc. 1, Claim 5). Her confirmed plan provides that property of the estate remains so after confirmation, (Doсs. 2 & 21). She is still in bankruptcy.
Angela Campbell, this is Brian Bell at the Attorney’s office Scott Caruthers. Give me a call here we need to speak. Reach me back at 1-800-495-8682. My direct extension hеre is 612 again this is Brian Bell calling from the Attorney’s office Scott Caruthers.
(Ex. 1) (underline and misspellings in original). Campbell testified that when she returned the call Bell informed her that he was an attorney
On January 21, 2016, Carruthers withdrew $50 from Campbell’s bank account. (Ex. 2). Campbell did not have sufficient funds in her account and incurred a $28 overdraft fee as a result. She testified that she incurred аn additional $200 in overdraft fees in the days that followed as a result of Carruthers’s action. Campbell eventually cancelled her debit card on the advice of her attorney.
On February 11, 2016, Bell again called Campbell and left the following voice message on her phone:
Angela Campbell Brian Bell here with the attorney’s office Scott Caruthers give me a call back here at 1-800-495-8682.
(Ex. 3) (grammatical errors and underline in original). Bell also callеd Campbell at her place of employment and demanded to know why he could not debit more money from her account. Campbell told him that she had cancelled her debit card on the advice of her attorney and asked him to leave her alone. According to Campbell, Bell responded “well, I’m not going to leave you alone because you owe me this money.” On February 15, 2016, Carruth-ers debited another $50 from Campbell’s bank account, and Campbell incurred another $28 overdraft fee as a result'. (Ex. 4). Campbell’s bank statement reflects that she was only able to bring her bank account current through the use of a payday loan. (Ex. 4).
Campbell sued Carruthers and his firm for violations of the automatic stay and the Fair Debt Collection Practices Act (“FDCPA”) on February 3, 2016. (Doc. 1).
II. ANALYSIS
The Court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b) and 157(a), and the District Court’s General Order of reference dated April 25,1985.
A. Adjudicatory Power
Campbell’s claim that the automatic stay has been violated is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A). Her FDCPA claim is non-core, but Carruthers was served with the complaint and has not refused consent to this Court’s adjudication of that claim. In Wellness International Network, Ltd. v. Sharif, — U.S. -,
This case is distinguishable from Allegro Law and Feggins because Carruthers has not litigated before this Court at all. Nevertheless, the Court concludes that Car-ruthers has impliedly consented to the Court’s adjudication of Campbell’s FDCPA claim. The summons that was served on Carruthers prominently featured the following warning:
IF YOU FAIL TO RESPOND TO THIS SUMMONS, YOUR FAILURE WILL BE DEEMED TO BE YOUR CONSENT TO ENTRY OF A JUDGMENT BY THE BANKRUPTCY COURT AND JUDGMENT BY DEFAULT MAY BE TAKEN AGAINST YOU FOR THE RELIEF DEMANDED IN THE COMPLAINT.
B. Liability
1. Willful Violation of the Automatic Stay
The filing of a bankruptcy petition “operates as a stay, applicable to all entities, of ... any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case....” 11 U.S.C. § 362(a)(6). The automatic stay also prohibits “any act to obtain possеssion of property of the estate or property from the estate or to exercise control over property of the estate” regardless of when the underlying claim arose. 11 U.S.C. § 362(a)(3). Property of the estate includes “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1). In Chapter 13 bankruptcy, it also includes all such property that the debtor acquires after thе commencement of the case. 11 U.S.C. § 1306(a)(1).
The Bankruptcy Code provides a statutory cause of action to redress willful violations of the automatic stay. Vaughn v. Cent. Miss. Credit Corp. (In re Vaughn),
Carruthers clearly violated the au- ■ tomatic stay provided by 11 U.S.C. §§ 362(a)(3) and (a)(6). The money in Campbell’s bank account was property of the estate, and Carruthers’s conduct in debiting her account was an act to gain control of it. See 11 U.S.C. § 362(a)(3). The fact that it had a negative balance when the February 15 debit occurred does not negate this conclusion because it merеly increased the debt Campbell owed to the bank, thereby increasing the bank’s claim against Campbell and- forcing Campbell to deposit more money to bring her account current. Moreover, Campbell’s student loan debt arose pre-petition, and the phone calls Bell made to her on Car-ruthers’s behalf were obvious attempts to collect it from her. See 11 U.S.C. § 362(a)(6).
Carruthers’s violations were willful. Bell knew that Campbell was in bankruptcy no later than January 7, 2016, when she informed him of the fact. As Bell was holding himself out as Carruthers’s agent, the Court may impute that knowledge to Carruthers himself. Even if Bell was somehow a rogue actor, however, Carruth-ers and his firm received notice that Campbell was suing them for violating the automatic stay on February 8, yet proceeded to violate the automatic stay again one week later by debiting Campbell’s bank account.' The Eleventh Circuit held in Jove Engineering that a defendant need оnly intend the conduct that violated the stay to willfully do so. Jove Eng’g,
2. Fair Debt Collection Practices Act
The FDCPA applies to “debt collectors,” which it defines as “any person who uses any instrumentality of interstate commerce ... the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect ... debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6).
The FDCPA prohibits debt collectors from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. This includes falsely representing that an individual is an attorney, § 1692e(3), implying that nonpayment will result in the garnishment of someone’s wages when doing so would be illegal, § 1692e(4), threatening to take action that cannot legally be taken, § 1692e(5), and using a false representation or deceptive means to collect a debt or obtain information concerning a consumer, § 1692e(10). The FDCPA also prohibits debt collectors from using “unfair or unconscionable means to collect ... any debt.” 15 U.S.C. § 1692f. The Court must consider these provisions from the standpoint of the “least sophisticated consumer.” LeBlanc v. Unifund CCR Partners,
The Court finds that Carruthers is a debt collector who is subject to the FDCPA. His agent represented that he was attempting to collect a debt on behalf of another, and Carruthers’s disciplinary records on file with the California State Bar, discussed infra Part III, indicate that he regularly attempts to collect debts on behalf of others. See In the Matter of Carruthers, Case No. 14-0-00594-DFM (Cal. Review Dept.2015); cf. Montgomery v. GCFS, Inc.,
The Bankruptcy Code permits an individual injured by a willful violation of the automatic stay to “recover actual damages, including costs and attorney’s fees, and, in appropriate circumstances, may recover punitive damages,” 11 U.S.C. § 362(k)(1). The plaintiff has the burden of proving damages resulting from a stay violation by a preponderance of the evidence. Vaughn,
1. Emotional Distress
Campbell requested an award of $5,000 for emotional distress damages at the May 25 hearing. The Eleventh Circuit has stated that to recover damages for emotional distress arising from a willful violation of the automatic stay, “a plaintiff must (1) suffer significant emotional distress, (2) clearly establish the significant emotional distress, and (3) demonstrate a causal connection between the significant emotional distress and the violation of the automatic stay.” Lodge v. Kondaur Capital Corp.,
Neither the Eleventh Circuit nor any lower court has expressly applied Lodge to emotional distress damages arising out of FDCPA violations. However, the Lodge standard is broadly applicable to statutes outside the Bankruptcy Code, and the FDCPA is analogous to the automatic stay and discharge injunction in that they all seek to protect similarly situated individuals. The Court sees no reason why the Eleventh Circuit would not extend the Lodge standard for proving emotional distress damages to FDCPA violations if it had the opportunity. The Court holds, therefore, that a FDCPA plaintiff claiming damages for emotional distress must satisfy the burden of proof set out in Lodge.
Campbell testified at the damages hearing that she has been extremely worried and has lost sleep as a result of Carruthers’s and Bell’s actions. She was also visibly distraught as she testified at the hearing. When pressed by the Court, however, Campbell also testified that she had not seen a doctor or missed any time from work as a result of the violative activity. The Court is sympathetic tоward Campbell, but she has not satisfied the Eleventh Circuit’s standard for proving emotional distress damages.
2. Actual Damages
Campbell presented evidence that Carruthers wrongfully debited $100 from her bank account and has not returned the money. As a result of his actions, Camp-b¿ll incurred approximately $200 in overdraft charges on her bank account. These are direct and concrete damages Campbell suffered as a result of Carruthers’s actions. The Court has held that the lost use of money wrongfully taken from a plaintiff can also give rise to compensable damages, see Vaughn,
Costs and attorney’s fees are actual damages under 11 U.S.C. § 362(k) when they are necessary to stop an ongoing stay violation or recover pre-litigation actual damages, Vaughn,
3. FDCPA Statutory Damages
In addition to actual damages, the FDCPA authorizes a statutory award of up to $1,000 per person. 15 U.S.C. § 1692k(a)(2)(A); see also Harper v. Better Bus. Servs., Inc.,
The Court readily concludes that the full $1,000 award is warranted here. Carruthers is an attorney in the business of debt collection who the Court presumes must be familiar with the FDCPA, making his violations clearly intentional. Moreover, he persisted in violating the FDCPA even after Campbell sued him for his conduct. Finally, his conduct was highly abusive in that he used repeated phone calls to coerce Campbell into giving him direct access to her bank acсount.
4. Punitive Damages
The Bankruptcy Code permits an award of punitive damages to redress willful violations of the automatic stay in “appropriate circumstances.” 11 U.S.C. § 362(k)(1). “ ‘Appropriate circumstances’ has been interpreted to require that the violator’s acts be egregious, vindictive, malicious, or accompanied by bad faith.” Hutchings v. Ocwen Fed. Bank (In re Hutchings),
The circumstances of this case are unquestionably appropriate for punitive damages. As discussed above, Carruthers and Bird intentionally violated the automatic stay multiple times, and continued to do so even after Carruthers was sued. Carruthers’s motives appear to extend beyond mere debt collection: they evince an intent to make a mockery of the bankruptcy system and the consumer protection laws altogether, and to enrich himself at the expense of debtors and other creditors who comply with the law. All this was done without any provocation on Campbell’s part. Carruthers’s conduct toward Campbell has been both egregious and malicious, and his status as an attorney
The Court will award Campbell $50,000 in punitive damages. The award is based not just on the egregiousness of Carruth-ers’s conduct, but also on the Court’s determination that such an amount is necessary to deter Carruthers from engaging in such conduct in the future. This is not a situation where a non-professional intended conduct that inadvertently violated the automatic stay. Carruthers is an аttorney who undoubtedly knows what conduct the automatic stay prohibits, yet he chose to engage in that conduct anyway. Moreover, his attitude toward this litigation indicates that he is unconcerned about the potential consequences of his conduct. He did not answer or appear at the damages hearing. Worse, he continued to intentionally violate the automatic stay even after he was sued for violating the automatic stay. The Court surmises that Car-ruthers chose this course of action assuming that his liability from this case, and the difficulty Campbell faces in collecting it from him, would not justify the aggravation of complying with the law. In other words, it is apparent that Carruthers knowingly and intentionally violated the law because he believes he can get away with it. A punitive damages award of this size is necessary to deter further unlawful conduct.
III. CONCLUSION
The Court closes with an observation regarding the tempоral proximity of this case to Carruthers’s professional disciplinary history. On October 15, 2015, the California State Bar suspended Carruthers for 60 days
Needless to say, the Court is troubled that Carruthers’s conduct in this case occurred so soon after his return from suspension. The California State Bar would also likely take a dim view of the timing and nature of Carruthers’s activity. The Court additionally notes a possible ethical violation in that Campbell’s testimony indicates that one of Carruthers’s employees is falsely passing himself off as an attorney. In light of the egregiousness of Carruth-ers’s violations of the law, as well as the recency of his professional discipline, the Court will send a copy of this memorandum decision to the California State Bar.
Notes
. A search of the California State Bar’s directory revealed no attorney with an active li-censé with a name spelled "Brian Bell” or something similar. This suggests that Bell is a non-attorney employee in Carruthers’s offiсe who may be passing himself off as an attorney,
. Campbell also asserted violations of 15 U.S.C. § 1692e(2), which prohibits the false representation of "the character, amount, or legal status of any debt[,]” in her complaint. (Docs. 1 and 8). The evidence does not support this allegation.
. Though not raised by Campbell, the Court notes in passing that Bell probably also violated 15 U.S.C. § 1692d, which, prohibits debt collectors from engaging "in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of á debt.” Viewed from the perspective of a consumer whose circumstances makes her "relatively more susceptible to harassment, oppression, or abuse!,]” Jeter, 760 F.2d at 1179 (adopting
. In Vaughn, the Court justified a punitive damages award in part on the defendant's use of non-attorneys to take legal action on its behalf as a cost-cutting measure. Vaughn,
. Carruthers was technically suspended for 2 years, but all except 60 days of the suspension was stayed by the California State Bar. However, Carruthers was placed on probation for the remainder of the two-year period and is still on probation as of the date of this judgment.