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Cordova v. Jenkins

United States District Court, D. New Mexico

October 19, 2018

JOSHUA CORDOVA, on his own behalf, and on behalf of all others similarly situated, Plaintiff,


         This matter comes before the Court upon Defendants Jody Jenkins and Jenkins, Wagnon & Young, P.C.'s Motion for Partial Summary Judgment on Plaintiff's Claims under the Fair Debt Collection Practices Act (“FDCPA”) and the New Mexico Unfair Practices Act (“UPA”) (“Motion”), filed on January 10, 2018. (Doc. 75). Plaintiff responded on February 14, 2018, and Defendants filed their Reply on March 15, 2018. (Docs. 83 and 97). Having considered the Motion, the accompanying briefing, and the relevant evidence, the Court GRANTS the Motion with respect to Plaintiff's FDCPA claim. The Court declines to exercise supplemental jurisdiction over the remaining state claims. The Court notes that Defendants also contend that this Court has diversity jurisdiction over this case. (Doc. 1) at 2. It is unclear to the Court how the required amount in controversy is satisfied, and, thus, the Court will allow additional briefing on that issue.

         A. Relevant Facts Viewed in the Light Most Favorable to Plaintiff

         On June 16, 2014, attorney Jody Jenkins (“Defendant Jenkins”) filed suit in Second Judicial District Court in the County of Bernalillo, New Mexico (“State District Court”) on behalf of debt buyer Autovest, L.L.C. (“Autovest”) against Plaintiff Joshua Cordova and his father (the “Lawsuit”). (Doc. 75-1) at 1-2. The Lawsuit arose from an auto loan that Plaintiff and his father signed with Wells Fargo in 2006 to finance the purchase of a motor vehicle. Id. at 3. Plaintiff's loan agreement stated, “If we hire an attorney who is not our salaried employee to collect what you owe, you will pay the attorney's reasonable fee and court costs the law permits. The maximum attorney's fee you will pay will be 15% of the amount you owe.” Id. at 4.

         The complaint in the Lawsuit alleged that Autovest was the owner and holder of the auto loan contract, having acquired it from Wells Fargo. Id. at 1. The complaint further alleged that Plaintiff defaulted on the auto loan and, as a result, Plaintiff was indebted to Autovest. Id. According to Plaintiff, Plaintiff's sister was supposed to pay the loan because she was the primary driver of the vehicle, but she failed to do so and the vehicle was repossessed before Plaintiff knew she had stopped making payments. (Doc. 75-1) at 8, depo. at 28:8-22. Plaintiff knew Autovest had filed the Lawsuit against him to recover the debt he owed, but “just never took any action to clear it up.” Id. at 9, depo. at 30:1-2.

         Throughout the Lawsuit, neither Plaintiff nor his father filed responsive pleadings, the State District Court did not hold any hearings, and Defendant Jenkins did not make any court appearances. (Doc. 83-3) at 1. Subsequently, Defendant Jenkins filed a one-page Motion for Default Judgment on behalf of Autovest, to which he attached a signed and notarized “Itemized Affidavit in Support of Attorney's Fees” (“Fee Affidavit”). (Doc. 83-1). The Fee Affidavit sought attorney's fees for the hours Defendants Jenkins and his law firm, Jenkins, Wagnon, and Young, P.C. (“Defendant JWY”) spent on the Lawsuit under the lodestar method.[1] Id. In support of their request for fees, Defendant Jenkins stated, under oath, that Defendant JWY had spent a total of 4.25 attorney hours, at a reasonable rate of $250 per hour, on the Lawsuit. Id. at 2. Defendants itemized the time expended on the Lawsuit as follows: (1) “[r]eceive and review file and general demand letter - .5;” (2) “[d]raft Complaint, Summons, Affidavit in Support of Complaint, and Non-Military affidavit - 1.0;” (3) “[f]ile Complaint/ Correspond with Process Server - .5;” (4) “[d]raft letter to clerk to file return of service with certificate of mailing - .25;” (5) “[d]raft Motion for Default Judgment and Final Judgment - 1.0; and” (6) “[m]iscellaneous communications with client - 1.0.” Id. at 1. Defendants sought a total of $1, 062.50 in attorney's fees and a total amount of court costs of $268.70. Id. at 2.

         On October 30, 2014, the State District Court granted Autovest's Motion for Default Judgment. (Doc. 83-3). The Court also awarded Defendants $934.68 in attorney's fees, with gross receipts tax included, which represented 15% of the debt as authorized by the loan agreement. Id. at 2. Plaintiff, as of the date of completion of briefing on this Motion, has not paid any portion of the default judgment, including the attorney's fees that the State District Court awarded Defendants. (Doc. 75-1) at 10, depo. at 31:2-12.

         Plaintiff subsequently filed a Class Action Complaint for Damages (“Complaint”) in State District Court on October 29, 2015. (Doc. 1-1) at 8-15. Defendants were not served with the Complaint until April 21, 2016, and Defendants removed the case to federal court on May 20, 2016. (Doc. 1) at 1. In the Complaint, Plaintiff alleges that Defendant Jenkins and Defendant JWY submitted fraudulent attorney fee affidavits in their New Mexico debt collection cases, including in the Lawsuit, resulting in hundreds of inflated judgments against Plaintiff and other New Mexico residents. (Doc. 1-1) at 8. Plaintiff alleged violations of the FDCPA (Count I) and UPA (Count II), and asserted that Defendants committed malicious abuse of process (Count III) and unjust enrichment (Count V). Id. at 13-15.

         Regarding the Lawsuit, specifically, Plaintiff alleges that Defendant Jenkins did not perform 4.25 hours of work. In support of this allegation, Plaintiff attaches to the Complaint several other nearly identical fee affidavits, which Defendant Jenkins submitted in other New Mexico debt collection cases resolved by default judgments around the time the Lawsuit was resolved. Id. at 10, 16-23; (Doc. 1-2) at 1-11. In those fee affidavits, like in the Lawsuit, Defendant Jenkins claims that he performed 4.25 hours of work, with the same itemization of attorney time as in the Lawsuit. Id. In addition, Plaintiff attaches to the Complaint a one-page Motion for Default Judgment filed in the Lawsuit, along with five other nearly identical motions for default judgment filed in those similar New Mexico cases. (Doc. 1-2) at 11-16. Plaintiff alleges that the fee affidavits “do not reflect actual attorney time expended on each case.” (Doc. 1-1) at 11. Plaintiff contends that Defendants' fee affidavits, therefore, contained false statements, which violated the FDCPA and the UPA, and constituted malicious abuse of process and unjust enrichment.[2] Id.

         With respect to the Lawsuit against Plaintiff, Defendant Jenkins testified at his deposition, “The [Fee Affidavit] says the fees sought [were] based on the time that would be charged, and anticipated time in executing. So that language says had this been an hourly case where there were records kept, this is what I believe the time entries would have shown.”[3] (Doc. 75-1) at 17, depo. at 63:3-7. Defendant Jenkins continued, “The amount of time that I have given you in these affidavits is based upon what I believe to be the minimum amount of time I have ever spent on one of these cases from start to finish.” 18, depo. at 92:8-11. Defendant Jenkins further explained, “I did spend at least this much time . . . I think what the affidavit says is that it's time that would be charged in obtaining the judgment. So when it would be charged in obtaining the judgment, I'm using my opinion to say this is how much time I think would be incurred had I kept records of this type of work for this type of case.” Id. at 17, depo. at 63:16, 18-23.

         Defendant Jenkins also testified about the amount of time that he typically spent reviewing a civil complaint. Defendant Jenkins testified that usually he reviewed a civil complaint three or four times, and that he “probably spend[s] a quarter of an hour each time I'm looking at something. 15, 20 minutes. It could be longer. It could be shorter.” (Doc. 83-7) at 4, depo. at 78:6-9, 80:23-25, 81:1-2. Referring to the history notes for the Lawsuit, Defendant Jenkins stated, “[I]n this particular case, it looks like there were several issues with the formatting of it based on the number of entries that are related to the people Tara Bratcher and Karli changing their time in June for changing the status back and forth meaning that there were multiple versions of this complaint that were drafted.” Id. at 6, depo. at 88:10-16.

         Additionally, Defendant Jenkins testified about the letter to the State District Court clerk regarding filing the return of service, stating that he did not recall if there was such a letter in the Lawsuit.[4] (Doc. 83-7) at 6, depo. at 85:16-17. He testified, “I know there was correspondence with the clerk about issuing the summons. And that would include a request that, you know, the clerk look at the file and issue the certificate of the state of the record.” Id., depo. at 85:18-21. Defendant Jenkins continued that the time entry for the letter to the court clerk in the Fee Affidavit is “an estimation of the time[, ]” but that “there is time [spent] in sending the summons to the court and the affidavit of service and the certificate of mailing if it's substitute service like I believe this one was.” Id., depo. at 86:2-5. Defendant Jenkins asserted in his testimony, “I know that at some point I told my staff to put together a letter to send that to the clerk. And I would not have necessarily signed off on that document and they may have just electronically filed it as opposed to sending with it some kind of enclosure letter.” Id., depo. at 86:11-16 (emphasis added).

         Karli Digiovanni is an employee of Defendant JWY. (Doc. 75-1) at 20, depo. 6:8-12. Ms. Digiovanni testified that she worked on the Lawsuit, but does not have a specific recollection of that work. Id. at 21, depo. at 10:13-18. Ms. Digiovanni knew that she worked on the Lawsuit only because her initials came up in the history notes that Defendant JWY maintained for the case. Id., depo. at 10:19-22. Responding to Plaintiff's counsel's questions about whether Defendant Jenkins had spent 0.25 hours of attorney time drafting a letter to the clerk to file the return of service, whether the letter had ever been drafted for the case, or whether Defendant Jenkins filed the complaint or corresponded with the process server, Ms. Digiovanni repeatedly testified that she did not know whether the work had been completed. (Doc. 83-6) at 2, depo. at 85:5-14, 86:10-15. Ms. Digiovanni also did not know whether Defendant Jenkins spent one hour of time communicating with anyone from Autovest regarding its lawsuit against Plaintiff. Id. at 1, depo. at 84:18-22.

         Ms. Digiovanni did testify that depending on the case, Defendant Jenkins would file the complaint or correspond with the process server. Id. at 2, depo. at 86:16-22. She also testified that she was sure that Defendant Jenkins filed complaints and corresponded with process servers on the vast majority of his cases, yet she could not remember a specific time when he actually completed those tasks. Id., depo. at 86:23-25, 87:1-5. Ms. Digiovanni could not remember specific changes that had been made to the fee affidavit form since she started working at the firm, but she knew the changes were on a “case-by-case” basis, so the court costs section would have changed with each case. Id. at 1, depo. at 84:2-5.

         According to Ms. Digiovanni, the complaint, the itemized affidavit of attorney's fees, the motion for default judgment, the certificate as to the state of the record, and the military affidavit for any given case are created using templates that Defendant Jenkins drafted. (Doc. 75-1) at 25, depo. at 78:20-25, 79, 80:1-20. After she creates a document using a template, Defendant Jenkins reviews the document and fills in the blanks. Id. at 23, 25, depo. at 45:6-23, 46:11-13, 47:6-25, 48:1-20, 78:20-25, 79, 80:1-20.

         Regarding how much time Defendant Jenkins typically spent reviewing a civil complaint, Ms. Digiovanni testified that “it would take maybe an hour up to several. It just depends.” Id. at 24, depo. at 62:11-18. Ms. Digiovanni also testified that it was normal for Defendant Jenkins to spend an hour or two, or longer, reviewing a single civil complaint. Id., depo. at 62:21-23. When Plaintiff's counsel asked Ms. Digiovanni whether it was her testimony under oath that Defendant Jenkins's usual practice was to take an hour or two to review a debt collection civil complaint, Ms. Digiovanni qualified her answer and said “[i]t was an estimate.” Id., depo. at 63:2-7.

         Plaintiff testified that he did not have any evidence that Defendant Jenkins did not spend at least 4.25 hours of time on the Lawsuit. (Doc. 75-1) at 6, depo. at 23:6-8. Plaintiff admitted that while he did not know whether Defendant Jenkins spent 4.25 hours on the Lawsuit, he agreed it was possible that Defendant Jenkins spent 4.25 hours on the Lawsuit. Id. at 12-13, depo. at 51:14-20, 24-25; 52:1. Plaintiff conceded that he thought it was unreasonable for Defendant Jenkins to spend 4.25 hours on an entire lawsuit, implying that 4.25 hours was very little to spend on an entire case. Id. at 13, depo. at 52:7-10.

         Plaintiff also testified that he did not have any evidence that Defendant Jenkins did not spend an hour communicating with his client during the course of the Lawsuit. Id. at 14, depo. at 53:7-16. Plaintiff testified that he did not have any evidence for any of the Complaint's claims other than what his lawyer may or may not have told him. Id. at 15, depo. at 56:13-20. Plaintiff testified that in terms of damages, he seeks only “the 900-and-some dollars that they want to get from me [in attorney's fees as part of the default judgment].” Id. at 10, depo. at 31:14-17. Plaintiff admitted that he had not paid any portion of the default judgment. Id, depo. at 31:2-12.

         B. The Motion for Summary Judgment

         With respect to Plaintiff's FDCPA claim, Defendants contend that the Fee Affidavit is not misleading, even to the least sophisticated consumer, because “it explicitly states that it contains an estimate of the attorney hours that would be spent on resolving the debt collection.” (Doc. 75) at 12. Defendants favorably compare this case to an out-of-circuit case in which a request for attorney's fees in a complaint did not violate the FDCPA because it was merely an estimate of attorney time spent on the matter. Id. at 11-14 (citing Elyazidi v. Suntrust Bank, 780 F.3d 227 (4th Cir. 2015)). Defendants assert that not only does Plaintiff not have any evidence that Defendant Jenkins did not spend 4.25 hours on the Lawsuit, “the uncontroverted evidence in this case is that [Defendant] Jenkins performed at minimum the work listed in the Fee Affidavit, if not more.” Id. at 15. Defendants additionally argue that the Fee Affidavit does not violate the FDCPA because it is a request to a court for attorney's fees, not a representation to Plaintiff as the debtor. Id. at 16-17.

         Regarding Plaintiff's UPA claim, Defendants assert that “there is no evidence that [Defendant] Jenkins knowingly made any material misrepresentations to Plaintiff in connection with the [Lawsuit].” (Doc. 75) at 17. Additionally, Defendants contend that Plaintiff's UPA claim fails “because Plaintiff has no evidence the Fee Affidavit contained misleading information.” Id. Defendants argue that because Plaintiff has not paid the attorney's fees awarded to Defendants in the Lawsuit, he has not suffered “actual injury, ” and thus cannot prove the required “causal relationship between the false or misleading representation and his losses.” Id. at 18, 21-22. Finally, Defendants challenge Plaintiff's UPA claim that is premised on the unconscionable trade practice theory, arguing that Plaintiff has not proven that Defendant Jenkins's conduct ...

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