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Carlisle v. National Commercial Services, Inc.

United States District Court, N.D. Georgia, Atlanta Division

June 12, 2015

ROLAND CARLISLE, Plaintiff,
v.
NATIONAL COMMERCIAL SERVICES, INC., et al., Defendants.

MAGISTRATE JUDGE'S ORDER AND NON-FINAL REPORT AND RECOMMENDATION

LINDA T. WALKER, Magistrate Judge.

This action is presently before the Court on Defendant National Commercial Services, Inc.'s Motion to Vacate Default, Plaintiff Roland Carlisle's Motion to Strike or Disregard Declaration of Zoran Jovanovski, and Plaintiff's Motion for Protective Order and to Quash. Docket Entry [38, 43, 51]. For the reasons set forth below, the undersigned RECOMMENDS that National Commercial Services, Inc.'s Motion to Vacate Default be DENIED. Docket Entry [38]. Plaintiff's Motion to Strike or Disregard Declaration of Zoran Jovanovski is GRANTED. Docket Entry [43]. Finally, Plaintiff's Motion for Protective Order and to Quash is GRANTED. Docket Entry [51].

PLAINTIFF'S MOTION TO STRIKE

As an initial matter, Plaintiff Roland Carlisle ("Plaintiff") moves to strike the Declaration of Zoran Jovanovski, who is the owner of Defendant National Commercial Services, Inc. ("NCS"). Plaintiff seeks to strike the Declaration of Jovanovski on the grounds that the Declaration is untimely because it was filed to support NCS' opening brief submitted with NCS' Motion to Vacate Default Judgment, but was not filed until NCS filed its Reply Brief. NCS argues in response to Plaintiff's Motion to Strike that only pleadings may be stricken, and even if it was appropriate to strike a declaration, it would be inappropriate to do so here because the Jovanovski Declaration is merely offered to counter points made in Plaintiff's Response.

This Court finds that the Declaration of Jovanovski should not be considered. Rule 6(c) of the Federal Rules of Civil Procedure provide that "[a]ny affidavit supporting a motion must be served with the motion." Fed.R.Civ.P. 6(c). The purpose of Rule 6(c)(2) is to ensure that the party opposing a motion be given sufficient time to respond to affidavits filed by the moving party, thereby avoiding trial by ambush and undue delay in the case. Tishcon Corp. v. Soundview Comm'ns, No. 1:04-CV-524-JEC, 2005 WL 6038743, at *8 (N.D.Ga. Feb. 15, 2005)). Similarly, the Local Rules for this Court provide that "[e]very motion presented to the clerk for filing shall be accompanied by a memorandum of law which cites supporting authority. If allegations of fact are relied upon, supporting affidavits must be attached to the memorandum of law." LR 7.1A(1), NDGa. Thus, as a general rule, affidavits must be filed and served with the motion and courts refuse to consider affidavits supportive of facts referenced in an opening brief. Exceptional Mktg. Grp. v. Jones, 749 F.Supp.2d 1352, 1359-60, 1365 (N.D.Ga. 2010) (C.J. Thrash) (granting plaintiff's motion to strike affidavits filed with defendant's reply brief because they merely embellished facts presented in defendant's opening brief in support of motion to dismiss); Moore's Federal Practice ¶ 60.8 (3d ed. 2015) ("If the reply affidavits are considered to support the original motion rather than dealing with issues raised by the opposition, they should not be admissible. Rule 6(c)(2) requires that the supporting affidavits be filed with the initial motion, and a party should not be able to evade that requirement by submitting additional affidavits supporting the original motion in conjunction with a reply. The courts generally allow reply affidavits to be filed only when the affidavits support the reply rather than the original motion."). Affidavits filed with a reply brief are considered only for the "limited purpose of responding to matters raised in the responses filed by the opposing parties." Exceptional Mktg. Grp., 749 F.Supp. at 1360; Tishcon, 2005 WL 6038743, at *9 (striking declarations which were filed on reply but actually supported original motion because defendants would have no opportunity to respond to pivotal evidence and utilizing the movant's procedures would greatly extend the time required complete briefing of a motion and properly evaluate the motion).

NCS argues Jovanovski's Declaration should be considered because it counters points made in Plaintiff's Response in Opposition to the Motion to Vacate Default Judgment. In support, NCS contends that Jovanovski's Declaration responds to Plaintiff's argument that NCS failed to set forth specific dates as to when it learned of the default and/or Amended Complaint prevented a finding that good cause existed to vacate the default. Specifically NCS argues the Jovanovski Declaration supplies "missing information." NCS also contends that the Declaration merely responds to Plaintiff's argument that NCS was properly served. In this Court's view, however, the Jovanovski Declaration should not be considered for the purpose of ascertaining whether NCS was properly served because as discussed below, NCS waived its objection to service when NCS failed to raise improper service in its opening brief in support of NCS' Motion to Vacate default. Furthermore, much of the Jovanovski Declaration provides support for factual assertions raised in NCS' opening brief in an effort to present good cause for setting aside the entry of default, for which NCS failed to provide evidentiary support when it filed its initial brief. For instance, in NCS' opening brief, NCS indicated that the Amended Complaint was served on NCS by leaving a copy with a mid-level employee instead of Zoran Jovanovski, who was the registered agent, that NCS initially sought to settle the case, that NCS only recently learned of the default, and that NCS sent the validation notice required by 1692g to Plaintiff. On Reply, NCS now seeks to submit evidence from Jovanovski for the first time regarding the manner of service, NCS' actions after learning of the lawsuit, details about when NCS learned of the default, and details about the validation notice it sent to Plaintiff. Additionally, to the extent that, as NCS argues, the Declaration could be construed as supplying "missing information, " the information was only "missing" because NCS made arguments necessitating such evidence and detail within its opening brief but failed to provide any specific details or supporting evidence, not because Plaintiff presented a new issue on Reply to which NCS needed to respond. Thus, this Court disagrees with NCS and finds that the Declaration of Jovanovski was not submitted for the purpose of responding to matters raised in Plaintiff's Opposition Brief, but rather to cure the error that NCS made when NCS did not file evidence in support of its factual allegations presented in its opening brief. Moreover, this case is not an appropriate case for consideration of the untimely filed Declaration because the case has already been delayed by NCS' lengthy default. If the Court were to consider the late Declaration, the Court would have to further delay the case in order to extend the briefing to allow Plaintiff to respond to the allegations within the Declaration. In addition, as discussed below, even if the Court were to consider the late-filed Declaration, it would not change the result in this case. Accordingly, this Court concludes that the Jovanovski Declaration should not be considered and Plaintiff's Motion to Strike is GRANTED. Docket Entry [43].

NCS' MOTION TO VACATE DEFAULT

I. BACKGROUND

On February 21, 2014, Plaintiff filed his Complaint in this Court, and subsequently amended his Complaint on May 16, 2014. (Docket Entries 1, 6). In Plaintiff's Amended Complaint, Plaintiff contends that NCS violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"), and the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. Plaintiff argues NCS is a California corporation whose principle business is the collection of debts from consumers and as such, NCS regularly furnishes information to one or more consumer reporting agencies including Defendants Experian Information Solutions, Inc., Trans Union, LLC, and Equifax Information Services, LLC. (Am. Compl. ¶ 5).

The origin of the conflict between Plaintiff and Defendants is a dispute Plaintiff had with Thrifty Car Rental ("Thrifty"). Plaintiff states that on July 15, 2012, he rented a car from Thrifty and paid a deposit of $350.00. (Am. Compl. ¶ 9). Law enforcement stopped Plaintiff while he was driving the vehicle, and impounded it. (Am. Compl. ¶ 10). On July 20, 2012, Thrifty provided Plaintiff with a rental summary indicating that the $350.00 rental deposit had been applied and a zero balance remained. (Am. Compl. ¶¶ 11-12). Thrifty subsequently billed Plaintiff for $1, 017.41 on August 8, 2012, $882.50 on August 10, 2012, and $1, 782.61 on August 15, 2012. (Am. Compl. ¶¶ 9-14).

On September 25, 2012, Plaintiff received a collection letter from JNR Adjustment, Inc. indicating that he owed $882.50 to DTAG Rental. (Am. Compl. ¶ 17). Plaintiff disputed the debt. (Am. Compl. ¶ 17). On February 22, 2013, NCS left Plaintiff a voicemail seeking to collect the debt, and Plaintiff again disputed the debt in March 2013. (Am. Compl. ¶¶ 19-20). A representative of NCS advised Plaintiff that there was no information in the file concerning the debt, but that NCS would obtain the information from Thrifty and return Plaintiff's call. (Am. Compl. ¶ 22). Plaintiff states that NCS nevertheless reported to Experian that he owed $1, 892.00 and that the payment status was seriously past due; reported to Equifax that he owed $1, 892.00 and that the status was unpaid; and reported to Trans Union that he owed $1, 892.00, but that the payment status was "charged off to bad debt." (Am. Compl. ¶¶ 24-26). NCS did not report to any of the credit reporting agencies that Plaintiff had disputed the debt. (Am. Compl. ¶¶ 24-26). When Plaintiff contacted Equifax to dispute the accuracy of NCS' information and requested that Equifax investigate, Equifax ultimately reported to Plaintiff that NCS had verified to Equifax that the balance owed was being reported correctly. (Am. Compl. ¶ 29). When Plaintiff challenged the accuracy of NCS' reporting with Experian, Experian acknowledged Plaintiff's dispute letter, but did not ever advise him as to the results of the investigation of the accuracy of NCS' report. (Am. Compl. ¶ 34). When Plaintiff notified Trans Union that he disputed the debt, Trans Union ultimately advised him that the investigation results were complete and the results were "VERIFIED, NO CHANGE."). (Am. Compl. ¶ 27). Trans Union also enclosed a copy of the NCS tradeline listing the balance owed Thrifty as $2, 071 and that the debt was not disputed. Plaintiff contends that NCS violated (1) Section 1692g(a) of the FDCPA when NCS failed to provide proper written notice within five days of the initial communication; (2) Section 1692e(2)(A) when NCS falsely represented the amount and legal character of the debt; and (3) Section 1692e(8) when NCS made false representations to Trans Union, Equifax, and Experian. (Am. Compl. ¶ 45). Plaintiff also contends that NCS violated the FCRA when NCS reported to Trans Union, Equifax, and Experian that Plaintiff owed a debt, failed to properly investigate his dispute of the debt, failed to accurately respond to verification requests by Equifax and Trans Union, failed to accurately report results of an accurate investigation to other reporting agencies, and failed to correct its own internal records to prevent the re-reporting of incorrect information to consumer reporting agencies. (Am. Compl. ¶ 78). Finally, Plaintiff contends that NCS' violations of the FDCPA and the FCRA were also violations of Georgia's Fair Business Practices Act. (Am. Compl. ¶ 83).

Plaintiff's Return of Service indicates that he served Susanna Aleksanyan with his Complaint and Amended Complaint on May 21, 2014, and that Aleksanyan is an Assistant Manager and designated by law to accept service of process on behalf of NCS. (Doc. 11). Plaintiff also filed a second Return of Service indicating that his Complaint and Amended Complaint was served upon Jackie Aviles on June 20, 2014, and that Aviles was the Administrative Manager and designated by law to accept service of process on behalf of NCS. (Doc. 18). This Court takes Judicial Notice of the California Secretary of State's website which indicates that NCS' address is 6644 Valjean Ave., Suite 100, Van Nuys, California 91406, and that NCS' agent for service of process is Zoran Jovanovski, and that Jovanovski's address is the same as that indicated for NCS. Corporations Search for National Commercial Services, Cal. Sec'y of State, http://http://kepler.sos.ca.gov (last visited May 15, 2015). Both the May and June Returns of Service indicate NCS was served at the aforementioned address.

After NCS failed to answer the Complaint, on July 14, 2015, the Clerk of Court entered default against NCS upon Plaintiff's request. (Doc. 23, entry dated July 14, 2015). Nearly four months later, on November 3, 2014, NCS moved to set aside the entry of default. (Doc. 38). NCS appears to concede in its opening brief that it did not timely answer Plaintiff's Complaint, but contends that the default should be set aside because it did not willfully ignore the litigation. (Def.'s Br. 4, 8 ("As stated above, NCS's failure to timely respond to the Amended Complaint was not willful inaction, but the result of excusable neglect.")). Instead, NCS argues that only a mid-level employee of NCS was served, and as a result, corporate officers did not immediately learn of the Amended Complaint. (Def.'s Br. 2). NCS further delayed its answer when it attempted to settle the matter with opposing counsel. NCS states that when it learned of the Amended Complaint, its California attorney contacted Plaintiff's counsel in an attempt to resolve the matter. (Def.'s Br. 2). According to NCS, while its counsel was attempting to resolve the matter, Plaintiff's counsel did not reveal that a default had been entered and that defense counsel only recently learned that default had occurred. (Def.'s Br. 2). NCS contends that the default should be set aside because the neglect that led to the tardiness of its Answer was excusable. NCS states that while it could have been more careful, its tardiness was caused by its efforts to resolve the suit and was not willful. (Def.'s Br. 4). NCS further contends that Plaintiff would not suffer prejudice as a result of the default because at the time NCS sought to set aside the default, discovery was still ongoing. NCS argues it has valid defenses to Plaintiff's FDCPA and FBPA claims because it sent the validation notice required by Section 1692g, the FDCPA does not require a debt collector to independently investigate the merits of a debt and allows the debt collector to rely on the creditor's representations, and NCS may assert the bona fide error defense. Finally, NCS contends that it complied with the FCRA because it confirmed with the creditor that the amount being demanded was the amount owed and verified that the balance was being reported correctly.

II. LEGAL ANALYSIS

A. National Commercial Services Waived Its Objection to the Sufficiency of Service in May and June 2014 and Is in Default

NCS argues for the first time in its Reply that it was not timely served. Specifically, NCS contends that the June 20, 2014 service on Jackie Aviles, who was National Commercial Services, Inc.'s Administrative Manager, was ineffective. In support, NCS, relying on the Declaration of Jovanovski, NCS' owner and agent for service of process, argues Aviles "would have never have accepted service of any legal document, and indeed, never accepted service of the Amended Complaint in this case." (Decl. of Zoran Jovanovski, hereinafter "Jovanovski Decl., " ¶¶ 11-13; Def.'s Reply 2). NCS admits on Reply it was initially served on May 21, 2014, with the original Summons and Complaint, but the Proof of Service is incorrect because it states that "Susanna Aleksanyan (Assistant Manager)" was served and NCS has never employed anyone by that name. (Jovanovski Decl. ¶ 3: Def.'s Reply 2 n.1). Plaintiff argues since it is not proper for the Court to consider the Jovanovski Declaration, NCS' Motion to ...


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