United States District Court, W.D. North Carolina, Charlotte Division
CASCADE CAPITAL, LLC and CASCADE CAPITAL, LLC - SERIES A, Plaintiffs,
DRS PROCESSING LLC d/b/a MILLER STARK KLEIN & ASSOCIATES Defendants.
J. Conrad, Jr., United States District Judge
MATTER comes before the Court on Cascade Capital,
LLC's and Cascade Capital, LLC-Series A's
(“Plaintiffs'”) Motion for Default Judgment,
(Doc. No. 13), and their Memorandum in Support, (Doc. No.
14). Plaintiffs' Motion is now ripe and ready for
Plaintiffs filed their complaint on August 8, 2017, (Doc. No.
1), and Defendant was served on August 18, 2017 by Certified
Mail, Return Receipt Requested, (Doc. No. 5). On August 24,
2017, Plaintiffs filed a Motion for Temporary Restraining
Order, (Doc. No. 6), and a Memorandum in Support, (Doc. No.
7). On September 18, 2017, Plaintiffs filed a Motion for
Entry of Default, (Doc. No. 11), which was granted by the
Clerk's office on September 20, 2017, (Doc. No. 12). On
November 1, 2017, Plaintiffs Motioned for Default Judgment.
(Doc. No. 13). Defendants have yet to appear or submit a
document before the Court.
hearing regarding this matter was held on November 8, 2017,
where the Court heard Plaintiffs' arguments in support of
their Motion of Default Judgment and their requested
injunctive relief. The Court notes that Plaintiffs did not
give Defendant notice of this hearing, nor were they required
to. Defendant has not appeared personally in front of this
Court since they were served by Plaintiffs. Fed.R.Civ.P.
55(b)(2) (“If the party against whom a default
judgment is sought has appeared personally or by a
representative, that party or its representative must be
served with written notice of the application at least 7 days
before the hearing.”) (emphasis added).
business involves the purchase of consumer accounts. (Doc.
No. 14 at 1). Once Plaintiffs purchases an account, they
either place it with third party agencies for collection or
sell portions of the account to third party purchasers.
(Id.). Among others, Plaintiffs have developed a
purchase relationship with Santander Consumer USA
(“Santander”). (Id.). Santander's
practice involves selling accounts by transmitting portfolios
to potential buyers who then evaluate the portfolio prior to
purchasing the account. (Id. at 2). Plaintiffs
believe that Santander requires all potential buyers to sign
a non-disclosure agreement in order to receive these
July 25, 2014 and June 9, 2015, Plaintiffs purchased
automobile portfolios and accounts from Santander.
(Id.). These portfolios contain more than 200, 000
consumer accounts. (Id. at 16). Plaintiffs have
documentation of each account's full chain of title.
(Id. at 2). Other parties expressed interest in
these automobile accounts and viewed their portfolios after
signing a non-disclosure agreement. Ultimately, however,
Plaintiff Cascade Capital, LLC was the sole buyer who
received title. (Id. at 2). Cascade Capital, LLC
thereafter transferred the legal title of some of these
automobile accounts to its series limited liability
companies, such as Cascade Capital-Series A. (Id.).
Neither Plaintiffs nor Santander transferred title to the
automobile accounts to Defendant. (Id.).
allege that “Defendant either: (1) directly obtained
information related to accounts within the Santander
Portfolios; or (2) accounts within the Santander Portfolios
were placed with Defendant for collection by a third party
other than Cascade.” (Id.). Through either
means, Plaintiffs became aware that Defendant began to
collect on these automobile accounts in February of 2017.
(Id. at 3). Defendant's communications to
consumers stated that Defendant- not Plaintiffs-had the legal
title and the right to collect on the account's balance.
One such communication stated:
Miller Stark Klein and Associates purchased this account with
the legal right to collect, settle or close for the amount
noted above . . . Once the settlement is completed and final
payment posts the balance is considered paid in full and no
further legal obligation is owed. You will have a paid
account with a (-0-) zero balance. This letter will serve
notice to all parties directly or indirectly involved that
any attempts to contact this consumer or to collect on this
arrangement after receipt of this letter is considered
illegal and harassment under the guidelines set forth by the
(Doc. No. 14 at 4).
customers notified both Plaintiffs and Santander about
Defendant's collections. (Id.). While Plaintiffs
remain unaware of the total number of consumers contacted by
Defendant, they found that at least 72 accounts were
contacted and that this number has grown since the filing of
this action. (Id.). Those 72 known accounts have an
aggregate balance of $511, 210.88 and Plaintiffs believe
approximately $27, 000.00 has been paid to Defendant.
(Id. at 6).
to filing their complaint, Plaintiffs made efforts to reach
out to Defendant in the hopes of ending their collection on
the Santander accounts. (Id.). Those efforts,
however, were in vain. Defendant continues to contact
Plaintiffs' automobile accounts and assert false
representations, such as telling consumers that: “(1)
the accounts were rightfully assigned to Defendant and/or
that Defendant has been engaged to resolve the delinquent
debt; (2) Defendant has the right to collect upon the
account; and (3) payment to Defendant would operate as cease
and desist to any other agency as well as the original
creditor that the matter was paid in full as agreed and act
as a cease and desist in the action.” (Id. at
the entry of default, the defaulted party is deemed to have
admitted all well-pleaded allegations of fact contained in
the complaint. Ryan v. Homecomings Fin. Network, 253
F.3d 778, 780 (4th Cir. 2001); Weft, Inc. v. GC Inv.
Assocs., 630 F.Supp. 1138, 1141 (E.D. N.C. 1986)
(citations omitted); see also Fed.R.Civ.P. 8(b)(6) (“An
allegation - other than one relating to the amount of damages
- is admitted if a responsive pleading is required and the
allegation is not denied.”). However, the defendant is
not deemed to have admitted conclusions of law and the entry
of “default is not treated as an absolute confession by
the defendant of his liability and of the plaintiff's
right to recover.” Ryan, 253 F.3d at 780
(citations omitted); see also E.E.O.C. v. Carter Behavior
Health Servs., Inc., No. 4:09-cv-122-F, 2011 WL 5325485,
at *3 (E.D. N.C. Oct. 7, 2011). Rather, in determining
whether to enter judgment on the default, the court must
determine whether the well-pleaded allegations in the
complaint support the relief sought. See Ryan, 253
F.3d at 780 (citing Weft, 630 F.Supp. at 1141); DIRECTV,
Inc. v. Pernites, 200 F. App'x 257, 258 (4th Cir.
2006) (a “defendant is not held to admit facts that are
not well-pleaded or to admit conclusions of law“)
(quoting Nishimatsu Constr. Co. v. Houston Nat'l
Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)); Arista
Records, LLC v. Gaines, 635 F.Supp.2d 414, 416 (E.D.
N.C. 2009); 10A Wright, Miller & Kane, Federal Practice
and Procedure § 2688 (3d ed. Supp. 2010)
(“[L]iability is not deemed established simply because
of the default . . . and the court, in its discretion, may
require some proof of the facts that must be established in
order to determine liability.”).
end, the Fourth Circuit has “repeatedly expressed a
strong preference that, as a general matter, defaults be
avoided and that claims and defenses be disposed of on their
merits.” Colleton Preparatory Acad., Inc. v. Hoover
Univ., Inc., 616 F.3d 413, 417 (4th Cir. 2010)
(citations omitted). Nonetheless, default judgment “may
be appropriate when the adversary process has been halted
because of an essentially unresponsive party.” SEC
v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005).
court finds that liability is established, it must then
determine damages. Carter Behavior Health, 2011 WL
5325485, at *4 (citing Ryan, 253 F.3d at 780-81;
Gaines, 635 F.Supp.2d at 416-17). The court must
make an independent determination regarding damages, and
cannot accept as true factual allegations of damages.
Id. (citing Lawbaugh, 359 F.Supp.2d at
422). While the court may conduct an evidentiary hearing to
determine damages, it is not required to do so, but may rely
instead on affidavits or documentary evidence in the record
to determine the appropriate sum. See EEOC v. CDG
Mgmt., LLC, No. RDB-08-2562, 2010 WL 4904440, at *2 (D.
Md. Nov. 24, 2010) (citations omitted); EEOC v. North Am.
Land Corp., No. 1:08-cv-501, 2010 WL 2723727, at *2
(W.D. N.C. Jul. 8, 2010).