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Federal Trade Commission v. Sicard

United States District Court, M.D. Florida, Orlando Division

January 23, 2018

DEQUAN M. SICARD, Defendant.



         Plaintiff Federal Trade Commission (“FTC”) commenced this action against Defendants Dequan M. Sicard (“Sicard”) and Hardco Holding Group, LLC, S&H Financial Group, Inc., and Daryl M. Hall (collectively, “Co-Defendants”) under the Federal Trade Commission Act, 15 U.S.C. § 53(b) (“FTCA”) and Fair Debt Collection Practices Act, 15 U.S.C. § 16921(a) (“FDCPA ”) alleging that they engaged in a scheme to defraud consumers. (Doc. 1 (“Complaint”).) Among other things, the FTC sought temporary, preliminary, and permanent injunctive relief and restitution. (Id. ¶ 1.)

         After properly being served, Sicard failed to timely answer or otherwise respond, so the FTC sought the clerk's entry of default against him. (Doc. 51.) That was granted (Doc. 52), and following Sicard's continued failure to timely defend the action, the FTC moved for default judgment against him and requested entry of a permanent injunction against Sicard. (Doc. 69 (“Motion).)

         On referral, U.S. Magistrate Judge Thomas B. Smith recommended granting the Motion in part, by entering a permanent injunction against Sicard and finding him jointly liable with Co-Defendants for $702, 059.00. (Doc. 70 (“R&R”).) Sicard, currently incarcerated and proceeding pro se, did not object to the R&R, but separately filed a motion for relief from default judgment and the Court's order entering a permanent injunction against Co-Defendants-which did not apply to Defendant. (Doc. 72 (“Response”).) The FTC opposed, construing the Response as an objection to the R&R. (Doc. 74.) The Court agrees that the Response should be construed as an objection, and, on de novo review, finds that the R&R is due to be adopted and the Response denied.

         I. Legal Standards

         When a party objects to a magistrate judge's findings, the district court must “make a de novo determination of those portions of the report . . . to which objection is made.” 28 U.S.C. § 636(b)(1). The district court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” Id. The district court must consider the record and factual issues based on the record independent of the magistrate judge's report. Ernest S. ex rel. Jeffrey S. v. State Bd. of Educ., 896 F.2d 507, 513 (11th Cir. 1990).

         II. Procedural History

         The FTC commenced this action on July 10, 2017, alleging that Sicard and Co-Defendants engaged in a pattern of deceptive and abusive debt collection practices that defrauded consumers of more than $690, 000. (Doc. 1, ¶¶ 1 2 -2 7 .) With the Complaint, the FTC moved ex parte for a temporary restraining order (Doc. 4 (“TRO”)), which the Court granted that same day (Doc. 15.) The FTC also sought a preliminary injunction against all defendants, which the Court set for a hearing. (Id. ¶¶ XXIV.) Before that hearing, the FTC filed a consent motion with Co-Defendants stipulating to the entry of a preliminary injunction. (Doc. 27.) At the hearing-where Sicard did not appear, despite notice and an opportunity to appear telephonically-the Court addressed the proposed preliminary injunction and inquired about the appointed Receiver's opinion about its sufficiency. (Doc. 32.) Finding it sufficient, the Court then preliminarily enjoined Co-Defendants and separately entered a preliminary injunction against Sicard. (Docs. 35, 36.)

         The case progressed, and Co-Defendants filed an answer to the Complaint. (Doc. 39.) Sicard did not. At the appropriate time, the FTC moved for an entry of default against Sicard (Doc. 51), which was granted (Doc. 52.) Co-Defendants and the FTC then moved to stay the case pending consideration of a settlement agreement (Doc. 57), which the Court allowed (Doc. 59). The case against Co-Defendants was therefore administratively closed. (See id.)

         On November 20, 2017, Sicard submitted his first filings in the case: (1) a motion seeking to extend his time to answer the Complaint until May 9, 2018; and (2) a motion to dissolve the then-defunct Temporary Restraining Order. (Docs. 60, 61.) Finding Sicard's extension motion deficient, Magistrate Judge Smith denied Sicard's request in a comprehensive order that explained filing procedures, given Sicard's pro se status. (Doc. 61.) Following this, Sicard made no attempt to file a corrected version of that motion. The FTC the moved for default judgment against Sicard (Doc. 64), which Magistrate Judge Smith denied without prejudice based on a computational error (Doc. 68).

         Meanwhile, the FTC reached a stipulated permanent injunction with Co-Defendants and moved for the Court's approval. (Doc. 66.) This was granted, so resolving all claims against Co-Defendants. (Doc. 67.) Turning its efforts toward Sicard, the sole remaining defendant, the FTC renewed its motion for default judgment with a corrected judgment amount. (Doc. 69.) As support, the FTC relied on the facts alleged in its Complaint-which Sicard admitted by virtue of his default-to establish his participation in a debt collection scheme that violated the FTCA and FDCPA. (Doc. 69-1, pp. 3-7.) Sicard, as a key perpetrator of the scheme, was liable for these violations along with Co-Defendants, so the FTC argued it was entitled to injunctive and equitable monetary relief. (Id. at 8-10.) The FTC also contended that the scope of its proposed order for permanent injunctive relief was appropriate in light of Sicards conduct. (Id. at 10-14.) Sicard failed to respond.

         Magistrate Judge Smith then issued his R&R finding default judgment against Sicard appropriate and recommending that the Court issue the permanent injunction. (Doc. 70.) On careful review, however, he found that the FTC's proposed monetary judgment did not reflect the joint and several nature of Sicard's liability with Co-Defendants. (Id. at 9-10.) Rather, he found that the FTC's proposed judgment- seeking $702, 059 from Sicard, the same amount it sought from Co-Defendants-ran afoul of the “one satisfaction rule” and would allow for duplicative recovery. (Id. at 10.) To cure this, Magistrate Judge Smith recommended modifying the judgment against Sicard by finding him jointly liable with Co-Defendants for $702, 059 and leave collection matters outside the terms of the judgment. (Id.)

         The FTC did not object to the R&R, but Sicard filed a motion seeking relief from default judgment and the entry of a permanent injunction. (Doc. 72.) The FTC responded in support of the R&R. The matter is therefore ripe for review.

         III. Discussion

         Sicard seems to generally oppose the entry of default and opposes the FTC's motion for default judgment against him, as well as the entry of a permanent injunction against him. (Id.) His Response does not address the R&R, but the Court will nonetheless construe this as an objection.[1] Upon review, the Court finds Sicard's arguments unavailing. Thus the R&R is due to be adopted and Sicard's Response denied.

         A. Entry of Default

         Federal Rule of Civil Procedure 55(a) allows entry of default against a party who has failed to plead or otherwise defend. Entry of default may be set aside for “good cause, ” which is a variable standard that takes into account whether: (1) the default was culpable or willful; (2) the defaulting party has a meritorious defense; or (3) the defaulting party acted promptly to correct the default. See F.R.C.P. 55(c); Compania Interamericana Export-Import, S.A. v. Compania Dominicana de Aviacion, 88 F.3d 948, 951 (11th Cir. 1996). “[I]f a party willfully defaults by displaying either an intentional or reckless disregard for judicial proceedings, the court need make no other findings in denying relief.” Id. at 951- 52 (citation omitted).

         Here, entry of default was warranted because Sicard failed to answer or otherwise defend this action. (See Docs. 51, 52.) Nonetheless, Sicard seeks to set this a side, claiming: (1) “excusable neglect” due to his current incarceration; (2) “meritorious defenses”; and (3) “due diligence.” (Doc. 72.) But none of these arguments demonstrate good cause to set aside the entry of default. Rather, the Court finds that Sicard willfully defaulted by failing to timely respond to the FTC's numerous filings, despite knowledge of this proceeding and the FTC's diligent attempts to induce his cooperation. (See, e.g., Doc. 21 (FTC filing a motion on Sicard's behalf to allow him to appear telephonically at a hearing, which Sicard did not attend); Doc. 45 (reflecting FTC performed in-person service for Sicard).) Thus, the entry of default against Sicard remains.

         B. Default Judgment

         Next, the Court finds that default judgment is appropriate here. Under Federal Rule of Civil Procedure 55(b)(2), a court may enter default judgment against a properly-served defendant who fails to appear or otherwise defend an action against him. Through default, a defendant “admit[s] the plaintiff's well-pleaded allegations of fact” for liability purposes. Buchanan v. Bowman, 820 F.3d 359, 361 (11th Cir. 1987). So long as the factual allegations of the complaint provide a sufficient legal basis to support entry of default judgment, a court may do so. See Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561 F.3d 1298, 1307 (11th Cir. 2009). To that end, a complaint must be founded on “ well-pleaded allegations.” Id.

         Here, as established above, Sicard failed to answer or otherwise defend this action. Therefore, default is appropriate so long as the Complaint's allegations are well-plead. Against this standard, the Complaint clearly suffices. It alleges that Sicard, along with Co-Defendants, engaged in a scheme to defraud consumers “through the collection of payments for debts that consumers do not actually owe or that Defendants do not have authority to collect” since at least June 2015. (Doc. 1, ¶ 12.) It details how the scheme operated, Sicard's role, and how such conduct violates the FTCA and FDCPA. (See Id. ¶¶ 9, 12-44.) All in all, the Complaint's well-pleaded allegations support default judgment against Sicard and none of Sicard's previously-discussed arguments persuade the Court otherwise.

         C. Relief

         Having established that default judgment is appropriate here, the only remaining issue is what relief to award. The FTC seeks equitable relief in the form of injunctive and monetary relief, as provided for by § 13(b) of the FTCA, 15 U.S.C. § 53(b), and Section 814(a) of FDCPA, 15 U.S.C. § 16921(a), to prevent Sicard from engaging in a variety of behavior related to debt collection. (See Docs. 1, ¶ 46; 64-4.) Looking at the Complaint and the Court's findings when it issued the TRO, preliminary injunction, and stipulated order entering a permanent injunction against Co-Defendants, Magistrate Judge Smith found the injunctive relief acceptable, and the monetary judgment appropriate to the extent Sicard is held jointly and severally liable with Co-Defendants for $702, 059. (Doc. 70, pp. 8-10.) Sicard has not rebutted this finding. Therefore, the Court finds that both injunctive and monetary relief are appropriate to the extent identified in the R&R.

         IV. Permanent Injunction and Monetary Relief

         The Court, having considered the memoranda and exhibits filed in support of said motion, and all other pleadings and files in this action, and now being fully advised in the premises, GRANTS the FTC's Motion and HEREBY ORDERS, ADJUDGES, AND DECREES as follows:


         1. The FTC brings this action pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), and Section 814 of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692l. The FTC seeks both permanent injunctive relief and disgorgement of unjust enrichment for alleged deceptive and unfair acts or practices by Defendant Sicard in connection with the collection of purported consumer debt.

         2. The FTC has the authority under Section 13(b) of the FTC Act and Section 814 of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692l, to seek the relief it has requested.

         3. This Court has jurisdiction over the subject matter of this action and has jurisdiction over Defendant Sicard. Venue in the Middle District of Florida is proper, and the Complaint states a claim upon which relief may be granted against Defendant Sicard under Section 13(b) of the FTC Act and Section 814 of the Fair Debt Collection Practices Act (“ FD CPA”), 15 U.S.C. § 1692l.

         4. The activities of Defendant Sicard, as alleged in the Complaint, were in or affecting commerce, as defined in Section 4 of the FTC Act, 15 U.S.C. § 44. Defendants are “debt collectors” collecting “debts, ” as those terms are defined in Sections 803(6) and 803(5) of the FDCPA, 15 U.S.C. §§ 1692a(6) and (5).

         5. Process and service of process as to Defendant Sicard is proper.

         6. Defendant Sicard is not an infant or an incompetent or in military service or otherwise exempted under the Soldiers' and Sailors' Civil Relief Act of 1940.

         7. Defendant Sicard failed to file a timely answer or otherwise file any timely response to the Complaint. Accordingly, Defendant Sicard is in default.

         8. Since at least 2015, Defendants, acting in common enterprise, operated a multi-million dollar debt collection scheme that successfully swindled over $700, 000 dollars from unsuspecting and terrified consumers. Defendants contacted consumers and third parties falsely claiming that a lawsuit had been filed against the consumer. When consumers tried to learn more about the purported lawsuits, Defendants' collectors threatened consumers with arrest or other legal action if they did not send funds for a purported payday loan or other debt. In fact, either consumers did not owe any debt or, in situations where consumers did have an outstanding debt, Defendants had no authority to collect that debt. In either case, Defendants merely pocketed the money they collected from intimidated consumers.

         9. As alleged in Counts I, II, V(a), V(b), V(c), V(d), and V(e) of the Complaint, in numerous instances, Defendants used false and misleading representations to collect debts, including claiming that consumers were delinquent on a payday loan or other debt that Defendants had authority to collection; consumers had a legal obligation to pay Defendants; consumers would be arrested for failing to pay; and Defendants had filed or would file legal action against consumers. These misleading representations were likely to mislead consumers acting reasonably under the circumstances. Therefore, Defendants' practices constitute a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). In making these representations, Defendants also (a) misrepresented the character, amount, or legal status of a debt in violation of Section 807(2)(A) of the FDCPA, 15 U.S.C. § 1692e(2)(A); (b) misrepresented that any individual is an attorney or that any communication is from an attorney in violation of Section 807(3) of the FDCPA, 15 U.S.C. § 1692e(3); (c) misrepresented that nonpayment of a debt would result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person in violation of Section 807(4) of the FDCPA, 15 U.S.C. § 1692e(4); (d) threatened to take any action that could not legally be taken or that was not intended to be taken in violation of Section 807(5) of the FDCPA, 15 U.S.C. § 1692e(5); and (e) used false representations or deceptive means to collect or attempt to collect a debt in violation of Section 807(10) of the FDCPA, 15 U.S.C. § 1692e(10).

         10. As alleged in Count III of the Complaint, in numerous instances, Defendants engaged in unlawful communications with third parties in violation of Section 805(b) of the FDCPA, 15 U.S.C. §1692c(b).

         11. As alleged in Count IV of the Complaint, in numerous instances, Defendants placed telephone calls to consumers without meaningful disclosure of their identity in violation of Section 806(6) of the FDCPA, 15 U.S.C. § 1692d(6).

         12. As alleged in Count V(f) of the Complaint, in numerous instances, Defendants failed to disclose in their initial communications with consumers that the debt collector is attempting to collect a debt and that any information obtained would be used for that purpose, and failed to disclose in subsequent communications that the communication was from a debt collection, in violation of Section 807(11) of the FDCPA, 15 U.S.C. § 1692e(11).

         13. As alleged in Count V(g) of the Complaint, in numerous instances, Defendants used business, company, or organization names other than their true names in violation of Section 807(14) of the FDCPA, 15 U.S.C. § 1692e(14).

         14. As alleged in Count VI of the Complaint, in numerous instances, Defendants failed to provide consumers with required validation notices in violation of Section 809(a) of the FDCPA, 15 U.S.C. § 1692g(a).

         15. Defendant Sicard is the de facto principal and manager of the Corporate Defendants. He is listed as the vice president of Defendant S & H Financial Group, Inc. on corporate records, and as the president on merchant account applications. He has signatory authority over the Corporate Defendants' bank accounts and their telephone service. Defendant Sicard formulated, directed, controlled, had the authority to control, or participated in ...

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