NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT MAY 30 2012
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
CHRISTOPHER CERESKO, No. 11-15456
Plaintiff-counter-defendant - D.C. No. 2:09-cv-00483-ECV
Appellant,
v. MEMORANDUM*
LVNV FUNDING, LLC; GURSTEL,
STALOCH & CHARGO, PA; RUTH A.
FISCHETTI,
Defendants-counter-claimants
- Appellees.
Appeal from the United States District Court
for the District of Arizona
Edward C. Voss, Magistrate Judge, Presiding
Argued and Submitted May 15, 2012
San Francisco, California
Before: REINHARDT, CLIFTON, and N.R. SMITH, Circuit Judges.
Christopher Ceresko appeals the district court’s award of attorneys’ fees and
costs, pursuant to 15 U.S.C. § 1692k(a)(3) of the Fair Debt Collection Practices
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Act (FDCPA), to LVNV Funding, LLC; Gurstel, Staloch & Chargo, P.A.; and
Ruth A. Fischetti (Defendants). We have jurisdiction under 28 U.S.C. § 1291, and
we affirm.
The FDCPA provides that, “[o]n a finding by the court that an action under
this section was brought in bad faith and for the purpose of harassment, the court
may award to the defendant attorney’s fees reasonable in relation to the work
expended and costs.” 15 U.S.C. § 1692k(a)(3). We review the district court’s
finding of bad faith and harassment for clear error and the court’s grant of
attorneys’ fees for abuse of discretion. Guerrero v. RJM Acquisitions LLC, 499
F.3d 926, 933 (9th Cir. 2007).
The district court found that Ceresko’s underlying FDCPA action was
brought in bad faith and for the purpose of harassment, because (1) the district
court had previously concluded that Ceresko’s allegations failed to establish a
violation of the FDCPA in the underlying action; (2) Ceresko’s counsel “suffered
the same result in three previous lawsuits . . . involving different plaintiffs making
the same claim: that an allegation or prayer for relief for costs and fees in a state
court collection action is a false statement in violation of the FDCPA”; and (3)
Ceresko “failed to provide a single citation to a case anywhere in the country
where this particular claim had been successful.”
2
1. The district court did not clearly err in finding that Ceresko’s underlying
FDCPA action was brought in bad faith and for the purpose of harassment.
A. The district court had previously concluded that Ceresko had failed to
establish a violation of the FDCPA in the underlying action. Ceresko did not
appeal or otherwise dispute the district court’s conclusion that his underlying
action was meritless.1
B. Ceresko’s counsel had unsuccessfully made similar arguments in two
prior cases in the District of Arizona. In those cases, the court decided that an
allegation or prayer for relief for costs and attorneys’ fees in a state court collection
complaint did not violate the FDCPA.2
1
Ceresko’s handling of the underlying action also shows its lack of merit.
After Defendants answered Ceresko’s complaint, Ceresko did not serve discovery
or otherwise pursue the case. Ceresko did not dispute Paragraph 9 of Defendants’
state court collection complaint. Nor did Ceresko dispute the debt or the amount of
the debt. When Defendants moved for summary judgment, Ceresko missed the
deadline to file for summary judgment and was granted an extension.
Additionally, two earlier lawsuits filed by Ceresko’s counsel further
illustrate Ceresko’s knowledge of these claims. Ceresko’s counsel filed an FDCPA
action on behalf of Mrs. Ceresko, but Mrs. Ceresko voluntarily dismissed her
action a week later. Ceresko’s counsel also filed an FDCPA action on behalf of
Ceresko, but that action was dismissed pursuant to stipulation by the parties.
2
See Cisneros v. Neuheisel Law Firm, P.C., No. CV06-1467-PHX-DGC,
2008 WL 65608 (D. Ariz. Jan. 3, 2008); Winn v. Unifund CCR Partners, No. CV
06-447-TUC-FRZ, 2007 WL 974099 (D. Ariz. Mar. 30, 2007).
3
In this case, Paragraph 9 of Defendants’ state court collection complaint
stated: “Pursuant to the terms and conditions and A.R.S. § 12-341 the prevailing
party will be entitled to an award of all costs and, pursuant to A.R.S. § 12-341.01,
reasonable attorneys’ fees incurred in pursuing this action.” Paragraph 10, the part
of Defendants’ complaint challenged by Ceresko in the underlying action, stated:
“Court costs as actually incurred are chargeable to [Ceresko].” Read with
Paragraph 9, Paragraph 10 constituted an allegation for costs and attorneys’ fees in
a state court collection complaint. Thus, the underlying action centered on
essentially the same argument Ceresko’s counsel had unsuccessfully made in two
prior cases.
C. Ceresko did not identify any favorable legal authorities applicable to his
claim. Ceresko’s precedent instead involved cases where attorneys’ fees and costs
demands were sent to the plaintiffs before the start of judicial proceedings.3
Even if we were to disagree with the district court, we cannot conclude that
the district court’s findings were “illogical, implausible, or without support in the
3
See Reichert v. Nat. Credit Sys., Inc., No. CV-03-1740, 2005 WL
5549677, at *3 (D. Ariz. Mar. 31, 2005); Gostony v. Diem Corp., 320 F. Supp. 2d
932, 937 (D. Ariz. 2003); Axtell v. Collections USA, Inc., No. CIV 02-0536-PHX-
DKD, 2002 WL 32595276 (D. Ariz. Oct. 22, 2002).
4
record.” See United States v. Spangle, 626 F.3d 488, 497 (9th Cir. 2010);
Guerrero, 499 F.3d at 933.
2. The district court did not abuse its discretion in awarding attorneys’ fees.
The district court identified and applied the correct legal rule from § 1692k(a)(3).
Furthermore, the district court’s decision did not result “from a factual finding that
was illogical, implausible, or without support in inferences that may be drawn from
the facts in the record.” See United States v. Hinkson, 585 F.3d 1247, 1263 (9th
Cir. 2009) (en banc).
AFFIRMED.4
4
We grant the motion of the National Association of Retail Collection
Attorneys for leave to file an amicus curiae brief in support of Defendants.
5
FILED
Ceresko v. LVNV Funding LLC, No. 11-15456 MAY 30 2012
MOLLY C. DWYER, CLERK
REINHARDT, Circuit Judge, dissenting: U.S. COURT OF APPEALS
I dissent. The “least sophisticated debtor,” the standard for establishing a
violation of the Fair Debt Collection Practices Act (“FDCPA”), see Guerrero v.
RJM Aquisitions LLC, 499 F.3d 926, 934 (9th Cir. 2007), would likely have been
misled by the inclusion of two separate paragraphs in the collection complaint, one
(Paragraph 9) stating that “the prevailing party will be entitled to an award of all
costs” and the second (Paragraph 10) stating that “Court costs as actually incurred
are chargeable to [the debtor].” The collection complaint provided no information
that the second paragraph was true only if the creditor was the “prevailing party.”
Ceresko therefore presented a “minimally colorable” claim, and the district court
clearly erred in finding that his FDCPA action was brought in bad faith and for the
purpose of harassment. See id. at 940-41.
Moreover, the district court clearly erred in finding that Ceresko’s counsel
“suffered the same result in three previous lawsuits involving different plaintiffs
making the same claim.” Two of the cases cited by the district court to support its
holding, Cisneros v. Neuheisel Law Firm, 2008 WL 65608 (D. Ariz. Jan. 3, 2008),
and Winn v. Unifund CCR Partners, 2007 WL 974099 (D. Ariz. Mar. 30, 2007),
involved claims that a request for a specific sum of attorneys’ fees in the prayer for
1
relief was a request for liquidated attorneys’ fees, which plaintiffs alleged violated
the FDCPA because only reasonable attorneys’ fees, not liquidated fees, were
recoverable under the agreements. The district courts rejected the FDCPA claims,
holding that the “least sophisticated debtor” would understand that “the prayer for
relief is aspirational—it describes what the collection agency seeks if it prevails.”
Cisneros, 2008 WL 65608, at *3; see also Winn, 2007 WL 974099, at *3. Here,
Ceresko claimed that the statement in the body of the complaint regarding court
costs being allocated to the debtor was misleading because it was represented as a
fact although there had been no determination that the creditor was the prevailing
party. Cisneros and Winn, therefore, presented entirely different claims than the
one presented by Ceresko here. The third case cited by the district court, Thompson
v. Crown Asset Management, LLC, 2009 WL 3059123 (D. Ariz. Sept. 23, 2009),
presented the same claim as the claim here, but it was not decided until six months
after the complaint in this case was filed. Neither Ceresko nor his counsel could
have known that the claim would be rejected at the time the instant claim was
brought.
Finally, the district court ignored the cases cited by Ceresko in support of his
FDCPA claim. In Reichert v. National Credit Systems, Inc., 2005 WL 5549677 (D.
Ariz. Mar. 31, 2005), Gostony v. Diem Corporation, 320 F. Supp. 2d 932 (D. Ariz.
2
2003), and Axtell v. Collections USA, 2002 WL 32595276 (D. Ariz. Oct. 22, 2002),
the district courts held that a request for attorneys’ fees or costs in a demand letter
was misleading because no judicial proceedings had been initiated and there had
been no determination that the creditor was the prevailing party, as required for the
recovery of such fees. Although those cases involved demand letters rather than a
complaint in a collection case, the underlying claims are similar to the one here:
that a demand for fees or costs by a creditor when there has been no determination
that the creditor is the prevailing party, is misleading.
Because the district court’s findings were based on clear errors and its
analysis of the controlling cases consisted of repeated errors of law, its award of
attorneys’ fees and costs against Ceresko was clearly erroneous and constituted an
abuse of discretion. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405
(1990).
3