Date: 05-23-2023

Case Style:

Joseph Ozmun v. Portolio Recovery Associates, LLC, et al.

Case Number: 16-CV-94

Judge: Sam Sparks

Court: United States District Court for the Western District of Texas (Travis County)

Plaintiff's Attorney:

Defendant's Attorney: Not Available

Description: Austin, Texas consumer credit lawyer represented Plaintiff who sued Defendants on Collection Practices Act and Texas Debt Collection Practices Act violation theories.


Ozmun contends Defendants then violated the Fair Debt Collection Practices Act (FDCPA) and the Texas Debt Collections Act (TDCA) when they (1) sought a default judgment against him for the full $2,065.21[1] and (2) communicated the debt to a credit reporting agency without noting Ozmun disputed the amount of the debt. Id. ¶¶ 65-67. It is therefore fair to say that this lawsuit-which includes 174 docket entries and which has required the attention of a United States District Court for more than two years-is rooted in a dispute over fifty-seven dollars.

The incongruity between the amount at issue and the effort expended in litigation is not the only problematic aspect of this case. More concerning are the actions of Ozmun's attorneys, particularly Celetha Chatman and Michael Wood, who have repeatedly violated scheduling orders[2]and the Texas Disciplinary Rules of Professional Conduct.[3] Perhaps most concerning of all, this entire suit appears to have been manufactured by Chatman and Wood to collect the attorneys' fees they contend must be given to any plaintiff who brings a “successful action” under the FDCPA. See Pl.'s Mot. Att'ys' Fees [#152] at 5. Indeed, Plaintiff Ozmun's involvement in his own lawsuit is strikingly limited: he has consistently been unable to describe the nature of his injuries, and the complaint in this case was filed by Chatman and Wood before Ozmun was even aware they represented him. See RSIEH's Mot. Summ. J. [#36-2] Ex. B (Ozmun Dep.) at 69:14-72:1; see also id. at 8:23-25, 150:6-10.

Less than a month after this case was filed, details of a proposed settlement were exchanged between Defendants and Chatman and Wood. Although the proposed settlement is not in the record, it appears Plaintiff offered to settle this case in exchange for $6,500. Def. PRA's Resp. Mot. Enforce Settlement Agreement [#22] at 2. But after Defendants requested the settlement agreement include language releasing them from liability on all of Plaintiffs claims, Plaintiffs counsel-without consulting with their client-refused to agree. See Ozmun Dep. at 150:25- 151:8, 170:16-171:1 (neither Chatman nor Wood communicated Defendants' offer of settlement to Ozmun); see also PRA's Resp. Mot. Enforce Settlement Agreement [#22-1] Ex. A at 2 (“Plaintiffs counsel refused the agreement because they would not sign a ‘global release.'”). Then, despite this refusal, Plaintiffs counsel moved to enforce the settlement agreement they had previously refused. See Mot. Enforce Settlement Agreement [#13]. The Court denied this motion after finding that no agreement had been reached and noting that Plaintiffs claim to the contrary relied on a “‘he said/she said' pleading” and an email that simply showed Plaintiff had memorialized its best and final offer of settlement. Order of Sept. 27, 2016 [#25] at 1. The Court concluded by stating it would “ultimately determine costs and perhaps attorney's fees and has a long memory.” Id.

As the case dragged on, evidence indicating it had been brought for questionable reasons accumulated. At his deposition on November 21, 2016, Ozmun acknowledged that, although Chatman and Wood had filed a complaint on his behalf nearly four months before, he had never met either Chatman or Wood. See Ozmun Dep. at 8:23-25 (“Q. And how about Ms. Chatman and Mr. Wood, how did they become your lawyers? A. I don't know that. I've not met them.”). In fact, Ozmun acknowledged he had not even seen the complaint filed on his behalf until “a couple days” before his deposition. See id. at 55:23-56:4 (“Q. Before the past couple days, had you ever seen [the complaint] before? A. I don't think so. Q. So you didn't review it before it was filed? . . . A. No, sir.”). Ozmun also admitted that although his complaint alleged he had suffered a reputational injury due to his lowered credit score, he had not actually seen his credit report and therefore had no way of knowing whether PRA's actions had lowered his credit score. See Ozmun Dep. at 119:6-18 (“Q. Do you know when it was you obtained the credit report that you are complaining about? ... A. This is the first time I've seen [the report].”); see also id. at 70:25-71:5 (“Q. [W]hat was your credit score at the time of the erroneous report? A. I don't remember. Q. What should it have been? A. I don't know.”). He further explained that although his complaint alleged he sent a letter to PRA disputing his debt, he could not remember who drafted or sent the letter, and he conceded that it had been his attorney's idea to send the letter in the first place. See id. at 120:10-19. (“Q. So do we now know whose idea it was to send the [dispute] letter, the May 31 letter? A. My attorney's. Q. OK. And did your lawyer draft that letter? A. Not necessarily. Q. Did your lawyer help you draft it? A. Or gave me guidelines. Q. And had you send it to PRA directly? A. I just don't remember.”). Finally, Ozmun stated that he believed the extent of Defendants' liability was $157.00. See id. at 139:21-24 (“Q. [Y]ou said $57 would be about right for [RSIEH]? A. To the extent I understand my suit, yes, sir.”); see also id. at 141:8-18 (“Q. And what you want from [PRA] is $100 for this alleged violation, right? A. For each violation, yes, sir. Q. Are you aware of them committing more than one? ... A. No, not myself, no sir.”).

Furthermore, in May of 2017, PRA provided the Court with evidence that it had received several misleading but identically worded dispute letters from other clients of Chatman and Wood. In these letters, Chatman and Wood's clients noted that they “refuse to pay” the debt owed to PRA because “[their] monthly expenses exceed [their] monthly income” before noting, almost as an afterthought, that “the amount [PRA is] reporting is not accurate, either.” See PRA's Mot. Summ. J. [#62-1] App. at 2-3.[4] These concerning facts did not go unremarked upon. On April 12, 2017, the Court stated it expected the parties to reach a settlement agreement soon and expressed concern that the only basis for Ozmun's lawsuit appeared to be “a technical violation involving $57.00 (if any violation at all).” Order of April 12, 2017 [#56] at 2.

Further admonitions followed. On July 24, 2017, the Court entered a take-nothing judgment on Plaintiffs state-law claims because Plaintiff lacked standing. Order of July 24, 2017 [#79] at 12. Although the Court determined genuine issues of fact precluded summary judgment on Plaintiff s FDCPA claims, it also observed there was “[e]vidence that Plaintiffs attorneys are involved in a scheme to force settlements from debt collectors by abusing the FDCPA” and that this case appeared to “misus[e] the statutes involved.” Id. at 16, 18. The Court warned that future decisions on costs and attorneys' fees would “be guided by the apparent lack of good faith in this case.” Id. at 18. On January 23, 2018, the Court held a hearing on Defendants' motion to hold Ozmun, Chatman, and Wood in contempt for failing to meet a court-imposed deadline. See Order of Feb. 15, 2018 [#91 ] at 1, 3. Although Defendants' counsel came from out of town to attend the hearing, neither Chatman nor Wood attended; instead, they sent a local attorney they had retained the day before who was unable to answer any of the Court's questions. See id. at 3. On January 26, 2018, the undersigned sent a letter to the Chairman of the Disciplinary Committee of the Western District of Texas in which he highlighted the evidence suggesting “Ms. Chatman and her associates are involved in a scheme to force settlements from debt collectors by abusing the FDCPA.” Mot. Recuse [#107-1] Ex. 1 at 1-2. And on May 16, 2018, the Honorable David Ezra-in considering a Motion to Recuse that Plaintiffs counsel had filed mere hours before a scheduled hearing- commented that “[t]he basis of the FDCPA suit leaves much to be desired.” Order of May 16,2018 [#113] at 2.

Eventually, the Court set this case for trial for July 16,2018. Order of June 27,2018 [#124]. Two days later, Ozmun moved to stay the case pending mandamus review of Judge Ezra's decision on the Motion to Recuse. Mot. Stay [#130] at 1, 3. The Court denied the motion, noting that trial had been set for more than eighteen months and was required “to resolve key factual questions.” Order of July 3,2018 [#138] at 4. On July 11, the parties filed a Joint Notice of Settlement wherein Plaintiff agreed to dismiss his remaining claims against the Defendants with prejudice in exchange for $1,250.00. Joint Notice Settlement [#141]. Both parties also announced their intention to seek attorneys' fees following dismissal. Plaintiff, however, refused to dismiss his claims, contending that because each side intended to file motions for fees and costs, dismissing the case would deprive the Court of jurisdiction over these motions. Resp. Mot. Dismiss [#145] at 2. On July 19, 2018, Defendants were then compelled to file a motion to dismiss-in effect, a motion to enforce the settlement agreement. The Court granted the motion so the settlement agreement could be effectuated. Order of Aug. 9, 2018 [#144].

Consistent with the notice of settlement, both parties filed motions for attorneys' fees and costs. Ozmun seeks fees and costs under 15 U.S.C. § 1692k(a)(3), which mandates an award of fees and costs to an individual plaintiff who maintains a successful action to enforce a defendant's liability under the FDCPA. Pl.'s Mot. Att'ys' Fees [#152] at 2-3. Defendants similarly seek an award of fees under 15 U.S.C. § 1692k(a)(3), as well as under Texas Finance Code § 392.403(c), Rule 11 of the Federal Rules of Civil Procedure, and 28 U.S.C. § 1927. Defs.' Mot. Att'ys' Fees [#151] at 2. Defendants also move to hold Chatman, Wood, Amy Clark, and Ozmun in contempt for perpetrating a fraud upon the court by failing to dismiss this case with prejudice as agreed to in the Notice of Settlement. Mot. Contempt [#164] at 2-3. These pending motions have been briefed and are ripe for decision.
Ozmun v. Portfolio Recovery Assocs. (W.D. Tex. 2023)

Outcome: Ozmun contends Defendants then violated the Fair Debt

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Collection Practices Act (FDCPA) and the Texas Debt Collections Act (TDCA) when they (1) sought a default judgment against him for the full $2,065.21[1] and (2) communicated the debt to a credit reporting agency without noting Ozmun disputed the amount of the debt. Id. ¶¶ 65-67. It is therefore fair to say that this lawsuit-which includes 174 docket entries and which has required the attention of a United States District Court for more than two years-is rooted in a dispute over fifty-seven dollars.

The incongruity between the amount at issue and the effort expended in litigation is not the only problematic aspect of this case. More concerning are the actions of Ozmun's attorneys, particularly Celetha Chatman and Michael Wood, who have repeatedly violated scheduling orders[2]and the Texas Disciplinary Rules of Professional Conduct.[3] Perhaps most concerning of all, this entire suit appears to have been manufactured by Chatman and Wood to collect the attorneys' fees they contend must be given to any plaintiff who brings a “successful action” under the FDCPA. See Pl.'s Mot. Att'ys' Fees [#152] at 5. Indeed, Plaintiff Ozmun's involvement in his own lawsuit is strikingly limited: he has consistently been unable to describe the nature of his injuries, and the complaint in this case was filed by Chatman and Wood before Ozmun was even aware they

3

represented him. See RSIEH's Mot. Summ. J. [#36-2] Ex. B (Ozmun Dep.) at 69:14-72:1; see also id. at 8:23-25, 150:6-10.

Less than a month after this case was filed, details of a proposed settlement were exchanged between Defendants and Chatman and Wood. Although the proposed settlement is not in the record, it appears Plaintiff offered to settle this case in exchange for $6,500. Def. PRA's Resp. Mot. Enforce Settlement Agreement [#22] at 2. But after Defendants requested the settlement agreement include language releasing them from liability on all of Plaintiffs claims, Plaintiffs counsel-without consulting with their client-refused to agree. See Ozmun Dep. at 150:25- 151:8, 170:16-171:1 (neither Chatman nor Wood communicated Defendants' offer of settlement to Ozmun); see also PRA's Resp. Mot. Enforce Settlement Agreement [#22-1] Ex. A at 2 (“Plaintiffs counsel refused the agreement because they would not sign a ‘global release.'”). Then, despite this refusal, Plaintiffs counsel moved to enforce the settlement agreement they had previously refused. See Mot. Enforce Settlement Agreement [#13]. The Court denied this motion after finding that no agreement had been reached and noting that Plaintiffs claim to the contrary relied on a “‘he said/she said' pleading” and an email that simply showed Plaintiff had memorialized its best and final offer of settlement. Order of Sept. 27, 2016 [#25] at 1. The Court concluded by stating it would “ultimately determine costs and perhaps attorney's fees and has a long memory.” Id.

As the case dragged on, evidence indicating it had been brought for questionable reasons accumulated. At his deposition on November 21, 2016, Ozmun acknowledged that, although Chatman and Wood had filed a complaint on his behalf nearly four months before, he had never met either Chatman or Wood. See Ozmun Dep. at 8:23-25 (“Q. And how about Ms. Chatman and Mr. Wood, how did they become your lawyers? A. I don't know that. I've not met them.”). In fact,

4

Ozmun acknowledged he had not even seen the complaint filed on his behalf until “a couple days” before his deposition. See id. at 55:23-56:4 (“Q. Before the past couple days, had you ever seen [the complaint] before? A. I don't think so. Q. So you didn't review it before it was filed? . . . A. No, sir.”). Ozmun also admitted that although his complaint alleged he had suffered a reputational injury due to his lowered credit score, he had not actually seen his credit report and therefore had no way of knowing whether PRA's actions had lowered his credit score. See Ozmun Dep. at 119:6-18 (“Q. Do you know when it was you obtained the credit report that you are complaining about? ... A. This is the first time I've seen [the report].”); see also id. at 70:25-71:5 (“Q. [W]hat was your credit score at the time of the erroneous report? A. I don't remember. Q. What should it have been? A. I don't know.”). He further explained that although his complaint alleged he sent a letter to PRA disputing his debt, he could not remember who drafted or sent the letter, and he conceded that it had been his attorney's idea to send the letter in the first place. See id. at 120:10-19. (“Q. So do we now know whose idea it was to send the [dispute] letter, the May 31 letter? A. My attorney's. Q. OK. And did your lawyer draft that letter? A. Not necessarily. Q. Did your lawyer help you draft it? A. Or gave me guidelines. Q. And had you send it to PRA directly? A. I just don't remember.”). Finally, Ozmun stated that he believed the extent of Defendants' liability was $157.00. See id. at 139:21-24 (“Q. [Y]ou said $57 would be about right for [RSIEH]? A. To the extent I understand my suit, yes, sir.”); see also id. at 141:8-18 (“Q. And what you want from [PRA] is $100 for this alleged violation, right? A. For each violation, yes, sir. Q. Are you aware of them committing more than one? ... A. No, not myself, no sir.”).

Furthermore, in May of 2017, PRA provided the Court with evidence that it had received several misleading but identically worded dispute letters from other clients of Chatman and Wood. In these letters, Chatman and Wood's clients noted that they “refuse to pay” the debt owed to PRA

5

because “[their] monthly expenses exceed [their] monthly income” before noting, almost as an afterthought, that “the amount [PRA is] reporting is not accurate, either.” See PRA's Mot. Summ. J. [#62-1] App. at 2-3.[4] These concerning facts did not go unremarked upon. On April 12, 2017, the Court stated it expected the parties to reach a settlement agreement soon and expressed concern that the only basis for Ozmun's lawsuit appeared to be “a technical violation involving $57.00 (if any violation at all).” Order of April 12, 2017 [#56] at 2.

Further admonitions followed. On July 24, 2017, the Court entered a take-nothing judgment on Plaintiffs state-law claims because Plaintiff lacked standing. Order of July 24, 2017 [#79] at 12. Although the Court determined genuine issues of fact precluded summary judgment on Plaintiff s FDCPA claims, it also observed there was “[e]vidence that Plaintiffs attorneys are involved in a scheme to force settlements from debt collectors by abusing the FDCPA” and that this case appeared to “misus[e] the statutes involved.” Id. at 16, 18. The Court warned that future decisions on costs and attorneys' fees would “be guided by the apparent lack of good faith in this case.” Id. at 18. On January 23, 2018, the Court held a hearing on Defendants' motion to hold Ozmun, Chatman, and Wood in contempt for failing to meet a court-imposed deadline. See Order of Feb. 15, 2018 [#91 ] at 1, 3. Although Defendants' counsel came from out of town to attend the hearing, neither Chatman nor Wood attended; instead, they sent a local attorney they had retained the day before who was unable to answer any of the Court's questions. See id. at 3. On January 26, 2018, the undersigned sent a letter to the Chairman of the Disciplinary Committee of the Western District of Texas in which he highlighted the evidence suggesting “Ms. Chatman and her associates are involved in a scheme to force settlements from debt collectors by abusing the FDCPA.” Mot. Recuse [#107-1] Ex. 1 at 1-2. And on May 16, 2018, the Honorable David Ezra-in considering a Motion to Recuse that Plaintiffs counsel had filed mere hours before a scheduled hearing- commented that “[t]he basis of the FDCPA suit leaves much to be desired.” Order of May 16,2018 [#113] at 2.

Eventually, the Court set this case for trial for July 16,2018. Order of June 27,2018 [#124]. Two days later, Ozmun moved to stay the case pending mandamus review of Judge Ezra's decision on the Motion to Recuse. Mot. Stay [#130] at 1, 3. The Court denied the motion, noting that trial had been set for more than eighteen months and was required “to resolve key factual questions.” Order of July 3,2018 [#138] at 4. On July 11, the parties filed a Joint Notice of Settlement wherein Plaintiff agreed to dismiss his remaining claims against the Defendants with prejudice in exchange for $1,250.00. Joint Notice Settlement [#141]. Both parties also announced their intention to seek attorneys' fees following dismissal. Plaintiff, however, refused to dismiss his claims, contending that because each side intended to file motions for fees and costs, dismissing the case would deprive the Court of jurisdiction over these motions. Resp. Mot. Dismiss [#145] at 2. On July 19, 2018, Defendants were then compelled to file a motion to dismiss-in effect, a motion to enforce the settlement agreement. The Court granted the motion so the settlement agreement could be effectuated. Order of Aug. 9, 2018 [#144].

Consistent with the notice of settlement, both parties filed motions for attorneys' fees and costs. Ozmun seeks fees and costs under 15 U.S.C. § 1692k(a)(3), which mandates an award of fees and costs to an individual plaintiff who maintains a successful action to enforce a defendant's liability under the FDCPA. Pl.'s Mot. Att'ys' Fees [#152] at 2-3. Defendants similarly seek an award of fees under 15 U.S.C. § 1692k(a)(3), as well as under Texas Finance Code § 392.403(c), Rule 11 of the Federal Rules of Civil Procedure, and 28 U.S.C. § 1927. Defs.' Mot. Att'ys' Fees [#151] at 2. Defendants also move to hold Chatman, Wood, Amy Clark, and Ozmun in contempt for perpetrating a fraud upon the court by failing to dismiss this case with prejudice as agreed to in the Notice of Settlement. Mot. Contempt [#164] at 2-3. These pending motions have been briefed and are ripe for decision.

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