HARRIS

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

PITTSBURGH DIVISION

LACEY J. HARRIS, )

) Civil Action No.:

) 2:25-CV-00170-CCW-CBB

Plaintiff, )

vs. ) ) ) C U h n r it is e t d y S C t r a i t s e w s e D ll i s W tr i i e c g t a J n u d d ge

)

DAKIS LEGAL GROUP, LLC, ) Christopher B. Brown

Defend ant. ) ) ) U nited States Magist rate Judge

REPORT AND RECOMMENDATION

ON MOTION FOR DEFAULT JUDGMENT ECF Nos. 41 and 48

Christopher B. Brown, United States Magistrate Judge

I. Recommendation

This civil action was initiated by Plaintiff Lacey J. Harris against Defendant

Dakis Legal Group, LLC d/b/a Clear Creek Legal (“Dakis”). Harris alleges Dakis

failed to perform various debt relief and credit repair services it agreed to provide as

well as violated several federal and state laws related to credit repair services and

consumer protection. ECF No. 26. The Court has subject matter jurisdiction under

28 U.S.C. § 1331 and supplemental jurisdiction under 28 U.S.C. § 1367.

Presently pending before the Court is a motion for default judgment by

Harris. ECF Nos. 41 and 48 (amended to include updated attorneys’ fees).

For the reasons that follow, it is respectfully recommended that the Court

grant Harris’s motion for default judgment and enter the Judgment Order set forth

below against Defendant Dakis.

II. Report

a. Background

In or around 2023, Harris entered into an agreement with Defendant Dakis

to perform debt negotiation and credit improvement services for her. ECF No. 26 at

¶ 20. As part of this process, Dakis informed Harris that her debts would be

consolidated into a single, lower monthly payment and Harris would make

payments to Dakis who would in turn negotiate with Harris’s creditor to reach

settlements for her debt. Id. at ¶ 16. A Dakis representative told Harris to stop

paying her creditors and to divert those funds to Dakis for its services, which she

did, paying Dakis an amount of $594.83 per month. Id. at ¶¶ 21-24. Harris was

charged an up-front “legal retainer” fee of $995 for purported legal services, which

was taken out of her monthly payments at $100 increments and was charged a

monthly “legal administration fee” of $99 for services related to “participation in

creditor negotiations” and “litigation defense services.” Id. at ¶¶ 28-29. On top of

these fees, Harris was charged $302.50 for “service costs” which Dakis described as

“implementation, management and maintenance of Harris’s debt negotiation plan”

and a $10.95 monthly unspecified “account fee.” Id. at ¶¶ 30-31. Given the

significant fees charged by Dakis, from the monthly $594.83 payment, Harris only

deposited $81.55 per month into her account to negotiate her debt. Id. at ¶ 31.

Harris maintained these monthly payments for over a year, but Dakis failed

to resolve any of Harris’s enrolled debt obligations. Id. at ¶¶ 33-34. This led to

Harris being sued by one of her creditors involved in the program, and while Dakis

claimed it would defend Harris in that lawsuit, it did not do so. Id. at ¶¶ 40-41.

In April 2024, Dakis informed Harris that it was changing its fee structure,

which Harris claims was done in an effort to avoid further liability. Id. at at ¶¶ 37-

38. Harris further claims this was as a result of Dakis being named as a non-party

“façade firm” in ongoing Consumer Financial Protection Bureau litigation against

an associated entity, Strategic Financial Services, LLC, (“SFS”) related to unlawful

upfront fees SFS and Dakis were charging its customers. Id. Dakis did not apply

the fee structure changes retroactively to Harris’s account and failed to resolve any

of the three accounts in the program. Id. at ¶¶ 39, 42-43. Harris then canceled her

agreement in the fall of 2024 and initiated this lawsuit. Id. at ¶ 44.

Harris asserts causes of action for, inter alia, violations of (1) the Federal

Credit Report Organizations Act, 15 U.S.C. § 1679b (“CROA”); (2) the Virginia

Credit Services Businesses Act, Va. Code § 59.1-335.2 (“VCSBA”); (3) the

Pennsylvania Credit Services Act 73 P.S. § 2183 (“PCSA”); (4) the Virginia

Consumer Protection Act Va. Code. § 59.1-196 et seq., (“VCPA”); and (5)

Pennsylvania Unfair Trade Practices and Consumer Protection Law 73 P.S. § 201-1

et seq. (“PUTPCPL”) Id. at ¶¶ 50-113.

Dakis was originally represented by counsel in this case, but counsel was

later permitted to withdraw representation and Dakis was ordered to retain counsel

by August 29, 2025. ECF Nos. 34, 36. It did not do so and has not otherwise

participated or appeared in this case since counsel withdrew in July 2025. Default

was entered against Dakis and the present motion for default judgment followed.

ECF Nos. 40, 41, 48. A default judgment hearing was held on December 9, 2025

and Dakis failed to appear. ECF No. 47.

b. Standard of Review

Federal Rule of Civil Procedure 55(b)(2) provides that a district court may

enter default judgment against a party when a default has been entered by the

Clerk of Court. Entry of default judgment is a matter within the sound discretion of

the district court. Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984). In

determining whether to grant a default judgment, courts examine three factors: 1)

prejudice to the plaintiff if default is denied; 2) whether the defendant appears to

have a litigable defense; and 3) whether the defendant’s delay is due to culpable

conduct. Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000) (“Chamberlain

factors”). “When a defendant fails to appear,” however, “the district court or its

clerk is authorized to enter a default judgment based solely on the fact that the

default has occurred.” Anchorage Assocs. v. Virgin Islands Bd. of Tax Rev., 922 F.2d

168, 177 n.9 (3d Cir. 1990).

The court must determine “whether the unchallenged facts constitute a

legitimate cause of action.” Joe Hand Promotions, Inc. v. Yakubets, 3 F. Supp. 3d

261, 270 (E.D. Pa. 2014) (citing 10A Charles Alan Wright, Arthur R. Miller, et al.,

Federal Practice and Procedure § 2688). Upon entry of default, “the factual

allegations of the complaint, except those relating to the amount of damages, will be

taken as true.” Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990). The

court need not accept the moving party’s legal conclusions. Id. If the plaintiff

asserts a legitimate cause of action, the court must then determine appropriate

damages. Id. “When a plaintiff prevails by default, he or she is not automatically

entitled to the damages they originally demanded.” Rainey v. Diamond State Port

Corp., 354 F. App'x 722, 724 (3d Cir. 2009). Rather, “defaults are treated as

admissions of the facts alleged, but a plaintiff may still be required to prove that he

or she is entitled to the damages sought.” Id.

c. Discussion

i. Legitimate Causes of Action

Dakis has failed to appear in this matter since counsel was permitted to

withdraw and default judgment is appropriate without further consideration of the

Chamberlain factors.

Harris has likewise established legitimate claims for violations of CROA,

VCSBA, PCSA, VCPA and PUTPCPL.

CROA prohibits any person from making or using “any untrue or misleading

representation of the services of the credit repair organization” or engaging in any

fraudulent or deceptive conduct “in connection with the offer or sale of the services

of a credit repair organization.” 15 U.S.C. § 1679b(a)(3); 15 U.S.C. § 1679b(a)(4). It

further prohibits any credit repair organization from charging or receiving any

money for agreed upon services until the service is “fully performed.” 15 U.S.C. §

1679b(b). The VCSBA and the PCSA prohibit the same conduct. See Va. Code. §

59.1-335.5-1 (prohibits credit repair services from charging or receiving money for

services prior to complete performance of services); 73 P.S. § 2183(1) (same); Va.

Code § 59.1-335.5-4 (prohibits false or misleading representations in the offer or

sale of credit repair services); 73 P.S. § 2183(4) (same). Accepting Harris’s

allegations as true, she claims Dakis presented itself as a credit repair organization

and represented to her that it would negotiate down her debt, defend her in any

credit-related legal action and improve her credit score. Harris claims Dakis did

none of the above and charged Harris for fees it did not incur for services it did not

perform which establishes legitimate claims under CROA, the VCSBA and the

PCSA.

The PUTPCPL is Pennsylvania’s consumer protection law which seeks to

prevent unfair or deceptive acts or practices in the conduct of any trade or

commerce and requires a plaintiff to show that she justifiably relied on the

defendant’s wrongful conduct or representation and suffered harm as a result of

that reliance. Weiss v. Fritch, Inc., 2018 WL 1940109, at *7 (Pa. Super. Ct. 2018).

The VCPA prohibits a supplier from using “deception, fraud, false pretense, or

misrepresentation in connection with a consumer transaction.” Va. Code § 59.1-

200(A)(14) (defining “consumer transaction” as inter alia, offering services for sale

used “primarily for personal . . . purposes.”). Harris claims Dakis promised to

provide her with credit repair and negotiation services, including defending her in

any credit-related lawsuit, she stopped paying her creditors and made monthly

payments for approximately a year to Dakis, and Dakis performed no such services

while charging Harris for fees it did not incur. These allegations establish

legitimate PUTPCPL and VCPA claims.

ii. Damages

Harris seeks actual damages in the amount of $9,517.28 as permitted by

CROA, the VCSBA, the PCSA, the PUTPCPL and the VCPA1 which represents the

amount of all payments she paid into her Global Holding account which was set up

by Dakis to collect its costs and fees and submitted proof of those payments. See

ECF No. 48-3. Thus, Harris has established by a preponderance of the evidence

that she has incurred actual damages in the amount of $9,517.28.

Harris also seeks punitive damages in the amount of $10,000 as permitted by

CROA, the VCSBA, and the PCSA.2 With respect to an award of punitive damages

under CROA, the Court must consider “(1) the frequency and persistence of

noncompliance by the credit repair organization; (2) the nature of the

noncompliance; [and] (3) the extent to which such noncompliance was intentional[.]”

15 U.S.C.A. § 1679g(b). Accepting Harris’s allegations as true, she claims Dakis

presented itself as a credit repair organization and represented to her that it would

negotiate down her debt, defend her in any credit-related legal action and improve

her credit score. Harris claims Dakis did none of the above and charged Harris for

fees it did not incur for services it did not perform. Further, Dakis amended its fee

1 See 15 U.S.C. § 1679g(a)(1), Va. Code. § 59.1-335.10, Va. Code. § 59.1-204, Va. Code. § 6.2-

2048, 73 P.S. § 2191, and 73 P.S. § 201-9.2(a).

2 See 15 U.S.C. § 1679g(a)(2)(A), Va. Code § 59.1-335.10, and 73 P.S. § 2191.

structure to shield itself from liability but did not apply those changes retroactively

and instead kept the unincurred fees. These allegations establish intentional and

persistent noncompliance of CROA throughout the entire relationship between

Harris and Dakis. Thus, Harris has established by a preponderance of the evidence

that she is entitled to punitive damages in the amount of $10,000.

Accordingly, accounting for the actual damages and punitive damages, it is

recommended that the Court award Harris damages in the amount of $19,517.28.

Finally, Harris seeks $5,266.80 in reasonable attorneys’ fees and costs as

permitted by CROA, the VCSBA, the PCSA, the PUTPCPL and the VCPA.3 Harris

seeks $516.80 in costs and $4,750 in attorneys’ fees which reflect an hourly rate of

$375 for attorney review and $125 for paralegal review. These costs and fees are

reasonable and should be awarded. ECF No. 48-1.

III. Conclusion

Based on the undisputed facts and evidence presented, it is respectfully

recommended that the Court grant Harris’s motion for default judgment and enter

the following Order:

AND NOW, after consideration of the foregoing motion for default judgment

filed by Plaintiff Lacey J. Harris, it is hereby ORDERED that said motion is

GRANTED.

3 See 15 U.S.C. § 1679g(a)(3), Va. Code §§ 59.1- 335.12(A) & 59.1-204(B), Va. Code § 6.2- 2048,

Va. Code § 59.1-204 and 73 P.S. § 2191.

IT IS FURTHER ORDERED that Judgment by Default is hereby entered

against Defendant DAKIS LEGAL GROUP, LLC, d/b/a CLEAR CREEK LEGAL as

follows:

1. A final judgment is entered in favor of Plaintiff and against Defendant

Dakis Legal Group in the amount of $19,517.28;

2. Plaintiff shall be awarded post-judgment interest at the applicable

statutory rate against Defendant Dakis Legal Group from the date the

judgment is entered; and

3. Plaintiff is awarded attorneys’ fees and costs against Defendant Dakis

Legal Group in the amount of $5,266.80.

IV. Notice

Therefore, pursuant to 28 U.S.C. § 636(b)(1)(B) and (C), Federal Rule of Civil

Procedure 72, and the Local Rules for Magistrates, the parties have until January

6, 2026 to object to this report and recommendation. Unless otherwise ordered by

the District Judge, responses to objections are due fourteen days after the service of

the objections. Failure to file timely objections will waive any appellate rights.

Brightwell v. Lehman, 637 F.3d 187, 193 n.7 (3d Cir. 2011).

Dated: December 23, 2025 Respectfully submitted,

s/ Christopher B. Brown

United States Magistrate Judge

cc: Honorable Christy Criswell Wiegand

United States District Judge

via electronic filing