United States District Court, D. Hawaii
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS
Oki Mollway United States District Judge.
putative class action asserts violations of the Fair Debt
Collection Practices Act and Hawaii's consumer protection
laws arising out of credit card debt sold to debt collectors.
Defendants seek judgment on the pleadings pursuant to Rule
12(c) of the Federal Rules of Civil Procedure. The court
grants Defendants' motion with respect to Plaintiff's
claim based on allegedly confusing account numbers, as well
as with respect to a claim Plaintiff offered to withdraw
(i.e., the claim arising out of Defendants' alleged
failure to pay Hawaii's general excise taxes). The court
denies the remainder of the motion.
22, 2016, Plaintiff Marivic Aldaya filed a First Amended
Class Action Complaint denominated as a class action. The
First Amended Complaint asserts claims under the Fair Debt
Collection Practices Act, Hawaii's statutory prohibition
against unfair or deceptive acts or practices, and
Hawaii's statutory prohibition against the use by
collection agencies of fraudulent, deceptive, or misleading
misrepresentations, or unfair or unconscionable means of
collecting or attempting to collect debts. See ECF
case arises out of a credit card debt incurred for personal,
family, or household use that Aldaya originally owed HSBC
Bank Nevada, N.A. See First Amended Complaint
¶¶ 12, 18, ECF No. 33, PageID # 272-73. The First
Amended Complaint's allegations concerning the credit
card debt are minimal. No credit card agreement is attached
to or described in the First Amended Complaint. Nor is the
exact amount of the alleged debt clearly established in it.
court takes judicial notice of Aldaya's Equifax credit
report, attached as Exhibit 6 to the First Amended Complaint,
which shows that Aldaya had a $600 credit limit with HSBC.
See ECF No. 33-6, PageID # 325. According to the
same report, Aldaya first failed to make payments on her
account in February 2010. Id., PageID 326. The
credit report indicates that HSBC eventually “charged
off” $546 of debt. Id. The First Amended
Complaint alleges that either $546 or $600 “was the
amount of the alleged debt sold by HSBC.” ECF No. 33,
PageID # 294.
to Paragraph 107 of the First Amended Complaint, federal
regulations require a “charge off” when a debt is
180 days overdue. Id. According to Equifax's
glossary of terms, a “charge off” is an
[a]ccounting term to indicate the creditor does not expect to
collect a balance owing and chooses to transfer the account
to an accounting category such as “bad debt” or
“charged to loss”. These accounts are usually
turned over to collection agencies. This is the most adverse
status reported on accounts.
f-credit-terms (last visited February 21, 2017).
Aldaya alleges that her debt was “charged off” in
March 2011. ECF No. 33 ¶ 109, PageID # 294.
says her charged off credit card debt was at some point
“assigned” to Defendants Midland Funding, LLC,
and Midland Credit Management, Inc. See First
Amended Complaint ¶¶ 13, 17, ECF No. 33, PageID #
272. Midland Funding is allegedly Defendant Encore Capital
Group, Inc.'s wholly owned subsidiary. Id.
¶ 9, PageID # 271. The First Amended Complaint has no
allegations concerning whether the Midland entities are
registered with the State of Hawaii as debt collectors, but
Aldaya conceded at the hearing on the present motion that
they are so registered. Aldaya represented, however, that the
parent company, Encore, is not so registered. Whether any
company is registered as a debt collector is not relevant to
the present motion. Aldaya says that neither of the Midland
entities pays general excise taxes in Hawaii. See
ECF No. 33 ¶¶ 182-84, PageID #s 308-09.
Equifax credit report attached to the First Amended Complaint
shows that Aldaya owed the following balances on her account:
33-6, PageID #s 327-29. The uneven monthly totals suggest
that a variable interest rate might have been assessed. There
is no explanation as to how Aldaya's debt went from the
charge off amount of $546 in November 2010 to $1, 304 in
August 2013, which appears to be when Midland first reported
to Equifax that Aldaya owed it money. At most, the letter of
May 15, 2015, indicates a “Previous Balance” of
$1, 026.59 with “Accrued Interest” of $412.80,
for a total of $1, 439.39. ECF No. 33-1, PageID # 315.
record does not contain allegations concerning Midland's
initial communication with Aldaya or allege that Aldaya
failed to receive the validation disclosures required by the
Fair Debt Collection Practices Act, 15 U.S.C. §
Letter Dated January 29, 2015.
earliest communication attached to the First Amended
Complaint is a letter from Midland Credit Management, Inc.,
to Aldaya dated January 29, 2015. See ECF No. 33-2,
PageID #s 316-17. In its top right corner, this letter
prominently identifies the original creditor as HSBC and
lists the original HSBC account number,
redacted in the exhibit to include only the last four digits,
4087. Id. PageID # 316. There is no dispute that the
original copy of this letter that Aldaya received (and all
other letters attached to the First Amended Complaint) listed
the complete original HSBC account number.
letter noted a new Midland Credit Management account number
of 8538045269. Id. The letter stated that the
balance owed was $1, 439.39, but that Aldaya could pay off
the loan for $863.63, in which event Midland would report
that the account was “Paid in Full for less than the
full balance.” Id. The letter indicated that
it was a communication from a debt collector and that any
information obtained would be used to collect the debt.
Id., PageID 317. It then listed various state
rights, most applicable to people living in states other than
similar letter was sent to Aldaya by Midland Credit
Management in March 2015. See ECF No. 33-3, PageID
Letter Dated April 27, 2015.
letter to Aldaya dated April 27, 2015, Midland Credit
Management, Inc., explained that Midland Funding LLC owned
the balance of $1, 439.39 that Aldaya had allegedly owed to
HSBC. ECF No. 33-4, PageID # 320. The letter acknowledged
that Aldaya was disputing her debt and asked Aldaya's
help to reach a quick resolution. Id. Like the
January and March 2015 letters, the April 2015 letter
prominently included Aldaya's original HSBC account
number in its upper right corner. Id.
April 2015 letter appears to have been a response to
Aldaya's assertion that the Midland entities' records
We understand that you are disputing the accuracy of our
records concerning the above referenced account. After
reviewing the information you provided, as well as our
account notes, and information provided by the previous
creditor, we are unable to determine the nature of your
dispute, and consequently deny that our records are
If you still believe the account information is inaccurate,
please provide an explanation of why you believe it is
inaccurate along with any documentation you have supporting
this explanation. Upon receipt of this new ...