Hemmy v. Midland Funding, LLC et al

Filing 75

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT ERC'S MOTION TO DISMISS COMPLAINT 17 AND GRANTING IN PART AND DENYING IN PART DEFENDANT MIDLAND'S MOTION FOR JUDGMENT ON THE PLEADINGS 40 . Signed by JUDGE LESLIE E. KOBAYASHI on 3/21/2017. (afc) Excerpt of order:"[T]his Court notes that there are three pending motions for summary judgment currently before it in this case. [Dkt. nos. 35 , 44 , 55 .] This Court will issue a separate enterin g order addressing how the instant Order affects those motions. After this Court resolves all of the pending motions for summary judgment, this Court will issue a deadline for Plaintiff to file her Motion for Leave [motion for leave to file an amend ed complaint]." Excerpt of conclusion: "The motions are GRANTED insofar as all of Plaintiffs claims against ERC and Midland are DISMISSED. The dismissal is WITHOUT PREJUDICE, except that the dismissal of Plaintiff's cla im against Midland in Count IV is WITH PREJUDICE. Plaintiff is granted leave to file a motion for leave to file an amended complaint, consistent with the terms of this Order."CERTIFICATE OF SERVICEParticipants r egistered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
MINA E. HEMMY,

)
)
Plaintiff,
)
)
vs.
)
)
MIDLAND FUNDING LLC, et al., )
)
)
Defendant.
_____________________________ )

CIVIL 16-00407 LEK-RLP

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT ERC’S
MOTION TO DISMISS COMPLAINT AND GRANTING IN PART AND DENYING
IN PART DEFENDANT MIDLAND’S MOTION FOR JUDGMENT ON THE PLEADINGS
Before the Court are: Defendant Enhanced Recovery
Company, LLC’s (“ERC”) Motion to Dismiss Complaint, Filed 7/25/16
[Dkt. 1] (“ERC’s Motion”), filed on October 11, 2016; and
Defendant Midland Funding, LLC’s (“Midland”) Motion for Judgment
on the Pleadings (“Midland’s Motion”), filed on November 7, 2016.
[Dkt. nos. 17, 40.]

Pro se Plaintiff Mina E. Hemmy (“Plaintiff”)

filed a memorandum in opposition to ERC’s Motion on October 21,
2016, and Midland filed a statement of no position as to ERC’s
Motion on December 6, 2016.

[Dkt. nos. 29, 47.]

ERC filed a

reply in support of its motion (“ERC Reply”) on December 13,
2016.

[Dkt. no. 48.]

to Midland’s Motion.

Plaintiff failed to file a timely response
On December 13, 2016, Midland filed a reply

in support of its motion (“Midland Reply”).

[Dkt. no. 49.]

Plaintiff filed a response to the Midland Reply (“Plaintiff’s
Midland Response”) on December 16, 2016, and Midland filed a

reply to Plaintiff’s Midland Response (“Supplemental Midland
Reply”) on December 22, 2016.

[Dkt. nos. 53, 54.]

On December 14, 2016, the Court issued an entering
order finding these matters suitable for disposition without a
hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice
of the United States District Court for the District of Hawai`i
(“Local Rules”).

After careful consideration of the motions,

supporting and opposing memoranda, and the relevant legal
authority, the ERC Motion and the Midland Motion are HEREBY
GRANTED IN PART AND DENIED IN PART for the reasons set forth
below.

Specifically, the motions are GRANTED insofar as all of

Plaintiff’s claims against ERC and Midland are DISMISSED.

The

dismissal of Plaintiff’s claim against Midland in Count IV is
WITH PREJUDICE, but the dismissal of all Plaintiff’s other claims
against Midland and all of Plaintiff’s claims against ERC is
WITHOUT PREJUDICE.

In other words, this Court will allow

Plaintiff to try to amend her Complaint to cure the defects in
those claims that this Court has identified in this Order.
BACKGROUND
On July 25, 2016, Plaintiff filed her Complaint for
Permanent Injunction and Other Relief (“Complaint”) against
Midland, ERC, and Defendant “Kirk Neste of Cades and Schutte”
(“Neste”).

Plaintiff brings this action pursuant to sections

5(a) and 13(b) of the Fair Debt Collections Practices Act

2

(“FDCPA”), 15 U.S.C. §§ 1692–1692p, and the Hawai`i Uniform
Commercial Code (“UCC”), Haw. Rev. Stat. Chapter 490, Article 9.
[Complaint at ¶¶ 1-2.]

According to the Complaint, “[t]he

alleged debt instrument has been treated as a tradable security
secured by [Plaintiff’s] legal name in commerce for alleged goods
and services or other money owed, which was by an alleged
contract/instrument sold or assigned to a third party.”

[Id. at

¶ 13.]
Attached to the Complaint as Exhibit A is a letter
dated April 12, 2016 from Plaintiff to Midland regarding
“correspondence purporting to allege a debt claimed by” Credit
One Bank, N.A., in the amount of $778.35 (“Midland Letter”).
[Complaint, Exh. A at 1.]

The letter gave Midland notice that

Plaintiff was disputing the debt and she demanded that Midland
cease and desist collection until it provided validation and
verification of the debt.

Plaintiff demanded the following

information to verify the debt:
1) The name and address of the person or persons
of Credit One bank, [sic] N.A. alleging a claim of
a debt.
2) The ORIGIN of the funds used to create this
alleged claim of a debt.
3) The name of the actual creditor even if that is
I.
4) The actual records of the organization or other
government unit showing the time and place of the
DEPOSIT and distribution of the funds used to
create this alleged claim of debt.
3

5) The actual records of the organization or other
governmental unit showing that an actual loan was
made from the organization or other governmental
unit’s own funds that resulted in the enclosed
alleged claim of a debt.
6) The actual FINANCIAL records of the
organization or other governmental unit with a
live signature on any and all
document/instrument(s) used to allege the
existence of a REAL LOAN of funds or debt from the
organization or other governmental unit, to
myself.
7) The actual records (or affidavit) of the
organization or other governmental unit showing
that any and all document/instrument(s) containing
my signature or the likeness of my signature were
not negotiated or pledged by the organization or
other governmental unit against my credit to
create the funds used for the appearance of a debt
and resulting in this alleged claim of debt.
[Id. at 2-3 (some emphases omitted).]

Plaintiff also demanded

information showing that the person preparing the validation of
the debt had the authority and the personal knowledge to do so.
[Id. at 3-4.]

She asserted that she was entitled to this

information pursuant to “the truth in lending laws of the United
States Code, Title 15 § 1601 et seq. and Regulation Z” and the
FDCPA.

[Id. at 2.]
Exhibit B is a letter dated October 22, 2015 from

Plaintiff to AFNI Inc. regarding its “report of a collection on
[her] credit” on behalf of AT&T in the amount of $2,456 (“AFNI
Letter”).

[Complaint, Exh. B at 1.]

to the Midland Letter.

The AFNI Letter is similar

Exhibit C is a letter dated May 20, 2016

from Plaintiff to Neste regarding “correspondence around May 10th
4

alleging a debt from” House’s Homes LLC for an “[a]lleged pending
judgment” (“Neste Letter”).

[Id., Exh. C at 1.]

The Neste

Letter is similar to the Midland Letter.
The Complaint alleges the following claims: failure to
report to consumer credit bureaus that a debt is disputed, in
violation of 15 U.S.C. § 1692e(8) (“Count I”); reporting an
unverified/invalid debt to third parties and/or credit bureaus,
in violation of 15 U.S.C. § 1692g(b) (“Count II”); a common law
defamation claim (“Count III”); and a UCC claim based upon the
alleged failure to provide an authentic statement of account upon
request, in violation of Haw. Rev. Stat. § 490:9-210, 625(f).
Plaintiff prays for the following relief from an unspecified
defendant: an order requiring the defendant “to delete this
unverified debt from its accounting books”; [id. at ¶ 15.A;] an
injunction requiring the defendant to comply with the FDCPA and
the UCC in all future debt collections; court supervision, or
supervision of a special master to ensure compliance; fees and
costs pursuant to 5 U.S.C. § 552(a)(4)(E) or any other applicable
law; damages and penalties for the FDCPA and UCC violations; and
any other appropriate relief.
The ERC Motion argues that this Court must dismiss
Plaintiff’s claims against it because the Complaint does not
contain any factual allegations against it.

Further, the

allegations of the Complaint and the exhibits thereto foreclose

5

Plaintiff’s state law claims, which must be dismissed with
prejudice.
The Midland Motion argues that: Plaintiff fails to
state a FDCPA claim against Midland; Plaintiff fails to state a
defamation claim; and Plaintiff’s debts do not fall within the
scope of the UCC.
The Court turns first to the merits of the Midland
Motion.
DISCUSSION
I.

Midland Motion
Midland filed its answer to the Complaint on October 7,

2016.

[Dkt. no. 12.]

Midland brings its motion pursuant to Fed.

R. Civ. P. 12(c), which states: “After the pleadings are closed –
but early enough not to delay trial – a party may move for
judgment on the pleadings.”
“Analysis under Rule 12(c) is substantially identical
to analysis under Rule 12(b)(6)[1] because, under both rules, a
court must determine whether the facts alleged in the complaint,
taken as true, entitle the plaintiff to a legal remedy.”

Pit

River Tribe v. Bureau of Land Mgmt., 793 F.3d 1147, 1155 (9th
Cir. 2015) (citation and quotation marks omitted).

However, this

Court is not required to accept as true “[t]hreadbare recitals of
1

Fed. R. Civ. P. 12(b)(6) allows a defendant to present the
defense of “failure to state a claim upon which relief can be
granted” by motion, instead of in a responsive pleading.
6

the elements of a cause of action, supported by mere conclusory
statements.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct.
1955 (2007) (Although for the purposes of a motion to dismiss we
must take all of the factual allegations in the complaint as
true, we “are not bound to accept as true a legal conclusion
couched as a factual allegation” (internal quotation marks
omitted))).
A.

FDCPA Claims
This district court has stated:
To state a claim under the FDCPA, a plaintiff must
show: (1) that he or she is a consumer; (2) that
the debt arises out of a transaction entered into
for personal purposes; (3) that the defendant is a
debt collector; and (4) that the defendant
violated one of the provisions of the FDCPA.

Minichino v. Piilani Homeowners Ass’n, CIVIL NO. 16-00461
DKW-RLP, 2016 WL 7093431, at *3 (D. Hawai`i Dec. 2, 2016) (citing
Freeman v. ABC Legal Servs. Inc., 827 F. Supp. 2d 1065, 1071
(N.D. Cal. 2011)).
The FDCPA defines a consumer as “any natural person
obligated or allegedly obligated to pay any debt.”
§ 1692a(3).

15 U.S.C.

The Complaint quotes this definition, [Complaint at

¶ 7,] and alleges that Plaintiff “is established as a secured
party creditor of the defendants alleged claim of a debt” [id. at
¶ 5].

In considering Midland’s Motion, this Court is not

required to accept Plaintiff’s recitation of the statutory
7

definition and her conclusory statement.

However, because

Plaintiff is proceeding pro se, this Court must liberally
construe the Complaint.

See, e.g., Eldridge v. Block, 832 F.2d

1132, 1137 (9th Cir. 1987) (“The Supreme Court has instructed the
federal courts to liberally construe the ‘inartful pleading’ of
pro se litigants.” (citing Boag v. MacDougall, 454 U.S. 364, 365,
102 S. Ct. 700, 701, 70 L. Ed. 2d 551 (1982) (per curiam))).
Liberally construing the Midland Letter together with allegations
in the Complaint, Plaintiff sufficiently alleges that she is a
consumer for purposes of the FDCPA.
However, even liberally construing the Complaint
together with the Midland Letter, Plaintiff’s allegations do not
satisfy the second element of a FDCPA claim – that “the debt
ar[ose] out of a transaction entered into for personal purposes.”
See Minichino, 2016 WL 7093431, at *3.
As to the third element, under the FDCPA:
The term “debt collector” means any person who
uses any instrumentality of interstate commerce or
the mails in any business the principal purpose of
which is the collection of any debts, or who
regularly collects or attempts to collect,
directly or indirectly, debts owed or due or
asserted to be owed or due another. . . .
§ 1692a(6).

In reviewing a district court’s dismissal of a

complaint that alleged FDCPA violations on the ground that the
complaint failed to state a claim, the Ninth Circuit stated:
The complaint fails to provide any factual basis
from which we could plausibly infer that the
8

principal purpose of Wells Fargo’s business is
debt collection. Rather, the complaint’s factual
matter, viewed in the light most favorable to the
Schlegels, establishes only that debt collection
is some part of Wells Fargo’s business, which is
insufficient to state a claim under the FDCPA.
Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 1209 (9th Cir.
2013) (citation omitted).
Similarly, even liberally construing the Complaint and
the Midland Letter, Plaintiff does not allege that “the principal
purpose of [Midland’s] business is debt collection”; at best, she
alleges that debt collection is a part of Midland’s business.
See id.
1.

Count I

As to the fourth element of an FDCPA claim – the
alleged violation of the act, Count I alleges a violation of
§ 1692e(8), which states:
A debt collector may not use any false, deceptive,
or misleading representation or means in
connection with the collection of any debt.
Without limiting the general application of the
foregoing, the following conduct is a violation of
this section:
. . . .
(8) Communicating or threatening to
communicate to any person credit information
which is known or which should be known to be
false, including the failure to communicate
that a disputed debt is disputed.
Reading the Complaint as a whole, Plaintiff has alleged that she
disputed a debt that Midland was attempting to collect.

9

Count I

includes the conclusory allegation that “the debt
collector/defendant have failed to report the debt as disputed to
the consumers credit bureaus.”

[Complaint at ¶ 8.]

The

Complaint does not include any supporting factual allegations,
such as an allegation that she obtained her credit report and the
report does not reflect the dispute.

See, e.g., Lohse v.

Nationstar Mortg., Case No. 14–cv–00514–JCS, 2014 WL 5358966, at
*8 (N.D. Cal. Oct. 20, 2014).2
Thus, although Plaintiff sufficinetly alleged the first
element of her § 1692e(8) claim, she failed to allege sufficient
facts to satisfy the other three elements.

This Court therefore

CONCLUDES that Count I fails to state a plausible claim for
relief.

See Iqbal, 556 U.S. at 678 (“To survive a motion to

dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible
on its face.’” (quoting Twombly, 550 at 570, 127 S. Ct. 1955));
id. (“A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” (citing Twombly, 550 at 556, 127 S. Ct. 1955)).

2

This

In Lohse, the district court concluded that the
plaintiffs’ allegations were sufficient to state a § 1692e(8)
violation. They alleged that “they obtained a copy of their
credit report on October 30, 2013 and that Nationstar failed to
accurately mark Plaintiff’s credit report by reporting the
Plaintiffs’ had disputed the debt.” 2014 WL 5358966, at *8.
10

Court therefore GRANTS the Midland Motion insofar as Plaintiff’s
claim against Midland in Count I is DISMISSED.
However, this Court also CONCLUDES that it is arguably
possible for Plaintiff to cure the defects in her claim against
Midland I by amendment.

See Lucas v. Dep’t of Corr., 66 F.3d

245, 248 (9th Cir. 1995) (“Unless it is absolutely clear that no
amendment can cure the defect, . . . a pro se litigant is
entitled to notice of the complaint’s deficiencies and an
opportunity to amend prior to dismissal of the action.”).

The

dismissal is therefore WITHOUT PREJUDICE.
2.

Count II

Count II alleges a violation of 15 U.S.C. § 1692g(b),
which states, in pertinent part:
If the consumer notifies the debt collector in
writing within the thirty-day period described in
subsection (a) of this section that the debt, or
any portion thereof, is disputed, or that the
consumer requests the name and address of the
original creditor, the debt collector shall cease
collection of the debt, or any disputed portion
thereof, until the debt collector obtains
verification of the debt or a copy of a judgment,
or the name and address of the original creditor,
and a copy of such verification or judgment, or
name and address of the original creditor, is
mailed to the consumer by the debt
collector. . . .
As previously noted, the Midland Letter is evidence that
Plaintiff disputed the debt that Midland attempted to collect,
and that she requested verification of the debt.

However, the

Complaint does not allege that Plaintiff notified Midland of her
11

dispute within the thirty-day period after Midland’s initial
communication, as required pursuant to § 1692g(a).3
Thus, although Plaintiff sufficiently alleged the first
element of her § 1692g(b) claim, she failed to allege sufficient
facts to satisfy the other three elements.

This Court therefore

CONCLUDES that Plaintiff’s claim against Midland in Count II

3

Section 1692g(a) states:
Within five days after the initial communication
with a consumer in connection with the collection
of any debt, a debt collector shall, unless the
following information is contained in the initial
communication or the consumer has paid the debt,
send the consumer a written notice containing –
(1)

the amount of the debt;

(2) the name of the creditor to whom the debt is
owed;
(3) a statement that unless the consumer, within
thirty days after receipt of the notice, disputes
the validity of the debt, or any portion thereof,
the debt will be assumed to be valid by the debt
collector;
(4) a statement that if the consumer notifies the
debt collector in writing within the thirty-day
period that the debt, or any portion thereof, is
disputed, the debt collector will obtain
verification of the debt or a copy of a judgment
against the consumer and a copy of such
verification or judgment will be mailed to the
consumer by the debt collector; and
(5) a statement that, upon the consumer’s written
request within the thirty-day period, the debt
collector will provide the consumer with the name
and address of the original creditor, if different
from the current creditor.
12

fails to state a plausible claim for relief.

However, this Court

also CONCLUDES that it is arguably possible for Plaintiff to cure
the defects in that claim by amendment.

This Court GRANTS the

Midland Motion insofar as this Court DISMISSES Plaintiff’s claim
against Midland in Count II WITHOUT PREJUDICE.
B.

Defamation Claim
Plaintiff apparently alleges that, because Midland

failed to verify the debt that it was attempting to collect from
her, reporting the debt to credit reporting agencies constituted
defamation.

However, the Fair Credit Reporting Act (“FCRA”)

provides that:
Except as provided in sections 1681n and 1681o of
this title,[4] no consumer may bring any action or
proceeding in the nature of defamation, invasion
of privacy, or negligence with respect to the
reporting of information against any consumer
reporting agency, any user of information, or any
person who furnishes information to a consumer
reporting agency, based on information disclosed
pursuant to section 1681g, 1681h, or 1681m of this
title, or based on information disclosed by a user
of a consumer report to or for a consumer against
whom the user has taken adverse action, based in
whole or in part on the report except as to false
information furnished with malice or willful
intent to injure such consumer.

4

15 U.S.C. § 1681n governs “Civil liability for willful
noncompliance,” and 15 U.S.C. § 1681o governs “Civil liability
for willful noncompliance.” However, both statutes address
liability for the failure to comply with requirements imposed on
credit reporting agencies; they do not permit Plaintiff to bring
a defamation claim against an entity that furnishes debt
information to the credit reporting agencies.
13

15 U.S.C.A. § 1681h(e) (emphases added).

Pursuant to § 1681h(e),

a defamation claim against Midland is preempted by the FCRA
unless it is based upon “false information furnished with malice
or willful intent to injure such consumer.”
The elements of a defamation claim under Hawai`i law
are:
(1) a false and defamatory statement concerning
another;
(2)

an unprivileged publication to a third party;

(3) fault amounting at least to negligence on the
part of the publisher [actual malice where the
plaintiff is a public figure]; and
(4) either actionability of the statement
irrespective of special harm or the existence of
special harm caused by the publication.
Gonsalves v. Nissan Motor Corp. in Hawaii, 100 Hawai`i 149, 171,
58 P.3d 1196, 1218 (2002) (alteration in Gonsalves) (citations
omitted).

Because Plaintiff is not a public figure, actual

malice is not required under Hawai`i law.

Although not required

to establish the elements of the claim under Hawai`i law,
Plaintiff must allege that Midland furnished false information
“with malice or willful intent to injure” her to avoid FCRA
preemption.

Even liberally construing Plaintiff’s Complaint, it

does not allege either malice or willful intent.
This Court CONCLUDES that Plaintiff’s defamation claim
against Midland fails to state a plausible claim for relief.
Although it appears unlikely that Plaintiff can do so, this Court
14

CONCLUDES that it is arguably possible for her to cure the defect
in her claim by amending her Complaint to include factual
allegations that would support a reasonable inference that
Midland acted with either malice or willful intent to injure her.
This Court therefore GRANTS the Midland Motion insofar this Court
DISMISSES Plaintiff’s claim against Midland in Count III, but the
dismissal is WITHOUT PREJUDICE.
C.

UCC Claim
Plaintiff alleges that Article 9 of the UCC applies

based upon the sale or assignment of the instrument of her
alleged debt.

See Complaint at ¶ 13.

Count IV alleges that “the

defendant” failed to respond to Plaintiff’s request for an
“‘authentic statement of account,’” in violation of Haw. Rev.
Stat. § 490:9-210, 625(f).

[Id. at ¶ 14.]

Section 490:9-210(a)(4) defines a “[r]equest regarding
a statement of account,” and § 409:9-210(b)(2) addresses what
response is required for such a request.

Section 490:9-625

governs the remedies available when a secured party fails to
comply with Article 9.

Midland, however, argues that Count IV

fails as a matter of law because Article 9 does not apply to the
facts of this case in the first instance.
Article 9 applies to, inter alia, “[a] transaction,
regardless of its form, that creates a security interest in
personal property or fixtures by contract” and “[a] sale of

15

accounts, chattel paper, payment intangibles, or promissory
notes.”

Haw. Rev. Stat. § 490:9-109(a)(1), (3).

However,

Article 9 does not apply to “[a]n assignment of accounts, chattel
paper, payment intangibles, or promissory notes which is for the
purpose of collection only.”

§ 490:9-109(d)(5) (emphasis added).

The Complaint, including the Midland Letter, clearly
alleges that the assignment of Plaintiff’s account to Midland was
for the purpose of collection only.

This Court therefore

CONCLUDES that Count IV fails to state a plausible claim for
relief because UCC Article 9 does not apply to the facts of this
case.

Further, this Court CONCLUDES that Plaintiff cannot cure

the defect in this claim by amendment.

This Court GRANTS the

Midland Motion insofar as this Court DISMISSES Plaintiff’s claim
against Midland in Count IV WITH PREJUDICE.
D.

Summary
This Court GRANTS the Midland Motion insofar as: 1) all

of Plaintiff’s claims against Midland are DISMISSED; and 2) the
dismissal of Plaintiff’s claim against Midland in Count IV is
WITH PREJUDICE.

To the extent that the Midland Motion seeks

dismissal of Counts I, II, and III with prejudice, the Midland
Motion is DENIED.

The dismissal of Plaintiff’s claims against

Midland in Counts I, II, and III is WITHOUT PREJUDICE.

16

III. ERC Motion
A.

FDCPA Claims
ERC argues that Plaintiff’s claims against it in

Counts I and II fail to state a claim upon which relief can be
granted because the Complaint does not contain any factual
allegations against it.

Although the Complaint does not clearly

state so, Plaintiff’s position appears to be that ERC is liable
for the attempted collection described in the AFNI Letter.
However, the Complaint does not include any factual allegations
that would allow this Court to draw the reasonable inference that
ERC is liable for the AFNI collection.

This Court therefore

CONCLUDES that Counts I and II fail to state plausible FDCPA
claims against ERC, and GRANTS the ERC Motion insofar as
Plaintiff’s claims against ERC in Counts I and II are DISMISSED.
However, this Court CONCLUDES that it is arguably
possible for Plaintiff to cure the defects in her FDCPA claims
against ERC by amendment.

This Court emphasizes that, in

addition to amending the Complaint to allege how ERC is allegedly
liable for the AFNI collection, Plaintiff must also amend her
FDCPA claims against ERC to address the general defects in her
FDCPA claims discussed in the analysis of the Midland Motion.
The dismissal of Plaintiff’s claims against ERC in Counts I and
II is WITHOUT PREJUDICE.

17

B.

Defamation Claim
This Court also CONCLUDES that Plaintiff’s defamation

claim against ERC in Count III fails to state a claim upon which
relief can be granted because of the lack of any factual
allegations regarding ERC.

This Court therefore GRANTS the ERC

Motion insofar as Plaintiff’s claim against ERC in Count III is
DISMISSED.
However, based on the same analysis of Plaintiff’s
defamation claim against Midland, this Court also CONCLUDES that
it is arguably possible for Plaintiff to cure the defects in her
defamation claim against ERC by amendment.

The dismissal of

Plaintiff’s defamation claim against ERC in Count III is
therefore WITHOUT PREJUDICE.
C.

UCC Claim
This Court also CONCLUDES that Plaintiff’s UCC claim

against ERC in Count IV fails to state a claim upon which relief
can be granted because of the lack of any factual allegations
regarding ERC.

This Court therefore GRANTS the ERC Motion

insofar as Plaintiff’s claim against ERC in Count IV is
DISMISSED.
Even if Plaintiff can amend her Complaint to allege how
ERC is liable for the AFNI collection, her UCC claim against ERC
would still fail as a matter of law for the reasons set forth in
the analysis of Plaintiff’s UCC claim against Midland.
18

However,

as this Court previously noted, it is not absolutely clear from
the Complaint that Plaintiff’s UCC claim against ERC is based on
the AFNI collection.

This Court therefore cannot conclude that

it is absolutely clear that Plaintiff cannot amend her Complaint
to state a plausible UCC claim against ERC.

Because it is

arguably possible for Plaintiff to cure the defects in her UCC
claim against ERC, the dismissal of Plaintiff’s UCC claim against
ERC in Count IV is WITHOUT PREJUDICE.
D.

Summary
This Court GRANTS the ERC Motion insofar as all of

Plaintiff’s claims against ERC are DISMISSED.

To the extent that

the ERC Motion seeks dismissal of Plaintiff’s claims with
prejudice, the ERC Motion is DENIED.

The dismissal of all of

Plaintiff’s claims against ERC is WITHOUT PREJUDICE.
IV.

Leave to Amend
This Court has dismissed Plaintiff’s claim against

Midland in Count IV with prejudice.

This Court has dismissed

Plaintiff’s claims against Midland in Counts I, II, and III and
all of Plaintiff’s claims against ERC without prejudice.
As to the claims that this Court has dismissed without
prejudice, this Court will allow Plaintiff to file a motion for
leave to file an amended complaint (“Motion for Leave”).
Plaintiff must attach her proposed amended complaint to the
Motion for Leave.

See Local Rule LR10.3 (“Any party filing or
19

moving to file an amended complaint . . . shall reproduce the
entire pleading as amended and may not incorporate any part of a
prior pleading by reference, except with leave of court.”).

The

Motion for Leave itself should explain why Plaintiff should be
allowed to file the proposed amended complaint.

The Motion for

Leave will be referred to the magistrate judge.
This Court CAUTIONS Plaintiff that her proposed amended
complaint must include all of the claims that she wishes to
pursue in this case, as well as all of the factual allegations
and all of the legal theories that these claims rely upon.
Plaintiff cannot rely upon or incorporate by reference any
portion of her original Complaint.

This Court will not consider

Plaintiff’s amended complaint collectively with her prior filings
in this case.
This Court also CAUTIONS Plaintiff that, if she fails
to file her Motion for Leave by the specified deadline, the
claims that this Court dismissed without prejudice in this Order
will be dismissed with prejudice.

In that instance, Plaintiff

would not have any claims against Midland and ERC remaining in
this case.

Further, this Court CAUTIONS Plaintiff that, even if

the magistrate judge grants her Motion for Leave and allows her
to file her proposed amended complaint, this Court may still
dismiss one or more of her amended claims with prejudice if
Plaintiff fails to cure the defects identified in this Order.
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This Court also CAUTIONS Plaintiff that this Court has
only given her leave to cure the defects in her claims identified
in this Order.

Plaintiff does not have leave to add any new

parties, new claims, or new theories of liability.

If Plaintiff

wishes to add any new parties, claims, or theories of liability,
she must file a motion to amend, pursuant to Fed. R. Civ.
P. 15(a)(2).

The motion to amend must be separate from the

Motion for Leave described in this Order.

If Plaintiff chooses

to file a motion to amend, she must comply with the deadline in
the Rule 16 Scheduling Order.

[Filed 11/1/16 (dkt. no. 38).]

Finally, this Court notes that there are three pending
motions for summary judgment currently before it in this case.
[Dkt. nos. 35, 44, 55.]

This Court will issue a separate

entering order addressing how the instant Order affects those
motions.

After this Court resolves all of the pending motions

for summary judgment, this Court will issue a deadline for
Plaintiff to file her Motion for Leave.
CONCLUSION
On the basis of the foregoing, ERC’s Motion to Dismiss
Complaint, Filed 7/25/16 [Dkt. 1], filed October 11, 2016, and
Midland’s Motion for Judgment on the Pleadings, filed November 7,
2016, are HEREBY GRANTED IN PART AND DENIED IN PART.

The motions

are GRANTED insofar as all of Plaintiff’s claims against ERC and
Midland are DISMISSED.

The dismissal is WITHOUT PREJUDICE,
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except that the dismissal of Plaintiff’s claim against Midland in
Count IV is WITH PREJUDICE.

Plaintiff is granted leave to file a

motion for leave to file an amended complaint, consistent with
the terms of this Order.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, March 21, 2017.

/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge

MINA E. HEMMY VS. MIDLAND FUNDING LLC, ET AL; CIVIL 16-00407 LEKRLP; ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT ERC’S
MOTION TO DISMISS COMPLAINT AND GRANTING IN PART AND DENYING IN
PART DEFENDANT MIDLAND’S MOTION FOR JUDGMENT ON THE PLEADINGS

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