Walkabout et al v. Midland Funding LLC et al

Filing 31

ORDER granting in part 14 Defendants' Motion to Dismiss and Brief in Support (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 5/14/2015. (ks)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
LORI WALKABOUT, individually and
on behalf of all others similarly situated,
Plaintiff,
v.
MIDLAND FUNDING LLC and
MIDLAND CREDIT MANAGEMENT, INC.,
Defendants.

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Case No. CIV-14-939-M

ORDER
Before the Court is Defendants’ Motion to Dismiss and Brief in Support, filed November
11, 2014. On January 26, 2015, plaintiff responded, and on February 2, 2015, defendants replied.
Based on the parties’ submissions, the Court makes its determination.
I.

Introduction1
Plaintiff filed this action individually and on behalf of a class of similarly situated

consumers. Plaintiff alleges that defendants violated the Fair Debt Collection Practices Act, the
Oklahoma Consumer Protection Act, and the Truth in Lending Act, and that defendants were
negligent per se.
Plaintiff opened a credit card account with HSBC Bank Nevada, N.A. (“HSBC”) on or
about May of 2007. Plaintiff incurred consumer credit card debt to HSBC related to consumer
purchases, and on or about February 2010, HSBC charged off plaintiff’s debt in the amount of
$2,311.00 and reported to the credit agency Experian that the account was closed and written off

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The facts set forth are taken from plaintiff’s Class Action Complaint (“Complaint”).

in the amount of $2,311.00 as of the reporting date of October of 2010.2 As a result of HSBC’s
actions in charging off plaintiff’s debt, plaintiff alleges that as of October of 2010: (1) she
stopped receiving any credit card periodic statements from HSBC; (2) HSBC stopped charging
interest, late charges and other charges on her account; and (3) HSBC waived its right to charge
and collect post charge off interest, late charges and other charges on the account. Further,
plaintiff alleges she has not incurred any debt nor has she made any payments on her HSBC
account since on or about March of 2010.
On September 3, 2013, defendant Midland Funding, LLC (“Midland Funding”) sued
plaintiff for the debt incurred with HSBC in the District Court of Canadian County, State of
Oklahoma, and alleged that plaintiff owed $2,311.52 as of April 8, 2013. Further, in attempt to
collect the debt, defendant Midland Credit Management, Inc. (“Midland Credit”) reported to
credit reporting agencies, Equifax and Transunion, that plaintiff’s debt owed was $2,738.00 as
September 12, 2013. Midland Funding reported to Transunion that plaintiff’s debt owed as of
July 24, 2014, was $2,916.00 and reported to Experian that plaintiff’s debt owed as of August
2014, was $2,927.00.
Defendants now move the Court to dismiss plaintiff’s claims, pursuant to Federal Rule of
Civil Procedure 12(b)(6), for failure to state a claim upon which relief can be granted.
II.

Standard for Dismissal
Regarding the standard for determining whether to dismiss a claim pursuant to Federal

Rule of Civil Procedure 12(b)(6), the United States Supreme Court has held:
To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is
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In her Complaint, plaintiff alleges that the amount charged off by HSBC was $2,511.00.
See Complaint ¶ 38. However, Exhibit 1 of plaintiff’s Complaint indicates that the amount
charged off and reported to Experian by HSBC was $2,311.00.
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plausible on its face. 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. The plausibility standard is not akin to a “probability
requirement,” but it asks for more than a sheer possibility that a
defendant has acted unlawfully. Where a complaint pleads facts
that are merely consistent with a defendant’s liability, it stops short
of the line between possibility and plausibility of entitlement to
relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations omitted). Further,
“where the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged – but it has not shown – that the pleader is entitled to
relief.” Id. at 679 (internal quotations and citations omitted). Additionally, “[a] pleading that
offers labels and conclusions or a formulaic recitation of the elements of a cause of action will
not do. Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual
enhancement.” Id. at 678 (internal quotations and citations omitted). “While the 12(b)(6)
standard does not require that Plaintiff establish a prima facie case in her complaint, the elements
of each alleged cause of action help to determine whether Plaintiff has set forth a plausible
claim.” Khalik v. United Air Lines, 671 F.3d 1188, 1192 (10th Cir. 2012). Finally, “[a] court
reviewing the sufficiency of a complaint presumes all of plaintiff’s factual allegations are true
and construes them in the light most favorable to the plaintiff.” Hall v. Bellmon, 935 F.2d 1106,
1109 (10th Cir. 1991).
III.

Discussion
A.

Fair Debt Collection Practices Act (“FDCPA”) and Truth In Lending Act
(“TILA”)

Defendants assert that plaintiff has failed to state plausible claims violations of the
FDCPA and the TILA. Specifically, as to plaintiff’s claim that defendants violated the FDCPA,

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defendants assert that plaintiff’s allegation that HSBC waived its right to interest and late charges
because it charged off the debt and stopped sending credit card statements is not a legally
sufficient allegation to support plaintiff’s claim that defendants violated the FDCPA. In her
response, plaintiff included her sworn affidavit in which affirms alleged facts that were not
included in her Complaint regarding her claim that defendants violated the FDCPA. Further,
defendants contend that plaintiff cannot state a claim under the TILA because defendants are not
original creditors as defined in the TILA and Regulation Z. As to plaintiff’s claim that
defendants violated the TILA, plaintiff also includes alleged facts in her response that were not
included in her Complaint. Having carefully reviewed the parties’ submissions, the Court finds
that in the interest of justice, plaintiff should be granted leave to file an amended complaint to
specifically allege the additional facts included in her affidavit and response regarding her claims
that defendants violated the FDCPA and the TILA.
B.

Oklahoma Consumer Protection Act (“OCPA”)
“The OCPA prohibits the use of certain false and misleading practices in consumer

transactions. As defined, a consumer transaction means advertising, [or] offering for sale or
purchase, [or] sale, [or] purchase, or distribution of any services or any property ... for purposes
that are personal, household, or business oriented.” Hollis v. Stephen Bruce & Assocs., No. CIV07-131-C, 2007 WL 4287623, at *4 (W.D. Okla. Dec. 5, 2007) (citing Okla. Stat. tit. 15, §§ 752
& 753) (internal quotations and citations omitted). Further, “the [OCPA] does not apply to debt
collection activities by persons or entities uninvolved in the underlying consumer transaction,”
Id., except in the following circumstances:
A person engages in a practice which is declared to be unlawful
under the Oklahoma Consumer Protection Act when, in the course
of the person's business, the person:
*
*
*
*
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31. Acting as a debt collector, contacts a debtor and threatens to
file a suit against the debtor over a debt barred by the statute of
limitations which has passed for filing suit for such debt; or
32. Acting as a debt collector, contacts a debtor and uses obscene
or profane language to collect a debt.
Okla. Stat. tit. 15, § 753(31) & (32).3
Plaintiff contends that the amendments made by the legislature to Section 753 of the
OCPA opened defendants, as debt collectors, up to liability for violating the OCPA. Defendants
contend that the amendments to Section 753 only apply to debt collectors in very specific
circumstances. Having carefully reviewed plaintiff’s Complaint, and presuming all of plaintiff’s
factual allegations are true and construing them in the light most favorable to plaintiff, the Court
finds that plaintiff has failed to establish a claim against defendants for violating the OCPA.
Specifically, the Court finds that plaintiff has failed to alleged that defendants either: (1)
contacted her and threatened to file a suit against her over her credit card debt, which was barred
by the statute of limitations for bringing a claim for the debt; or (2) contacted her and used
obscene or profane language to collect her debt. Therefore, the Court finds plaintiff’s claim that
defendants violated the OCPA should be dismissed.
C.

Negligence per se

Since the Court is allowing plaintiff to amend her complaint to allege specific facts
regarding her claims that defendants violated the FDCPA and the TILA, the Court will not
address plaintiff’s negligence per se claim in this Order.
IV.

Conclusion
Accordingly, for the reasons set forth above, the Court GRANTS IN PART Defendants’

Motion to Dismiss and Brief in Support [docket no.14] as follows:

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Section 753 of the OCPA was amended on May 12, 2012, to include paragraphs 31 and
32, applying to debt collectors.
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(1)

the Court GRANTS defendants’ motion to dismiss as to plaintiff’s claim that
defendants violated the OCPA and DISMISSES plaintiff’s claim that defendants
violated the OCPA; and

(2)

the Court GRANTS plaintiff leave to amend her complaint as to her claims that
defendants violated the FDCPA and the TILA. Plaintiff shall file her amended
complaint on or before May 28, 2015.4

IT IS SO ORDERED this 14th day of May, 2015.

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Upon plaintiff filing her amended complaint, the Court will find the remaining parts of
defendants’ motion to dismiss moot.
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