Cox v. Hilco Receivables, LLC
2010 U.S. Dist. LEXIS 124605
| N.D. Tex. | 2010Background
- Cox purchased a vehicle in 2004, financed by Wells Fargo; Wells Fargo repossessed and sold the vehicle, leaving a deficiency.
- Hilco purchased Cox's deficiency balance and Central Credit Services was retained to collect it.
- April 8, 2009 collection letter from Central to Cox stated Hilco could authorize settlement and that Cox’s account would be settled upon payment.
- Cox alleges Hilco could not legally hold the debt due to no Chapter 348 license, violating the FDCPA and TDCA.
- Defendants move to dismiss under Rule 12(b)(6) arguing (a) license not required to hold debt, (b) license issue does not alone violate FDCPA/TDCA, (c) Central’s independent collection role negates Hilco’s liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| License requirement under Chapter 348 governs holders | Hilco must be licensed; without license it cannot hold the debt. | Hilco may not be a holder under § 348.001; no license needed to own the deficiency. | Hilco qualifies as a holder; license required to act as holder; thus issue survives. |
| FDCPA misrepresentation about who owns the debt | Misrepresentation that debt is owed to Hilco violates FDCPA §1692e(2) and (10). | Unlicensed status alone not per se FDCPA violation; focus is on misrepresentation. | FDCPA §1692e(2) and (10) plead sufficiently; §1692e(5) dismissed. |
| FDCPA threat or unconscionable conduct | Letter’s implications constitute threats/unconscionable collection. | No threat to take action that cannot be legally taken; no unconscionable means shown. | FDCPA §1692e(5) and §1692f claims dismissed with prejudice. |
| TDCA claims based on misrepresentation | TDCA prohibits same misrepresentations as FDCPA; Hilco’s status violated TDCA §392.304(a). | TDCA parallels FDCPA; no separate basis to dismiss beyond FDCPA arguments. | TDCA claims survive for same reasons as FDCPA claims. |
| Vicarious liability for Central's collection actions | Hilco can be liable for Central's letter as agent or through control. | Pollice reasoning not binding in Fifth Circuit; Hilco not liable for Central’s actions. | Hilco vicariously liable for Central’s representations; counts survive. |
Key Cases Cited
- Wade v. Regional Credit Assoc., 87 F.3d 1098 (9th Cir. 1996) (unlicensed collection activities not per se FDCPA violations; notices informational)