Hauk v. LVNV FUNDING, LLC, 2010 U.S. Dist. LEXIS 117834

Background

LVNV purchased defaulted debts of Hauk and Velazquez and sued them in Maryland state court through attorneys.
LVNV allegedly lacked Maryland debt-collection licensing before filing suit as required by Md. Bus. Reg. § 7-301(a).
Amended complaint alleges specific FDCPA and Maryland state-law violations based on licensing and filing practices in the Hauk and Velazquez actions.
Plaintiffs filed suit in Frederick County, Maryland, which LVNV removed to federal court; amended complaint followed.
LVNV moved to dismiss, contending Maryland licensing statute violates the dormant Commerce Clause and that several FDCPA and state-law claims fail.
Court denied most dismissal arguments but granted dismissal of Count I seeking injunctive/declaratory relief to bar LVNV from operating without a license (moot after LVNV obtained a license).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does Maryland's debt-collector licensing statute violate the dormant Commerce Clause?	LVNV is burdened interstate commerce; license requirement discriminates and is excessive.	License promotes local interests and is not clearly excessive; LVNV may be engaged in Maryland business.	Claims survive; licensing statute not yet shown to discriminate or unduly burden interstate commerce on motion to dismiss.
Does LVNV's alleged lack of license render its collection actions an unfair or unconscionable means under FDCPA § 1692f?	Unlicensed operation constitutes unfair collection means under § 1692f.	No license argument resolves at later stage; need more evidence.	§ 1692f claim survives the motion to dismiss.
Do FDCPA disclosures under §§ 1692e(11) and 1692g apply to interrogatories, and are interrogatories exempt as formal pleadings?	Interrogatories used in March 2009 must include disclosures; no automatic exemption.	Interrogatories may be treated as formal pleadings or communications exempt from disclosures.	Interrogatories are not automatically exempt; § 1692e(11) and § 1692g disclosures remain potentially applicable; claim survives for now.
Does LVNV's filing of lawsuits without a Maryland license constitute a 'threat to take action that cannot legally be taken' under § 1692e(5)?	Unlicensed filings themselves threaten to pursue illegal actions in court.	Filing actual lawsuits cannot be a 'threat' if action could be taken; issues are close and unresolved here.	§ 1692e(5) claim denied without prejudice; can be resolved on summary judgment if pursued.

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standard requiring plausible claims)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (heightened pleading standard)
Presley v. City of Charlottesville, 464 F.3d 480 (4th Cir. 2006) (Rule 12(b)(6) standard; facially plausible claims)
Edwards v. City of Goldsboro, 178 F.3d 231 (4th Cir. 1999) (pleading and factual inference standards in review)
Yamaha Motor Corp., U.S.A. v. Jim's Motorcycle, Inc., 401 F.3d 560 (4th Cir. 2005) (two-tier dormant Commerce Clause analysis)
Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality of Or., 511 U.S. 93 (U.S. 1994) (dormant Commerce Clause burden vs. local benefits)
Pike v. Bruce Church, Inc., 397 U.S. 137 (U.S. 1970) (burden-vs-benefits test for interstate commerce)
Beskind v. Easley, 325 F.3d 506 (4th Cir. 2003) (dormant Commerce Clause two-tier approach guiding analysis)
Allenberg Cotton Co. v. Pittman, 419 U.S. 20 (U.S. 1974) (distinguishes intrastate vs interstate business in forum-state regulation)
Sayyed v. Wolpoff & Abramson, LLP, 485 F.3d 226 (4th Cir. 2007) (interrogatories and FDCPA treatment; later appellate remand)
Sayyed v. Wolpoff & Abramson, LLP, 733 F. Supp. 2d 635 (D. Md. 2010) (district court treatment post-remand)
LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir. 2010) (FDCPA disclosures and license context)
G.E.M. v. Plough, 180 A.2d 474 (Md. 1962) ( Maryland 'closed-door' statute interpretation context)