Civ. No.

19-00316 JMS-KJM
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII

Viernes v. DNF Assocs.

475 F. Supp. 3d 1119 (D. Haw. 2020)
Decided Jul 31, 2020

Civ. No. 19-00316 JMS-KJM following reasons, the court DENIES Defendant's
Motion.
07-31-2020

Ronald VIERNES, and all others similarly II. BACKGROUND

situated, Plaintiff, v. DNF ASSOCIATES, LLC, Plaintiff Ronald Viernes ("Plaintiff" or "Viernes")
Defendant. brought this class action against DNF, alleging
that DNF unlawfully collected debts in violation
Justin A. Brackett, Honolulu, HI, Brian Lewis
of the Fair Debt Collection Practices Act, 15
Bromberg, Joshua Tarrant-Windt, Bromberg Law
U.S.C. §§ 1692 et seq. ("FDCPA"), and Hawaii
Office, P.C, NYC, NY, for Plaintiff. Brendan H.
Revised Statutes ("HRS") § 480-2 for failure to
Little, Lippes, Mathias, Wexler, Friedman LLP,
register as a collection agency with the State of
Buffalo, NY, Andrew James Lautenbach, Starn
Hawaii. Specifically, Plaintiff alleges that DNF
O'Toole, Marcus & Fisher, Honolulu, HI, for
violated both the FDCPA and HRS § 480-2 when
Defendant.
it filed a complaint against Plaintiff seeking to
collect a debt which DNF had purchased from Kay
J. Michael Seabright, Chief United States District Jewelers. ECF No. 1 at PageID #4, 7-8. On May
Judge 28, 2020, DNF filed the instant Motion, seeking
Justin A. Brackett, Honolulu, HI, Brian Lewis summary judgment as to both claims. ECF No. 48.
Bromberg, Joshua Tarrant-Windt, Bromberg Law On July 15, 2020, Plaintiff filed his Opposition.
Office, P.C, NYC, NY, for Plaintiff. ECF No. 64. On July 20, 2020, DNF filed its
Reply. ECF No. 67. The court finds this matter
Brendan H. Little, Lippes, Mathias, Wexler, suitable for disposition without a hearing pursuant
Friedman LLP, Buffalo, NY, Andrew James to Local Rule 7.1(c).
Lautenbach, Starn O'Toole, Marcus & Fisher,
Honolulu, HI, for Defendant. III. STANDARD OF REVIEW
Summary judgment is proper where there is no
ORDER DENYING DEFENDANT DNF
genuine issue of material fact and the moving
ASSOCIATES, LLC'S MOTION FOR
party is entitled to judgment as a matter of law.
SUMMARY JUDGMENT, ECF NO. 48
Fed. R. Civ. P. 56(a). Federal Rule of Civil
J. Michael Seabright, Chief United States District Procedure ("FRCP") 56(a) mandates summary
1120 Judge*1120 I. INTRODUCTION judgment "against a party who fails to make a
showing sufficient to establish the existence of an
Before the court is Defendant DNF Associates,
element essential to that party's case, and on which
LLC's ("Defendant" or "DNF") Motion for
that party will bear the burden of proof at trial."
Summary Judgment. ECF No. 48. For the
Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106

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 Viernes v. DNF Assocs. 475 F. Supp. 3d 1119 (D. Haw. 2020)

S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; see also Plaintiff alleges that DNF is in violation of the
Broussard v. Univ. of Cal. at Berkeley , 192 F.3d FDCPA and HRS § 480-2 because DNF brought
1252, 1258 (9th Cir. 1999). suit against Plaintiff to recover an alleged debt but
was not registered with the Hawaii Department of
"A party seeking summary judgment bears the
Commerce and Consumer Affairs ("the DCCA")
initial burden of informing the court of the basis
as a "collection agency" pursuant to HRS § 443B-
for its motion and of identifying those portions of
3. See Pl.’s Opp'n, ECF No. 64 at PageID #431
the pleadings and discovery responses that
("Defendant violated the FDCPA when it sued
demonstrate the absence of a genuine issue of
Plaintiff to recover an alleged debt despite not
material fact." Soremekun v. Thrifty Payless, Inc. ,
being registered with the DCCA as a collection
509 F.3d 978, 984 (9th Cir. 2007) (citing Celotex ,
agency."); see also ECF No. 1.
477 U.S. at 323, 106 S.Ct. 2548 ). "When the
moving party has carried its burden under Rule 56 A. FDCPA
[ (a) ], its opponent must do more than simply
Under 15 U.S.C. § 1692e of the FDCPA, "[a] debt
show that there is some metaphysical doubt as to
collector may not use any false, deceptive, or
the material facts [and] come forward with
misleading representation or means in connection
specific facts showing that there is a genuine issue
of any debt." And "a complaint served directly on
for trial." Matsushita Elec. Indus. Co. v. Zenith
a consumer to facilitate debt-collection efforts is a
Radio , 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89
communication subject to the requirements of §[ ]
L.Ed.2d 538 (1986) (citation and internal
1692e." Donohue v. Quick Collect, Inc. , 592 F.3d
quotation signals omitted); see also Anderson v.
1027, 1031-32 (9th Cir. 2010).
Liberty Lobby, Inc. , 477 U.S. 242, 247-48, 106
S.Ct. 2505, 91 L.Ed.2d 202 (1986) (stating that a DNF does not dispute that a collection complaint
party cannot "rest upon the mere allegations or was filed on its behalf, that Plaintiff is a
denials of his pleading" in opposing summary "consumer," or that DNF is a "debt collector" for
judgment). purposes of the FDCPA. Rather, DNF argues it did
not communicate with Plaintiff in connection with
"An issue is ‘genuine’ only if there is a sufficient
the collection of a debt because the collection
evidentiary basis on which a reasonable fact finder
complaint was filed by its lawyers, Mandrich Law,
could find for the nonmoving party, and a dispute
and not by DNF or any of its employees. ECF No.
is ‘material’ only if it could affect the outcome of
48-1 at PageID #229-30. The court disagrees.
1121 the *1121 suit under the governing law." In re
Barboza , 545 F.3d 702, 707 (9th Cir. 2008) First, DNF cites to no authority (nor can it) for
(citing Anderson , 477 U.S. at 248, 106 S.Ct. 2505 such proposition. At most, DNF cites to two cases
). When considering the evidence on a motion for —both of which are inapposite to DNF's position.
summary judgment, the court must draw all First, DNF cites to an out-of-circuit district court
reasonable inferences on behalf of the nonmoving case, Hunstein v. Preferred Collection and
party. Matsushita Elec. Indus. Co. , 475 U.S. at Management Services, Inc. , 2019 WL 5578878, at
587, 106 S.Ct. 1348 ; see also Posey v. Lake Pend *3 (M.D. Fla. Oct. 29, 2019), for the proposition
Oreille Sch. Dist. No. 84 , 546 F.3d 1121, 1126 that a "third party who generated and sent the
(9th Cir. 2008) (stating that "the evidence of [the plaintiff a collection letter was not a
nonmovant] is to be believed, and all justifiable communication in connection with the collection
inferences are to be drawn in his favor" (citations of a debt." See ECF No. 48-1 at PageID #231. In
omitted)). Hunstein , the defendant debt collector transmitted
information to a third-party mail center,
IV. DISCUSSION CompuMail, to generate a collection letter to the

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 Viernes v. DNF Assocs. 475 F. Supp. 3d 1119 (D. Haw. 2020)

plaintiff. 2019 WL 5578878, at *1. The plaintiff possibly be liable (which the court is not
argued that the transmitted information to determining here) does not absolve DNF from
CompuMail was a "communication" in violation liability as a matter of law.
of the FDCPA. The court rejected this argument,
Further, DNF's position—that a complaint filed by
noting that the plaintiff "conflate[d] the two
its lawyers is allegedly a third-party filing—belies
communications." Id. at *3. The information
basic principal-agency principles between a
transmitted to CompuMail did not constitute a
lawyer and a client. See Comm'r of Internal
"communication" in violation of the FDCPA. The
Revenue v. Banks , 543 U.S. 426, 427, 125 S.Ct.
letter generated by CompuMail on behalf of the
826, 160 L.Ed.2d 859 (2005) (the "attorney-client
defendant, however, was a "communication" for
relationship" "is a quintessential principal-agent
purposes of the FDCPA. Id. ("The fact that the
relationship, for the client retains ultimate
debt collection letter that CompuMail generated
dominion and control over the underlying claim");
and sent would be considered a ‘communication in
see also DeMott, The Lawyer as Agent , 67
connection with the collection of a debt’ does not
Fordham L. Rev. 301, 301 (1998) ("[T]he lawyer-
make the transfer of information to CompuMail a
client relationship is a commonsensical illustration
communication in connection with the collection
of agency. A lawyer acts on behalf of the client,
of a debt."). Thus, and in fact, Hunstein
representing the client, with consequences that
contradicts DNF and supports the opposite
bind the client."). Under DNF's theory, any filings
position—that is, a collection complaint (like a
in courts, including this court, could never be
collection letter) generated by a third party or
attributed to the clients whom attorneys represent,
agent (like CompuMail or Mandrich Law) on
including DNF's own filings by its counsel here.
behalf of a debt collector is a "communication"
That cannot be.
1122 under the FDCPA.*1122 In its Reply, DNF also
claims Donohue v. Quick Collect, Inc. , 592 F.3d Accordingly, DNF's Motion for Summary
1027 (9th Cir. 2010) and Heintz v. Jenkins , 514 Judgment as to Plaintiff's FDCPA count is
U.S. 291, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995) DENIED.
support the proposition that Mandrich Law, not
DNF, should be held liable. ECF No. 66 at PageID B. HRS § 480-2
#460. Donohue , however, held that a civil DNF also argues that it did not violate HRS § 480-
complaint filed by Quick Collect is a 2 because it is not a "collection agency" for debt
communication subject to § 1692e. See Donohue , collection purposes under Hawaii law and thus
592 F.3d at 1031-32. Donohue held that this was not required to register with the DCCA
reasoning was consistent with Heintz —attorneys pursuant to HRS § 443B-3. See ECF No. 48-1 at
who " ‘regularly’ engage in consumer-debt- PageID #232-33. A collection agency cannot
collection activity, even when that activity consists "collect or attempt to collect any money or any
of litigation" could be subject to the FDCPA. other forms of indebtedness alleged to be due and
Heintz , 514 U.S. at 298, 115 S.Ct. 1489 ; see also owing from any person who resides or does
Donohue , 592 F.3d at 1032. But DNF business in [Hawaii] without first registering."
mischaracterizes Donohue and Heintz —these HRS § 443B-3. And failure to register "by a
cases do not stand for the proposition that only the collection agency shall constitute unfair methods
attorney can be held liable for FDCPA violations of competition and unfair or deceptive acts or
when filing a complaint on behalf of its client. practices in the conduct of any trade or commerce
Rather, an attorney who " ‘regularly’ engage[s] in for the purpose of section 480-2." HRS § 443B-
consumer-debt-collection activity" may also be 20.
liable. Merely because Mandrich Law could also
Hawaii law defines a "collection agency" as:

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 Viernes v. DNF Assocs. 475 F. Supp. 3d 1119 (D. Haw. 2020)

any person, whether located within or I am inquiring about the need for a
outside this State, who by oneself or collection agency license for a foreign
through others offers to undertake or holds entity that is only a debt buyer. We do not
oneself out as being able to undertake or collect on our own debt but rather use
does undertake to collect for another collection agencies to collect on our
person, claims or money due on accounts behalf. Would we still need to apply for an
or other forms of indebtedness for a exemption for a collection agency license.
commission, fixed fee, or a portion of the
Id. at PageID #244. In response, the DCCA
sums so collected.
employee wrote the following:

"Collection agency" includes: The Collection Agencies Program licenses

collection agencies; we do not license
(1) Any person using any name other than passive debt buyers. Our interpretation of a
the person's own in collecting the person's passive debt buyer means that the debt
own claims with the intention of buyer does not participate in the collection
conveying, or which tends to convey the of the debt. They are not a collection
impression that a third party has been agency, rather the debt buyer purchases the
employed; debt, then out-sources the debt to a third
party licensed debt collector to collect the
1123 *1123
debt.
(2) Any person who, in the conduct of the
person's business for a fee, regularly However, there are debt buyers/collection
repossesses any merchandise or chattels agencies who purchase the debt, then
for another; and collect on the debt. If you collect on any
debt, you need to be licensed/registered.
(3) Any person who regularly accepts the
assignment of claims or money due on Id.
accounts or other forms of indebtedness Putting aside the admissibility of such hearsay at
and brings suits upon the assigned claims trial,1 and putting aside that Plaintiff disputes the
or money due on accounts or other forms facts and assumptions DNF presented to the
of indebtedness in the person's own name; DCCA, DNF fails to refer the other half of the
provided that any suits shall be initiated DCCA employee's email, which states that:
and prosecuted by an attorney who shall 1 Plaintiff objects to the admissibility of this
have been appointed by the assignee.
email, arguing it is inadmissible hearsay.

HRS § 443B-1. See ECF No. 63-9. The court need not rule
on the admissibility of this evidence,
DNF's argument is very limited and specific—it because, as noted, such evidence (even if
refers to an email correspondence with an admissible) fails to meet DNF's burden for
unnamed DCCA employee stating that DNF did purposes of summary judgment.
not need to be licensed or registered as a
"collection agency" based on the limited facts
DNF posited to the DCCA employee. See ECF
No. 49-2. Specifically, an individual purportedly
on behalf of DNF wrote to the DCCA as follows:

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 Viernes v. DNF Assocs. 475 F. Supp. 3d 1119 (D. Haw. 2020)

[the DCCA] will not provide legal advice instance in the Reply. LR 7.2 ("Any
nor does the department provide legal argument raised for the first time in the

interpretations. Should you believe that reply shall be disregarded.").

you are exempt from registering with the 3 Although not clear, it appears DNF may
State of Hawaii, then the burden of proof also claim, separate from the DCCA email,
would be upon you to show that that the court should grant summary
registration was not necessary in the event judgment because DNF "does not send
of an investigation. written communications to consumers,
contact consumers via telephone or direct
Id. Accordingly, this email from the DCCA, which the activities of the third party debt
itself states is "not legal advice" or a "legal collectors with whom it contracts." Mot.,
interpretation[ ]" is insufficient for DNF to meet ECF No. 48-1 at PageID #233. But this
its burden at summary judgment to show that it argument is untethered to the actual
was not, as a matter of law, a collection agency definition of "collection agency" in HRS §
under Hawaii law. Nor, does DNF's cited authority 443B-1. Specifically, a collection agency
aid its position. DNF cites a Massachusetts includes "[a]ny person who regularly
Supreme Court case for the proposition that a accepts the assignment of claims or money

"passive" debt buyer (which DNF purports to be) due on accounts ... and brings suit upon the

is not a debt collector subject to a license in assigned claims or money due on accounts
... in the person's own name" where the suit
Massachusetts. See ECF No. 66 at PageID #454-
is initiated and prosecuted by an attorney
55 (citing Dorrian v. LVNV Funding, LLC , 479
appointed by the assignee. HRS § 443B-1
Mass. 265, 94 N.E.3d 370 (2018) ). But
(subpart 3). Accordingly, it appears that
Massachusetts’ state statutory licensing
DNF is a collection agency under Hawaii
requirements have absolutely no bearing on law (although the court need not and does
1124 Hawaii's state licensing requirements *1124 and not make such determination here). See
whether DNF would be a collection agency under also Goray v. Unifund CCR Partners ,
Hawaii law. Thus, this case is wholly inapplicable. 2007 WL 4260017, at *10-11 (D. Haw.
And DNF does not provide any other arguments or Dec. 4, 2007) (finding that Unifund was
evidence in support that it was not a collection required to register as a collection agency
agency as a matter of law.2 Accordingly, DNF fails under § 443B-1 (subpart 3) because it was

to meet its initial burden for summary judgment a buyer of debt and appointed an attorney
to initiate and prosecute a collection action
purposes that it is not a "collection agency" and its
on that debt).
motion for summary judgment as to Plaintiff's
state law claim, HRS § 480-2, is DENIED.3 --------

2 DNF argues, for the first time in its Reply, V. CONCLUSION

that it is not a collection agency because For the foregoing reasons, the court DENIES
there were no alleged injuries. See ECF
DNF's Motion for Summary Judgment, ECF No.
No. 66 at PageID #453. This was not raised
48.
in DNF's opening brief, and the court will
not consider an argument raised in the first IT IS SO ORDERED.