KEAUHOU MASTER HOMEOWNERS v. HAWAI'I CTY

• Decision Date: 08 April 2004
• Docket Number: No. 23520.,23520.
• Citation: 87 P.3d 883,104 Haw. 214
• Court: Hawaii Supreme Court
• Parties: KEAUHOU MASTER HOMEOWNERS ASSOCIATION, INC., a Hawai'i non-profit corporation; William S. Taylor, as an individual, a trustee of the William S. Taylor Trust and as a representative of a class of taxpayers and homeowners residing in Keauhou, Hawai'i; and Walter Kriewald, as an individual and as a representative of a class of homeowners residing in Keauhou, Hawai'i, Plaintiffs-Appellants, v. COUNTY OF HAWAI'I, a municipal corporation, Harry Kim, in his capacity as a Mayor, Ronald K. Takahashi, in his capacity as Deputy Director of Public Works, Bruce McClure, in his capacity as Director of Public Works, Kamehameha Schools/Bernice Pauahi Bishop Estate, a Hawai'i non-profit trust organization, Lokelani Lindsey, Henry Peters, Oswald Stender, Richard Wong and Gerard A. Jervis as Trustees of the Bernice Pauahi Bishop Estate, Kamehameha Investment Corporation, a Hawai'i corporation, and Watanabe, Ing & Kawashima, a Hawai'i partnership, Defendants-Appellees.

87 P.3d 883

104 Haw. 214

KEAUHOU MASTER HOMEOWNERS ASSOCIATION, INC., a Hawai'i non-profit corporation; William S. Taylor, as an individual, a trustee of the William S. Taylor Trust and as a representative of a class of taxpayers and homeowners residing in Keauhou, Hawai'i; and Walter Kriewald, as an individual and as a representative of a class of homeowners residing in Keauhou, Hawai'i, Plaintiffs-Appellants, v. COUNTY OF HAWAI'I, a municipal corporation, Harry Kim,¹ in his capacity as a Mayor, Ronald K. Takahashi,² in his capacity as Deputy Director of Public Works, Bruce McClure,³ in his capacity as Director of Public Works, Kamehameha Schools/Bernice Pauahi Bishop Estate, a Hawai'i non-profit trust organization, Lokelani Lindsey, Henry Peters, Oswald Stender, Richard Wong and Gerard A. Jervis as Trustees of the Bernice Pauahi Bishop Estate, Kamehameha Investment Corporation, a Hawai'i corporation, and Watanabe, Ing & Kawashima, a Hawai'i partnership, Defendants-Appellees.

No. 23520.

Supreme Court of Hawai'i.

April 8, 2004.

Francis L. Jung, Kailua Kona, (of Jung & Vassar), for the plaintiffs-appellants Keauhou Master Homeowners Association, Inc., et al.

James E. Duffy, Honolulu, (of Fujiyama, Duffy & Fujiyama), for the defendants-appellees Watanabe, Ing & Kawashima.

MOON, C.J., LEVINSON, NAKAYAMA, and ACOBA, JJ., and Circuit Judge McKENNA, in Place of DUFFY, J., recused.

Opinion of the Court by LEVINSON, J.

The plaintiffs-appellants William S. Taylor, as an individual, a trustee of the William S. Taylor Trust, and as a representative of a class of taxpayers and homeowners residing in Keauhou, Hawai'i, and Walter Kriewald, as an individual and as a representative of a class of homeowners residing in Keauhou, Hawai'i [hereinafter, collectively, "the Appellants"],⁴ appeal from the following orders and judgment of the third circuit court, the Honorable Ronald Ibarra presiding: (1) the January 6, 1997 order partially granting and partially denying the Appellants' motion for partial summary judgment, filed July 19, 1996 [hereinafter, "the January 6, 1997 order"]; (2) the August 5, 1997 order granting the defendant-appellee Watanabe, Ing & Kawashima's [hereinafter, "WIK"] motion to dismiss or in the alternative for partial summary judgment, filed May 15, 1997 [hereinafter, "the August 5, 1997 order"]; and (3) the May 10, 2000 final judgment.

The Appellants argue on appeal that the circuit court erred in: (1) filing the January 6, 1997 order; (2) ruling that "[t]he Fair Debt Collection Practices Act (FDCPA)[, 15 United States Code (U.S.C.) §§ 1692-1692o (1994)⁵] does not apply to the unpaid sewer charges involved in this case"; and (3) filing the May 10, 2000 final judgment, which incorporated the January 6, 1997 and August 5, 1997 orders.

WIK responds (1) that the circuit court correctly ruled that the FDCPA does not apply to the facts of this case and thus properly granted WIK's motion, (2) that the circuit court correctly entered the January 6, 1997 order because there were genuine issues of material fact as to whether the letter was sent in an attempt to collect a debt, and (3) that the Appellants are not entitled to partial summary judgment on their FDCPA claims because they failed to adduce undisputed, competent, and admissible evidence that would prove all the requisite elements of their FDCPA claims.

For the reasons discussed infra in section III, we hold: (1) that the circuit court correctly entered the January 6, 1997 order because there was a genuine issue of material fact as to whether WIK was a "debt collector" as defined by 15 U.S.C. § 1692a(6);⁶ (2) that the circuit court erred in entering the August 5, 1997 order inasmuch as we adopt the holding of Pollice v. National Tax Funding, L.P., 225 F.3d 379, 400-03 (3d Cir.2000), that debtors' obligations for sewer charges are "debts" as defined by 15 U.S.C. § 1692a(5);⁷ and (3) that the circuit court erred in rendering final judgment in favor of WIK based on the August 5, 1997 order. Accordingly, we (1) affirm the January 6, 1997 order, (2) vacate the August 5, 1997 order, (3) vacate the May 10, 2000 final judgment, and (4) remand this matter to the circuit court for further proceedings consistent with this opinion.

I. BACKGROUND

On January 5, 1995, the Appellants filed a complaint against WIK, alleging, inter alia, that WIK had violated several provisions of the FDCPA. The Appellants based their claim on WIK's mailing of approximately 325 letters on or about November 28, 1994, the text of which provided as follows:

Our law firm represents Keauhou Community Services, Inc. ("KCS"), the company which provides wastewater treatment services to you. Enclosed is a statement of your account for wastewater service charges. With the exception of the charges for December 1994 services, all of these charges are past due. Pursuant to KCS' tariff, a late payment charge of one percent (1%) per month has been assessed on the outstanding balance.

KCS has been properly authorized by the Public Utilities Commission of the State of Hawaii to provide wastewater treatment services to you, and has been providing those services since February 1, 1994. We understand that a number of residents in the Keauhou area had been withholding payment of wastewater service charges based upon the lawsuit filed by the Keauhou Master Homeowners Association, Inc., challenging the transfer of sewer services from the County to KCS. That lawsuit was dismissed by the Federal District Court on October 19, 1994, although the Association has filed an appeal.

This is to inform you that if payment is not made by December 15, 1994, KCS intends to pursue its legal rights and remedies against you. These include the right to disconnect service and/or to obtain a judgment against you in court. KCS may also refer the matter to a collection agent.

We would prefer that you cooperate with KCS in payment for the services that are being provided to you without the necessity of having to pursue other remedies.

The Appellants asserted that the letters violated the following provisions of the FDCPA: (1) 15 U.S.C. § 1692e(11), which requires "debt collectors" to advise consumers that they are "attempting to collect a debt and that any information obtained will be used for that purpose"; (2) 15 U.S.C. § 1692g(a)(3), which requires "debt collectors" to advise consumers, either in the initial communication or within five days after receipt of the letter, 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"; (3) 15 U.S.C. § 1692g(a)(4), which requires "debt collectors" to advise consumers, either in the initial communication or within five days after receipt of the letter, 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[;] (4) 15 U.S.C. § 1692g(a)(5), which requires "debt collectors" to advise consumers, either in the initial communication or within five days after receipt of the letter, 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"; and (5) 15 U.S.C. § 1692f(6), which prohibits "debt collectors" from "collect[ing] or attempt[ing] to collect any debt" by "[t]aking or threatening to take any nonjudicial action to effect dispossession or disablement of property if . . . there is no present intention to take possession of the property."⁸

On July 19, 1996, the Appellants filed their motion for partial summary judgment with respect, inter alia, to the Appellants' FDCPA claims against WIK. In their memorandum in support of their motion, the Appellants noted that, "[i]n response to Interrogatory No. 2 propounded by [the Appellants], Defendant WIK admitted that it had sent the [l]etter and attached . . . a list of three hundred twenty-five (325) individual names and addresses of homeowners in Keauhou to which it had sent . . . [the l]etter." The Appellants further urged that

WIK is a "debt collector" within the definition of the [FDCPA] as it ". . . regularly collects or attempts to collect, . . ., debts owed . . . another." The fact that WIK regularly attempts to collect debts for another is amply demonstrated by the admission by WIK that it sent out three hundred twenty-five (325) collection letters on behalf of Keauhou Community Services, Inc.

(Ellipsis points and emphasis in original.)

On January 6, 1997, the circuit court entered its order partially granting and partially denying the Appellants' motion for partial summary judgment, filed July 19, 1996, ruling that "there is a genuine issue of material fact as to whether the letter dated November 28, 1994 was sent in an attempt to collect a debt."

On May 15, 1997, WIK filed a motion to dismiss or in the alternative for summary judgment, contending that "[d]ismissal of . . . [the Appellant's FDCPA] claim is appropriate because, as a matter of law, the Fair Debt Collection Practices Act does not and cannot apply to unpaid sewer charges involved in this case." WIK further explained in its memorandum in support of the motion that,

[a]s with amounts owed for condominium association dues, cable television services, child support payments, roadway and subdivision fees, and per capita taxes for public services, the unpaid sewer charges at issue do not involve the extension of credit and do not fall within the definition of transactions that Congress intended to regulate through the FDCPA. Therefore, as a matter of law, the FDCPA does not apply to the case at bar and [Ap...