UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

SOUTH BEND DIVISION

SUSAN HAVENS, on behalf of herself )

and a class, )

)

Plaintiff, )

)

v. ) Case No. 3:12-CV-671-PPS

PORTFOLIO INVESTMENT )

EXCHANGE INC. and CREDIT )

CONTROL, LLC, )

)

Defendants. )

ORDER AND OPINION

Susan Havens racked up more than $11,000 in credit card debt, and when she didn’t pay

her bill, the debt was sold by the credit card company to an out of state debt collector who then

attempted to collect the debt. Havens purports to represent a group of similarly situated people

in this putative class action brought under the Fair Debt Collection Practices Act, the crux of

which involves the validity of the assignment and attempted collection of the debt by an out-ofstate debt collector. There are two defendants, Portfolio Investment Exchange Inc., the out-ofstate entity who originally bought the debt from the bank, and Credit Control, LLC, the company

Portfolio Investment Exchange hired to collect the debt.

Both Defendants seek dismissal of the complaint.1

 The core question is whether Portfolio

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 Havens has also filed a Motion to Strike (or alternatively, Motion to Convert the Motion

to Dismiss to a Motion for Summary Judgment) encompassing an email that counsel for the

Defendants received from the Indiana Department of Financial Institutions concerning the

agency interpretation of certain administrative regulations relevant to this case. (DE 23.) 

Because I am not relying in any way on the email in arriving at my decision, the Motion to Strike

will be denied as moot. 

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Investment Exchange did, in fact, need to be licensed to make consumer loans in Indiana before

it could try to collect Havens’s debt. If so, the class action lawsuit will go forward; if not, both

of the counts alleged in the complaint fail.

Credit Control and Portfolio Investment Exchange point me to convincing authority that

a license is unnecessary. They cite commentary to the applicable loan licensing statute, as well

as the loan assignment statute, which expressly reject the notion that an out-of-state company

accepting assignment of an Indiana consumer loan without physically entering the state – like

Portfolio Investment Exchange – must have a loan license. For those reasons, and for the

reasons discussed more thoroughly below, I will grant the motions to dismiss, albeit without

prejudice. 

BACKGROUND

The facts alleged in the complaint, which I accept as true for present purposes, are short

and straightforward. Havens is a resident of Nappanee, Indiana. (DE 1 at 1.) At some point

prior to December 2011, she ran up a balance of around $11,000 on a credit card issued by

HSBC. (DE 1-1 at 2-3.) HSBC then sold her loan to Portfolio Investment Exchange. (Id.) That

company is licensed as a collection agency in Illinois, but not in Indiana. (DE 1 at 2-3.) It

doesn’t have an Indiana Uniform Consumer Credit Code (IUCCC) loan license. (Id. at 2.) 

Portfolio Investment Exchange’s agent, Credit Control – which is a licensed Indiana collection

agency – contacted Havens by letter on December 27, 2011 seeking payment on the assigned

debt. (DE 1-1 at 2.) Havens claims that by accepting the assignment of her loan without the

proper license, Portfolio Investment Exchange – and by extension, its agent, Credit Control –

engaged in improper debt collection activities in violation of the Fair Debt Collection Practices

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Act and the Indiana Deceptive Consumer Sales Act (IDCSA). (DE 1 at 4-5.) Both defendants

now seek dismissal of the complaint. 

DISCUSSION

In order to survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil

Procedure, “a complaint must contain sufficient factual matter, accepted as true, to state a claim

to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal

quotation marks omitted); Bell Atl. Corp. v. Twombley, 550 U.S. 544, 555 (2007). I must accept

all factual allegations as true and draw all reasonable inferences in the complainant’s favor, but I

don’t need to accept threadbare legal conclusions supported by purely conclusory statements. 

See Iqbal, 556 U.S. at 678-79. The first step in my analysis is to identify and disregard all

allegations in the complaint that are not entitled to the assumption of truth, especially including

any legal conclusions. Id. at 678. Then I must look at the remaining allegations to determine

whether they plausibly – and not merely possibly or conceivably – suggest an entitlement to

relief. Id. This task invariably requires me to draw on my judicial experience and common

sense. Id. at 679.

The central issue in this case is whether Portfolio Investment Exchange is required to

have an IUCCC loan license to be assigned loans involving Indiana debtors, notwithstanding the

fact that it doesn’t have a physical presence in the state and it uses an Indiana collection agency

(Credit Control) to engage in collections efforts. I should first explain why that is the pivotal

question in this case before addressing the merits.

Havens’s first cause of action attempts to state a claim under the Fair Debt Collections

Practices Act. See 15 U.S.C. § 1692k. Under the applicable provision, a “debt collector” is

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barred from falsely representing “the character, amount, or legal status of any debt.” 15 U.S.C. §

1692e(2)(A). Havens’s theory is that if Portfolio Investment Exchange is required to have an

IUCCC loan license in order to take assignment of her debt and attempt to collect it, then the

lack of any such license renders the assignment of that debt illegal – and thus any collection

efforts concerning it would be a FDCPA violation. Similarly, the Indiana Deceptive Consumer

Sales Act defines it to be a deceptive or unconscionable act to solicit or engage in a consumer

transaction without the requisite license. See Ind. Code § 24-5-0.5-10 (a)(1). 

Based on the claims brought by Havens, the importance of the licensing question is

obvious. If a license is required, then it’s possible that Havens may have cognizable claims

under the FDCPA and the similar state law. If, on the other hand, Portfolio Investment

Exchange doesn’t need a license, then both of those claims necessarily must fail.

So does Portfolio Investment Exchange need an IUCCC loan license? As I mentioned

above, the defendants raise a strong threshold argument in their motion to dismiss that the

relevant licensing provision of the IUCCC is not intended to apply extraterritorially – that is,

companies without a physical presence in the state are exempt from its requirements. They cite

commentary to the particular statutory provision indicating this. Here’s what the applicable

subsection of the IUCCC states:

A person that does not qualify under subsection (1) [as a depository institution, a

subsidiary of a depository institution, or a credit union service organization] or (2)

[as a collection agency] shall acquire and retain a license under this article in

order to regularly engage in Indiana in the following actions with respect to

consumer loans that are not mortgage transactions:

(a) The making of consumer loans. 

(b) Taking assignments of consumer loans. 

(c) Undertaking direct collection of payments from or enforcement of rights

against debtors arising from consumer loans. 

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Ind. Code § 24-4.5-3-502(3). The statute is conspicuously silent as to what “regularly

engag[ing] in Indiana” means – in other words, it doesn’t say how substantial the nexus must be

between the consumer loan activity in question and Indiana.

Fortunately, there is some extraneous guidance on this issue. When the Indiana

legislature passed the original version of this statute in 1968, it included the following

commentary (which it identified as the “Uniform Consumer Credit Code Comment”): 

Out-of-state lenders who make loans through the mail normally will not be

subject to the licensing requirement if the evidence of debt is received by the

lender out of this State. Section 1.201. An out-of-state lender who opens a loan

office in this State at which evidence of debt for [consumer] loans is received

must be licensed.

Id. at cmt. 2 (emphasis added). Although the law has been changed several times over the past

several decades, including a major (though seemingly nonsubstantive) rewording in 2006, the

legislature has never altered this guidance.

This is not the only commentary supporting the contention that out-of-state companies

without a presence in Indiana don’t need an IUCCC loan license. Section 24-4.5-6-201 of the

Indiana Code generally addresses which entities will fall under the loan licensing scope of the

IUCCC. It states that it will apply to any entity “engaged in Indiana” in a variety of consumer

activities. Id. at 1. Once again, the statute doesn’t specifically define what that geographical

restriction means. But the commentary to the provision does – and it specifically addresses the

issue of out-of-state companies taking assignment of loans involving Indiana consumers. That

commentary states:

Assignees of consumer obligations must file notification under Section 6.202 only

if all of the three following elements are present: (1) the assigned obligations

arose out of sales, leases or loans made in this State, (2) the assignee has an office

or place of business in this State, and (3) the assignee undertakes direct collection

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of payments from the debtors or direct enforcement of obligations against debtors. 

An assignee having no office or place of business within this State is not required

to file notification even though he is engaged in direct collection or direct

enforcement of consumer accounts in this State.

Id. at cmt. 2 (emphasis added). 

Given the foregoing commentary, not surprisingly, Portfolio Investment Exchange’s

main argument is straightforward. It says that I should rely on that commentary and interpret the

IUCCC loan licensing statutes to exclude out-of-state companies without a physical presence in

the state. That makes a good deal of sense, for obvious reasons.

Havens responds in two ways. First, she argues that this statutory commentary shouldn’t

be controlling because the statute has been amended several times since it was originally

enacted. Second, she disputes its applicability, saying that it is merely the commentary to the

model uniform UCCC, and not the Indiana statute, and thus it shouldn’t be controlling.

I’ll address the second argument first because it’s the easiest to resolve. It simply doesn’t

matter whether the commentary cited by Portfolio Investment Exchange represents the views of

the drafters of the model UCCC (as opposed to the Indiana legislators). Indiana law is quite

clear that model or uniform commentary is persuasive when construing an ambiguous statute.

See Basileh v. Alghusain, 912 N.E.2d 814, 821 (Ind. 2009) (“The comments to a uniform act are

indicative of the Legislature’s intent in enacting a statute based on the uniform act.”); In re

Lawrance, 579 N.E.2d 32, 38 (Ind. 1991) (stating that a court may “consider the notes of the

Commissioners of Uniform Laws when construing a uniform statute”) (quoting Eads v. J & J

Sales Corp., 257 Ind. 485, 275 N.E.2d 802, 806 (1971)). So I must view this commentary as

persuasive guidance on the extraterritoriality issue unless the statute has been changed to render

it obsolete.

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And that takes me to Havens’s first argument that the commentary should be disregarded

because §§ 24-4.5-6-201 and 24-4.5-3-502 have been amended several times since their initial

enactment in 1968. It’s certainly true that they have, in fact, been amended – and substantially

so, at least with respect to § 24-4.5-3-502.2

 But none of the amendments involved expanding the

extraterritorial application of the loan licensing requirements, and at no point did the Indiana

legislature indicate that the original guidance was no longer applicable. Indeed, based on my

review of the public laws amending the statute, the issue of extraterritoriality never even came

up during subsequent amendments.

Therefore, I am confronted with a situation in which I must construe an ambiguous

statute that seems to be intended to be given a particular construction by its drafters when it was

first enacted, with subsequent amendments that don’t seem to change the initial construction. 

While I haven’t been able to find any case in the Seventh Circuit matching that precise fact

pattern, there are several published Indiana decisions involving the analogous situation in which

a statute was construed a certain way by the courts, with a later amendment that doesn’t address

this construction. Those cases hold that unless the amendment specifically is intended to change

the judicial construction, it “embodies” that prior interpretation. See Necessary v. Inter-State

Towing, 697 N.E.2d 73, 79 (Ind. Ct. App. 1998); Thomas v. Eads, 400 N.E.2d 778, 783 (Ind. Ct.

App. 1980). The theory is that when a legislature is aware that a statute is being interpreted in a

particular way and fails to expressly reject that construction, it has effectively “acquiesced” to it. 

See Thomas, 400 N.E.2d at 783.

2

 Section 24-4.5-3-502 appears to have been largely rewritten in 2006, although the

changes seem to be mostly cosmetic (though extensive), and the substance of the law seems

unchanged.

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I see little reason why this principle wouldn’t apply with even more force to a

legislatively-imposed (or at least suggested) statutory construction. The Indiana legislatures that

amended §§ 24-4.5-6-201 and 24-4.5-3-502 could have had little doubt that the loan licensing

provisions of the IUCCC were not intended to apply to out-of-state assignees of Indiana

consumers’ debt; it says so right in the commentary to those provisions, after all. Yet they didn’t

do anything to alter the statute or change the guidance to correct that. That inaction is fatal to

Havens’s argument. Based on the persuasive commentary accompanying the relevant provisions

of the IUCCC, I conclude that the best way to interpret the loan licensing requirement is to

exclude out-of-state assignees of Indiana consumer loans – including companies like Portfolio

Investment Exchange that don’t have a presence in the state.

Much of Havens’s response to the motion to dismiss amounts to a deflection. Perhaps

Portfolio Investment Exchange doesn’t need to obtain an IUCCC loan license, she

acknowledges, but in that case it should be licensed as an Indiana collection agency (which, she

goes on to claim, is the license that most consumer loan assignees obtain). The defendants

respond by pointing out that this isn’t what Havens alleged in her complaint.

They have a point. I think a fair reading of Havens’s complaint shows that her main beef

is that she thinks that Portfolio Investment Exchange must be licensed as an IUCCC loan

company, and not a collection agency. But let’s set that objection aside for the moment. There’s

(potentially) an even bigger problem with her new theory.

As noted above, Section 24-4.5-3-502(2) specifically exempts licensed collection

agencies from the IUCCC loan licensing requirement. It also includes commentary suggesting

that out-of-state companies need not obtain such a license if they do not establish a physical

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presence in the state. See the problem? If Havens’s interpretation of the statute is correct, and

an out-of-state company must be licensed as a collection agency if it doesn’t get an IUCCC loan

license, then why would the commentary need to exempt out-of-state companies without a

physical presence in the state in the first place? They already would be excused from any

IUCCC loan license requirement by virtue of having an Indiana collection license. 

Put simply, Havens’s construction of the IUCCC loan licensing statute would render that

commentary entirely superfluous. That can’t be what the drafters intended. And it’s a tenet of

statutory interpretation that courts “will avoid an interpretation that renders any part of the

statute meaningless or superfluous.” Gargano v. Lee Alan Bryant Health Care Facilities, Inc.,

970 N.E.2d 696, 702 (Ind. Ct. App. 2012). To be sure, this canon of construction must apply

with less force when the meaningless language will be the statute’s commentary (as opposed to a

provision in the statute itself), but it still should carry some weight when the alternative is to

render that specifically included commentary wholly superfluous.

So I tentatively agree with the defendants that Havens’s apparent theory that Portfolio

Investment Exchange needed to become licensed as a collection agency if it wasn’t going to

obtain an IUCCC loan license is fundamentally unconvincing. But I’m hesitant to foreclose this

argument entirely, since it wasn’t really alleged in her complaint, and the parties didn’t address

the line of reasoning in great detail in their dismissal briefing. Therefore, I’ll err on the side of

caution and dismiss the current complaint without prejudice. If she’d like to elaborate on her

collection agency license theory in a new pleading (and then the parties can hash it out in the

inevitable dismissal briefing), she’s free to do so – though I’ll caution that she should be

prepared to address my foregoing concern that such an argument would render the IUCCC

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commentary superfluous.

CONCLUSION

Therefore, and for the foregoing reasons, the pending Motion to Dismiss (DE 21) is

GRANTED. The pending Motion for Class Certification (DE 5) and Rule 12(f) Motion to

Strike (DE 23) are DENIED AS MOOT. The pending complaint is DISMISSED WITHOUT

PREJUDICE. Havens will be given thirty days to amend her complaint if she so desires. 

SO ORDERED.

ENTERED: August 15, 2013.

s/ Philip P. Simon 

PHILIP P. SIMON, CHIEF JUDGE

UNITED STATES DISTRICT COURT

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