F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

V I E N -P H U O N G T H I H O , Plaintiff-Appellant

,

v.

R E C O N T R

U S T C O M P A

N Y , NA, subsidiaries of B ank of America, N.A.; C O U N T R Y W I D E H O M E L O A

N S I N C ; B A N K O F A M E R

I C A , N.A., Defendants-Appellees

. No. 10-56884

D.C. No. 2 :10-cv-00741-GW -SS

AMENDED OPI

N I ON

A ppeal from the United States District Court for the Central District of California Georg e H. W u, District J u d g e, Presiding

Arg ued and Submitted J une 5, 2015 Submission Vacated J une 8, 2015 Resubmitted September 3, 2015 Pasadena, California

F iled October 19, 2016 Amended May

22, 2017H O V

. R E C O N T R U S T C O

. 2

B efore: Alex Koz inski and Consuelo M. Callahan, Circuit J udg es, and Edward R. Korman, * Senior District J udg e.

Opinion by

J udg e Koz inski; Partial Dissent and Partial Concurrence by J udg e Korman

SUMMARY * *

F air Debt Collection P r actices Act

The p anel filed a

n amended o pinion affirming in part a nd vacating in part the district court’s dismissal of an action for failure to state a claim, and h olding that the trustee of a California deed of trust securing a real es t a t e loan was not a “debt collector” under the F air Debt Collection Practices Act.

Seeking damag e s under the F DCPA, the plaintiff alleg ed that the trustee of the deed of trust on her property sent h e r a notice of default and a notice of sale that misrepresented the
amount of debt she owed. The plaintiff also soug ht to rescind her mortg ag e transaction under the Truth in L ending Act.

The p anel affirmed the dismissal of the FD CPA c laim. F in d i n g u npersuasive d e c isions of the F ourth and Six th Circ u i t s , the p anel held that the trustee was not a “debt

* T h e Ho n o rab le Ed w ard R. Ko rm an , Sen io r District J u d g e f o r th e U.S. D i s t r ict Co u rt f

o r th e Eastern District o f New Yo rk

, sittin g b y d esig n atio n

.

** T h is su m m ary co n stitu

t es n o p art o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.H O V

. R E C O N T R U S T C O

. 3

collector” subject to damag es u nder the F DCPA because the
trustee was not attempting to collect money from the plaintiff. The panel held that the object o f a n on-judicial foreclosure in Ca l i f ornia is to retake a

nd resell the security on the loan. Thus, actions taken to facilit a t e a n on-judicial foreclosure, such as sending the n ot i c e o f default and notice of sale, a re not attempts to c o l l e c t “debt” as that term is defined by the F DCPA. The panel wrote that following a trustee’s sale, the
trustee collects money from the home’s purchaser, not the orig inal borrower. B ecause the money c o l lected from a trustee’s sale is not money ow e d by a consumer, it is not “debt.” According ly

, the foreclosure notices were an enforcement of a s e curity interest, rather than g eneral d ebt collection under 15 U.S.C. § 1692a(6).

The panel held that even though the district court twice dismissed the plaintiff’s TI L A rescission claim a n d she did
not replead it in her third complaint, it was preserved for appeal because the district court instructed her that she would b e required to alleg e the ability to repay the loan in order to state a rescission claim. T h e panel held that under Merritt v

. Countrywide F

i n

. Corp.
, 759 F .3d 1023 (9th Cir. 2014), decided after the district court’s dismissal, a mortg ag o r need
not alleg e the abi l i ty to repay in order to state a rescission claim. According ly

, the p anel vacated the dismissal o f the TI L A c laim and remanded for consideration of t h e c l aim in lig ht of Merritt

.

The panel affirmed the dismissal o f ot her claims in a memorandum disposition.

J udg e Korman dissented in part and concurred in part. He
wrote that the only reasonable reading of the F DCPA is that

a trustee pursuing a non-judicial or judicial foreclo s u r eH O V

. R E C O N T R U S T C O

. 4

proceeding is a debt collector becaus e b o t h proceeding s a re intended to obtain money b y forcing the sale of the property being foreclosed upon. He also wrote that the F DCPA does
not interfere with California’s arrang ement for c onduc t ing non-judicial foreclosures in a way that would justify nullify ing the protect i o n s that the F DCPA provides, and the F DCPA’s preemption section provides ample room f or the operation of California law. J udg e Korman c oncurred in the remand to the district court for consideration of t he T I L A rescission cause of action.

COUNSEL

Nicolette Glaz er, Esq. (arg ued), L a w Offices of L arry R. Glaz e r, Century

City , California, for Plaintiff-Appellant.

Marg aret M. Grig non (arg ued) and Kasey J

. Curti s , Reed Smith L L P, L os Ang eles, California; Carolee A. Hoover a nd David C. P o we l l, McGuire W oods L L P, San F rancisco, California; for Defendants-Appellees.

Dean T. K irby

, J r. and Martin T

. McGuinn, Kirby & Mcg u i nn, A P.C., San Dieg o, California, for Amici Curiae U n i t e d T r u s t e e ’ s A s s o c i a t i o n , C a l i f o r n i a B a n k e r s Association, American L eg al and F inanci a l N e t w o r k

, A r i zona Trustee Association and California Mortg ag e Association.

Meredith F uchs, G ene r a l Counsel, To-Quy en Truong
, Deputy General Counsel, J oh n R

. Coleman, Assistant General Counsel, N andan M. J oshi and Thomas M. McCray

- Worrall, A t t o r n e y s , C o n s u m e r F i n a n c i a l P r o t e c t i o n B u r e a u , W a shing ton, D.C., for Amicus Curiae Consumer Fi n ancial Protection B ureau.H O V

. R E C O N T R U S T C O

. 5

OP INION

KOZ I NSKI , Circuit J udg e:

The principal question in this appeal is whether the trustee of a California deed of t r u s t i s a “debt collector” under the F air Debt Collection Practices Act (F DCPA).

F ACTS

Vien-Phuong Thi Ho boug ht a house in L ong B each using funds she b orrowed from Country wide B ank. The loan was

s e cured by a deed of trust. A deed o f trust involves three parties. See Y

v anova v

. New Century Mortg. Corp. , 62 Cal. 4th 919, 926–27 (Cal. 2016) (ex p laining California deeds of trust). The first party is th e l e n d er, who is the trust beneficiary

. The second party is the borrower-t r u stor, w ho holds equi t a ble title to the p roperty

. The third p a rty is the trustee, an ag ent for both the lender an d the borrower w ho h o l d s l eg al title to the property and is authoriz ed to sell the
p r o p e r t y if the debtor d efaults. Id. at 927. I n this case, t h e lender was Country

wide, the borrower was Ho and the trustee was ReconTrust.

After H o beg an missing loan pay ments, Rec o n Trust init i a ted a n on-judicial foreclosure. See id. at 926–27 ( d e t a i l i n g C a l i f

o r n i a ’ s c o m plex statutory procedure g overni n g non-judicial foreclosures). As the first step in this process, ReconTrust recorded a notice o f defau lt and mailed this notice to Ho. See Cal. Civ. Code § 2924(a)(1). The notice advised H o that she owed more than $20,000 on her loan a nd that she “ may have the leg al rig ht to brin g [ her] account in
g ood standing by p ay ing a l l of [ her] past due pay ments” to Country wide. The notice a lso advised Ho tha t her homeH O V

. R E C O N T R U S T C O

. 6

“may be sold without a

ny c ourt action

. ” Ho did not pay up. ReconTrust then took the second step i n the process b y recording and mailing a notice o f s a le. See Cal. Civ. Code §§ 2924(a)(3). This notice advised Ho that her home would be auctioned “unless [ she t o o k] action to protect [her] property .” F o llowing the trustee’s sale, ReconTrust w o u l d deliver the deed to the purchaser and the proceeds of the sale
to Country

wide. See 5 Harr

y D. Miller & Marvin B

. Starr, Cal. R eal Est. § 13:1 ( 4th ed. 2015). Ho would then lose both possession of the h ouse and h e r rig ht of redemption. Id. §§ 13:266, 13:267. 1

Ho filed this lawsuit alleg ing that ReconTrust violated the F DCPA by sending h er notices that misrepresented the
amount of debt she owed. S ee 15 U.S.C. § 1692e(2)(A). Ho also soug ht to rescind her mortg a g e t r a n saction under the Truth i n L ending A ct (TI L A) on the g round that the defendants had perpetrated fraud ag a inst her. See 15 U.S.C. § 1635(a). The district court twice dismissed Ho’s rescission claim w ithout prejudice, and Ho did not re p l e ad it. The district court then g r anted ReconTrus t’s motion to dismiss Ho’s F DCPA claims. 2

1 It’ s n o t clear f

ro m th e reco rd w

h eth er a tru stee’ s sale ev er o ccu rred

. T h e n otice o f sale ad v ised H o th at h er h o m e w o u ld b e so ld o n a c e r t a i n d ate. Ho w ev er, Ho ’ s l o an serv icer ap p ro v ed a m o d if icatio n of th e lo an a f ew d ay s p rio r to th at d ate. T h e p arties s ay n o th i n g f u rth er ab ou t th e tru s tee’ s sale. Fo r o u r p u rp o ses, it d o esn ’t m a t ter w h eth er th e sale t o ok
p lace. S ale o f th e h o u se w o u l d n o t ren der th e case m o ot b ecau se Ho is seek in g d am ag es.

2 T h e d istrict co u rt also d i sm issed Ho ’ s o th er claim s u n d er th e FDCP A
, t h e Rack eteer In f

l u en ced an d Co rru p t Org an izatio n s A ct an d th e Real Estate Settl e m e n t P ro ced u res A ct. W e af

f irm th ese d ism issals in a

m em o ran d u m

d isp o s itio n

f iled co n cu rren tly

h erew ith

.H O V

. R E C O N T R U S T C O

. 7

Ho a ppeals, arg uing that ReconTrust is a “debt collector” because the n otice of default and the notice of sale constitute attempts to c ollect debt. B ecause both notices threate n ed foreclosure unless Ho broug ht her account current, she reasonably viewed those documents as an inducement to pay up. Ho also arg ues that her TI L A r escission claim should be reinstated on app e a l because our circuit clarified the requirements for such a claim b etween the district court’s dismissal and this appeal. See Merritt v. Countrywide Fin. Corp. , 759 F .3d 1023, 1032–33 (9th Cir. 2014).

D ISCUSSION

I

The F DCPA subjects “debt co l l ectors” to civil damag e s for e ng ag ing in certain abusive practices while attempting to collect debts. See §§ 1692d–f, 1692k. The statute’s g eneral definition of “debt c ollector” captures an y entity that “reg u larly collects or attempts to collect, dir ectly o r indirectly

, debts owed or due or ass e rted to be owed or d ue [ to] another.” § 1692a(6). Debt is defined as an “oblig ation . . . of a consumer to pay

money

. ” § 1692a(5).

The F DCPA imposes liability o n l y when an e ntity is attempting to collect d ebt. 15 U

. S

. C

. § 1692(e). F or the
purposes o f the F DCPA, the word “debt” is sy nony mous with “money .” 1 5 U.S.C. § 1 692a(5). Thus, ReconTrust would only be liable if it attempted to collect money from Ho. A nd this it did not do, directly o r otherwise. The object of a nonjudicial foreclosure is to retake and resell the security

, not to collect money from the b orrower. California law d o e s not allow for a deficiency judg ment follo w i n g non-judicial foreclosure. This means that the foreclosure ex ting uishes theH O V

. R E C O N T R U S T C O

. 8

e n t i re debt even if it results in a recovery of less than t h e amount of the debt. Cal. Civ. Code § 580d(a); see Burnett v. Mortg. Elec. Registrat ion S y s., Inc.
, 706 F .3d 1231, 1239 (10th Cir. 2 013) (“[ A] non-judicial foreclosure does not result in a mortg ag or’s oblig ati o n t o pay money ––it merely r esults in the sale of property subject to a deed of trust.”); Alaska Tr., LLC v

. Ambridge

, 3 72 P.3d 207, 228 (Alaska 2016) (W infree, J
., dissenting ) ( noting that non-judicial foreclosure “does not in and of itself collect a d ebt, b ut rather calls for the v e s t i ng and divesting of title to real property according to the parties’ prior a g reement” (internal quotation marks o mitted)). Thus, actions taken to facilitate a non-judicial foreclosure, such a s sending the notice o f default an d n otice of sale, a re not attempts to collect “debt” as tha t t e r m is defined by the F DCPA.

T h e prospect of having property r epossessed may , o f
course, b e an inducement to pay off a d ebt. Bu t t h at inducement ex ists by virtue of the lien, reg ardless of whether foreclosure proceeding s actually commence. The fear o f having y our c ar impounded may induce y ou to pay off a stack of accumulated parking tickets, but that doesn’t make the g u y with the tow truck a debt collector.

Our h olding today affirms the leading case of Hulse v. Ocwen Federal B ank

, 195 F

. Supp. 2 d 1188, 1204 (D. Or. 2002), which held that “foreclosing on a trust d eed is an

en tirely different path” than “collecting funds from a debtor.” 3 W e acknowledg e that two c ircuits have declined to

3 T h e d issen t’ s ef

f o rt to d isco u

n t Hu lse

, d issen t at 2 1, d o esn ’ t ch an g e t h e fa c t th at Hu lse is in d eed th e lead in g case f o r w h at o th er co u rts h av e

reco g n ized as th e m aj o rity p o sitio n

. S ee, e.g

. , Au ro ra Lo a n S

ervs., LLC

v

. Kmiecik

, 9 9 2 N .E.2 d 1 2 5
, 1 3 4 (Ill. A p p

. Ct. 2 0 1 3 ) (“ T h e m in o rity v iewH O V

. R E C O N T R U S T C O

. 9

follow Hulse

. Glazer v. Chas e H o m e Fin. LLC
, 704 F .3d 453, 4 61 ( 6th Cir. 2013); W ilson v. D r a

per & Goldberg, P.L.L.C.
, 443 F .3d 373, 378–79 ( 4th Cir. 2006). B ut neither

case concerned the nuances of California foreclosure law, a nd

we find neither case persuasive here. The F ourth Circuit in W ilson was more concerned with avoiding what it viewed a s

a “loophole in the A c t” than with f ollowing the Act’s tex t. 443 F .3d a t 376. W e rely on policy to h elp interpret statutory lang uag e; we don’t make it ourselves. The Six th C i r c u i t’s decision in G lazer r ests e ntirely on the premise that “the ultimate purpose of foreclosur e is the pay ment of money

. ” 704 F .3d at 4 63. B ut the F D CPA d e f ines d e bt as an

“ oblig ation of a consumer to pay money .” 15 U. S

. C

. § 1692a(5) ( emphasis added). F ollowing a trustee’s sale, the
trustee collects money from the home’s purchaser, not from the orig inal b orrower. B ecause the money c o l l e cted from a trustee’s sale is not money owed b y a c o n sumer, it isn’t “debt” as defined by the F DCPA.

The most p l a u sible reading of the statute is that the foreclosure notices were “ the enforcemen t of [ a ] security interest[ ] ” as c ontemplated by se ction 1692f(6) rather than “debt collection” a s contemplated by section 1692a. The F DCPA’s g eneral d efinition of “debt collector,” contained at section 1 692a(6), applies to entities that “reg ularly collect[ ]

or attempt[ ] to collect, directly or indirectly

, debts owed or due or asserted to b e owed or due [ to] another.” Entities that

tak en i s th at th e act o f f

o reclo s in g o n a m o rtg ag e is th e co llectio n o f a deb t

acco rd i n g t o th e FDCP A .”). District co u rts acro s s ou r circu it h av e ap p ro v ed o f Hu lse t im e an d ag a i n

. S ee, e.g

. , Ca stro v

. Exec. Tr. S ervs., LLC
, No

. CV- 0 8

- 2 1 5 6- P HX- L OA
, 2 0 0 9 WL 4 3 8 6 8 3
, at * 6 (D. A riz. Feb

. 2 3
, 2 0 0 9 ); Izen b erg v

. ETS Servs., LLC
, 58 9 F. Su p p

. 2 d 1 19 3
, 1 1 9 9 (C.D. Cal. 2 0 08 ); In es v

. Co un t r ywid e Ho me Lo a n s, In c. , No

. 0 8 cv 1 2 6 7 W QH(NL S), 2 0 0 8 W L 4 7 9 1 8 6 3
, at * 2 (S.D. Cal. No v

. 3
, 2 0 0 8 ).H O V

. R E C O N T R U S T C O

. 10

qualify as debt co l l e c t ors under this g eneral definition a re debt collectors for purposes of the entire statute. However, the F D CPA also includes a narrower definiti o n o f “debt collector.” This narr o w e r d e finition of the term “also includes” entities whose p r i n cipal business purpose is “the enforcement of security interests.” 15 U.S.C. § 169 2 a(6). Thi s provision would be superfluous if all entities that enforce security interests were already in c luded in the definition o f debt collector for purposes o f the entire F DCPA. B ut the relationship between sections 1 692a(6) and 1692f(6) makes sense if some security enforcers are debt c o l lectors only for the limited purposes of section 1692f(6). All parties
ag ree that ReconTrust is a debt collector und er the narrow definition. Ordinarily

, section 1 692f(6) would p rotect a

consumer ag ainst the abusive practices of a security enforcer who does not fit the broader definition of a debt collector. B ut that doesn’t matter in our case because ReconTrust is not accused o f conduct prohibited by section 1692f(6). The sole question here is whether ReconTrust is a debt collector under th e g eneral definition—that is, whether ReconTrust “reg u larly collects” debts.

W e do not hold that the F D CPA intende d t o e x clude all entities who s e principal purpose is to enforce security interests. I f entities that enforce security interests eng ag e in activities that constitute debt collection, t h e y a r e d ebt collectors. W e hold only that t h e enforcement of security interests is n o t a lway s debt collection. W e ag ree with the dissent that the terms a

r e not mutually ex clusive. B ut they also aren’t coex tensive. 4

4 T h e d i s s e n t ’s ex t en s iv e relian ce o n th e FDCP A ’ s j u d icial v en u e clau se, d i ssen t a t 3 2

– 3 5
, f ails f o r t h e sam e reaso n

. T h e clau se in deed

co n tem p lates th at a secu rity en f

o rcer can b e a d eb t co llecto r, bu t it o f f ersH O V

. R E C O N T R U S T C O

. 11

W e therefore ag ree with a central premise of W ilson and Glazer : An entity does not become a g eneral “debt collector” if its “only role i n t he d ebt collection process is the enforcement of a security interest.” W ilson

, 4 43 F .3d at 378;

see Glazer

, 704 F .3d at 464. B ut from there our paths diverg e. W e view all o f ReconTrust’s activities as falling under the umbrella o f “enforcement of a security interest.” Under Ca l i f

o r n i a ’ s n o n

-

j u dicial foreclosure statutes, ReconTrust could not conduct the trustee’s sale u n til it sent the notice of default and the notice of sale. I f ReconTrust can administer a t r u s tee’s sale without c ollecting a debt, it must be able to maintain that status w hen it ta k es the statutorily

r e q uired steps to conduct the trustee’s sale. The rig ht to “enforce” the security interest necessarily implies the rig ht to send the required notices; to hold otherwis e would divorce the notices from their contex t. 5

The Glazer court rejected this view, noting that it couldn’t think of any one other than repossessors “whose only role in the collec t i o n process is the enforcement of security interests.” 7 04 F .3d at 464. Glazer ex plained that a “ lawy er principally eng ag ed in mortg ag e foreclosu r e d oes not meet

n o in d icatio n th at an en tity is a d eb t co llecto r b eca use it en f o rces a

secu rity in terest.

5 A g ain

, a tru stee o f a d eed o f tru st m ig h t b eco m e a “ d eb t co llecto r”

u n d er th e g en eral d ef

in i tio n if h e d id so m eth in g in a d d itio n to th e actio n s req u ired to en f

o rce a secu rity in t e r e s t

. S e e Derisme
, 8 8 0 F. Su p p

. 2 d at 3 2 6 ; s ee a lso Ka lten b a c h v

. Rich a rd s , 4 6 4 F.3 d 5 2 4
, 5 2 8

– 2 9 (5 th Cir. 2 0 0 6 ). Ho m ak es n o arg u m en t th at Reco n T ru st d id m o re th an w h at w as req u ired b y Calif

o rn ia law to en f

o rce th e d eed o f tru st. It reco rd ed an d

m ailed n o tices th at w ere scrip ted b y th e Calif o rn ia leg islat u re. S

ee Cal. Civ

. Co d e § 2 9 24

. A n d

, w h i le th ese n o tices ad v ised Ho th at sh e co u ld

av o id f o reclo s u re b y pay in g u

p , t h at w as req u ired b y Calif orn ia l aw in

o rd er to co n d u ct th e tru stee’ s sale.H O V

. R E C O N T R U S T C O

. 12

this criteria [ si c]
, for he must communicate with the debtor
reg arding the d ebt during the fore closure proceeding s,” but this is “ not so for repossessor s , who ty pically ‘ enforce’ a

se c urity interest–– i.e.
, repossess or disable property ––when
t h e d e b tor is not present, in order to keep the peace.” 7 0 4 F .3d at 4 64. W e find thi s d istinction unpersuasive. The F DCPA itself recog niz e s that repossessors will communicate with d e btors. 6 Enforcement of a security interest will often involve communica t i ons between the forecloser and the

c o nsumer. W hen these communications are limited to t h e foreclo sure process, they d o not transform foreclosure into debt collection.

The notices a t is s ue in our case didn’t request pay ment from Ho. 7 They merely informed H o that the f oreclosure
process had beg un, ex plain e d t he foreclosure timeline,

a p p r i sed her of her rig hts and stated that she could cont a ct

6 Sectio n 16 9 2 a(6 ) p ro v id es th at en f o rcers o f secu rit y i n s t r u m en ts

are d eb t co llecto rs o n ly f

o r th e lim ited p u rp o ses o f sectio n 1 6 92 f

. Sectio n 1 6 9 2 f (6 ) p ro h ib its “ [t]ak in g o r th rea ten in g to ta ke an y n o n j u d icial actio n to ef f ect d isp o ssessio n o r d isab lem en t of p ro p erty ” (em p h asis ad ded ). B y ref errin g to “ th reats” an d n o t j u st actio n s, t h e statu te co n tem

plates th at rep o ssesso rs w ill co m

m u n icate w ith d eb to rs. T h e f act th at Co n g ress w en t

o u t o f its w a y t o e xp o se en f o rcers o f secu rity in terests to liab ility f or

“ t h reaten in g ” d eb to rs s h o w s t h at su ch en f

o rcers w ere ex p ected to d o m ore th an m erely rep o ssess p ro p erty

in th e m id d le o f

th e n ig h t.

7 T h e d issen t m ak es m

u ch o f th e f

act th at th e n o tice o f tru stee’ s sale in clu d ed a d isclaim er s t a t in g th at Reco n T ru st “ is a d eb t co llecto r attem p tin g to co llect a d eb t.” T h is d isclaim er isn ’ t su f f icien t to sh o w th at Reco n T ru st is a d eb t co llecto r. S ee Gu errero v

. RJM Acq u isitio n s LLC
, 4 9 9 F.3 d 9 2 6, 9 32 (9 th Cir. 2 0 0 7) (p er cu riam ); see a lso Gb u rek v

. Litto n Lo a n S ervicin g LP
, 6 1 4 F.3 d 3 8 0, 3 8 6 n .3 (7 th Cir. 2 0 10 ) (sim ilar). “ D eb t

co llecto r” isn ’ t an electiv e categ o ry

. It’ s d eterm in ed o b j ectiv ely

, b ased on th e activ ities o f

th e en tity in q u estio n

.H O V

. R E C O N T R U S T C O

. 13

Country wide (not Reco n T r u s t) if she wished to make a pay ment. These notices w ere desig n ed to protect the debtor. T h e y a r e e n t i r e l y d i f f e r e n t f r o m t h e h a r a s s i n g communications that the FD C P A was meant to stamp out. Thus, w e ag ree with the California Courts of Appeal t hat “g iving notice of a foreclosure sale to a c o n s umer a s required by the [ California] Civil Code does not constitute debt collection activity under the F DCPA.” Pfeifer v. Countrywi d e Home Loans, Inc.
, 150 Cal. Rptr. 3d 673, 684 (Cal. Ct. App. 2012); see Fonteno v

. W ells Fargo Bank, N.A.
, 176 Cal. Rptr. 3d 676, 690–92 (Cal. Ct. App. 2014). 8

Even thoug h the notices didn’t e x plicitly r eq u e s t p a y m e n t, Ho contends that they still qualify as debt collection because they p ressured her to send money to Country wide. See Burnett
, 7 06 F .3d at 1239. B u t , a s we’ve ex p lained, the enforce m e nt o f a security interest often creates an incentive
to pay the underly ing debt. I f this w e r e sufficient to transform the enforcement of security i n t e r ests into d ebt collection

, t h e n all security enforcers would be d ebt collect o rs. This would render meaning less the F DCPA’s

ca r e f u lly drawn distinction b etween debt collectors a nd enforcers of security inter e sts, and ex pand the scope o f the F DCPA well past the boundary of clear cong r essional intent and common sense.

Moreover, even if an entity like ReconTrust did fall under the F DCPA’ s g eneral definition of a “debt collector,” it would sti l l b e ex empt under one o f the F DCPA’s ex press

8 We f in d it sig n i f

i can t th at Calif

o rn ia ex p ressly ex em

p ts tru stees of d eed s o f t ru st f ro m liab ility u n d er th e Ro sen th al A ct, th e state an alo g u e of th e FDCP A

. S

ee C a l

. C iv

. Co d e. § 2 92 4 (b ). T h e Calif o rn ia l eg islatu

re clearly v iew s su ch tru stees as m aterially d if f eren t f ro m d eb t co llecto rs.H O V

. R E C O N T R U S T C O

. 14

ex c e pti o n s to that definition. The F DCPA ex cludes from the term “debt collector” an ent i t y whose activities

are “incidental to

. . . a b o na fide e scrow arrang ement.” 15 U.S.C. § 1692a(6)(F )

. 9 A California mortg ag e trustee— which holds leg al title on behalf o f t he borrower a nd lender—functions as an e s c r o w. Even if ReconTrust’s activities could be charac teriz ed as collection, they a re “incidental to” t he e scrow arrang e ment because they are for the sole benefit of the lender. See Rowe v. Educ. Credit Mgmt. Co r

p

. , 559 F .3d 1028, 1034–35 (9th Cir. 2 009) (construing “incidental to”).

A final consideration weig hs in favor of ReconTru s t: Holding trustees liable under the F DCPA would subject them
to o blig ations that would f rustrate their a

bility to comply with the California statutes g overning non-judicial fore c l o sure. ReconTrust lists a half doz en c o n fli c t s b etween the F DCPA and California law. F or ex ample, the F D CPA prohibits d ebt collectors from communicating with thir d parties about the debt absent consent from the debtor. 1 5 U

. S

. C. § 1692c(b). Bu t California law requires the trustee to announce a l l trustee’s sales in a newspaper a n d mail the n otice o f default
t o v a r i o u s t h i r d p a r t i e s

. S e e C a l

. C i v

. C o d e §§ 2924b(c)( 1 )

– ( 2 ), 2924f(b). The F DCPA also prohibits

9 T h e F DCP A also ex clu d es f ro m its def

in itio n o f “ d eb t co l l ecto r” an

en tity th at acts “ in cid en tal to a b o n a f id e f id u ciary o b lig atio n .” 1 5 U.S.C. § 1 6 9 2a(6 )(F). B u t b ecau se Calif orn ia co u rts h av e co n sisten tly h eld th at

a tru stee is n o t a f

id u ciary

, w e are relu ctan t to rely o n th i s p ro v isio n h ere. S ee, e.g

. , H

a t ch v

. Co llin s , 27 5 Cal. Rp tr. 47 6
, 4 8 0 ( C t. A p p

. 19 9 0) (h o ld i n g th at a t

ru stee o f a d e e d o f t ru st “ d o es n o t stan d in a f i d u ciary relatio n sh ip ” to eith er th e b en ef iciary o r th e cred ito r); see a lso S tep h en s, Pa rta in & Cu n n in g ha m v

. Ho llis

, 24 2 Cal. Rp tr. 2 5 1
, 2 5 5 (Ct. A p p

. 19 8 7) (“ J u st as a p an da is n o t an o rd in ary b ear, a tru stee o f a d eed of t ru st is n o t

an o rd in ary tru stee.”).H O V

. R E C O N T R U S T C O

. 15

debt collectors from directly communi cating with debtors if
t h e debt c ollector knows that the debtor is represented b y counsel. 15 U .S.C. § 1692c(a)( 2 ). California law requires the trustee to mail the notices of default and sal e d irectly to the borrower, and makes no e x ception for borrowers who a re represented by c ounsel. Cal. Civ. Code. §§ 2 924b(b)(1), 2924f(c)(3). I n both of t h e s e cases, a trustee c ould not comply with California law without violating the F DCPA.

T h ing s would become even more complicated if t h e

consumer e lected to d ispute the debt pursuant to the F DCPA. I n such a case, a trustee would be required t o “cease collection of the debt” until he obtained verification of that debt. 15 U.S.C. § 1692g (b). California law compels trustees t o m ail a copy of the notice o f default within ten bus i n e s s day s after recording it. Cal. Civ. Code § 2924b(b)(1). I f the

consumer disputes his d ebt as soon a s it is recorded, the
trustee would have to seek verification of the debt, and would be unable to mail the n otice until the d ebt was v erified. I n the likely e vent that such verification took long er than t en day s, the trustee would miss California’s s t at u t ory d eadline for mailing out the notice. And if veri f i c at i o n requests or other hassles resulted in a delay o f a y ear or long er, the trustee would be required to restart the fo r ec losure process. See § 2924g (c)(2).

ReconTrust’s amici sug g e st that holding trustees liable a s de b t collectors would “literally prevent [ California’s foreclosure] s y s t e m from functioning .” B rief f or United Trustee’s A ss’n et al. as A mici Curiae Suppo r t ing Defendants-Appellees, Ho v. ReconTrust (No. 10-56884), 2015 WL 1020492, at *4. I n an amicus brief filed in support of Ho, the Consumer F inan c i al Protection B ureau conceded that “ a conflict may ex i s t b e t w een state and federal law.”H O V

. R E C O N T R U S T C O

. 16

B rief for Consumer F inancial Protection Bu r eau as Amicus Curiae Suppo r

t i n g P l a i n t i f

f

- A p pellant, Ho v. ReconTrust (No. 10-56884), 2 015 W L 4735787, at *14. 1 0 There c a n b e n o doubt that labeling Rec onTrust a debt collector under the bro a d e r definition of the F DCPA would create sustained friction between the federal statute and the state scheme.

F orecl o s u r e is a traditional area of state concern. See BFP v. Resolution Trust Corp.
, 5 11 U.S. 531, 54 4 (1994) (characteriz ing the reg ulation o f foreclosures as “an essential
state interest”); Rank

v. Nimmo
, 677 F .2d 692, 697 (9th Cir. 1982) (noting that “mortg ag e foreclosure has t r a ditionally been a matter for s t a t e c o urts and state law”). W e are thus especially reluctant to accept an interpretation of a federal
statute that would g enerate conflict between state and federal law. This reluctance flows naturally from the fact that, when Cong r ess leg islates “in a field whic h t he States have traditionally occupied,” federal cour t s “ start with the assumption that the historic police powers of the States were not to b e superseded by the F ederal Act unless that was the clear a nd manifest purpose of Cong res s

. ” Rice v. Santa Fe Elevator Corp.

, 331 U.S. 218, 230 (1947). W e find no such clear purpose here.

10 A t ou r in v i tatio n , th e ag en cy f iled an am icu s b rief

arg u in g th at all
tru s tees o f d eed s o f tru st are d eb t co llecto rs u n d er sectio n 1 69 2 a(6 ). T h e ag en cy h as n ot ex ercised its au th ority to p ro m u lg ate a ru le in terp retin g th e term “ d eb t co llecto r.” T h u s, w e acco rd d ef eren ce to th e ag en cy ’ s in terp retatio n o f th at p h rase o n ly to th e ex ten t th at w e f in d th at in terp retatio n p ersu asiv e. S ee Un ited S ta t es v

. Mea d Co rp

. , 53 3 U .S. 2 1 8
, 2 2 6

– 2 9 (2 0 0 1 ) (citin g S

kid mo re v

. S wift & C o

. , 3 2 3 U.S. 1 34
, 1 3 9

– 4 0 (1 9 4 4)). W e are u n

p ersu ad ed b y

th e ag en cy ’ s read in g o f th e statu te an d th eref o re d o n o t d ef

er to it.H O V

. R E C O N T R U S T C O

. 17

W e also find no c omfort in the dissent’s s u gg estion that the conflicts between California law a nd the F DCPA can be mitig ated b y c onsent between the p arties to a mortg ag e deal. Dissent at 41–43. The fact that part i e s may be able to draft their w ay around conflicts renders them conflicts no less. Releg ating future parties to the uncertain process o f a dding contractual terms may itself upset a state’s c arefully drawn scheme of notice and disclosure; additional efforts or more complex terms are themselves costs of that conflict.

W h en one interpretation of an ambig uous federal statute would create a conflict with state foreclosure law and another interpretation would n o t , respect for our federal sy stem counsels in f

a v o r of the latter. The statutory phrase “debt collector” is notoriou s l y ambig uous, causing our sister circuits to divide as to whether foreclosure -related activities constitute d ebt collection. 1 1 Eve n c ourts h olding that foreclosure is debt collection have r ecog niz ed that t h e t e r m “debt collector” is cry

ptic. See, e .g. , Glazer

, 704 F .3d at 460; Ambridge

, 372 P.3d at 222 ( observing that “the F DCPA could certainly be clearer on the question”). Given this ambig uity

, we are hesitant to c onstrue f ederal law in a man n e r that interfe r e s with California’s sy stem for conducting non11 Co mp a r e Gla zer , 7 0 4 F.3 d at 4 61 (h o ld in g th at all “ m o rtg ag e f o reclo su re is d eb t co llectio n ” f

or th e p u rp oses o f th e FDC P A) ; Wi l so n , 4 4 3 F .3 d at 3 7 8

– 7 9 (sim ilar); an d Pip er v

. Po rtn off La w Asso cs., Ltd

. , 3 9 6 F.3 d at 23 5

– 3 6 (3 d Cir. 2 0 05 ) (sim i la r), with Bu rn ett , 7 06 F.3 d at 1 2 3 9 (su g g estin g th at n o n

-

j u d icial f

o reclo su re is n o t d e b t c o llectio n f or p u rp o s es o f th e F D CP A
, b u t ref u sin g to so h o ld ); W

a rren v

. Co u n trywid

e Ho me Lo a n s, In c. , 3 4 2 F. A p p’ x 4 5 8 , 4 6 1 (1 1 th Cir. 2 0 09 ) (h o ld in g th at

“ f o reclo s i n g on a h o m e is n o t d eb t co llectio n f o r p u rp o ses” o f th e F D C P A) ; a n d Bro wn v

. Mo rris
, 2 43 F. A p p’ x 3 1
, 3 5 (5 th Cir. 2 0 0 7 ) (h o ld i n g th at “ f

o reclo su re is n o t p er se FDCP A

d eb t co llectio n ”).H O V

. R E C O N T R U S T C O

. 18

judicial foreclosure s

. C

f

. Sheriff v

. Gillie

, 136 S. Ct. 1594, 1601 (2016).

II

The d istrict court twice dismiss e d Ho’s T I L A rescission claim w ithout prejudice, and Ho didn’t replead it in her third complaint. W e have held t h at claims dismissed without prejudice and n ot repleaded are n o t preserved for appeal; they

are instead considered “voluntarily dismissed.” See Lacey v. Maricopa Cty.
, 6 9 3 F

. 3d 896, 928 (9th Cir. 2012). Here, howe v e r , t h e district c ourt didn’t g ive Ho a free c hoice in whether to keep repleading the T I L A rescission claim. Rather, the court said that i f Ho wished to replead the claim she “would be required to alleg e that she is prepared and able
to pay back the amount of her purchase p rice less a ny downpay ment she contributed and a ny p ay m e n ts made since the time of her p urchase.” The judg e concluded that if Ho “is not able to make that alleg ation in g o od fa i t h

, she should not continue to maintain a TI L A rescission claim.” I t’s unclear whether the judg e meant this as benevolent advice o r a stern command. B ut a reasonable l i t ig ant, particularly o ne p roceeding pro se, could h ave c onstrued this as a s t r i ct condition, one that mig ht have precipitated the judg e’s ire o r

even invited a sanction if disobey e d. Ho could not or would
not commit to pay back the loan, and dropped the claim in her third complaint.

The district c ourt based its condition o n Y amamoto v. Bank of N.Y

. , which g ave courts equitable d i s c retion to “impose conditions on rescission that assure that the borrower
meets her o blig ations once the creditor has perform e d i ts oblig ations.” 3 29 F .3d 1167, 1173 (9th Cir. 2003). B ut, a fter the d istrict court dismissed Ho ’ s c laims, we held that aH O V

. R E C O N T R U S T C O

. 19

mortg ag or need not alleg e the ability to r epay the loan in order to state a rescission claim under TI L A that can survive

a motion to dismiss. Merritt v. Countrywide Fin. Corp.
, 759 F .3d 1023, 1032–33 (9t h C i r. 2014). Ho arg ues that her rescission claims were properly preserved for appeal and should be reinstated.

W h ere, as here, the district court dismisses a c laim a nd instructs the plaintiff not to refile the claim unless h e includes certain additional a l l e g a t ions that the p laintiff is unable o r

un wi l l ing to make, the dismissed claim is preserved for appeal even if not repleaded. A plaintiff is the master of his claim a n d shouldn’t h ave to choose b etween defy ing the district c ourt and making alleg ations that h e i s unable o r unwilling to bring into court.

This rule is a natural ex tension of o u r holding in Lacey

. The Lacey rule—which displaced our circuit’s long standing and notably harsh rule that all claims not repleaded in an

a m ended c omplaint were considered waived—was motivated by two principal concerns: judicial e co n omy and fairness to the parties. 693 F .3d at 925–28. Those concerns apply h ere. W e see n o point in forcing a plaintiff into a drawn-out contest of wills w ith the district court when, for whatever reason, the plaintiff chooses not to c o m p ly with a court-imposed condition f

or repleading

. W e r emand to the district court for consideration of H o’s TI L A r escission claim in lig ht o f Merritt v. Countrywide Fin. Corp. , 759 F .3d at 1032–33.

AF F IRMED in part, VACATED and REMANDED in part. No costs.H O V

. R E C O N T R U S T C O

. 20

KORMAN, District J udg e, dissenting in part and concurring in part:

The majority opinion opens with the principal ques t ion presented by this case: “[ W ] hether the trustee of a California deed of trust is a ‘debt collector’ under the F air Debt Collection Practice s Act (F DCPA).” Maj. Op. at 5

. After a discussion of the issue, the majority concludes by observing that the p hra s e “debt collector” is “notoriously a mbig u ous” and that, g iven this ambig uity

, w e should refuse to construe it in a manner that interferes with California’s arrang ements for conducting nonjudicial foreclosures. Maj. Op. at 17–18.

My reading of the F air Debt Collection Practices A ct (“F DCPA”), c onsistent with the manner in which it has been construed by e very other circuit that has addressed whether foreclosure procedures a r e debt coll e ction subject to the F DCPA, sug g ests that the only reasonable r e a ding is that a trustee pur s uing a nonjudicial foreclosure proceeding is a d ebt collector. See Kaymark v. Bank of Am., N.A. , 783 F .3d 168, 179 (3d Cir. 2015), cert. d

enied

, 136 S.Ct. 794 ( 2016); Glazer

v. Chase Home F

i n

. LLC
, 704 F

. 3d 453, 461–63 (6th Cir. 2013); W ilson v. Draper & Goldberg, P.L.L.C.
, 443 F .3d 373, 376–77 (4th Cir. 2006); see also Alas k a T r

. , LLC v

. Ambridge

, 372 P.3d 207, 213–216 (Alaska 2016); Shapiro & Meinhold v. Zartman
, 823 P.2d 120, 123–24 ( C o l o

. 1 992) (en banc). The same is true of a judicial f oreclosure
p r o c e e ding —an a lternative available in California. S e e C o k e r

v. JPMorgan Chase Bank, N.A.
, 364 P.3d 1 7 6
, 1 78 (Cal. 2016). B oth are intended to obtain money by forcing the sale of the property

being foreclosed upon.

T h e majority “affirms” what it c haracteriz es as the “leading case” of Hulse v. Ocwen Federal Bank, FSB
, 195 F

.H O V

. R E C O N T R U S T C O

. 21

Supp. 2d 1188 (D. Or. 2002), which held that “foreclosing on

a trust deed i s a n entirely different path” than “collecting funds f rom a d ebtor,” because “[ p] ay ment of funds is not the object of the foreclos u r e a c t ion. Rather the lender is foreclosing its interest in th e property .” Id. at 1204. The reasoning in Hulse

, if o ne could call it that, is contai ned in
two short p arag r aphs, and it is the leading cas e o n l y i n the number o f appellate c ases that have by name rejected its

reaso ning

. See, e.g. , Glazer

, 704 F .3d at 4 6 0, 463; Kaltenbach v

. Richards

, 464 F .3d 524, 528 (5th C i r. 2 006); W ilson , 443 F .3d at 376.

This is not s u r

p r i sing

. The sug g estion in Hulse that a foreclosu re p ro ceeding is one in which “the lender is foreclosing its inter e s t i n the property ” is flatly w rong

. A foreclosure proceeding is one in which the i n t erest of the debtor ( and not the c reditor) is foreclosed in a p r o ceeding conducted by a trustee w ho holds title t o t h e p r operty a nd who then uses the proceeds to retire all or par t o f t h e d ebt owed by the borrower. See Cal. Civ. Code § 2931; Y vanova

v. New Century Mortg. Corp.
, 365 P.3d 845, 850 (Cal. 2016). Any ex cess f

u n d s r aised over the amount owed b y the borrower (and costs a ssociated with the foreclosure) are p aid to the borrower. See Cal. Civ. Code § 2924k; see also J esse D u k e minier & J ames E. Krier, P roperty 590 (2d ed. 1988). Thus, contrary to the holding in Hulse

, “[ t] here can be no serious doubt that the ultimate purpose of foreclosure is t he
pay ment of money .” Glazer , 704 F .3d at 463. Nor, because the F DCPA defines a “debt c ollector” as one who c ollects o r attempts to collect, “directly or indirectly ,” debts o we d to another, 15 U.S.C. § 1 692a(6), does it matter that the money collected at a foreclosure sale d o es not come directly from the debtor.H O V

. R E C O N T R U S T C O

. 22

B e cause the majority makes Hulse the foundation of its analy sis, it p apers o ver Hulse ’s irredeemably flawed analy sis by sug g esting that it comes close to being the seminal c ase in the area. Nevertheless, it can only do so by rely ing on an int e r mediate I llinois appellate court decision for the proposition that “

Hulse is indeed the leading case for what other courts h a ve recog niz ed as the majority position.” Maj. Op. at 8 n .3 ( citing Aurora Loan Servs., LLC v. Kmiecik

, 992 N .E.2 d 125, 134 ( I ll. App. Ct. 2013)). T h e I llinois appellate court decision d id n o t do its own “head count.” I nstead it cite d G l a z er v. Chase H ome Fin. LLC
, 704 F .3d 453, 4 64 (6th Cir. 2013), for t h e proposition that “[ t] he minority vie w t a k e n is that the act of foreclosing o n a mortg ag e i s the collection of a debt according to the F DCPA.” Aurora Loa n S ervs., LLC
, 992 N.E.2d at 134. Glazer

, in turn, said no more than a contrary view h a s been “adopte d by a majority of district courts.” Glazer

, 704 F .3d
at 460. W e d o not decide cases o n the basis of “head counts” of district court cases, althoug h we shoul d a t least be concerned when we r each a result that h a s b een rejected b y every circuit that has decided the issue in a published opinion. See Maj. Op. at 17 n.11 ( citing G lazer

, 704 F .3d a t 461; W il son v. D raper & Goldberg, P.L.L.C.
, 4 4 3 F .3d 373, 378–79 (4th Cir. 2006); P iper v. Portnoff Law Assocs., Ltd.

, 396 F .3d 227, 235–36 (3d Cir. 2005)).

After analy

z ing the majority ’s c onstruction of the F DCPA, I discuss below each of the conflicts conjured by the majority and show that the F DCPA does n ot interfere with California’s a r r a n ge m e n t f o r c onducting nonjudicial foreclosures in a way that would justify nullif y i n g the protections that the F DCPA provides. More sig nificantly

, the lang uag e of the F DCPA’s preemption section provides ample

room for the operation of California law without the need forH O V

. R E C O N T R U S T C O

. 23

ex e mpting an entire categ ory of debt c ollectors. T h us, it provides that the F DCPA “does not annul, alter, or affect, o r

ex e mpt a

ny person s u bject to the provisions of this subchapter from comply i n g with the laws of any State with respect to debt collection practices, e x c e p t to the e x tent that those laws a

re inconsistent with any provision of this subchapter, and then only to the e x tent of the inconsistency

. ” 15 U.S.C. § 1692n.

W h ile this sug g ests a desire to interf e r e as little a s possible “with the laws o f any State,” it g ives e f f e c t t o the

concern that the “primary reason why debt coll e ction abuse is so widespread is the lack o f meaning ful leg islation on the State level.” S. Rep. No. 95-382, at 2 (197 7 ). “Cong ress enacted the F DCPA despite the fact that some states already had procedural requirements for debt collectors . . . in place, because it ‘decided to protect consumers who owe money b y adopting a different, and in part mo r e string ent, set o f requirements that w ould c onstitute minimum n ational standards for d ebt collection practices.’” Piper
, 396 F

. 3d at 236 n.11 (quoting Romea v. Heiberger & Assocs

. , 163 F .3d 111, 118 (2d C i r

. 1 9 9 8)). I ndeed, one o f the declared
purposes of the F DCPA is “ to p romote c o n sistent State action to protect cons u mers ag ainst debt collection abuses.” 15 U.S.C. § 1692(e).

This case affords no basis for u ndermining the minimum national standards that Cong re s s h a s adopted. Nor does it justify ig noring the rule we have f ollowed consistently that,

as “a broad remedial statute,” Gonzales v. Arrow Fin. Servs., LLC
, 660 F .3d 1055, 1060 (9th Cir. 2011), the F DCPA must be liberally construed in favor of the consumer. Hernandez

v. W illiams, Zinman & Parham PC
, 829 F .3d 1068, 1078–79 ( 9 t h Cir. 2016); see a lso Johnson v. Riddle

, 305 F .3d 11 0 7
,H O V

. R E C O N T R U S T C O

. 24

1117 ( 1 0 t h C i r. 2002). I ndeed, the foreclosure process conducted here was entirely consis t e n t w ith both California law and the F D CPA. The complaint h ere does n o t d erive from any conflict b etw een these statutes. I nstead, the complaint alleg es that th e trustee under the Deed of Trust, ReconTrust, sent the d ebtor, Ho, a notice that was misleading and false because it listed an inaccurate amount d u e

. The

cause o f a c tion that the F DCPA provides for this alleg ed misconduct does n o t c onflict w ith California law. I f California law does not provide such a remedy

, the F DCPA

ca u se of action simply supplements it, just as Cong ress intended.

I. The Def

inition of “Debt Collector”

I turn first to the arg uments based o n the definition of the phrase “ debt collector.” The F D CPA p r o v ides, in relevant part, that “[ t] he term ‘debt’ means a ny oblig ation or alleg ed oblig ation of a c onsumer to pay money

. ” 15 U .S.C. § 1692a(5). “The term ‘consumer’ means any natural person oblig ated or alleg edly oblig a ted to pay a ny debt.” Id. § 1692a(3). There is no dispute that Ho is oblig ated under a promissory note to pay the len d e r t he purchase price of her property

. Section 1692a(6) d efines the term “debt collector”
t o mean “any person who uses any instrumentality o f interstate commerce or the mails in any business the principal
purpose of w hich is the col l e c t i o n of any debts, or w ho
reg ularly collects or a ttempts to c ollect, directly o r indirectly

, debts owed or due or asserted to be owed or due a n o t h e r.” There is n o dispute that ReconTrust seeks to enfo r c e Ho’s oblig ation to pay t h e m o ney owed on the promissory note, and that it e ng ag es in suc h activities g enerally

, w ith the deg ree of reg

u larity described in section 1692a(6).H O V

. R E C O N T R U S T C O

. 25

Nevertheless, the majority a r g ues that, “[ f] or the purposes of the F DCPA, the w ord ‘ debt’ is sy n ony mous w ith ‘money .’ Thus, ReconTrust would only be liable if it att empted to collect money from [ the borrower] Ho.” Maj. Op. a t 7 (citing 15 U.S.C. § 1692a(5)). B e c a use California law does not permit deficiency judg ments in cases where there has been a nonjudicial foreclosure, no money will be collected directly from Ho. Consequently

, “ [ t] he object of a n o n

- j udicial foreclosure is to retake a n d resell the security

, not to collect
money .” Id . This sug g estion cannot be rig ht.

The object of a nonjudicial f or e cl o sure is not to “retake and r esell” the debtor’s home. The only way r e al property that is fore c l o s e d upon can be retaken by the creditor is to purchase it a t a fo r e closure sale. See Cal. Civ. Code § 2924g (a). Moreover, the purpose o f a f oreclosure proceeding is to collect money

. T hus, a judicia l decree o f foreclosure directs “an officer of t h e c ourt to sell the land at

a public sale, pay the debt to the lender, and pay any amount

ex c e eding the d ebt to the borrower.

. . . E x cept for the power to f oreclose privately

, the deed of trust is treated in a lmost all sig nificant respects as a mortg ag e.” Duk e minier & Krier,
supra , a t 5 90–91; see also D ikeman v. Jewel Gold Mining C o. , 13 F

. 2d 118, 118 ( 9th Cir. 1926) (“F oreclosure is a remedy by

which the property

covered by

the mortg a g e may be subjected to sale for the pay ment of the demand for which
t h e mortg ag e stands as security

. . . .” (quoting Flanders v. Aumack , 51 P. 447, 450 (Or. 1897))).

The nonjudicial foreclosure process in California is illust r a tive. “Nonjudicial foreclosure proceeding s must be conducted b y auction i n a f a ir a n d open manner, with the property sold to the hig hest bidder.” Dreyfuss v. Union Bank of Cal

., 11 P.3d 383, 390 (Cal. 2000); see also Cal. Civ. CodeH O V

. R E C O N T R U S T C O

. 26

§ 2924g (a). The o bject of the nonjudicial f oreclosure procedure is to sell the real property pledg ed as security thus raising money to retire all or p art of the debt owed by the borrower pursuant to t h e p r o missory note. See A. J ames Casner & W

. B arton L each, Cases and Text on Property 737 (2d ed. 1969) (“To whatev er e x tent foreclosure puts value into [ the mortg ag ee’s] hands, the debt of [ the m o rtg ag or] to [ the mortg ag e e] is discharg ed

. . . .”). I n d e e d

, a ny e x cess funds raised over the amount o w e d by the borrower (and
costs a ssociated with the foreclosure) a r e paid to the borrower. See Cal. Civ. Code § 2 924k; see also Dukeminier & Krier, supra , at 590.

The arg ument that ReconTrust cannot be a debt collector because it may not collect money d irectly from the debtor

ov er l o o ks the disjunctive lang uag e of the definition o f d ebt collector, as well as the inchoate conduct inclu d e d i n that definition. Thus, a debt collector is one wh o “ attempts to collect, directly or indirectly

, debts

. . . owed or d u e another.” 15 U.S.C. § 1692a(6). The nonjudicial foreclosure procedure accomplishes this in one of two alternative way s.

F irst, the creditor, throug h the trustee, may collect money indirectly throug h a n onjudicial foreclosure sale. The same is true o f a j u dicial foreclosure, althoug h it is not conducted by a trustee. The fact that the money may not come directly from the borrower does n o t alter the fact that any funds raised would come as a result of the elimination of th e debtor’s interest and equity in the property

. This clearly constitutes the indirect c ollection of a debt, and the majority d o es not

ex p lain why it does not. Second, the money may be collected d i rectly

, b ecause the lang uag e in the notices sent t o t h e borrower may prompt h er—p e r h a p s the better word is scare her—to ex e rcise her r ig hts o f reinstatement or redemption b yH O V

. R E C O N T R U S T C O

. 27

pay ing the arrear s on the promissory note at the risk losing the roof over her head. See Y vanova , 365 P.3d at 850 (“I f

. . . the borrower does n o t e x e r cise his or her rig h ts o f reinstatement or redemption, the property is sold at auction to the hig hest b idder.”). 1 Or, a s the majority aptly p u t s i t , the notices tell the debtor “ that she could avoid [ this f ate] b y pay ing up.” Maj. Op. at 11 n.5. The s a m e i s t rue of a complaint seeking a judicial foreclosure. 2

Thus, in this case, ReconTrust commenced the foreclosure p roceeding

, “ a s an ag e nt o f the B eneficiary [ the

cr e d i t o r ] u n der a Deed o f Trust,” by the filing o f a notice o f d e f ault served on H o warning that she was in default on the
pay ments due on the promissory note she sig ned o n J une 23, 2007, in the amount o f $ 5 4 8
, 0 00. She was told that the
amount of the default was $ 2 2
, 7 82.68 and would increase until h er account became current, that sh e m ay b e able “to bring [ her] account in g ood standing [ and avoid f oreclosure] by pay ing all of [ her] past due pay ments plus permitted costs

1 “ T h e m ortg ag o r’ s in terest in th e p ro p erty is k n ow n as th e ‘ eq u i t

y ,’

a sh o rten ed f

o r m o f ‘ eq u ity o f red em p tio n ’ w h ich also p ay s lin g u istic h o m ag e to th e g en eratio n s o f ch an cello rs w h o h av e b een m o v ed t o p ro t ect d eb to rs f ro m o v erreach in g m o n ey l en d ers.” Du k em in ier & Krier, su p ra , at 5 8 9

.

2 T h e prin cip al d if

f eren ce betw een a j u dicial an d a n o n j u d i ci a l f o reclo su re is t h at in th e latter, w ith so m e ex cep tio n , see Ba n k o f K i r k wo o d Pla za v. Mu eller

, 2 9 4 N .W .2 d 6 40
, 6 4 2

– 4 3 (N.D. 1 9 8 0 ), a d ef icien cy j u d g m en t ag ain s t th e deb to r m ay b e o b tain ed f o r th e dif f eren ce b etw een t h e m o n ey co l lected at th e f o reclo su re s ale an d th e am o u n t of th e d eb t still o w ed o n th e p ro m isso ry n o te. Su ch an ef f o rt ag ain st th e d eb to r in a n o n j u d icial f o reclo s u re is p rec l u d ed b ecau se f o rg iv en ess of th e

r e m a in d er of th e d eb t is a trad eo f f i n retu rn f

o r “ an in ex p en s i v e a n d ef f icien t rem ed y

ag ain st a d ef

au ltin g b o rro w er.” S

ee Yva n o va , 36 5 P .3 d at 8 5 0

.H O V

. R E C O N T R U S T C O

. 28

and ex p enses,” and that she w ould “have only the leg a l rig ht
to stop the sale of [ her] property by p ay ing the entire amount demanded by [her] creditor.” She was also told that, “[ w] hile [ her] property [ was] in foreclosure, [ she] still must p ay other oblig ations (such as insu r an c e and tax es) required by [her] note and deed of trust or mortg ag e.”

The notice of trustee’s sale a g ain told Ho that she was “I N DEF A UL T” and advised h e r t h at, “ UNL ESS YOU TAKE ACTI ON TO PROTECT YOUR PROPERTY, I T MAY B E SOL D AT A PUB L I C SAL E.” T he nex t parag raph told Ho that R ec o n Trust would “sell [her house] on 8/28/2009
at 01 :00 PM, At the f ront entrance to the Pomona Superior Courts B uilding. ” S ig nificantly

, the notice o f trustee’s sale contained the following

, in conformity with section 1692e(11): “RECONTRUST COMPANY, N.A. is a debt collector attempting

to collect a debt. Any

information obtained will be used for that purpose.”

W h ile the majority sug g ests that ReconT r u s t ’ s d e s c r iption of itself does not necessarily establish that it was eng ag ing in debt-collection activity

, Maj. Op. at 12 n.7, the Second Circuit h as h e ld that a debtor r e c e iving this letter cannot safely disreg ard i t o n t h a t b asis, Hart v. FCI Lender Servs., Inc.
, 797 F

. 3 d 219, 227 (2d Cir. 2015). I nstead, “the L etter

c l early announces itself a n attempt to collect a debt, and its other tex t only emphasiz e s the plausibility and g ravity of that
announcement. W e see n o reason why we should not take it
at its word

. . . .” I

d. ; see also M

cLaughlin v. Phelan Hallinan & Schmieg, LLP
, 756 F .3d 240, 246 (3d Cir. 2 014) (attaching sig n ificance to the fact that a law firm described i tself as a debt collector in a letter to the debtor) ; Re e s e v. Ellis, Painter, R atterree & Adams, LLP
, 678 F .3d 1 211, 1217 (11th Cir. 2012) (same). I n d e ed, in the present case, theH O V

. R E C O N T R U S T C O

. 29

n o t i c es may have succeeded in obtaining money from H o directly bec a u se, as the majority o bserves, the loan service provider approved a loan modification ag reement prior to the d ate of the foreclosure sale. Maj. O p. at 6 n.1. T h e modification, which would take effect upon the pay ment o f $12,000, provided for a $36,000 increase in the amount o f the mortg ag e and a reduction in the monthly interest pay

ment.

The majority does not, and cannot, deny the effect of the lang uag e in the notices sent to Ho. Nor does it even address the lang uag e o f section 1692a(6) that defines “debt collector”

as one who attempts to collect “ i ndirectly ” debts o wed to another. I nstead, it makes a number of arg uments predicated

on the assumption t h a t the mortg ag e foreclosure process involves the enforcement of a security inte r e s t

. Thus, it b e g i n s i t s d e f

e n s e o f R e c o n T r u s t ’ s i n t e r r o r e m communications by arg uing that, i f those communications succeed in obtaining the pay ment of a debt, it is akin to the simple fear of having y our car impounde d b e c a u se y ou h ad accumulated parking tickets. This f ear, the majority sug g ests, “doesn’t make the g u y with the tow t r u c k a d ebt collector.” Maj. Op. a t 8. I leave it to the reader to evaluate whether the

a c t i v ities of a trustee of a deed of trust, which I h a v e described a

bove, can fairly be analog iz ed to those of a tow truck driver who simply p u l l s u p t o a c ar on the street a nd repossesses it.

Perhaps b ecause the a

nswer is obvious, the majority then
arg ues that t h e FD CPA intended to ex clude entities whose principal purpose is to enforce security interests, and because

a n o n j u dicial foreclosure proceeding comes within the definition of enforcement of a security in t erest, ReconTrust is not a debt collector wi t h i n the meaning of the F DCPA. Maj. Op. at 11–12. Moreover, f or this reason, ReconT r ustH O V

. R E C O N T R U S T C O

. 30

was entitled to eng ag e in communications necessary to effectuate the enforcement of a s ecurity interest. I d

. at 11. This arg ument fails for a number of reasons.

F irst, ReconTrust is a debt collector, b ecause it directly o r indirectly collects money owed by the debtor to the creditor. Under these circumstances, it is irrelevant that the nonjudicial
process entailed in a mortga ge foreclosure proceeding may ha v e also constituted the e nforcement of a security interest. See Kaltenbach v. Richards , 464 F .3d 524, 528–29 (5th Cir. 2006) (“[ T] he entire F DCPA can appl y t o a party whose principal business is enforcing security inter e s t s but w ho

n e v e r theless fits § 1629a(6)’s g eneral definition of a d ebt collector.”). Se c o n d

, the F DCPA ex pressly contains six

ex c lusions f

rom its definition of “ debt collector” but does not

ex c lude entities who enforce security interests. 1 5 U .S.C. §§ 1692a(6)(A)–(F ). Moreover, section 1692a(6), which contains the definition of “debt collector” and which I repeat here with the a dditional lang uag e upon w h i ch the majority relies, does not support the a rg ument t h a t o ne who enforces

a security interest—and more particul a r l y , the oblig a tion o f

a debtor to p ay money owed p ursuant to a promiss o ry n ote throug h a foreclosure proceeding —does not come within the definition of debt c ollector. Specifically

, section 1692a(6) provides that:

[ t] he term “debt collector” means any person wh o uses a

ny instrumentality of interstate

commerce or the mails i n any business the principal purpose of which is the collection o f
any debts, or wh o reg ularly collects o r attempts to collect, d i rectly o r indirectly

, debts owed or due or asserted to be o wed o r d u e a nother.

. . . For the purpose of sectionH O V

. R E C O N T R U S T C O

. 31

1692f( 6) of t h i s t itle, such term also includes
any person who uses any instrumental ity of interstate commerce or the mail s in a ny business the principal p urpose of which is the enforcement of security interests.

(Emphasis added). Section 1692f(6)—to which the last sentence, emphasiz ed abo v e , makes reference—proscribes “[ t] aking or threatening to take a ny nonjudicial a c t i o n to effect dispossession or disablement o f property if—(A) there is n o p resent rig ht to poss e ssion of the property claimed a s

co l l a t e ral throug h an enforceable security interest; (B ) there is no present intention to take possession of the prope r t y ; o r (C) the property is ex e mpt b y law f rom such dispossession o r disablement.”

The majority arg ues that the last se n t e nce of section 1692a(6), which subjects security enforcers to the foreg oing proscriptions, “would be superfluous if all e ntities that enforce security interests were already include d in the definition of d ebt collector f or the p u r

p o s e of the entire F DCPA.” Maj. O p. at 10. I n other words, what point would there be in say ing that the term “debt collector” also includes enforcers of security interests if security enforcers were already included in the g eneral d e f inition? The answer is obvious. No t a l l e ntities that eng ag e in the enforcement o f security interests do so in the same way

. See, e.g. , Glaze r , 704 F .3d a t 464. There are entities that enforce security interests y et who do not ty pi c ally eng ag e in activity that would als o c ome w ithin the definition o f “debt collection.” T he tow truck driver to which the majority alludes i s o n e

ex a mple. See Maj. Op. at 8. Moreover, if they “attempt to collect, directly or indirectly

, debts

. . . owed or d ue another”—in the manner ReconTrust d id here–they do not doH O V

. R E C O N T R U S T C O

. 32

so with sufficient r eg u larity to bring them within the definition of “debt collector.” See Pflueger v. Auto Finance Group, I n c. , No. CV–97–9499 CAS(CTX), 1999 W L 33740813, at *4–6 (C.D. Cal. Apr. 26, 1999).

Sig nificantly

, the concept of “dispossession o r disablement of property ” does not eas i l y f it a mortg ag e foreclosure proceeding

, and is more commonly associated with the taking of personal property

. B ecause no njudicial foreclosur e p r oceeding s do n ot involve the dispossession o r disabling of p ersonal property , the proscriptions contained in section 1692f(6) do not apply to those proceeding s. Thus, if the majority i s c o r rect, then it would follow that a trustee o f

a deed of trust could undertake any of the unfair and abusive conduct p roscribed in the F D CPA, because it would not come wi t h i n t h e definition of “debt c ollector,” nor would it be a security enforcer dispossessing or d i s abling property

. 3 Cong r ess hardly

could have intended such a result.

I ndeed, another provision of the F DCPA provides compelling support for the proposition that mortg ag e foreclosures c ome within the defi n i t ion of debt collection,

even thoug h they may involve security interests. Thus, the judicial venue clause, the purpose of which is to require that

a foreclosure proceeding b e filed in the place “most convenient and least e x p e nsive for the d ebtor,” Kaltenbach

, 464 F .3 d a t 5 2 8, provides that “[ a] ny debt collector w ho br i n gs any leg al action on a debt ag ainst any consumer

s h all—(1) in the case of an action to enforce an interest i n

3 T h e d ef in itio n al sectio n o f th e FDCP A d o es n o t co n tain a def in itio n

o f t h e t erm “ secu rity en f

o rcer.” See 1 5 U.S.C. § 1 6 9 2a. T h e m e a n in g

m u st t h eref o re b e d eriv ed f

ro m th e m an n er in w

h ich th e term is u sed

, n am ely , o n e w

h o d isp o ssesses o r d isab les p erso n al p ro perty

.H O V

. R E C O N T R U S T C O

. 33

real property securing the c onsumer’s obligation

, bring such action only in a judicial d istrict or similar leg al e n tity in which such real property is located,” 15 U.S.C. § 1692i(a)(1) (emphasis added). 4

The clause is p articularly sig ni f i cant for two reasons. F irst, Cong ress did n o t s a y , as one would ex pect it to have said u n der the analy sis employ ed b y the majority

, t h a t any security enforcer who bring s a mortg ag e f oreclosure proceeding must do so in the des i g n a t e d venue. I nstead, its

use o f the term “any debt collector” demonstr a t e s that C o n g r e s s u n d e r s t o o d t h at a m o r t ga ge f o r e c l o s u r e proceeding

— an action to enforce an interest in r eal property securing the debtor’s oblig ation—constitutes debt collection within the meaning of the F DCPA. I ndeed, if, as the majority
sug g ests, mortg ag e foreclosure proc e eding s constitute the enforcement of a security interest and not debt collection,
t h en the venue clause w ould be rendered meaning less, because security enforcers seeking a judicial f oreclosure would not be subject to the limitation on venue contained in section 1692i(a)(1).

The majority arg ues that the venue clause “contemplates that a security e nforcer can be a debt collector, but it offers no indication that an entity is a debt c o llector because it enforces

a s e c u r i ty interest.” Maj. Op. at 10–11 n.4. I ag ree that an

4 Sectio n 1 69 2 i(a)(2 ), p erm its an y oth er actio n , in clu d in g an actio n f o r a d ef icien cy j u d g m en t, to b e f iled in th e d istrict “ ( A) i n w h ich su ch

co n su m er sig n ed th e co n t

ract su ed u

p o n ; o r (B ) in w

h ich su ch co n su m er resid es at t h e co m

m en cem en t of th e actio n .” B ecau se th e dif f eren ce b etw een t h e am o u n t o b tain ed at th e f o reclo su re sale an d th e am o u

n t du e

o n th e p r o m isso ry n o te can n o t be k n o w n , an actio n f

o r a d ef icien cy j u d g m en t arisin g o u t o f a j u d i c i a l f o reclo su re p ro ceed in g can n o t b e

co m m en ced u n til af

ter th e f o reclo su re sale is o v er.H O V

. R E C O N T R U S T C O

. 34

entity may n ot be a debt c ollector merely because it enforces

a security i n terest. S

ee G lazer

, 704 F .3d at 463–64; P iper
, 396 F

. 3d at 236. I r e l y o n the venue clause because it demonstrates that Cong ress u nder s t ood that mortg ag e foreclosure proceeding constitutes a unique way to enforce a security interest, and supports the broader proposition that a foreclosure proceedi n g meets the definition of d ebt collection. Kaymark

, 783 F .3d at 179. Th u s , the Third Circuit has o bserved that “[ n] owhere does the FD C P A

ex c lude foreclosure actions f rom its reach. On the contrary

, foreclosure meets the broad d efinition of ‘ debt collection’ under t h e FD CPA, and it is even contemplated in v arious
p l a c es in the statute.” Id. (citing

, inter alia, 1 5 U .S.C. § 1692i).

This interpretation is supported by the leg islative history of the F DCPA. I n particular, the S e n a t e Report on the F DCPA note d that “the committee does not intend the definition to c over

. . . the collectio n o f debts, such as mortgages and student loans, by persons who originated such loans

. ” S. Rep. No. 95-382, at 3 (19 7 7 ) (emphasis added). This lang uag e strong ly sug g ests a mortg ag e or deed of trust

can be a debt, and an entity like R e c o n Trust can be a d ebt collector because i t d i d n o t orig inate the loan to Ho. W hile I share the late J u s t i c e Scalia’s lack of confidence in such leg islative h istory

, see H on. Antonin Scalia, A M a tter of Interpretation: Fede r a l Courts and the Law 32–34 (Amy Gutmann ed., 1997), I cite it h ere only because it is consistent with the langu a g e and structure of the F DCPA that I have discussed a

bove, a n d because, accepting the majority ’s
sug g estion that the definition o f debt collector is ambig uous,

our precedents resort to this leg islative history

, see Hernandez

, 829 F .3d at 1073; see also Int’l Ass’n of Machinists & Aerospace W orkers

, L o c al Lodge 9 64 v. BFH O V

. R E C O N T R U S T C O

. 35

Goodrich Aerostructures Grp.
, 387 F

. 3d 1046, 1 0 51–52 (9th Cir. 2004).

I come now t o the last part o f the arg ument of the majority that proceeds on the assumption that ReconTrust is

a security enforcer an d

, a s such, “must be a ble to maintain that status” when it does communicate with the debtor b y taking “the statutorily

required steps to c onduct the trustee’s sale.” Maj. O p

. a t 11. This is another way of say ing that California may override the p r otections afforded by the F DCPA by prescribing the steps necessary to c ommence a fore c l o s u re proceeding

, even if those steps would otherwise qualify ReconTrust as a debt collector.

There is no support in the lang uag e of the F DCPA for this pronouncement. I ndeed, we h a v e held that a complaint served on a debtor is a communication subject to the F DCPA, Donohue v. Quick Collect, Inc.
, 592 F

. 3d 1027, 1031–32 (9th Cir. 2010), and there are any number of cases that have held that commu n ications necessary to commence f oreclosure proceeding s, judicial o r nonjudicial, may come within the de f inition o f debt collection, see Kaymark

, 783 F .3d at 176–78 (holding that a foreclosure complaint is a communication subject to the F DCPA); Alaska Tr.
, 372 P.3d

a t 2 1 7

– 18 ( e x plaining that a notice required to initiate foreclosure proceeding s c ould “at the same time be an attempt to collect a debt”); see also Romea
, 163 F .3d at 116 (holding that the fact that state law re q u i r ed a debt collector
to send a letter to commence e viction p r o ce eding s was “wholly irrelevant to the requirements and applicability of the F DCPA”).

Pe rh a p s recog niz ing the force of the arg uments in favor of holding that the F DCPA does apply to trustees of a deed o fH O V

. R E C O N T R U S T C O

. 36

trust, the majority appears to acknowledg e that a trustee could b e c o m e a d ebt collector by doing something “ in addition t o the actions required to enforce a security interest.” Maj. Op.
at 11 n.5. The majority does not say what additional action

a trustee of a deed of tr u s t w o u l d have to take in order to

m ake him a debt collector. Certainly

, it could n ot mean additional eg reg ious actions in w hich some debt collectors
eng ag e, such as b a n gi ng on the debtor’s door or calling her incessantly

. Under the holding of the majority

, a t rustee eng ag ed in conducting a nonjudicial foreclosure p r o ceeding is not collecting a debt. Thus, the F DCPA would not prohibit it from eng ag ing in these activities. Moreove r , the third amended complaint alleg es that “defendant and/or its ag ents unlawfully trespassed [ Ho’s] property

. . . b y dispatching
ag ents w ho entered upon the subject property , b a ng ing on doors in a g ang ster ty

pe fas h i o n , p o sting false notices to let
tenants on the premises know that Pl ai n t i f f [ was] in loan default and demanding that plaintiff sho u l d call B AC, with intent to scare, intimidate, a nd h arass p laintiff, a

nd plaintiff’s tenants.”

Of course, the conduct p rohibited by the F DCPA includes conduct that is far less egr eg ious than bang ing on doors a nd calling debtors incessantly

. Nevertheless, Cong r ess reg arded them as sufficiently problematic to warrant including them in the list of activities that constitute h arassment o r abuse, see 15 U.S.C. § 1692d, or are “unfair or unconscio nable,” id. § 1692f. Thus, among the activities that the F DCPA lists as abusive is “[ t] he advertisement for sale of any debt to coerce pay ment of the debt.” Id. § 1692d(4). And among the unfair

or unconscionable means to attempt to collect the d eb t i s “[ c] ommunicating with a consumer reg a rding a debt by post card.” Id. at § 1692f(7). As the Second Circuit has held, “that Cong ress c ited the ind ustry ’s worst practices whenH O V

. R E C O N T R U S T C O

. 37

passing the F DCPA do es n o t limit the statute’s purview to those practices, when t h e tex t reaches well bey ond. [ The parties] provide[ ] no reason to believe that Cong ress did not intend the F DCPA to offer broad protection to debtors

. . . . ” Hart
, 797 F .3d at 228.

Moreover, even if t h e service of the notices and their
content were r equired by California law, the liability a ttached
to ReconTrust’s a ctivity does not a rise from either the service of the notices or their required script. I nstead, it arises from the fact that the notices that “ ReconTrust had sent [ Ho] were misleading and fal s e b ecause the amounts listed on them” reflected inaccurate amounts due. California did n ot require ReconTrust to provide fa l s e a nd misleading notices. The

mere fact that California re q u i r e s an otherwise accurate notice to b e sent to commen c e a nonjudicial f oreclosure proceeding should not r e lieve the t r u s tee f rom comply ing with the F DCPA.

Up to this point, the majority has spilled considerable ink in arg uing that ReconTrust is not a debt collector because it does not directly collect a n y money f

r o m b o rrowers under a deed of t r u s t and because it is an enforcer of security interests. P e rhaps because the majority itself remains unconvinced, in t h e space of half a p ag e it invokes a nd

curs o r i ly applies an a dditional and even less p ersuasive

e x c e ption to the g eneral definition of “debt collector.” S e e Maj. Op. at 1 3–14. Specifical l y , the majority a rg u es that “even if an entity like ReconTrust did fall under the F DCPA’s
g eneral d e f

i n i tion of a ‘debt collector,’ it would still be

ex e mpt under” 15 U.S.C. § 1692a(6)(F )(i), which provides an

ex c e ption for entities ac t i ng “incidental to a bona fide fiduciary o blig ation or a b o n a fide e scrow arrang ement.” Maj. Op. at 13–14. Putting aside the question whether a deedH O V

. R E C O N T R U S T C O

. 38

of trust qualifies as “a bona fide es cr o w a r r ang ement,” the critical issue is w hether ReconTru s t, as trustee under Ho’s Deed of Trust, is acting

“incidental to” the Deed of Trust by initiating a n onjudicial foreclosure on H o’s home. W hile the majority rejects the sug g estion that ReconTrust was a cting a s

a fiduciary

, it does accept the sug g estion that ReconTrust was acting as an escrow ag ent and that the same “incidental to” requirement applies here. Id . at 14 & n.9.

I n W ilson v. D raper & Goldberg , 443 F .3d 373 (4th Cir. 2006), the F ourth Circuit held that “the critical i n q u iry ” in determining whether a trustee u n d e r a deed of trust f alls within the ex ception provided by 15 U.S.C. § 1692a(6)(F )(i) is whether the trustee’s actions are “incidental to a b ona fide fiduciary o b l i g ation.” Id. at 377. I n holding that the trustee did not meet the “incidental t o ” r equirement, the F ourth Circuit observed that “a trustee’s actions to foreclose o n a property pursuant to a deed of trust a r e not ‘ incidental’ to its fiduciary oblig ation. R ather, they are central to it. Thus, to the ex tent Defendants u sed the f oreclosure process to collect [ the plaintiff’s] alleg ed debt, they cannot benefit from the

ex e mption contained in 1692 a(6)(F )(i).” Id.

The same analy s is applies w ith equal f orce to escrow ag ents. The deed o f t r u st w as formulated precisely to allow for nonjudic i a l foreclosure proceeding s. And those proceeding s, for the reasons I have discussed a b ove, constitute the d irect or indirect collection of a debt. I ndeed,

a n analy sis of the d evelopment o f the deed of trust sug g e s t s that its primary purpose is to facilit a t e t h e collection of a debt, and that the trustee/escrowee arrang ement is incidental
to the collection of a debt, and not the reverse. I quote from Professor J esse Dukeminier’s history o f the development o f the deed of trust:H O V

. R E C O N T R U S T C O

. 39

[ L ] a w y ers for lenders cast about for a way to avoi d judicial foreclosure (which requires a costly and time-consuming l awsuit) and the statutory rig ht of r edemption from foreclosure sale. They soug ht a way

for the lender to sell the land and be paid soon after default. They fo und this in the form o f a deed of trust

. . . . U n d e r a d e e d of trust, the borrower convey s title to the land to a person (who is us u ally a third person but may be the lender) to hold in
trust to secure pay

me n t o f the debt to the l e n d e r. I n a deed of trust the trustee is g iv e n the power to sel l t he land w ithout g oing to court if the borrower defaults. The power o f sale foreclosure is more effici e n t and less costly than a judicial f

o reclosure, but courts and statutes reg u late it by requiring n otice a nd procedures that are fair to t h e borrower. Ex cept for the power to f o r eclose privately

, the de e d o f trust is treated in almost all sig nificant respects as a mortg ag e.

Dukeminier & Krier, supra , at 5 90–91; see also Y vanova , 365 P.3d at 849–50. T h u s , a trustee’s initiation of a nonjudicial foreclosure cannot possi b ly b e considered to be “incidental to” a deed of trust—rather, nonjudicial foreclosure is its animating purpose.

I n sum, Cong ress h a s p r o vided a definition o f a d ebt collector. Once ReconTrust’s a ctivities broug h t it within that definition, it wa s a d ebt collector, as ReconTrust acknowledg ed in the notice of sale it sent to Ho in which it characteriz ed itself as a d ebt collector seeking to enforce a debt. See 15 U.S.C. § 1 692a(6). This conclusion is a l soH O V

. R E C O N T R U S T C O

. 40

consistent with the opinion of the Consumer F inanci al Protection B ureau (“CF PB ”), which we solicit e d and which the majority rejects, Maj. Op. at 16 n.10, “that entities satisfy ing the g eneral definition o f ‘debt collector’ are subject
to the entire [ F DCPA] ,” B ri e f o f Amicus Curiae Consumer F inancial Protection B ureau in Support of A ppellant a nd Reversal at 18 n.8, 2015 W L 4735787, at *18 n.8.

II. The F DCP A Does Not Interf ere w ith Calif

ornia’s Arrangem ents f

or Nonjudicial F oreclosures

I turn now to the claim that, b ecause t h e term “debt collector” is said to be ambig uous, it should not be construed in a manner that would f rustrate ReconTrust’s ability to comply with California’s procedures for nonjudicial foreclosures. Maj. Op. at 14. I n deed, in t h i s case, it is not disputed that ReconTrust c omplie d in every respect with California law. Nevertheless, citing several alleg ed conflicts betw een the F DCPA and California foreclosure law, ReconTrust a

nd its amici have warned th at treating trustees

as debt collectors w ould “ literally prev e n t [ California’s foreclosure] s y s t e m from functioning

. ” B rief o f Amici Curiae United Trustee’s Ass’n et al. a t 4, 2015 W L 1020492,
at *4. This overwroug ht statement is simply false. Three circuits, coverin g twelve states, have held that f oreclosure proceeding s are debt collection unde r the F DCPA, see Kaymark v

. Bank of Am., N.A.
, 783 F .3d 1 68, 179 (3d Cir. 2015); Glazer v. Chase H ome Fin. LLC
, 7 0 4 F .3d 453, 461–63 (6th Cir. 2 0 1 3); W ilson v. Draper & Goldberg, P.L.L.C.
, 443 F

. 3d 373, 376–77 (4th Cir. 2006); see also Piper v. Portnoff

Law Assocs., Ltd.

, 396 F .3d 227, 234–36 (3d Cir. 2005), along with the Supreme Courts of Alaska a nd Colorado. See Alaska Tr., LLC v. Ambridge

, 372 P.3d 2 0 7
, 2 13–216 (Alaska 2016); Shapiro & Meinhold v. Zartman
, 8 2 3H O V

. R E C O N T R U S T C O

. 41

P.2d 120, 123–24 (Colo. 1 992) (en banc). Neither ReconTrust nor its amici have provided any evidence that these holding s have ha d any effect—much less that the sky has fallen in—on the foreclosure laws of those sta t e s

. M o r eover, the arg ument ig nores the f act that the F DCP A ’s preemption clause ex pressly leaves in place “the laws of any State with respect to debt collection practices

, e x cept to the

ex tent that those laws are inconsistent with any provision o f [ the F D CPA]
, and then o nly to the ex tent of the inconsistency .” 15 U.S.C. § 1692n. I ndeed, it also contains

a mechanism for the ex emption of certain debt collection practices that d o not precisely m a t ch those of the F DCPA. See 15 U.S.C. § 1692o.

I now proceed to a d d r e s s each of the provisions of the FD C P A t h a t a l l e g e d l y i n t e r f e r e w i t h C a l i f

o r n i a ’s

a r r a ng e ments f

or conducting nonjudicial foreclos u r e proceeding s. N one of them have the effect that the majority attributes to them. I ndeed, this c ase demonstrates h ow

r e adily the California foreclosure sy stem can function along side the F DCPA. The majority does not dispute that the first two alleg ed conflicts between C a l i f o rnia law and the F DCPA m a y be avoided “by consent between the parties to

a mortg a g e dea l

. ” Maj. Op. at 17. Such consent was procured her e. Nevertheless, the majority arg u es that “[ t] he fact that p arties may b e a b l e to draft their way around conflic t s renders them conflicts no less. Releg ating future
pa rt i e s to the uncertain process of adding contractual terms may itself u p s e t a state’s c a refully drawn scheme o f notice and disclosure; additional e f forts or more complex terms a re themselves costs of that conflict.” Id. I do not understand to what the majority is referring when it speaks of an “uncertain
process of adding contrac t u a l t e rms.” The lang uag e o f the Deed of Tr u s t i s not the result of the addition of terms to aH O V

. R E C O N T R U S T C O

. 42

barg a ined-for ag r e e m e n t

. I nstead, the Deed is a “ take it o r leave it” form to the terms of which the borrower must ag r ee if he or she wants a l o a n

. Thus, the pre-printed D eed o f Trust, which is sig ned only by the bo rr o wer, describes itself

a s f o l l o w s : “ C A L I F O R N I A

- S i n g l e F a m i l y

- F a n n i e M ae/F reddie Mac UNI F ORM I N STRUMENT WI TH MERS.”

I ndeed, as I will show below, the alleg ed conflicts a re, to borrow the Y i d d i s h t e r

m, g ornisht mit g ornisht—nothing with nothing

. I n the two instances in which Calif o r nia law alleg edly conflicts with the F D C P A, the net effect of the borrower’s consent is to permit the foreclosure to g o forward in the manner prescribed by California law. Thus, in the first instance, the debtor a g rees to allow the trustee to announce the foreclosure sale in a news p ap er, a s well as mail the notices of default to various third parties, which is r equired by California law. Moreover, in the second instance, the debtor ag rees to allow the trustee to mail the notices o f default and sale directly to him or her, as req uired b y California law. I provide some brief backg round detail in the discussion that follows.

1. W h ile the F DCPA prohibits d ebt collectors from

co mmunicating with third p arties w ithout the debtor’s consent, California law mandates that trustees announce any sale in a newspaper, a s well as m a i l notices of default to various th i r d p a r t i es. Maj. Op. at 14. As the majority acknowledg es, d ebt collectors may communicate with third parties once they have the debtor’s consent. Id. (citing 15 U.S.C. § 1692c(b)). H ere, Ho provided such con s e nt b y sign ing the Deed of Trust, which stated that, if the lender invoked its power of sale, the “ Trustee shall cause this notice [ of sale] to be recorded in each c o u n t y in w hich any part o fH O V

. R E C O N T R U S T C O

. 43

the Property is located. L ender or Trustee shall mail cop i e s of the notice as pres c r i b ed b y Applicable L aw to B orrower and to the other persons prescribed by Applicable L aw.” The effect o f this was to permit ReconTrust to comply w ith the California law mandating ce r t a i n public disclosure of a foreclosure sale.

2. The majority also observes that, while the F DCPA prohibits debt collectors from communicating dire c t ly with debtors if t h e c o llector knows that the debtor has counsel, under Californi a l aw, a trustee must mail the notices o f default and sale to the borrower directly

. Maj. Op. at 15. The F DCPA, however, allows consumers to consent to direct communication. 15 U.S.C. § 1692c(a). B y sig ning the Deed of Trust, Ho consented to the “L ender or Tr u stee [mailing ] copies of the notice as prescribed b y [ C a lifornia] L aw to B orrower.”

3. I now proceed to th e remaining conflict b etween California law and the F DCPA relied upo n b y the majority

. The majority w arns that, if a debtor d e c i d e d to d ispute the debt pursuant to the F DCPA, the trustee would have to cease any debt c ollection activities unti l i t v erified the debt. Maj. Op. at 15. I f such v e r i f

i cation took more than ten day s, the
trustee would miss the statutory deadline fo r m a i ling the notice of default. Id. Moreover, if the v e rification took over

a y e ar, the trustee would have to r estart the f o re c l o sure process. Id.

This scenario is e ntirely far-fetched, because a d ebt collector could easily satisfy this v erificatio n r equirement

w i thin ten day s and thus avoid delay ing the nonjudic i al foreclosure p rocess. I ndeed, if it took long er, it would be the trustee’s own fault. Sp e c i f i c ally

, we have “ decline[ d] toH O V

. R E C O N T R U S T C O

. 44

impose

. . . a hig h threshold” on debt c ollectors attempting to verify disputed debts and h ave ex plained tha t , “ [ a] t the minimum, ‘verification of a d ebt involves nothing more than the d e bt collector confirming in writing that the amount being demanded is w hat the cred i t o r i s c laiming is owed.’” Clark

v. Capital Credit & Co l l e c t ion S ervs., Inc.
, 460 F .3d 1162, 117 3 –74 (9th Cir. 2006) (quoting Chaudhry v. Gallerizzo

, 174 F .3d 394, 406 (4th C i r. 1999)). I n deed, in an unpublished opinion, we recently affi rmed a district court’s ruling that a d ebt collector satisfied section 1 692g (b) b y sending a letter to the debtor that included the debtor’s address, the date o f t h e d e ed of trust, and the name a nd address of the orig inal creditor. Zhang v. Countrywide Home Loans, Inc.
, 601 F

. App’x 5 67, 567 (9th Cir. 2 015) (unpublished), a

ff’g N o. 11-cv-347 5 (NC), 2012 W L 1245682, at *11 (N.D. Cal. Apr. 13, 2012). So much for the conflicts that the majority conjures.

I n sum, none of the conflicts identified w o u l d stop the California f

oreclosure sy stem from functioning

. O n the contrary , the F DCPA’s p reemption cla u s e e xp r e s s l y p r eserves State law and avoids ex cluding compliance with it “ex cept to the ex tent that those laws are inconsistent with any provision of [ the F D CP A ]
, an d then only to the ex tent of the inconsistency .” 15 U.S.C. § 1692n. 5

5 T h e CFB P d o es n o t co n c e d e , a s th e m aj o rity su g g ests, “ a co n f lict

m ay ex ist betw een state an d f ed eral l aw .” Maj

. Op

. at 1 5

. In stead

, citin g to th e FDCP A ’ s p reem

p tio n clau s e, th e CFP B ex plain ed

, “ [t]h at a co n f lict

m ay ex ist b etw een state an d f ed eral l aw i s n o basis f

o r state l aw to tru m

p

o r so m eh o w ex cu se co m p lian ce w ith f

ed eral law .” B rief o f A m icu s Cu riae Co n su

m er F i n an cial Pro tectio n B u reau i n Su p p o rt o f A p p ellan t an d Rev ersal at 1 4 , 2 0 1 5 W L 4 7 3 57 8 7, at * 1 4

.H O V

. R E C O N T R U S T C O

. 45

Moreover, the F DCPA p rovides a method f or re s o lving conflicts wi th state law that the majority ig nores. Section 1692o states that the CF PB “shall by r eg ulation ex empt from the requirements of this s u b chapter any class of d ebt collection practices within any State if the [ CF PB ] determines that under the law of that State that class of debt coll ection practices is subject to requirements substantially similar to those imposed by this subchapter, and that t h ere is adequate provision for enforcement.” T h e Second Circuit d iscussed section 1692o in Romea . There, a defendant law firm sent a form letter to a p l a i ntiff-debtor pursuant to state law, demanding that she pay her back r e nt. Romea
, 163 F .3d at 113. I n finding that the d efendant wa s a debt collector, the Second Circuit cited to an older v ersion of s e c t i o n 1692o, which g ranted the F ederal T rade Commission the authority to provide ex emptions, to ex plain t h at, “if the p rotections afforded tenants under New Y ork’s Article 7 p rocess do result in ‘ requirements substantially similar to those imposed by [ the F DCPA] ,’ then N ew Y ork may petitio n the F ederal Trade Commission to promulg ate reg u lations that ex empt § 711 notices from the F DCPA.” Id. at 118 n. 11 (alteration in orig inal); see a lso F TC N otice of Maine Ex emption F rom The F air Debt Collection Practices Act, 60 F ed. Reg

. 66972, 66973 ( Dec. 2 7, 1995) (g rant ing Maine’s request for an

ex e mption from certain provisions of the F DCPA for c ertain debt c o l l e ction practices because “ the level of protection to

consumers u nder the Maine Act is substantially equivalent to that p rovided in the F D CPA”). Rather than asking this Court
to adopt an u n natural reading of the term “debt collector,” ReconTrust and its amici should ask California to p etition the CF PB for an ex emption to the statute.

I n sum, the position of the majority is that, becaus e the phrase “ debt collector” is ambig uous, we should r efus e toH O V

. R E C O N T R U S T C O

. 46

construe it in a manner that conflicts wi t h California’s
arrang ements for conducting nonjudicial foreclosures. W hile
my reading of the phrase d iffer s from that of the majority

, even if the majority is c orrect, the provisions of the F DCPA do not interfere with the o peration of nonjudicial f oreclosure
p r oceeding s in California. B ecause the majority a pplies California law in a way that o verrides the arra n gements that Cong r ess has made for t h e protection o f debtors, I respectfu l l y d issent from the affirmance of the judg ment dismissing the F DCPA claim. I concur in the remand to the district court f

or consideration of Ho’s Truth in L ending A ct rescission cause of action.