FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JOHN SCHLEGEL, on behalf of

himself and all others similarly

situated; CAROL ROBIN SCHLEGEL,

on behalf of herself and all others

similarly situated,

Plaintiffs-Appellants,

v.

WELLS FARGO BANK, NA,

Defendant-Appellee.

No. 11-16816

D.C. No.

3:10-cv-05679-

CRB

OPINION

Appeal from the United States District Court

for the Northern District of California

Charles R. Breyer, District Judge, Presiding

Argued and Submitted

March 15, 2013—San Francisco, California

Filed July 3, 2013

Before: J. Clifford Wallace and Sandra S. Ikuta, Circuit

Judges, and Marvin J. Garbis, Senior District Judge.*

Opinion by Judge Ikuta

* The Honorable Marvin J. Garbis, Senior District Judge for the U.S.

District Court for the District of Maryland, sitting by designation.
2 SCHLEGEL V. WELLS FARGO BANK

SUMMARY**

Foreclosure

The panel affirmed in part and reversed in part the

dismissal of an action seeking relief under the Fair Debt

Collection Practices Act and under the Equal Credit

Opportunity Act, which makes it illegal for a creditor to

discriminate against a credit applicant on the basis of race,

color, religion, national origin, sex or marital status, or age.

The panel held that appellants’ complaint did not

plausibly allege that a bank that sent mortgage default notices

despite the existence of a loan modification agreement was a

“debt collector” under the FDCPA because the complaint did

not allege that the principal purpose of the bank’s business

was debt collection, or that the bank was in the business of

collecting the debts of others. The panel rejected a per se rule

that a creditor cannot meet the definition of a debt collector.

The panel held that the complaint stated a claim under

ECOA’s notice requirement, which provides: “Each

applicant against whom adverse action is taken shall be

entitled to a statement of reasons for such action from the

creditor.” The panel held that the bank’s alleged acceleration

of appellants’ debt constituted a revocation of credit and thus

met the definition of adverse action.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
SCHLEGEL V. WELLS FARGO BANK 3

COUNSEL

S. Chandler Visher, Law Offices of S. Chandler Visher, San

Francisco, California; Daniel M. Harris (argued) and Anthony

P. Valach, Jr., The Law Offices of Daniel Harris, Chicago,

Illinois, for Plaintiffs-Appellants.

Jan T. Chilton (argued), Mark D. Lonergan, and Michael J.

Steiner, Severson & Werson, San Francisco, California, for

Defendant-Appellee.

OPINION

IKUTA, Circuit Judge:

John and Carol Schlegel appeal the dismissal of their

action seeking relief under the Fair Debt Collection Practices

Act (FDCPA), 15 U.S.C. §§ 1692–1692p (2006), and the

Equal Credit Opportunity Act (ECOA), 15 U.S.C.

§§ 1691–1691f (2006). We affirm the district court’s

dismissal of the Schlegels’ FDCPA claim, because their

complaint did not plausibly allege that Wells Fargo was a

“debt collector” for purposes of the Act. We reverse,

however, the court’s dismissal of the Schlegels’ claim that

Wells Fargo, in violation of ECOA, failed to give them notice

within thirty days after taking an adverse action.

I

In January 2009, John and Carol Robin Schlegel obtained

a $157,605 loan from NTFN, Inc., secured by their Las
4 SCHLEGEL V. WELLS FARGO BANK

Cruces, New Mexico home.1 They subsequently fell behind

on their mortgage payments, and in March 2010, filed a

petition in bankruptcy. As part of the bankruptcy process,

they reaffirmed the loan pursuant to 11 U.S.C. § 524. The

loan and deed of trust were assigned to Wells Fargo.

On March 27, 2010, Wells Fargo proposed a loan

modification agreement that retained the same interest rate

but extended the maturity date of the loan from February

2039 to April 2050. The bankruptcy court approved the loan

modification agreement, which became effective on July 1,

2010, with payments to begin on August 1, 2010. The

Schlegels received a discharge in bankruptcy on July 9, 2010.

On July 19, 2010, Wells Fargo sent the Schlegels a

default notice indicating that the Schlegels’ loan was “in

default for failure to make payments due,” and stating that,

unless the Schlegels became current on their loan payments

by August 18, 2010, it would “become necessary to require

immediate payment in full (also called acceleration) of [their]

Mortgage Note and pursue the remedies provided for in

[their] Mortgage or Deed of Trust, which include

foreclosure.” The Schlegels contacted Wells Fargo, which

“told them not to worry, to sit tight and to proceed with the

loan modification.” Beginning August 1, 2010, the Schlegels

made the monthly payments required under the modification

agreement.

Notwithstanding its assurances, Wells Fargo did not

correct its records regarding the status of the Schlegels’ loan. 

The Schlegels received a second default notice, dated

November 7, 2010, which stated that their mortgage was in

1 The following facts are taken from the Schlegels’ amended complaint.
SCHLEGEL V. WELLS FARGO BANK 5

default and that, unless they paid the amount due by

December 7, 2010, Wells Fargo would proceed with

acceleration of the loan and possibly commence foreclosure

proceedings. When the Schlegels again called Wells Fargo

on November 13 regarding this notice, Wells Fargo told them

that no modification agreement was in effect and that they

were in default under their loan. Wells Fargo then sent a

third default notice, dated November 14, 2010, stating that the

Schlegels were in default and that it would “become

necessary . . . to accelerate the Mortgage Note and pursue the

remedies against the property” unless the past due payments

were made by December 14, 2010.

On December 3, 2010, the Schlegels sent a letter to Wells

Fargo asking it to explain its failure to acknowledge the loan

modification. When Wells Fargo did not respond, the

Schlegels filed this lawsuit on December 14, 2010, requesting

relief under the FDCPA and ECOA.

Despite the Schlegels’ complaint, Wells Fargo sent yet

another default notice, dated December 20, this time formally

accelerating the loan. The notice stated: “You are hereby

notified that, due to the default under the terms of the

mortgage or deed of trust, the entire balance is due and

payable.” It also stated that the “loan file ha[d] been referred

to” the bank’s “attorneywith instructions to begin foreclosure

proceedings.” Two days later, on December 22, Wells

Fargo’s attorneys sent the Schlegels a fifth default notice,

threatening to commence foreclosure proceedings unless full

payment was made by January 24, 2011. Only after this fifth

default notice did Wells Fargo eventually acknowledge that

the July 2010 modification agreement was in effect and that

the default notices sent to the Schlegels were incorrect.
6 SCHLEGEL V. WELLS FARGO BANK

According to the Schlegels, this sequence of default

notices from Wells Fargo “caused the Schlegels mental

anguish,” including worsening the effects of John Schlegel’s

post-traumatic stress disorder.

The district court dismissed the Schlegels’ complaint for

failure to state a claim, and the Schlegels timely appealed. 

We have jurisdiction under 28 U.S.C. § 1291.

II

We review de novo the district court’s order dismissing

the Schlegels’ complaint for failure to state a claim upon

which relief can be granted. Brantley v. NBC Universal, Inc.,

675 F.3d 1192, 1197 (9th Cir. 2012). In so doing, we accept

as true all “well-pleaded factual allegations” in the complaint,

which we construe “in the light most favorable” to the

plaintiffs. Autotel v. Nev. Bell Tel. Co., 697 F.3d 846, 850

(9th Cir. 2012). In order to survive a motion to dismiss, the

Schlegels’ complaint had to allege “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). “A claim has facial

plausibility when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id.

The Schlegels’ complaint raises two claims, one under the

FDCPA and the other under ECOA. We address each claim

in turn.
SCHLEGEL V. WELLS FARGO BANK 7

A

Congress passed the FDCPA in 1977 with the stated

purposes of eliminating “abusive debt collection practices,”

ensuring “that those debt collectors who refrain from using

abusive debt collection practices are not competitively

disadvantaged,” and promoting “consistent State action to

protect consumers against debt collection abuses.” 15 U.S.C.

§ 1692(e). In furtherance of these purposes, the FDCPA bans

a variety of debt collection practices and allows individuals

to sue offending debt collectors.

The Schlegels’ complaint alleges that Wells Fargo

violated two of the FDCPA’s provisions. The first, 15 U.S.C.

§ 1692e, provides that a “debt collector may not use any

false, deceptive, or misleading representation or means in

connection with the collection of any debt.” The second,

15 U.S.C. § 1692f, provides that a “debt collector may not

use unfair or unconscionable means to collect or attempt to

collect any debt.” Because these prohibitions apply only to

“debt collector[s]” as defined by the FDCPA, the complaint

must plead “factual content that allows the court to draw the

reasonable inference” that Wells Fargo is a debt collector. 

Iqbal, 556 U.S. at 678; see also Dougherty v. City of Covina,

654 F.3d 892, 900–01 (9th Cir. 2011) (citing Bell Atlantic

Corp. v. Twombly 550 U.S. 544, 570 (2006)).2

2 Wells Fargo argues that it qualifies as a creditor under § 1692a(4), and

therefore cannot be a debt collector. See 15 U.S.C. § 1692a(4) (excluding

from the definition of “creditor” “any person to the extent that he receives

an assignment or transfer of a debt in default solely for the purpose of

facilitating collection ofsuch debt for another”). In making this argument,

Wells Fargo relies on out-of-circuit decisions holding that a person who

meets the FDCPA definition of “creditor” is per se not a “debt collector.” 

See, e.g., McKinney v. Cadleway Props., Inc., 548 F.3d 496, 498 (7th Cir.
8 SCHLEGEL V. WELLS FARGO BANK

The FDCPA defines the phrase “debt collector” to

include: (1) “any person who uses any instrumentality of

interstate commerce or the mails in any business the principal

purpose of which is the collection of any debts,” and (2) any

person “who regularly collects or attempts to collect, directly

or indirectly, debts owed or due or asserted to be owed or due

another.” 15 U.S.C. § 1692a(6).3 On appeal, the Schlegels

argue that Wells Fargo meets both definitions.

2008) (“The FDCPA covers debt collectors, not creditors, and these

categories are mutually exclusive.” (internal quotation marks omitted));

Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 359 (6th Cir. 2012). We

reject this per se rule, which finds no support in the text of the FDCPA,

but nevertheless conclude on other grounds that Wells Fargo does not

meet the statutory definition of debt collector.

 

3

 15 U.S.C. § 1692a(6) states, in relevant part:

The term “debt collector” means any person who uses

any instrumentality of interstate commerce or the mails

in any business the principal purpose of which is the

collection of any debts, or who regularly collects or

attempts to collect, directly or indirectly, debts owed or

due or asserted to be owed or due another.

Notwithstanding the exclusion provided by clause (F)

of the last sentence of this paragraph, the term includes

any creditor who, in the process of collecting his own

debts, uses any name other than his own which would

indicate that a third person is collecting or attempting to

collect such debts. For the purpose ofsection 1692f (6)

of this title, such term also includes any person who

uses any instrumentality of interstate commerce or the

mails in any business the principal purpose of which is

the enforcement of security interests.

15 U.S.C. § 1692a. The definition expressly excludes six types of persons

or organizations from the definition of “debt collector.” § 1692a(6)

(A)–(F). None of these subsections is relevant to this case.
SCHLEGEL V. WELLS FARGO BANK 9

1

According to the Schlegels, the amended complaint

sufficiently alleges that Wells Fargo meets the first definition

of “debt collector” by stating that “Wells Fargo is in the

business of collecting debts and uses instrumentalities of

interstate commerce in that business.” The Schlegels concede

that the complaint does not expressly state that the “principal

purpose” of Wells Fargo’s business is debt collection, as

required by the first definition in § 1692a(6), but argue that

the complaint “invoked” this concept. We disagree. The

complaint fails to provide any factual basis from which we

could plausibly infer that the principal purpose of Wells

Fargo’s business is debt collection. Rather, the complaint’s

factual matter, viewed in the light most favorable to the

Schlegels, establishes only that debt collection is some part of

Wells Fargo’s business, which is insufficient to state a claim

under the FDCPA. See Dougherty, 654 F.3d at 900–01.

At oral argument, the Schlegels raised a different

argument in support of the proposition that Wells Fargo fits

within the first definition of “debt collector.” Noting that this

definition requires debt collection to be the “principal

purpose” of “any business,” they argue that the word

“business” does not mean “company,” but rather any activity

of a company. Thus, the Schlegels contend, the question is

not whether Wells Fargo’s principal business is the collection

of debts, but whether Wells Fargo is engaged in any activity

which has the principal purpose of collecting debts.

We reject this argument because it is not supported by the

statutory text. The Schlegels’ proposed definition would

expand the term “debt collector” to include any person who

collects a debt in the course of doing business, because such
10 SCHLEGEL V. WELLS FARGO BANK

a person would be engaged in the endeavor of debt collection. 

Such an expansive reading would render superfluous the

second definition of “debt collector,” which includes those

“who regularly collect[ ] or attempt[ ] to collect, directly or

indirectly, debts owed or due or asserted to be owed or due

another.” § 1692a(6). Because interpretations that create

superfluity are to be avoided, Hearn v. W. Conf. of Teamsters

Pension Tr. Fund, 68 F.3d 301, 304 (9th Cir. 1995), we

decline to adopt the Schlegels’ strained understanding of the

word “business” in § 1692a(6).

2

The Schlegels next argue that their complaint adequately

alleged that Wells Fargo meets the second definition of debt

collector, which as noted above includes any person who

“regularly collects or attempts to collect, directly or

indirectly, debts owed or due or asserted to be owed or due

another.” § 1692a(6). They contend that Wells Fargo fits this

definition because it is in the business of collecting not only

the debts it originated, but also debts that were originated by

others. In this case, for example, the Schlegels’ debt was

originally owed to NTFN, Inc. before it was assigned to

Wells Fargo.

This argument fails, because it would require us to

overlook the word “another” in the second definition of “debt

collector.” The complaint makes no factual allegations from

which we could plausibly infer that Wells Fargo regularly

collects debts owed to someone other than Wells Fargo. 

Because NTFN, Inc. assigned the Schlegels’ loan and deed of

trust to Wells Fargo, Wells Fargo’s collection efforts in this

case relate only to debts owed to itself. The statute is not
SCHLEGEL V. WELLS FARGO BANK 11

susceptible to the Schlegels’ interpretation that “owed or due

another” means “originally owed or due another.”

For this reason, we reject the Schlegels’ argument that the

following language in the complaint adequately alleges that

Wells Fargo collects debts “owed or due another”:

Wells Fargo is in the business of collecting

debts and uses instrumentalities of interstate

commerce in that business. See Oppong v.

First Union Mortg. Corp., 215 Fed.Appx. 114

(3d Cir. 2007) (“the District Court was correct

to conclude that Wells Fargo is a debt

collector under the FDCPA” . . . “in a typical

eighteen month period, it appears that Wells

Fargo acquires 534 mortgages in default”).

The quoted language itself does not allege that Wells Fargo

collects the debts of another. Even if the cited opinion were

fully incorporated into the complaint, it would not rectify this

omission, because Oppong fails to differentiate between debts

“owed to another” and debts originally owed to another but

now owed to Wells Fargo. See, e.g., Oppong, 215 F. App’x.

at 119 (relying on evidence that Wells Fargo acquired a large

number of defaulted mortgages and attempted to collect the

debts as support for its conclusion that Wells Fargo collects

debts owed to another).

Because the Schlegels’ complaint does not plausibly

allege that Wells Fargo is a debt collector under § 1692a(6),
12 SCHLEGEL V. WELLS FARGO BANK

we affirm the district court’s dismissal of the Schlegels’

FDCPA claim.4

B

The Schlegels’ complaint also raises a claim under

ECOA, which makes it illegal “for any creditor to

discriminate against any applicant, with respect to any aspect

of a credit transaction . . . on the basis of race, color, religion,

national origin, sex or marital status, or age.” 15 U.S.C.

§ 1691(a)(1). One way that ECOA effectuates this goal is

through its notice requirement, which states: “Each applicant

against whom adverse action is taken shall be entitled to a

statement of reasons for such action from the creditor.” Id.

§ 1691(d)(2). ECOA defines an “adverse action” as a:

denial or revocation of credit, a change in the

terms of an existing credit arrangement, or a

refusal to grant credit in substantially the

amount or on substantially the terms

requested. Such term does not include a

refusal to extend additional credit under an

existing credit arrangement where the

4

In passing, the Schlegels suggest that the district court should not have

dismissed without leave to amend. They make no argument in support of

this assertion, however, and we therefore do not address it here. Fed. R.

App. P. 28(a)(5), (8), (9); Kohler v. Inter-Tel Techs., 244 F.3d 1167, 1182

(9th Cir. 2001) (“Issues raised in a brief which are not supported by

argument are deemed abandoned.”).
SCHLEGEL V. WELLS FARGO BANK 13

applicant is delinquent or otherwise in default,

or where such additional credit would exceed

a previously established credit limit.

Id. § 1691(d)(6).

When a creditor takes an adverse action against an

applicant without giving the required notice, the applicant

may sue for a violation of ECOA. Id. § 1691e (“Any creditor

who fails to comply with any requirement imposed under this

subchapter shall be liable to the aggrieved applicant for any

actual damages sustained by such applicant”); see also

Thompson v. Galles Chevrolet Co., 807 F.2d 163, 166 (10th

Cir. 1986) (quoting Sayers v. Gen. Motors Acceptance Corp.,

522 F. Supp. 835, 840 (W.D. Mo. 1981)).

The Schlegels contend that Wells Fargo’s acceleration of

their debt constituted a “revocation of credit” for purposes of

the definition of “adverse action.” ECOA defines “credit” to

mean “the right granted by a creditor to a debtor to defer

payment of debt or to incur debts and defer its payment or to

purchase property or services and defer payment therefor.” 

15 U.S.C. § 1691a(d). ECOA does not define “revocation,”

and so we read it as having its plain meaning: “The action of

revoking, rescinding, or annulling; withdrawal.” Oxford

English Dictionary 838 (2d ed. 1989); see also id. (defining

“revoke” as “[t]o annul, repeal, rescind, cancel”); MerriamWebster’s Collegiate Dictionary 1068 (11th ed. 2005)

(defining “revoke” to mean: “to annul by recalling or taking

back”). Thus, a lender revokes credit when it annuls, repeals,

rescinds or cancels a right to defer payment of a debt.

Here, the Schlegels’ complaint plausibly alleges that

Wells Fargo annulled, repealed, rescinded, or canceled their
14 SCHLEGEL V. WELLS FARGO BANK

right to defer repayment of their loan. Paragraph 25 of their

complaint alleges that, on December 20, 2010, the Schlegels

received a notice from the bank informing them that, “due to

the default under the terms of the mortgage or deed of trust,

the entire balance is due and payable.” The complaint’s

allegations establish that the Schlegels made diligent efforts

to determine whether Wells Fargo’s default notices were

mere clerical errors or represented Wells Fargo’s termination

of the loan modification agreement. Based on Wells Fargo’s

prolonged non-responsiveness, and its affirmative statements

regarding loan acceleration and default, the facts alleged

plausibly give rise to the claim that Wells Fargo terminated

the loan modification agreement and thereby revoked the

Schlegels’ credit for purposes of § 1691(d)(6).

Wells Fargo argues that its default notices to the

Schlegels did not constitute adverse actions because the

default notices had no binding effect and did not modify the

terms of the Schlegels’ loan or the loan modification

agreement. We disagree. In essence, Wells Fargo is arguing

that because its default notices violated the loan modification

agreement, they could not constitute a revocation of credit. 

But neither the text of § 1691 nor its implementing

regulations suggest that a “revocation of credit” must be valid

and enforceable in order to constitute an adverse action. 

When Wells Fargo informed the Schlegels that it had

accelerated their loan and was commencing foreclosure

proceedings, its statements communicated the bank’s refusal

to abide by the terms of the loan modification agreement,

which had given the Schlegels a longer period to repay the

loan. On its face, this communication revoked the prior credit

arrangement.
SCHLEGEL V. WELLS FARGO BANK 15

While sending a mistaken default notice would not

necessarily constitute an adverse action, the Schlegels’

complaint describes egregious conduct that goes far beyond

clerical error. In fact, despite the Schlegels’ repeated

inquiries, Wells Fargo did not inform the Schlegels that its

acceleration of their loan was a mistake until after the

Schlegels filed a complaint. While Wells Fargo now claims

that its acceleration of the loan was an unintentional error,

and that the prior loan modification agreement remains in

effect, such assertions do not erase its prior revocation of

credit for purposes of ECOA.

Because the parties agree that Wells Fargo did not send

the Schlegels an adverse action notice, the complaint’s

allegations that Wells Fargo took an adverse action without

complying with ECOA’s notice requirements are enough for

the ECOA claim to survive a motion to dismiss. 

Accordingly, we reverse the district court’s dismissal of their

ECOA claim and remand for proceedings consistent with this

opinion. Each party will bear its own costs on appeal.

AFFIRMED IN PART, REVERSED IN PART and

REMANDED.