Source: https://supreme.justia.com/cases/federal/us/586/17-1307/
Timestamp: 2019-04-24 10:40:59+00:00

Document:
The McCarthy law firm was hired to carry out a nonjudicial foreclosure on Obduskey’s Colorado home. Obduskey invoked the Fair Debt Collection Practices Act (FDCPA) provision, 15 U.S.C. 1692g(b), providing that if a consumer disputes the amount of a debt, a “debt collector” must “cease collection” until it “obtains verification of the debt” and mails a copy to the debtor. Instead, McCarthy initiated a nonjudicial foreclosure action.
The Tenth Circuit and Supreme Court affirmed the dismissal of Obduskey’s suit, holding that McCarthy was not a “debt collector.” A business engaged in only nonjudicial foreclosure proceedings is not a “debt collector” under the FDCPA, except for the limited purpose of section 1692f(6). The FDCPA defines “debt collector” an “any person . . . 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.” The limited-purpose definition states that “[f]or the purpose of section 1692f(6) . . . [the] term [debt collector] also includes any person . . . in any business the principal purpose of which is the enforcement of security interests.” McCarthy, in enforcing security interests, is subject to the specific prohibitions contained in 1692f(6) but is not subject to the FDCPA’s main coverage. Congress may have chosen to treat security-interest enforcement differently from ordinary debt collection to avoid conflicts with state nonjudicial foreclosure schemes; this reading is supported by legislative history, which suggests that the present language was a compromise between totally excluding security-interest enforcement and treating it like ordinary debt collection.
A business engaged in only nonjudicial foreclosure proceedings is not a “debt collector” under the Fair Debt Collection Practices Act, except for the limited purpose of section 1692f(6).
Law firm McCarthy & Holthus LLP was hired to carry out a nonjudicial foreclosure on a Colorado home owned by petitioner Dennis Obduskey. McCarthy sent Obduskey correspondence related to the foreclosure. Obduskey responded with a letter invoking a federal Fair Debt Collection Practices Act (FDCPA or Act) provision, 15 U. S. C. §1692g(b), which provides that if a consumer disputes the amount of a debt, a “debt collector” must “cease collection” until it “obtains verification of the debt” and mails a copy to the debtor. Instead, McCarthy initiated a nonjudicial foreclosure action. Obduskey sued, alleging that McCarthy failed to comply with the FDCPA’s verification procedure. The District Court dismissed on the ground that McCarthy was not a “debt collector” within the meaning of the FDCPA, and the Tenth Circuit affirmed.
The Fair Debt Collection Practices Act regulates “ ‘debt collector[s].’ ” 15 U. S. C. §1692a(6); see 91Stat. 874, 15 U. S. C. §1692 et seq. A “ ‘debt collector,’ ” the Act says, is “any person . . . 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.” §1692a(6). This definition, however, goes on to say that “[f]or the purpose of section 1692f(6)” (a separate provision of the Act), “[the] term [debt collector] also includes any person . . . in any business the principal purpose of which is the enforcement of security interests.” Ibid.
About half the States also provide for what is known as nonjudicial foreclosure, where notice to the parties and sale of the property occur outside court supervision. 2 Dunaway §17:1. Under Colorado’s form of nonjudicial foreclosure, at issue here, a creditor (or more likely its agent) must first mail the homeowner certain preliminary information, including the telephone number for the Colorado foreclosure hotline. Colo. Rev. Stat. §38–38–102.5(2) (2018). Thirty days later, the creditor may file a “notice of election and demand” with a state official called a “public trustee.” §38–38–101. The public trustee records this notice and mails a copy, alongside other materials, to the homeowner. §§38–38–102, 38–38–103. These materials give the homeowner information about the balance of the loan, the homeowner’s right to cure the default, and the time and place of the foreclosure sale. §§38–38–101(4), 38–38–103. Assuming the debtor does not cure the default or declare bankruptcy, the creditor may then seek an order from a state court authorizing the sale. Colo. Rule Civ. Proc. 120 (2018); see Colo. Rev. Stat. §38–38–105. (Given this measure of court involvement, Colorado’s “nonjudicial” foreclosure process is something of a hybrid, though no party claims these features transform Colorado’s nonjudicial scheme into a judicial one.) In court, the homeowner may contest the creditor’s right to sell the property, and a hearing will be held to determine whether the sale should go forward. Colo. Rules Civ. Proc. 120(c), (d).
If the court gives its approval, the public trustee may then sell the property at a public auction, though a homeowner may avoid a sale altogether by curing the default up until noon on the day before. Colo. Rev. Stat. §§38–38–110, 38–38–104(VI)(b). If the sale goes forward and the house sells for more than the amount owed, any profits go first to lienholders and then to the homeowner. §38–38–111. If the house sells for less than what is owed, the creditor cannot hold the homeowner liable for the balance due unless it files a separate action in court and obtains a deficiency judgment. See §38–38–106(6); Bank of America v. Kosovich, 878 P.2d 65, 66 (Colo. App. 1994). Other States likewise prevent creditors from obtaining deficiency judgments in nonjudicial foreclosure proceedings. Restatement §8.2. And in some States, pursuing nonjudicial foreclosure bars or curtails a creditor’s ability to obtain a deficiency judgment altogether. NCLC, Foreclosures and Mortgage Servicing §12.3.2.
In 2014, Wells Fargo Bank, N. A., hired a law firm, McCarthy & Holthus LLP, the respondent here, to act as its agent in carrying out a nonjudicial foreclosure. According to the complaint, McCarthy first mailed Obduskey a letter that said it had been “instructed to commence foreclosure” against the property, disclosed the amount outstanding on the loan, and identified the creditor, Wells Fargo. App. 37–38; see id., at 23. The letter purported to provide notice “[p]ursuant to, and in compliance with,” both the Fair Debt Collection Practices Act (FDCPA) and Colorado law. Id., at 37. (The parties seem not to dispute that this and other correspondence from McCarthy was required under state law. Because that is a question of Colorado law not briefed by the parties before us nor passed on by the courts below, we proceed along the same assumption.) Obduskey responded with a letter invoking §1692g(b) of the FDCPA, which provides that if a con- sumer disputes the amount of a debt, a “debt collector” must “cease collection” until it “obtains verification of the debt” and mails a copy to the debtor.
On appeal, the Court of Appeals for the Tenth Circuit affirmed the dismissal, concluding that the “mere act of enforcing a security interest through a non-judicial foreclosure proceeding does not fall under” the Act. Obduskey v. Wells Fargo, 879 F.3d 1216, 1223 (2018).
Obduskey then petitioned for certiorari. In light of different views among the Circuits about application of the FDCPA to nonjudicial foreclosure proceedings, we granted the petition. Compare ibid. and Vien-Phuong Thi Ho v. ReconTrust Co., NA, 858 F.3d 568, 573 (CA9 2016) (holding that an entity whose only role is the enforcement of security interests is not a debt collector under the Act), with Kaymark v. Bank of America, N. A., 783 F.3d 168, 179 (CA3 2015) (holding that such an entity is a debt collector for the purpose of all the Act’s requirements), Glazer v. Chase Home Fin. LLC, 704 F.3d 453, 461 (CA6 2013) (same), and Wilson v. Draper & Goldberg, P. L. L. C., 443 F.3d 373, 376 (CA4 2006) (same).
It is logically, but not practically, possible that Congress simply wanted to emphasize that the definition of “debt collector” includes those engaged in the enforcement of security interests. But why then would Congress have used the word “also”? And if security-interest enforcers are covered by the primary definition, why would Congress have needed to say anything special about §1692f(6)? After all, §1692f(6), just like all the provisions applicable to debt collectors, would have already applied to those who enforce security interests. The reference to §1692f(6) would on this view be superfluous, and we “generally presum[e] that statutes do not contain surplusage.” Arlington Central School Dist. Bd. of Ed. v. Murphy, 548 U.S. 291, 299, n. 1 (2006). By contrast, giving effect to every word of the limited-purpose definition narrows the primary definition, so that the debt-collector-related prohibitions of the FDCPA (with the exception of §1692f(6)) do not apply to those who, like McCarthy, are engaged in no more than security-interest enforcement.
Second, we think Congress may well have chosen to treat security-interest enforcement differently from ordinary debt collection in order to avoid conflicts with state nonjudicial foreclosure schemes. As Colorado’s law makes clear, supra, at 3–4, state nonjudicial foreclosure laws provide various protections designed to prevent sharp collection practices and to protect homeowners, see 2 Dunaway §17:1. And some features of these laws are in tension with aspects of the Act. For example, the FDCPA broadly limits debt collectors from communicating with third parties “in connection with the collection of any debt.” §1692c(b). If this rule were applied to nonjudicial foreclosure proceedings, then advertising a foreclosure sale—an essential element of such schemes—might run afoul of the FDCPA. Given that a core purpose of publicizing a sale is to attract bidders, ensure that the sale price is fair, and thereby protect the borrower from further liability, the result would hardly benefit debtors. See 2 Dunaway §17:4. To be sure, it may be possible to resolve these conflicts without great harm to either the Act or state foreclosure schemes. See Heintz v. Jenkins, 514 U.S. 291, 296–297 (1995) (observing that the FDCPA’s protections may contain certain “implici[t] exception[s]”). But it is also possible, in light of the language it employed, that Congress wanted to avoid the risk of such conflicts altogether.
Second, Obduskey points to the Act’s venue provision, 15 U. S. C. §1692i(a), which states that “[a]ny debt collector who brings any legal action on a debt against any consumer shall . . . in the case of an action to enforce an interest in real property securing the consumer’s obligation, bring such action only in a judicial district” where the “property is located.” (Emphasis added.) This provision, he says, makes clear that a person who judicially enforces a real-property-related security interest is a debt collector; hence, a person who nonjudicially enforces such an interest must also be a debt collector. Indeed, he adds, this subsection “only makes sense” if those who enforce secu- rity interests in real property are debt collectors subject to all prohibitions and requirements that come with that designation. Brief for Petitioner 21.
More to the point, the venue provision does nothing to alter the definition of a debt collector. Rather, it applies whenever a “debt collector” brings a “legal action . . . to enforce an interest in real property.” §1692i(a)(1). In other words, the provision anticipates that a debt collector can bring a judicial action respecting real property, but it nowhere says that an entity is a debt collector because it brings such an action. Obduskey suggests that under our interpretation this provision will capture a null set. We think not. A business that qualifies as a debt collector based on other activities (say, because it “regularly collects or attempts to collect” unsecured credit card debts, §1692a(6)) would have to comply with the venue provi- sion if it also filed “an action to enforce an interest in real property,” §1692i(a)(1). Here, however, the only basis alleged for concluding that McCarthy is a debt collector under the Act is its role in nonjudicial foreclosure proceedings.
I join the Court’s opinion, which makes a coherent whole of a thorny section of statutory text. I write separately to make two observations: First, this is a close case, and today’s opinion does not prevent Congress from clarifying this statute if we have gotten it wrong. Second, as the Court makes clear, “enforcing a security interest does not grant an actor blanket immunity from the” mandates of the Fair Debt Collection Practices Act (FDCPA), 15 U. S. C. §1692 et seq. See ante, at 13–14.
As the Court recognizes, if the first sentence were the only text before us, nonjudicial foreclosure plainly would qual- ify as debt collection—after all, foreclosure itself “is a means of collecting a debt,” ante, at 7, whether “directly or indirectly,” §1692a(6). That may be because a house can be sold—thus satisfying the debt with the proceeds—but it may also be because the initiation of a foreclosure itself sends a clear message: “[P]ay up or lose your house.” Brief for Petitioner 17; see Alaska Trustee, LLC v. Ambridge, 372 P.3d 207, 217–218 (Alaska 2016); Glazer v. Chase Home Finance LLC, 704 F.3d 453, 461 (CA6 2013).
The problem for Obduskey’s reading, as the Court explains, is the second sentence, which then becomes superfluous if all security-interest enforcement is already covered by sentence one. See ante, at 8–9. To be clear, there is a reasonable argument that the second sentence covers security-interest enforcers who are not already covered by the first sentence: Under this argument, those additional security-interest enforcers are “people who engage in the business of repossessing property, whose business does not primarily involve communicating with debtors in an effort to secure payment of debts,” Piper v. Portnoff Law Assoc., Ltd., 396 F.3d 227, 236 (CA3 2005); see also Alaska Trustee, 372 P. 3d, at 219–220; Glazer, 704 F. 3d, at 463–464, such as “the repo man [who] sneaks up and ‘tows a car in the middle of the night,’ ” ante, at 11. But, as the Court explains, that reading does not resolve the surplusage problem, because even such repossession agencies engage in a means of collecting debts “indirectly”—which means that they are similarly situated to entities pursuing nonjudicial foreclosures after all. See ante, at 10–12.
April 9, 2018 Motion to extend the time to file a response from April 16, 2018 to May 16, 2018, submitted to The Clerk.
April 11, 2018 Motion to extend the time to file a response is granted and the time is extended to and including May 16, 2018.
May 16, 2018 Brief of respondents McCarthy & Holthus LLP, et al. in opposition filed.
May 23, 2018 Waiver of the 14-Day waiting period under Rule 15.5 filed by petitioner.
June 28, 2018 Petition GRANTED.
July 16, 2018 Joint motion for an extension of time to file the opening briefs on the merits filed.
July 23, 2018 Joint motion to extend the time to file the opening briefs on the merits granted. The time to file the joint appendix and petitioner's brief on the merits is extended to and including September 10, 2018. The time to file respondents' brief on the merits is extended to and including November 7, 2018.
August 8, 2018 Consent to the filing of amicus briefs received from counsel for Dennis Obduskey submitted.
August 8, 2018 Blanket Consent filed by Petitioner, Dennis Obduskey.
September 4, 2018 Consent to the filing of amicus briefs received from counsel for McCarthy & Holthus LLP, et al. submitted.
McCarthy & Holthus LLP, et al.

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