Obduskey v. McCarthy & Holthus LLP

A business engaged only in nonjudicial foreclosure proceedings does not constitute a debt collector under section 1692a(6) of the Fair Debt Collection Practices Act (FDCPA), with the exception of the limited purpose definition of section 1692f(6).

Petitioner purchased a home with a loan secured by the property and subsequently defaulted. The bank hired Respondent to act as an agent in commencing a nonjudicial foreclosure. Petitioner filed a lawsuit alleging that Respondent violated the Fair Debt Collection Practices Act’s (Act) requirement that a “debt collector” cease collection and obtain verification of a debt when a consumer disputes the amount due. The district court dismissed the suit and the Tenth Circuit affirmed, concluding that Respondent did not constitute a “debt collector” subject to the verification procedure. The Supreme Court agreed, first citing that the text of the Act, which contained a sentence noting that a “debt collector” also included businesses that principally enforce a security interest. The Court reasoned that the use of the term “also” suggested such inclusion was in addition to, and thus separate from, the definition provided in the Act’s primary definition. The Court also reasoned that the disparate treatment between enforcement of a security interest and general debt collection likely resulted from Congress’s desire to avoid conflicts with state nonjudicial foreclosure schemes. Finally, the Court cited legislative history as confirming such a reading through a compromise between two versions of the Act. AFFIRMED.