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Obduskey v. McCarthy & Holthus LLP

Supreme Court of the United States · 2018 · Property
139 S. Ct. 1029 (2019)
Updated
PropertyNonjudicial foreclosureFDCPAdebt collectorsecurity interests§1692a(6)§1692f(6)verification of debt

Facts

Dennis Obduskey bought a home in Colorado with a loan secured by the property and later defaulted. Wells Fargo hired McCarthy & Holthus LLP to act as its agent in carrying out a Colorado nonjudicial foreclosure, and McCarthy sent Obduskey a letter stating it had been instructed to commence foreclosure, identifying the creditor, and listing the amount outstanding. Obduskey responded by invoking 15 U.S.C. §1692g(b), which requires a debt collector to cease collection until it verifies the debt if the consumer disputes it. McCarthy did not provide verification and instead filed a notice of election and demand to initiate the nonjudicial foreclosure.

Issue

Whether a law firm carrying out a nonjudicial foreclosure is a "debt collector" subject to the FDCPA's general requirements, including the debt-verification procedure in §1692g(b). More specifically, the question was whether an entity principally engaged in enforcing security interests falls outside the Act's primary definition of debt collector except for §1692f(6).

Rule

Under the FDCPA, a business engaged in no more than the enforcement of security interests through nonjudicial foreclosure proceedings is not a "debt collector" for purposes of the Act's main provisions. Such an entity is treated as a debt collector only for the limited purpose of §1692f(6).

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One of 10 multiple-choice questions for this case. Pick an answer to see why.
Sierra Crest Legal Group, a fictional law firm in Phoenix, was hired only to carry out an Arizona nonjudicial foreclosure on Nina Alvarez's home. After the firm mailed the notices Arizona law requires before a trustee's sale, Nina disputed the debt and demanded verification, but the firm proceeded with the sale steps without sending verification.

If Nina sues under the FDCPA's debt-verification provision, what is the strongest argument for the firm?

Explanation. The majority held that a business engaged in no more than nonjudicial foreclosure proceedings is outside the FDCPA's primary debt-collector definition, except for the limited purpose of §1692f(6). Thus §1692g(b)'s verification requirement does not apply where the actor's relevant conduct is only state-law foreclosure enforcement steps. (Derived from Obduskey v. McCarthy & Holthus LLP (2019).)