On March 20, 2019, the Supreme Court decided Obduskey v. McCarthy & Holthus LLP, No. 17-1307, holding that a business engaged in only nonjudicial foreclosure proceedings is not a “debt collector” for all purposes under the Fair Debt Collection Practices Act (FDCPA).
The term “debt collector” is defined in 15 U.S.C. § 1692a(6) to mean “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.” That definition goes on to say that “[f]or the purposes of section 1692f(6) … such term also includes any person … in any business the principal purpose of which is the enforcement of security interests.” Section 1692f(6), in turn, prohibits taking or threatening to take nonjudicial action with respect to property under certain circumstances.
McCarthy & Holthus LLP, a law firm, was hired to carry out a nonjudicial foreclosure on a Colorado home owned by Dennis Obduskey. McCarthy sent Obduskey correspondence related to the foreclosure. Obduskey responded with a letter stating that he disputed the amount of a debt under 15 U.S.C. § 1692g(b), a portion of the FDCPA that provides that if a debtor disputes the amount of a debt in writing, a “debt collector” must stop its attempts to collect the debt until it “obtains verification of the debt” and mails a copy to the debtor. McCarthy did not stop its collection attempts, and instead initiated the nonjudicial foreclosure action. Obduskey sued McCarthy, alleging that McCarthy was a “debt collector” for purposes of the debt-verification provision of § 1692g(b). The parties agreed that § 1692f(6) did not apply to Obduskey's actions. The district court dismissed the lawsuit, holding that McCarthy was not a “debt collector” for purposes of § 1692g(b). The Tenth Circuit affirmed.
The Supreme Court affirmed. The Court held that under the “primary definition” of “debt collector” in § 1692a(6), McCarthy was not a debt collector because it did not engage in debt collection. And while McCarthy was a “business the principal purpose of which is the enforcement of security interests,” that made it a “debt collector” only for purposes of § 1692f(6), which everyone agreed did not apply to McCarthy's conduct. For purposes of the remaining provisions of the FDCPA, including the debt-validation requirement at issue here, someone is a “debt collector” only if covered by the “primary definition” in § 1692a(6).
Justice Breyer delivered the opinion for a unanimous Court. Justice Sotomayor filed a concurring opinion.Download Opinion of the Court.