Andrew Schlaf v. Safeguard Property, LLC
899 F.3d 459
7th Cir.2018Background
- Andrew and Wendy Schlaf defaulted on an FHA‑insured mortgage serviced by Green Tree; Green Tree contracted Safeguard to perform property‑preservation services including HUD‑required "contact attempt inspections."
- Green Tree’s servicing system automatically ordered inspections for accounts 45+ days past due when initial contact attempts failed; orders and inspection results flowed through an automated system between Green Tree and Safeguard.
- Safeguard representatives performed visual occupancy inspections and left a Green Tree door hanger (in English and Spanish) with Green Tree’s phone number; the hanger did not identify Safeguard and contained no demand for payment or debt details.
- Safeguard employees were instructed not to discuss the reason for their visit or the mortgagor’s delinquency; Safeguard did not receive debt information nor compensation tied to collection outcomes.
- The Schlafs sued Safeguard under the FDCPA, alleging violations of §§ 1692g and 1692e(11); the district court granted summary judgment for Safeguard, concluding it was not a "debt collector." The Seventh Circuit affirmed.
Issues
| Issue | Schlafs' Argument | Safeguard's Argument | Held |
|---|---|---|---|
| Whether Safeguard is a "debt collector" under FDCPA §1692a(6) (principal‑purpose prong) | Safeguard’s activities facilitated debt collection and thus statute should apply | Safeguard’s principal business is property preservation, not debt collection | Held: Not a debt collector under principal‑purpose prong (principal business ≠ debt collection) |
| Whether Safeguard is a "debt collector" under §1692a(6) (regularly collects or attempts, directly or indirectly, debts of another) | Leaving door hangers to induce calls to Green Tree is an indirect attempt to collect => qualifies as debt collection | Safeguard’s role was ministerial/messenger‑like, remote from collection; no debt details, no payment demand, no discretion or contingent compensation | Held: Not a debt collector under the "regularly collects/indirect" prong (too attenuated and ministerial) |
| Whether the door hanger constituted a communication "in connection with" collection of a debt | Hanger encouraged contact about the default and thus was a communication in connection with collection | Hanger was part of occupancy inspection/property preservation and lacked any demand/payment/settlement content | Held: Hanger was connected to property‑preservation inspection, not debt‑collection communication |
| Whether disputed facts precluded summary judgment | Schlafs: purpose/context of hanger is disputed and material | Safeguard: record shows one admitted purpose was to prompt contact, but facts still show no indirect collection; purpose not material | Held: No genuine material fact preventing summary judgment for Safeguard on debt‑collector status |
Key Cases Cited
- Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718 (2017) (limits on treating entities as debt collectors under FDCPA)
- White v. Goodman, 200 F.3d 1016 (7th Cir. 2000) (ministerial third‑party tasks can fall outside FDCPA coverage)
- Romine v. Diversified Collection Servs., Inc., 155 F.3d 1142 (9th Cir. 1998) (services tailored to aid collection can constitute indirect debt collection)
- Gburek v. Litton Loan Servicing LP, 614 F.3d 380 (7th Cir. 2010) ("in connection with" inquiry is fact‑specific; factors include demand for payment and context)
- Ruth v. Triumph P’ships, 577 F.3d 790 (7th Cir. 2009) (creditors’ ongoing relationship with debtor affects FDCPA applicability)
- McCready v. eBay, Inc., 453 F.3d 882 (7th Cir. 2006) (recognizing FDCPA’s two prongs for defining debt collector)
- Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322 (7th Cir. 1997) (FDCPA’s primary goal: protect consumers from abusive debt collection practices)