De Dios v. International Realty & Investments
641 F.3d 1071
| 9th Cir. | 2011Background
- De Dios, a tenant, sued Norton Community Apartments and later International Realty as property manager for rent disputes and related claims.
- International Realty managed the property beginning July 1, 2007 under a Property Management Agreement after Norton regained control from a receivership.
- During 2006 a Stipulated Forbearance delayed increases and litigation over rent until a judicial ruling; rent increases were resolved by settlement.
- In July 2007 International Realty sent a Collection Letter seeking delinquent rent accrued August 2006 onward, despite forbearance and pending judgments.
- District court granted summary judgment, holding International Realty was not a debt collector because the debt was not in default when acquired or when the letter was sent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether International Realty is a debt collector under the FDCPA | Juan De Dios argues Realty is a debt collector under §1692a(6). | International Realty contends it is exempt as a debt servicer/manager and not collecting a defaulted debt. | Yes, not a debt collector under §1692a(6)(F)(iii); debt not in default when obtained. |
| Whether the debt was in default when acquired or when collection began | Debt was in default and thus could be collected under the Act. | Debt was not in default when International Realty acquired it; forbearance suspended obligations and collection letter sought future payments. | Debt was not in default when obtained; forbearance delayed due dates and collection letter sought prospective payments. |
| Whether the district court properly sanctioned counsel and awarded fees | Sanctions and fees were improper or overbroad. | Sanctions were warranted for vexatious, multi-claim filings and for opposing the disqualification motion. | Sanctions and fees affirmed; no abuse of discretion. |
Key Cases Cited
- Bailey v. Security National Servicing Corp., 154 F.3d 384 (Seventh Cir. 1998) (forbearance letters not dunning; not a collection demand)
- Atel Fin. Corp. v. Quaker Coal Co., 321 F.3d 924 (9th Cir. 2003) (court may affirm on any grounds supported by record)
- Franceschi v. Mautner-Glick Corp., 22 F.Supp.2d 250 (S.D.N.Y. 1998) (settlement/forbearance context affects default status)
- Berndt v. Fairfield Resorts, Inc., 339 F.Supp.2d 1064 (W.D. Wis. 2004) (default under contract/for screening default standards)
- Skerry v. Mass. Higher Educ. Assistance Corp., 73 F.Supp.2d 47 (D. Mass. 1999) (default status and student loan context influencing default analysis)
- Frair Check Investors, Inc., 502 F.3d 159 (3d Cir. 2007) (FDCPA interpretations of forbearance/default)