893 F.3d 680
9th Cir.2018Background
- McNair, a homeowner in an Arizona HOA, defaulted on association assessments; Maxwell & Morgan represented the association and pursued suits, judgments, and a judicial foreclosure begun in 2013.
- Defendants obtained a writ of special execution and a sheriff’s sale; the sale yielded less than the full claimed amount and included attorneys’ fees and costs totaling $11,600.13.
- McNair sued under the FDCPA alleging multiple violations; most claims were time-barred except two: (1) failure to timely respond to requests for a statement of the amount owed, and (2) misrepresenting the debt amount and claiming unapproved attorneys’ fees in 2013–2014 judicial filings.
- The district court granted summary judgment for Defendants on the latter claim, holding Defendants were not “debt collectors” under the FDCPA in conducting foreclosure and that the state court implicitly approved the fees.
- The Ninth Circuit reversed on the legal-status and fee-approval grounds: judicial foreclosure to collect HOA assessments can be FDCPA debt-collection, and the writ improperly represented that accruing attorneys’ fees were already court-approved. The case was remanded for damages determination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether pursuing judicial foreclosure to collect HOA assessments is "debt collection" under the FDCPA | Foreclosure to collect unpaid HOA assessments is an attempt to collect consumer debt and thus falls within the FDCPA | Foreclosure (like in Ho/Hulse) is not debt collection because its object is to retake security, not collect money | Court held judicial foreclosure to collect HOA fees is debt collection under the FDCPA when the scheme can allow deficiency judgments |
| Whether filing a writ that claims "accruing" attorneys' fees that have not been judicially quantified violates FDCPA § 1692e(2)(A) (misrepresenting amount/legal status) | McNair: the praecipe/writ falsely implied the accruing fees had been approved by the court, misrepresenting the debt | Defendants: superior-court actions (issuance of writ and later rulings) amounted to approval of the fees; no FDCPA violation | Court held the writ misrepresented the legal status of the accrued fees because Arizona law requires a court motion to quantify post-judgment fees; summary judgment for Defendants reversed on this claim |
| Whether Ho v. ReconTrust controls to exempt foreclosure activities from FDCPA when collecting HOA fees | McNair: Ho is limited to non-judicial foreclosures extinguishing debt where no deficiency may be pursued | Defendants: Ho (and Hulse) means foreclosure activities are not FDCPA debt collection | Court distinguished Ho (non-judicial context) and held Ho does not preclude FDCPA liability in judicial foreclosures that may permit deficiency judgments |
| Whether district court properly refused to assess damages after finding no violation | McNair: damages (statutory and any actual) must be assessed if violation occurred | Defendants: no violation, so no damages | Court remanded for the district court to determine statutory and any actual damages because violation was found for the writ fee representation |
Key Cases Cited
- Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718 (statutory definition of “debt collector” under the FDCPA)
- Heintz v. Jenkins, 514 U.S. 291 (attorneys who litigate consumer-debt claims can be debt collectors under the FDCPA)
- Ho v. ReconTrust Co., N.A., 858 F.3d 568 (non-judicial foreclosure not debt collection under the FDCPA; limited to non-judicial schemes)
- Mashiri v. Epsten Grinnell & Howell, 845 F.3d 984 (letters to collect HOA assessments constitute debt collection)
- Burnett v. Mortgage Electronic Registration Sys., Inc., 706 F.3d 1231 (discussion of foreclosure effects on debt extinguishment)
- Woliansky v. Miller, 704 P.2d 811 (Arizona rule that trial court has discretion to determine reasonable attorney fees)