Todd Bates v. Green Farms Condominium Ass'n
958 F.3d 470
6th Cir.2020Background
- The FDCPA distinguishes between general "debt collectors" (subject to the whole Act) and entities who enforce security interests (subject only to §1692f(6)); Obduskey held that counsel who handle nonjudicial foreclosures fall into the latter category.
- Todd and Marcia Bates lost their condominium in Michigan via a nonjudicial foreclosure after alleged condo-due delinquencies; Highlander (management) hired law firm Makower to foreclose.
- The Bateses allege they paid dues (supported by cashier’s checks), contend a lien was wrongfully recorded and charges overstated, and assert FDCPA claims under §§1692d and 1692e(2)(A) (not §1692f(6)), plus state tort claims.
- The district court granted judgment on the pleadings under Rule 12(c), concluding the complaint failed to plead "other conduct" sufficient to transform the defendants into general debt collectors under Obduskey, and declined supplemental jurisdiction over state claims.
- The Sixth Circuit affirmed: the complaint’s allegations were conclusory and, as pleaded, fell within Obduskey’s rule that state-law steps to effect a nonjudicial foreclosure are covered by the security-interest enforcer definition; the Rule 12(d) conversion/summary-judgment argument was rejected as harmless.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants are "debt collectors" under FDCPA general definition (15 U.S.C. §1692a(6)) | Bateses: Makower and Highlander acted as general debt collectors in pursuing foreclosure and making false representations | Defendants: They were enforcing a security interest via nonjudicial foreclosure and thus fall under the Obduskey exception (only §1692f(6) applies) | Court: Complaint fails to plausibly allege general-debt-collector status; Obduskey covers the pleaded state-law foreclosure steps |
| Whether recording the lien constituted "other conduct" outside Obduskey | Bateses: Recording a lien created (not merely enforced) the security interest, so Obduskey doesn’t apply | Defendants: Michigan law makes the lien automatic and recording is an antecedent, state-law step to enforce the security interest | Court: Recording the lien is an antecedent, state-law enforcement step and falls within Obduskey |
| Whether alleged false representations, retaining checks, and added charges transform defendants into general debt collectors | Bateses: Alleged false statements, withholding of checks, and overstated charges constituted prohibited collection conduct under §1692e(2)(A) | Defendants: Allegations are conclusory and amount to state-law foreclosure activity; insufficient to show regular debt-collection activity | Court: Allegations are threadbare and too conclusory to plausibly show defendants regularly collect debts or engaged in "other conduct" that removes Obduskey protection |
| Whether the district court erred by considering outside evidence without converting to summary judgment under Rule 12(d) | Bateses: District court relied on extraneous documents in opposition brief; conversion and 56(d) relief should have been required | Defendants: Court may ignore extraneous materials on a 12(c) motion; any mention of evidence was not outcome-determinative | Court: Any mention of outside evidence was harmless because dismissal is justified on the pleadings alone; no reversible error and Bateses never sought leave to amend |
Key Cases Cited
- Obduskey v. McCarthy & Holthus LLP, 139 S. Ct. 1029 (U.S. 2019) (nonjudicial-foreclosure counsel fall under the security-interest-enforcer definition; left open what "other conduct" could transform status)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standard — courts ignore legal conclusions and require plausible factual allegations)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for pleading; facts must raise claim above speculative level)
- Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718 (U.S. 2017) (statutory focus on what an entity "does" in defining debt collector status)
- Heintz v. Jenkins, 514 U.S. 291 (U.S. 1995) (attorneys can be debt collectors under the FDCPA when they collect consumer debts)
- Barany-Snyder v. Weiner, 539 F.3d 327 (6th Cir. 2008) (standard of review for Rule 12(c) motions)
- Max Arnold & Sons, LLC v. W.L. Hailey & Co., Inc., 452 F.3d 494 (6th Cir. 2006) (Rule 12(d) conversion harmless where dismissal can be justified without extraneous matters)