Vien-Phuong Thi Ho v. ReconTrust Co.
858 F.3d 568
| 9th Cir. | 2016Background
- Ho borrowed money from Countrywide secured by a California deed of trust; ReconTrust acted as the trustee.
- ReconTrust recorded and mailed a statutorily required notice of default and notice of sale after Ho missed payments; notices warned of foreclosure and explained rights (including that payment could stop sale).
- Ho sued asserting ReconTrust violated the FDCPA by sending misleading notices that misrepresented amounts due, and sought TILA rescission (the latter was dismissed below and not repleaded).
- The district court dismissed Ho’s FDCPA claims; she appealed, arguing the trustee’s foreclosure notices constitute debt-collection attempts under the FDCPA.
- The Ninth Circuit majority held the trustee is not a "debt collector" under the FDCPA for California nonjudicial foreclosure notices, but remanded the TILA rescission claim for reconsideration in light of later Ninth Circuit precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a trustee conducting California nonjudicial foreclosure is a "debt collector" under FDCPA §1692a(6) | Notices of default/sale are attempts to collect debt because they threaten foreclosure and induce payment | Foreclosure enforces a security interest and retakes/resells property; it does not attempt to collect money from the borrower under California law (no deficiency after nonjudicial sale) | Held: Trustee’s statutorily required foreclosure notices are enforcement of a security interest, not FDCPA "debt collection" under the general definition; trustee not a general FDCPA debt collector for those acts |
| Whether enforcement-of-security-interest language in FDCPA makes all security enforcers "debt collectors" for all purposes | N/A (Ho argued trustee is a debt collector) | Trustee is only a debt collector under the FDCPA’s narrow 1692f(6) provision; broader definition does not encompass routine foreclosure communications | Held: Enforcement of security interests can make one a debt collector only for limited purposes (e.g., §1692f(6)); ReconTrust fits the narrow category but not the general definition for these acts |
| Whether FDCPA and California foreclosure procedures conflict such that trustees must be exempted | N/A | Treating trustees as FDCPA debt collectors would create direct conflicts with California nonjudicial foreclosure requirements (third‑party notices, mailing deadlines), undermining state scheme | Held: Circuit favors an interpretation avoiding federal-state conflict; practical conflicts bolster reading that routine trustee foreclosure notices are not FDCPA debt collection |
| Preservation of TILA rescission claim after district court dismissal without repleading | Ho argues dismissal conditioned on alleging ability to tender effectively discouraged repleading, so claim preserved on appeal | District court treated dismissal without prejudice and required repleading condition; plaintiff didn’t replead | Held: Where district court conditions repleading on allegations plaintiff cannot/will not make, the claim is preserved for appeal; remanded for TILA rescission reconsideration in light of Merritt v. Countrywide |
Key Cases Cited
- Hulse v. Ocwen Fed. Bank, 195 F. Supp. 2d 1188 (D. Or. 2002) (nonjudicial foreclosure distinguished from debt collection; leading authority for trustee-not-debt-collector view)
- Glazer v. Chase Home Fin. LLC, 704 F.3d 453 (6th Cir. 2013) (foreclosure is debt collection; disagreeing with Hulse)
- Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373 (4th Cir. 2006) (foreclosure communications can constitute debt collection)
- Merritt v. Countrywide Fin. Corp., 759 F.3d 1023 (9th Cir. 2014) (mortgagor need not allege ability to tender to state TILA rescission claim)
- Kaymark v. Bank of Am., N.A., 783 F.3d 168 (3d Cir. 2015) (foreclosure fits FDCPA definition of debt collection)
- Burnett v. Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231 (10th Cir. 2013) (nonjudicial foreclosure does not necessarily collect debt; used by majority)
- BFP v. Resolution Trust Corp., 511 U.S. 531 (1994) (foreclosure regulation is an essential state interest; cited re federal-state tension)