Zakia Mashiri v. Epsten Grinnell & Howell
2017 U.S. App. LEXIS 665
| 9th Cir. | 2017Background
- Mashiri, a San Diego homeowner and HOA member, fell behind on a $385 assessment and received a May 1, 2013 collection letter from Epsten (counsel for the HOA) demanding $598 and warning a lien would be recorded if not paid within 35 days.
- The letter included a FDCPA-style validation statement informing Mashiri she had 30 days to dispute the debt and could request verification.
- Mashiri disputed the debt in writing on May 20 and requested validation; Epsten sent an account statement and then recorded a lien on her property on June 18 before mailing verification. Mashiri later paid $385 while continuing to dispute the balance.
- Mashiri sued under the FDCPA (15 U.S.C. §1692g and §1692e(5)), the Rosenthal Act, and California UCL; the district court dismissed, finding the letter adequately explained validation rights and did not unlawfully threaten to record a lien.
- The Ninth Circuit reversed, holding the complaint plausibly alleged the letter both (1) demanded payment in a timeframe that undermined the 30-day dispute right and (2) contained a lien-threat that overshadowed the FDCPA validation rights under the least-sophisticated-debtor standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Epsten is subject only to §1692f(6) (enforcement-of-security-interest exception) | Epsten’s actions were debt collection, so full FDCPA applies | Epsten argues it only sought to perfect/enforce a security interest and is limited to §1692f(6) | Epsten was engaged in debt collection (demanding payment) and is subject to the full FDCPA |
| Whether the May letter violated §1692g by demanding payment sooner than the 30-day dispute period | The 35-day payment deadline can produce less than 30 days after receipt, forcing forfeiture of dispute rights | The letter complied with §1692g requirements | Letter plausibly demanded payment in a way that undermined the 30-day dispute right; §1692g claim plausible |
| Whether the lien-threat in the letter overshadowed/decreased the effectiveness of the validation notice | Threat to record a lien "will" occur after 35 days regardless of dispute, so debt verification protections are undermined | Recording lien is permitted by state law and does not conflict with FDCPA | Threat plausibly overshadowed validation rights because the least sophisticated debtor could believe dispute would not prevent lien-recording; §1692g claim plausible |
| Whether the FDCPA requires suspension of collection (e.g., lien-recording) pending verification when dispute is timely | Mashiri: §1692g(b) requires collection to cease until verification is mailed | Epsten: state law timing and lien-perfection needs justify notice and lien steps | Court: §1692g(b) duties coexist with state law; collection (including lien-recording) must cease pending verification where §1692g(b) applies |
Key Cases Cited
- Ho v. ReconTrust Co., NA, 840 F.3d 618 (9th Cir. 2016) (distinguishes enforcement of security interests from debt collection and confirms FDCPA applies where activities constitute debt collection)
- Terran v. Kaplan, 109 F.3d 1428 (9th Cir. 1997) (demand for payment before 30-day dispute period can violate §1692g)
- Swanson v. S. Or. Credit Serv., Inc., 869 F.2d 1222 (9th Cir. 1988) (validation notice must be conveyed effectively; transparency requirement)
- Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98 (1st Cir. 2014) (overshadowing analysis where other language nullifies validation rights)
- Shimek v. Weissman, Nowack, Curry & Wilco, P.C., 374 F.3d 1011 (11th Cir. 2004) (lien-filing after verification request violates §1692g(b); discussed but found factually distinguishable)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: complaint must state plausible claim)