Ho v. ReconTrust Co.

Enforcement of a security interest is not collection of a debt under the Fair Debt Collection Practices Act, so a deed of trust trustee does not act as a debt collector, subject to that Act, in taking steps to nonjudicially foreclose the deed of trust.  A deed of trust trustee is not a “debt collector” subject to the general restrictions of the Fair Debt Collection Practices Act because enforcement of a security interest is not collection of a debt—i.e., money—even if enforcement of the security interest may give the debtor a strong incentive to pay up, so as to keep the collateral.  Enforcement of a security interest is subject to some narrow restrictions under 15 USC 1692f(6), and deed of trust trustees are subject to those restrictions.  But to hold them also to be debt collectors in general would make the special definition in 1692f(6) superfluous.  Also, deeming deed of trust trustees to be debt collectors generally under the FDCPA would interfere with California’s non-judicial foreclosure procedure in a fundamentally disruptive manner that Congress didn’t clearly signal it intended.  Sending required pre-foreclosure notices of default and sale are not debt collection either.  The notices are legally required steps in enforcing the security interest.  And they mention the debt or arrearage not to collect it, but to inform the borrower about how he can avoid foreclosure.  If the district court grants a motion to dismiss some claims with leave to amend (or without prejudice) and the plaintiff does not replead them in a later amended complaint, those claims are deemed to have been voluntarily dismissed and are not preserved for review on appeal.  See Lacey v. Maricopa County (9th Cir. 2012) 693 F.3d 896.  However, if the district court conditions leave to amend on adding specific allegations that the plaintiff cannot or does not wish to add, the plaintiff may argue on appeal that the condition was erroneous even if the plaintiff doesn’t replead the claim—whether complying with the condition or not.

Ninth Circuit Court of Appeals (Kozinski, J.; Korman, J., dissenting in part & concurring in part); October 19, 2016; 2016 WL 6091564


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