Vien-Phuong Ho v. Recontrust Co. ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
VIEN-PHUONG THI HO, No. 10-56884
Plaintiff-Appellant,
D.C. No.
v. 2:10-cv-00741-GW-SS
RECONTRUST COMPANY, NA,
subsidiaries of Bank of AMENDED OPINION
America, N.A.;
COUNTRYWIDE HOME LOANS
INC; BANK OF AMERICA, N.A.,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
George H. Wu, District Judge, Presiding
Argued and Submitted June 5, 2015
Submission Vacated June 8, 2015
Resubmitted September 3, 2015
Pasadena, California
Filed October 19, 2016
Amended May 22, 2017
2 HO V. RECONTRUST CO.
Before: Alex Kozinski and Consuelo M. Callahan, Circuit
Judges, and Edward R. Korman,* Senior District Judge.
Opinion by Judge Kozinski;
Partial Dissent and Partial Concurrence by Judge Korman
SUMMARY**
Fair Debt Collection Practices Act
The panel filed an amended opinion affirming in part and
vacating in part the district court’s dismissal of an action for
failure to state a claim, and holding that the trustee of a
California deed of trust securing a real estate loan was not a
“debt collector” under the Fair Debt Collection Practices Act.
Seeking damages under the FDCPA, the plaintiff alleged
that the trustee of the deed of trust on her property sent her a
notice of default and a notice of sale that misrepresented the
amount of debt she owed. The plaintiff also sought to rescind
her mortgage transaction under the Truth in Lending Act.
The panel affirmed the dismissal of the FDCPA claim.
Finding unpersuasive decisions of the Fourth and Sixth
Circuits, the panel held that the trustee was not a “debt
*
The Honorable Edward R. Korman, Senior District Judge for the
U.S. District Court for the Eastern District of New York, sitting by
designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
HO V. RECONTRUST CO. 3
collector” subject to damages under the FDCPA because the
trustee was not attempting to collect money from the plaintiff.
The panel held that the object of a non-judicial foreclosure in
California is to retake and resell the security on the loan.
Thus, actions taken to facilitate a non-judicial foreclosure,
such as sending the notice of default and notice of sale, are
not attempts to collect “debt” as that term is defined by the
FDCPA. The panel wrote that following a trustee’s sale, the
trustee collects money from the home’s purchaser, not the
original borrower. Because the money collected from a
trustee’s sale is not money owed by a consumer, it is not
“debt.” Accordingly, the foreclosure notices were an
enforcement of a security interest, rather than general debt
collection under 15 U.S.C. § 1692a(6).
The panel held that even though the district court twice
dismissed the plaintiff’s TILA rescission claim and she did
not replead it in her third complaint, it was preserved for
appeal because the district court instructed her that she would
be required to allege the ability to repay the loan in order to
state a rescission claim. The panel held that under Merritt v.
Countrywide Fin. Corp., 759 F.3d 1023 (9th Cir. 2014),
decided after the district court’s dismissal, a mortgagor need
not allege the ability to repay in order to state a rescission
claim. Accordingly, the panel vacated the dismissal of the
TILA claim and remanded for consideration of the claim in
light of Merritt.
The panel affirmed the dismissal of other claims in a
memorandum disposition.
Judge Korman dissented in part and concurred in part. He
wrote that the only reasonable reading of the FDCPA is that
a trustee pursuing a non-judicial or judicial foreclosure
4 HO V. RECONTRUST CO.
proceeding is a debt collector because both proceedings are
intended to obtain money by forcing the sale of the property
being foreclosed upon. He also wrote that the FDCPA does
not interfere with California’s arrangement for conducting
non-judicial foreclosures in a way that would justify
nullifying the protections that the FDCPA provides, and the
FDCPA’s preemption section provides ample room for the
operation of California law. Judge Korman concurred in the
remand to the district court for consideration of the TILA
rescission cause of action.
COUNSEL
Nicolette Glazer, Esq. (argued), Law Offices of Larry R.
Glazer, Century City, California, for Plaintiff-Appellant.
Margaret M. Grignon (argued) and Kasey J. Curtis, Reed
Smith LLP, Los Angeles, California; Carolee A. Hoover and
David C. Powell, McGuire Woods LLP, San Francisco,
California; for Defendants-Appellees.
Dean T. Kirby, Jr. and Martin T. McGuinn, Kirby &
Mcguinn, A P.C., San Diego, California, for Amici Curiae
United Trustee’s Association, California Bankers
Association, American Legal and Financial Network, Arizona
Trustee Association and California Mortgage Association.
Meredith Fuchs, General Counsel, To-Quyen Truong, Deputy
General Counsel, John R. Coleman, Assistant General
Counsel, Nandan M. Joshi and Thomas M. McCray-Worrall,
Attorneys, Consumer Financial Protection Bureau,
Washington, D.C., for Amicus Curiae Consumer Financial
Protection Bureau.
HO V. RECONTRUST CO. 5
OPINION
KOZINSKI, Circuit Judge:
The principal question in this appeal is whether the trustee
of a California deed of trust is a “debt collector” under the
Fair Debt Collection Practices Act (FDCPA).
FACTS
Vien-Phuong Thi Ho bought a house in Long Beach using
funds she borrowed from Countrywide Bank. The loan was
secured by a deed of trust. A deed of trust involves three
parties. See Yvanova v. New Century Mortg. Corp., 62 Cal.
4th 919, 926–27 (Cal. 2016) (explaining California deeds of
trust). The first party is the lender, who is the trust
beneficiary. The second party is the borrower-trustor, who
holds equitable title to the property. The third party is the
trustee, an agent for both the lender and the borrower who
holds legal title to the property and is authorized to sell the
property if the debtor defaults. Id. at 927. In this case, the
lender was Countrywide, the borrower was Ho and the trustee
was ReconTrust.
After Ho began missing loan payments, ReconTrust
initiated a non-judicial foreclosure. See id. at 926–27
(detailing California’s complex statutory procedure governing
non-judicial foreclosures). As the first step in this process,
ReconTrust recorded a notice of default and mailed this
notice to Ho. See Cal. Civ. Code § 2924(a)(1). The notice
advised Ho that she owed more than $20,000 on her loan and
that she “may have the legal right to bring [her] account in
good standing by paying all of [her] past due payments” to
Countrywide. The notice also advised Ho that her home
6 HO V. RECONTRUST CO.
“may be sold without any court action.” Ho did not pay up.
ReconTrust then took the second step in the process by
recording and mailing a notice of sale. See Cal. Civ. Code
§§ 2924(a)(3). This notice advised Ho that her home would
be auctioned “unless [she took] action to protect [her]
property.” Following the trustee’s sale, ReconTrust would
deliver the deed to the purchaser and the proceeds of the sale
to Countrywide. See 5 Harry D. Miller & Marvin B. Starr,
Cal. Real Est. § 13:1 (4th ed. 2015). Ho would then lose both
possession of the house and her right of redemption. Id.
§§ 13:266, 13:267.1
Ho filed this lawsuit alleging that ReconTrust violated the
FDCPA by sending her notices that misrepresented the
amount of debt she owed. See 15 U.S.C. § 1692e(2)(A). Ho
also sought to rescind her mortgage transaction under the
Truth in Lending Act (TILA) on the ground that the
defendants had perpetrated fraud against her. See 15 U.S.C.
§ 1635(a). The district court twice dismissed Ho’s rescission
claim without prejudice, and Ho did not replead it. The
district court then granted ReconTrust’s motion to dismiss
Ho’s FDCPA claims.2
1
It’s not clear from the record whether a trustee’s sale ever occurred.
The notice of sale advised Ho that her home would be sold on a certain
date. However, Ho’s loan servicer approved a modification of the loan a
few days prior to that date. The parties say nothing further about the
trustee’s sale. For our purposes, it doesn’t matter whether the sale took
place. Sale of the house would not render the case moot because Ho is
seeking damages.
2
The district court also dismissed Ho’s other claims under the
FDCPA, the Racketeer Influenced and Corrupt Organizations Act and the
Real Estate Settlement Procedures Act. We affirm these dismissals in a
memorandum disposition filed concurrently herewith.
HO V. RECONTRUST CO. 7
Ho appeals, arguing that ReconTrust is a “debt collector”
because the notice of default and the notice of sale constitute
attempts to collect debt. Because both notices threatened
foreclosure unless Ho brought her account current, she
reasonably viewed those documents as an inducement to pay
up. Ho also argues that her TILA rescission claim should be
reinstated on appeal because our circuit clarified the
requirements for such a claim between the district court’s
dismissal and this appeal. See Merritt v. Countrywide Fin.
Corp., 759 F.3d 1023, 1032–33 (9th Cir. 2014).
DISCUSSION
I
The FDCPA subjects “debt collectors” to civil damages
for engaging in certain abusive practices while attempting to
collect debts. See §§ 1692d–f, 1692k. The statute’s general
definition of “debt collector” captures any entity that
“regularly collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or due
[to] another.” § 1692a(6). Debt is defined as an “obligation
. . . of a consumer to pay money.” § 1692a(5).
The FDCPA imposes liability only when an entity is
attempting to collect debt. 15 U.S.C. § 1692(e). For the
purposes of the FDCPA, the word “debt” is synonymous with
“money.” 15 U.S.C. § 1692a(5). Thus, ReconTrust would
only be liable if it attempted to collect money from Ho. And
this it did not do, directly or otherwise. The object of a non-
judicial foreclosure is to retake and resell the security, not to
collect money from the borrower. California law does not
allow for a deficiency judgment following non-judicial
foreclosure. This means that the foreclosure extinguishes the
8 HO V. RECONTRUST CO.
entire debt even if it results in a recovery of less than the
amount of the debt. Cal. Civ. Code § 580d(a); see Burnett v.
Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231, 1239
(10th Cir. 2013) (“[A] non-judicial foreclosure does not result
in a mortgagor’s obligation to pay money––it merely results
in the sale of property subject to a deed of trust.”); Alaska Tr.,
LLC v. Ambridge, 372 P.3d 207, 228 (Alaska 2016) (Winfree,
J., dissenting) (noting that non-judicial foreclosure “does not
in and of itself collect a debt, but rather calls for the vesting
and divesting of title to real property according to the parties’
prior agreement” (internal quotation marks omitted)). Thus,
actions taken to facilitate a non-judicial foreclosure, such as
sending the notice of default and notice of sale, are not
attempts to collect “debt” as that term is defined by the
FDCPA.
The prospect of having property repossessed may, of
course, be an inducement to pay off a debt. But that
inducement exists by virtue of the lien, regardless of whether
foreclosure proceedings actually commence. The fear of
having your car impounded may induce you to pay off a stack
of accumulated parking tickets, but that doesn’t make the guy
with the tow truck a debt collector.
Our holding today affirms the leading case of Hulse v.
Ocwen Federal Bank, 195 F. Supp. 2d 1188, 1204 (D. Or.
2002), which held that “foreclosing on a trust deed is an
entirely different path” than “collecting funds from a
debtor.”3 We acknowledge that two circuits have declined to
3
The dissent’s effort to discount Hulse, dissent at 21, doesn’t change
the fact that Hulse is indeed the leading case for what other courts have
recognized as the majority position. See, e.g., Aurora Loan Servs., LLC
v. Kmiecik, 992 N.E.2d 125, 134 (Ill. App. Ct. 2013) (“The minority view
HO V. RECONTRUST CO. 9
follow Hulse. Glazer v. Chase Home Fin. LLC, 704 F.3d
453, 461 (6th Cir. 2013); Wilson v. Draper & Goldberg,
P.L.L.C., 443 F.3d 373, 378–79 (4th Cir. 2006). But neither
case concerned the nuances of California foreclosure law, and
we find neither case persuasive here. The Fourth Circuit in
Wilson was more concerned with avoiding what it viewed as
a “loophole in the Act” than with following the Act’s text.
443 F.3d at 376. We rely on policy to help interpret statutory
language; we don’t make it ourselves. The Sixth Circuit’s
decision in Glazer rests entirely on the premise that “the
ultimate purpose of foreclosure is the payment of money.”
704 F.3d at 463. But the FDCPA defines debt as an
“obligation of a consumer to pay money.” 15 U.S.C.
§ 1692a(5) (emphasis added). Following a trustee’s sale, the
trustee collects money from the home’s purchaser, not from
the original borrower. Because the money collected from a
trustee’s sale is not money owed by a consumer, it isn’t
“debt” as defined by the FDCPA.
The most plausible reading of the statute is that the
foreclosure notices were “the enforcement of [a] security
interest[]” as contemplated by section 1692f(6) rather than
“debt collection” as contemplated by section 1692a. The
FDCPA’s general definition of “debt collector,” contained at
section 1692a(6), applies to entities that “regularly collect[]
or attempt[] to collect, directly or indirectly, debts owed or
due or asserted to be owed or due [to] another.” Entities that
taken is that the act of foreclosing on a mortgage is the collection of a debt
according to the FDCPA.”). District courts across our circuit have
approved of Hulse time and again. See, e.g., Castro v. Exec. Tr. Servs.,
LLC, No. CV-08-2156-PHX-LOA, 2009 WL 438683, at *6 (D. Ariz.
Feb. 23, 2009); Izenberg v. ETS Servs., LLC, 589 F. Supp. 2d 1193, 1199
(C.D. Cal. 2008); Ines v. Countrywide Home Loans, Inc., No.
08cv1267WQH(NLS), 2008 WL 4791863, at *2 (S.D. Cal. Nov. 3, 2008).
10 HO V. RECONTRUST CO.
qualify as debt collectors under this general definition are
debt collectors for purposes of the entire statute. However,
the FDCPA also includes a narrower definition of “debt
collector.” This narrower definition of the term “also
includes” entities whose principal business purpose is “the
enforcement of security interests.” 15 U.S.C. § 1692a(6).
This provision would be superfluous if all entities that
enforce security interests were already included in the
definition of debt collector for purposes of the entire FDCPA.
But the relationship between sections 1692a(6) and 1692f(6)
makes sense if some security enforcers are debt collectors
only for the limited purposes of section 1692f(6). All parties
agree that ReconTrust is a debt collector under the narrow
definition. Ordinarily, section 1692f(6) would protect a
consumer against the abusive practices of a security enforcer
who does not fit the broader definition of a debt collector.
But that doesn’t matter in our case because ReconTrust is not
accused of conduct prohibited by section 1692f(6). The sole
question here is whether ReconTrust is a debt collector under
the general definition—that is, whether ReconTrust
“regularly collects” debts.
We do not hold that the FDCPA intended to exclude all
entities whose principal purpose is to enforce security
interests. If entities that enforce security interests engage in
activities that constitute debt collection, they are debt
collectors. We hold only that the enforcement of security
interests is not always debt collection. We agree with the
dissent that the terms are not mutually exclusive. But they
also aren’t coextensive.4
4
The dissent’s extensive reliance on the FDCPA’s judicial venue
clause, dissent at 32–35, fails for the same reason. The clause indeed
contemplates that a security enforcer can be a debt collector, but it offers
HO V. RECONTRUST CO. 11
We therefore agree with a central premise of Wilson and
Glazer: An entity does not become a general “debt collector”
if its “only role in the debt collection process is the
enforcement of a security interest.” Wilson, 443 F.3d at 378;
see Glazer, 704 F.3d at 464. But from there our paths
diverge. We view all of ReconTrust’s activities as falling
under the umbrella of “enforcement of a security interest.”
Under California’s non-judicial foreclosure statutes,
ReconTrust could not conduct the trustee’s sale until it sent
the notice of default and the notice of sale. If ReconTrust can
administer a trustee’s sale without collecting a debt, it must
be able to maintain that status when it takes the statutorily
required steps to conduct the trustee’s sale. The right to
“enforce” the security interest necessarily implies the right to
send the required notices; to hold otherwise would divorce
the notices from their context.5
The Glazer court rejected this view, noting that it couldn’t
think of anyone other than repossessors “whose only role in
the collection process is the enforcement of security
interests.” 704 F.3d at 464. Glazer explained that a “lawyer
principally engaged in mortgage foreclosure does not meet
no indication that an entity is a debt collector because it enforces a
security interest.
5
Again, a trustee of a deed of trust might become a “debt collector”
under the general definition if he did something in addition to the actions
required to enforce a security interest. See Derisme, 880 F. Supp. 2d at
326; see also Kaltenbach v. Richards, 464 F.3d 524, 528–29 (5th Cir.
2006). Ho makes no argument that ReconTrust did more than what was
required by California law to enforce the deed of trust. It recorded and
mailed notices that were scripted by the California legislature. See Cal.
Civ. Code § 2924. And, while these notices advised Ho that she could
avoid foreclosure by paying up, that was required by California law in
order to conduct the trustee’s sale.
12 HO V. RECONTRUST CO.
this criteria [sic], for he must communicate with the debtor
regarding the debt during the foreclosure proceedings,” but
this is “not so for repossessors, who typically ‘enforce’ a
security interest––i.e., repossess or disable property––when
the debtor is not present, in order to keep the peace.” 704
F.3d at 464. We find this distinction unpersuasive. The
FDCPA itself recognizes that repossessors will communicate
with debtors.6 Enforcement of a security interest will often
involve communications between the forecloser and the
consumer. When these communications are limited to the
foreclosure process, they do not transform foreclosure into
debt collection.
The notices at issue in our case didn’t request payment
from Ho.7 They merely informed Ho that the foreclosure
process had begun, explained the foreclosure timeline,
apprised her of her rights and stated that she could contact
6
Section 1692a(6) provides that enforcers of security instruments
are debt collectors only for the limited purposes of section 1692f. Section
1692f(6) prohibits “[t]aking or threatening to take any nonjudicial action
to effect dispossession or disablement of property” (emphasis added). By
referring to “threats” and not just actions, the statute contemplates that
repossessors will communicate with debtors. The fact that Congress went
out of its way to expose enforcers of security interests to liability for
“threatening” debtors shows that such enforcers were expected to do more
than merely repossess property in the middle of the night.
7
The dissent makes much of the fact that the notice of trustee’s sale
included a disclaimer stating that ReconTrust “is a debt collector
attempting to collect a debt.” This disclaimer isn’t sufficient to show that
ReconTrust is a debt collector. See Guerrero v. RJM Acquisitions LLC,
499 F.3d 926, 932 (9th Cir. 2007) (per curiam); see also Gburek v. Litton
Loan Servicing LP, 614 F.3d 380, 386 n.3 (7th Cir. 2010) (similar). “Debt
collector” isn’t an elective category. It’s determined objectively, based on
the activities of the entity in question.
HO V. RECONTRUST CO. 13
Countrywide (not ReconTrust) if she wished to make a
payment. These notices were designed to protect the debtor.
They are entirely different from the harassing
communications that the FDCPA was meant to stamp out.
Thus, we agree with the California Courts of Appeal that
“giving notice of a foreclosure sale to a consumer as
required by the [California] Civil Code does not constitute
debt collection activity under the FDCPA.” Pfeifer v.
Countrywide Home Loans, Inc., 150 Cal. Rptr. 3d 673, 684
(Cal. Ct. App. 2012); see Fonteno v. Wells Fargo Bank, N.A.,
176 Cal. Rptr. 3d 676, 690–92 (Cal. Ct. App. 2014).8
Even though the notices didn’t explicitly request payment,
Ho contends that they still qualify as debt collection because
they pressured her to send money to Countrywide. See
Burnett, 706 F.3d at 1239. But, as we’ve explained, the
enforcement of a security interest often creates an incentive
to pay the underlying debt. If this were sufficient to
transform the enforcement of security interests into debt
collection, then all security enforcers would be debt
collectors. This would render meaningless the FDCPA’s
carefully drawn distinction between debt collectors and
enforcers of security interests, and expand the scope of the
FDCPA well past the boundary of clear congressional intent
and common sense.
Moreover, even if an entity like ReconTrust did fall under
the FDCPA’s general definition of a “debt collector,” it
would still be exempt under one of the FDCPA’s express
8
We find it significant that California expressly exempts trustees of
deeds of trust from liability under the Rosenthal Act, the state analogue of
the FDCPA. See Cal. Civ. Code. § 2924(b). The California legislature
clearly views such trustees as materially different from debt collectors.
14 HO V. RECONTRUST CO.
exceptions to that definition. The FDCPA excludes from
the term “debt collector” an entity whose activities
are “incidental to . . . a bona fide escrow arrangement.”
15 U.S.C. § 1692a(6)(F).9 A California mortgage trustee—
which holds legal title on behalf of the borrower and
lender—functions as an escrow. Even if ReconTrust’s
activities could be characterized as collection, they are
“incidental to” the escrow arrangement because they are for
the sole benefit of the lender. See Rowe v. Educ. Credit
Mgmt. Corp., 559 F.3d 1028, 1034–35 (9th Cir. 2009)
(construing “incidental to”).
A final consideration weighs in favor of ReconTrust:
Holding trustees liable under the FDCPA would subject them
to obligations that would frustrate their ability to comply with
the California statutes governing non-judicial foreclosure.
ReconTrust lists a half dozen conflicts between the FDCPA
and California law. For example, the FDCPA prohibits debt
collectors from communicating with third parties about the
debt absent consent from the debtor. 15 U.S.C. § 1692c(b).
But California law requires the trustee to announce all
trustee’s sales in a newspaper and mail the notice of default
to various third parties. See Cal. Civ. Code
§§ 2924b(c)(1)–(2), 2924f(b). The FDCPA also prohibits
9
The FDCPA also excludes from its definition of “debt collector” an
entity that acts “incidental to a bona fide fiduciary obligation.” 15 U.S.C.
§ 1692a(6)(F). But because California courts have consistently held that
a trustee is not a fiduciary, we are reluctant to rely on this provision here.
See, e.g., Hatch v. Collins, 275 Cal. Rptr. 476, 480 (Ct. App. 1990)
(holding that a trustee of a deed of trust “does not stand in a fiduciary
relationship” to either the beneficiary or the creditor); see also Stephens,
Partain & Cunningham v. Hollis, 242 Cal. Rptr. 251, 255 (Ct. App. 1987)
(“Just as a panda is not an ordinary bear, a trustee of a deed of trust is not
an ordinary trustee.”).
HO V. RECONTRUST CO. 15
debt collectors from directly communicating with debtors if
the debt collector knows that the debtor is represented by
counsel. 15 U.S.C. § 1692c(a)(2). California law requires
the trustee to mail the notices of default and sale directly to
the borrower, and makes no exception for borrowers who are
represented by counsel. Cal. Civ. Code. §§ 2924b(b)(1),
2924f(c)(3). In both of these cases, a trustee could not
comply with California law without violating the FDCPA.
Things would become even more complicated if the
consumer elected to dispute the debt pursuant to the FDCPA.
In such a case, a trustee would be required to “cease
collection of the debt” until he obtained verification of that
debt. 15 U.S.C. § 1692g(b). California law compels trustees
to mail a copy of the notice of default within ten business
days after recording it. Cal. Civ. Code § 2924b(b)(1). If the
consumer disputes his debt as soon as it is recorded, the
trustee would have to seek verification of the debt, and would
be unable to mail the notice until the debt was verified. In the
likely event that such verification took longer than ten days,
the trustee would miss California’s statutory deadline for
mailing out the notice. And if verification requests or other
hassles resulted in a delay of a year or longer, the trustee
would be required to restart the foreclosure process. See
§ 2924g(c)(2).
ReconTrust’s amici suggest that holding trustees liable as
debt collectors would “literally prevent [California’s
foreclosure] system from functioning.” Brief for United
Trustee’s Ass’n et al. as Amici Curiae Supporting
Defendants-Appellees, Ho v. ReconTrust (No. 10-56884),
2015 WL 1020492, at *4. In an amicus brief filed in support
of Ho, the Consumer Financial Protection Bureau conceded
that “a conflict may exist between state and federal law.”
16 HO V. RECONTRUST CO.
Brief for Consumer Financial Protection Bureau as Amicus
Curiae Supporting Plaintiff-Appellant, Ho v. ReconTrust (No.
10-56884), 2015 WL 4735787, at *14.10 There can be no
doubt that labeling ReconTrust a debt collector under the
broader definition of the FDCPA would create sustained
friction between the federal statute and the state scheme.
Foreclosure is a traditional area of state concern. See
BFP v. Resolution Trust Corp., 511 U.S. 531, 544 (1994)
(characterizing the regulation of foreclosures as “an essential
state interest”); Rank v. Nimmo, 677 F.2d 692, 697 (9th Cir.
1982) (noting that “mortgage foreclosure has traditionally
been a matter for state courts and state law”). We are thus
especially reluctant to accept an interpretation of a federal
statute that would generate conflict between state and federal
law. This reluctance flows naturally from the fact that, when
Congress legislates “in a field which the States have
traditionally occupied,” federal courts “start with the
assumption that the historic police powers of the States were
not to be superseded by the Federal Act unless that was the
clear and manifest purpose of Congress.” Rice v. Santa Fe
Elevator Corp., 331 U.S. 218, 230 (1947). We find no such
clear purpose here.
10
At our invitation, the agency filed an amicus brief arguing that all
trustees of deeds of trust are debt collectors under section 1692a(6). The
agency has not exercised its authority to promulgate a rule interpreting the
term “debt collector.” Thus, we accord deference to the agency’s
interpretation of that phrase only to the extent that we find that
interpretation persuasive. See United States v. Mead Corp., 533 U.S. 218,
226–29 (2001) (citing Skidmore v. Swift & Co., 323 U.S. 134, 139–40
(1944)). We are unpersuaded by the agency’s reading of the statute and
therefore do not defer to it.
HO V. RECONTRUST CO. 17
We also find no comfort in the dissent’s suggestion that
the conflicts between California law and the FDCPA can be
mitigated by consent between the parties to a mortgage deal.
Dissent at 41–43. The fact that parties may be able to draft
their way around conflicts renders them conflicts no less.
Relegating future parties to the uncertain process of adding
contractual terms may itself upset a state’s carefully drawn
scheme of notice and disclosure; additional efforts or more
complex terms are themselves costs of that conflict.
When one interpretation of an ambiguous federal statute
would create a conflict with state foreclosure law and another
interpretation would not, respect for our federal system
counsels in favor of the latter. The statutory phrase “debt
collector” is notoriously ambiguous, causing our sister
circuits to divide as to whether foreclosure-related activities
constitute debt collection.11 Even courts holding that
foreclosure is debt collection have recognized that the term
“debt collector” is cryptic. See, e.g., Glazer, 704 F.3d at 460;
Ambridge, 372 P.3d at 222 (observing that “the FDCPA could
certainly be clearer on the question”). Given this ambiguity,
we are hesitant to construe federal law in a manner that
interferes with California’s system for conducting non-
11
Compare Glazer, 704 F.3d at 461 (holding that all “mortgage
foreclosure is debt collection” for the purposes of the FDCPA); Wilson,
443 F.3d at 378–79 (similar); and Piper v. Portnoff Law Assocs., Ltd., 396
F.3d at 235–36 (3d Cir. 2005) (similar), with Burnett, 706 F.3d at 1239
(suggesting that non-judicial foreclosure is not debt collection for
purposes of the FDCPA, but refusing to so hold); Warren v. Countrywide
Home Loans, Inc., 342 F. App’x 458, 461 (11th Cir. 2009) (holding that
“foreclosing on a home is not debt collection for purposes” of the
FDCPA); and Brown v. Morris, 243 F. App’x 31, 35 (5th Cir. 2007)
(holding that “foreclosure is not per se FDCPA debt collection”).
18 HO V. RECONTRUST CO.
judicial foreclosures. Cf. Sheriff v. Gillie, 136 S. Ct. 1594,
1601 (2016).
II
The district court twice dismissed Ho’s TILA rescission
claim without prejudice, and Ho didn’t replead it in her third
complaint. We have held that claims dismissed without
prejudice and not repleaded are not preserved for appeal; they
are instead considered “voluntarily dismissed.” See Lacey v.
Maricopa Cty., 693 F.3d 896, 928 (9th Cir. 2012). Here,
however, the district court didn’t give Ho a free choice in
whether to keep repleading the TILA rescission claim.
Rather, the court said that if Ho wished to replead the claim
she “would be required to allege that she is prepared and able
to pay back the amount of her purchase price less any down-
payment she contributed and any payments made since the
time of her purchase.” The judge concluded that if Ho “is not
able to make that allegation in good faith, she should not
continue to maintain a TILA rescission claim.” It’s unclear
whether the judge meant this as benevolent advice or a stern
command. But a reasonable litigant, particularly one
proceeding pro se, could have construed this as a strict
condition, one that might have precipitated the judge’s ire or
even invited a sanction if disobeyed. Ho could not or would
not commit to pay back the loan, and dropped the claim in her
third complaint.
The district court based its condition on Yamamoto v.
Bank of N.Y., which gave courts equitable discretion to
“impose conditions on rescission that assure that the borrower
meets her obligations once the creditor has performed its
obligations.” 329 F.3d 1167, 1173 (9th Cir. 2003). But, after
the district court dismissed Ho’s claims, we held that a
HO V. RECONTRUST CO. 19
mortgagor need not allege the ability to repay the loan in
order to state a rescission claim under TILA that can survive
a motion to dismiss. Merritt v. Countrywide Fin. Corp., 759
F.3d 1023, 1032–33 (9th Cir. 2014). Ho argues that her
rescission claims were properly preserved for appeal and
should be reinstated.
Where, as here, the district court dismisses a claim and
instructs the plaintiff not to refile the claim unless he includes
certain additional allegations that the plaintiff is unable or
unwilling to make, the dismissed claim is preserved for
appeal even if not repleaded. A plaintiff is the master of his
claim and shouldn’t have to choose between defying the
district court and making allegations that he is unable or
unwilling to bring into court.
This rule is a natural extension of our holding in Lacey.
The Lacey rule—which displaced our circuit’s longstanding
and notably harsh rule that all claims not repleaded in an
amended complaint were considered waived—was motivated
by two principal concerns: judicial economy and fairness to
the parties. 693 F.3d at 925–28. Those concerns apply here.
We see no point in forcing a plaintiff into a drawn-out contest
of wills with the district court when, for whatever reason, the
plaintiff chooses not to comply with a court-imposed
condition for repleading. We remand to the district court for
consideration of Ho’s TILA rescission claim in light of
Merritt v. Countrywide Fin. Corp., 759 F.3d at 1032–33.
AFFIRMED in part, VACATED and REMANDED in
part. No costs.
20 HO V. RECONTRUST CO.
KORMAN, District Judge, dissenting in part and concurring
in part:
The majority opinion opens with the principal question
presented by this case: “[W]hether the trustee of a California
deed of trust is a ‘debt collector’ under the Fair Debt
Collection Practices Act (FDCPA).” Maj. Op. at 5. After a
discussion of the issue, the majority concludes by observing
that the phrase “debt collector” is “notoriously ambiguous”
and that, given this ambiguity, we should refuse to construe
it in a manner that interferes with California’s arrangements
for conducting nonjudicial foreclosures. Maj. Op. at 17–18.
My reading of the Fair Debt Collection Practices Act
(“FDCPA”), consistent with the manner in which it has been
construed by every other circuit that has addressed whether
foreclosure procedures are debt collection subject to the
FDCPA, suggests that the only reasonable reading is that a
trustee pursuing a nonjudicial foreclosure proceeding is a debt
collector. See Kaymark v. Bank of Am., N.A., 783 F.3d 168,
179 (3d Cir. 2015), cert. denied, 136 S.Ct. 794 (2016); Glazer
v. Chase Home Fin. LLC, 704 F.3d 453, 461–63 (6th Cir.
2013); Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373,
376–77 (4th Cir. 2006); see also Alaska Tr., LLC v.
Ambridge, 372 P.3d 207, 213–216 (Alaska 2016); Shapiro &
Meinhold v. Zartman, 823 P.2d 120, 123–24 (Colo. 1992)
(en banc). The same is true of a judicial foreclosure
proceeding—an alternative available in California. See Coker
v. JPMorgan Chase Bank, N.A., 364 P.3d 176, 178 (Cal.
2016). Both are intended to obtain money by forcing the sale
of the property being foreclosed upon.
The majority “affirms” what it characterizes as the
“leading case” of Hulse v. Ocwen Federal Bank, FSB, 195 F.
HO V. RECONTRUST CO. 21
Supp. 2d 1188 (D. Or. 2002), which held that “foreclosing on
a trust deed is an entirely different path” than “collecting
funds from a debtor,” because “[p]ayment of funds is not the
object of the foreclosure action. Rather the lender is
foreclosing its interest in the property.” Id. at 1204. The
reasoning in Hulse, if one could call it that, is contained in
two short paragraphs, and it is the leading case only in the
number of appellate cases that have by name rejected its
reasoning. See, e.g., Glazer, 704 F.3d at 460, 463;
Kaltenbach v. Richards, 464 F.3d 524, 528 (5th Cir. 2006);
Wilson, 443 F.3d at 376.
This is not surprising. The suggestion in Hulse that a
foreclosure proceeding is one in which “the lender is
foreclosing its interest in the property” is flatly wrong. A
foreclosure proceeding is one in which the interest of the
debtor (and not the creditor) is foreclosed in a proceeding
conducted by a trustee who holds title to the property and
who then uses the proceeds to retire all or part of the debt
owed by the borrower. See Cal. Civ. Code § 2931; Yvanova
v. New Century Mortg. Corp., 365 P.3d 845, 850 (Cal. 2016).
Any excess funds raised over the amount owed by the
borrower (and costs associated with the foreclosure) are paid
to the borrower. See Cal. Civ. Code § 2924k; see also Jesse
Dukeminier & James E. Krier, Property 590 (2d ed. 1988).
Thus, contrary to the holding in Hulse, “[t]here can be no
serious doubt that the ultimate purpose of foreclosure is the
payment of money.” Glazer, 704 F.3d at 463. Nor, because
the FDCPA defines a “debt collector” as one who collects or
attempts to collect, “directly or indirectly,” debts owed to
another, 15 U.S.C. § 1692a(6), does it matter that the money
collected at a foreclosure sale does not come directly from the
debtor.
22 HO V. RECONTRUST CO.
Because the majority makes Hulse the foundation of its
analysis, it papers over Hulse’s irredeemably flawed analysis
by suggesting that it comes close to being the seminal case in
the area. Nevertheless, it can only do so by relying on an
intermediate Illinois appellate court decision for the
proposition that “Hulse is indeed the leading case for what
other courts have recognized as the majority position.” Maj.
Op. at 8 n.3 (citing Aurora Loan Servs., LLC v. Kmiecik,
992 N.E.2d 125, 134 (Ill. App. Ct. 2013)). The Illinois
appellate court decision did not do its own “head count.”
Instead it cited Glazer v. Chase Home Fin. LLC, 704 F.3d
453, 464 (6th Cir. 2013), for the proposition that “[t]he
minority view taken is that the act of foreclosing on a
mortgage is the collection of a debt according to the
FDCPA.” Aurora Loan Servs., LLC, 992 N.E.2d at 134.
Glazer, in turn, said no more than a contrary view has been
“adopted by a majority of district courts.” Glazer, 704 F.3d
at 460. We do not decide cases on the basis of “head counts”
of district court cases, although we should at least be
concerned when we reach a result that has been rejected by
every circuit that has decided the issue in a published opinion.
See Maj. Op. at 17 n.11 (citing Glazer, 704 F.3d at 461;
Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373,
378–79 (4th Cir. 2006); Piper v. Portnoff Law Assocs., Ltd.,
396 F.3d 227, 235–36 (3d Cir. 2005)).
After analyzing the majority’s construction of the
FDCPA, I discuss below each of the conflicts conjured by the
majority and show that the FDCPA does not interfere with
California’s arrangement for conducting nonjudicial
foreclosures in a way that would justify nullifying the
protections that the FDCPA provides. More significantly, the
language of the FDCPA’s preemption section provides ample
room for the operation of California law without the need for
HO V. RECONTRUST CO. 23
exempting an entire category of debt collectors. Thus, it
provides that the FDCPA “does not annul, alter, or affect, or
exempt any person subject to the provisions of this
subchapter from complying with the laws of any State with
respect to debt collection practices, except to the extent that
those laws are inconsistent with any provision of this
subchapter, and then only to the extent of the inconsistency.”
15 U.S.C. § 1692n.
While this suggests a desire to interfere as little as
possible “with the laws of any State,” it gives effect to the
concern that the “primary reason why debt collection abuse
is so widespread is the lack of meaningful legislation on the
State level.” S. Rep. No. 95-382, at 2 (1977). “Congress
enacted the FDCPA despite the fact that some states already
had procedural requirements for debt collectors . . . in place,
because it ‘decided to protect consumers who owe money by
adopting a different, and in part more stringent, set of
requirements that would constitute minimum national
standards for debt collection practices.’” Piper, 396 F.3d at236 n.11 (quoting Romea v. Heiberger & Assocs., 163 F.3d
111, 118 (2d Cir. 1998)). Indeed, one of the declared
purposes of the FDCPA is “to promote consistent State
action to protect consumers against debt collection abuses.”
15 U.S.C. § 1692(e).
This case affords no basis for undermining the minimum
national standards that Congress has adopted. Nor does it
justify ignoring the rule we have followed consistently that,
as “a broad remedial statute,” Gonzales v. Arrow Fin. Servs.,
LLC, 660 F.3d 1055, 1060 (9th Cir. 2011), the FDCPA must
be liberally construed in favor of the consumer. Hernandez
v. Williams, Zinman & Parham PC, 829 F.3d 1068, 1078–79
(9th Cir. 2016); see also Johnson v. Riddle, 305 F.3d 1107,
24 HO V. RECONTRUST CO.
1117 (10th Cir. 2002). Indeed, the foreclosure process
conducted here was entirely consistent with both California
law and the FDCPA. The complaint here does not derive
from any conflict between these statutes. Instead, the
complaint alleges that the trustee under the Deed of Trust,
ReconTrust, sent the debtor, Ho, a notice that was misleading
and false because it listed an inaccurate amount due. The
cause of action that the FDCPA provides for this alleged
misconduct does not conflict with California law. If
California law does not provide such a remedy, the FDCPA
cause of action simply supplements it, just as Congress
intended.
I. The Definition of “Debt Collector”
I turn first to the arguments based on the definition of the
phrase “debt collector.” The FDCPA provides, in relevant
part, that “[t]he term ‘debt’ means any obligation or alleged
obligation of a consumer to pay money.” 15 U.S.C.
§ 1692a(5). “The term ‘consumer’ means any natural person
obligated or allegedly obligated to pay any debt.” Id.
§ 1692a(3). There is no dispute that Ho is obligated under a
promissory note to pay the lender the purchase price of her
property. Section 1692a(6) defines the term “debt collector”
to mean “any person who uses any instrumentality of
interstate commerce or the mails in any business the principal
purpose of which is the collection of any debts, or who
regularly collects or attempts to collect, directly or indirectly,
debts owed or due or asserted to be owed or due another.”
There is no dispute that ReconTrust seeks to enforce Ho’s
obligation to pay the money owed on the promissory note,
and that it engages in such activities generally, with the
degree of regularity described in section 1692a(6).
HO V. RECONTRUST CO. 25
Nevertheless, the majority argues that, “[f]or the purposes
of the FDCPA, the word ‘debt’ is synonymous with ‘money.’
Thus, ReconTrust would only be liable if it attempted to
collect money from [the borrower] Ho.” Maj. Op. at 7 (citing
15 U.S.C. § 1692a(5)). Because California law does not
permit deficiency judgments in cases where there has been a
nonjudicial foreclosure, no money will be collected directly
from Ho. Consequently, “[t]he object of a non-judicial
foreclosure is to retake and resell the security, not to collect
money.” Id. This suggestion cannot be right.
The object of a nonjudicial foreclosure is not to “retake
and resell” the debtor’s home. The only way real property
that is foreclosed upon can be retaken by the creditor is to
purchase it at a foreclosure sale. See Cal. Civ. Code
§ 2924g(a). Moreover, the purpose of a foreclosure
proceeding is to collect money. Thus, a judicial decree of
foreclosure directs “an officer of the court to sell the land at
a public sale, pay the debt to the lender, and pay any amount
exceeding the debt to the borrower. . . . Except for the power
to foreclose privately, the deed of trust is treated in almost all
significant respects as a mortgage.” Dukeminier & Krier,
supra, at 590–91; see also Dikeman v. Jewel Gold Mining
Co., 13 F.2d 118, 118 (9th Cir. 1926) (“Foreclosure is a
remedy by which the property covered by the mortgage may
be subjected to sale for the payment of the demand for which
the mortgage stands as security . . . .” (quoting Flanders v.
Aumack, 51 P. 447, 450 (Or. 1897))).
The nonjudicial foreclosure process in California is
illustrative. “Nonjudicial foreclosure proceedings must be
conducted by auction in a fair and open manner, with the
property sold to the highest bidder.” Dreyfuss v. Union Bank
of Cal., 11 P.3d 383, 390 (Cal. 2000); see also Cal. Civ. Code
26 HO V. RECONTRUST CO.
§ 2924g(a). The object of the nonjudicial foreclosure
procedure is to sell the real property pledged as security thus
raising money to retire all or part of the debt owed by the
borrower pursuant to the promissory note. See A. James
Casner & W. Barton Leach, Cases and Text on Property 737
(2d ed. 1969) (“To whatever extent foreclosure puts value
into [the mortgagee’s] hands, the debt of [the mortgagor] to
[the mortgagee] is discharged . . . .”). Indeed, any excess
funds raised over the amount owed by the borrower (and
costs associated with the foreclosure) are paid to the
borrower. See Cal. Civ. Code § 2924k; see also Dukeminier
& Krier, supra, at 590.
The argument that ReconTrust cannot be a debt collector
because it may not collect money directly from the debtor
overlooks the disjunctive language of the definition of debt
collector, as well as the inchoate conduct included in that
definition. Thus, a debt collector is one who “attempts to
collect, directly or indirectly, debts . . . owed or due another.”
15 U.S.C. § 1692a(6). The nonjudicial foreclosure procedure
accomplishes this in one of two alternative ways.
First, the creditor, through the trustee, may collect money
indirectly through a nonjudicial foreclosure sale. The same
is true of a judicial foreclosure, although it is not conducted
by a trustee. The fact that the money may not come directly
from the borrower does not alter the fact that any funds raised
would come as a result of the elimination of the debtor’s
interest and equity in the property. This clearly constitutes
the indirect collection of a debt, and the majority does not
explain why it does not. Second, the money may be collected
directly, because the language in the notices sent to the
borrower may prompt her—perhaps the better word is scare
her—to exercise her rights of reinstatement or redemption by
HO V. RECONTRUST CO. 27
paying the arrears on the promissory note at the risk losing
the roof over her head. See Yvanova, 365 P.3d at 850 (“If . . .
the borrower does not exercise his or her rights of
reinstatement or redemption, the property is sold at auction to
the highest bidder.”).1 Or, as the majority aptly puts it, the
notices tell the debtor “that she could avoid [this fate] by
paying up.” Maj. Op. at 11 n.5. The same is true of a
complaint seeking a judicial foreclosure.2
Thus, in this case, ReconTrust commenced the
foreclosure proceeding, “as an agent of the Beneficiary [the
creditor] under a Deed of Trust,” by the filing of a notice of
default served on Ho warning that she was in default on the
payments due on the promissory note she signed on June 23,
2007, in the amount of $548,000. She was told that the
amount of the default was $22,782.68 and would increase
until her account became current, that she may be able “to
bring [her] account in good standing [and avoid foreclosure]
by paying all of [her] past due payments plus permitted costs
1
“The mortgagor’s interest in the property is known as the ‘equity,’
a shortened form of ‘equity of redemption’ which also pays linguistic
homage to the generations of chancellors who have been moved to protect
debtors from overreaching moneylenders.” Dukeminier & Krier, supra,
at 589.
2
The principal difference between a judicial and a nonjudicial
foreclosure is that in the latter, with some exception, see Bank of
Kirkwood Plaza v. Mueller, 294 N.W.2d 640, 642–43 (N.D. 1980), a
deficiency judgment against the debtor may be obtained for the difference
between the money collected at the foreclosure sale and the amount of the
debt still owed on the promissory note. Such an effort against the debtor
in a nonjudicial foreclosure is precluded because forgiveness of the
remainder of the debt is a tradeoff in return for “an inexpensive and
efficient remedy against a defaulting borrower.” See Yvanova, 365 P.3d
at 850.
28 HO V. RECONTRUST CO.
and expenses,” and that she would “have only the legal right
to stop the sale of [her] property by paying the entire amount
demanded by [her] creditor.” She was also told that, “[w]hile
[her] property [was] in foreclosure, [she] still must pay other
obligations (such as insurance and taxes) required by [her]
note and deed of trust or mortgage.”
The notice of trustee’s sale again told Ho that she was “IN
DEFAULT” and advised her that, “UNLESS YOU TAKE
ACTION TO PROTECT YOUR PROPERTY, IT MAY BE
SOLD AT A PUBLIC SALE.” The next paragraph told
Ho that ReconTrust would “sell [her house] on 8/28/2009
at 01:00 PM, At the front entrance to the Pomona
Superior Courts Building.” Significantly, the notice of
trustee’s sale contained the following, in conformity with
section 1692e(11): “RECONTRUST COMPANY, N.A. is a
debt collector attempting to collect a debt. Any information
obtained will be used for that purpose.”
While the majority suggests that ReconTrust’s description
of itself does not necessarily establish that it was engaging in
debt-collection activity, Maj. Op. at 12 n.7, the Second
Circuit has held that a debtor receiving this letter cannot
safely disregard it on that basis, Hart v. FCI Lender Servs.,
Inc., 797 F.3d 219, 227 (2d Cir. 2015). Instead, “the Letter
clearly announces itself an attempt to collect a debt, and its
other text only emphasizes the plausibility and gravity of that
announcement. We see no reason why we should not take it
at its word . . . .” Id.; see also McLaughlin v. Phelan
Hallinan & Schmieg, LLP, 756 F.3d 240, 246 (3d Cir. 2014)
(attaching significance to the fact that a law firm described
itself as a debt collector in a letter to the debtor); Reese v.
Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1217
(11th Cir. 2012) (same). Indeed, in the present case, the
HO V. RECONTRUST CO. 29
notices may have succeeded in obtaining money from Ho
directly because, as the majority observes, the loan service
provider approved a loan modification agreement prior to the
date of the foreclosure sale. Maj. Op. at 6 n.1. The
modification, which would take effect upon the payment of
$12,000, provided for a $36,000 increase in the amount of the
mortgage and a reduction in the monthly interest payment.
The majority does not, and cannot, deny the effect of the
language in the notices sent to Ho. Nor does it even address
the language of section 1692a(6) that defines “debt collector”
as one who attempts to collect “indirectly” debts owed to
another. Instead, it makes a number of arguments predicated
on the assumption that the mortgage foreclosure process
involves the enforcement of a security interest. Thus, it
begins its defense of ReconTrust’s in terrorem
communications by arguing that, if those communications
succeed in obtaining the payment of a debt, it is akin to the
simple fear of having your car impounded because you had
accumulated parking tickets. This fear, the majority suggests,
“doesn’t make the guy with the tow truck a debt collector.”
Maj. Op. at 8. I leave it to the reader to evaluate whether the
activities of a trustee of a deed of trust, which I have
described above, can fairly be analogized to those of a tow
truck driver who simply pulls up to a car on the street and
repossesses it.
Perhaps because the answer is obvious, the majority then
argues that the FDCPA intended to exclude entities whose
principal purpose is to enforce security interests, and because
a nonjudicial foreclosure proceeding comes within the
definition of enforcement of a security interest, ReconTrust
is not a debt collector within the meaning of the FDCPA.
Maj. Op. at 11–12. Moreover, for this reason, ReconTrust
30 HO V. RECONTRUST CO.
was entitled to engage in communications necessary to
effectuate the enforcement of a security interest. Id. at 11.
This argument fails for a number of reasons.
First, ReconTrust is a debt collector, because it directly or
indirectly collects money owed by the debtor to the creditor.
Under these circumstances, it is irrelevant that the nonjudicial
process entailed in a mortgage foreclosure proceeding may
have also constituted the enforcement of a security interest.
See Kaltenbach v. Richards, 464 F.3d 524, 528–29 (5th Cir.
2006) (“[T]he entire FDCPA can apply to a party whose
principal business is enforcing security interests but who
nevertheless fits § 1629a(6)’s general definition of a debt
collector.”). Second, the FDCPA expressly contains six
exclusions from its definition of “debt collector” but does not
exclude entities who enforce security interests. 15 U.S.C.
§§ 1692a(6)(A)–(F). Moreover, section 1692a(6), which
contains the definition of “debt collector” and which I repeat
here with the additional language upon which the majority
relies, does not support the argument that one who enforces
a security interest—and more particularly, the obligation of
a debtor to pay money owed pursuant to a promissory note
through a foreclosure proceeding—does not come within the
definition of debt collector. Specifically, section 1692a(6)
provides that:
[t]he term “debt collector” means any person
who uses any instrumentality of interstate
commerce or the mails in any business the
principal purpose of which is the collection of
any debts, or who regularly collects or
attempts to collect, directly or indirectly,
debts owed or due or asserted to be owed or
due another. . . . For the purpose of section
HO V. RECONTRUST CO. 31
1692f(6) of this title, such term also includes
any person who uses any instrumentality of
interstate commerce or the mails in any
business the principal purpose of which is the
enforcement of security interests.
(Emphasis added). Section 1692f(6)—to which the last
sentence, emphasized above, makes reference—proscribes
“[t]aking or threatening to take any nonjudicial action to
effect dispossession or disablement of property if—(A) there
is no present right to possession of the property claimed as
collateral through an enforceable security interest; (B) there
is no present intention to take possession of the property; or
(C) the property is exempt by law from such dispossession or
disablement.”
The majority argues that the last sentence of section
1692a(6), which subjects security enforcers to the foregoing
proscriptions, “would be superfluous if all entities that
enforce security interests were already included in the
definition of debt collector for the purpose of the entire
FDCPA.” Maj. Op. at 10. In other words, what point would
there be in saying that the term “debt collector” also includes
enforcers of security interests if security enforcers were
already included in the general definition? The answer is
obvious. Not all entities that engage in the enforcement of
security interests do so in the same way. See, e.g., Glazer,
704 F.3d at 464. There are entities that enforce security
interests yet who do not typically engage in activity that
would also come within the definition of “debt collection.”
The tow truck driver to which the majority alludes is one
example. See Maj. Op. at 8. Moreover, if they “attempt to
collect, directly or indirectly, debts . . . owed or due
another”—in the manner ReconTrust did here–they do not do
32 HO V. RECONTRUST CO.
so with sufficient regularity to bring them within the
definition of “debt collector.” See Pflueger v. Auto Finance
Group, Inc., No. CV–97–9499 CAS(CTX), 1999 WL
33740813, at *4–6 (C.D. Cal. Apr. 26, 1999).
Significantly, the concept of “dispossession or
disablement of property” does not easily fit a mortgage
foreclosure proceeding, and is more commonly associated
with the taking of personal property. Because nonjudicial
foreclosure proceedings do not involve the dispossession or
disabling of personal property, the proscriptions contained in
section 1692f(6) do not apply to those proceedings. Thus, if
the majority is correct, then it would follow that a trustee of
a deed of trust could undertake any of the unfair and abusive
conduct proscribed in the FDCPA, because it would not come
within the definition of “debt collector,” nor would it be a
security enforcer dispossessing or disabling property.3
Congress hardly could have intended such a result.
Indeed, another provision of the FDCPA provides
compelling support for the proposition that mortgage
foreclosures come within the definition of debt collection,
even though they may involve security interests. Thus, the
judicial venue clause, the purpose of which is to require that
a foreclosure proceeding be filed in the place “most
convenient and least expensive for the debtor,” Kaltenbach,
464 F.3d at 528, provides that “[a]ny debt collector who
brings any legal action on a debt against any consumer
shall—(1) in the case of an action to enforce an interest in
3
The definitional section of the FDCPA does not contain a definition
of the term “security enforcer.” See 15 U.S.C. § 1692a. The meaning
must therefore be derived from the manner in which the term is used,
namely, one who dispossesses or disables personal property.
HO V. RECONTRUST CO. 33
real property securing the consumer’s obligation, bring such
action only in a judicial district or similar legal entity in
which such real property is located,” 15 U.S.C. § 1692i(a)(1)
(emphasis added).4
The clause is particularly significant for two reasons.
First, Congress did not say, as one would expect it to have
said under the analysis employed by the majority, that any
security enforcer who brings a mortgage foreclosure
proceeding must do so in the designated venue. Instead, its
use of the term “any debt collector” demonstrates that
Congress understood that a mortgage foreclosure
proceeding—an action to enforce an interest in real property
securing the debtor’s obligation—constitutes debt collection
within the meaning of the FDCPA. Indeed, if, as the majority
suggests, mortgage foreclosure proceedings constitute the
enforcement of a security interest and not debt collection,
then the venue clause would be rendered meaningless,
because security enforcers seeking a judicial foreclosure
would not be subject to the limitation on venue contained in
section 1692i(a)(1).
The majority argues that the venue clause “contemplates
that a security enforcer can be a debt collector, but it offers no
indication that an entity is a debt collector because it enforces
a security interest.” Maj. Op. at 10–11 n.4. I agree that an
4
Section 1692i(a)(2), permits any other action, including an action
for a deficiency judgment, to be filed in the district “(A) in which such
consumer signed the contract sued upon; or (B) in which such consumer
resides at the commencement of the action.” Because the difference
between the amount obtained at the foreclosure sale and the amount due
on the promissory note cannot be known, an action for a deficiency
judgment arising out of a judicial foreclosure proceeding cannot be
commenced until after the foreclosure sale is over.
34 HO V. RECONTRUST CO.
entity may not be a debt collector merely because it enforces
a security interest. See Glazer, 704 F.3d at 463–64; Piper,
396 F.3d at 236. I rely on the venue clause because it
demonstrates that Congress understood that mortgage
foreclosure proceeding constitutes a unique way to enforce a
security interest, and supports the broader proposition that a
foreclosure proceeding meets the definition of debt
collection. Kaymark, 783 F.3d at 179. Thus, the Third
Circuit has observed that “[n]owhere does the FDCPA
exclude foreclosure actions from its reach. On the contrary,
foreclosure meets the broad definition of ‘debt collection’
under the FDCPA, and it is even contemplated in various
places in the statute.” Id. (citing, inter alia, 15 U.S.C.
§ 1692i).
This interpretation is supported by the legislative history
of the FDCPA. In particular, the Senate Report on the
FDCPA noted that “the committee does not intend the
definition to cover . . . the collection of debts, such as
mortgages and student loans, by persons who originated such
loans.” S. Rep. No. 95-382, at 3 (1977) (emphasis added).
This language strongly suggests a mortgage or deed of trust
can be a debt, and an entity like ReconTrust can be a debt
collector because it did not originate the loan to Ho. While
I share the late Justice Scalia’s lack of confidence in such
legislative history, see Hon. Antonin Scalia, A Matter of
Interpretation: Federal Courts and the Law 32–34 (Amy
Gutmann ed., 1997), I cite it here only because it is consistent
with the language and structure of the FDCPA that I have
discussed above, and because, accepting the majority’s
suggestion that the definition of debt collector is ambiguous,
our precedents resort to this legislative history, see
Hernandez, 829 F.3d at 1073; see also Int’l Ass’n of
Machinists & Aerospace Workers, Local Lodge 964 v. BF
HO V. RECONTRUST CO. 35
Goodrich Aerostructures Grp., 387 F.3d 1046, 1051–52 (9th
Cir. 2004).
I come now to the last part of the argument of the
majority that proceeds on the assumption that ReconTrust is
a security enforcer and, as such, “must be able to maintain
that status” when it does communicate with the debtor by
taking “the statutorily required steps to conduct the trustee’s
sale.” Maj. Op. at 11. This is another way of saying that
California may override the protections afforded by the
FDCPA by prescribing the steps necessary to commence a
foreclosure proceeding, even if those steps would otherwise
qualify ReconTrust as a debt collector.
There is no support in the language of the FDCPA for this
pronouncement. Indeed, we have held that a complaint
served on a debtor is a communication subject to the FDCPA,
Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1031–32 (9th
Cir. 2010), and there are any number of cases that have held
that communications necessary to commence foreclosure
proceedings, judicial or nonjudicial, may come within the
definition of debt collection, see Kaymark, 783 F.3d at
176–78 (holding that a foreclosure complaint is a
communication subject to the FDCPA); Alaska Tr., 372 P.3d
at 217–18 (explaining that a notice required to initiate
foreclosure proceedings could “at the same time be an
attempt to collect a debt”); see also Romea, 163 F.3d at 116(holding that the fact that state law required a debt collector
to send a letter to commence eviction proceedings was
“wholly irrelevant to the requirements and applicability of the
FDCPA”).
Perhaps recognizing the force of the arguments in favor
of holding that the FDCPA does apply to trustees of a deed of
36 HO V. RECONTRUST CO.
trust, the majority appears to acknowledge that a trustee could
become a debt collector by doing something “in addition to
the actions required to enforce a security interest.” Maj. Op.
at 11 n.5. The majority does not say what additional action
a trustee of a deed of trust would have to take in order to
make him a debt collector. Certainly, it could not mean
additional egregious actions in which some debt collectors
engage, such as banging on the debtor’s door or calling her
incessantly. Under the holding of the majority, a trustee
engaged in conducting a nonjudicial foreclosure proceeding
is not collecting a debt. Thus, the FDCPA would not prohibit
it from engaging in these activities. Moreover, the third
amended complaint alleges that “defendant and/or its agents
unlawfully trespassed [Ho’s] property . . . by dispatching
agents who entered upon the subject property, banging on
doors in a gangster type fashion, posting false notices to let
tenants on the premises know that Plaintiff [was] in loan
default and demanding that plaintiff should call BAC, with
intent to scare, intimidate, and harass plaintiff, and plaintiff’s
tenants.”
Of course, the conduct prohibited by the FDCPA includes
conduct that is far less egregious than banging on doors and
calling debtors incessantly. Nevertheless, Congress regarded
them as sufficiently problematic to warrant including them in
the list of activities that constitute harassment or abuse, see
15 U.S.C. § 1692d, or are “unfair or unconscionable,” id.
§ 1692f. Thus, among the activities that the FDCPA lists as
abusive is “[t]he advertisement for sale of any debt to coerce
payment of the debt.” Id. § 1692d(4). And among the unfair
or unconscionable means to attempt to collect the debt is
“[c]ommunicating with a consumer regarding a debt by post
card.” Id. at § 1692f(7). As the Second Circuit has held,
“that Congress cited the industry’s worst practices when
HO V. RECONTRUST CO. 37
passing the FDCPA does not limit the statute’s purview to
those practices, when the text reaches well beyond. [The
parties] provide[] no reason to believe that Congress did not
intend the FDCPA to offer broad protection to debtors . . . .”
Hart, 797 F.3d at 228.
Moreover, even if the service of the notices and their
content were required by California law, the liability attached
to ReconTrust’s activity does not arise from either the service
of the notices or their required script. Instead, it arises from
the fact that the notices that “ReconTrust had sent [Ho] were
misleading and false because the amounts listed on them”
reflected inaccurate amounts due. California did not require
ReconTrust to provide false and misleading notices. The
mere fact that California requires an otherwise accurate
notice to be sent to commence a nonjudicial foreclosure
proceeding should not relieve the trustee from complying
with the FDCPA.
Up to this point, the majority has spilled considerable ink
in arguing that ReconTrust is not a debt collector because it
does not directly collect any money from borrowers under a
deed of trust and because it is an enforcer of security
interests. Perhaps because the majority itself remains
unconvinced, in the space of half a page it invokes and
cursorily applies an additional and even less persuasive
exception to the general definition of “debt collector.” See
Maj. Op. at 13–14. Specifically, the majority argues that
“even if an entity like ReconTrust did fall under the FDCPA’s
general definition of a ‘debt collector,’ it would still be
exempt under” 15 U.S.C. § 1692a(6)(F)(i), which provides an
exception for entities acting “incidental to a bona fide
fiduciary obligation or a bona fide escrow arrangement.”
Maj. Op. at 13–14. Putting aside the question whether a deed
38 HO V. RECONTRUST CO.
of trust qualifies as “a bona fide escrow arrangement,” the
critical issue is whether ReconTrust, as trustee under Ho’s
Deed of Trust, is acting “incidental to” the Deed of Trust by
initiating a nonjudicial foreclosure on Ho’s home. While the
majority rejects the suggestion that ReconTrust was acting as
a fiduciary, it does accept the suggestion that ReconTrust was
acting as an escrow agent and that the same “incidental to”
requirement applies here. Id. at 14 & n.9.
In Wilson v. Draper & Goldberg, 443 F.3d 373 (4th Cir.
2006), the Fourth Circuit held that “the critical inquiry” in
determining whether a trustee under a deed of trust falls
within the exception provided by 15 U.S.C. § 1692a(6)(F)(i)
is whether the trustee’s actions are “incidental to a bona fide
fiduciary obligation.” Id. at 377. In holding that the trustee
did not meet the “incidental to” requirement, the Fourth
Circuit observed that “a trustee’s actions to foreclose on a
property pursuant to a deed of trust are not ‘incidental’ to its
fiduciary obligation. Rather, they are central to it. Thus, to
the extent Defendants used the foreclosure process to collect
[the plaintiff’s] alleged debt, they cannot benefit from the
exemption contained in 1692a(6)(F)(i).” Id.
The same analysis applies with equal force to escrow
agents. The deed of trust was formulated precisely to allow
for nonjudicial foreclosure proceedings. And those
proceedings, for the reasons I have discussed above,
constitute the direct or indirect collection of a debt. Indeed,
an analysis of the development of the deed of trust suggests
that its primary purpose is to facilitate the collection of a
debt, and that the trustee/escrowee arrangement is incidental
to the collection of a debt, and not the reverse. I quote from
Professor Jesse Dukeminier’s history of the development of
the deed of trust:
HO V. RECONTRUST CO. 39
[L]awyers for lenders cast about for a way to
avoid judicial foreclosure (which requires a
costly and time-consuming lawsuit) and the
statutory right of redemption from foreclosure
sale. They sought a way for the lender to sell
the land and be paid soon after default. They
found this in the form of a deed of trust . . . .
Under a deed of trust, the borrower conveys
title to the land to a person (who is usually a
third person but may be the lender) to hold in
trust to secure payment of the debt to the
lender. In a deed of trust the trustee is given
the power to sell the land without going to
court if the borrower defaults. The power of
sale foreclosure is more efficient and less
costly than a judicial foreclosure, but courts
and statutes regulate it by requiring notice and
procedures that are fair to the borrower.
Except for the power to foreclose privately,
the deed of trust is treated in almost all
significant respects as a mortgage.
Dukeminier & Krier, supra, at 590–91; see also Yvanova, 365
P.3d at 849–50. Thus, a trustee’s initiation of a nonjudicial
foreclosure cannot possibly be considered to be “incidental
to” a deed of trust—rather, nonjudicial foreclosure is its
animating purpose.
In sum, Congress has provided a definition of a debt
collector. Once ReconTrust’s activities brought it within that
definition, it was a debt collector, as ReconTrust
acknowledged in the notice of sale it sent to Ho in which it
characterized itself as a debt collector seeking to enforce a
debt. See 15 U.S.C. § 1692a(6). This conclusion is also
40 HO V. RECONTRUST CO.
consistent with the opinion of the Consumer Financial
Protection Bureau (“CFPB”), which we solicited and which
the majority rejects, Maj. Op. at 16 n.10, “that entities
satisfying the general definition of ‘debt collector’ are subject
to the entire [FDCPA],” Brief of Amicus Curiae Consumer
Financial Protection Bureau in Support of Appellant and
Reversal at 18 n.8, 2015 WL 4735787, at *18 n.8.
II. The FDCPA Does Not Interfere with California’s
Arrangements for Nonjudicial Foreclosures
I turn now to the claim that, because the term “debt
collector” is said to be ambiguous, it should not be construed
in a manner that would frustrate ReconTrust’s ability to
comply with California’s procedures for nonjudicial
foreclosures. Maj. Op. at 14. Indeed, in this case, it is not
disputed that ReconTrust complied in every respect with
California law. Nevertheless, citing several alleged conflicts
between the FDCPA and California foreclosure law,
ReconTrust and its amici have warned that treating trustees
as debt collectors would “literally prevent [California’s
foreclosure] system from functioning.” Brief of Amici
Curiae United Trustee’s Ass’n et al. at 4, 2015 WL 1020492,
at *4. This overwrought statement is simply false. Three
circuits, covering twelve states, have held that foreclosure
proceedings are debt collection under the FDCPA, see
Kaymark v. Bank of Am., N.A., 783 F.3d 168, 179 (3d Cir.
2015); Glazer v. Chase Home Fin. LLC, 704 F.3d 453,
461–63 (6th Cir. 2013); Wilson v. Draper & Goldberg,
P.L.L.C., 443 F.3d 373, 376–77 (4th Cir. 2006); see also
Piper v. Portnoff Law Assocs., Ltd., 396 F.3d 227, 234–36 (3d
Cir. 2005), along with the Supreme Courts of Alaska and
Colorado. See Alaska Tr., LLC v. Ambridge, 372 P.3d 207,
213–216 (Alaska 2016); Shapiro & Meinhold v. Zartman, 823
HO V. RECONTRUST CO. 41
P.2d 120, 123–24 (Colo. 1992) (en banc). Neither
ReconTrust nor its amici have provided any evidence that
these holdings have had any effect—much less that the sky
has fallen in—on the foreclosure laws of those states.
Moreover, the argument ignores the fact that the FDCPA’s
preemption clause expressly leaves in place “the laws of any
State with respect to debt collection practices, except to the
extent that those laws are inconsistent with any provision of
[the FDCPA], and then only to the extent of the
inconsistency.” 15 U.S.C. § 1692n. Indeed, it also contains
a mechanism for the exemption of certain debt collection
practices that do not precisely match those of the FDCPA.
See 15 U.S.C. § 1692o.
I now proceed to address each of the provisions of the
FDCPA that allegedly interfere with California’s
arrangements for conducting nonjudicial foreclosure
proceedings. None of them have the effect that the majority
attributes to them. Indeed, this case demonstrates how
readily the California foreclosure system can function
alongside the FDCPA. The majority does not dispute that the
first two alleged conflicts between California law and the
FDCPA may be avoided “by consent between the parties to
a mortgage deal.” Maj. Op. at 17. Such consent was
procured here. Nevertheless, the majority argues that “[t]he
fact that parties may be able to draft their way around
conflicts renders them conflicts no less. Relegating future
parties to the uncertain process of adding contractual terms
may itself upset a state’s carefully drawn scheme of notice
and disclosure; additional efforts or more complex terms are
themselves costs of that conflict.” Id. I do not understand to
what the majority is referring when it speaks of an “uncertain
process of adding contractual terms.” The language of the
Deed of Trust is not the result of the addition of terms to a
42 HO V. RECONTRUST CO.
bargained-for agreement. Instead, the Deed is a “take it or
leave it” form to the terms of which the borrower must agree
if he or she wants a loan. Thus, the pre-printed Deed of
Trust, which is signed only by the borrower, describes itself
as follows: “CALIFORNIA-Single Family-Fannie
Mae/Freddie Mac UNIFORM INSTRUMENT WITH
MERS.”
Indeed, as I will show below, the alleged conflicts are, to
borrow the Yiddish term, gornisht mit gornisht—nothing with
nothing. In the two instances in which California law
allegedly conflicts with the FDCPA, the net effect of the
borrower’s consent is to permit the foreclosure to go forward
in the manner prescribed by California law. Thus, in the first
instance, the debtor agrees to allow the trustee to announce
the foreclosure sale in a newspaper, as well as mail the
notices of default to various third parties, which is required
by California law. Moreover, in the second instance, the
debtor agrees to allow the trustee to mail the notices of
default and sale directly to him or her, as required by
California law. I provide some brief background detail in the
discussion that follows.
1. While the FDCPA prohibits debt collectors from
communicating with third parties without the debtor’s
consent, California law mandates that trustees announce any
sale in a newspaper, as well as mail notices of default to
various third parties. Maj. Op. at 14. As the majority
acknowledges, debt collectors may communicate with third
parties once they have the debtor’s consent. Id. (citing
15 U.S.C. § 1692c(b)). Here, Ho provided such consent by
signing the Deed of Trust, which stated that, if the lender
invoked its power of sale, the “Trustee shall cause this notice
[of sale] to be recorded in each county in which any part of
HO V. RECONTRUST CO. 43
the Property is located. Lender or Trustee shall mail copies
of the notice as prescribed by Applicable Law to Borrower
and to the other persons prescribed by Applicable Law.” The
effect of this was to permit ReconTrust to comply with the
California law mandating certain public disclosure of a
foreclosure sale.
2. The majority also observes that, while the FDCPA
prohibits debt collectors from communicating directly with
debtors if the collector knows that the debtor has counsel,
under California law, a trustee must mail the notices of
default and sale to the borrower directly. Maj. Op. at 15. The
FDCPA, however, allows consumers to consent to direct
communication. 15 U.S.C. § 1692c(a). By signing the Deed
of Trust, Ho consented to the “Lender or Trustee [mailing]
copies of the notice as prescribed by [California] Law to
Borrower.”
3. I now proceed to the remaining conflict between
California law and the FDCPA relied upon by the majority.
The majority warns that, if a debtor decided to dispute the
debt pursuant to the FDCPA, the trustee would have to cease
any debt collection activities until it verified the debt. Maj.
Op. at 15. If such verification took more than ten days, the
trustee would miss the statutory deadline for mailing the
notice of default. Id. Moreover, if the verification took over
a year, the trustee would have to restart the foreclosure
process. Id.
This scenario is entirely far-fetched, because a debt
collector could easily satisfy this verification requirement
within ten days and thus avoid delaying the nonjudicial
foreclosure process. Indeed, if it took longer, it would be the
trustee’s own fault. Specifically, we have “decline[d] to
44 HO V. RECONTRUST CO.
impose . . . a high threshold” on debt collectors attempting to
verify disputed debts and have explained that, “[a]t the
minimum, ‘verification of a debt involves nothing more than
the debt collector confirming in writing that the amount being
demanded is what the creditor is claiming is owed.’” Clark
v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162,
1173–74 (9th Cir. 2006) (quoting Chaudhry v. Gallerizzo,
174 F.3d 394, 406 (4th Cir. 1999)). Indeed, in an
unpublished opinion, we recently affirmed a district court’s
ruling that a debt collector satisfied section 1692g(b) by
sending a letter to the debtor that included the debtor’s
address, the date of the deed of trust, and the name and
address of the original creditor. Zhang v. Countrywide Home
Loans, Inc., 601 F. App’x 567, 567 (9th Cir. 2015)
(unpublished), aff’g No. 11-cv-3475 (NC), 2012 WL
1245682, at *11 (N.D. Cal. Apr. 13, 2012). So much for the
conflicts that the majority conjures.
In sum, none of the conflicts identified would stop the
California foreclosure system from functioning. On the
contrary, the FDCPA’s preemption clause expressly preserves
State law and avoids excluding compliance with it “except to
the extent that those laws are inconsistent with any provision
of [the FDCPA], and then only to the extent of the
inconsistency.” 15 U.S.C. § 1692n.5
5
The CFBP does not concede, as the majority suggests, “a conflict
may exist between state and federal law.” Maj. Op. at 15. Instead, citing
to the FDCPA’s preemption clause, the CFPB explained, “[t]hat a conflict
may exist between state and federal law is no basis for state law to trump
or somehow excuse compliance with federal law.” Brief of Amicus
Curiae Consumer Financial Protection Bureau in Support of Appellant and
Reversal at 14, 2015 WL 4735787, at *14.
HO V. RECONTRUST CO. 45
Moreover, the FDCPA provides a method for resolving
conflicts with state law that the majority ignores. Section
1692o states that the CFPB “shall by regulation exempt from
the requirements of this subchapter any class of debt
collection practices within any State if the [CFPB] determines
that under the law of that State that class of debt collection
practices is subject to requirements substantially similar to
those imposed by this subchapter, and that there is adequate
provision for enforcement.” The Second Circuit discussed
section 1692o in Romea. There, a defendant law firm sent a
form letter to a plaintiff-debtor pursuant to state law,
demanding that she pay her back rent. Romea, 163 F.3d at
113. In finding that the defendant was a debt collector, the
Second Circuit cited to an older version of section 1692o,
which granted the Federal Trade Commission the authority to
provide exemptions, to explain that, “if the protections
afforded tenants under New York’s Article 7 process do
result in ‘requirements substantially similar to those imposed
by [the FDCPA],’ then New York may petition the Federal
Trade Commission to promulgate regulations that exempt
§ 711 notices from the FDCPA.” Id. at 118 n. 11 (alteration
in original); see also FTC Notice of Maine Exemption From
The Fair Debt Collection Practices Act, 60 Fed. Reg. 66972,
66973 (Dec. 27, 1995) (granting Maine’s request for an
exemption from certain provisions of the FDCPA for certain
debt collection practices because “the level of protection to
consumers under the Maine Act is substantially equivalent to
that provided in the FDCPA”). Rather than asking this Court
to adopt an unnatural reading of the term “debt collector,”
ReconTrust and its amici should ask California to petition the
CFPB for an exemption to the statute.
In sum, the position of the majority is that, because the
phrase “debt collector” is ambiguous, we should refuse to
46 HO V. RECONTRUST CO.
construe it in a manner that conflicts with California’s
arrangements for conducting nonjudicial foreclosures. While
my reading of the phrase differs from that of the majority,
even if the majority is correct, the provisions of the FDCPA
do not interfere with the operation of nonjudicial foreclosure
proceedings in California. Because the majority applies
California law in a way that overrides the arrangements that
Congress has made for the protection of debtors, I
respectfully dissent from the affirmance of the judgment
dismissing the FDCPA claim. I concur in the remand to the
district court for consideration of Ho’s Truth in Lending Act
rescission cause of action.