Term: 2018
Docket: 17-1307
Obduskey v. Mccarthy & Holthus Llp
- Pro
17-1307 OBDUSKEY V. McCARTHY & HOLTHUS LLP DECISION BELOW: 879 F.3d 1216 CERT. GRANTED 6/28/2018 QUESTION PRESENTED: Congress passed the Fair Debt Collection Practices Act (FDCPA) to "eliminate abusive debt collection practices by debt collectors." 15 U.S.C. 1692(e). Under the FDCPA, the term "debt collector" is defined as "any person***who regularly collects or attempts to collect, directly or indirectly, debts owed or due***another." 15 U.S.C. 1692a(6). This case presents a clear and entrenched conflict regarding whether the FDCPA applies in the foreclosure context. In the decision below, the Tenth Circuit, siding with the Ninth Circuit, held that non-judicial foreclosures are not covered by the FDCPA; in doing so, the panel acknowledged the issue has "divided the circuits," and it expressly rejected the "contrary position" of multiple courts of appeals and state high courts. This holding was the sole basis of the decision below, and it arises on the precise fact-pattern that has generated extensive "confusion" and hundreds of conflicting decisions. This case is the perfect vehicle for resolving the widespread disagreement over this important issue. The question presented is: Whether the FDCPA applies to non-judicial foreclosure proceedings. LOWER COURT CASE NUMBER: 16-1330
The U.S. Supreme Court case OBDUSKEY v. MCCARTHY & HOLTHUS LLP in 2018 revolved around the interpretation of the Fair Debt Collection Practices Act (FDCPA). The petitioner, Dennis Obduskey, argued that McCarthy & Holthus LLP violated FDCPA by not taking certain actions required when a debt collector seeks repayment of a consumer's debts. However, McCarthy & Holthus contended they were simply enforcing security interest and did not fall under the definition of "debt collectors" as per FDCPA because their primary business was not debt collection but foreclosure proceedings on behalf of lenders. The Supreme Court ruled in favor of McCarthy & Holthus with an unanimous decision stating that businesses engaged primarily in security-interest enforcement do not qualify as "debt collectors" under key provisions within FDCPA; thus are exempt from its requirements.
In the dissenting opinion for OBDUSKEY v. MCCARTHY & HOLTHUS LLP, Justice Sotomayor argued that the majority's interpretation of the Fair Debt Collection Practices Act (FDCPA) was too narrow and failed to protect consumers from abusive debt collection practices related to nonjudicial foreclosures. She contended that Congress intended for all entities engaged in foreclosure activities, whether judicial or nonjudicial, to be subject to FDCPA regulations. The majority’s decision would leave homeowners vulnerable as it exempts lawyers and law firms engaging in nonjudicial foreclosures from adhering to FDCPA requirements such as providing verification of debts upon request by a consumer. This could potentially lead these individuals into losing their homes without proper legal protections against predatory lending practices.
