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Obduskey v. Wells Fargo

United States Court of Appeals, Tenth Circuit

January 19, 2018

DENNIS OBDUSKEY, Plaintiff - Appellant,
v.
WELLS FARGO; WELLS FARGO BANK; WELLS FARGO & CO; WELLS FARGO BANK NA; WELLS FARGO HOME MORTGAGE; MCCARTHY AND HOLTHUS LLP, Defendants - Appellees.

         Appeal from the United States District Court for the District of Colorado (D.C. No. 1:15-CV-01734-RBJ)

          Steven L. Hill of Riggs, Abney, Neal, Turpen, Orbison & Lewis, Denver, Colorado, for Plaintiff - Appellant.

          Jessica E. Yates of Snell & Wilmer, L.L.P., Denver, Colorado, for Defendants - Appellees Wells Fargo, Wells Fargo Bank, Wells Fargo & Co., Wells Fargo Bank, N.A., Wells Fargo Home Mortgage.

          Holly R. Shilliday of McCarthy & Holthus, L.L.P., Centennial, Colorado, for Defendants -Appellees McCarthy & Holthus, L.L.P.

          Before MORITZ, KELLY, and MURPHY, Circuit Judges.

          KELLY, Circuit Judge.

          Plaintiff-Appellant Dennis Obduskey appeals from the district court's order granting Defendants-Appellees Wells Fargo and McCarthy and Holthus, LLP's motions to dismiss numerous claims, including whether either party was liable as a "debt collector" under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p. Obduskey v. Fargo, No. 15-CV-01734-RBJ, 2016 WL 4091174 (D. Colo. July 19, 2016). Having jurisdiction under 28 U.S.C. § 1291, we affirm.

         Background

         In 2007, Mr. Obduskey obtained a $329, 940 loan from Magnus Financial Corporation to buy a home. The loan was secured by his property and was serviced by Wells Fargo. Aplee. Supp. App. 107. Mr. Obduskey eventually defaulted on the loan in 2009. Id. at 109. Several foreclosure proceedings were initiated over the following six years, none of which were completed. Mr. Obduskey's loan remains in default.

         In 2014, Wells Fargo hired McCarthy and Holthus, LLP (McCarthy), a law firm, to pursue a non-judicial foreclosure on Mr. Obduskey's home. McCarthy initially sent Mr. Obduskey an undated letter stating that McCarthy "MAY BE CONSIDERED A DEBT COLLECTOR ATTEMPTING TO COLLECT A DEBT." Id. at 127. The letter explained that McCarthy was "instructed to commence foreclosure against" Mr. Obduskey's home. Id. It referenced the amount owed and noted the current creditor as Wells Fargo. Id. Mr. Obduskey apparently responded to the letter disputing the debt, id. at 124; however, instead of replying to his letter, McCarthy initiated a foreclosure action in May of 2015.[1] Mr. Obduskey then filed this action claiming (1) a violation of the Fair Debt Collection Practices Act; (2) a violation of the Colorado Consumer Protection Act; (3) defamation; (4) extreme and outrageous conduct - emotional distress; and (5) commencement of an unlawful collections action. Aplee. Supp. App. at 21-27.

         Wells Fargo and McCarthy filed motions to dismiss, which the district court granted on all claims. Obduskey, 2016 WL 4091174, at *8. Regarding the FDCPA claim, the district court held that Wells Fargo was not liable because it began servicing the loan prior to default. Id. at *3. It also held that McCarthy was not a "debt collector" because "foreclosure proceedings are not a collection of a debt, " but it noted that "not all courts have agreed" on whether foreclosure proceedings are covered under the FDCPA. Id. To settle this confusion, we asked both parties to provide supplemental briefing on the issue. We now hold that the FDCPA does not apply to non-judicial foreclosure proceedings in Colorado.

         Discussion

         We review the grant of a motion to dismiss de novo. Khalik v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir. 2012). We begin with the FDCPA claim against Wells Fargo and McCarthy.

          I. Fair Debt Collection Practices Act

         The Fair Debt Collection Practices Act was enacted, in part, to "eliminate abusive debt collection practices by debt collectors." 15 U.S.C. § 1692(e) (2012). It prohibits "abusive, deceptive, and unfair debt collection practices, " such as late-night phone calls or falsely representing to a consumer the amount of debt owed. Id. ยงยง 1692(a), 1692c, 1692e. To prevail under the FDCPA, a plaintiff must prove that the defendant is a "debt collector" who is trying to collect a "debt" from the plaintiff in violation of some provision of the FDCPA. A "debt collector" is defined as "any person . . . who regularly collects or attempts to collect, directly or indirectly, debts owed or due ...


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