Obduskey v. McCarthy & Holthus LLP. (17-1307)

argument 17-1307

Obduskey v. McCarthy & Holthus LLP.

Supreme Court of the United States 1h 1m 6 speakers 8 chapters transcribed 5 days ago official recording ↗

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What is the legal argument about non‑judicial foreclosures under the Fair Debt Collection Practices Act?

John G. Roberts 0:00

We'll hear argument next in case seventeen

Unknown 0:02

thirteen oh seven. Abduski vs. McCarthy and Holfis. Mr Geyser? Mr. President, Mr Chief Justice, and may it please the Court. Nonjudicial foreclosures are covered under the Fair Debt Collection Practices Act as a direct or indirect attempt to collect a consumer's debt. It is a direct attempt because the pre foreclosure notices are indistinguishable from traditional dunning letters. It is an indirect attempt because the foreclosure process is designed by law to automatically sell the consumer's house to obtain payment on the consumer's debt. These conclusions follow directly from the Act's plain text, structure, purpose, and history. Respondent can only resist these conclusions by rewriting the statutory text, creating a huge loophole in the Act's scope and eliminating the safeguards that Congress designed to protect consumers from debt collector mistakes and abuse, which occur all too often in the foreclosure context.

Unknown 0:59

We think that the easiest way to resolve this case is to focus directly on the pre foreclosure notices. Those notices are quintessential FTCPA communications. They just so happen to arise in the foreclosure context. They state that there is a default on the debt, they state the amount of the debt owed, they state to whom the debt is owed, and critically they state the consequence of failing to satisfy that debt. That message is unequivocal to any consumer who receives it.

Samuel A. Alito 1:27

I think you have a you have a pretty good argument if we look just at fifteen USC sixteen ninety two A six, which talks about uh regularly collects or attempts to collect directly or indirectly debts owed or due or assert it to be owed to due to another. At least you've got a you you've got a reasonable argument under that provision. But The two provisions that seem to me to create a lot of problems for your position are fifteen USA fifteen USC sixteen ninety two A six, which uh um creates a special definition of debt collector for a purpose that's not relevant here and that refers to any business, the principal purpose of which is the enforcement of security interests. So if a a business it's whose per principal purpose is the s enforcement of security interests uh fell within the prior definition, the all purpose definition, there wouldn't be a reason for for that provision.

Samuel A. Alito 2:35

So I I think you've got a tough time explaining that away. And your your answer is that refers to repo activities. But then there's another provision uh that talks about what looks like repo activities in a lot more specific language. Uh sixteen ninety two F six, which talks about dispossession and disablement. So what's your answer to that?

Unknown 3:00

Well, Your Honor, I think these provisions actually reinforce our reading of the Act. What Congress did is it started with the main definition for debt collector. And then it proceeded and it expanded that definition. If you look at the language, it says this term also includes that those are words of expansion. They're collecting people who otherwise don't fall within the main definition. So when we talk about traditional repo activity, we're talking about the type of person who is enforcing a security interests without directly or indirectly collecting a debt.

Brett M. Kavanaugh 3:29

It's only expanding it for purposes. of sixteen ninety two F six. That's the that means that it's something less than that. Other than sixteen ninety two F six. At least that's the most natural or a natural way to read it.

Unknown 3:47

We we fully agree. Our point is that for someone who is enforcing a security interest but not also directly or indirectly collecting a debt, those people are only subject to that one subsection. And it's very clear what Congress had in mind precisely because of sixteen ninety two F six. It talks about dispossessing or disabling property. That's talking about taking possession of property. It's not talking about demanding payment. It doesn't talk about selling assets to liquidate someone's debt. It specifically focused on exactly the kind of activity that Congress would have had in mind for