When is a Debt Collector not a Debt Collector?

De Dios v. International Realty & Investments
Decided: 4/11/2011
No. 08-56288
Circuit Judge McKeown for the Court; Circuit Judges W. Fletcher and Clifton
Full Text HERE

DEBT COLLECTION LAW: For purposes of the Fair Debt Collection Practices Act, a collector is not a “debt collector” if collector sends a letter to a debtor, prior to the date of default, informing of funds due on a subsequent date, if the collector had a right to collect prior to the date the letter was sent.

De Dios began renting an apartment in 2001. Between late 2005 and June 2006, the apartment was in receivership held by International Realty and Investments, Inc. (“International”) who collected the rents. In 2006, a new landlord increased rents. De Dios initially paid under protest, and then ceased rent payments. In July 2006, multiple tenants, including De Dios, sued the original owner in state court over inter alia rent disputes. De Dios’ rent increase obligation was held in abeyance pending judicial resolution. The state court dismissed the claims. The original owner regained control in July 2007. In July 2007, International sent De Dios a letter claiming the balance for the past due rent from August 2006 forward, and stated payment was due by August 15, 2007. De Dios filed suit in federal court claiming International violated disclosure agreements under the Fair Debt Collection Practices Act (“FDCPA”). 15 U.S.C. § 1692. The district court granted International’s motion for summary judgment. The Ninth Circuit agreed, holding that International was not a “debt collector” under the FDCPA. The Court found that FDCPA excludes persons collecting a debt that was not in default at the time the debt was obtained by such person. The Court found that the debts owed to International by De Dios were not in default on the date the letter was sent. The Court concluded that International was not a “debt collector” under FDCPA because it acquired the debt before it was due. The Court further affirmed $500 in vexatious litigation penalties and $12,000 in attorney fees awarded to International. AFFIRMED.

Summarized by Willamette Law Online writer Evan Barrickman

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