FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
TIMOTHY BARNES, No. 16-35418
Plaintiff-Appellant,
D.C. No.
v. 3:15-cv-01001-
BR
ROUTH CRABTREE OLSEN PC; JOHN
THOMAS, OSB# 024691; SHAYDA Z.
LE, OSB# 121547; FEDERAL OPINION
NATIONAL MORTGAGE
ASSOCIATION; SETERUS, INC.;
JANAYA CARTER, OSB# 032830;
JOHN AND JANE DOES, 1–10,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Oregon
Anna J. Brown, District Judge, Presiding
Argued and Submitted May 14, 2020
Portland, Oregon
Filed June 30, 2020
Before: Jay S. Bybee and Lawrence J. VanDyke, Circuit
Judges, and Vince Chhabria, * District Judge.
Opinion by Judge Chhabria
*
The Honorable Vince Chhabria, United States District Judge for
the Northern District of California, sitting by designation.
2 BARNES V. ROUTH CRABTREE OLSEN
SUMMARY **
Fair Debt Collection Practices Act
The panel affirmed the district court’s dismissal of an
action under the Fair Debt Collection Practices Act
concerning a judicial foreclosure proceeding in Oregon.
The panel held that if a foreclosure plaintiff seeks not
only to foreclose on the property but also to recover the
remainder of the debt through a deficiency judgment, then
the plaintiff is attempting to collect a debt within the
meaning of the FDCPA. But if the plaintiff is simply
enforcing a security interest by retaking or forcing a sale of
the property, without regard to any additional debt that may
be owed, then the FDCPA does not apply. Here, appellant
pleaded no conduct by the defendants beyond the filing of a
foreclosure complaint and actions to effectuate that
proceeding. Accordingly, the district court properly granted
defendants’ motion to dismiss.
COUNSEL
Matthew A. Carvalho (argued), Yarmuth LLP, Seattle,
Washington, to Plaintiff-Appellant.
Janet M. Schroer (argued), Hart Wagner LLP, Portland,
Oregon, for Defendants-Appellees Routh Crabtree Olsen
PC, John Thomas, Shayda Z. Le, and Janaya Carter.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
BARNES V. ROUTH CRABTREE OLSEN 3
Lance E. Olsen (argued), McCarthy Holthus LLP, Seattle,
Washington, for Defendants-Appellees Federal National
Mortgage Association and Seterus, Inc.
OPINION
CHHABRIA, District Judge:
This case presents a recurring issue: whether and when
the enforcement of a security interest in property triggers the
prohibitions on unfair debt-collection practices set forth in
the Fair Debt Collection Practices Act (FDCPA). This most
recent installment centers on a judicial foreclosure
proceeding in Oregon.
Although some courts have placed weight on the
distinction between judicial and non-judicial foreclosure in
deciding whether the FDCPA applies to the enforcement of
a security interest in property, we conclude that the Act’s
applicability turns not on the foreclosure forum but on
whether the foreclosure plaintiff seeks to recover any debt
beyond the proceeds from the sale of the foreclosed property.
For example, if the plaintiff seeks not only to foreclose on
the property but also to recover the remainder of the debt
through a deficiency judgment, the plaintiff is attempting to
collect a debt within the meaning of the FDCPA. But if the
plaintiff is simply enforcing a security interest by retaking or
forcing a sale of the property, without regard to any
additional debt that may be owed, the Act does not apply.
The defendants in this FDCPA case (the foreclosure
plaintiff and its attorneys) sought only to force a sheriff’s
sale at which interested buyers could bid on the foreclosed
property. Indeed, any effort to recover money from the
debtor would have been fruitless because Oregon law
4 BARNES V. ROUTH CRABTREE OLSEN
precludes deficiency judgments when a creditor judicially
forecloses a residential deed of trust. Therefore, their pursuit
of judicial foreclosure was not a form of “debt collection”
regulated by the FDCPA.
I
Timothy Barnes, the plaintiff in this case, is a repeat
visitor to this court. In 2007, he took out a loan of $378,250
from Chase Bank to satisfy a divorce judgment and to
repurchase his home from his ex-wife. See Barnes v. Chase
Home Finance, LLC, 934 F.3d 901, 905 (9th Cir. 2019). He
also granted Chase Bank a deed of trust on his home as
security for the note. In September 2010, Barnes ceased his
loan payments and soon after filed a federal lawsuit seeking
damages and rescission of the loan under the Truth in
Lending Act. The district court rejected Barnes’ claims, a
decision that we recently affirmed on appeal. See id. at 909.
Meanwhile, the Federal National Mortgage
Association—better known by its more personable
nickname, Fannie Mae—acquired the note and the deed of
trust from Chase Bank. Fannie Mae subsequently initiated a
proceeding in the Circuit Court for the County of Polk to
foreclose the deed of trust on Barnes’ home. The state court
dismissed the foreclosure action without prejudice,
reasoning that the pending Truth in Lending Act action was
duplicative. The Oregon Court of Appeals vacated this
decision, Federal National Mortgage Ass’n v. United States,
380 P.3d 1186, 1190 (Or. Ct. App. 2016), but Fannie Mae
has not yet renewed its attempt to foreclose the deed of trust.
Not satisfied with merely forestalling the foreclosure
action, Barnes went on the offensive again in federal court.
He filed a pro se complaint alleging that Fannie Mae pursued
judicial foreclosure without lawful authority, neglected in
BARNES V. ROUTH CRABTREE OLSEN 5
the foreclosure complaint to make consumer disclosures
required by the FDCPA, and committed a series of
misrepresentations during that proceeding. He also sued
Fannie Mae’s loan servicer, the law firm that represented
Fannie Mae in the foreclosure proceeding, and the firm’s
attorneys. According to Barnes, the defendants violated the
FDCPA and the parallel provision of the Oregon Unlawful
Trade Practices Act, Or. Rev. Stat. § 646.639, while
engaging in a civil conspiracy to boot.
After affording Barnes an opportunity to amend his
complaint, the district court dismissed it with prejudice for
failure to state a claim. The FDCPA claim could not proceed,
the district court concluded, for a fundamental reason—
namely, that none of the defendants had engaged in debt
collection by initiating the judicial foreclosure proceeding.
The court further held that this defect required dismissal of
the state-law claims. Oregon law provides that compliance
with the FDCPA constitutes compliance with the Unlawful
Trade Practices Act. See Or. Rev. Stat. § 646.643. And under
Oregon law, civil conspiracy is a theory of joint liability that
depends on an underlying civil violation. Granewich v.
Harding, 985 P.2d 788, 792–93 (Or. 1999).
We initially affirmed the dismissal of Barnes’ complaint
for essentially the same reasons given by district court.
719 F. App’x 700 (9th Cir. 2018). But upon receipt of
Barnes’ petition for rehearing, we ordered supplemental
briefing to discuss the effect (if any) of the Supreme Court’s
intervening decision in Obduskey v. McCarthy & Holthus
LLP, 139 S. Ct. 1029 (2019). We also appointed pro bono
appellate counsel to represent Barnes.
6 BARNES V. ROUTH CRABTREE OLSEN
II
All parties agree that none of Barnes’ claims can proceed
unless at least one of the defendants is a “debt collector” as
that term is defined by the FDCPA. Most of the Act’s
prohibitions apply only to debt collectors while collecting or
attempting to collect a debt; this general rule holds true for
the violations claimed by Barnes. See 15 U.S.C. §§ 1692e–
g. As we already mentioned, the defendants sought to
foreclose a deed of trust on Barnes’ home in state court. A
deed of trust, like a mortgage, grants a creditor (in the event
of default) the remedy of foreclosure—the process by which
the property is sold and its proceeds distributed. The crux of
the parties’ dispute is whether the defendants’ pursuit of
judicial foreclosure was a form of debt collection.
A
Our cases explain that a debt collector is a person who
engages in “the collection of a money debt” on behalf of a
third party. Dowers v. Nationstar Mortgage, LLC, 852 F.3d
964, 970 (9th Cir. 2017). To trace this understanding to the
statutory text, start at square one. A “debt” is “any obligation
or alleged obligation of a consumer to pay money arising out
of a transaction in which the money, property, insurance, or
services which are the subject of the transaction are
primarily for personal, family, or household purposes,
whether or not such obligation has been reduced to
judgment.” 15 U.S.C. § 1692a(5). Simplified somewhat, a
“debt” is a consumer’s obligation to “pay money.” See Ho v.
ReconTrust Co., NA, 858 F.3d 568, 571 (9th Cir. 2017). The
primary definition of a “debt collector,” in turn, is “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
BARNES V. ROUTH CRABTREE OLSEN 7
or asserted to be owed or due another.” 15 U.S.C.
§ 1692a(6). Because the debt must be owed or due
“another,” an entity that collects a debt owed itself—even a
debt acquired after default—does not qualify under this
definition. Henson v. Santander Consumer USA Inc.,
137 S. Ct. 1718, 1724 (2017). 1
The key takeaway from these statutory definitions is that
the FDCPA regulates people or entities whose principal
business is collecting, or who regularly collect, money owed
by a consumer to a third party. When (as here) a consumer
defaults on a home loan, that default opens the door to an
action on the note obliging the consumer to pay back the
loan. Fannie Mae could have—but did not—take this
approach. Only personal liability would be at stake in that
hypothetical lawsuit: Barnes borrowed nearly $400,000
from Chase Bank; he stopped paying years ago; and he owes
Chase Bank’s successor, Fannie Mae, the balance plus
interest (which was more than $530,000 as of 2014). A third
party—typically a loan servicer or law firm—that pursues
collection on the note is engaged in debt collection, and the
FDCPA regulates this activity whether the attempt to collect
money is made (for example) by phone call, demand letter,
or court complaint. See Heintz v. Jenkins, 514 U.S. 291, 294
(1995).
1
Citing Henson and pointing to the complaint’s allegation that
Fannie Mae acquired the debt after default but before filing the
foreclosure complaint, Fannie Mae argues that (at most) it attempted to
collect a debt owed itself. Fannie Mae did not, however, present a
Henson-type argument to the district court despite similar circuit
precedent on the books at the time. See Schlegel v. Wells Fargo Bank,
NA, 720 F.3d 1204, 1209 (9th Cir. 2013). In light of our resolution of the
principal issue raised on appeal, we need not rule on the argument or
grapple with forfeiture.
8 BARNES V. ROUTH CRABTREE OLSEN
In contrast to an action on the note, the enforcement of a
security interest does not entail an attempt to collect money
from the debtor. To be sure, the receipt of a foreclosure
complaint can be a strong incentive for a borrower to halt the
foreclosure by paying his outstanding debt to the lender. See
Or. Rev. Stat. § 88.100; see also Ho, 858 F.3d at 572. But
courts have long recognized the “very palpable distinction”
between security interests and the debts they secure.
Woodson v. Murdock, 89 U.S. (22 Wall.) 351, 370 (1874);
see, e.g., Long v. Bullard, 117 U.S. 617, 621 (1886). The
respective rights and obligations are related yet distinct.
While the deed of trust creates a lien on the property to
secure the creditor’s right to repayment, the note makes the
debtor personally liable for loan. See Brandrup v.
ReconTrust Co., N.A., 303 P.3d 301, 305, 314 (Or. 2013).
Consider, for instance, the repo man who tows a car subject
to a security agreement, thereby exercising the creditor’s
right to retake the property, without attempting to collect on
the defaulted loan. See Obduskey, 139 S. Ct. at 1038.
Foreclosure is the analogous procedure for repossessing real
property. As we have explained, the remedy of foreclosure
authorizes a creditor “to retake and resell the security, not to
collect money from the borrower.” Ho, 858 F.3d at 571.
The difference between security-interest enforcement
and debt collection is underscored by the FDCPA’s
expanded definition of “debt collector” in a limited context
not applicable here. See Obduskey, 139 S. Ct. at 1037. Recall
that the Act primarily defines a debt collector as someone
who uses commerce to collect money debts owed to another.
15 U.S.C. § 1692a(6). In addition, this statutory definition
provides that the term “debt collector” “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,” § 1692a(6), but only for
BARNES V. ROUTH CRABTREE OLSEN 9
purposes of the prohibition on “[t]aking or threatening to
take any nonjudicial action to effect dispossession or
disablement of property” absent lawful authority and a
present intention to take possession, § 1692f(6). This
limited-purpose definition, which governs a discrete factual
scenario involving the enforcement of a security interest,
reinforces that the primary definition of debt collector does
not include security-interest enforcement.
Rather than focusing on the distinction between security-
interest enforcement and collecting money, Barnes asserts
that the crucial distinction is between judicial and non-
judicial foreclosure. As he points out, Obduskey and Ho held
that two non-judicial foreclosure proceedings did not
involve debt collection, while another case, McNair v.
Maxwell & Morgan PC, 893 F.3d 680 (9th Cir. 2018), held
that a judicial foreclosure proceeding did involve debt
collection. The Supreme Court, moreover, reserved the
question “whether those who judicially enforce mortgages
fall within the scope of the primary definition.” Obduskey,
139 S. Ct. at 1039. Perhaps for these reasons, some district
courts have treated judicial foreclosure categorically as a
form of debt collection. See, e.g., Smith v. Bank of New York
Mellon, 2019 WL 2994695, at *5 (W.D. Wash. July 9,
2019).
We do not agree that, as a categorical matter, a person
who initiates a judicial foreclosure proceeding is attempting
to collect a debt. Our cases make clear that a plaintiff must
identify something beyond the mere enforcement of a
security interest to establish that the defendants are acting as
debt collectors subject to the FDCPA’s broad code of
conduct. See Ho, 858 F.3d at 573. That additional debt-
collection ingredient can be present for judicial foreclosure,
provided that state law permits a creditor to recover money
10 BARNES V. ROUTH CRABTREE OLSEN
from the debtor after foreclosure if the property sells for less
than the debt. Cf. Dowers, 852 F.3d at 970 n.2. That remedy,
called a deficiency judgment, is often available in judicial
foreclosure proceedings (but typically not in non-judicial
proceedings). See Obduskey, 139 S. Ct. at 1034. Because
Arizona authorizes deficiency judgments as part of judicial
foreclosure, we accordingly held in McNair that the filing of
a foreclosure writ in Arizona can qualify as debt collection.
893 F.3d at 683; see also Cohen v. Rosicki, Rosicki &
Associates, P.C., 897 F.3d 75, 83 (2d Cir. 2018) (reaching
same conclusion for judicial foreclosure under New York
law). But unless a deficiency judgment is on the table in the
proceeding, a person judicially enforcing a deed of trust is
seeking only the return or sale of the security, not to collect
a debt.
Nor, contrary to Barnes’ argument, does the FDCPA’s
venue provision compel the conclusion that judicial
foreclosure is an across-the-board form of debt collection.
The Act directs “[a]ny debt collector who brings any legal
action on a debt against any consumer” to file “an action to
enforce an interest in real property securing the consumer’s
obligation” in “a judicial district or similar legal entity in
which such real property is located.” 15 U.S.C.
§ 1692i(a)(1). Because this provision “does nothing to alter
the definition of a debt collector,” Obduskey, 139 S. Ct. at
1039, Barnes’ reliance on § 1692i only begs the question
whether this particular action was filed by a debt collector.
Sometimes a foreclosure proceeding will involve debt
collection, such as when the plaintiff in that action seeks a
deficiency judgment, and in that instance the FDCPA
prescribes the appropriate venue. See, e.g., McNair, 893 F.3d
at 683. But the venue provision applies by its own terms only
to actions brought by debt collectors. This requirement is not
satisfied when the proceeding merely involves enforcement
BARNES V. ROUTH CRABTREE OLSEN 11
of a security interest in property unless the person “qualifies
as a debt collector based on other activities.” Obduskey,
139 S. Ct. at 1039.
Speaking of other activities beyond filing and
maintaining an action, a person who enforces a security
interest may take “antecedent steps required under state law”
to that end—for example, providing the debtor with notice
that failure to repay could lead to the loss of one’s home. Id.
Or as we have put it, “actions taken to facilitate” the
enforcement of a security interest, “such as sending the
notice of default and notice of sale,” are deemed to “fall[ ]
under the umbrella of ‘enforcement of a security interest.’”
Ho, 858 F.3d at 572–73. That is not to say that the filing of
a foreclosure complaint grants “blanket immunity” to
engage in abusive debt-collection practices. Obduskey,
139 S. Ct. at 1040. Quite to the contrary, a person who
engages in debt collection before, during, or after the judicial
foreclosure proceeding is subject to the full panoply of
FDCPA prohibitions. But the Act kicks in only once a person
does “something in addition to the actions required to
enforce a security interest.” Ho, 858 F.3d at 573 n.5.
B
Returning now to the specifics of this case, Oregon
strictly circumscribes the availability of a deficiency
judgment when a person judicially enforces a residential
deed of trust. State law provides that “a judgment to
foreclose a residential trust deed . . . may not include a
money award for the amount of the debt against the grantor.”
Or. Rev. Stat. § 86.797(2). This provision, formerly codified
at § 86.770(2), “prohibits deficiency judgments regardless
whether the creditor forecloses judicially or through a trustee
sale.” Connelly v. Derwinski, 961 F.2d 129, 131 (9th Cir.
1992). Judicial foreclosure in Oregon “extinguishes the
12 BARNES V. ROUTH CRABTREE OLSEN
entire debt even if it results in a recovery of less than the
amount of the debt.” Ho, 858 F.3d at 571–72; see Banteir v.
Harrison, 485 P.2d 1073, 1075 (Or. 1971).
Barnes contends that Fannie Mae crossed the line into
debt collection by including in its foreclosure complaint a
request for a money award—specifically, for the “unpaid
principal balance,” “accrued unpaid interest,” and additional
interest “to accrue during the pendency of this action.” At
first glance, this fact seems helpful to Barnes. But upon
closer inspection, the demand merely reflected a quirky
pleading requirement imposed by Oregon law—one that
bore no relation to the actual relief sought by the plaintiff
and that has since been altered to square with the realities of
judicial foreclosure in the State. Compare Or. Rev. Stat.
§ 88.010(1) (2014) with § 88.010(1) (2020). The requested
“money award” served simply to identify the amount of the
debt secured by the property, which authorized a sheriff’s
sale to discharge that liability in the same manner as for a
typical judgment debtor. § 18.862(1) (2014); see also
§§ 18.860(1)(a), 88.106. So that the form of the procedure
better tracks the substance of the proceeding, Oregon
recently eliminated this prerequisite to foreclosure, and now
a foreclosure plaintiff must instead file “a declaration of the
amount of the debt that the lien secures.” § 88.010(1)(a); see
also § 18.862(1). 2
2
By identifying the amount owed, the request for a money award
can redound to the benefit of the debtor, who may receive the leftover
proceeds if the purchase price at the sheriff’s sale exceeds the money
award. Or. Rev. Stat. § 18.950(4); see also § 86.794(4) (establishing
priority for proceeds of non-judicial foreclosure). The foreclosure
plaintiff can also “credit bid” at the sale of the property “using the debt
it is owed to offset the purchase price.” Private Capital Group, LLC v.
Harris, 363 P.3d 502, 510 (Or. Ct. App. 2015) (internal quotation marks
BARNES V. ROUTH CRABTREE OLSEN 13
Thus, both before and after this amendment, the
requirement that the plaintiff identify the amount owed
fulfills a procedural function in the foreclosure scheme by
calculating the debt secured by the residential deed of trust.
But in no event would a money award have been enforceable
against Barnes because Oregon’s anti-deficiency provision
extinguishes the debtor’s personal liability upon judicial
foreclosure of a residential deed of trust. § 86.797(2).
Beyond Fannie Mae’s compliance with the then-existing
formality of requesting a money award in the complaint,
Barnes did not allege any actions by the defendants that
could arguably constitute debt collection. Barnes speculates
that Fannie Mae could have abandoned judicial foreclosure
in favor of an action on the note. See
Barclaysamerican/Financial, Inc. v. Boone, 773 P.2d 1338,
1339 (Or. Ct. App. 1989); see also Or. Rev. Stat. § 88.040.
Yet the hypothetical possibility that a person may change
course and pursue a different remedy down the road is not
enough to trigger the FDCPA. Indeed, in Obduskey, the
Supreme Court held that Colorado’s non-judicial foreclosure
scheme was not a form of debt collection even though the
creditor can recoup any deficiency by filing a subsequent
action, meaning that even if the foreclosure sale went
through, the debtor was still exposed to personal liability for
the remainder of the debt. 139 S. Ct. at 1034.
Finally, although Fannie Mae already has text,
precedent, and history on its side, it bears emphasizing that
foreclosure is a traditional domain of state authority. See Ho,
858 F.3d at 576. We ordinarily demand a clearer statement
omitted); see Or. Rev. Stat. § 18.936(1)(c). And finally, the debtor can
halt the sheriff’s sale by paying the amount owed in the judgment.
§ 88.100.
14 BARNES V. ROUTH CRABTREE OLSEN
from Congress before we will conclude that federal
legislation scrambles “the usual constitutional balance of
federal and state powers.” Gregory v. Ashcroft, 501 U.S.
452, 460 (1991). This background principle guides our
interpretation of the FDCPA no less than any other federal
statute. See Sheriff v. Gillie, 136 S. Ct. 1594, 1602 (2016). In
Obduskey, the Court relied in part on the federalism
implications of characterizing non-judicial foreclosure as
debt collection. 139 S. Ct. at 1037. The potential for federal-
state conflict is even more fraught for judicial foreclosure,
which is administered by state judges. Cf. Gregory, 501 U.S.
at 460. Absent a situation where a plaintiff is permitted to,
and does, use a judicial proceeding as a vehicle for debt
collection in addition to foreclosure, we are reluctant to
construe the FDCPA in a manner that interferes with state
judicial procedures for enforcing security interests in real
property. Cf. McNair, 893 F.3d at 683.
* * *
A judicial foreclosure proceeding is not a form of debt
collection when the proceeding does not include a request
for a deficiency judgment or some other effort to recover the
remaining debt. Barnes pleaded no conduct by the
defendants beyond the filing of a foreclosure complaint and
actions to effectuate that proceeding. Accordingly, the
district court properly granted the motion to dismiss.
AFFIRMED.