In Schlegel v. Wells Fargo Bank, NA, — F.3d —-, 2013 WL 3336727 (9th Cir. 2013), the Court of Appeals for the Ninth Circuit held that a mortgage lender was not a debt collector under the FDCPA.
The Schlegels next argue that their complaint adequately alleged that Wells Fargo meets the second definition of debt collector, which as noted above includes any person who “regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” § 1692a(6). They contend that Wells Fargo fits this definition because it is in the business of collecting not only the debts it originated, but also debts that were originated by others. In this case, for example, the Schlegels’ debt was originally owed to NTFN, Inc. before it was assigned to Wells Fargo. This argument fails, because it would require us to overlook the word “another” in the second definition of “debt collector.” The complaint makes no factual allegations from which we could plausibly infer that Wells Fargo regularly collects debts owed to someone other than Wells Fargo. Because NTFN, Inc. assigned the Schlegels’ loan and deed of trust to Wells Fargo, Wells Fargo’s collection efforts in this case relate only to debts owed to itself. The statute is not susceptible to the Schlegels’ interpretation that “owed or due another” means “originally owed or due another.” For this reason, we reject the Schlegels’ argument that the following language in the complaint adequately alleges that Wells Fargo collects debts “owed or due another”: “Wells Fargo is in the business of collecting debts and uses instrumentalities of interstate commerce in that business. See Oppong v. First Union Mortg. Corp., 215 Fed.Appx. 114 (3d Cir.2007) (“the District Court was correct to conclude that Wells Fargo is a debt collector under the FDCPA” … “in a typical eighteen month period, it appears that Wells Fargo acquires 534 mortgages in default”).” The quoted language itself does not allege that Wells Fargo collects the debts of another. Even if the cited opinion were fully incorporated into the com-plaint, it would not rectify this omission, because Oppong fails to differentiate between debts “owed to another” and debts originally owed to another but now owed to Wells Fargo. See, e.g., Oppong, 215 F. App’x. at 119 (relying on evidence that Wells Fargo acquired a large number of defaulted mortgages and attempted to collect the debts as support for its conclusion that Wells Fargo collects debts owed to another). Because the Schlegels’ complaint does not plausibly allege that Wells Fargo is a debt collector under § 1692a(6), we affirm the district court’s dismissal of the Schlegels’ FDCPA claim.
The Court of Appeals held, however, that the Plaintiffs properly alleged an ECOA claim based on the acceleration of the loan balance.
The Schlegels contend that Wells Fargo’s acceleration of their debt constituted a “revocation of credit” for purposes of the definition of “adverse action.” . . . Thus, a lender revokes credit when it annuls, repeals, rescinds or cancels a right to defer payment of a debt. Here, the Schlegels’ complaint plausibly alleges that Wells Fargo annulled, repealed, rescinded, or canceled their right to defer payment of a debt. right to defer repayment of their loan. Paragraph 25 of their complaint alleges that, on December 20, 2010, the Schlegels received a notice from the bank informing them that, “due to the default under the terms of the mortgage or deed of trust, the entire balance is due and payable.” The complaint’s allegations establish that the Schlegels made diligent efforts to determine whether Wells Fargo’s default notices were mere clerical errors or represented Wells Fargo’s termination of the loan modification agreement. Based on Wells Fargo’s prolonged non-responsiveness, and its affirmative statements regarding loan acceleration and default, the facts alleged plausibly give rise to the claim that Wells Fargo terminated the loan modification agreement and thereby revoked the Schlegels’ credit for purposes of § 1691(d)(6). Wells Fargo argues that its default notices to the Schlegels did not constitute adverse actions be-cause the default notices had no binding effect and did not modify the terms of the Schlegels’ loan or the loan modification agreement. We disagree. In essence, Wells Fargo is arguing that because its default notices violated the loan modification agreement, they could not constitute a revocation of credit. But neither the text of § 1691 nor its implementing regulations suggest that a “revocation of credit” must be valid and enforceable in order to constitute an adverse action. When Wells Fargo informed the Schlegels that it had accelerated their loan and was commencing foreclosure proceedings, its statements communicated the bank’s refusal to abide by the terms of the loan modification agreement, which had given the Schlegels a longer period to repay the loan. On its face, this communication revoked the prior credit arrangement. While sending a mistaken default notice would not necessarily constitute an adverse action, the Schlegels’ complaint describes egregious conduct that goes far beyond clerical error. In fact, despite the Schlegels’ repeated inquiries, Wells Fargo did not inform the Schlegels that its acceleration of their loan was a mistake until after the Schlegels filed a com-plaint. While Wells Fargo now claims that its acceleration of the loan was an unintentional error, and that the prior loan modification agreement remains in effect, such assertions do not erase its prior revocation of credit for purposes of ECOA. Because the parties agree that Wells Fargo did not send the Schlegels an adverse action notice, the complaint’s allegations that Wells Fargo took an adverse action without complying with ECOA’s notice requirements are enough for the ECOA claim to survive a motion to dismiss. Accordingly, we reverse the district court’s dismissal of their ECOA claim and remand for proceedings consistent with this opinion. Each party will bear its own costs on appeal.