In McNair v. Maxwell & Morgan PC, 2018 WL 3097153 (9th Cir. 2018), the Court of Appeals for the Ninth Circuit clarified when attorneys are engaged in debt collection under the FDCPA.

Our decision in Ho does not, however, preclude FDCPA liability for an entity that seeks to collect a debt through a judicial foreclosure scheme that allows for deficiency judgments. In Ho, we noted that because “[t]he object of a non-judicial foreclosure is to retake and resell the security, not to collect money from the borrower[,]” and because “California law does not allow for a deficiency judgment following non-judicial foreclosure[,]” “the foreclosure extinguishes the entire debt even if it results in a recovery of less than the amount of the debt.” Id. at 571–72 (citing Cal. Civ. Code § 580d(a); Burnett v. Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231, 1239 (10th Cir. 2013); Alaska Tr., LLC v. Ambridge, 372 P.3d 207, 228 (Alaska 2016) (Winfree, J., dissenting) ). Accordingly, we held that “actions taken to facilitate a non-judicial foreclosure, such as sending the notice of default and notice of sale, are not attempts to collect ‘debt’ as that term is defined by the FDCPA.” Id. at 572. Here, by contrast, Defendants filed the Praecipe and Writ in order to collect a debt arising from Plaintiff’s failure to pay homeowner association fees as part of a judicial foreclosure scheme that in many cases allows for deficiency judgments. See Ariz. Rev. Stat. §§ 33-727(A), 33-729(B)–(C). Therefore, and for the reasons discussed above, this action constitutes debt collection under the FDCPA.

The 9th Circuit also said that the plaintiff could pursue a claim against the attorneys as debt collectors for seeking attorneys fees — implying that a court already had found them owing.

The Praecipe filed by Defendants on November 5, 2013 requested that the Clerk of the Maricopa County Superior Court issue the attached Writ of Special Execution against McNair. The Writ states that “attorney fees of $1,687.50, plus accruing attorney fees of $1,597.50 … are now at the date of this Writ due” under the stipulated judgment executed by both parties on June 27, 2012 and adopted by order of the Superior Court on July 12, 2012.2Under the FDCPA, debt collectors “may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. This includes “[t]he false representation of the character, amount, or legal status of any debt[.]” Id. § 1692e(2)(A). In Arizona, requests for post-judgment attorneys’ fees must be made in a motion to the court. See Ariz. R. Civ. P. 54(g). The record reflects that at the time the Writ was filed, no court had yet approved the quantification of the “accruing” attorneys’ fees claimed in the Writ. Accordingly, Defendants falsely represented the legal status of this debt, by implicitly claiming that the accruing attorneys’ fees of $1,597.50 already had been approved by a court. See Woliansky v. Miller, 146 Ariz. 170, 704 P.2d 811, 813 (App. 1985) (“The determination of the reasonable amount of attorney fees was peculiarly within the discretion of the trial court.”); Costa v. Maxwell & Morgan PC, No. CV-15-00315-PHX-NVW, 2015 WL 3490115, at *6 (D. Ariz. June 3, 2015) (plaintiff stated claim that Maxwell & Morgan PC violated § 1692e(2) by “demanding attorneys’ fees not [yet] approved by a court”).