Bankruptcy Court (Cal.) Finds FDCPA Claim Pre-empted by Bankruptcy Code

In GANAS v. Wells Fargo Bank, N.A., 2014 WL 3400536 (Bkrtcy.E.D.Cal.), the Bankruptcy Court for the Eastern District of California was confronted with the question of whether a borrower could bring a Rosenthal Act claim against a mortgage servicer for filing an allegedly incorrect proof of claim in the borrower’s bankruptcy proceeding.  The Court first grappled with the question of whether a mortgage servicer could be liable as a debt collector under the Rosenthal Act.  The Court noted that most cases found that a servicer could not be liable for seeking to collect on a secured debt as the servicer seeks to foreclose on the property, not collect personally from the borrower.  However, the Court declined to follow these cases.  In coming to this conclusion, the Court reviewed the plain language of the statute which defines a debt collector as “any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection. The term includes any person who composes and sells, or offers to compose and sell, forms, letters, and other collection media used or intended to be used for debt collection, but does not include an attorney or counselor at law.”  The Court found that, “nothing in the statutory definition excludes a consumer debt from the Rosenthal Act merely because it is secured by real or personal property. Further, nothing in the statutory definition excludes a person from the Rosenthal Act merely because he, she, or it is attempting to collect a consumer debt that is for a transaction that he, she or it entered into with the consumer.”   However, the Court then dismissed the claim regardless as preempted by the bankruptcy code.  In MSR Exploration, LTD v. Meridian Oil, Inc., 74 F .3d 910 (9th Cir.1995), the 9th Circuit found that a party could not assert a state law claim to enforce violations of the bankruptcy code.  In In re McCarther–Morgan, BAP SC–08–1093KWMOJU, 2009 WL 7810817 (B.A.P. 9th Cir. Jan. 27, 2009) the BAP extended this specifically to a Rosenthal Act claim for filing a time-barred proof of claim.  The Court chose to follow these cases and dismiss the Rosenthal Act claim as preempted by the bankruptcy code.  The Court also dismissed related claims alleging other violations of non-bankruptcy law for the purported filing of a false proof of claim on the same ground.