In Best v. Ocwen Loan Servicing (May 21, 2021) ___Cal.App.5th___ [2021 Cal. App. LEXIS 423] the court rejected arguments by a mortgage loan servicer and beneficiary that the Rosenthal Fair Debt Collection Pracitices Act did not apply to non-judicial foreclosures, relying on Obduskey v. McCarthy & Holthus LLP (2019) 139 S.Ct. 1029 and Davidson v. Seterus, Inc. (2018) 21 Cal.App.5th 283 in finding a mortgage deed of trust is “consumer” debt within the meaning of the Rosenthal Act.
The court also rejected the argument that Davidson involved different conduct beyond what is authorized in the statute for non-judicial foreclosures:
In a fallback argument, the Bank seeks to distinguish the conduct involved in Davidson, such as harassing phone calls (Davidson., supra, 21 Cal.App.5th at pp. 291-292), from conduct authorized by the foreclosure statutes, such as recording a document. Like Chicken Little, it vaguely suggests the sky will fall if the Rosenthal Act is applied so broadly. However, it suggests no statutory basis for such a distinction. Moreover, it identifies no actual conflict between the foreclosure statutes and the Rosenthal Act. For example, while the foreclosure statutes authorize the recordation of a substitution of trustee (Civ. Code, § 2934a, subd. (a)(1)), they do not authorize or require the substitution of trustee to contain a “false representation.” (See 15 U.S.C.A. § 1692e(10); see also Civ. Code, § 1788.17 [incorporating 15 U.S.C.A. § 1692e].)
And the court also rejected the argument that holding the Rosenthal Act applied to non-judicial foreclosures would prohibit the trustee from giving the notice of sale:
At oral argument, counsel for the Bank noted that the FDCPA, as incorporated by the Rosenthal Act, prohibits a debt collector (with some exceptions) from communicating “in connection with the collection of any debt, with any person other than the consumer . . . .” (15 U.S.C.A. § 1692c(b).) Counsel argued that this would prevent a trustee from giving notice of sale. (See Civ. Code, §§ 2924, subd. (a)(3), 2924f.) However, the provision of the Rosenthal Act incorporating the FDCPA states, “every debt collector collecting or attempting to collect a consumer debt shall comply with” the FDCPA. (Civ. Code, § 1788.17.) As already discussed, under Obduskey, a business engaged in nonjudicial foreclosure proceedings is not a “debt collector” within the meaning of the FDCPA and therefore is not forbidden to communicate with third parties. Thus, even though such a business is a “debt collector” under the Rosenthal Act, it can contact third parties without violating the FDCPA, and hence without violating the Rosenthal Act. We therefore conclude that a nonjudicial foreclosure can be “debt collection” by a “debt collector” so as to trigger the protections of the Rosenthal Act.
Although this holding does not directly address the recent 11th Circuit decision which held a debt collector violated the FDCPA by sharing a debtor’s information with a vendor that sent dunning letters, it seems to implicitly hold the opposite even though a trustee is typically an outside vendor and a loan servicer must share information about the customer with the trustee. Again, the court here reasoned that a business engaged in nonjudicial foreclosure proceedings is not a debt collector within the meaning of the FDCPA and therefore is not forbidden to communicate with third parties under 15 U.S.C. § 1692c(b). The court reached this conclusion despite the fact that Rosenthal Act does not incorporate the FDCPA’s definitions in 15 U.S.C. § 1692a because the court held that even though such a business may be a debt collector under the more expansive definition of the Rosenthal Act, “it can contact third parties without violating the FDCPA, and hence without violating the Rosenthal Act.“