Foreclosure Is Not Debt Collection Under the FDCPA in the 11th Circuit

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The United States District Court for the Middle District of Florida has issued an opinion collecting 11th Circuit precedent and reiterating that foreclosure or other enforcement of a security interest, without more, is not “collection of any debt” under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692-1692p (“FDCPA”). While an enforcement of a security interest comingled with an attempt to collect payment on the underlying debt may fall under the FDCPA, mere foreclosure or other security enforcement does not. Gillis v. Deutsche Bank Trust Company Americas, 2015 WL 1345309 (M.D. Fla., Mar. 23, 2015).

Plaintiff Gillis had executed a promissory note, secured by his home, which was assigned to the bank. When Gillis defaulted on the note, the bank and its attorneys initiated a foreclosure action in state court. Gillis sued the bank and its attorneys in a separate action for violating the FDCPA on the basis of alleged misidentification of the bank, filing of false documents, and other actions taken in the underlying foreclosure action.

On the defendants’ motion to dismiss, the Court found that none of the foreclosure activity alleged constituted collection activity under the FDCPA, and dismissed the FDCPA claims, noting several interrelated holdings from the U.S. Court of Appeals for the 11th Circuit. In Warren v. Countrywide Home Loans, Inc., 342 F. App’x 458 (11th Cir. 2009), the 11th Circuit held that “enforcement of a security interest through the foreclosure process is not debt collection for the purposes of [the FDCPA].” Id. at 460. In Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211 (11th Cir. 2012), the Court stated that if a foreclosure notice did not contain an attempt to collect on the debt secured by the mortgage, the FDCPA would not apply, but if the notice also demanded payment of the debt, the notice would be collection activity under the FDCPA and be subject to its requirements to avoid false representations. The 11th Circuit further reiterated that holding in Birster v. American Home Mortgage Servicing, Inc., 481 F. App’x 579 (11th Cir. 2012), stating that an entity could both enforce a security interest and collect a debt, finding that the creditor’s law firm attempted to do both. Finally, in Dunavant v. Sirote & Permutt, P.C., 2015 WL 525536 (11th Cir. Feb. 9, 2015), the Court ruled that the Warren, Reese, and Birster holdings are not in conflict. Reiterating Warren, the Court explained that enforcement of a security interest alone is not debt collection for purposes of the FDCPA.

Given the 11th Circuit’s precedent, the District Court was compelled to dismiss Gillis’s FDCPA claims. Gillis failed to allege any act that would constitute debt collection under the FDCPA. None of the foreclosure actions by the bank’s attorneys were directed at Gillis, nor did any of those actions include any demand for payment. As the only activities were directed solely to enforcing the bank’s security interest through the state court foreclosure action, Gillis’s FDCPA claims failed as a matter of law.

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