June 22, 2021

Volume XI, Number 173

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Court Of Appeal Finds Mortgage Servicer To Be A Debt Collector

Rosenthal Fair Debt collection Practices Act defines a "debt collector" as "any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engaged in debt collection".  Cal. Civ. Code § 1788.2(c).  "Debt collection" under the Rosenthal act means "any act or practice in connection with the collection of consumer debt".  Cal. Civ. Code § 1788.2(b) ("consumer debt" is defined in § 1788.2(f)).  The Rosenthal Act doesn't say whether it applies to persons attempting to collect mortgage debt and the federal courts have split on the question.  

Yesterday, the California Court of Appeal held that the Rosenthal Act's definition does apply to a mortgage servicer that engages in debt collection practices in attempting to obtain repayment of mortgage debt.  Davidson v. Seterus, Inc., 2018 Cal. App. LEXIS 202.  The case is likely to be of concern for consumer mortgage servicers that may now find themselves to be the target of plaintiffs alleging violations of the many "thou shalt nots" written into the Rosenthal Act.

Parent companies may also be dismayed by the Court of Appeal's holding that the plaintiff had stated a cause of action against the defendant's parent corporation for violations of the Rosenthal Act merely by alleging generally that the parent and subsidiary acted as agents for each other and that they aided and abetted each other.  

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume VIII, Number 73
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Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

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