Making a Case for Defining Debt

Tenth Circuit adds to conflicting body of case law on non-judicial foreclosures

With a recent ruling on non-judicial foreclosures, 10th Circuit Court of Appeals added one more voice to the conflicting opinions from other federal circuits that may eventually have the U.S. Supreme Court weighing in.

In Obduskey v. Wells Fargo, the court ruled Jan. 19 that the Fair Debt Collection Practices Act does not apply to non-judicial foreclosure proceedings in Colorado. In the underlying case, Dennis Obduskey defaulted on a home loan serviced by Wells Fargo, which hired the law firm McCarthy and Holthus to pursue a non-judicial foreclosure. The firm sent Obduskey a letter to notify him of the proceedings. Although Obduskey responded with a letter disputing the debt, McCarthy continued with initiating the foreclosure in 2015.

Obduskey brought a number of claims against the bank, including violations of the FDCPA and the Colorado Consumer Protection Act, and commencing an unlawful collections action. The district court granted motions to dismiss the claims, ruling Wells Fargo was not liable because it began servicing the loan prior to Obduskey’s default. The district court also ruled McCarthy did not classify as a “debt collector” because “foreclosure proceedings are not a collection of a debt.”

The 10th Circuit upheld the district court’s dismissals. Although the ruling settles the question in its own jurisdiction, other courts have not come to a consensus on the case law.

To read this story and other complete articles featured in the February 5, 2017 print edition of Law Week Colorado, copies are available for purchase online.