Appeal from the Superior Court of the State of Alaska, Third Judicial District, No. 3AN-10-06356 CI Anchorage, Mark Rindner, Judge.
Appearances: Richard Ullstrom, RCO Legal-Alaska, Inc., Anchorage, for Appellants.
James J. Davis, Jr. and Daniel C. Coons, Alaska Legal Services Corporation, Anchorage, and Deepak Gupta and Jonathan E. Taylor, Gupta Beck PLLC, Washington, D.C., for Appellees.
Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.
Brett and Josephine Ambridge defaulted on their home loan. Alaska Trustee, LLC, in the business of pursuing nonjudicial foreclosures, sent the Ambridges a notice of default that failed to state the full amount due as required by the federal Fair Debt Collection Practices Act (FDCPA). The Ambridges filed suit against Alaska Trustee and its owner, Stephen Routh, seeking damages under the FDCPA and the Alaska Unfair Trade Practices and Consumer Protection Act (UTPA), as well as injunctive and declaratory relief. The superior court held that both Alaska Trustee and Routh were "debt collectors" subject to liability under the FDCPA, awarded damages under that Act, and awarded injunctive relief under the UTPA. Alaska Trustee and Routh appeal, arguing that neither of them is a debt collector as defined by federal law and that injunctive relief was improperly awarded.
We conclude that the superior court's decision that Alaska Trustee was a debt collector and liable for the violation of the FDCPA accords with the more persuasive authority, and we therefore affirm it. But while we agree with the superior court's decision that Routh was a debt collector as well, we conclude that the evidence did not support finding him liable for the violation, and we reverse the superior court's decision on this issue. Finally, we affirm the superior court's award of injunctive relief under the UTPA.
II. FACTS AND PROCEEDINGS
A. Alaska Trustee's Notices Of Default To The Ambridges
The Ambridges bought their first home in 2006. They took out a home loan from Alaska Housing Finance Corporation, secured by a deed of trust against the property; the loan was serviced by Wells Fargo Bank, N.A. The Ambridges fell behind on their payments in late 2007 and received a letter from Alaska Trustee, LLC, notifying them that they were in default and that a foreclosure sale would take place in January 2008.
The Ambridges were able to cure the default. But they fell behind again and received another notice of default from Alaska Trustee in August 2009. This time they were unable to cure the default, and their property was sold at auction in December 2009.
The 2009 notices of default are at the center of this appeal. The first one described the deed of trust and the property, and it stated that "[t]he amount of the obligation secured is $196, 712.28, plus interest, late charges, costs and any future advances." It also had a statement at the top that read: "The purpose of this letter is to collect a debt. Any information obtained will be used for that purpose." At the bottom, the notice had a lengthy paragraph entitled "Fair Debt Collection Practices Act Statement."
The amended notice, sent later, contained the same provisions and attached an additional page that stated at the bottom: "THE PURPOSE OF THIS COMMUNICATION IS TO COLLECT THE DEBT. ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE." It also provided this information for the recipient: "Your rights will clearly be affected by the foreclosure and you may wish to seek legal advice. If you have been discharged of this debt in Bankruptcy, you are not to regard this message as a demand for payment or an assertion of personal liability."
Federal law requires, among other things, that a consumer be informed of "the amount of the debt" in the initial communication about the debt or within five days thereafter. Alaska Trustee's notices to the Ambridges each stated the principal amount due, but neither stated the full amount due, as they failed to specify what was owed for "interest, late charges, costs and any future advances." Alaska Trustee conceded in the superior court that, if it is subject to the FDCPA, its notices violated that law by failing to state the full amounts due.
B. Alaska Trustee
Alaska Trustee is a limited liability company, formed in 2005 by Routh, an attorney, who continues to be the company's owner and managing member. Alaska Trustee's activities consist of "processing non-judicial foreclosures of deeds of trust on real property." This includes "ordering the title report, recording the Notice of Default in the real property records, providing notice of the foreclosure as required by statute, responding to requests from the borrower . . . for reinstatement or payoff quotes, " and handling formalities before and after foreclosure sales. If a borrower asks for information about reinstating a loan in order to avoid foreclosure, Alaska Trustee sends a reinstatement letter that gives the reinstatement amount and allows payment to the mortgage servicer or sometimes to Alaska Trustee itself. Alaska Trustee does not bring suit to recover on an underlying note, nor does it write demand letters.
The details of Routh's involvement with Alaska Trustee are also important to the resolution of this appeal; they are discussed below in section IV.B.
C. Proceedings In The Superior Court
The Ambridges filed a complaint against Alaska Trustee and Routh alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) and Alaska's Unfair Trade Practices and Consumer Protection Act (UTPA). They asked for injunctive and declaratory relief, requiring the defendants to include the actual amount of the debt owed in their first communications with consumers; they also requested damages, costs, and full attorney's fees. The superior court ruled on a number of dispositive motions. As relevant to this appeal, the superior court held that both Alaska Trustee and Routh were "debt collectors" subject to 15 U.S.C. § 1692g(a). It held that a violation of the FDCPA translates into an "unfair or deceptive" act or practice prohibited by the UTPA. It also held that the Ambridges were entitled to a private injunction under AS 45.50.535(a), requiring Alaska Trustee to include in its notices of default the information required by federal law. However, it dismissed the claim for damages under the UTPA, on grounds that the Ambridges failed to demonstrate any ascertainable loss. The court also dismissed the UTPA injunction claims against Routh on grounds that he was never provided with pre-suit notice of his potential violations as required by AS 45.50.535.
The superior court entered a final judgment awarding the Ambridges $4, 000 in damages under the FDCPA. Alaska Trustee and Routh appeal the superior court's adverse decisions, arguing that (1) Alaska Trustee is not a "debt collector" subject to the FDCPA; (2) Routh is not a "debt collector" subject to the FDCPA; and (3) the Ambridges were not entitled to injunctive relief under the UTPA.
III. STANDARDS OF REVIEW
"We review a grant of summary judgment 'de novo, affirming if the record presents no genuine issue of material fact and if the movant is entitled to judgment as a matter of law.' " We "view the facts in the light most favorable to the non-moving part[ies], " drawing "all reasonable  inferences" in their favor. We review questions of law de novo, "apply[ing] our independent judgment. . ., 'adopting the rule of law most persuasive in light of precedent, reason, and policy.' " Similarly, "[w]e apply our independent judgment in matters of statutory interpretation, " interpreting "the statute in question by looking to the meaning of the statute's language, its legislative history, and its purpose."
A. The Superior Court Did Not Err In Determining That Alaska Trustee Is A "Debt Collector" Under § 1692a(6) Of The FDCPA.
The FDCPA was enacted in 1977 "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." The FDCPA defines a "debt" as a consumer obligation to pay money, arising out of a transaction the subject of which is "primarily for personal, family, or household purposes." "Debt collector" is defined, in relevant part, as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." The definition has one other sentence relevant here: "For the purpose of section 1692f(6) of this title, ['debt collector'] also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests." Section 1692f(6), in turn, describes violations of the FDCPA to include
[t]aking or threatening to take any nonjudicial action to effect dispossession or disablement of property if . . . (A) there is no present right to possession of the property claimed as collateral through an enforceable security interest; (B) there is no present intention to take possession of the property; or (C) the property is exempt by law from such dispossession or disablement.
Alaska Trustee disputes this conclusion. It argues first that recovering collateral is a fundamentally different activity than seeking the payment of money, and that the FDCPA is concerned only with the latter. It highlights the distinction between judicial foreclosures - which may result in a deficiency judgment for the payment of money - and nonjudicial foreclosures, which result only in loss of the property. It cites cases holding that the processing of nonjudicial foreclosures does not constitute debt collection for purposes of the FDCPA. And it contends that its position is supported by the FDCPA's definition of "debt collector, " which it interprets to mean that an entity that enforces security interests can only be a debt collector for purposes of § 1692f(6) - which prohibits conduct "[t]aking or threatening to take any nonjudicial action to effect dispossession... of property" when there is no present right or intention to do so - a category that does not include Alaska Trustee.
1. The FDCPA does not exclude nonjudicial foreclosure from the debt-collection activities it addresses.
Interpreting the FDCPA liberally to effectuate its remedial purposes, as the superior court did,  we join those courts holding that mortgage foreclosure, whether judicial or nonjudicial, is debt collection covered by the Act. Our holding relies first on the Act's broad language. The definition of "debt" plainly encompasses a home mortgage, which is usually the most significant of a consumer's debts, and the definition does not differentiate between consumer debts that are secured and those that are not. The Act's definition of "debt collector" is similarly broad, covering regular collection efforts that are either direct or indirect. As to the first question raised by this case - whether the nonjudicial foreclosure of a security interest is a method of "collect[ing] or attempt[ing] to collect, directly or indirectly, " a "debt, " that is, a consumer's "obligation . . . to pay money" - we agree with the Sixth Circuit's common-sense answer: "In fact, every mortgage foreclosure, judicial or otherwise, is undertaken for the very purpose of obtaining payment on the underlying debt, either by persuasion (i.e., forcing a settlement) or compulsion (i.e., obtaining a judgment of foreclosure, selling the home at auction, and applying the proceeds from the sale to pay down the outstanding debt)."
That Congress intended the FDCPA to apply to home mortgages is evident not just from the Act's broad language but also from its legislative history. The Senate Report on the bill observed, for example, that "[t]he collection of debts, such as mortgages and student loans, by persons who originated such loans" is not debt collection, implying that the collection of mortgages by persons who did not originate such loans is debt collection. The Senate Report further stated that the activities of "mortgage service companies" are not covered by the law "so long as the debts were not in default when taken for servicing, " implying, again, that the activities of mortgage service companies are covered if they otherwise meet the statutory definition. And as originally enacted in 15 U.S.C. § 1692l, the FDCPA's "Administrative enforcement" section assigned enforcement of the FDCPA not only to the Federal Trade Commission, but also to the Federal Home Loan Bank Board under "section 5(d) of the Home Owners Loan Act of 1933, section 407 of the National Housing Act, and sections 6(i) and 17 of the Federal Home Loan Bank Act, . . . in the case of any institution subject to any of those provisions." The Federal Home Loan Bank Board was created by the Federal Home Loan Bank Act of 1932 to oversee Federal Home Loan Banks, which in turn were created to ensure that local lenders had funds available to finance home mortgages.Although none of the cited laws are concerned exclusively with home mortgages, that is their primary focus; their specific mention in the FDCPA shows at least Congress's awareness that unfair debt collection practices occurred in the same regulated arena.
The FDCPA's list of enforcement agencies was most recently modified and simplified under the Dodd-Frank Act; it now charges "the appropriate Federal banking agency" with enforcement with respect to FDIC-insured banks and "State savings associations, " and it charges the newly-created Consumer Financial Protection Bureau (the Bureau) with enforcement "with respect to any person subject to this subchapter."It is the Bureau's statutory duty to "regulate the offering and provision of consumer financial products or services under the Federal consumer protection laws, " and Dodd- Frank requires that courts defer to the Bureau's interpretation of federal consumer financial laws "as if the Bureau were the only agency ...