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Alaska Trustee, LLC v. Ambridge

Supreme Court of Alaska

March 4, 2016

ALASKA TRUSTEE, LLC and STEPHEN ROUTH, Appellant,
v.
BRETT AMBRIDGE and JOSEPHINE AMBRIDGE, Appellees

          Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Mark Rindner, Judge. Superior Court No. 3AN-10-06356 CI.

         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. WINFREE, Justice, with whom STOWERS, Justice, joins, dissenting.

          OPINION

         MAASSEN, Justice.

         I. INTRODUCTION

         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.[1] 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." [2]

         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.[3] 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.'" [4] We " view the facts in the light most favorable to the non-moving part[ies]," [5] drawing " all reasonable [] inferences" in their favor.[6] 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.'" [7] Similarly, " [w]e apply our independent judgment in matters of statutory interpretation," [8] interpreting " the statute in question by looking to the meaning of the statute's language, its legislative history, and its purpose." [9]

         IV. DISCUSSION

         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." [10] 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." [11] " 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." [12] 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." [13] 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.

         The superior court noted a split in the way courts apply these sections: some hold that enforcers of security interests are debt collectors as long as they meet the general definition of § 1692a(6),[14] while others hold that enforcers of security interests are debt collectors only for purposes of § 1692f(6).[15] Recognizing that the FDCPA, as a remedial statute, should be liberally construed, the superior court followed the first line of authority, determining that an entity pursuing nonjudicial foreclosure is a debt collector subject to the FDCPA.

         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.[16] It cites cases holding that the processing of nonjudicial foreclosures does not constitute debt collection for purposes of the FDCPA.[17] 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,[18] 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" [19] 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.[20] 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)." [21]

          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.[22] 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.[23] And as originally enacted in 15 U.S.C. § 1692 l, 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." [24] 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.[25] Although none of the cited laws are concerned exclusively with home mortgages, that is their primary focus; [26] 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." [27] 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," [28] 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 authorized to apply, enforce, interpret, or administer" such laws.[29] And as is described further below, the Bureau is adamant in its view that home mortgage foreclosures are subject to the FDCPA.

         In Glazer v. Chase Home Finance, the Sixth Circuit found further support for this interpretation of the Act in § 1692i.[30] That provision requires that a debt collector who is bringing " an action to enforce an interest in real property securing the consumer's obligation" shall " bring such action only in a judicial district . . . in which such real property is located." [31] As the court noted in Glazer, § 1692i, limited to " debt collectors," " suggests that filing any type of mortgage foreclosure action, even one not seeking a money judgment on the unpaid debt, is debt collection under the Act." [32]

         2. We are persuaded by the rationale of those courts holding that the FDCPA applies to mortgage foreclosures.

         The Sixth Circuit in Glazer found persuasive the decision of the Fourth Circuit in Wilson v. Draper & Goldberg, P.L.L.C.,[33] as do we. Wilson has a factual background similar to that presented here. The defendant law firm was retained by a bank to foreclose on the plaintiff's mortgage.[34] It sent a letter advising the plaintiff of her default and its plan to commence foreclosure proceedings in the near future; the letter further advised that it was " written pursuant to the provisions of the [FDCPA]" and was " an attempt to collect a debt" but that the law firm was not a " debt collector[]." [35] In a follow-up letter, the law firm responded to the plaintiff's request for the amount necessary to reinstate the loan and explained how a reinstatement payment should be made.[36]

         The plaintiff sued for violations of the FDCPA: specifically, " failing to verify the debt, . . . continuing collection efforts after [the plaintiff] had contested the debt, and . . . communicating directly with her when they knew she was represented by counsel." [37] The district court granted summary judgment to the defendants, concluding that " [t]rustees foreclosing on a property pursuant to a deed of trust are not 'debt collectors' under the [Act]." [38]

         But the Fourth Circuit reversed. It first rejected the defendants' argument that they had not acted in connection with a " debt" :

Defendants notified [the plaintiff] that she was in " default in [her] Deed of Trust Note payable to the Lender . . . [and] that the Lender [had] accelerated the debt." Defendants informed [the plaintiff] that her failure to make mortgage payments entitled Chase to immediate payment of the balance of her loan, as well as fees, penalties, and interest due. These amounts are all " debts" under the Act, because they were " obligation[s] . . . to pay money arising out of a transaction in which the . . . property . . . which [is] the subject of the transaction [is] primarily for personal, family, or household purposes." [39]

         The court next rejected the defendants' argument that the " 'debt' ceased to be a 'debt' once foreclosure proceedings began." [40] It held that the debt remained a debt, and that the defendants' " actions surrounding the foreclosure proceeding were attempts to collect that debt." [41] It observed that accepting the defendants' contrary argument " would create an enormous loophole in the Act immunizing any debt from coverage if the debt happened to be secured by a real property interest and foreclosure proceedings were used to collect the debt," and it saw " no reason to make an exception to the Act when the debt collector uses foreclosure instead of other methods." [42] Finally, the court noted the law firm's provision of a reinstatement amount, payable to the law firm directly by cashier's check, as additional evidence that the law firm was a debt collector attempting to collect a debt.[43]

         The Colorado Supreme Court reached the same conclusion in Shapiro & Meinhold v. Zartman.[44] Liberally construing the FDCPA's definition of " debt collector" in light of the Act's remedial purposes, the court held that the defendants in that case -- attorneys pursuing judicial foreclosure proceedings -- were " not exempt [from coverage under the Act] merely because their collection activities [were] primarily limited to foreclosures." [45] Noting that the FDCPA's definition of " debt collector includes one who 'directly or indirectly' engages in debt collection activities on behalf of others," the court concluded: " Since a foreclosure is a method of collecting a debt by acquiring and selling secured property to satisfy a debt, those who engage in such foreclosures are included within the definition of debt collectors if they otherwise fit the statutory definition." [46]

         We agree that foreclosing on property, selling it, and applying the proceeds to the underlying indebtedness constitute one way of collecting a debt -- if not directly at least indirectly. The language of the Amended Notice of Default at issue here supports this conclusion. Besides its express declaration that " [t]he purpose of this letter is to collect a debt" and its inclusion of a " Fair Debt Collection Practices Act Statement," [47] the Notice states " [t]he amount of the obligation secured" (" $196,712.28, plus interest, late charges, costs and any future advances" ) and gives notice that the trustee has elected to sell the property " and apply the proceeds to the indebtedness." It asserts that " [ i ] f you have been discharged of this debt in Bankruptcy, you are not to regard this message as a demand for payment" (emphasis added), strongly implying that absent a discharge in bankruptcy the letter is a demand for payment. And as in Wilson, the follow-up letter states the amount of money necessary to reinstate the loan and gives payment instructions for reinstatement.[48] Whether through reinstatement or less directly through foreclosure sale and recovery of the proceeds, " [t]here can be no serious doubt that the ultimate purpose of [this] foreclosure is the payment of money." [49]

         3. The arguments against holding that the FDCPA applies to mortgage foreclosures are not persuasive.

         For its different interpretation of the FDCPA, Alaska Trustee relies in part on the reasoning of the federal district court in Hulse v. Ocwen Federal Bank, FSB, which concluded that " [t]he FDCPA is intended to curtail objectionable acts occurring in the process of collecting funds from a debtor," whereas " foreclosing on a trust deed is an entirely different path." [50]

         According to the court in Hulse, " [p]ayment of funds is not the object of the foreclosure action. Rather, the lender is foreclosing its interest in the property." [51] Alaska Trustee reasons further that the FDCPA is not meant to protect the possessor of secured property in the same way it protects other debtors: while it may be futile to harass a debtor for the repayment of funds the debtor does not have, the possessor of secured property can avoid harassment by simply returning the property (and therefore needs less protection from harassment).[52]

         We do not find this rationale persuasive. As the Ambridges point out, a home mortgage is, for most individuals, their largest and most long-term debt and the most likely to be affected at some point by unforeseen financial difficulties. The lender's foreclosure on its security -- the home -- is likely to be a devastating prospect for the homeowner, who may therefore be particularly susceptible to abusive collection practices.[53] If Congress had intended to exclude such a substantial segment of consumer debt from the reach of the FDCPA, it could easily have said so explicitly.[54] Indeed, the Act's definition of " debt collector" lists six specific exclusions from the definition, none of which encompasses the enforcers of mortgages or other security interests.[55] Had Congress intended to exclude such a significant category from the Act's coverage, the list of exclusions would have been the obvious place for it to do so.

         The dissent finds determinative the distinction between a consumer's obligation to pay money and a deed of trust, which is not itself an obligation to pay money but rather a mechanism by which property is transferred in the event the money is not paid.[56] But in the past we have taken a more functional approach. In Dworkin v. First National Bank of Fairbanks [57] we considered whether an action to foreclose a mortgage was governed by a ten-year statute of limitations for actions to enforce real property liens or instead by the six-year statute of limitations for actions to collect the underlying debt. We recognized two schools of thought on the issue but concluded that " [i]n our view the sounder result is reached by those authorities which hold that in the absence of a controlling statute the foreclosure action is subject to the same period of limitations as the underlying debt." [58] We relied on language the Washington Supreme Court had quoted with approval from a Colorado case:

In Colorado, whether the form of security be a mortgage or a deed of trust, the debt is the principal thing. The security is a mere incident. . . . An action to foreclose a mortgage or deed of trust is simply, in effect, an action to collect the debt, to secure the payment of which was the sole purpose of its execution; and, when the statute after the lapse of a certain time bars an action upon the debt for its collection, we believe it includes all actions seeking to effectuate that purpose.[59]

         This description continues to reflect the real nature of a home mortgage foreclosure: " simply, in effect, an action to collect the debt."

         We also disagree with the dissent's position that Alaska Trustee cannot be held liable under the FDCPA for sending the notice that commences a non-judicial foreclosure under Alaska law because the notice " did not attempt to collect money" and because it is statutorily required.[60] As explained above, we conclude that a reasonable consumer would read the notice as a demand for payment; the debtor can avoid the threatened action only by paying the debt. And that a notice is required in order to advance a state foreclosure proceeding does not mean it cannot at the same time be an attempt to collect a debt and thus subject to the FDCPA. In Romea v. Heiberger & Associates, for example, a landlord's law firm pursuing evictions was required by New York law to give a three-day notice of the amount of past-due rent as the first step in a " summary proceeding to recover possession of real property." [61] The law firm argued that the purpose of the repossession process was " not debt collection, but rather 'a means of quickly adjudicating disputes over rights of possession of real property,'" to which the amount owed by the tenant was merely " incidental." [62] The court rejected these arguments in language equally relevant here: " Although [the law firm] is correct that the notice required by [the summary eviction law] is a statutory condition precedent to commencing a summary eviction proceeding that is possessory in nature, this does not mean that the notice is mutually exclusive with debt collection." [63] The Consumer Financial Protection Bureau takes the same position.[64]

         Finally, we disagree with the dissent's warning that " making deed of trust trustees . . . 'debt collectors' will wreak havoc" on the non-judicial foreclosure process because the FDCPA allows consumers to ask debt collectors to cease contact and to validate disputed debts, steps the dissent predicts " will grind non-judicial deed of trust foreclosures to a halt." [65] But the FDCPA specifically allows continued communication with a consumer " where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy," [66] an exception that applies to the types of notice provided during nonjudicial foreclosure proceedings.[67] And the debt validation procedure contemplated by the FDCPA can be as simple as mailing the consumer a copy of " verification of the debt or a copy of a judgment, or the name and address of the original creditor," [68] a step we doubt a trustee would have difficulty taking if asked.[69]

         4. Mortgage foreclosure is not governed by section 1692f(6) alone.

         Finally, we necessarily reject Alaska Trustee's other definitional argument, also advanced by the dissent[70]: that under § 1692a(6), entities enforcing security interests are " debt collectors" only for purposes of § 1692f(6), i.e., if they are " [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. We note again the structure of the definitional section, which defines " debt collector" to include a person in a business " the principal purpose of which is the collection of any debts" and a person who " regularly collects or attempts to collect" debts due another.[71] This general definition is explicitly expanded, not qualified, by the phrase, " For the purpose of section 1692f(6) of this title, such term 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." [72] The phrase " also includes" cannot reasonably be read to eliminate persons who would otherwise be included in the Act's broad definition.

         We do agree with the dissent's observation that, structurally, the definition differentiates between businesses the principal purpose of which is " the collection of any debts" and those the principal purpose of which is " the enforcement of security interests." We agree that a business cannot be both. But a business whose principal purpose is not " the collection of any debts" may still be a debt collector under the general definition because, though its " principal purpose" is something else, it " regularly collects or attempts to collect" debts due another. Such a business may have as its principal purpose the enforcement of security interests. On the other hand, a business may enforce security interests as its principal purpose but not regularly collect debts; such a business does not satisfy the general definition and is a " debt collector" for purposes of section 1692f(6) only.

         To say that mortgage foreclosures are debt collection is not to say, as the dissent would have it, that all enforcement of security interests is debt collection, thus making the definition's reference to security interests redundant.[73] The FDCPA defines " debt" as a consumer's " obligation . . . to pay money." [74] The documents at the heart of this case, though they certainly serve notice purposes in the foreclosure process, also plainly reflect attempts to collect a debt. They are replete with references to " the debt," " the indebtedness," and " the obligation." No reasonable consumer could read the Notice of Default and not understand that, as the Notice plainly states, " The purpose of this letter is to collect a debt." But the enforcement of security interests will not always entail these obvious debt-collection measures. A repossession agency, for example, may take automobiles off the street and have no regular practice of communicating with debtors in a way that a reasonable consumer would interpret as prompting the payment of money -- indeed, such businesses may not communicate with debtors at all.[75] Such businesses are brought into the " debt collector" definition for the narrow prohibitive purposes of § 1692f(6) only. But unlike such entities, Alaska Trustee not only enforces security interests; it also attempts to collect debts under the ordinary meaning of those words.

         This was the conclusion of the Sixth Circuit in Glazer : the third sentence of § 1692a(6) is a statement of inclusion, not exclusion. That is, it does not operate to exclude an entire category of persons and entities who would otherwise be included in the definition, but rather " simply 'make[s] clear that some persons who would be without the scope of the general definition are to be included where § 1692f(6) is concerned.'" [76] The Sixth Circuit in Glazer concluded that the sentence probably brought into the " debt collector" definition only " repossession agencies and their agents," noting that " we can think of no others whose only role in the collection process is the enforcement of security interests." [77] But even the limited expansion of the definition to " repossession agencies and their agents" serves a real purpose. A company in the business of repossessing vehicles may well have no regular practice of communicating with debtors that would subject the company to the myriad provisions of the Act governing the allowable content of such communications; [78] but the definitional section clarifies that even such an entity is prohibited by the Act from repossessing or threatening to repossess the property if there is " no present right" or " present intention" to take it or if the property is exempt from repossession.[79]

         We recognize the split in authority regarding the effect of § 1692f(6) on the " debt collector" definition. Alaska Trustee relies on Derisme v. Hunt Leibert Jacobson P.C., which adopted the conclusion of two federal courts of appeal and the Federal Trade Commission (FTC) that " the purposeful inclusion of enforcers of security interests for one section of the FDCPA [§ 1692f(6)] implies that the term debt collector does not include an enforcer of security interests for any other sections of the FDCPA." [80] But both of the cited federal circuits -- the Sixth and the Eleventh -- have more recently decided the issue the other way, holding that an enforcer of security interests may also be a debt collector subject to the broader provisions of the FDCPA so long as it meets the general definition.[81] And Derisme 's reliance on the FTC commentary[82] appears to have been misplaced. The commentary provides, " Because the FDCPA's definition of 'debt collection' includes parties whose principal business is enforcing security interests only for . . . [ § 1692f(6)] purposes, such parties ( if they do not otherwise fall within the definition ) are subject only to this provision and not to the rest of the FDCPA." [83]

         As noted above, the Dodd-Frank Act gave primary authority for enforcement of the FDCPA to the Consumer Financial Protection Bureau, which has been forceful about the need to ensure that mortgage foreclosure proceedings are not exempted from the FDCPA's protections. In its statutorily mandated annual report to Congress on the Fair Debt Collections Act in 2013, the Bureau explained why it had filed an amicus brief in support of the consumers in Birster v. American Home Mortgage Servicing, Inc.,[84] a case recently decided by the Eleventh Circuit:

Some courts have unduly restricted the FDCPA's protections by rejecting challenges to harmful practices occurring in the context of foreclosure proceedings. In particular, courts have concluded that businesses involved in enforcing security interests are not " debt collectors" subject to most of the Act's requirements, and that activity surrounding foreclosure or other enforcement of security interests is not debt collection covered by the Act. These decisions have left consumers vulnerable to harmful collection tactics as they fight to save their homes from foreclosure.[85]

         The court in Birster held that a loan servicer that advised the debtors it would foreclose on their home unless they cured their default by paying a certain sum within 30 days " may be liable under the FDCPA beyond § 1692f(6) even though it was also enforcing a security interest." [86] The Bureau's amicus brief in Birster was followed by another in Ho v. ReconTrust Co., in which the Bureau again advanced the same interpretations of the Act.[87]

         Ultimately, while the provisions of the FDCPA could certainly be clearer on the question presented in this case, we conclude that the meaning we find in them is most consistent with their language, liberally interpreted in light of the Act's remedial purposes. The superior court was correct in ruling that Alaska Trustee, through its processing of nonjudicial foreclosures, is a " person who uses . . . the mails in any business the principal purpose of which is the collection of any debts," is therefore a " debt collector" as defined by § 1692a(6), and is subject to the broader provisions of the FDCPA.[88]

         B. The Superior Court Did Not Err In Determining That Routh Is A " Debt Collector" Under The FDCPA, But The Evidence Did Not Support Its Conclusion That Routh Was Liable For The Violation At Issue.

         We also affirm the superior court's decision that Steven Routh, Alaska Trustee's sole owner and shareholder, was a " debt collector" subject to liability under the FDCPA, but we disagree with the superior court's conclusion that Routh was therefore necessarily liable for the violation at issue.

         Alaska Trustee argues that Routh cannot be held liable under the FDCPA unless he personally participated in a specific violation of the Act. Alaska Trustee focuses on the statutory section Routh is alleged to have violated, which states in relevant part: " Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication . . ., send the consumer a written notice containing . . . the amount of the debt . . . ." [89] According to Alaska Trustee, " [t]he statute clearly places the burden of providing the amount of the debt on the debt collector who sent the initial communication to the debtor[,] . . . the Alaska Trustee employee who mailed the Notice of Default, and Alaska Trustee itself." Holding Routh liable for the business's debt-collection practices, Alaska Trustee argues, is an assertion of vicarious liability, contravening state law intended to insulate members of limited liability companies from individual liability for corporate acts.[90]

         Alaska Trustee urges that we instead apply the Ninth Circuit's analysis in Cruz v. International Collection Corp., in which the court considered the FDCPA liability of the sole owner, officer, and director of a debt collecting company.[91] The court observed in Cruz that merely because an individual meets the definition of " debt collector" does not mean he has violated the FDCPA: " [T]he FDCPA does not prohibit merely qualifying as a debt collector but instead prohibits debt collectors from taking certain specific actions." [92] Determining individual liability under the FDCPA is therefore a two-step analysis, in which courts ask " 1) whether the individual qualifies as a debt collector, and 2) whether that individual has taken an action that violates the FDCPA." [93] We agree that this two-step analysis is appropriate.

         Again, " debt collector" is relevantly defined as " any person who uses . . . 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 another." [94] We agree that a person with a mere ownership interest in a debt collection business is unlikely to fall within this definition. [95] But the facts of this case go beyond mere ownership.

         The evidence showed that Routh was Alaska Trustee's sole owner and managing member and had been since the company's creation in 2005. He was ultimately in charge of the company's operations, though he attested that in recent years his management was " at the enterprise level of client relations, staffing decisions, strategic planning and the like" and that he often spent " only a few hours a week, if any," at Alaska Trustee's offices. The day-to-day manager, Athena Vaughn, reported to him and in turn supervised the other managerial employee, Rose Santiago. Routh testified that Vaughn and Santiago were " the operational piece" of the company's management, but they did not have access to the business's financial information. As the managing member he was in " [f]requent contact with [Vaughn], both [by] phone and in person," and " [i]ssues that [were] important [got] elevated [to him] very quickly." He had the final say on the language of forms and correspondence, though he was likely to get involved only when " made aware that there are issues that go beyond just the mere formalities or issues that need counsel involved." But given what Routh perceived as the high-risk legal environment -- in which " we need to be very careful on what is said and parse things very closely" in order to avoid litigation -- he testified that " most changes [to collection forms] would either be touched on by me and reviewed by me or . . . more typically, I think, counsel."

         In sum, Routh's involvement in the business, though usually distant, was that of a high-level manager with real decisional authority, not an absentee owner or shareholder whose only interest was financial. These undisputed facts are sufficient to establish that Routh is a person who " regularly collects or attempts to collect, directly or indirectly, debts owed . . . or due another" [96] and is therefore a " debt collector" for purposes of the FDCPA.[97]

         This does not answer the second question identified in Cruz -- whether Routh, as a debt collector, " has taken an action that violates the FDCPA." [98] The court in Cruz did not need to answer this question at length, since the individual under discussion " himself was personally involved in at least one violation of the FDCPA." [99] Here, the parties and the superior court did not address Routh's liability in terms of Cruz 's two-step analysis: their apparent assumption was that if Routh was a " debt collector" as defined in the Act, he was liable for the alleged violation. Many courts seem to follow a similar analysis. The superior court in this case cited Del Campo v. American Corrective Counseling Service, Inc., which noted three measures other courts have used to determine whether individuals should be held liable: they " (1) materially participated in collecting a debt, (2) exercise[d] control over the affairs of [a debt collection] business, or (3) were regularly engaged, directly and indirectly, in the collection of debts." [100] The second and third of these tests seem to conflate the two questions of (1) whether the individual is a " debt collector" and, (2) if so, whether he violated the FDCPA. We therefore find it most helpful to frame the issue -- whether the individual has " taken an action that violates the FDCPA" -- in terms of whether the individual " materially participated" in the specific violation alleged.[101]

         The violation at issue here is the debt collector's failure to include the full amount due in the initial communication to the debtor or within five days of it.[102] The Act provides that it is the " debt collector" who " shall" provide this information.[103] It is undisputed that this information was not provided.

         But the undisputed facts show that Routh did not " materially participate" in creating the notices of default that the Ambridges allege were in violation of the FDCPA. The superior court concluded, on Routh's undisputed testimony, that Routh " did not draft, review, approve or sign the Notice of Default" sent to the Ambridges.[104] Routh testified that while " [t]he creation of forms and so forth might have my involvement," most foreclosure documents were drafted without it, including the form at issue here. He testified that the notices of default could be changed without his approval unless he was made aware that there were issues that " go beyond just the mere formalities or [were] issues that need counsel involved." Routh testified that Alaska Trustee did change its forms in response to the superior court's rulings on the violation alleged in this case; he testified further that while he was " aware of" the changes made, he did not make them himself, and that he later approved them based on the recommendation of counsel. Routh also testified that any potential problem with the notices of default that Alaska Trustee served on the Ambridges never " crossed [his] radar" before the superior court's rulings.[105]

         We conclude that these facts are insufficient to show that Routh materially participated in the specific violation of the FDCPA that the Ambridges are pursuing. Under the two-step inquiry of Cruz, Routh is a " debt collector" but is not individually liable for the violation. We therefore affirm in part, and reverse in part, the superior court's decision of this issue.

         C. The Superior Court Did Not Err In Awarding Injunctive Relief Under The UTPA.

         The superior court held that the Ambridges were entitled to an injunction under the Unfair Trade Practices and Consumer Protection Act (UTPA), requiring that Alaska Trustee conform its notices of default to the requirements of 15 U.S.C. § 1692g(a)(1).[106] The court concluded that injunctive relief was authorized by AS 45.50.535(a), which provides that " any person who was the victim of [an] unlawful act, whether or not the person suffered actual damages, may bring an action to obtain an injunction prohibiting a seller or lessor from continuing to engage in an act or practice declared unlawful under AS 45.50.471." We affirm the superior court's decision of this issue.

         Alaska Trustee challenges the propriety of injunctive relief on three grounds. First, it argues that an FDCPA violation is not necessarily a violation of the UTPA, because Alaska law would not consider unfair or deceptive every conceivable violation of the federal law. Alaska Trustee contends that the Ambridges were not harmed or misled in any way by what in this case was at most a technical violation of the FDCPA, because the Ambridges knew that the notice of default included only the principal amount due (it was explicitly described as such) and they could not have paid it anyway.

         We reject this argument. Alaska Statute 45.50.471(a) declares unlawful all " [u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce." The legislature has directed that in interpreting these words we give " due consideration and great weight" to " the interpretations of 15 U.S.C. § 45(a)(1) [the Federal Trade Commission Act]." [107] The words of Alaska's statute therefore " have a fixed meaning . . . which has emerged from agency and judicial interpretation of the identical words of the federal statute." [108]

         We applied these principles in State v. O'Neill Investigations, Inc., in which we held that the activities of independent debt collectors fall within the scope of the UTPA.[109] We defined " unfairness" by reference to F.T.C. v. Sperry & Hutchinson Co., in which the United States Supreme Court set out these factors for consideration:

(1) whether the practice . . . offends public policy as it has been established by statutes . . ., in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).[110]

         To simplify matters here, the FDCPA expressly states that a violation of it " shall be deemed an unfair or deceptive act or practice in violation of [the Federal Trade Commission Act]," [111] the Act the legislature requires us to consider in interpreting AS 45.50.471.[112] Clearly, a violation of the FDCPA falls " within at least the penumbra of some . . . statutory . . . concept of unfairness," thus satisfying the first Sperry factor.[113] Under O'Neill, a violation of the FDCPA is inescapably an " unfair or deceptive act[] or practice[]" under AS 45.50.471(a).

         Alaska Trustee's second argument is that holding the UTPA applicable to violations of the FDCPA that involve real property foreclosures conflicts with our line of cases holding that " goods or services" for purposes of the UTPA do not include real estate transactions.[114] We addressed this issue most recently in Alaska Trustee, LLC v. Bachmeier, in which we affirmed that " [f]or the past thirty years we have consistently held that 'the sale of real property is not within the regulatory scope of the [UTPA].'" [115] At issue in Bachmeier were two statutory amendments, the most recent of which expanded the UTPA's definition of " goods or services" to include " goods or services provided in connection with . . . a transaction involving an indebtedness secured by the borrower's residence." [116] We concluded that the amendment " elaborated what types of goods and services are covered by the Act, but did not change the longstanding definition of goods and services itself -- a definition that has never encompassed real property transactions." [117]

         There was no FDCPA claim before us in Bachmeier.[118] The plaintiff's sole argument for coverage under the UTPA was based on the amendments to the definition of " goods or services," an argument we rejected.[119] The argument here is different: not that non-judicial foreclosures are covered " goods or services," but that violations of the FDCPA in the course of non-judicial foreclosures are " unfair or deceptive acts or practices" that are brought within the UTPA by O'Neill and the statutory command that we align our interpretation of the UTPA with federal interpretations of the Federal Trade Commission Act. There are different avenues to coverage under the UTPA, and a violation of the FDCPA is one of them.

         Finally, we turn to Alaska Trustee's argument that the UTPA's injunctive relief provision does not apply to it because it is not " a seller or lessor." [120] In support of this argument, Alaska Trustee contends that " [a] non-judicial foreclosure is unquestionably a service related to real property and is not a consumer service, as the person 'purchasing' the service is not a consumer, but generally a financial institution, mortgage servicer, or an individual who provided owner financing and for whom the foreclosure must be regarded as a business transaction." We have already explained that application of the UTPA in this case follows from the claimed violations of the FDCPA and does not depend on whether the service is related to real property. Nor did the legislature intend to limit the UTPA to " consumer" services, as our prior cases have repeatedly observed.[121] And the UTPA injunction provision does not require that the person seeking the remedy be a " consumer" of the service; it allows a claim by " any person who was the victim of the unlawful act." [122]

         For these reasons, we conclude that the superior court did not err when it awarded injunctive relief to the Ambridges under AS 45.50.535(a).

         V. CONCLUSION

         We REVERSE the decision of the superior court holding Routh liable for the violation at issue. We otherwise AFFIRM the decisions of the superior court.

          DISSENT

         WINFREE, Justice, with whom STOWERS, Justice, joins, dissenting.

         The primary issue in this appeal is whether a business that regularly -- but only -- acts as a trustee conducting non-judicial deed of trust foreclosures falls for all purposes under the Fair Debt Collection Practices Act's (FDCPA) " debt collector" definition.[1] Because the court collapses the FDCPA's disparate usage of the terms " security interest" and " debt" ; [2] because one who merely enforces a security interest should not be subject to the entire FDCPA but only to its illegal dispossession subsection; [3] and because the Ambridges brought suit under a FDCPA section requiring an " initial communication . . . in connection with the collection of any debt" [4] before liability attaches, but a statutorily required notice of default under Alaska law is not such a communication, I dissent.

         I. A Deed Of Trust Is A Security Instrument, Not A Debt.

         A deed of trust is interdependent yet distinct from the debt it secures.[5]

The mortgage was created by the early English court as a transfer of title from the mortgagor to the mortgagee, generally as security for a loan by the mortgagee to the mortgagor. Once the mortgagor repaid the loan proceeds, title to the property would return to him. If, however, the mortgagor failed to pay the mortgage by the due date, called the law day, he would forfeit all interest in the property.[6]

         Because of injustices surrounding law day forfeitures, a common law right of equitable redemption developed allowing a mortgagor to repay the loan after law day and thus regain title to property.[7] But the right of equitable redemption made title uncertain, and therefore the remedy of strict foreclosure arose: " If the mortgagor failed to redeem within [a certain time], the redemption right ...


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