Judges: Ripple
Filed: Aug. 10, 2018
Latest Update: Mar. 03, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 17-2811 ANDREW SCHLAF, on behalf of plaintiffs and a class, et al., Plaintiffs-Appellants, v. SAFEGUARD PROPERTY, LLC, Defendant-Appellee. _ Appeal from the United States District Court for the Northern District of Illinois, Western Division. No. 3:15-cv-50113 — Frederick J. Kapala, Judge. _ ARGUED FEBRUARY 21, 2018 — DECIDED AUGUST 10, 2018 _ Before RIPPLE, KANNE, and HAMILTON, Circuit Judges. RIPPLE, Circuit Judge. Andrew and
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 17-2811 ANDREW SCHLAF, on behalf of plaintiffs and a class, et al., Plaintiffs-Appellants, v. SAFEGUARD PROPERTY, LLC, Defendant-Appellee. _ Appeal from the United States District Court for the Northern District of Illinois, Western Division. No. 3:15-cv-50113 — Frederick J. Kapala, Judge. _ ARGUED FEBRUARY 21, 2018 — DECIDED AUGUST 10, 2018 _ Before RIPPLE, KANNE, and HAMILTON, Circuit Judges. RIPPLE, Circuit Judge. Andrew and W..
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 17‐2811
ANDREW SCHLAF, on behalf of
plaintiffs and a class, et al.,
Plaintiffs‐Appellants,
v.
SAFEGUARD PROPERTY, LLC,
Defendant‐Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Western Division.
No. 3:15‐cv‐50113 — Frederick J. Kapala, Judge.
____________________
ARGUED FEBRUARY 21, 2018 — DECIDED AUGUST 10, 2018
____________________
Before RIPPLE, KANNE, and HAMILTON, Circuit Judges.
RIPPLE, Circuit Judge. Andrew and Wendy Schlaf brought
this action against Safeguard Property, LLC, alleging viola‐
tions of the Fair Debt Collection Practices Act (“FDCPA”).
Specifically, they claim that Safeguard is a debt collector un‐
der the statute and failed to comply with various obligations
imposed on debt collectors under the statute. The parties
filed cross‐motions for summary judgment. The district
2 No. 17‐2811
court ruled that Safeguard is not a “debt collector” under the
FDCPA and therefore granted summary judgment to Safe‐
guard. Because Safeguard’s actions were too attenuated
from Green Tree’s own debt‐collection efforts, we hold that
the district court was correct to conclude that Safeguard is
not a debt collector. We therefore affirm its judgment.
I
BACKGROUND
A.
Andrew and Wendy Schlaf own property in Illinois. The
property is subject to an FHA‐insured mortgage serviced by
Green Tree Servicing, LLC.1 The Schlafs defaulted on the
mortgage, and Green Tree was unsuccessful in its initial at‐
tempts to contact them about the delinquent payments and
late fees.
Green Tree contracts with Safeguard, a “mortgage field
servicing company,”2 to perform a variety of services on
properties with defaulted mortgages, including lawn
maintenance and winterizing services. The relationship be‐
tween Green Tree and Safeguard is governed by a Master
Property Services Agreement.3 Exhibit A to the Agreement
describes the various property preservation services that
Safeguard will perform for Green Tree when Green Tree
1 Green Tree is now known as Ditech Financial LLC.
2 R.107 at 1.
3 See R.97 at 24–65.
No. 17‐2811 3
places an order; these include a variety of property inspec‐
tions, lock changes, pool maintenance, and utility manage‐
ment.4 Most relevant here, Green Tree arranged with Safe‐
guard to assist Green Tree in complying with certain De‐
partment of Housing and Urban Development (“HUD”)
regulations to which any of its properties with FHA‐insured
mortgages are subject (including the Schlafs’ mortgage). As
relevant here, the regulations require Green Tree to inspect
those properties for occupancy:
When a mortgage is in default because a pay‐
ment was not received within 45 calendar days
of the due date of the missed payment, and ef‐
forts to reach the mortgagor by telephone or
correspondence have proven unsuccessful, the
mortgagee must make an inspection to deter‐
mine if the property is vacant or abandoned.[5]
To comply with the HUD inspection obligation, Green
Tree contracted with Safeguard to perform “contact attempt
inspection[s]” on the properties.6 Green Tree’s “servicing
system” automatically placed an order for a contact attempt
inspection when an account was “45 or more days past due”
and “efforts to reach the mortgagor by telephone or corre‐
spondence have proven unsuccessful.”7 The inspection order
4 See id. at 50–56.
5 Id. at 77.
6 R.84 at 2.
7 R.97 at 5. According to Daniel Van Keuren, Green Tree’s Director of
Default Services, the servicing system runs a “nightly batch process” to
(continued)
4 No. 17‐2811
was sent automatically to Safeguard “through [a] system
that is built between [Green Tree] and Safeguard.”8 The re‐
sults of the inspection were then sent back to Green Tree
through the same automated system.
During the contact attempt inspections, a Safeguard rep‐
resentative visited the property to determine its occupancy
status and placed a door hanger on an outside doorknob of
the property. The door hanger it placed for Green Tree con‐
tained a piece of paper that gave instructions in English and
Spanish for the property owner to contact Green Tree:
IMPORTANT
…
PLEASE CALL
…
GREEN TREE
800‐666‐1143
…
PLEASE BE READY TO GIVE YOUR ACCOUNT NUMBER
…
flag the delinquent accounts that require contact attempt inspections. Id.
Consistent with the HUD guidelines, the system flags a property for in‐
spection when it is “45 days past due and every 30 days thereafter while
it remains delinquent.” Id. Borrowers with occupied properties are au‐
tomatically filtered out of the inspection order list if they have made con‐
tact with Green Tree in the last thirty days. Id. The system also can au‐
tomatically order other types of services. For example, if the property is
in a city that requires Green Tree to register properties in foreclosure, the
servicing system will automatically order Safeguard to process the regis‐
tration. Id. at 7–8.
8 Id. at 6.
No. 17‐2811 5
WE ARE EXPECTING YOUR CALL TODAY.[9]
The phone number listed on the door hanger was Green
Tree’s phone number. The door hanger did not identify
Safeguard in any way.
Safeguard’s representatives verified occupancy for Green
Tree by visually inspecting the property for indicators such
as “whether grass is cut, personal property is visible, glass is
intact and utilities are on.”10 The door hanger was to be left
only after the Safeguard representative verified through
such an inspection that the property was occupied. Further,
Safeguard representatives were instructed to leave the door
hanger even if they spoke personally to the homeowner
while conducting the inspection. However, they were not to
identify themselves as Safeguard representatives if they en‐
countered the homeowners or others on the property and
were instructed “to avoid talking about why they are on the
property.”11
Safeguard admits that contact attempt inspections are
performed “because HUD guidelines require them to be per‐
formed when a mortgage is in default.”12 It maintains that
the purpose of the inspection, as required by the guidelines,
is “to determine if a property is being maintained and
9 R.81‐1 at 14.
10 R.101 at 8.
11 Id. at 5.
12 Id. at 3.
6 No. 17‐2811
whether it is occupied.”13 However, Safeguard acknowledg‐
es that “one of the purposes of leaving the door hanger is to
attempt to contact the mortgagor in an effort to have the
mortgagor … contact the client.”14
When Green Tree was unsuccessful in its initial attempts
to contact the Schlafs about their delinquent payments, it ar‐
ranged with Safeguard to perform a series of contact attempt
inspections at the Schlafs’ property.15 During each of the in‐
spections,16 a Safeguard representative left Green Tree’s door
hanger on the Schlafs’ door. On at least one occasion,
Mr. Schlaf encountered the Safeguard representative while
the representative was hanging the door hanger. Mr. Schlaf
testified that the representative did not identify himself as
being employed with Safeguard or with any company and
that the representative told Mr. Schlaf he was “[j]ust doing
[his] job.”17 On other occasions, Mr. Schlaf encountered the
13 Id.
14 Id. at 2.
15 Mr. Schlaf testified that he first communicated with Green Tree in May
2014 to attempt to “take[] care of” “a past due amount.” R.81‐3 at 8. He
received a letter from Green Tree notifying him that he had missed a
monthly payment on November 5, 2014, id. at 56, and an official Notice
of Default on November 17, 2014, id. at 57.
16 From our review of the record, it appears that Safeguard performed
ten inspections in total at the Schlafs’ property, beginning on November
20, 2014, and continuing monthly until September 11, 2015, with no in‐
spection occurring in December 2014. R.97 at 87–117 (monthly work or‐
ders).
17 R.84‐1 at 21.
No. 17‐2811 7
Safeguard representatives as they were leaving his property,
and he was unable to identify them or speak with them.
Mr. Schlaf called the number on the door hanger at least
once and testified that it “took [him] right to Green Tree.”18
He testified that, to his knowledge, Safeguard is “property
preservation,” and he did not know if Safeguard collected
debt.19 Further, he testified that he never “receive[d] any‐
thing” or “ha[d] a conversation with anybody from Safe‐
guard Properties attempting to collect” on the delinquent
mortgage debt.20
B.
The Schlafs filed this action21 on May 14, 2015, alleging
that Safeguard had violated the FDCPA by not including
certain disclosures on the door hangers. Specifically, they
alleged that Safeguard had failed to comply with the initial
18 Id. at 20.
19 Id. at 15.
20 Id.
21 The Schlafs originally filed this action as a class action and moved for
class certification shortly after they filed their complaint. See R.4. They
later filed a motion to continue their motion for class certification “until
the Court sets an initial status hearing.” R.10 at 2. The district court de‐
nied the Schlafs’ motion to continue because they had not “request[ed] a
briefing schedule on [it] or contemplate[d] proceeding on it at this time”
and ordered that the motion for class certification be “stricken with leave
to refile when they are prepared to proceed.” R.16. It does not appear
that the Schlafs ever refiled their motion for class certification.
8 No. 17‐2811
disclosure requirements of 15 U.S.C. § 1692g. Section 1692g
requires debt collectors, “[w]ithin five days after the initial
communication with a consumer in connection with the col‐
lection of any debt,” to disclose certain details about the
debt, such as the name of the creditor, the amount owed,
and that the debtor has the right to dispute the debt. The
Schlafs also alleged that Safeguard had violated 15 U.S.C.
§ 1692e(11), which requires debt collectors to disclose in their
initial communications that they are communicating with
the debtor in an attempt to collect a debt and that any infor‐
mation they obtain will be used for that purpose.
Safeguard moved to dismiss the complaint under Federal
Rule of Civil Procedure 12(b)(6), contending that it is not a
“debt collector” within the meaning of the FDCPA and,
therefore, is not subject to the disclosure requirements of the
statute. The district court denied Safeguard’s motion to dis‐
miss; it ruled that the Schlafs had pleaded sufficient facts to
state a claim that Safeguard was a debt collector.
The case proceeded through discovery, and the parties
filed cross‐motions for summary judgment. Safeguard re‐
newed its argument that it is not a debt collector, and the
Schlafs contended that the undisputed facts proved both that
Safeguard was a debt collector and that the door hangers vi‐
olated the FDCPA. Based on the record evidence, the district
court held that Safeguard is not a debt collector and there‐
fore not subject to the FDCPA’s disclosure requirements.
In explaining its ruling, the district court noted that an
entity can be a debt collector under the FDCPA under either
No. 17‐2811 9
the “principal purpose” definition or the “regularly collects”
definition.22 Under the “principal purpose” definition, an
entity is a debt collector if it “uses any instrumentality of in‐
terstate commerce or the mails in any business the principal
purpose of which is the collection of any debts.” 15 U.S.C.
§ 1692a(6). Under the “regularly collects” definition, an enti‐
ty is a debt collector if it “regularly collects or attempts to
collect, directly or indirectly, debts owed or due or asserted
to be owed or due another.” Id. The district court held that
Safeguard is not a debt collector under either definition.
First, the district court held that Safeguard is not a debt
collector under the principal purpose definition because
Safeguard performs “numerous other services to Green Tree
such as grass cutting, winterizing pipes and utilities, and
providing security and a lockbox.”23 Therefore, Safeguard’s
“principal purpose” is not debt collection.
As to whether Safeguard “regularly collects or attempts
to collect, directly or indirectly, debts owed or due or assert‐
ed to be owed or due another,” id., the district court held
that Safeguard’s role in Green Tree’s debt‐collection process
was too remote and incidental even to be considered “indi‐
rect” debt collection. The district court emphasized that the
Safeguard representative did not make any contact with the
Schlafs other than to deliver the door hanger and did not
communicate with the Schlafs about their debt. In fact, the
Safeguard representatives were given no information about
22 R.107 at 3.
23 Id. at 5.
10 No. 17‐2811
the Schlafs’ debt. The court likened Safeguard’s role to that
of a “messenger.”24 The court noted that the door hangers
did not identify Safeguard in any way and that Safeguard’s
compensation from Green Tree in no way depended on
whether the Schlafs repaid their debt.
Because the district court concluded that Safeguard is not
a debt collector and thus not subject to the strictures of the
FDCPA, the district court granted Safeguard’s motion for
summary judgment and denied that of the Schlafs.
II
DISCUSSION
The Schlafs now appeal the district court’s grant of sum‐
mary judgment to Safeguard. They contend that the district
court erred in interpreting the FDCPA to exclude entities
like Safeguard from its definition of “debt collector.” For the
reasons stated in the following discussion, we agree with the
district court that Safeguard is not a debt collector and there‐
fore affirm its judgment.
A.
Our review of the district court’s summary judgment de‐
cision is de novo. Hendricks‐Robinson v. Excel Corp., 154 F.3d
685, 692 (7th Cir. 1998). Summary judgment is appropriate
only if there are no disputed questions of material fact and
24 Id. at 8.
No. 17‐2811 11
the moving party is entitled to judgment as a matter of law.
Id.; Fed. R. Civ. P. 56(a). “With cross‐motions, our review of
the record requires that we construe all inferences in favor of
the party against whom the motion under consideration is
made.” Hendricks‐Robinson, 154 F.3d at 692. “Thus, we exam‐
ine the record in the light most favorable to the [Schlafs],
granting them the benefit of all reasonable inferences that
may be drawn from the evidence and reversing if we find a
genuine issue concerning any fact that might affect the out‐
come of the case.” Id.
The task before us is twofold. First, we must interpret the
language of the statute; secondly, we must determine
whether the statute is applicable to Safeguard’s activity.
The first task is one of statutory construction. We must
interpret the plain language of the statute in light of its
placement in the overall text of the statute. See Univ. of Chi. v.
United States, 547 F.3d 773, 777 (7th Cir. 2008). Here, the lan‐
guage of the FDCPA tells us explicitly and succinctly that
the statute’s principal purpose is “to eliminate abusive debt
collection practices by debt collectors.” 15 U.S.C. § 1692(e)
(“Congressional findings and declaration of purpose”).25 In‐
deed, we already have acknowledged specifically that pur‐
pose: “The primary goal of the FDCPA is to protect consum‐
ers from abusive, deceptive, and unfair debt collection prac‐
25 Section 1692(e) reads in full: “It is the purpose of this subchapter 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.”
12 No. 17‐2811
tices, including threats of violence, use of obscene language,
certain contacts with acquaintances of the consumer, late
night phone calls, and simulated legal process.” Bass v.
Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322,
1324 (7th Cir. 1997). Broadly, it prohibits debt collectors from
using “any false, deceptive, or misleading representation or
means in connection with the collection of any debt.” 15
U.S.C. § 1692e. The FDCPA further limits the practices of
debt collectors in more specific ways, such as regulating debt
collectors’ communications with consumers, id. § 1692c, pro‐
hibiting specific forms of harassment and abuse, id. § 1692d,
defining certain conduct as per se “unfair or unconsciona‐
ble,” id. § 1692f, and requiring certain disclosures by debt
collectors to consumers about the debt being collected, id.
§ 1692g.
The protections of the statute are, however, subject to
two limitations. First, the statute’s substantive provisions
apply only to debt collectors. E.g., 15 U.S.C. §§ 1692b, 1692c.
Creditors are therefore not subject to the FDCPA as long as
they are collecting their own debt in their own name and
their “principal purpose” as an entity is not debt collection.
Aubert v. Am. Gen. Fin., Inc., 137 F.3d 976, 978 (7th Cir. 1998);
see also 15 U.S.C. § 1692a(4).26 Second, the statute applies on‐
26 The FDCPA defines “creditor” as “any person who offers or extends
credit creating a debt or to whom a debt is owed,” excluding “any per‐
son to the extent that he receives an assignment or transfer of a debt in
default solely for the purpose of facilitating collection of such debt for
another.” 15 U.S.C. § 1692a(4). The Supreme Court has clarified recently
that even parties who “regularly purchase debts originated by someone
else and then seek to collect those debts for their own account” are not
debt collectors under the FDCPA because they are not collecting debts
(continued)
No. 17‐2811 13
ly to communications made “in connection with the collec‐
tion of any debt.” E.g., 15 U.S.C. § 1692c(a). Persons seeking
the protections of the FDCPA therefore must satisfy these
two threshold criteria. See Gburek v. Litton Loan Servicing LP,
614 F.3d 380, 384 (7th Cir. 2010). Here, the Schlafs and Safe‐
guard dispute only the first limitation: whether Safeguard is
a debt collector.
The plain language of the statute provides a formidable
anchor for our analysis. The FDCPA defines “debt collector”
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 col‐
lects or attempts to collect, directly or indirectly, debts owed or
due or asserted to be owed or due another.” 15 U.S.C.
§ 1692a(6) (emphases added). Indeed, we have recognized
that § 1692a(6) establishes two categories of debt collectors:
(1) those whose “principal purpose … is the collection of any
debts,” and (2) those who “regularly collect[] or attempt[] to
collect, directly or indirectly, debts owed or due or asserted
to be owed or due another.” McCready v. eBay, Inc., 453 F.3d
882, 888–89 (7th Cir. 2006). Here, the parties appropriately
focus on whether Safeguard’s contact attempt inspections
are “indirect” debt collection services under the second
prong.
Limiting our analysis to the language of the statute, we
cannot say that Safeguard engages in indirect debt collection
simply by leaving a door hanger that asks the homeowner to
owed another. Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718,
1721 (2017).
14 No. 17‐2811
call Green Tree. In a very broad, theoretical sense, it is possi‐
ble to characterize facilitating the reestablishment of com‐
munication between the homeowner and Green Tree as a
preliminary step in Green Tree’s own debt‐collection process.
It is difficult to say, however, that such specific and very lim‐
ited action even indirectly implicates the specific statutory
concerns set forth in the statute’s language. The FDCPA
treats creditors and debt collectors differently precisely be‐
cause creditors have an “ongoing relationship with the debt‐
or” and thus have “incentive to engender good will by treat‐
ing the debtor with honesty and respect.” Ruth v. Triumph
P’ships, 577 F.3d 790, 797 (7th Cir. 2009). Here, the outward
appearance of the inspection gives every indication that it is
coming from Green Tree. The door hanger does not identify
Safeguard in any way, and the phone number connects the
homeowner directly to Green Tree. Safeguard does not dis‐
cuss the debt with the homeowners and has no other contact
with the homeowners other than to leave the door hanger.
The door hanger itself does not give any details about the
homeowners’ debt or demand payment. The district court’s
characterization of Safeguard’s role as more akin to that of a
messenger than as an indirect facilitator of debt collection
was therefore apt.
Our conclusion that Safeguard is not an indirect debt col‐
lector is consistent with our interpretation of a separate,
threshold requirement repeated throughout the FDCPA: that
the communication being challenged was made “in connec‐
tion with” debt collection. Whether a communication was
sent “in connection with the collection of any debt” is an ob‐
jective question of fact. Ruth, 577 F.3d at 798. We therefore
have not established a “bright‐line rule” for determining
whether a communication was made in connection with
No. 17‐2811 15
debt collection; rather, we have described it as a “com‐
monsense inquiry” consisting of several factors, none of
which is dispositive. Gburek, 614 F.3d at 384–85. Whether the
communication includes a “demand for payment” is one
such factor. Id. at 385. Another factor is the “nature of the
parties’ relationship”; specifically, whether the relationship
arose only out of the defaulted debt. Id. Finally, we consider
“the purpose and context of the communication[],” judged
by an objective standard. Id. For example, a communication
that is sent in the same setting as a collection notice or made
“to threaten and harass the debtor into settling her debt” or
“to encourage [the debtor] to contact [the creditor] to discuss
debt‐settlement options” is more likely to be made in con‐
nection with debt collection. Id. at 386.
Here, the door hangers contain no demand for payment
and, indeed, make no reference to the Schlafs’ debt whatso‐
ever, other than to give Green Tree’s name and phone num‐
ber. The relationship between Safeguard and the Schlafs
“arose out of … the plaintiffs’ defaulted debt,” id. at 385
(quoting Ruth, 577 F.3d at 799), only in the sense that Safe‐
guard performs contact attempt inspections only at proper‐
ties where mortgagors have defaulted on their payments.
The door hangers contain no offers of debt settlement or re‐
payment options, and Safeguard leaves the door hanger to
encourage, on behalf of Green Tree, the owner to contact
Green Tree.27 However, given that the door hangers are left
27 Safeguard submits on appeal that “the purpose of the phone number
on the door hanger is so that the mortgagor can call in if they have a
question as to why the inspection was performed.” Appellee’s Br. 13.
This purported purpose is belied by the door hanger, which makes no
(continued)
16 No. 17‐2811
as part of an occupancy inspection and not left in the context
of a collection letter or notice of default, the door hangers are
left in connection with property preservation, not debt col‐
lection.
Congress’s use of the terms “directly or indirectly” cer‐
tainly evinces an intent that the statute cover a wide range of
activity that is inimical to the purpose of the statute. At the
same time, however, the context in which those terms are
employed does indicate that there are some limitations to the
statute’s reach and to what activity constitutes “indirect”
debt collection. The entity at issue must “collect[] or at‐
tempt[] to collect … debts.” 15 U.S.C. § 1692a(6). Here, Safe‐
guard had no part in the collection or attempted collection of
a debt. Indeed, we believe that our work to date, as well as
that of our sister circuits, evinces an understanding that only
activity that implicates the concerns set out in the statute
ought to be considered indirect debt collection. We have
mention that an inspection even was performed. See R.81‐1 at 14. A
homeowner reading the door hanger would have no way of knowing
from the door hanger that anybody performed an inspection at his prop‐
erty, let alone that he should call Green Tree for the purpose of finding
out why such an inspection had been performed.
The Schlafs contend that the purpose of the door hanger is a disput‐
ed fact that precludes summary judgment. However, taking the facts in
the light most favorable to the Schlafs, as we must, we note that Safe‐
guard admits elsewhere in the record evidence that one purpose of the
door hanger is “to attempt to contact the mortgagor in an effort to have
the mortgagor … contact the client.” R.101 at 2. Therefore, the purpose of
the door hanger is not a disputed fact. Moreover, it is not material. As we
discussed above, even assuming that this is the purpose of leaving the
door hanger, Safeguard is not a debt collector.
No. 17‐2811 17
acknowledged, for instance, that an entity can be an agent of
a debt owner in the most technical sense but not be a debt
collector if it performs only “ministerial duties” that aid in
the collection of debt, such as “stuffing and printing” letters.
White v. Goodman, 200 F.3d 1016, 1019 (7th Cir. 2000). Our
work in interpreting the FDCPA and its purpose in other
contexts establishes that the FDCPA is aimed at curbing
abuses by third‐party debt‐collection agents who are much
more involved in actual debt collection than Safeguard,
whose primary purpose is property preservation. Although
White involved other questions of statutory interpretation
under the FDCPA, its application of the FDCPA is instruc‐
tive. It applied the statute to a third‐party service that ob‐
tained a list of debtors from its client, the creditor, as well as
sent letters to the debtors demanding payment and threat‐
ened future collection efforts. Id. at 1018. The third‐party
agency had discretion to determine that certain debtors were
“futile” to contact (such as if they were in bankruptcy). Id.
Further, if the letters were unsuccessful, the third‐party
agency had discretion “to decide what additional efforts, if
any, to make to collect the debt.” Id. at 1019. The third‐party
agency received thirty‐five percent of any money paid to the
creditor by debtors it contacted. Id. There was no doubt that,
given the close relationship of the third party’s activities to
debt collection, the third‐party agency was engaged in debt
collection on behalf of the creditor.
Safeguard’s actions on behalf of Green Tree, by contrast,
do not rise to the level of the debt‐collection efforts we de‐
scribed in White. Green Tree’s servicing system automatical‐
ly generates a list of properties on which it orders Safeguard
to perform contact attempt inspections and gives Safeguard
no other information about the debts associated with those
18 No. 17‐2811
properties. Safeguard does not have discretion to evaluate
the likelihood of repayment and then focus its efforts on the
mortgagors most likely to make payment to Green Tree; ra‐
ther, Safeguard must perform the inspections on all proper‐
ties on which the inspection is ordered. Safeguard makes no
attempt to collect payments from the mortgagors and, in
fact, instructs its representatives not to discuss the reason for
its visit with any mortgagors it encounters.28 Further, there is
no evidence that Safeguard is compensated based on the
number of mortgagors who contact Green Tree after the con‐
tact attempt inspection or begin to repay their debt to Green
Tree.
The decisions of our colleagues in the Third and Ninth
Circuits also provide a significant and helpful contrast to the
present case. In Romine v. Diversified Collection Services, Inc.,
155 F.3d 1142 (9th Cir. 1998), the Ninth Circuit held that
Western Union was a debt collector when it advertised
“Talking Telegrams” that would aid collection agencies in
reaching debtors for whom they had been unable to obtain
telephone numbers. Id. at 1144. Specifically, Western Union
would deliver a “Talking Telegram” to the debtor’s address,
instructing the debtor that Western Union had a telegram
that it could not deliver because it did not have the debtor’s
28 Notably, the Master Property Services Agreement provides that “Safe‐
guard will neither demand nor accept any cash, check, money order, or
any other form of payment or consideration, including rent, from any
person. If contact is made with an occupant or third party, it is Safe‐
guard’s policy not to discuss, mention, or allude to the mortgagor’s loan
or the mortgagor’s delinquency or default with the occupant, the mort‐
gagor, or any third party.” R.97 at 51.
No. 17‐2811 19
phone number and that the debtor should call Western Un‐
ion immediately. Id. When the debtor called Western Union,
his phone number was captured by Western Union’s caller
ID system, and the operator also manually recorded the
debtor’s name, address, and phone number, all of which it
transmitted to the collection agency. Id. Western Union also
transmitted the “Talking Telegram,” which the court de‐
scribed as a “debt collection message,” and followed up with
a mailed written telegram. Id.
The Ninth Circuit concluded that Western Union’s efforts
could amount to indirect debt collection under § 1692a(6).
The court noted that Western Union advertised its Talking
Telegram services as “specially developed for the credit and
collections industry.” Id. at 1147. Further, the court noted
that the “dual role of the service is to (1) retrieve unavailable
telephone numbers for creditors and debt collection agen‐
cies; and (2) to catalyze debt collection activity through tele‐
grams bearing the Western Union name.” Id. The court con‐
cluded that the Talking Telegram service in its entirety went
“beyond mere information gathering or message delivery.”
Id. at 1149.
Safeguard’s actions here bear little resemblance to those
of Western Union in Romine. The gimmick of the “Talking
Telegram” was aimed specifically at debt collection and was
confrontational, indeed sensational. By contrast, Safeguard is
so far removed from Green Tree’s actual debt‐collection pro‐
cess that it cannot be said to have engaged in debt collection,
even indirectly, under § 1692a(6). The principal purpose of
the contact inspection is to assist Green Tree in its FHA
property preservation efforts, not its debt‐collection efforts.
We recognize that Safeguard transmits valuable infor‐
20 No. 17‐2811
mation—occupancy status—back to Green Tree. However,
although knowledge of the property’s occupancy status
might assist Green Tree in its own debt‐collection efforts,
Green Tree is required by HUD regulations to verify occu‐
pancy. It is not unreasonable for Green Tree to comply with
that obligation by contracting with Safeguard to perform a
nonintrusive visual inspection of the mortgaged properties.
Whether to commence collection efforts and the nature of
those collection efforts remained exclusively in the hands of
Green Tree.
Likewise, the Third Circuit’s decision in Siwulec v. J.M.
Adjustment Services, LLC, 465 F. App’x 200 (3d Cir. 2012)
(unpublished), provides a helpful contrast. The Schlafs’ reli‐
ance on Siwulec therefore is not persuasive. Siwulec involved
a third‐party agency that visited homeowners with past‐due
mortgage payments to deliver letters from their lenders
seeking “information” from the homeowners to help the
lenders resolve “past due” payments. Id. at 201. The third
party also instructed its representatives “to urge alleged
debtors, in person, to call the creditor while they watched”
and “to gather contact information from the debtors directly,
to speak with their neighbors, and to conduct a visual as‐
sessment of their properties.” Id. at 204. The Third Circuit
concluded that under the facts as pleaded by the plaintiff,
the agency’s involvement “br[ought the agency] out of any
messenger exception and into the coverage of the FDCPA”
and that the plaintiffs had plausibly pleaded that the agency
was a debt collector. Id. Unlike the agency in Siwulec, Safe‐
guard does not deliver any communications that contain in‐
formation about the debt or past due payments, does not col‐
lect homeowners’ contact information, and does not “urge
No. 17‐2811 21
alleged debtors, in person, to call the creditor while they
watched.” Id.
We readily acknowledge that the extant case law is not
dispositive of our decision, which rests, as it should, on our
analysis of the plain wording of the statute. To be sure, what
constitutes “indirect” debt collection will have to be deter‐
mined on a case‐by‐case basis until the case law produces a
more robust understanding of that concept. Congress cer‐
tainly must have foreseen that such a term would require
such fact‐specific adjudication. Our holding today is limited
to the situation before us, a situation that implicates none of
the concerns articulated by Congress in enacting the statute.
Conclusion
For the reasons stated above, the district court did not err
in concluding that Safeguard is not an indirect debt collector.
We therefore affirm the judgment of the district court.
AFFIRMED
