PAEZ, Circuit Judge:
Zakia Mashiri ("Mashiri") appeals the dismissal of her complaint alleging that the
We hold that the district court erred. Mashiri has alleged a plausible claim for relief because the collection letter contains language that overshadows and conflicts with her FDCPA debt validation rights when reviewed under the "least sophisticated debtor" standard. We also reject Epsten's argument, raised for the first time on appeal, that in sending the collection letter, it merely sought to perfect a security interest and is therefore subject only to the limitations in § 1692f(6). We hold that Epsten is subject to the full scope of the FDCPA. We reverse and remand for further proceedings consistent with this Opinion.
Mashiri alleges that she owns a home in San Diego, California and is a member of the Westwood Club homeowners' association ("HOA").
In a collection letter dated May 1, 2013 (the "May Notice"), Epsten, on behalf of the HOA, sought to collect Mashiri's overdue assessment fee, as well as corresponding late, administrative, and legal fees. The May Notice also included a warning that failure to pay the assessment fee would result in the HOA recording a lien against Mashiri's property. This notice is required by section 5660 of the Davis-Stirling Common Interest Development Act, Cal. Civ. Code §§ 4000 et seq., which governs the collection of overdue homeowners' association assessments.
Accompanying the May Notice, Epsten included copies of Mashiri's account statement and the HOA's assessment collection policy.
On or about May 20, 2013, in a letter to Epsten, Mashiri disputed the debt and requested that Epsten validate it. Mashiri also stated that she never received a bill for the July 2012 assessment fee. Approximately two weeks later, on June 5, Epsten responded with another copy of Mashiri's account statement.
On June 18, 2013, Epsten, on behalf of the HOA, recorded a lien on Mashiri's property in the amount of $928, reflecting the $598 she previously owed and $330 in additional legal fees. Three days later, on June 21, Mashiri sent the HOA a check for $385. In a letter accompanying the check, Mashiri disputed the balance of the debt. As required by the Davis-Stirling Act, on June 24, Epsten notified Mashiri of the lien. Cal. Civ. Code § 5675(e).
Mashiri ultimately filed her complaint alleging violations of the FDCPA, the Rosenthal Act, and the Unfair Competition Law based on the contents of the May Notice. Epsten subsequently moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. The district court granted Epsten's motion to dismiss, concluding, inter alia, that the May Notice "complied with the clarity and accuracy requirements" of the FDCPA and therefore "did not threaten to take action that could not legally be taken" as prohibited by the FDCPA. The district court dismissed Mashiri's state law claims as dependant on
We review de novo a dismissal under Rule 12(b)(6). Ariz. Students' Ass'n v. Ariz. Bd. of Regents, 824 F.3d 858, 864 (9th Cir. 2016). For purposes of our review, we accept the complaint's well-pleaded factual allegations as true and construe all inferences in favor of Mashiri. Id. The "complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted). "The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
Congress enacted the FDCPA "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." 15 U.S.C. § 1692(e). In furtherance of these stated goals, "[t]he FDCPA subjects `debt collectors' to civil damages for engaging in certain abusive practices while attempting to collect debts." Ho v. ReconTrust Co., NA, 840 F.3d 618, 620 (9th Cir. 2016).
Mashiri challenges the district court's ruling that she did not allege a plausible violation of § 1692g of the FDCPA, and its corresponding dismissal of the § 1692e(5) and state law claims that depended on her § 1692g claim. See 15 U.S.C. § 1692g. She argues that the May Notice violated § 1692g for two reasons. First, she contends that the May Notice demanded payment sooner than the expiration of the debtor's thirty-day dispute period. Second, she claims that by threatening to record a lien within thirty-five days, irrespective of whether she disputed the debt, Epsten failed to explain effectively a debtor's right to dispute the debt. Epsten counters that it was not attempting to collect a debt and therefore the May Notice needed to comply only with the obligations in § 1692f(6) of the FDCPA relating to enforcement of security interests. Epsten further argues that even if it is subject to § 1692g, it complied with the statutory requirements. We turn first to whether Epsten is subject solely to § 1692f(6), and then discuss whether Mashiri has sufficiently alleged a violation of § 1692g and related claims.
For the first time in its answering brief, Epsten argues that it is subject only to § 1692f(6)
The FDCPA defines "debt" as "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment." 15 U.S.C. § 1692a(5) (emphasis supplied); see also Ho, 840 F.3d at 621 ("For the purposes of the FDCPA, the word `debt' is synonymous with `money.'"). "The FDCPA imposes liability only when an entity is attempting to collect debt." Ho, 840 F.3d at 621.
The contents of the May Notice plainly belie Epsten's contention that it did not attempt to collect a debt. The May Notice requested payment of Mashiri's homeowner's assessment fee, stating: "This letter is to advise you that
Epsten nonetheless argues that, based on the definition of a "debt collector" under § 1692a(6),
Because Epsten sent the May Notice as a debt collector attempting to collect payment of a debt — irrespective of whether it also sought to perfect the HOA's security interest and preserve its right to record a lien in the future — it is subject to the full scope of the FDCPA, including § 1692g and § 1692e. See id. Epsten's attempt to escape liability under § 1692g and § 1692e therefore fails.
As noted above, Mashiri argues that she alleged a violation of § 1692g on two grounds. First, she argues that the May Notice requested payment by a date that was inconsistent with a debtor's right to dispute the debt within thirty days from receipt of the notice. Second, she argues that Epsten's threat to record a lien within thirty-five days of the date of the letter overshadowed her right to dispute the debt. We address each of these arguments below, and hold that Mashiri has alleged a plausible § 1692g violation on both grounds.
The FDCPA requires a debt collector to send the debtor a written notice that informs the debtor of the amount of the debt, to whom the debt is owed, her right to dispute the debt within thirty days of receipt of the letter, and her right to obtain verification of the debt.
Importantly, notice of the debtor's right to dispute the debt and to request the name of the original creditor must not be overshadowed or inconsistent with other messages appearing in the communication.
Turning to Mashiri's first basis for a § 1692g violation, Mashiri claims that the May Notice did not provide a debtor thirty days in which to dispute the debt. We have previously observed that a § 1692g violation would result if a debt collector demanded payment prior to the expiration of the thirty-day dispute period to which debtors are entitled. As we explained in Terran:
Id. at 1434.
In this case, the May Notice demanded payment within thirty-five days of the date of the letter, which is inconsistent with a debtor's right to dispute a debt within thirty days of receipt of the letter. By the time a debtor receives such a letter, there may be fewer than thirty days before payment is due.
Mashiri alleged a plausible § 1692g violation for the additional reason that the least sophisticated debtor may not understand, on the basis of the May Notice, that upon notifying Epsten of a dispute, debt collection activities would "cease ... until the debt collector obtains verification of the debt ... and a copy of such verification... is mailed to the consumer by the debt collector." 15 U.S.C. § 1692g(b). Rather, the May Notice stated that a lien "will" be recorded if Mashiri "fail[ed] to pay." The least sophisticated debtor would likely (and incorrectly) believe that even if she disputed the debt and Epsten had not yet mailed verification of the debt to her, Epsten would record a lien on the thirtyfifth day after the date of the letter. "In this manner, the letter effectively overshadows the disclosed right to dispute by conveying an inaccurate message that exercise of the right does not have an effect that the statute itself says it has." Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98, 105 (1st Cir. 2014).
Epsten relies on Shimek v. Weissman, Nowack, Curry & Wilco, P.C., 374 F.3d 1011 (11th Cir. 2004) (per curiam) for the proposition that, upon receipt of a request for debt verification, the FDCPA does not require a debt collector to take affirmative action to stop the recording of a lien that had already been filed. That case, however, correctly recognizes that "sending a lien to the clerk of the court [for filing] after a verification of the debt was requested is clearly contrary to § 1692g(b)'s requirement that a debt collector shall `cease collection of the debt' once the verification is requested." Id. at 1014. In addition, Shimek is factually inapposite because "[u]nder Georgia law, the filing of a lien by a creditor is a necessary step for securing payment of a debt," and the Eleventh Circuit "assum[ed] the propriety of filing the lien with the Court Clerk contemporaneously with the demand letter." Id. at 1013-14. In California, pursuant to the Davis-Stirling Act, a homeowners' association may not record a lien with a county recorder's office contemporaneously with mailing the demand letter, but instead must provide notice of the debt at least thirty days prior to recording a lien, during which time a debtor-homeowner may dispute the debt. Cal. Civ. Code § 5660.
The obligations imposed on the HOA pursuant to the FDCPA, including the provision requiring suspension of debt collection activities pending debt verification, are thus consistent with the requirements the HOA must satisfy pursuant to the Davis-Stirling Act. The HOA's right to record a lien thirty days after providing notice under section 5660 is not absolute, but instead is dependent on whether the homeowner disputes the debt. Indeed, pursuant to the Davis-Stirling Act, if the homeowner disputes the debt and requests an informal dispute resolution proceeding, the HOA must participate in dispute resolution "prior to recording a lien." Cal. Civ. Code § 5670.
In this context, the threat of recording of a lien is a debt collection activity, which under the FDCPA must cease if the debtor-homeowner disputes the debt and the debt collector has not yet mailed verification of the debt to the debtor-homeowner. The Davis-Stirling Act does not mandate otherwise. Epsten was obligated to explain such debt validation rights in an effective manner. See Swanson, 869 F.2d at 1225. In
We hold that Mashiri has plausibly alleged a claim under § 1692g, and we reverse the district court's dismissal of that claim. Because we reverse the district court's dismissal of Mashiri's § 1692g claim, we reverse the district court's dismissal of Mashiri's claims that depended on § 1692g and arose under § 1692e(5), the Rosenthal Act, and the Unfair Competition Law.