In Deaguero v. Mountain Lion Acquisitions, Inc., 2016 WL 7030364 (2016), the California Court of Appeal in an unpublished decision found that the CFL does not prohibit the sale of debt to an unlicensed entity.
Deaguero’s claims depend upon his construction of section 22340, subdivision (a). Specifically, his claim that Mountain Lion violated the FDCPA and RFDCPA is based on the claim that Mountain Lion attempted to collect a debt that it knew was void and uncollectable under section 22340, subdivision (a). Accordingly, if the debt was collectable and was not void, there was no violation of the FDCPA or RFDCPA for which Deaguero can claim damages. Deaguero’s argument on appeal focuses on his claim that the trial court erred in finding no violation of the FDCPA or RFDCPA because Mountain lion did not know that it was attempting to collect an uncollectable debt. He claims both the FDCPA and the RFDCPA are strict liability statutes. We need not address this claim because we hold the underlying debt was valid and collectable. Subdivision (a) of section 22340 provides that a licensed finance lender “may sell promissory notes evidencing the obligation to repay loans made by the licensee pursuant to this division or evidencing the obligation to repay loans purchased from and made by another licensee pursuant to this division to institutional investors, and may make agreements with institutional investors for the collection of payments or the performance of services with respect to those notes.” Subdivision (b) of section 22340 defines “ ‘institutional investors,’ ” and Mountain Lion does not fit any of the descriptions of an institutional investor. Deaguero’s claims depend on section 22340 being construed to mean that a finance lender may sell promissory notes only to institutional investors, and that the sale in this case to a noninstitutional investor rendered the debt void and uncollectable pursuant to section 22750, subdivision (b). That section provides in pertinent part that if any licensed or unlicensed person willfully violates the California Finance Lenders Law in making or collecting a loan, the loan contract is void and may not be collected. This contention was rejected in Montgomery v. GCFS, Inc. (2015) 237 Cal.App.4th 724 (Montgomery). We agree with Montgomery, and rely on its analysis.. . The question here is whether the statutory language permits finance lenders to sell their notes only to institutional investors. (Ibid.) The language of the statute does not clearly answer this question. On the one hand, since the statute does not prohibit the sale of consumer loans to noninstitutional lenders, it could mean that such loans may be sold to anyone. On the other hand, applying the principle expressio unius est exlusio alterius (the inclusion of one thing in a statute implies the exclusion of other things), it might mean that the inclusion of institutional investors implies the exclusion of all others. (Id. at pp. 729-730.) . . The purpose of section 22340, subdivision (a) of the California Finance Lenders Law was to eliminate the need for licensed finance lenders to obtain a real estate broker’s license in order to sell loans secured by real estate on the secondary market. (Montgomery, supra, 237 Cal.App.4th at p. 730.) Finance lenders are not required to have a real estate license when acting within the scope of their license as a finance lender. (Id. at p. 731.) Prior to the enactment of section 22340, subdivision (a), the law regulating finance lenders was silent concerning the authority of finance lenders to sell and service promissory notes, but persons engaged in assigning notes to the public that were secured by real property were required to have a real estate license. (Id. at p. 730.). . “This legislative history makes clear that section 22340 [subdivision] (a) was intended to clarify Business and Professions Code section 10133.1, subdivision (a)(6): the sale of any debt, including debt secured by real estate, by a licensed finance lender to an institutional investor was within the authority of that lender’s license. That history also makes clear that the Legislature did not intend the provision to prohibit the sale of debt to non-institutional investors. Instead, the Legislature left the statute silent as to other sales, leaving open the possibility that other statutory schemes could regulate those sales.” (Montgomery, supra, 237 Cal.App.4th at p. 731, italics added.) . . Thus, CashCall, as a licensed finance lender, did not violate section 22340, subdivision (a), when it sold a non-real-estate-secured loan to Mountain Lion, and Mountain Lion did not violate the statute when it purchased the debt. As there was no violation of section 22340, subdivision (a), Deaguero’s claim that the debt was void and uncollectable is groundless. Because the debt was valid and collectable, Deaguero’s claim that Mountain Lion owes damages for violation of the FDCPA and RFDCPA is also groundless.