District Court (Cal.) Finds Automobile Finance Company Accepting RISCs from Car Dealer is Not Subject to FDCPA

In Tu v. Camino Real Chevrolet, 2013 WL 140278 (C.D.Cal. 2013), Judge Otis Wright III held that an automobile finance company is not a ‘debt collector’ under the FDCPA.

Westlake is in the business of taking assignment of retail installment sales contracts from automobile dealers. (Mot. at 2.) It then becomes the holder in due course of those contracts. The automobile purchaser then makes the monthly payments directly to Westlake, which “engages in collection activities when a purchaser fails to make the contractually agreed to payments but only in its own name and only as to its own debt.” (Id.) Plaintiff was one such purchaser who fell in arrears on his payments. ¶ . . . As already noted, however, Westlake is primarily in the business of accepting installment sales contracts,” and its “debt collection activities are ancillary to that primary business purpose.” (Mot. at 6 (citation omitted).) See, e.g., Rowe v. Educ. Credit Mgm’t Corp., 559 F.3d 1028, 1031 (9th Cir.2009) (stating that “a ‘creditor’ is not a ‘debt collector’ under the FDCPA”); Bever v. Cal–Western Reconveyance Corp., 2012 WL 2522563, *3 (E.D. Cal., June 28, 2012) (“Creditors collecting their own debts are generally not subject to the FDCPA.”); see also Mansour v. Cal–Western Reconveyance Corp., 618 F.Supp.2d 1178, 1182 (D.Ariz.2009) (“A ‘creditor’ includes ‘any person … to whom a debt is owed,’ unless the debt is transferred or assigned after default by the consumer solely for the purpose of facilitating collection on the original creditor’s behalf. 15 U.S.C. § 1692a(4).”). ¶  Here, Plaintiff was not in default when Westlake was assigned the sales contract. (See Compl. ¶¶ 13–15.) Nor does Plaintiff allege that the contract was assigned “solely for the purpose of facilitating collection on the original creditor’s behalf.” Suffice it to say, the Court disagrees with Plaintiff that Westlake’s “principal business is the enforcement of security interest.” (Opp’n at 4.) Rather, Westlake’s principal business appears limited to financing, merely utilizing its “[ancillary] debt collection activities” when the need arises. (Mot. at 6) Accordingly, because Westlake is not a “debt collector” within the meaning of the FDCPA, the Court lacks jurisdiction over this claim, and may not exercise supplemental jurisdiction over the remaining state law causes of action.