District Court (Ohio) Says Repossession Agency That Violates Self-Help Rules Subjects Itself to FDCPA

In Vantu v. Echo Recovery, L.L.C., — F.Supp.3d —-, 2015 WL 571102 (N.D.Ohio 2015), Judge Carr found a repossession loses its exemption under the FDCPA when it violates state law.

In any event, the fact that Echo’s principal business is not debt collection would not save it from liability under the FDCPA. That is so, because Vantu has plausibly alleged Echo is an enforcer of security interests that violated § 1692f(6).  An entity that enforces security interests (a repossession agency, for example) is generally not a “debt collector.” Montgomery, supra, 346 F.3d at 699–700. But in limited circumstances the FDCPA treats such an entity as a debt collector. Glazer v. Chase Home Fin., LLC, 704 F.3d 453, 463–64 (6th Cir.2013).  Section 1692a(6) provides that, “[f]or purposes of section 1692f(6)” only, the term “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.” 15 U.S.C. § 1692a(6).  Section 1692f(6), in turn, forbids a debt collector from “[t]aking or threatening to take any nonjudicial action to effect dispossession or disablement of property if … there is no present right to possession of the property claimed as collateral through an enforceable security interest.” 15 U.S.C. § 1692f(6)(A).  In tandem, then, these provisions subject security enforcers who attempt to repossess collateral without a present right to possess the collateral to liability under the FDCPA. Glazer, supra, 704 F.3d at 463–64; Montgomery, supra, 346 F.3d at 699–700.   “Courts presented with the issue of determining whether a [security-interest enforcer] has violated § 1692f(6) look to the applicable state self-help repossession statute which identifies the circumstances under which an enforcer of a security interest does not have a present right to the collateral at issue.” Alexander v. Blackhawk Recovery & Investigation, L.L.C., 731 F.Supp.2d 674, 679 (E.D.Mich.2010).  In general, a security-interest enforcer loses its right to present possession of the collateral if it breaches the peace. See O.R.C. § 1309.609(B)(2) (secured party may repossess collateral without judicial process only “if it acts without breach of the peace”); cf. Ford Motor Credit Co. v. Ryan, 189 Ohio App.3d 580, 909 (2010) (repossessor may enter “another’s land to effectuate a repossession, so long as the repossessor does not breach the peace”); see also Alexander, supra, 731 F.Supp.2d at 68–81 (reaching same result under Michigan’s version of Uniform Commercial Code). Turning to Vantu’s complaint, I find it sufficient to state a plausible violation of § 1692f(6).  Vantu’s complaint alleges Maddox, acting on behalf of Echo, sought to repossess Vantu’s ex-husband’s car and, while doing so, pulled out a gun, threatened to shoot her, and battered her. These allegations support a conclusion Echo is an enforcer of security interests (a point Echo concedes ( see Doc. 18 at 7–8)), and that a breach of the peace occurred.  Under these circumstances, Echo had no right to present possession of the collateral, and its conduct (if true) violated the FDCPA.