Davidson v. Seterus, Inc.Annotate this Case
At issue in this appeal was whether a mortgage servicer could be considered a "debt collector" under California's Rosenthal Fair Debt Collection Practices Act (the Rosenthal Act; Civ. Code,1 sec. 1788 et seq.). There was a split of authority among the many federal district courts that have considered the issue, and there was “a paucity of California authority addressing the question.” In this case, plaintiff Edward Davidson brought a putative class action against Seterus and its parent company, International Business Machines, Inc. (IBM), alleging that the defendants violated the Act and the Unfair Competition Law (UCL). The defendants demurred to Davidson's complaint, arguing that neither of them was a " 'debt collector' " who engages in " 'debt collection' " under the Act. The trial court sustained the defendants' demurrer, concluding that the defendants "are not 'debt collectors' because servicing a mortgage is not a form of collecting 'consumer debts.' " On appeal, Davidson contended the trial court erred in determining that mortgage servicers were not "debt collectors" under the Rosenthal Act. The Court of Appeal ultimately agreed with Davidson's contention, in no small part due to the Court’s adherence to "the general rule that civil statutes for the protection of the public are, generally, broadly construed in favor of that protective purpose." The Court therefore reversed the trial court and remanded this case for further proceedings.