Schlegel v. Wells Fargo Bank, No. 11-16816 (9th Cir. 2013)
Annotate this CasePlaintiffs filed suit against Wells Fargo under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692-1692p, and the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691-1691f. The court affirmed the district court's dismissal of plaintiffs' FDCPA claim because the complaint did not plausibly allege that Wells Fargo was a debt collector under section 1692a(6). The court reversed, however, the district court's dismissal of the ECOA claim where the complaint's allegations that Wells Fargo took an adverse action without complying with ECOA's notice requirements were enough for the ECOA claim to survive a motion to dismiss because the parties agreed that Wells Fargo did not send plaintiffs an adverse action notice.
Court Description: Foreclosure. The panel affirmed in part and reversed in part the dismissal of an action seeking relief under the Fair Debt Collection Practices Act and under the Equal Credit Opportunity Act, which makes it illegal for a creditor to discriminate against a credit applicant on the basis of race, color, religion, national origin, sex or marital status, or age. The panel held that appellants’ complaint did not plausibly allege that a bank that sent mortgage default notices despite the existence of a loan modification agreement was a “debt collector” under the FDCPA because the complaint did not allege that the principal purpose of the bank’s business was debt collection, or that the bank was in the business of collecting the debts of others. The panel rejected a per se rule that a creditor cannot meet the definition of a debt collector. The panel held that the complaint stated a claim under ECOA’s notice requirement, which provides: “Each applicant against whom adverse action is taken shall be entitled to a statement of reasons for such action from the creditor.” The panel held that the bank’s alleged acceleration of appellants’ debt constituted a revocation of credit and thus met the definition of adverse action.
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