De Dios v. International Realty & Investments

Congress passed the Fair Debt Collection Practices Act (the “Act”) to “eliminate abusive debt collection practices by debt collectors.” 15 U.S.C. § 1692 (e). The Act broadly applies to any business that uses an instrumentality of interstate commerce to collect a debt on its own or another’s behalf. Id. § 1692a(6). This appeal centers around one of several narrow exclusions in the Act, which exempts as a debt collector any person collecting “a debt which was not in default at the time it was obtained by such person.” Id. § 1692a(6)(F)(iii) (emphasis added). We conclude that the residential property manager in this case was not a debt collector because it acquired the debt before default, thus exempting the manager from the Act.

I. BACKGROUND

In 2001, Maribel Juan De Dios rented an apartment in Los Angeles. After seeking an exemption from the rent stabilization law, in 2006 a new landlord began increasing De Dios’s monthly rent to amounts De Dios considered excessive. De Dios initially paid under protest, but then ceased payment of the increased rent.

Meanwhile, between late 2005 and June 2006, the property was in receivership. The court-appointed receiver retained his…