Third Circuit State a ‘Self Proclaimed Debt Collector’ Can Validate a Foreclosure Proceeding

The initial communication and validation notice was issued in the foreclosure complaint drafted by the law firm and self-proclaimed debt collector representing First Union in the foreclosure action.

Oppong v. First Union Mortg, 326 F. App’x 663 (3d Cir. 2009)

A complete contradiction. From rejection of the classification of a debt collector to “a self-proclaimed” debt collector, no wonder its hidden away as an unpublished opinion. It’s a shocker as the Ninth Circuit would confirm and as written by the lawyers at K&L Gates LLP which follows.

APR 17, 2021

Before: RENDELL, FUENTES and ALDISERT (deceased), Circuit Judges.

Atuahene Oppong appeals from the judgment of the United States District Court for the Eastern District of Pennsylvania entered in favor of Wells Fargo Home Mortgage, Inc. (“Wells Fargo”), in Oppong’s suit under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq.

Oppong’s original complaint naming First Union Mortgage Corporation (“First Union”), Wells Fargo, and Francis S. Hallinan, Esq. (“Hallinan”), as defendants alleged that they failed to provide him with the requisite validation information concerning his debt on his home mortgage, in violation of 15 U.S.C. § 1692g. In 2004, we affirmed the District Court’s grant of summary judgment as to First Union because it was not a “debt collector,” under the FDCPA. See Oppong v. First Union Mortgage Corp., No. 04-1252, slip op. at 9, 112 Fed.Appx. 866 (3d Cir. 2004).

We noted that although the payoff figure and reinstatement figure documents on the letterhead of Federman Phelan, L.L.P., explicitly stated that “this firm is a debt collector attempting to collect a debt,” there was no record evidence that attorney Hallinan himself was engaged in debt collecting activities, and thus, we concluded that he was not a “debt collector” under the FDCPA.

Id. at 6-7.

We vacated judgment as to Wells Fargo, however, and remanded the matter to the District Court  because an issue of material fact existed as to Wells Fargo’s “debt collector” status. In 2006, we affirmed the District Court’s ruling at summary judgment that Wells Fargo was a “debt collector” under the FDCPA, but we vacated its ruling that Oppong’s action was barred by the doctrine of res judicata. See Oppong v. First Union Mortgage Corp., 215 Fed.Appx. 114, 120 (3d Cir. 2007).

1 Oppong obtained the loan in 1995 from Corestates Mortgage Corporation, which merged with First Union soon thereafter. He defaulted on the loan in 1996.

On remand, the District Court conducted a one-day non-jury trial at which Oppong testified. Oppong agreed to the facts proposed by Wells Fargo. These facts are set forth in the District Court’s opinion. See D. Ct. Op. at 3-5.

The District Court found that the only interaction between Oppong and Wells Fargo, at any relevant time, was a letter that Wells Fargo sent to Oppong, dated February 26, 2001, stating that Wells Fargo had assumed the role of servicer of Oppong’s mortgage.

The court also found that Wells Fargo never sent Oppong a validation notice and that it never attempted to collect the debt.

The District Court found that the law firm of Federman and Phelan, L.L.P., drafted and filed the foreclosure action for First Union in January 2000 and that, at the foreclosure trial in January 2002, the law firm gave Oppong the payoff figure document, which itemized the payoff figure and amounts owed on the loan and attorney’s fees.

At trial, Oppong contended that Wells Fargo violated the FDCPA when it failed to provide him with a validation notice.

Wells Fargo argued that Oppong had in fact received an “initial communication” when he was served with the foreclosure complaint filed in 2000. Wells Fargo also argued that the language in the foreclosure complaint satisfied all of the requirements set forth in § 1692g and, thus, it constituted a proper “validation notice.”

The District Court agreed, noting in addition that Wells Fargo’s duties as a debt collector under the FDCPA were not triggered because Wells Fargo never attempted to collect on the debt.

The District Court entered judgment for Wells Fargo and against Oppong. Oppong filed this timely appeal.

We review a district court’s findings of fact following a bench trial under the clearly erroneous standard. Gordon v. Lewistown Hosp., 423 F.3d 184, 201 (3d Cir. 2005). We exercise plenary review “over a district court’s choice and interpretation of legal precepts.” Blasband v. Rales, 971 F.2d 1034, 1040 (3d Cir. 1992).

We will affirm.

Oppong claims that Wells Fargo erroneously relied on the foreclosure complaint’s initial communication and validation notice because it was issued by First Union, who is not a “debt collector” under the law.

The claim is meritless.

The District Court properly set forth the principles of law regarding the FDCPA and correctly applied the standards for determining Wells Fargos’ compliance with §§ 1692a and 1692g to the facts in Oppong’s case.

The initial communication and validation notice was issued in the foreclosure complaint drafted by the law firm of Federman and Phelan, a self-proclaimed debt collector representing First Union in the foreclosure action.

The District Court correctly held that the substance  of the foreclosure complaint’s validation notice fully complied with all of the notice requirements set forth in 15 U.S.C. ¶ 1692g.

The District Court also properly held that the validation notice satisfied the objective “Least Sophisticated Consumer” standard.

See Wilson v. Quadramed Corp., 225 F.3d 350 n. 2 (3d Cir. 2000); Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir. 1991).

The notice was straightforward, not confusing or misleading; it indicated that the drafter of the complaint, the law firm of Federman and Phelan, was in fact a debt collector trying to collect a debt; it cautioned Oppong to seek legal advice, advised him where to get it; and it informed him where he could find legal assistance if he could not afford a lawyer.

Thus, because Oppong received a fully compliant validation notice in 2000, Wells Fargo was not obligated under the FDCPA to send its own validation notice for the same debt after it took over servicing the loan in March 2001.

See Senftle v. Landau, 390 F.Supp.2d 463, 473 (D.Md. 2005); Nichols v. Byrd 435 F.Supp.2d 1101, 1106 (D.Nev. 2006).

2 Wells Fargo argues that Oppong failed to raise this argument at trial and thus it is waived on appeal. Appellee’s Brief at 22. Upon review of the trial transcript, it appears that, although Oppong did not present verbatim the claim that he raises on appeal, he did argue that First Union was a creditor, not a debt collector, and that Wells Fargo, as a debt collector, had a separate duty under the FDCPA to issue its own validation notice upon its own initial communication with Oppong. See TT at 38-39. We deem this presentation of the issue to be sufficient to preserve the pro se appellate claim.

3 Oppong’s case rests entirely on whether the foreclosure complaint constitutes an “initial communication” under the FDCPA.

In 2006, Congress amended 15 U.S.C § 1692g, providing that “formal pleadings in a civil action shall not be treated as an initial communication” for purposes of triggering the five-day time period for sending a written validation notice. See § 1692g(d).

We need not decide whether § 1692g(d) applies retroactively in Oppong’s case because the result is the same either way. If § 1692g(d) does not apply retroactively, then Wells Fargo did not violate the FDCPA because the law firm’s foreclosure complaint constituted a legitimate initial communication and validation notice regarding the same debt.

If § 1692g(d) does apply in Oppong’s case, the foreclosure complaint filed in 2000 and Wells Fargo’s formal substitution of itself as a party in the foreclosure action in July 2001, “shall not be treated as” initial communications under the new provision.

Thus, neither the law firm’s nor Wells Fargo’s involvement in the foreclosure action triggered the provisions of the FDCPA.


4 The District Court noted the potential for confusion in discerning between the notice of a thirty day response time for the FDCPA and the twenty-day period permitted for answering a foreclosure complaint. The District Court concluded that a “least sophisticated consumer” reviewing the foreclosure complaint in Oppong’s case would have comprehended and been able to follow its independent guidelines. See District Court Opinion at 14.

We note that Oppong apparently comprehended the difference in the deadlines for filing an FDCPA response and for filing an answer to the foreclosure complaint because he answered the foreclosure complaint within the twenty-day time period.

Oppong next argues that the District Court erred in making a factual finding that Wells Fargo never attempted to collect on the debt. He asserts that Wells Fargo attempted to collect on the debt when it substituted itself as the plaintiff in the foreclosure action on July 24, 2001, and that Wells Fargo violated the FDCPA when it failed to provide Oppong with validation of the debt within five days of its initial communication.

Even assuming that Wells Fargo’s substitution in the foreclosure action could somehow be described as an attempt to collect on the debt, § 1692g did not require an additional validation notice from Wells Fargo because, as we have already discussed, the requisite validation notice regarding the same debt had already been issued in the foreclosure complaint more than one year earlier.

See Senftle v. Landau, 390 F.Supp.2d 463, 473 (D.Md. 2005); Nichols v. Byrd, 435 F.Supp.2d 1101, 1106 (D.Nev. 2006). 

5 Other than the District Court’s finding that Wells Fargo never attempted to collect on the debt, Oppong does not dispute on appeal the correctness of facts to which he agreed at trial.

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The Ninth Circuit Holds That Subsequent Debt Collectors Must Send FDCPA Validation-of-Debt Notices

Jul 29, 2016

The Ninth Circuit recently construed the Fair Debt Collection Practices Act (“FDCPA”) provision[1] that requires a debt collector to send a validation-of-debt notice within five days of “the initial communication” with a consumer regarding the collection of a debt. In Hernandez v. Williams, Zinman & Parham P.C.,[2] the Court addressed the question of whether “the initial communication” refers only to the very first communication sent to a consumer regarding the debt or to the first communication sent by each debt collector that seeks to collect on the debt. The question has divided district courts, and the Ninth Circuit is the first federal court of appeals to provide an answer in a published opinion.[3] In doing so, the Court held that the FDCPA requires each debt collector to send a debt validation notice containing specific disclosures within five days of that collector’s first communication with the consumer regarding the collection of the debt, regardless of whether a prior debt collector had sent a notice regarding the same debt.

The Proceedings Below

The Hernandez action arose from a loan obtained by the plaintiff to finance the purchase of an automobile. When the plaintiff stopped making payments on the loan, a debt collector sent a letter to the plaintiff seeking to collect on the debt. The debt collector later retained a law firm to assist with the collection efforts. The law firm sent the plaintiff a collection letter but did not provide a full validation-of-debt notice.[4] On that basis, the plaintiff filed suit against the law firm alleging violation of the FDCPA § 1692g.

The law firm asserted that it was not required to provide a validation-of-debt notice because the initial debt collector’s letter to the plaintiff was the “initial communication” with respect to the debt at issue and, therefore, the sole communication triggering § 1692g(a)’s requirements. The district court agreed and granted summary judgment in favor of the law firm.[5]

The Ninth Circuit’s Decision

On appeal, the plaintiff argued that under § 1692g(a), each and every debt collector must provide a debt validation notice to the subject consumer. The Ninth Circuit agreed, holding that “although the sentence in § 1692g(a) in which the phrase ‘the initial communication’ appears is ambiguous when read in isolation, when the sentence is read in the context of the FDCPA as a whole and in light of the statute’s remedial purpose, it is clear that the validation notice requirement applies to each debt collector that attempts to collect a debt.”[6]

The Ninth Circuit noted that although the statute refers to “the initial communication,” which suggests that there may be only one initial communication, the statute also refers to “a debt collector,” which suggests that Congress may have intended to impose the validation-of-debt notice requirement on any debt collector subject to FDCPA requirements.[7] The Court concluded that only the latter interpretation is consistent with the rest of the statutory text and avoids creating substantial loopholes that would undermine the protections the statute provides.[8] The Court further held that interpreting “the initial communication” to refer to the first communication by any debt collector is consistent with the FDCPA’s declared purpose of protecting consumers from abusive debt collection practices, and that the FDCPA must be liberally construed in favor of the consumer in order to effectuate this goal.[9]

Although it ruled that review of external interpretative sources was not necessary, the Court noted that a Senate Report discussing § 1692g(a) provided that “[a]fter initially contacting a consumer, a debt collector must sen[d] him or her written notice” with the required information.[10] The Ninth Circuit stated that “[a]lthough the Senate Report does not expressly define the meaning of ‘the initial communication,’ its discussion of § 1692g’s purpose extinguishes any doubt that Congress intended the validation notice provision to protect consumers throughout the entire lifecycle of a debt.”[11] The Court further noted that both the Consumer Financial Protection Bureau (“CFPB”), which has rulemaking authority under the FDCPA, and the Federal Trade Commission, which shares concurrent authority with the CFPB to enforce the FDCPA, asserted in an amicus brief that § 1692g requires all debt collectors to send a validation-of-debt notice. The Court, however, ruled that it need not defer to agency interpretation because the statute as a whole was unambiguous with respect to the question presented.


The Ninth Circuit has now held that the reference in § 1692g to “the initial communication” refers to the first communication by each and every debt collector that seeks to collect on a debt. As noted above, however, two other federal courts of appeal have reached a contrary conclusion (albeit in unpublished rulings), and several district courts in other circuits have likewise refused to extend the validation-of-debt notice requirement of § 1692g to subsequent debt collectors.

Thus, it is possible a circuit split may develop with respect to the issue. Nevertheless, in light of the Hernandez decision, debt collectors who conduct business within Ninth Circuit jurisdictions now must comply with its holding, even if a prior debt collector has already sent the consumer a validation-of-debt notice concerning the debt.[12]


[1] 15 U.S.C. § 1692g(a).

[2] — F.3d —-, No. 14-15672, 2016 WL 3913445 (9th Cir. July 20, 2016).

[3] The Tenth Circuit and the Third Circuit have each declined to apply the debt-validation-notice requirements of 15 U.S.C. § 1692g to a subsequent debt collector, but have only done so in unpublished decisions, which do not explain the basis for their construction of the statute. See Lee v. Cohen, McNeile & Pappas, P.C., 520 F. App’x 649 (10th Cir. 2013) (unpublished); Oppong v. First Union Mortg. Corp., 326 F. App’x 663 (3d Cir. 2009) (per curiam) (unpublished).

[4] The law firm conceded that it was acting as a “debt collector” for purposes of the FDCPA. Hernandez, 2016 WL 3913445 at *1, n.1. Because the law firm did not argue before the district court or on appeal that it was exempt from §1692g(a)’s requirements because it was acting as an agent for the original debt collector, the Ninth Circuit noted that it would not address that issue on appeal. Id.

[5]Hernandez v. Williams, Zinman & Parham, P.C., No. CV-12-731-PHX-SMM, 2014 WL 977649, at *3-5 (D. Ariz. Mar. 13, 2014), rev’d — F.3d —-, No. 14-15672, 2016 WL 3913445 (9th Cir. July 20, 2016).

[6]Hernandez, 2016 WL 3913445 at *3.

[8]Id. at *7–8.

[10] S. Rep. No. 95-382, 95th Cong. 1st Sess. 4 (1977) (emphasis added).

[11]Hernandez, 2016 WL 3913445 at *10.

[12] The Ninth Circuit covers the states of Alaska, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington and the territories of Guam and the Northern Mariana Islands.

Third Circuit State a ‘Self Proclaimed Debt Collector’ Can Validate a Foreclosure Proceeding
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