Currently pending before the U.S. Supreme Court in Obduskey v. Wells Fargo is the question of whether the FDCPA applies to nonjudicial foreclosures. A circuit split currently exists on the issue: the Tenth Circuit in the underlying Obduskey case found that nonjudicial foreclosures do not fall under the FDCPA’s purview, whereas the Sixth Circuit found the opposite.

Directly impacted by this circuit split is a case in the Eastern District of Michigan, Garland v. Orlans PC, No. 18-cv-11561 (E.D. Mich. Nov. 21, 2018), where a judge decided to stay the matter pending the U.S. Supreme Court’s decision on the issue.

Garland, like Obduskey, deals with a nonjudicial foreclosure. Defendant filed a motion to dismiss the case, however the motion to dismiss requests that the matter be stayed (or put on hold) until the U.S. Supreme Court’s decision is released. Since the Eastern District of Michigan sits within the Sixth Circuit, the court would ordinarily be bound by the Sixth Circuit’s precedent. In this matter, it would mean that the FDCPA applies to nonjudicial foreclosures like the one from where this suit stemmed. However, since all courts in the United States -- including the Sixth Circuit and the courts within its jurisdiction -- are bound by the decisions of the U.S. Supreme Court, the Obduskey decision might overturn the current precedent that binds the Eastern District of Michigan and may require the court to come to a completely different conclusion.

The court agreed with the defendant. Since the Obduskey decision will directly impact the court’s decision in this matter, the court found it would be better to wait. Additionally, the court noted that staying the matter could save a substantial amount of effort and expense for the court and the parties. If the court were to deny the request to stay, the litigation would continue as usual while the Obduskey decision is pending. If the Obduskey decision comes down and finds that the FDCPA does not apply to nonjudicial foreclosures, then the FDCPA claims in this case would be moot and the time, effort, and expense used to continue the litigation would have been wasted. Since the risk of continuing the litigation while Obduskey is pending far outweighs the minimal risk to plaintiff caused by staying the matter, the court decided to grant the request to stay.

insideARM Perspective

Right now, all signs point toward the U.S. Supreme Court siding with the Tenth Circuit. Two relatively recent items support this prediction. First, the Bureau of Consumer Financial Protection (BCFP or Bureau) recently filed an amicus brief in the Obduskey case, siding with the Tenth Circuit and arguing that the FDCPA does not apply to nonjudicial foreclosures. Second, after Justice Brett Kavanaugh joined the bench, the U.S. Supreme Court now has a right-leaning majority that is unlikely to extend the reach of the FDCPA. Based on this, it sounds like the judge in the Garland matter made the right call.


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