An opinion issued by the nation’s highest court in a case involving a defaulted car loan could impact the interpretation of the Real Estate Settlement Procedures Act.
The lawsuit was originally filed against Santander Consumer USA Inc. The plaintiff alleged that the lender was subject to the
Fair Debt Collection Practices Act.
Santander was not the original lender. Instead, it acquired the automobile loan from CitiFinancial Inc. after the borrower defaulted
on the loan.
A federal lawsuit filed against Santander alleged the lender qualified as a debt collector under the Fair Debt Collection Practices Act.
But the district court ruled that Santander didn’t qualify as a debt collector because it didn’t regularly collect debts for others.
The decision was appealed to the U.S. Court of Appeals for the Fourth Circuit. But the district court’s decision was affirmed.
So the case was presented to the Supreme Court, which agreed to hear it.
On Monday, the Supreme Court decided in favor of Santander and affirmed the lower court’s decision.
“A company may collect debts that it purchased for its own account, like Santander did here, without triggering the statutory definition in dispute,” the opinion stated. “By defining debt collectors to include those who regularly seek to collect debts ‘owed … another,’ the statute’s plain language seems to focus on third party collection agents regularly collecting for a debt owner — not on a debt owner seeking to collect debts for itself.”
The unanimous opinion was delivered by Justice Neil Gorsuch, a nominee of President Trump who was recently confirmed.
Joseph Lynyak III, a partner at Dorsey & Whitney LLC, noted that the approach in the case might bode well if the Supreme Court reviews the Consumer Financial Protection Bureau’s Section 8 RESPA interpretation — which overruled decades of established interpretative guidance.
“There is a new sheriff in town, and thankfully this time it is not the CFPB,” Lynyak said in a written statement. “The Supreme Court indicated that words count, grammar and syntax count — importantly, clearly stated statutory language should not be negated by contrary policy not reflected in the statute.”
