McNair v. Maxwell & Morgan, PC: HOA Court Case Guide

The rule in one sentence

Public-interest record: appellate finding against Maxwell & Morgan

Case Participants

What happened and why it matters

Martha McNair bought a home in Gilbert, Arizona in 2004 that was part of the Neely Commons Community Association, obligating her under a recorded declaration of covenants, conditions, and restrictions (CC&Rs) to pay an annual assessment in monthly installments. After she fell behind, the law firm Maxwell & Morgan P.C. — retained by the Association — pursued her through a series of collection lawsuits, a stipulated judgment, and ultimately a judicial foreclosure that sold her home. McNair then sued the firm and its principals under the federal Fair Debt Collection Practices Act (FDCPA), alleging they misrepresented the amount she owed and sought attorneys’ fees to which they were not entitled. The district court granted summary judgment to the defendants, holding most claims time-barred and rejecting the timely claims — reasoning in part that pursuing a foreclosure was not “debt collection” and that the state court had implicitly approved the fees. The Ninth Circuit affirmed in part and reversed in part. Distinguishing Ho v. ReconTrust Co. (a non-judicial foreclosure case), the panel held that collecting HOA assessments through a judicial foreclosure that allows deficiency judgments is “debt collection” subject to the FDCPA. It further held that the firm’s writ of special execution violated 15 U.S.C. § 1692e by falsely representing the legal status of $1,597.50 in “accruing” attorneys’ fees as court-approved when no court had yet approved them. The panel remanded for a determination of statutory and any actual damages, and a concurrently filed memorandum disposition affirmed the remaining, largely untimely claims.

The panel addressed the two independent grounds on which the district court had granted summary judgment. First, the district court had held that the defendants were not engaged in “debt collection” because the writ was filed to foreclose on a lien. The Ninth Circuit rejected that reasoning as irreconcilable with the statutory text. Under 15 U.S.C. § 1692a(5), a “debt” is an obligation to pay money arising out of a transaction primarily for personal, family, or household purposes, and under § 1692a(6) a “debt collector” is anyone who regularly collects debts owed to another. McNair’s obligation arose from unpaid homeowner-association assessments on her residence, so it plainly qualified as consumer debt, and the firm plainly qualified as a debt collector. The court cited Mashiri v. Epsten Grinnell & Howell, 845 F.3d 984 (9th Cir. 2017), and Heintz v. Jenkins, 514 U.S. 291 (1995), for the settled rule that attorneys who regularly engage in consumer-debt collection are covered by the Act even when that activity consists of litigation.

The court then distinguished Ho v. ReconTrust Co., NA, 858 F.3d 568 (9th Cir. 2017), on which the defendants relied. Ho held that a trustee facilitating a non-judicial foreclosure was not collecting a “debt” because, under California law, such a foreclosure cannot yield a deficiency judgment and thus extinguishes the entire debt regardless of the sale price — the object being to retake and resell the security, not to collect money from the borrower. Here, by contrast, the defendants pursued a judicial foreclosure under a scheme that, in many cases, permits deficiency judgments, citing A.R.S. §§ 33-727(A) and 33-729(B)-(C). That difference placed the firm’s conduct squarely within the FDCPA’s definition of debt collection.

Second, the district court had held, in the alternative, that the writ did not violate the Act because the Maricopa County Superior Court had implicitly approved the claimed fees by issuing the writ and later rejecting McNair’s challenges. The panel found this analysis failed to ask the right question: whether the defendants were legally entitled to claim the fees at the time they applied for the writ. The FDCPA bars any false or misleading representation of the character, amount, or legal status of a debt, 15 U.S.C. § 1692e(2)(A). Under Arizona Rule of Civil Procedure 54(g), post-judgment attorneys’ fees must be requested by motion, and when the November 5, 2013 writ was filed, no court had yet approved the quantification of the $1,597.50 in “accruing” fees. By listing those fees as “now … due,” the writ falsely represented that they had already been judicially approved. The court cited Woliansky v. Miller and Costa v. Maxwell & Morgan PC for the point that fee amounts are set by the court’s discretion. Because the district court had not reached damages, the panel remanded for a determination of statutory and, if applicable, actual damages under 15 U.S.C. § 1692k, noting McNair might have suffered no actual damages given the Superior Court’s later approval of the fees.

This published Ninth Circuit decision is significant for homeowners, associations, and the law firms that collect HOA debt because it confirms that the FDCPA applies to judicial-foreclosure collection of delinquent assessments. Many collectors had read Ho v. ReconTrust to mean that any foreclosure is outside the Act. McNair narrows Ho to its facts: the exemption turns on whether the foreclosure scheme can produce a deficiency judgment. Because Arizona’s judicial-foreclosure process can, a firm that collects assessments through it is a “debt collector” pursuing a “debt” and must comply with the FDCPA’s prohibitions on false or misleading representations.

The decision also draws a practical line for how collectors may present attorneys’ fees in enforcement papers. Listing “accruing” fees as presently due in a writ of special execution — before any court has approved that amount under Arizona Rule 54(g) — can be an actionable misrepresentation of the debt’s legal status, even if a court later blesses the same fees. For homeowners, McNair confirms a federal remedy (including statutory damages) against overreaching collection conduct; for associations and their counsel, it is a reminder to secure judicial approval before characterizing post-judgment fees as owed. The Supreme Court denied certiorari in 2019, leaving the ruling in force within the Ninth Circuit.

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AI-generated video overview of McNair v. Maxwell & Morgan, PC. The Ninth Circuit appellate holding is the adverse source-backed point; the case settled after remand and no damages judgment should be implied.

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AI-generated audio deep dive for McNair v. Maxwell & Morgan, PC. The Ninth Circuit appellate holding is the adverse source-backed point; the case settled after remand and no damages judgment should be implied.

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