Plaintiff Jeffrey Nabatmama is a tenant within the Shenandoah Villas Homeowners Association. The association imposed over $106,000 in fines against plaintiff for alleged violations of its CC&Rs. Defendant Ross Morgan & Co., Inc. is the association’s community management company, who attempted to collect the fines from plaintiff. Plaintiff filed a complaint against the defendant under the Fair Debt Collection Practices Act (FDCPA). Particularly, plaintiff alleged defendant violated 15 U.S.C.S. §§ 1692a-1692o in its collection attempts.

Defendant filed a motion to dismiss. In ruling on the motion, the trial court appreciated the distinction between regular assessments and fines and held that only the former is considered “debt” under the FDCPA. The court further held that fines do not arise from a consensual transaction, which is required for an obligation to be considered “debt” under the FDCPA; because the fines are penalties imposed for violations of association rules and not from the initial property purchase or agreement to pay regular assessments.

The court held that since fines do not constitute “debt” under the FDCPA, the plaintiff’s claims failed as a matter of law. Thus, the court granted defendant’s motion to dismiss plaintiff’s complaint, with prejudice, because the court found that any amendment to the complaint would be futile.

TAKEAWAY: Regular assessments arise under a consensual transaction tied to a purchase of property while fines are penalties for rule violations. For this reason, community association assessments are considered debts and subject to the FDCPA, but fines are not.