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  • District Court denies motion to dismiss FDCPA statute of limitations claims

    Courts

    On March 5, the U.S. District Court for the Northern District of Illinois denied defendants’ motion to dismiss a class action lawsuit alleging the defendants violated the FDCPA by failing to mention that payment on a settlement offer would restart the statute of limitations on the underlying “legally unenforceable debt.” According to the opinion, the defendants sent the plaintiff a letter outlining three discount program payment options, with a post-script stating that “[d]ue to the age of this debt, we will not sue you for it or report payment or non-payment of it to a credit bureau.” However, the plaintiff claimed that the letter’s failure to disclose that the statute of limitations could be restarted if a payment was made was a concrete information injury sufficient for Article III standing. The court rejected the defendants’ argument that the plaintiff alleged only a bare statutory violation and failed to identify a particularized injury in fact. Instead, the court ruled that even though the plaintiff has a complete defense because the statute of limitations had expired, the alleged injury is clear because the letter “seems to bait the consumer into paying money on a time-barred debt, either by settling for sixty cents on the dollar . . . or by unwittingly renewing the statute of limitations by making a new payment on the debt.”

    Courts FDCPA Debt Collection Statute of Limitations Spokeo Consumer Finance

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  • Maryland Court of Appeals holds state licensing requirement is a “statutory specialty” with 12-year statute of limitations

    State Issues

    On December 18, the Court of Appeals of Maryland held that the licensing requirement, §12-302, of the Maryland Consumer Loan Law (MCLL) is a “statutory specialty” and causes of action under it are accorded a 12-year statute of limitations period. The decision results from a question of law posed to the appeals court by the U.S. District Court for the District of Maryland after consumers brought an action in the district court against a lender for alleged violations of the MCLL that occurred over three years before the lawsuit was filed. The lender claimed the action was time-barred under the state’s three-year general statute of limitations for civil actions, while the consumers argued the MCLL was an “other specialty,” which would provide a 12-year statute of limitations under state law. To answer the question, the appeals court applied a three-part test to determine whether the statute constituted an “other specialty”: (i) if the obligation sought to be enforced is imposed solely by statute; (ii) if the remedy pursued is authorized solely by statute; and (iii) if the civil damages sought are liquidated, fixed, or, by applying clear statutory criteria, are readily ascertainable. The appeals court analyzed the first and third prongs of the test as the parties agreed the second was not an issue. For the first prong, the court concluded that the MCLL’s licensing requirement was created and imposed solely by statute and not by common law. As for the third prong, the court agreed with the consumers that the need for fact-finding with regard to the monetary liability does not preclude “ready ascertainment.” Because all three elements of the test were satisfied, the court concluded the licensing requirement is a “statutory specialty” and is afforded a 12-year statute of limitations period.

    State Issues Courts Licensing Statute of Limitations

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  • Arizona Supreme Court holds statute of limitations for credit cards begins to accrue upon first missed payment

    Courts

    On July 27, the Arizona Supreme Court held that a cause of action to collect a credit card debt subject to an acceleration clause begins to accrue as of the date of the consumer’s first uncured missed payment. According to the opinion, the consumer was sued in 2014 by a debt collector for an unpaid balance of over $17,000 on a credit card issued in 2007. Throughout 2007 and 2008 the consumer routinely made late payments and completely missed the February 2008 payment. The consumer moved for summary judgment, arguing that the claim was barred by Arizona’s six-year statute of limitations, which began to accrue at the time of the first missed payment in February 2008. The motion was granted by the trial court. The appellate court reversed, agreeing with the debt collector that the cause of action for the entire debt does not accrue until the creditor accelerates the debt. Disagreeing with the appeals court, and affirming the trial court’s decision, the Arizona Supreme Court distinguished revolving credit card accounts from closed-end installment contracts, which have a set date that the debt must be paid in full. The court explained that with installment contracts, the accrual date can be no later than the date in which the entire balance must be paid, as compared to credit card accounts, which have no end date. On that basis, the court held that allowing a creditor to delay accrual by not accelerating the debt, would “functionally eliminate the protection provided to defendants by the statute of limitations.”

    Courts State Issues Credit Cards Statute of Limitations Acceleration

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  • 9th Circuit affirms dismissal of SCRA private action, applies federal four-year catch-all statute of limitations

    Courts

    On July 26, the U.S. Court of Appeals for the 9th Circuit affirmed the dismissal of a private suit alleging a mortgage servicer violated the Servicemembers Civil Relief Act (SCRA) prohibition on foreclosure on the grounds that the claim was time-barred, holding that the federal catchall four-year statute of limitations applies to private suits under the SCRA. The decision results from a 2016 lawsuit filed by a United States Marine veteran (the plaintiff) alleging that the August 2010 foreclosure sale on his home violated section 303(c) of the SCRA as it occurred within nine months of the end of his active military service. While the SCRA does not provide a specific statute of limitations for a private right of action, the defendants moved to dismiss the case as time-barred, arguing that the court should apply the closest state-law analogue to the SCRA. The plaintiff argued that the court should look to the Uniformed Services Employment and Reemployment Rights Act (USERRA) as the most analogous statute, which does not limit the period for filing claims. In response to the plaintiff, the defendants added an alternative argument that the court should apply 28 U.S.C. § 1658(a), which establishes a four-year limitation period for any claims arising from a federal law enacted after 1990, which does not delineate a specific limitations period. The district court granted the motion to dismiss, rejecting the plaintiff’s arguments, and applied the four-year statute of limitations found in the Washington State Consumer Protection Act.

    In affirming the dismissal of the plaintiff’s case on an alternate ground, the court noted that while the SCRA’s protection against foreclosure existed prior to 1990, Congress did not add a private right of action until 2010. The court rejected the plaintiff’s argument that the private right of action was “implied” prior to the 2010 because there was no evidence Congress intended to create one under the SCRA’s predecessor, the Soldiers’ and Sailors’ Civil Relief Act. The court held that because a private right of action was not provided until 2010, the four-year catch-all provision of 28 U.S.C. § 1658(a) applied, and the plaintiff’s claim under the SCRA was time-barred.

    Courts Ninth Circuit SCRA Foreclosure Statute of Limitations Appellate

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