Metropolitan News-Enterprise


Thursday, May 24, 2018


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Man Who Failed to Pay Charges on Credit Card Entitled to Attorney Fees, Costs—C.A.

Action Against Him Found to Be Untimely Under Delaware Law


By a MetNews Staff Writer


A man who failed to pay his charges on a credit card and was sued after an out-of-state statute of limitation lapsed is entitled to $140,550.51 in attorney fees and costs under a decision of the First District Court of Appeal.

Acting Justice Alison M. Tucher, an Alameda Superior Court judge sitting on assignment, wrote the opinion, filed Tuesday. In a published portion, it affirms summary judgment in favor of defendant Robert M. Lujan in the action against him on the debt, and in an unpublished portion, partially affirms summary judgment in his favor on his cross complaint based on wrongful collection practices.

Although Professional Collection Consultants (“PCC”), assignee of the debt, brought its action against Lujan within California’s four-year limitations period, the contract between Lujan and the credit card company, Chase Bank USA, N.A., specifies that “federal law and the law of Delaware” are to be applied. The action was not filed within the three years allowed under Delaware law.

Tucher’s opinion rejects the contention that Delaware law does not apply. PCC put forth such theories as there having been an open book account which, the jurist said, is supported by no facts.

Declaring that “we cannot disregard the cardmember agreement here,” she said the three-year time bar applies.

Other Arguments

However, PCC insisted that if Delaware law does apply, it is still entitled to victory. Its action is timely, it asserted, based on a Delaware statute which tolls a limitations period while an alleged obligor is outside the state.

Tucher noted that other states have declined to apply that provision, and said:

“Because Lujan is not susceptible to suit in Delaware, applying the tolling provision would produce the absurd result of abolishing the statute of limitations defense entirely, which is surely inconsistent with a fundamental policy of California law. Because Delaware’s tolling provision is not inherent in, or inseparable from, its statute of limitations…, our refusal to adopt Delaware’s non-resident tolling statute does not prevent us from enforcing Delaware’s statute of limitations.”

She acknowledged that under a 2005 decision of the Supreme Court of Delaware, if Lujan were to move to Delaware, and PCC sued him there, a court would apply the tolling provision and might find the action was not time-barred. The jurist said:

“That result does not require an out-of-state court to apply Delaware’s non-resident tolling statute to persons who have never lived in Delaware.”

CCP §431.7 Cited

Invoking Code of Civil Procedure §431.7, LCC argued that if Lujan prevailed on his cross complaint, it should be able to offset against any judgment against it the sums Lujan owes based on credit card charges. That provision says, in part:

“Where cross-demands for money have existed between persons at any point in time when neither demand was barred by the statute of limitations, and an action is thereafter commenced by one such person, the other person may assert in the answer the defense of payment in that the two demands are compensated so far as they equal each other, notwithstanding that an independent action asserting the person’s claim would at the time of filing the answer be barred by the statute of limitations.”

That code section, Tucher pointed out, applies only where each party had a claim against the other before a statute of limitations had run.

“Here, Lujan’s cross-complaint alleges PCC’s unlawful attempt to collect on the time-barred debt, claims that by definition did not exist at a time before PCC’s claim was barred by the statute of limitations,” she wrote. “Because Lujan’s claims only arose after the statute of limitations on Chase or PCC’s claim had run, Code of Civil Procedure section 431.70 has no relevance here.”

Lujan cross-complained under the state Fair Debt Collection Practices Act and the Rosenthal Fair Debt Collection Practices Act. In a portion of the opinion that was not certified for publication, Tucher declared that the trial judge correctly granted summary judgment in favor of a cross-defendant that was merely an intermediary that assigned the debt to PCC and was not itself a debt collector, but erroneously granted summary judgment to an executive and attorney of PCC who could be deemed debt collectors.

The case was remanded for trial against them.

Tucher found no abuse of discretion in denying Lujan statutory damages, and found the award of attorney fees and costs reasonable. Lujan was awarded costs on appeal.

The case is Professional Collection Consultants v. Lujan 2018 S.O.S. 2499.


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