Wednesday, April 15, 2020
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Ninth Circuit:
Action Against Debt Collector Under California Law Barred
Panel Applies 2019 Opinion, Decided Under Federal Statute, to Suit Based on California Law; Says Unpaid Amounts May Be Sought Without Disclosing Statute of Limitation Has Run
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals declared yesterday that under California law, as well as federal law, a debt collector may make efforts to secure payment without disclosing that the statute of limitation had expired.
A three-judge panel, in a memorandum opinion, cited the Ninth Circuit’s Dec. 18, 2019 opinion in Stimpson v. Midland Credit Management, Inc. There, Circuit Judge Sandra S. Ikuta said that under the federal Fair Debt Collection Practices Act (“FDCPA”), “a debt collector is entitled to collect a lawful, outstanding debt even if the statute of limitations has run, so long as the debt collector does not use means that are deceptive or misleading and otherwise complies with legal requirements.”
That holding was applied yesterday to an action brought under California’s Rosenthal Fair Debt Collection Practices Act (“RFDCPA”), as well as the FDCPA.
Offer to ‘Resolve’
Kelly Woodward brought her action in the District Court for the Central District of California. She sued Collection Consultants of California (“CCOC”) based on a March 14, 2018 letter it sent to her reciting charges by Kaiser Permanente amounting to $395.08 and saying:
“We would like to wish you and your family a happy, healthy and prosperous New Year. We know every family wants to save money wherever they can; perhaps now more than ever. With that in mind, we are starting this year by offering you the ability to resolve your account(s) for only $118.52. Why not use that year-end bonus or tax return to take advantage of this great opportunity and resolve your account(s) once and for all?”
Woodward said in her complaint:
“Defendant’s statement and the letter failed to disclose the age of the debt, that there is a four-year statute of limitations on the debt, and that the debt was out of statute. More importantly. Defendant’s statement failed to state that making a payment on the time-barred debt could revive the statute of limitations and permit Defendant to sue Plaintiff on the debt.”
(The plaintiff disputed the legitimacy of the charges.)
Phillips Affirmed
Yesterday’s decision affirms a dismissal of Woodward’s action without leave to amend by the district’s chief judge, Virginia A. Phillips.
The circuit judges—Kim Wardlaw, Mary H. Murguia, and Eric D. Miller—did not separately discuss the RFDCPA. They wrote:
“The reasoning of Stimpson is controlling here….Here, CCOC’s letter provides an offer to ‘resolve’ Woodward’s past-due accounts without mentioning that the statute of limitations has expired, but it is not misleading or deceptive in any way, and it complies with all legal requirements.”
Reviving Obligation
In Stimpson, the plaintiff, who resides in Idaho, insisted that Idaho law applied (although the loan agreement specified that Nevada law was controlling) and that under the law of his state, making one payment would revive the obligation—a consequence which, he argued, the debt collector was obliged to disclose. Ikuta’s opinion rejects the contention that such a duty exists.
Yesterday’s opinion notes:
“…Woodward’s case is even less compelling than the plaintiff’s case in Stimpson because in California, a debtor does not revive the statute of limitations by making a payment on a time-barred debt.”
The opinion cites Code of Civil Procedure §360 which specifies that “no such payment of itself shall revive a cause of action once barred.”
Woodward filed her action on June 28, 2018. Effective Jan. 1, 2019, the RFDCPA was amended to require, under Civil Code § 1788.14, that a debtor be told if an action on the debt is time-barred.
The case is Woodward v. Collection Consultants of California, 19-55296.
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