The Third Circuit Court of Appeals today reversed a District Court ruling that had granted summary judgment in favor of a debt collector that was accused of violating the Fair Debt Collection Practices Act as well as a state statute in New Jersey for allegedly suing to collect on a debt in which the statute of limitations had expired.
The Appeals Court ruling in the class-action lawsuit said that a debtor’s residence, New Jersey in this case, did not allow for the extension of a three-year statute of limitations which is the law in Delaware, which was cited as the governing body in the agreement between the creditor and the debtor.
A copy of the presidential ruling can be accessed here.
The plaintiff, Andrew Panico, incurred a credit card debt with MBNA Corp. In June 2010, MBNA placed the debt with Portfolio Recovery Associates, which was unsuccessful in trying to collect on the unpaid balance. PRA filed suit against Panico in October 2014 in New Jersey Supreme Court. New Jersey has a six year statute of limitations on collections lawsuits. The plaintiff moved for summary judgment on the grounds that the suit was time-barred because the credit agreement cited application of Delaware law as the governing statute. PRA agreed to a stipulated dismissal of its lawsuit. Panico turned around in 2015 and filed a class-action lawsuit against PRA. PRA was granted a summary judgment in the case based on its argument that the debt was not time-barred. Panico appealed and the Third Circuit issued its opinion today.
Both sides agree that Delaware’s laws are what governs this particular agreement. What PRA attempted to argue, unsuccessfully, is that Delaware’s tolling statute paused the clock on the statute of limitations.
PRA tried to use a case involving a company in Saudi Arabia that could not be served with its lawsuit because of its location as precedent for why it should still be allowed to sue the plaintiff, but Judge Luis Felipe Restrepo had not problem shooting down that argument.
“…serving a resident of New Jersey differs substantially from serving a Saudi Arabian corporation. Indeed, PRA had no trouble serving Panico when it sued him in New Jersey state court.”
By agreeing to PRA’s line of thinking, the precedent “would also have the effect of eliminating the protections of the FDCPA, [New Jersey Consumer Fraud Act], and other state statutes intended to protect debtors and regulate debt collection,” Restrepo wrote in his opinion.
Restrepo pointed to a line of cases that have all held that the tolling statute does not stop the statute of limitations clock from running.
