Judge Denies MTD in FDCPA SOL Case

A District Court judge in Illinois has denied a defendant’s motion to dismiss after a plaintiff filed a class-action lawsuit alleging the defendant violated the Fair Debt Collection Practices Act by failing to mention in a letter that payment on a settlement offer would restart the statute of limitations on the underlying debt.

A copy of the ruling in Navarroli v. Midland Funding LLC, Midland Credit Management, Inc., and Encore Capital Group, Inc., can be accessed by clicking here.

The plaintiff received a collection letter from the defendant. The letter included the following statement: “Congratulations! You have been pre-approved for a discount program designed to save you money. Act now to maximize your savings and put this debt behind you. . . .” The letter also included three payment options — a one-time payment of 60% of the amount owed, six monthly payments that would equate to 80% of the amount owed, and a monthly payment plan with payments as low as $50. The letter included a deadline to accept the offer and the following postscript: “The law limits how long you can be sued on a debt and how long a debt can appear on your credit report. Due 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.”

The plaintiff filed suit, alleging the letter did not inform him that had he made a payment, the statute of limitations would have re-started. The defendant filed the motion to dismiss, arguing that the defendant lacked standing to file suit because he did not suffer a concrete injury.

“The very nature and purpose of MCM’s letter seems to be to bait the consumer into paying money on a time-barred debt, either by settling for sixty cents on the dollar — a percentage that is orders of magnitude higher than what Defendants allegedly paid to obtain the outdated debt — or by unwittingly renewing the statute of limitations by making a new payment on the debt,” Judge Sara Ellis wrote in denying the motion to dismiss, ruling that “the alleged injury is clear.” The plaintiff already had a “complete defense” because the statute of limitations had expired, Judge Ellis wrote.

In denying the motion to dismiss, Judge Ellis ruled that the defendant’s argument that the plaintiff alleged a “bare statutory violation without identifying a particularized injury in fact,” did not stand up.