In a case that was defendant by Mitch Williamson at Barron & Newburger, a New Jersey state Appeals Court has upheld the dismissal of a class-action lawsuit against a debt buyer that was accused of unlawfully purchasing the debt of the plaintiff and others without first obtaining a business license to operate as a consumer lender or finance company as required by the New Jersey Consumer Finance Licensing Act. The plaintiff missed her chance to raise her arguments when she chose not to do so during other proceedings when the defendant filed a collection lawsuit against the plaintiff.
The Background: Back in 2014, the plaintiff defaulted on a credit card debt that was purchased by the defendant. The defendant filed a lawsuit to recover the balance and obtained a default judgment. The defendant moved to start garnishing the plaintiff’s wages, and by 2017, the plaintiff had repaid the debt in full.
- In 2019, the plaintiff filed a class action in New Jersey state court, alleging the defendant did not have the proper license to do what it did. Ultimately, the state court judge dismissed the plaintiff’s suit on the grounds it was barred by both the res judicata and controversy doctrine. Res judicata is a doctrine that says actions may not be relitigated once it has been decided on the merits. The controversy doctrine is specific to New Jersey and states that litigants assert all known claims in one action.
The Ruling: The plaintiff argued on appeal that her claims are based on transaction that were technically voided by the legislature through the Consumer Finance Licensing Act and may be adjudicated at any time.
- Ultimately, the plaintiff attempted to use “circular” logic in an attempt to raise defenses to justify the plaintiff’s “own violation of the principles of finality, fairness and judicial economy in proceeding with a second suit on the same debt,” the Appeals Court ruled.
