9th Circuit Explains What Sort of Litigation Actions by Debt Collector Can Trigger New FDCPA Statute of Limitations Period

The Ninth Circuit issued an Opinion reversing dismissal of a borrower’s Fair Debt Collection Practices Act (FDCPA) claim as time-barred by the FDCPA’s one-year statute of limitations where actions by the debt collector in underlying collections lawsuits triggered a new limitations period.

Despite the borrower obtaining a discharge on his student loan debt, the debt collector was hired to attempt to collect on the loan.  The debt collector initiated multiple state court suits against the borrower on behalf of the purchaser of the debt.  However, the state courts ultimately found that the debt collector’s affidavit to establish ownership of the debt was premised on hearsay.  The state courts excluded the affidavit and granted summary judgment for the borrower.

The borrower then instituted a class action suit against the debt collector, alleging that the collection suits constituted “a knowingly meritless debt collection lawsuit” in violation of the FDCPA.  The district court dismissed the borrower’s suit, finding the claims to be time-barred due to the borrower’s failure to initiate the suit within one year of the debt collector filing suit in the underlying state court collection actions.

On appeal, the Ninth Circuit reversed dismissal of the FDCPA claims, finding that they were not time-barred.  The Court explained that there is a two-step inquiry to determine what conduct by the debt collector triggers the statute of limitations, based on: 1) when was the debt collector’s last opportunity to comply with the FDCPA; and, 2) whether the date of the alleged violation is easily ascertainable.  For a debt collector’s litigation conduct to restart the statute of limitations, the Court held that the borrower must state, “sufficient facts to show that the debt collector’s act is a new violation of the FDCPA.”

In finding that the borrower’s suit did not fall outside of the FDCPA’s one-year statute of limitations, the Court relied on the debt collector’s filing of a subsequent affidavit in the underlying suits against the borrower regarding ownership of the debt.  According to the Court, the debt collector’s filing of the second affidavit constituted an additional independent FDCPA violation which triggered a new one-year statute of limitations.  The Court remanded the case for further proceedings before the district court.