Tuesday, May 18, 2010

FYI: 6th Cir Rejects Debtor's "Fraudulent Concealment" Argument in FDCPA Case

The U.S. Court of Appeals for the Sixth Circuit recently held that a consumer plaintiff's claims were barred by the FDCPA's one year statute of limitations periodand that the exception to the statute of limitations for circumstances where a party fraudulently conceals information that prevents another party from discovering its wrongdoing did not apply to the particular facts in this case.  A copy of the opinion is attached.

Defendant Unifund, a debt collector, sued plaintiff, a consumer, to collect a certain debt owed by plaintiff.  Plaintiff filed affirmative defenses and counterclaims, raising Unifund's lack of capacity to sue and alleging that Unifund violated the FDCPA by misrepresenting plaintiff's debt.  Both parties eventually dismissed their claims against one another.  Plaintiff then sued Unifund in state court, reasserting her claims from the debt collection action.  Unifund removed the case to federal court and moved to dismiss the action on statute of limitations grounds.  The district court ruled in favor of Unifund on its motion to dismiss, holding that because plaintiff filed her suit over a year after she had been served with the FDCPA complaint, which was when her claim accrued, it was barred by the FDCPA's one year statute of limitations, 15 U.S.C. § 1692k(d).  The district court further rejected plaintiff's claim that Unifund had tolled the statute of limitations by fraudulently concealing its lack of capacity to sue.  This appeal followed.

In affirming the district court's ruling in favor of Unifund, the Sixth Circuit looked to the generally accepted principle that it will not extend the statute of limitations "by even a single day," with limited exceptions.  One exception to this rule applies to defendants who fraudulently conceal their wrongdoing and thus prevent a plaintiff from filing suit during the limitations period.  The court found that plaintiff's claim did not fall into this limited exception given that she could not show that: (1) there was concealment that (2) prevented plaintiff from discovering Unifund's wrongdoing during the period and (3) that she exercised diligence in trying to uncover Unifund's conduct.  The court noted that plaintiff's own actions showed that Unifund did not prevent her from raising her FDCPA claims during the limitations period, given that plaintiff herself raised the same claims in the debt collection action. 
Even though Unifund had been delinquent in providing discovery to plaintiff in the debt collection action, the court found that publicly available information would have told plaintiff what she needed to know, and that the record showed that plaintiff had ample reason to look at such public records. 
Let me know if you have any questions.  Thanks.


Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois  60602
Direct:  (312) 551-9320 

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