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Appeals Court Rules FDCPA SOL Clock Starts When Alleged Violation Occurs

For the second time, the Second Circuit Court of Appeals has ruled on a case that seeks to determine when the statute of limitations on a potential violation of the Fair Debt Collection Practices Act occurs, determining that an individual does not need to receive notice of the violation before the statute of limitations starts.

A copy of the ruling in Alexander Benzemann v. Houslanger & Associates, Todd Houslanger, New Century Financial Services, and Citibank can be accessed by clicking here.

The Background

Twice, Houslanger sought to enforce a judgment against Andrew Benzemann, but in both cases, asked Citibank to freeze the accounts of the plaintiff. After the second time, the plaintiff sued, alleging a violation of the FDCPA, but a District Court judge granted summary judgment in favor of the defendants, ruling the one-year statute of limitations had expired. The plaintiff had became aware of the second freeze on December 13, 2011, but had filed suit on December 14, 2012.

The plaintiff appealed the summary judgment ruling and the Second Circuit reversed the decision, ordering the District Court to determine whether the account was frozen on December 13 or December 14, and, if it was frozen on December 13, whether the FDCPA is subject to the common law discovery rule. [EDITOR’S NOTE: The Supreme Court is hearing arguments in a case about whether the discovery rule applies to the FDCPA.]

The District Court ruled the account was frozen on December 13, at which point the defendant again moved for summary judgment and won. The plaintiff appealed, arguing that an individual must receive notice of a violation before the statute of limitations clock can start running. In this case, the plaintiff received notice on December 14, 2011, which would make his filing within the statute of limitations window.

The Ruling

In this case, the language of the FDCPA is unambiguous, the Second Circuit ruled. The FDCPA states that claims must be brought “within one year from the date on which the violation occurs.” Applying the plaintiff’s theory, it’s possible that a breach of a law never took place if an individual is never made aware of it, the Second Circuit wrote in its opinion.

“This novel interpretation might help Plaintiff evade the FDCPA’s statute of limitations, but it appears to us unsupported by the common understanding of the words ‘violation’ and ‘occur,’ ” the Appeals Court wrote.

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