The Court of Appeals for the Fifth Circuit has upheld a lower court’s summary judgment ruling in favor of a plaintiff who received collection letters attempting to collect on debt for which the statute of limitations had expired, a fact that was not mentioned in those letters.
A copy of the ruling in the case of Manuel v. Merchants and Professional Bureau Inc., can be accessed by clicking here.
The plaintiff incurred a debt that dated back to January 2011. The creditor placed the debt with the defendant for collection that year. The defendant sent six collection letters to the plaintiff in 2011, none of which generated a response from the plaintiff. Six years later, in 2017, the defendant sent four more letters. By then, the four-year statute of limitations to be able to sue to collect on unpaid debts had expired. None of the four letters sent in 2017 mentioned that the plaintiff could not be sued because the debt was time-barred or that a partial payment may restart the statute of limitations clock.
The plaintiff filed suit, alleging the new set of letters violated Sections 1692e and 1692f of the Fair Debt Collection Practices Act. A District Court judge granted summary judgment for the defendant on the 1692f claim, and granted summary judgment for the plaintiff on the 1692e claim. The defendant appealed that decision to the Fifth Circuit.
In upholding the lower court’s ruling, the Fifth Circuit relied heavily on a decision it made in 2016 in Daugherty v. Convergent Outsourcing, Inc. In that case, an individual received a letter offering to settle a time-barred debt for 10% of what was owed. The Fifth Circuit held that “a collection letter that is silent as to litigation, but which offers to ‘settle’ a timebarred debt without acknowledging that such debt is judicially unenforceable, can be sufficiently deceptive or misleading to violate the FDCPA.”
Because the second set of letters does not even mention when the debt was incurred, so as to provide some insight to the plaintiff whether it might be legal enforceable or not, “the complete silence in these letters works in conjunction with their vague language to mislead the unsophisticated consumer that the debt is enforceable,” the Appeals Court wrote.
The Appeals Court also had issue with some of the language used in the second set of letters, such as calling the situation “urgent” and making a “very special offer” without going into details.
“The combined effect of the letters’ vague language and their silence as to the debt’s time-barred nature leaves an unsophisticated consumer with the impression that the debt is enforceable, and that if payment is not levied quickly then adverse collection efforts will follow,” the Appeals Court wrote.