Judge Denies MTD in FDCPA Case Over Garnishment SOL

A District Court judge in Texas has denied a defendant’s motion to dismiss after it was sued for violating the Fair Debt Collection Practices Act, ruling that a garnishment action taken eight years after a default judgment was awarded is not subject to the law’s one year statute of limitations when the underlying default judgment was obtained after filing a collection suit in the wrong venue.

A copy of the ruling in the case of Barboza v. Weinstein & Riley can be accessed by clicking here.

The plaintiff, a resident of Collins County, Texas, was sued in 2010 by one of the defendants for an unpaid credit card debt. The suit was filed, though, in Denton County, Texas. A default judgment was granted in 2011 and nothing happened for nearly eight years, until a garnishment action was filed with the plaintiff’s bank. The plaintiff filed suit, alleging the defendants violated Section 1692i of the FDCPA, which sets forth where a collection suit must be filed against consumers with unpaid debts.

In looking at a 2015 ruling from an Idaho District Court judge in the case of Cole v. Cardez Credit Affiliates, LLC, Judge Kimberly Priest Johnson of the District Court for the Eastern District of Texas, Sherman Division, found a precedent that she could agree with. In that case, the District Court judge ruled that the venue provision of Section 1692i should be “broadly interpreted” because otherwise, a collector could filed a collection suit in the improper venue, secure a default judgment against a “none-the-wiser” debtor, wait for the statute of limitations to expire, and then go after the debt with a garnishment action.

“When a debt collector brings a garnishment action based on a default judgment obtained in the wrong venue, the Court finds it reasonable to interpret the action as ‘against any consumer,’ for the consumer, while not the subject of the garnishment action, experiences the inability to have his day in court, in a proper venue, on the merits of the judgment,” Judge Priest Johnson wrote.

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