Judge Denies MTD in FDCPA Case Over Disputed Debt

A District Court judge in Washington has denied a defendant’s motion to dismiss, ruling that the plaintiff’s notification that she was disputing the debt invalidated the defendant’s representation that the plaintiff had not appeared in an underlying collection lawsuit, thus negating the Fair Debt Collection Practices Act’s one-year statute of limitations.

The Backstory: Back in 2012, the defendant filed a collection lawsuit against the plaintiff seeking to recover an unpaid medical debt. After being served with the summons and complaint, the plaintiff sent a letter to the defendant, in which she disputed the debt and requested validation. After receiving what she believed to be an inadequate response, she sent the defendant another letter, requesting the same information. The defendant provided the plaintiff with the contact information for its attorney and set a deadline to resolve the debt, or it would proceed as allowed to do so by law.

But a week before the deadline, the defendant sought — and received — a default judgment by attesting that the plaintiff had not appeared.

The defendant did nothing with the judgment for 10 years until it filed an order this February seeking to extend it. The plaintiff then filed suit, alleging the defendant violated the FDCPA and state law in Washington by engaging in deceptive collection practices.

The Defense: The FDCPA’s one-year statute of limitations and the Washington Consumer Protection Act’s four-year statute of limitations are well expired. The defendant also argued it could not be held liable for actions it engaged in 10 years ago, or that it is seeking to extend an otherwise lawfully renewable judgment.

Not So Fast: But, Judge Tana Lin of the District Court for the Western District of Washington noted, the statute of limitations defense cannot be applied when the defendant’s representations or conduct have caused the plaintiff to run afoul of the statute.

The defendant knew or should have known that the letters it exchanged with the plaintiff after filing the initial collection lawsuit “could be construed as an informal appearance” thus triggering notification requirements regarding default judgments, Judge Lin ruled.

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