June 15, 2009
The Ninth Circuit: Banks, Credit Cards and Collections.
If you’re a bank, consider writing your contracts under New Hampshire law. (If you’re a cardholder, pay your bills).
If you have a credit card agreement with a choice of law clause subjecting any disagreements to New Hampshire law, there doesn’t seem to be a statute of limitations that applies. So says the U.S. Court of Appeals for the Ninth Circuit in Avery v. First Resolution Management, No. 07-35726 (decided April 2, 2009; amended May 22, 2009), reviewing a decision of the U.S. District Court for the District of Oregon. The decision was adverse to an Oregon credit card holder who was sued under the Fair Debt Collection Practices Act (FDCPA) after three years--the length of time limiting credit card disputes in New Hampshire.
Despite amicus briefs by advocacy groups warning of the consequences, the suit was allowed because New Hampshire law also tolls (essentially, suspends) the statute of limitations if the defendant wasn’t available for service of process in the state. The Ninth Circuit interpreted that the statute’s use of “state” referred to New Hampshire itself. But defendant Avery, like many credit card holders, had never even visited the state in question--so the statute of limitations could be tolled forever. The Ninth Circuit acknowledged this possibility in a footnote (at page 6097), but left it for the lower courts and, possibly, the New Hampshire legislature to hammer out.
In another debt-collection case interpreting the FDCPA itself, Hyde, et al. v. Midland Credit Mgmt., et al., 07-55326 (June 9, 2009) (factually unrelated to Avery), the Ninth Circuit reversed the U.S. District Court for the Central District of California. It held that the FDCPA does not permit a court to award attorney's fees against a plaintiff's attorney where the plaintiff brought a frivolous claim for alleged violations by a creditor. In the absence of specific language to the contrary, the customary presumption applies: if a plaintiff's attorney is to be held liable for a defendant's attorney's fees (or vice versa), then it would have to come through traditional means (e.g., Fed. R. Civ. P. 11).
Posted by Rob Bodine at June 15, 2009 10:29 PM
The debt collection process is fraught with problems and before anyone decides on an attorney, debt consolidator or settlement, they should obtain the benefits of no harassment and start the validation process. I suggest http://cpinstituteonline.org.
Posted by: Steve Dale at June 15, 2009 01:28 PM