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United States Supreme Court Rules on Statute of Limitations for FDCPA Claims

Posted By USFN, Monday, February 17, 2020

by Melinda J Maune, Esq.
Martin Leigh PC
USFN Member (KS, MO)

On December 10, 2019, the United States Supreme Court  (“Supreme Court”) affirmed a Third Circuit decision and held absent the application of an equitable doctrine, the statute of limitations begins to run when the alleged Fair Debt Collections Practice Act (“FDCPA”) violation occurs, not when the violation is discovered.  Justice Thomas authored the 8-1 decision in Rotkiske v Klemm ,140 S.Ct. 355 (2019).

In 2009 Klemm & Associates (“Klemm”) sued Petitioner Kevin Rotkiske (“Rotkiske”) for payment on his credit card debt. At an address where Rotkiske no longer resided, someone other than Rotkiske accepted service.   Unaware of the service or the lawsuit, Rotkiske failed to respond and a default judgment was entered against him. Rotkiske claims he first became aware of the default judgment against him in 2014 after his home mortgage application was denied due to the judgment against him.

In June 2015, less than one year after discovering the default judgment, Rotkiske filed suit against Klemm for violating the FDCPA by wrongfully obtaining a default judgment by improper service. Rotkiske urged the court to apply the discovery rule to the statute of limitations period with the beginning of the one-year period to begin on the date he knew of should have of the FDCPA.  In the alternative, his amended complaint argued equitable tolling excused his otherwise untimely filing.  Klemm moved to dismiss the Rotkiske’s suit on basis that the FDCPA’s one-year statute of limitations under 15 U.S.C. 1692k(d) had expired.

The District Court rejected Rotkiske’s argument and dismissed the FDCPA claim as time-barred and ruled that 1692k(d) contained no extension of time to discover the claim. The Third Circuit affirmed the District Court and the occurrence rule, requiring the statute of limitations to begin on the date the violation occurred as opposed to the date of discovery.

In determining that the statute of limitations under the FDCPA begins on the date of the violation, the Supreme Court reviewed the plain language of the statute and found the language of 15 U.S.C. 1692k(d) to be unambiguous and that the statute clearly set the date of the violation as the event that starts the statute of limitations. Judge Thomas declined to take an expansive approach and include a general discovery rule to the FDCPA, noting judicial supplementation was particularly inappropriate when Congress had shown it knew how to adopt the omitted language or provision.

At the time the FDCPA was adopted, Congress had enacted other statutes with provisions for a discovery rule. The Justices therefore reasoned that the absence of such provision in the FDCPA meant that Congress knowingly omitted the discovery of a claim from the FDCPA’s statute of limitations. Justice Thomas’ opinion noted that the role of the Court was simply to enforce the value judgments made by Congress.

The Supreme Court’s opinion was narrow and did not address whether Rotkiske may have had an equity based or fraud specific discovery rule defense to the untimely filing of his lawsuit. The majority of the Supreme Court ruled that Rotkiske failed to preserve that issue on appeal to the Third Circuit nor raised it in his petition for certiorari.  By failing to address whether the text of 1692k(d) permits the application of equitable doctrine, it appears the court has left the door open for future FDCPA litigants to plead for this exception in FDCPA cases.   In short, this brief opinion may be a limited victory for debt collectors.

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