California district court dismisses putative class action filed against Simmonds & Narita’s debt buyer client, holding that letter seeking to collect time-barred account did not violate the FDCPA.
In January 2020, the Central District of California granted Simmonds & Narita’s motion to dismiss a putative FDCPA class action filed against the firm’s debt buyer client, holding that the letter sent in an effort to collect a time-barred account did not violate the FDCPA. The letter included an out of statute disclosure that made it clear that defendant would not sue, which stated as follows: “The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, and we will not report it to any credit reporting agency. Depending on the laws of your state, certain actions, such as making a payment or promising to pay the debt, may restart the time period for the filing of a lawsuit against you; but even if that were the case, we still will not sue you on this debt.” The court rejected plaintiff’s argument that the letter should have stated that defendant “cannot sue” the debtor, rather than stating that it “will not sue” the debtor, holding that the debtor would not be misled into thinking that the debt was legally enforceable.
The court also rejected each of plaintiff’s alternative claims. The time-sensitive offers to “resolve” the debt and “save money” did not create a false sense of urgency, as the least sophisticated debtor would understand that an offer to resolve a time-barred account was optional. Nor did defendant have an obligation to explain the potential impact that a partial payment might have on the statute of limitations. The court also rejected the argument that defendant had a duty to investigate the validity of plaintiff’s outstanding balance before sending the letter. Finally, the court held that a follow-up letter, that listed the balance due as zero and informed the debtor the account was closed was not an attempt to collect a debt and therefore did not violate the FDCPA.