California federal district court grants motion to dismiss for Simmonds & Narita’s debt buyer client on claims brought under the FDCPA and Rosenthal Act regarding allegedly time-barred debt
The plaintiff alleged that the debt buyer violated the FDCPA and the Rosenthal Act arising out of a letter sent to the plaintiff offering options on repaying a debt. The letter included the language: “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.” The letter also offered a payment plan and stated that the debt “[would] be considered ‘Settled in Full’ after [Plaintiff's] final payment [was] successfully posted.” The U.S. District Court for the Central District of California granted defendant’s motion to dismiss.
The court held the FDCPA and Rosenthal Act claims failed as a matter of law for three reasons. First, the court explained that the defendant was required to include the “will not sue” language due to a consent decree it had entered into with the Consumer Financial Protection Bureau. Second, the court rejected plaintiff’s argument that the letter was misleading because it did not disclose that a payment on the debt would restart the statute of limitations period. Plaintiff's interpretation of California law on this issue, said the court, “is simply incorrect.” Finally, the court rejected plaintiff’s contention that the use of the word “settle” in the letter could be misleading to the least sophisticated debtor, because the only mention of “settle” in the letter sent to Plaintiff is a statement that Plaintiff's account “will be considered ‘Settled in Full’ after [his] final payment is successfully posted.” It was clear from context, according to the court, that this use of “settle” is the sense of full payment on an account or transaction, not resolution of a legal case.