In an unpublished case, the U.S. Court of Appeals for the Third Circuit held that actions to obtain a judgment and enforce that judgment in a collection lawsuit filed outside the statute of limitations do not create a continuing violation under the Fair Debt Collections Practices Act (FDCPA).
In Moore v. Cohn Lifland Pearlman Herrmann & Knopf LLP, et al., the plaintiff defaulted on her car loan. The car was then repossessed and sold, but there was a deficiency balance. The creditor retained the defendant attorney and law firm to sue the plaintiff for the outstanding balance, however the lawsuit was filed after the New Jersey statute of limitations for contracts for sale of goods lapsed. Nevertheless, the creditor obtained a default judgment. The law firm then obtained a writ of execution and garnished the plaintiff’s wages for three pay periods before she successfully vacated the judgment and wage execution. Sixteen months after the debt collection lawsuit was filed, the plaintiff filed a putative class action against the law firm and attorney, alleging they violated the FDCPA by filing a lawsuit to collect time-barred debts and for unjust enrichment for the wage garnishments. The district court granted a motion to dismiss for filing outside the statute of limitations. The plaintiff then filed an amended complaint, listing seven debt collection practices that occurred within the year preceding her FDCPA suit, all related to obtaining the default judgment, writ of execution, and garnishments. The defendants again moved to dismiss the complaint as untimely, and the plaintiff argued the continuing violation theory made her suit timely and alternatively that each post-complaint action was an independent violation. Her amended complaint was dismissed, and she appealed.
The Third Circuit held the continuing violation theory is inapplicable to FDCPA lawsuits. That theory was developed in hostile work environment claims to address situations where the whole course of conduct creates liability. The Third Circuit noted that no court has found the continuing violation theory can be extended to FDCPA claims and doing so in this case would broaden the theory too far, applying it to discrete collection efforts that are separately actionable. The court also held the subsequent efforts to obtain a judgment and garnish the plaintiff’s wages did not support an FDCPA claim because that contravened a Supreme Court admonition against allowing a consumer to stop “communications inherent in an ordinary lawsuit” and grind such suits to a halt.
The Third Circuit affirmed the dismissal of the plaintiff’s FDCPA claims.
