Third Circuit Holds FDCPA Statute of Limitations Runs from Violation, Not Discovery

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The United States Court of Appeals for the Third Circuit has split with the Fourth and Ninth Circuits and held, en banc, that civil lawsuits alleging violations of the Fair Debt Collection Practices Act(“FDCPA“), 15 U.S.C. § 1692 et seq., must be filed within one year of the alleged violations, and that the statute of limitationsis not tolled until the violations are discovered by the plaintiff. Rotkiske v. Klemm, 890 F.3d 422 (3d Cir. 2018).

The plaintiff incurred debt to Capital One Bank, which was referred to collection with Klemm & Associates (“Klemm”). Klemm filed suit in March 2008, but was unable to find Rotkiske to serve the complaint, when an individual unknown to Rotkiske answered the door at his prior residence. In January 2009, Klemm again attempted to serve Rotkiske at that same address, and an individual unknown to Rotkiske answered the door and accepted service. Klemm then obtained a default judgment against Rotkiske for the debt.

When plaintiff’s application for a mortgage was rejected in 2014 he learned, for the first time, of the existence of the prior lawsuit and the outstanding judgment against him. He sued Klemm and the various firms involved in the Eastern District of Pennsylvania, alleging that the defendants made sure he would not be served to obtain the default judgment in violation of the FDCPA. The District Court granted summary judgment to the defendants based on the statute of limitations, and the Third Circuit decided, sua sponte, to hear the case en banc.

Pursuant to 15 U.S.C. § 1692k(d), actions under the FDCPA must be brought “within one year from the date on which the violation occurs.” Rotkiske argued that, consistent with decisions from the Fourth and Ninth Circuits, the discovery rule should apply to delay the beginning of the limitations period until he knew or should have known of the alleged violation. The Third Circuit disagreed, noting that Congress explicitly put an occurrence trigger in the statute, rather than a discovery trigger, and that the decisions cited by Rotkiske failed to analyze the text of the FDCPA when they adopted the discovery rule. While the Court held that equitable tolling of the limitations period might apply in cases of fraudulent, misleading, or self-concealing conduct, it declined to reach that question because Rotkiske failed to raise the question of equitable tolling in his appeal.

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