1st Circuit Rules Collection Actions Do Not Give Rise to New Claims Under the Massachusetts Consumer Protection Act

On January 17, 2020, the U.S. Court of Appeals for the First Circuit affirmed the dismissal of a complaint alleging defendant’s enforcement of a predatory mortgage loan was unfair and deceptive, in violation of the Massachusetts Consumer Protection Act (Chapter 93A).  The court held that the statute of limitations began running when the petitioner entered into the loan agreement and that collection letters do not give rise to claims in their own right.

The petitioner closed a loan in March 2005 and she defaulted in 2008.  Petitioner claims that the loan was predatory at the outset and that the lender knew or should have known that the petitioner would not be able to repay it.  With the exception of two periods during which the petitioner had filed for bankruptcy, the loan servicer sent the petitioner monthly statements demanding payment. 

In September 2018, the petitioner filed a claim in district court alleging that the defendant engaged in unfair and deceptive practices because the defendant (1) enforced a predatory mortgage loan and (2) attempted to collect on the loan in an unreasonable manner, in violation of the Massachusetts Consumer Protection Act.

Petitioners argued that the collection statements gave rise to claims under Chapter 93A, alleging that the collection attempt was “use” or “employment” of the allegedly unfair mortgage.  The court found that time began to accrue when she entered into the loan, and that the collection actions did not lead to new claims with new accruals of time.  As the statute of limitations under the Massachusetts Consumer Protection Act is four years, the court affirmed the district court’s decision that the claims are timed-barred.

The text of the full decision can be found here.