6th Circuit Holds Separate FDCPA Violation Within Statute of Limitations Is Not a Continuing Violation

Recently, a three judge panel for the U.S. Court of Appeals for the Sixth Circuit held that because one claim brought under the Federal Debt Collection Practices Act (FDCPA) occurred within the one-year statute of limitations, the suit was not time-barred.  The Sixth Circuit’s decision reversed and remanded the district court’s dismissal of the complaint.

The case arose when a consumer financed furniture through a retail installment contract (RIC) and subsequently defaulted on the debt.  However, before the default, the debt was sold to a new debtor.  The new debtor sued the consumer to recover the outstanding debt.  However, the RIC attached to the state court complaint did not properly establish that the debt was properly transferred to the new debtor.  The new debtor’s attorney subsequently supplemented the record with an updated RIC to reflect transfer of the debt and thereafter the state court granted the new debtor’s motion for summary judgment.  On appeal, the state appellate court agreed with the consumer that the new debtor had not sufficiently demonstrated transfer of the debt, remanded the case back to the state court, and the new debtor then voluntarily dismissed the case. 

One year and fifteen days after the original suit was filed, the consumer sued the new debtor’s attorney in federal district court for violating the FDCPA.  The suit alleged that the new debtor’s attorney improperly altered the RIC during the pendency of the suit to make it look like the debt assignment was proper.  The district court dismissed the case as time-barred because it was brought more than a year after the original suit was filed. 

The consumer then timely appealed, asserting that because the filing of the altered RIC occurred within the one-year statute of limitations, it was not time-barred.  The new debtor’s attorney argued in response that the alleged violation was a continuation of the violation asserted in the initial suit, under the “continuing violation doctrine.”   The Sixth Circuit disagreed, ruling that the filing of a falsified RIC was not a “continuing violation” in this context because it was a separate violation that occurred within the appropriate statute of limitations period.

After finding that the alleged FDCPA violation was separate from the underlying suit, the Sixth Circuit reversed the district court’s decision to dismiss the case and remanded for further proceedings.