ILNews

Suit filed after statute of limitations end

Back to TopE-mailPrintBookmark and Share

The Indiana Court of Appeals reversed summary judgment for a company that purchases and collects charged-off credit card debt, ruling the statute of limitations prevented the company from going after a delinquent consumer.

Jason Smither obtained a Mastercard account from Providian Bank in 1999. On Feb. 9, 2000, he had made a payment toward his $1,700 debt on the card but never made another payment or charge on the card. Providian "charged off" the debt Sept. 18, 2000, but kept sending monthly statements to Smither, eventually requesting a minimum payment of $670 on the outstanding balance in December 2000. Asset Acceptance purchased Smither's account in December 2001 from Providian Bank. On May 30, 2006, Asset sued Smither seeking damages of $2,157.62 plus interest.

Asset tried serving Smither twice at an incorrect address, and the trial court granted default judgment for the company. The court later ordered the case closed for failure to prosecute but noted the case could be redocketed in the future. Around this time, Smither discovered the default judgment by looking at his credit report and contested the judgment saying the statute of limitations had passed. The trial court granted summary judgment for Asset.

Even though Asset didn't introduce the account agreement applicable to Smither's card, the appellate court in Jason Smither v. Asset Acceptance LLC, No. 55A04-0902-CV-70, used the boiler plate language regarding default and acceleration to decide the appeal. Using Portfolio Acquisitions LLC v. Feltman, 909 N.E.2d 876, 881 (Ill. App. Ct. 2009), the judges decided that Indiana Code Section 34-11-2-7(1), which governs actions on accounts and unwritten contracts and has a six-year statute of limitations, is appropriate to use when ruling on attempts to collect credit card debt.

Feltman established credit card accounts aren't like promissory notes or installment loans because the amount of debt a consumer has may be in flux, wrote Judge Michael Barnes. He also noted that credit card accounts closely resemble the common law definition of an "open account." The general rule is that the statute of limitations for an action on an open account "commences from the date the account is due."

"Whether we consider the statute of limitations to have begun running on the date of Smither's last payment or the next payment due date thereafter, Asset's lawsuit filed on May 30, 2006, was more than six years after both dates," wrote Judge Barnes.

Asset argued it was entitled to delay the running of the statute of limitations because the credit card agreement governing Smither's account had an optional acceleration clause that it used when it "charged off" his account in 2000.

Even if the Court of Appeals assumed that a credit card company could delay the running of the statute of limitations by waiting to invoke an optional acceleration clause, Providian never invoked it and Asset had no evidence equating a debt "charge off" with the exercise of an optional acceleration clause. Even if Providian believed it was invoking the clause, it never took any affirmative action to notify Smither of that fact, wrote Judge Barnes. The first time Asset or Providian requested immediate and full payment from Smither was after the lawsuit was filed in 2006. Thus, the suit is time-barred.

The judges remanded for summary judgment to be entered for Smither.

ADVERTISEMENT

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. From his recent appearance on WRTV to this story here, Frank is everywhere. Couldn't happen to a nicer guy, although he should stop using Eric Schnauffer for his 7th Circuit briefs. They're not THAT hard.

  2. They learn our language prior to coming here. My grandparents who came over on the boat, had to learn English and become familiarize with Americas customs and culture. They are in our land now, speak ENGLISH!!

  3. @ Rebecca D Fell, I am very sorry for your loss. I think it gives the family solace and a bit of closure to go to a road side memorial. Those that oppose them probably did not experience the loss of a child or a loved one.

  4. If it were your child that died maybe you'd be more understanding. Most of us don't have graves to visit. My son was killed on a state road and I will be putting up a memorial where he died. It gives us a sense of peace to be at the location he took his last breath. Some people should be more understanding of that.

  5. Can we please take notice of the connection between the declining state of families across the United States and the RISE OF CPS INVOLVEMENT??? They call themselves "advocates" for "children's rights", however, statistics show those children whom are taken from, even NEGLIGENT homes are LESS likely to become successful, independent adults!!! Not to mention the undeniable lack of respect and lack of responsibility of the children being raised today vs the way we were raised 20 years ago, when families still existed. I was born in 1981 and I didn't even ever hear the term "CPS", in fact, I didn't even know they existed until about ten years ago... Now our children have disagreements between friends and they actually THREATEN EACH OTHER WITH, "I'll call CPS" or "I'll have [my parent] (usually singular) call CPS"!!!! And the truth is, no parent is perfect and we all have flaws and make mistakes, but it is RIGHTFULLY OURS - BY THE CONSTITUTION OF THIS GREAT NATION - to be imperfect. Let's take a good look at what kind of parenting those that are stealing our children are doing, what kind of adults are they producing? WHAT ACTUALLY HAPPENS TO THE CHILDREN THAT HAVE BEEN RIPPED FROM THEIR FAMILY AND THAT CHILD'S SUCCESS - or otherwise - AS AN ADULT.....

ADVERTISEMENT