ILNews

Suit filed after statute of limitations end

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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.

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  1. People have heard of Magna Carta, and not the Provisions of Oxford & Westminster. Not that anybody really cares. Today, it might be considered ethnic or racial bias to talk about the "Anglo Saxon common law." I don't even see the word English in the blurb above. Anyhow speaking of Edward I-- he was famously intolerant of diversity himself viz the Edict of Expulsion 1290. So all he did too like making parliament a permanent institution-- that all must be discredited. 100 years from now such commemorations will be in the dustbin of history.

  2. Oops, I meant discipline, not disciple. Interesting that those words share such a close relationship. We attorneys are to be disciples of the law, being disciplined to serve the law and its source, the constitutions. Do that, and the goals of Magna Carta are advanced. Do that not and Magna Carta is usurped. Do that not and you should be disciplined. Do that and you should be counted a good disciple. My experiences, once again, do not reveal a process that is adhering to the due process ideals of Magna Carta. Just the opposite, in fact. Braveheart's dying rebel (for a great cause) yell comes to mind.

  3. It is not a sign of the times that many Ind licensed attorneys (I am not) would fear writing what I wrote below, even if they had experiences to back it up. Let's take a minute to thank God for the brave Baron's who risked death by torture to tell the government that it was in the wrong. Today is a career ruination that whistleblowers risk. That is often brought on by denial of licenses or disciple for those who dare speak truth to power. Magna Carta says truth rules power, power too often claims that truth matters not, only Power. Fight such power for the good of our constitutional republics. If we lose them we have only bureaucratic tyranny to pass onto our children. Government attorneys, of all lawyers, should best realize this and work to see our patrimony preserved. I am now a government attorney (once again) in Kansas, and respecting the rule of law is my passion, first and foremost.

  4. I have dealt with more than a few I-465 moat-protected government attorneys and even judges who just cannot seem to wrap their heads around the core of this 800 year old document. I guess monarchial privileges and powers corrupt still ..... from an academic website on this fantastic "treaty" between the King and the people ... "Enduring Principles of Liberty Magna Carta was written by a group of 13th-century barons to protect their rights and property against a tyrannical king. There are two principles expressed in Magna Carta that resonate to this day: "No freeman shall be taken, imprisoned, disseised, outlawed, banished, or in any way destroyed, nor will We proceed against or prosecute him, except by the lawful judgment of his peers or by the law of the land." "To no one will We sell, to no one will We deny or delay, right or justice." Inspiration for Americans During the American Revolution, Magna Carta served to inspire and justify action in liberty’s defense. The colonists believed they were entitled to the same rights as Englishmen, rights guaranteed in Magna Carta. They embedded those rights into the laws of their states and later into the Constitution and Bill of Rights. The Fifth Amendment to the Constitution ("no person shall . . . be deprived of life, liberty, or property, without due process of law.") is a direct descendent of Magna Carta's guarantee of proceedings according to the "law of the land." http://www.archives.gov/exhibits/featured_documents/magna_carta/

  5. I'm not sure what's more depressing: the fact that people would pay $35,000 per year to attend an unaccredited law school, or the fact that the same people "are hanging in there and willing to follow the dean’s lead in going forward" after the same school fails to gain accreditation, rendering their $70,000 and counting education worthless. Maybe it's a good thing these people can't sit for the bar.

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