NEW ORLEANS – The U.S. Court of Appeals for the Fifth Circuit heard a debt collection case originally heard in the Southern District of Texas and reversed and remanded the district court’s original decision.
The appeal arose over differing interpretations of the Fair Debt Collection Practices Act, and especially whether or not the underlying complaint was filed within the FDCPA’s “limitations period.”
Rolando Serna originally filed suit against the Law Office of Joseph Onwuteaka PC, Joseph Onwuteaka and Samara Portfolio Management LLC in the U.S. District Court in the Southern District of Texas. Serna allegedly defaulted on a promissory note from the First Bank of Delaware, Samara Portfolio Management purchased the loan and on Aug. 14, 2011, served Serna in an attempt to recover the loan.
In Serna’s original complaint, he asserted that because he neither resided nor entered the loan agreement in Harris County, the defendant’s suit violated the FDCPA’s venue requirement.
The district court dismissed the plaintiff’s claim, concluding that it was untimely because he filed suit against Onwuteaka more than a year after the underlying debt-collection suit, which is outside the FDCPA’s limitations period.
In arriving at its decision, the Appeals Court stated that one must interpret when the underlying debt-collection suit was brought, and if it was within the limitations period. The decision rested on the interpretation of Texas’s treatment of the word “bring,” and whether or not it was synonymous with filing a pleading, especially in the phrase “bring such action.”
The Appeals Court decided that to the extent there were two reasonable interpretations of when a violation of the “bring such action” language occurs, the remedial nature of the FDCPA and the importance of protecting customers by allowing them to sue compelled the court to conclude that a violation is not complete until the alleged debtor becomes aware of the debt-collection suit.
Therefore, the Appeals Court concluded, Serna’s action was within the limitations period, because it was within a year of when he was notified of the suit. The case was reversed and remanded back to district court for further proceedings.
The case was heard by Judges Jerry E. Smith, Catharina Haynes, and James E. Graves Jr.
Smith wrote a dissenting opinion, arguing that the Serna’s action were outside of the limitations period, because the terms “bring such an action” and “an action…may be brought” refer to the same act and should be given the same meaning.
“Spelunking unnecessarily in the depths of legislative history, the majority loses its way,” Smith wrote.
Case no. 12-20529.