Mooneyham v. GLA Collection Co., Inc. et al
Filing
25
MEMORANDUM OPINION & ORDER by Judge Greg N. Stivers re 15 Motion to Dismiss for Failure to State a Claim. The Court finds the doctrine of equitable tolling available under the FDCPA. Because Mooneyham has properly alleged facts to warrant its application, CMREs Motion to Dismiss is denied. cc: Counsel (JAC)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
BOWLING GREEN DIVISION
CASE NO. 1:14-CV-179-GNS-HBB
CHRISTOPHER MOONEYHAM
PLAINTIFF
v.
GLA COLLECTION CO., INC. and
CMRE FINANCIAL SERVICES, INC.
DEFENDANTS
MEMORANDUM OPINION & ORDER
Defendant CMRE Financial Services, Inc. (“CMRE”) has moved to dismiss this action
pursuant to Fed. R. Civ. P. 12(b)(6), asserting the claims against it are barred by the applicable
statute of limitations. (CMRE’s Mot. to Dismiss, DN 15). The parties present a question of law
left expressly unanswered in the Sixth Circuit. Because the Court finds equitable tolling
appropriate in this context, however, no ruling on the discovery rule’s applicability to the Fair
Debt Collections Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p, is necessary. CMRE’s
Motion to Dismiss (DN 15) is DENIED.
I.
STATEMENT OF FACTS AND CLAIMS
Pursuant to Rule 12(b)(6), this ruling assumes the truth of all facts alleged in the
Complaint, which claims that Plaintiff Christopher Mooneyham (“Mooneyham”) first became
aware of medical debt on his credit report when he was preparing to purchase a home. In
reviewing his credit report, Mooneyham discovered listings for medical debt furnished by two
“debt collectors” as defined by the FDCPA.
One debt collector, GLA Collection Co., Inc. (“GLA”), furnished information on debts
attributable to Mooneyham individually in 2009 and 2010. When Mooneyham tried to pay GLA
the face amount of the debt, he was told of interest charges to which the debt was purportedly
1
subject. These interest charges, GLA informed him, ranged from 8% to 18% annually.
Mooneyham claims these interest charges violate state law, and thus their assertion in 2014
violates the FDCPA.
The movant, CMRE, furnished information in 2009 and 2010 concerning four debts.
When contacted, CMRE informed Mooneyham that its debt was the sole responsibility of his
wife. Mooneyham contends this was a false representation in violation of the FDCPA.
Mooneyham filed suit on December 17, 2014, within a month of his conversations with
GLA and CMRE. He alleges both violated Section 1692e of the FDCPA relating to false
representations and Section 1692f relating to unfair practices. GLA answered the Complaint on
January 22, 2015, asserting the statute of limitations as one of its defenses. (GLA’s Answer ¶ 32,
DN 14). In lieu of answering the Complaint, on February 6, 2015, CMRE filed this motion to
dismiss, asserting the same defense. (CMRE’s Mot. to Dismiss, DN 15). The allegations against
both remaining defendants allege identical statutory violations, but defendants are not identically
situated. Mooneyham claims GLA violated the FDCPA in asserting prohibited interest charges.
These assertions, made in November 2014, bring that claim against GLA clearly within the
statute of limitations. Mooneyham’s claims against CMRE occurred earlier, outside the
limitations period. Thus, this ruling addresses the statute of limitations only as applied to CMRE.
II.
JURISDICTION
As Plaintiff presents a claim under the FDCPA, 15 U.S.C. §§ 1692-1692p, this Court has
federal question jurisdiction pursuant to 28 U.S.C. § 1331. 15 U.S.C. § 1692k provides for civil
liability for specified violations of the FDCPA.
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III.
STANDARD
Motions pursuant to Rule 12(b)(6) are reviewed under a lenient standard. “The purpose of
Rule 12(b)(6) is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to
legal relief even if everything alleged in the complaint is true.” Mayer v. Mylod, 988 F.2d 635,
638 (6th Cir. 1993) (citation omitted). While courts are free to make judgments of law with
dispositive effect, “[a] complaint should not be dismissed for failure to state a claim unless it
appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which
would entitle him to relief.” Mayer, 988 F.2d at 638 (quoting Conley v. Gibson, 355 U.S. 41, 4546 (1957)). Accordingly, in ruling on motions to dismiss pursuant to Rule 12(b)(6), all factual
allegations in a complaint are accepted as true.
Nonetheless, “a plaintiff’s obligation to provide the grounds of his entitle[ment] to relief
requires more than labels and conclusions, and a formulaic recitation of the elements of a cause
of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in
original) (internal quotation marks omitted) (citation omitted). Fed. R. Civ. P. 9(b) requires
pleading fraud with particularity. Wilson v. HSBC Bank, N.A., 594 F. App’x 852, 858 (6th Cir.
2014). The particularity requirement includes allegations of fraud in violation of the FDCPA.
Gulley v. Pierce & Assocs., P.C., 436 F. App’x 662, 664 (7th Cir. 2011) (citation omitted).
IV.
DISCUSSION
The FDCPA mandates civil actions be brought “within one year from the date on which
the violation occurs.” 15 U.S.C. § 1692k(d). Mooneyham alleges CMRE “violated the FDCPA
by attempting to collect a debt . . . not owe[d], falsely representing that . . . debt, and furnishing
false negative credit information . . . to one or more consumer reporting agencies.” (Compl. ¶ 41,
DN 1). He alleges CMRE furnished the information concerning these four debts on August 19,
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2009; August, 19 2009; July 22, 2010; and August 24, 2010. (Compl. ¶ 24). When contacted in
2014, however, CMRE correctly identified the debt as belonging to Mooneyham’s wife. (Compl.
¶ 28). Mooneyham does not appear to allege this 2014 communication violated the FDCPA. The
provision of furnishing of inaccurate information (constituting both a collection activity and false
representation according to Plaintiff), allegedly occurred in 2009 and 2010. (Compl. ¶ 41). Based
upon these allegations, Plaintiff’s assertion of these claims is untimely.
Mooneyham contends his filing was timely under the “discovery rule.” The common law
in many states, and in certain circumstances federal common law, recognizes the discovery rule
under which a cause of action accrues not when an injury occurs but when that injury is
discovered. See Charles Alan Wright, et al., 4 Fed. Prac. & Proc. Civ. § 1056 (3d ed. 2014). “A
cause of action ‘is deemed to be discovered when, in the exercise of reasonable diligence, it
could have been discovered.’” Goodson v. Bank of Am., N.A., No. 14-5419, 2015 WL 364045, at
*6 (6th Cir. Jan. 28, 2015) (quoting Gabelli v. SEC, 133 S. Ct. 1216, 1221 (2013)). This is
variously described as either tolling the statute of limitations or delaying the date of accrual so as
to permit a cause of action. See Wright, supra, § 1056. As a matter of federal common law, the
application of the discovery rule in FDCPA actions has been left explicitly unanswered in the
Sixth Circuit. Ruth v. Unifund CCR Partners, 604 F.3d 908, 914 (6th Cir. 2010) (“We need not
decide whether the FDCPA incorporates a discovery rule.”). Mooneyham urges this Court to join
others in recognizing the rule in this context. CMRE argues the statute itself, both its legislative
history and its language along with the Supreme Court and Sixth Circuit precedent dictate
otherwise.
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A.
The discovery rule’s applicability to FDCPA actions, absent fraud, is
undecided in the Sixth Circuit.
Both parties cite the same Supreme Court case in support of their arguments: TRW, Inc. v.
Andrews, 534 U.S. 19 (2001), which involved a credit reporting agency which revealed credit
information at the request of an identity thief. The lawsuit was brought when the victim
attempted to refinance her home and learned of the misreporting after the applicable limitations
period. The Supreme Court found the action was time-barred because the statute clearly evinced
Congressional intent to preclude the discovery rule. The Court observed, however, that “lower
federal courts generally apply a discovery accrual rule when a statute is silent on the issue.”
(Pl.’s Resp. to CMRE’s Mot. to Dismiss 4, DN 16 (citing TRW, Inc. 534 U.S. at 27) (internal
quotation mark omitted)). The Ninth Circuit decision under review had held the discovery rule
should be incorporated into statutes “unless Congress has expressly legislated otherwise.” TRW,
Inc., 534 U.S. at 27 (internal quotation marks omitted) (citation omitted). The U.S. Supreme
Court reversed, stating that “[t]o the extent such a presumption exists, a matter this case does
not oblige us to decide, the Ninth Circuit conspicuously overstated its scope and force.” Id.
(emphasis added).
Both CMRE and Mooneyham exaggerate the Court’s language to their own ends. The
U.S. Supreme Court found “that the text and structure of [the statute] evince[d] Congress’ intent
to preclude judicial implication of a discovery rule.” TRW, Inc., 534 U.S. at 28. Despite a spirited
concurrence, the majority opinion of the Supreme Court declined to rule out a presumptive
discovery rule, merely holding that in the context of that case that the Fair Credit Reporting Act
(“FCRA”), the statute’s text and context clearly specified otherwise. Accord Langendorfer v.
Kaufman, No. 1:10-CV-00797, 2011 WL 3682775, at *4 (S.D. Ohio Aug. 23, 2011) (“TRW does
not foreclose a general discovery rule to FDCPA cases.”).
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Justice Scalia’s TRW, Inc. dissent emphasized that the discovery rule developed in a
fraud context. TRW, Inc. 534 U.S. at 37. Chief Justice Roberts later explained:
The doctrine arose in 18th-century fraud cases as an “exception” to the standard
rule, based on the recognition that something different was needed in the case of
fraud, where a defendant’s deceptive conduct may prevent a plaintiff from even
knowing that he or she has been defrauded. This Court has held that “where a
plaintiff has been injured by fraud and ‘remains in ignorance of it without any
fault or want of diligence or care on his part, the bar of the statute does not begin
to run until the fraud is discovered.’”
Gabelli, 133 S. Ct. at 1221 (internal quotation marks omitted) (citations omitted). Within the
fraud context, Sixth Circuit precedent suggests the discovery rule’s applicability to FDCPA
actions. See Slorp v. Lerner, Sampson & Rothfuss, 587 F. App’x 249, 258-59 (6th Cir. 2014)
(“Tolling doctrines such as . . . the discovery rule exist to address such situations.”). Absent
fraud, the Sixth Circuit has neither expressly endorsed nor rejected the discovery rule. In
Goodson v. Bank of America, N.A., a district court in Tennessee found the discovery rule
misplaced outside fraud. Goodson v. Bank of Am., N.A., No. 1:12-00065, 2014 WL 940492, at
*2-3 (M.D. Tenn. Mar. 10, 2014). In affirming on other grounds, the Sixth Circuit avoided ruling
on the applicability of the discovery rule and noted that “[a]ssuming arguendo that [the Plaintiff]
properly raised the discovery rule and equitable tolling doctrines, neither applies . . . because she
could have discovered [the violation], in the exercise of reasonable diligence . . . .” Goodson,
2015 WL 364045, at *6. The applicability of the discovery rule to FDCPA violations absent
fraud remains open in the Sixth Circuit.
CMRE argues the holding in Tyler v. DH Capital Management, Inc., 736 F.3d 455 (6th
Cir. 2013), precludes application of the discovery rule to the FDCPA. (Reply in Supp. of
CMRE’s Mot. to Dismiss 8-11, DN 21). The holding therein, however, is inapposite. Tyler dealt
with a FDCPA violation involving whether an improper litigation attempt to collect a debt
accrued at the time of filing of the improper suit or upon service of process. Because the Court
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found the violation occurred at filing, the claim was properly included in the subject bankruptcy
estate. CMRE argues Tyler invalidates several cases on which Mooneyham relies,1 including the
only district court cases that were not guided by precedent binding on that court.2 Those cited
cases all examined whether the statute of limitations began to run at the filing of an improper
action or at service of process. CMRE, however, ignores Tyler’s instruction that claim “accrual
for the purposes of § 541[—which defines what property is part of a bankruptcy estate—]is
different from accrual for statute-of-limitations purposes.” Tyler, 736 F.3d at 463 (citing State
Farm Life Ins. Co. v. Swift, 129 F.3d 792, 798 (5th Cir. 1997)). In fact, the Court explicitly
rejected reliance on authority dealing with in the statute of limitations issues. Id. Thus, Tyler
clarifies that it is not determinative for claims accrual purposes involving statutes of limitation.
That said, the Sixth Circuit has left open the applicability of the discovery rule to actions brought
under the FDCPA.
B.
Mooneyham should not be charged with constructive knowledge of
information in credit report.
CMRE argues overt government support for free credit checks negates the need for the
discovery rule.3 (Reply in Supp. of CMRE’s Mot. to Dismiss 11-12). Implicit in this argument is
the idea that consumers should be charged with constructive knowledge of the information
contained in their credit reports. Charged with constructive knowledge, the discovery rule would
1
Mooneyham cites Langendorfer, 2011 WL 3682775; Andrade v. Erin Capital Mgmt. LLC, No.
09-21186-CIV, 2010 WL 1961843, at *1 (S.D. Fla. May 17, 2010); and Perez v. Bureaus Inv.
Grp. No. II, LLC, No. 1:09-CV-20784, 2009 WL 1973476 (S.D. Fla. July 8, 2009).
2
Mooneyham also cites In re Humes, 468 B.R. 346, 356 (Bankr. E.D. Ark. 2011) (statute of
limitations issue decided under Eighth Circuit’s standard from Mattson v. U.S. West
Communications, 967 F. 259 (8th Cir. 1992)) and Greenfield v. Kluever & Platt, LLC, No. 09 C
3576, 2010 WL 604830, at *2 (N.D. Ill. Feb. 16, 2010) (statute of limitations issue decided in
reliance on Cada v. Baxter Healthcare Corp., 920 F.2d 446 (7th Cir. 1990)).
3
Mooneyham cites to federal law requiring “nationwide consumer reporting agencies” to make
available free credit reports to consumers upon request. (Reply to CMRE’s Mot. to Dismiss 11).
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not save these claims from the statute of limitations because the discovery rule sets the date of
claim accrual when the plaintiff “discovered, or ha[s] failed in reasonable diligence to discover”
the violation. Holmberg v. Armbrecht, 327 U.S. 392, 397 (1946) (citations omitted).
This Court does not believe consumers should be charged with constructive knowledge of
the information in their credit reports for FDCPA violations for two reasons. First, such
constructive knowledge seems contrary to the standard applied to other provisions of the FDCPA
to identify violations. Courts evaluate conduct purportedly in violation of the FDCPA under a
“least sophisticated consumer” standard. Barany-Snyder v. Weiner, 539 F.3d 327, 333 (6th Cir.
2008). “This standard ensures that the FDCPA protects all consumers, the gullible as well as the
shrewd.” Id. (internal quotation marks omitted) (citation omitted). Charging all consumers with
notice of their credit report appears entirely inconsistent with the least sophisticated consumer
standard. CMRE argues Government attempts to encourage consumers to check their credit
reports annually weakens the rationale for any discovery rule because the government has
already created mechanisms through which consumers might discover inaccurate information.
(Reply to CMRE’s Mot. to Dismiss 11-12, DN 21). This may be true, but government attempts
to encourage consumers is as much evidence that the average consumer, much less the “least
sophisticated,” fails to utilize available resources as it is evidence that further protections are
unneeded.
Second, courts generally do not charge consumers with knowledge of information in their
credit report. The Fifth Circuit charged a consumer with constructive knowledge of a FDCPA
violation for purposes of the discovery rule, but only where the consumer had actually requested
the report, had received collections notices, and was receiving phone calls from bills collectors.
Wagner v. BellSouth Telecomms., Inc., 520 F. App’x 295, 298 (5th Cir. 2013). A sister court in
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this district refused to charge a FCRA claimant with constructive knowledge of their credit
report. McAnly v. Middleton & Reutlinger, P.S.C., 77 F. Supp. 2d 810, 814 (W.D. Ky. 1999).4
Given the guidance of this precedent and the principles underlying the FDCPA, this Court finds
it incongruous to charge Mooneyham with that knowledge here. See also Akalwadi v. Risk Mgmt.
Alternatives, Inc., 336 F. Supp. 2d 492, 501 (D. Md. 2004) (relying upon the date the credit
report was received to find claim outside FDCPA limitations period).
C.
Equitable tolling is available whether or not the discovery rule is available.
Mooneyham argues the discovery rule should be applied to save his claim. Despite the
Sixth Circuit’s reticence, he argues, precedent supports the rule’s application. He further argues
the rule is appropriate where “false credit information about a consumer [is reported] on the
consumer’s credit report[,]” particularly where that credit information is “medical debt.” (Pl.’s
Resp. to CMRE’s Mot. to Dismiss 6-10, DN 16). The Court finds this argument more
appropriate to equitable tolling than a general discovery rule.
Equitable tolling and the discovery rule are undeniably related doctrines. Mechanically,
the differences between the two lie in the manner in which a statute of limitations defense is
avoided. The discovery rule, traditionally applied when fraud hinders discovery of injury,
prevents the accrual of a claim until the date on which the injury is discovered. Equitable tolling,
by contrast, merely exempts certain time periods from the application of the statute without
affecting the date of accrual. Judge Posner explains;
Equitable tolling is frequently confused both with fraudulent concealment on the
one hand and with the discovery rule . . . on the other. It differs from the former in
that it does not assume a wrongful—or any—effort by the defendant to prevent
the plaintiff from suing. It differs from the latter in that the plaintiff is assumed to
know that he has been injured, so that the statute of limitations has begun to run;
4
This ruling preceded the U.S. Supreme Court’s ruling in TRW, Inc. that the discovery rule did
not apply to FCRA claims.
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but he cannot obtain information necessary to decide whether the injury is due to
wrongdoing and, if so, wrongdoing by the defendant.
Cada, 920 F.2d at 451. While often discussed in parallel because of their similar effect, the
doctrines are distinct. Stewart v. Bureaus Inv. Grp. No. 1, LLC, No. 3:10-CV-1019-WKW, 2014
WL 2462883 (M.D. Ala. June 2, 2014) (concluding that the discovery rule did not apply to the
FDCPA but equitable tolling may); Accord Goodson, 2015 WL 364045, at *1 (noting that
“[b]ecause neither the discovery rule nor equitable tolling applies . . . .”); Lutz v. Chesapeake
Appalachia, L.L.C., 717 F.3d 459 (6th Cir. 2013) (stating that the discovery rule is unavailable
under applicable Ohio law but equitable tolling might be).
Equitable tolling is more appropriate than the discovery rule in the present instance. As
the Seventh Circuit explained, the discovery rule assumes a defendant has taken action—often
fraudulent action—to conceal the injury. That is not the case here. Assuming the truth of
Plaintiff’s allegations, there is no assertion that the act of reporting Mooneyham’s wife’s debt to
a credit agency constituted fraud. There is no allegation that CMRE concealed the credit report
or otherwise concealed the violation. The debt may have been improperly attributed or reported,
and its reporting may have been in violation of the FDCPA, but CMRE took no affirmative
action to prevent its discovery.
Furthermore, the discovery rule’s availability in FDCPA claims remains questionable in
this Circuit. Of the two circuits that have endorsed the discovery rule in FDCPA actions, only
one has applied it outside the fraud context. Compare Lembach v. Bierman, 528 F. App’x 297,
302 (4th Cir. 2013) (endorsing discovery rule where fraud concealed discovery); with Mangum v.
Action Collection Serv., Inc., 575 F.3d 935 (9th Cir. 2009) (finding discovery rule applied to
FDCPA actions generally). The discovery rule’s blanket application to FDCPA actions could
have unintended and ill-advised consequences, not to mention being arguably contrary to
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Congressional intent. Equitable tolling’s availability, however, renders unnecessary a ruling on a
general discovery rule’s applicability in this case.
As with the discovery rule, the Sixth Circuit remains silent on equitable tolling’s
applicability to the FDCPA. Ruth, 604 F.3d at 914. Unlike the discovery rule, the Supreme Court
seems to assume equitable tolling may be presumptively applied. The Court has stated that
federal limitations periods “are customarily subject to equitable tolling, unless tolling would be
inconsistent with the text of the relevant statute.” Young v. United States, 535 U.S. 43, 49 (2002)
(citations omitted). This includes application outside pleading errors and fraud. Id. at 50. This
mandate is not dissimilar to the Court’s mandate that the discovery rule may not be applied when
“the text and structure [of the statute] evince Congress’ intent to preclude judicial implication of
a discovery rule.” TRW, Inc., 534 U.S. at 28. Despite the similar standards, the mechanical
differences distinguishing the doctrines command different application to the FDCPA.
The text and structure of the FDCPA may preclude application of the discovery rule but
allows for equitable tolling. The text of the FDCPA limitations provision provides:
An action to enforce any liability created by this subchapter may be brought in
any appropriate United States district court without regard to the amount in
controversy, or in any other court of competent jurisdiction, within one year from
the date on which the violation occurs.
15 U.S.C. § 1692k. The statute ties the date of accrual to the date on which the violation occurs.
Plaintiff’s allegations put the date of CMRE’s violation, when they reported the debt to the credit
reporting agency, in 2009 and 2010. Delaying the date of accrual, as the discovery rule would do,
is thus arguably inconsistent with this statute. The statute’s text is, however, consistent with
equitable tolling. The statute mandates that the violation starts the limitations period. Equitable
tolling does not change the date of accrual, instead exempting certain time periods when
calculating the limitations period.
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While not necessarily relying on this textual rationale, several district courts within the
Sixth Circuit have found equitable tolling applicable to the FDCPA. See Foster v. D.B.S.
Collection Agency, 463 F. Supp. 2d 783, 799 (S.D. Ohio 2006); Zigdon v. LVNV Funding, LLC,
No. 1:09CV0050, 2010 WL 1838637, at *6 (N.D. Ohio Apr. 23, 2010); Simmons v. BAC Home
Loans Servicing, LP, No. 3:14-0761, 2014 WL 3844788, at *4 (M.D. Tenn. Aug. 5, 2014)
(finding tolling unavailable on the facts, but assuming its availability to FDCPA claims);
Castleberry v. Neumann Law P.C., No. 1:07-CV-856, 2008 WL 5744179, at *8 (W.D. Mich.
July 9, 2008) (assuming equitable tolling available). Finding the text of the statute consistent
with the application of equitable tolling, this Court follows custom in finding equitable tolling
available in FDCPA actions.
D.
Equitable tolling is appropriate to Mooneyham’s claim against CMRE.
Mooneyham’s filings never differentiate between equitable tolling and the discovery rule,
nor for that matter mentions equitable tolling at all. Mooneyham’s arguments, however, make
clear that this is the doctrine to which he appeals. “In most cases in which equitable tolling is
invoked, the statute of limitations has run before the plaintiff obtained information essential to
deciding whether he had a claim.” Cada, 920 F.2d at 453 (emphasis in original). While
Mooneyham makes no claim that CMRE’s act of reporting a debt to the collection agency was
fraudulent or that CMRE took active steps to conceal any misdeed, he alleges the only actions
CMRE took with respect to the debt was to report it. (Compl. ¶ 24). Mooneyham does not allege,
nor does CMRE argue, any other actions were taken to collect this (allegedly false) debt.
Without other actions taken, Mooneyham was not alerted nor prompted to investigate whether
the claims on his credit report were accurate. Without fraud, active concealment, or a selfconcealing violation, equitable tolling is the more appropriate doctrine.
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The doctrine of equitable tolling, however, is not applied haphazardly. It “is available
only in compelling circumstances which justify a departure from established procedures.”
Puckett v. Tenn. Eastman Co., 889 F.2d 1481, 1488 (6th Cir.1989). A plaintiff bears the burden
to demonstrate equity so requires. Allen v. Yukins, 366 F.3d 396, 401 (6th Cir.2004). The Sixth
Circuit has identified five factors that should be considered:
(1) lack of notice of the filing requirement, (2) lack of constructive knowledge of
the filing requirement, (3) diligence in pursuing one's rights, (4) absence of
prejudice to the defendant, and (5) the plaintiff's reasonableness in remaining
ignorant of the particular legal requirement.”
Chavez v. Carranza, 559 F.3d 486, 492 (6th Cir. 2009) (citation omitted). Not all of these
considerations may be material in every case, nor is the list exhaustive. Graham-Humphreys v.
Memphis Brooks Museum of Art, Inc., 209 F.3d 552, 561 (6th Cir. 2000). Equitable tolling is
necessarily a case-by-case determination. Id.
The first two of these factors favor the application of equitable tolling based on the
Court’s conclusion that Mooneyham should not be charged with constructive knowledge of the
information in his credit report. These two factors collapse in this context, as knowledge of the
statute of limitations (notice of filing requirement) would only be relevant after Mooneyham
received the information necessary to determine he had a claim, when he received his credit
report and is charged with constructive notice of the limitations period. As discussed above,
charging Mooneyham with knowledge of his credit report before he had reason to check it is
unreasonable in light of the FDCPA’s purpose. It follows that these factors favor the application
of equitable tolling.
This conclusion also implicates the third and fifth factors, Mooneyham’s diligence in
pursuing his rights and his reasonableness in remaining unaware of the claim. This Court’s
refusal to charge Mooneyham with constructive knowledge is partly based on the recognition
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that most consumers, including many reasonable ones, do not check their credit reports on an
annual basis. Until such consumers are given cause for concern, they have no need to do so.
Mooneyham alleges he was in the process of obtaining financing to purchase a new home when
he discovered the credit anomalies. (Compl. ¶¶ 14-21). He then promptly checked his credit
report and contacted the relevant debt collectors. (Compl. ¶¶ 17, 27). His complaint specifies
only that he reviewed his credit report “recently”; his Response provides the conversations were
within a month of filing this action, which demonstrates diligence in pursuing his rights. (Compl.
¶ 17; Pl.’s Resp. to CMRE’s Mot. to Dismiss 1, DN 16).
Despite these factors, there is prejudice to CMRE. On a practical level, employees
involved in the actions disputed here may or may not remain employed by CMRE several years
later, and if they are may have little memory of any decision process. Lacking such evidence,
proving the FDCPA’s “bona fide error” defense, should CMRE assert it, would be more difficult.
See 15 U.S.C. § 1692k(c) (containing a defense for bona fide errors). Taken with the foregoing
factors, however, the purpose of the FDCPA outweighs prejudice to the defendant in the
application of equitable tolling. The FDCPA’s purpose is “to eliminate abusive debt collection
practices by debt collectors.” 15 U.S.C. § 1692(e). The focus is thus on the activities of debt
collectors. Without the application of equitable tolling, the responsibility to ensure only proper
debts are sent to credit reporting agencies would be transferred to the debtor after one year. Even
had Mooneyham checked his credit report annually, as CMRE argues he should have, it would
have been possible to miss the limitations deadline. Without equitable tolling, reporting false
debt in violation of the FDCPA would likely be unavailable to consumers who failed to
systematically check their credit reports. This seems contrary to the purposes of the FDCPA.
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While failure to methodically check one’s credit report may not be unusual, the
confluence of factors here is. In the present circumstances, Mooneyham had no reason to know
of the misreporting of a medical debt because there was no action taken to collect the debt which
would have undoubtedly alerted him to the invalid claim. Mooneyham was neither sleeping on
his rights, unreasonable in his delayed realization of those rights, nor did he delay after learning
of the false credit report. Under these facts, the statute of limitations is equitably tolled until the
date on which his credit report was reviewed. Plaintiff’s Complaint puts this date “recently,” and
the defendants have not argued otherwise. His filing on December 17, 2014, is thus timely.
V.
CONCLUSION
The Court finds the doctrine of equitable tolling available under the FDCPA. Because
Mooneyham has properly alleged facts to warrant its application, CMRE’s Motion to Dismiss is
DENIED.
June 8, 2015
cc:
counsel of record
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