In Finley v. Dynamic Recovery Solutions, LLC, 2015 WL 5728307 (N.D. Cal. 2015), Judge Henderson granted summary judgment to a succession of debt collection agencies based on the staleness of the claim and the lack of imputed knowledge to the latter agencies that the debtor was represented by counsel. The facts were as follows:
In June of 2001, banks and debt collectors started contacting Plaintiff Nancy Finley (“Plaintiff”) regarding a debt she owed of approximately $18,000. Compl. at ¶ 10 (Docket No. 1-1). California’s four-year statute of limitations for Plaintiff’s debt appears to have run sometime in 2004 or 2005. Id. at ¶¶ 17, 18. Nonetheless, debt collection agencies continued to contact Plaintiff, off and on, for almost ten years after the statute of limitations expired. Id. at ¶ 10. On January 15, 2010, Defendant Accelerated Financial Solutions (“Accelerated”) purchased Plaintiff’s debt. Stile Decl. at ¶ 5 (Docket No. 35-1). Also, sometime in April of 2010, Plaintiff received a letter from Defendant Consumer Recovery Associates (“Consumer”), requesting repayment of the debt. Compl. at ¶ 10(m). Plaintiff’s counsel sent a letter to Consumer on April 29, 2010, notifying Consumer that Plaintiff was represented by counsel, that Plaintiff disputed the debt, and alleging violations of the federal Fair Debt Collection Practices Act (“FDCPA”), among other assertions. Id. at ¶ 14. Consumer did not respond to Plaintiff’s counsel’s letters. Id. at ¶ 15. Consumer asserts that after receiving the letter, Consumer coded the account as cease and desist and closed the account on its system. Fox Decl. ¶¶ 5, 6 (Docket No. 87). Sometime between January 27 and February 4, 2014, Accelerated opened an account with Defendant Dynamic Recovery Solutions (“Dynamic”) for the purposes of collecting Plaintiff’s debt. Stile Decl. at ¶ 6; Porter Decl. at ¶ 5 (Docket No. 34-1). On May 7, 2014, Dynamic sent a debt collection letter to Plaintiff, requesting payment of $39,969.99. Ex. J to King Decl. (Docket No. 47). The collection letter offered to “settle [Plaintiff’s] account” under various payment plan arrangements. Id. Plaintiff also alleges that Dynamic called her approximately nine times between March 8, 2014, and June 7, 2014. Opp’n to Dynamic Mot. at 3 (Docket No. 44).
The District Court found that the “continuing wrong” doctrine did not apply, and, therefore, the claim against CRA was barred by the Statute of Limitations.
Analogous to other types of claims that allow assertion of the continuing wrong doctrine, the key inquiry in debt collection cases is “whether the conduct complained of constitutes a continuing pattern and course of conduct as opposed to unrelated discrete acts.” Id. at 1161. If a pattern exists, the continuing wrong doctrine brings the entire course of action into the statute of limitations so long as the action is filed within one year of the date of the most recent alleged violation. Id. (“If there is a pattern, then the suit is timely if the action is filed within one year of the most recent date on which the defendant is alleged to have violated the FDCPA, and the entire course of conduct is at issue.”). Plaintiff does not offer any support for why this Court should apply the continuing wrong doctrine to violations by different defendants, nor does Plaintiff try to convince the Court that Consumer committed repeated instances or continuing acts of the same nature. Furthermore, the Ninth Circuit has disapproved of applying the doctrine of continuing wrong to situations where the continuing wrong is only the “ill effects from an original violation.” Ward v. Caulk, 650 F.2d 1144, 1146-47 (9th Cir. 1981). Therefore, Plaintiff’s continuing wrong argument fails.
The other Defendants, the Court applied a standard that the new debt collectors had to have actual, and not imputed, knowledge that the debtor was represented by counsel.
Furthermore, the theory that Accelerated’s records impute actual knowledge to Dynamic is not sufficient to prove actual knowledge. In Randolph, the Seventh Circuit held that a collection agency’s letter to debtor who was represented by counsel did not violate FDCPA, since the collection agency did not know debtor was represented by counsel, even though the original creditor’s files contained information that the debtor was represented. 368 F.3d at 729-30. This is because a creditor’s knowledge is not imputed to collection agency. Id.; see also Schmitt v. FMA Alliance, 398 F.3d 995, 997-98 (8th Cir. 2005) (holding that a creditor’s knowledge that the consumer is represented by counsel is not imputed to the debt collector under the FDCPA; noting that imputing a creditor’s actual knowledge of a debtor’s representation to the debt collector “contradicts established agency law, which dictates that while the knowledge of the agent is imputed to the principal, the converse is not true”). Because Plaintiff was unable to raise a genuine issue of material fact in response to Dynamic’s motion for summary judgment, and Plaintiff offered no evidence beyond mere speculation, Dynamic’s motion for summary judgment is GRANTED as to whether Dynamic knew that Plaintiff was represented by counsel.