Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-56657/USCOURTS-ca9-13-56657-0/pdf.json

Parties Involved:
Attorney Lina
Appellee
Deborah A. Lyons
Appellant
Michael & Associates
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DEBORAH A. LYONS,

Plaintiff-Appellant,

v.

MICHAEL & ASSOCIATES;

ATTORNEY LINA,

Defendants-Appellees.

No. 13-56657

D.C. No.

3:13-cv-0011-LAB-KSC

OPINION

Appeal from the United States District Court

for the Southern District of California

Larry A. Burns, District Judge, Presiding

Argued and Submitted December 10, 2015

Pasadena, California

Filed June 8, 2016

Before: Stephen Reinhardt, Carlos F. Lucero*,

and Jacqueline H. Nguyen, Circuit Judges.

Opinion by Judge Nguyen

 

*

 The Honorable Carlos F. Lucero, Circuit Judge for the U.S. Court of

Appeals for the Tenth Circuit, sitting by designation.

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2 LYONS V. MICHAEL & ASSOCS.

SUMMARY**

Fair Debt Collection Practices Act

The panel reversed the district court’s dismissal as timebarred of a complaint under the Fair Debt Collection

Practices Act.

The plaintiff alleged that the defendants were debt

collectors who violated the FDCPA when they sued her in the

wrong judicial district to collect a debt that had been

transferred to them. The panel held that the discovery rule

applies in an FDCPA action. Accordingly, the one-year

statute of limitations began to run when the defendants served

the plaintiff with process, rather than on the date the debt

collection action was filed.

COUNSEL

Richard J. Rubin (argued), Santa Fe, New Mexico; Robert L.

Hyde and Joshua Swigart, Hyde & Swigart, San Diego,

California, for Plaintiff-Appellant.

Lisa D. Dubowski (argued) and Christina L. Rymsza,

Michael & Associates, PC, Thousand Oaks, California, for

Defendants-Appellees.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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LYONS V. MICHAEL & ASSOCS. 3

OPINION

NGUYEN, Circuit Judge:

Deborah Lyons appeals the district court’s dismissal of

her case against Lina Michaels and Michael & Associates on

the ground that it was time-barred. Lyons alleges that the

defendants are debt collectors who violated the Fair Debt

Collection Practices Act (“FDCPA”) when they sued her in

the wrong judicial district to collect a debt that had been

transferred to them. The district court concluded that the

FDCPA’s one-year statute of limitations began to run on the

date that the debt collection action was filed, and because

Lyons failed to bring this case within one year of that date,

her claim is time-barred. Relying on Naas v. Stolman,

130 F.3d 892 (1997), the district court rejected Lyons’

argument that, under the discovery rule, her complaint was

timely filed within one year of the date that the defendants

served her with process, which is when she first learned of the

collection action. Instead of Naas, the district court should

have applied Mangum v. Action Collection Service, Inc.,

575 F.3d 935 (9th Cir. 2009). In that case, we held that the

discovery rule applies in an FDCPA action. We therefore

reverse and remand.

BACKGROUND

On January 3, 2013, Lyons filed this lawsuit in the district

court for the Southern District of California against Lina

Michaels1and Michael & Associates (collectively, “Michael

& Associates”). According to Lyons’ complaint, Michael &

Associates are debt collectors who violated the FDCPA when

 

1

 Named in the complaint as “Attorney Lina.”

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4 LYONS V. MICHAEL & ASSOCS.

they filed a lawsuit against her on December 7, 2011, in

Monterey County, California, to collect on a debt that she

owed to American Express, which had been transferred to

them. The FDCPA requires debt collectors who take legal

action to collect a debt unrelated to an interest in real property

to file in the judicial district where the consumer (1) “signed

the contract sued upon,” or (2) “resides at the commencement

of the action.” 15 U.S.C. § 1692i. Lyons alleges that

Michael & Associates violated these provisions of the

FDCPA because she did not enter into a contract with

America Express in Monterey County and, during the

relevant time period, she resided in San Diego County,

California. In short, she claims that Michael & Associates

sued her in the wrong county.

Michael & Associates moved to dismiss the complaint on

the ground that it was not filed “within one year from the date

on which the violation occurs” as the FDCPA requires—that

is, within one year from December 7, 2011, the date they filed

the debt collection action against her. 15 U.S.C. § 1692k(d). 

Lyons does not dispute that her action was filed more than

one year after she was sued by Michael & Associates. She

nevertheless argues that her complaint was timely because

she did not know or have reason to know about the collection

case against her until mid-January of 2012, when she was

served with process. According to Lyons, the FDCPA statute

of limitation is tolled by the discovery rule.

Citing Naas v. Stolman, the district court dismissed

Lyons’ case as time-barred. In Naas, a panel of this court

suggested that an FDCPA “violation occurs” when the debt

collection action is filed. 130 F.3d at 893. The district court

recognized some tension between Naas and a subsequent

case, Mangum v. Action Collection Service, Inc.—which

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LYONS V. MICHAEL & ASSOCS. 5

applied the “discovery rule” to an FDCPA action without

mentioning Naas, 575 F.3d at 941—but ultimately decided

that Naas controls the outcome of this case. This appeal

followed.

JURISDICTION & STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1291. We review

de novo the dismissal of a complaint on the basis of a statute

of limitations. Cholla Ready Mix, Inc. v. Civish, 382 F.3d

969, 973 (9th Cir. 2004).

DISCUSSION

A claim under the FDCPA must be brought “within one

year from the date on which the violation occurs.” 15 U.S.C.

§ 1692k(d). The question is which date controls.

A.

We start our analysis with Mangum, which is almost

directly on point. In that case, the plaintiff alleged that debt

collection agencies violated the FDCPA by wrongfully

disclosing her debt information to an outside party, and that

her complaint was timely because she filed it within one year

of the date that she learned of the disclosure. 575 F.3d at

937–39. The question that we had to decide was “whether

commencement of the one year [statute of limitations] period

was delayed by the discovery rule.” Id. at 940. We

recognized that

[I]n general, the discovery rule applies to

statutes of limitations in federal litigation, that

is, “[f]ederal law determines when the

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6 LYONS V. MICHAEL & ASSOCS.

limitations period begins to run, and the

general federal rule is that ‘a limitations

period begins to run when the plaintiff knows

or has reason to know of the injury which is

the basis of the action.”’

Id. (second alteration in original) (quotingNorman-Bloodsaw

v. Lawrence Berkeley Lab., 135 F.3d 1260, 1266 (9th Cir.

1998)). We considered whether the statutory language and

legislative history of the FDCPA, or the Supreme Court’s

then-recent guidance in TRW Inc. v. Andrews, 534 U.S. 19

(2001), in which the Court held that the discovery rule does

not apply to the Fair Credit Reporting Act, compelled us to

reach a different conclusion. See Mangum, 575 F.3d at

939–41. Concluding that they did not, we applied the

discovery rule and held that Mangum’s complaint was timely

because the statute of limitations only began to run when she

first knew (or should have known) that her information had

been wrongfully disclosed. Id. at 941.

Following Mangum, we also applied the discovery rule

where the alleged FDCPA violation involved debt collection

letters. See Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d

1109, 1118 n.5 (9th Cir. 2014) (“The district court

appropriately concluded that ‘the first time that [Tourgeman]

reasonably could have become aware of the allegedly false

and misleading representations in Defendants’ letters was

when his father was served with summons and complaint in

the state court lawsuit in October 2007,’ after which litigation

discovery revealed the existence of the collection letters.”).

Here, Lyons alleges that Michael & Associates violated

the FDCPA by filing a collection lawsuit against her in

Monterey County, a location where she neither lived nor

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LYONS V. MICHAEL & ASSOCS. 7

“signed the contract sued upon.” See 15 U.S.C. § 1692i. The

fact that the alleged violation was the wrongful filing of a

debt collection action—rather than the wrongful disclosure of

information to third parties as in Mangum, or a violation in

debt collection letters as in Tourgeman—makes no difference

to our analysis. We therefore hold that the discovery rule

applies equally regardless of the nature of the FDCPA

violation alleged by a plaintiff. In this case, Lyons argues

that she first learned of the collection action when she

received service of process, and that she had no reason to

suspect that she had been sued in Monterey County, a venue

that is considerably distant from her residence in the San

Diego County. Michael & Associates do not contend

otherwise, instead contesting only the date on which the

statute of limitations was triggered. Applying the discovery

rule to the undisputed facts, we find that Lyons’ complaint

was timely-filed.

We reject the suggestion by Michael & Associates to

apply the discovery rule narrowly to only certain FDCPA

claims, depending on the nature of the violation alleged by a

plaintiff. Applying the discoveryrule to some FDCPA claims

but not others would be out of step with our general approach

to the discovery rule, and would threaten to capriciously limit

the broad, remedial scope of the FDCPA. See Tourgeman,

755 F.3d at 1118 (“In addition, ‘[b]ecause the FDCPA . . . is

a remedial statute, it should be construed liberally in favor of

the consumer.’”) (quoting Clark v. Capital Credit &

Collection Servs., Inc., 460 F.3d 1162, 1176 (9th Cir. 2006));

see also Donohue v. Quick Collect, Inc., 592 F.3d 1027,

1033–34 (9th Cir. 2010).

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8 LYONS V. MICHAEL & ASSOCS.

B.

We next address Naas v. Stolman, a case relied on by the

district court to conclude that the statute of limitations begins

to run on the date the underlying debt collection action was

filed. 130 F.3d at 893. Naas, however, does not dictate the

result here. In that case, the question of whether the

discovery rule applies to FDCPA cases was never presented

to nor addressed by our court.

In Naas, the plaintiffs were sued in a state court debt

collection action for unpaid hospital bills. After the debt

collector successfully obtained judgment, the plaintiffs

appealed to the Appellate Department of the California

Superior Court, which eventually affirmed the judgment. Six

months before the state Appellate Department ruled,

however, the plaintiffs filed a federal lawsuit claiming

FDCPA violations. At the time of filing, the parties had been

litigating the debt collection action for more than two years. 

The district court dismissed the federal lawsuit as timebarred. On appeal, the plaintiffs argued that the complaint

was timely because it was filed within one year of the date the

state Appellate Department affirmed the judgment against

them. Id. We disagreed, stating that the appellate court

judgment date could not possibly be the “date on which the

violation occurs” under the plain language of 15 U.S.C.

§ 1692k(d). If the plaintiffs were correct, “then their federal

action would have been premature, as it was brought six

months before that judgment.” Id. (“The alleged violation of

the Act was not a reviewing court judgment, but the bringing

of the suit itself. . . . We hold that the statute of limitations

began to run on the filing of the complaint in the Municipal

Court.”).

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LYONS V. MICHAEL & ASSOCS. 9

Notably, the discovery of the debt collection suit is

entirely absent from our analysis in Naas: the plaintiffs did

not argue for a later start date based on when they were

served with process, and, perhaps for obvious reasons, there

is no indication that the affirmance of the judgment was the

first time the plaintiffs learned of the defendants’ debt

collection efforts. See id. at 892–93. Simply put, Naas

answered a different question than the one posed by the

parties here. That the court in Naas was not considering

application of the discovery rule is further illustrated by the

fact Naasrelied in part on cases involving the mailing of debt

collection letters, but as we recently held in Tourgeman, the

discovery rule applies in such matters too. 755 F.3d at 1118

n.5.

Moreover, factual differences between this case and Naas

also confirm that the discovery rule should apply here. 

Naas’s conclusion—that the limitations period is triggered by

the filing of the collection action—is based in part on the

assumption that the filing date is “easily ascertainable.” 130

F.3d at 893. But that is less obvious where, as here, the

collection lawsuit is alleged to have been filed in an improper

venue far from where the plaintiff actually lived. Indeed, the

discovery rule seems particularly apropos where the very

nature of the deficiency alleged increases the likelihood that

the filing date would not be “easily ascertainable” to the

debtor absent some other form of notice, such as service of

process.2

2 We decline to adopt Michael & Associates’ suggestion to apply

Mangum where service on the collection lawsuit was improper, and apply

Naas where it was proper. It is unclear why, if Naas is best read a true

exception to Mangum’s general application of the discovery rule, proper

service would be an appropriate boundary line. To concede that improper

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10 LYONS V. MICHAEL & ASSOCS.

Naas thus stands for the proposition that, under the

FDCPA, the injury which forms the basis of the action is the

filing of the underlying collection lawsuit. When confronted

for the first time in Mangum with the question of whether the

discovery rule should apply to that same statute of limitations

provision, we answered in the affirmative. Of course,

Mangum does not foreclose the possibility that the statute of

limitations could begin on the filing date where the alleged

FDCPA violation is a collection lawsuit (that is, “when the

violation occurs”), but it allows plaintiffs to demonstrate that

it does not.

While Mangum did not involve the filing of a collection

lawsuit, we see no reason to limit our conclusion that the

discovery rule applies to 15 U.S.C. § 1692k(d) to its

particular facts. Such a holding would read Naas too broadly

and Mangum too narrowly. We therefore conclude that the

district court should have applied Mangum’s holding that the

discovery rule applies to FDCPA claims.

CONCLUSION

“[I]n general, the discovery rule applies to statutes of

limitations in federal litigation . . . .” Mangum, 575 F.3d at

940. We follow Mangum in expressly applying that general

rule to 15 U.S.C. § 1692k(d) where the alleged FDCPA

violation is the filing of a collection lawsuit. Applying the

service dictates application of the discovery rule is to concede that the

discovery date is relevant and that the filing date, on its own, may be

insufficient.

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LYONS V. MICHAEL & ASSOCS. 11

discovery rule to the undisputed facts here, we find that

Lyons’ complaint was timely. We therefore reverse and

remand for proceedings consistent with this opinion.

REVERSED AND REMANDED.

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