1 – OPINION AND ORDER

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

ANDREA JENKINS-BROWN, individually 

and on behalf of all others similarly situated

Plaintiffs, 

v.

LIBERTY ACQUISITIONS SERVICING, 

LLC,

Defendant.

Case No. 3:14-cv-01610-ST

OPINION & ORDER

STEWART, Magistrate Judge:

INTRODUCTION

On October 10, 2014, plaintiff, Andrea Jenkins-Brown (“Jenkins-Brown”), filed this 

proposed class action on behalf of herself and others similarly situated against defendant Liberty 

Acquisitions Servicing, LLC (“Liberty Servicing”), a collection agency, and its attorney, Thomas 

L. Potter (“Potter”), alleging one claim under the Fair Debt Collections Practices Act, 15 USC 

§ 1692a–p (“FDCPA”). Jenkins-Brown alleges that defendants improperly pursued collection of 

contractual interest added to certain charged-off consumer Demand Deposit Accounts (“DDA

accounts”) originating with U.S. Bancorp (“U.S. Bank”) and/or Wells Fargo Bank N.A. (“Wells 

Fargo”). Potter has since been dismissed and no longer is a defendant in this case (docket #46). 
2 – OPINION AND ORDER

Liberty has now filed Motions for Leave to File First Amended Class Action Allegation 

Complaint (dockets #76 (unredacted) & #78 (redacted)) seeking to:

1. Remove all allegations relating to Wells Fargo DDA accounts and to Potter; 

2. Substitute Jesus Villanueva, Jr. (“Villanueva”) as class representative in place of 

Jenkins-Brown; 

3. Add Liberty Holdings (“Holdings”), the sole member of Liberty Servicing

(collectively the “Liberty Parties”), as a defendant under an alter ego theory of liability for the 

alleged First Claim of debt collection violations;

4. Allege a new Third Claim for breach of fiduciary duties against the Liberty Parties;

5. Allege a new Second Claim for fraudulent transfer against the Liberty Parties, as well 

as new defendants, Javlin One, LLC and Javlin Capital, LLC (collectively the “Javlin Parties”) 

based on the sale by the Liberty Parties of all of their assets to Jefferson Capital Systems, LLC 

(“Jefferson”) and an alleged transfer by Jefferson of approximately $7.6 million of the sale 

proceeds to the Javlin Parties. 

LEGAL STANDARD

Pursuant to FRCP 15(a)(2), a court “should freely give leave” to amend “when justice so 

requires.” However, leave to amend “is not to be granted automatically.” Jackson v. Bank of

Haw., 902 F2d 1385, 1387 (9th Cir 1990). Deciding whether to grant leave to amend, the 

Supreme Court has offered the following factors for the court to consider:

In the absence of any apparent or declared reason — such as undue delay, 

bad faith or dilatory motive on the part of the movant, repeated failure to 

cure deficiencies by amendments previously allowed, undue prejudice to 

the opposing party by virtue of allowance of the amendment, futility of 

amendment, etc. — the leave sought should, as the rules require, be 

“freely given.” 
3 – OPINION AND ORDER

Foman v. Davis, 371 US 178, 182 (1962); see also Carvalho v. Equifax Info. Servs., LLC, 629 

F3d 876, 892 (9th Cir 2010). 

Of these factors, “[i]t is the consideration of prejudice to the opposing party that carries 

the greatest weight.” Eminence Capital, LLC v. Aspeon, Inc., 316 F3d 1048, 1052 (9th Cir 2003). 

DISCUSSION

Liberty Servicing does not oppose the proposed amendment to remove all allegations 

relating to Wells Fargo DDA accounts. However, it objects to changing the class representative 

and adding new claims and defendants, and argues that the action should be dismissed because 

there is no available class representative.

I. Villanueva as Class Representative

A. Proposed Allegations Relating to Villanueva

On September 30, 2013, Liberty Servicing sued Villanueva in Jackson County Circuit 

Court for an alleged overdraft debt that accrued on his U.S. Bank DDA account. Proposed First 

Amended Complaint (“FAC”), ¶ 20. The complaint alleged that Villanueva entered into a 

service contract with U.S. Bank on July 24, 2009, and that Liberty Servicing bought the account 

on April 13, 2013. Id, Ex. A (docket #77), ¶¶ 3, 6. Villanueva owed an unpaid principal balance 

of $619.29, plus interest of $810.36, calculated at the contractual rate of 21.9% compounded 

monthly since November 11, 2009. Id, ¶¶ 24-25 & Ex. A, ¶ 9. Villanueva was served with a 

copy of the complaint on October 10, 2013. Id, ¶ 22. Liberty Servicing then filed a Motion for

an Award of Default, and the state court entered a default judgment against Villanueva on 

December 13, 2013, for the principal amount of $619.29, pre-judgment interest of $869.36, and 

post-judgment interest calculated at the rate of 21.9% per annum compounded monthly. Id, 
4 – OPINION AND ORDER

¶¶ 27-28. Liberty Servicing garnished Villanueva’s wages and filed a Full Satisfaction of Money 

Award with the state court on September 15, 2014. Id, ¶ 30. 

B. Member of Class 

Because Jenkins-Brown is ill and no longer able to serve as the class representative, she 

proposes Villanueva as her replacement. Where the sole named plaintiff and class representative 

is unable to continue to serve, another class member who intends to be part of the class may be 

substituted prior to class certification to fill that role. Aguilar v. Boulder Brands, Inc., No. 3:12-

CV-01862-BTM, 2014 WL 4352169, at *9 (SD Cal Sept. 2, 2014). The description of the class 

currently includes “all individuals . . . from whom Defendants attempted to collect a charged-off 

consumer [DDA] debt originating with U.S. Bank . . . at any time on or after one year prior to the 

filing of this action.” Complaint, ¶ 30. This definition of the class corresponds with the oneyear statute of limitations for FDCPA actions. 15 USC § 1692k(d). 

Liberty Servicing’s debt collection suit against Jenkins-Brown falls well within the oneyear time period. On October 24, 2013, Liberty Servicing sued her in Multnomah County 

Circuit Court, served her with a copy of the complaint on November 5, 2013, filed a Motion for 

an Award of Default on January 31, 2014 that the court granted, and filed a Full Satisfaction of 

Money Award on June 2017. Complaint, ¶¶ 16-27. 

As long as Liberty Servicing attempted to improperly collect interest on Villanueva’s 

charged-off DDA account originating from U.S. Bank on or after October 10, 2013 (one year 

prior to the filing of this action), he is suitable to become the new class representative in place of 

Jenkins-Brown. Villanueva’s debt collection suit was filed in state court on September 30, 2013, 

about a month before Liberty Servicing sued Jenkins-Brown with a similar suit and over one 

year prior to the filing of the class action Complaint. However, in addition to filing the debt 
5 – OPINION AND ORDER

collection suit, Liberty Servicing allegedly made other unlawful attempts to collect interest on 

Villanueva’s charged-off DDA account that independently support a claim under the FDCPA. 

Those actions include filing a Motion for an Award of Default on December 13, 2013, 

garnishing Villanueva’s wages for an amount that included interest (date uncertain), and filing a 

Full Satisfaction of Money Award with the state court on September 15, 2014. Regardless of 

when Liberty Servicing filed the lawsuit, its later attempts to collect interest on the charged-off 

DDA account occurred on or after October 10, 2013, satisfying the requirement to be an eligible 

class member. As a member of the class, Villanueva is suitable to become the new class 

representative.

C. Statute of Limitations

In an abundance of caution, Villanueva filed a separate lawsuit in this court on 

December 17, 2015, against Liberty Servicing containing the same allegations as in the Proposed 

FAC which was filed the same day. Villanueva v. Liberty Acquisition Servs., LLC et al, Civil 

Case No. 3:15-cv-02354-ST, 1 Liberty Servicing contends that Villanueva’s claims are barred by 

the statute of limitations because his separate lawsuit was not timely filed within one year after 

the last possible FDCPA violation on September 15, 2014, when a Full Satisfaction of Money 

Award was filed. Because Villanueva is a member of the putative class, as discussed above, the 

original Complaint asserted his claims and is the operative pleading for a statute of limitations 

analysis. Thus, the timeliness of Villanueva’s separately filed action is irrelevant to the analysis.

The Liberty Parties also contend that Villanueva’s claim is not timely filed because it 

does not relate back to the original Complaint. In their view, the statute of limitations for his 

claim was triggered no later than September 30, 2013, when the debt collection lawsuit was filed 

 1

 If he is allowed to serve as the class representative in this case, then Villanueva requests that his separate case 

either be consolidated with this case or dismissed.
6 – OPINION AND ORDER

against Villanueva, which was more than one year before the Complaint was filed on October 

10, 2014. The filing of that lawsuit allegedly violated the FDCPA by misrepresenting the 

Liberty Parties’ authority to collect interest on the charged-off DDA accounts at the contractual

rate of 21.9%.2 

However, under Ninth Circuit law, the one-year limitation period for bringing a claim 

under the FDCPA “begins to run when the plaintiff knows or had reason to know of the injury 

which is the basis of the action.” Mangum v. Action Collection Serv., Inc., 575 F3d 935, 940 (9th

Cir 2009). Under the discovery rule, the statute of limitations based on the unfair attempt to 

collect interest through a lawsuit did not begin to run until October 10, 2013, when Villanueva 

was served with the complaint and discovered the violation. Thus, under the discovery rule, 

Villanueva had until October 10, 2014, one year after service of the state court complaint to file 

his claim, rendering his claim timely filed.

3

 

The Ninth Circuit’s decision in Naas v. Stolman, 130 F3d 892 (9th Cir 1997), appears to 

render the discovery rule inapplicable to FDCPA violations arising from a debt collection suit 

against a debtor. Considering decisions by the Eighth and Eleventh Circuits, the Ninth Circuit 

found that when the alleged violation is the filing of the lawsuit, the statute of limitations begins 

to run on the date the complaint is filed. This conclusion is analogous to other circuits finding 

that the statute of limitations begins to run when a harassing collection letter is mailed. 

 2 The Proposed FAC also contains allegations in paragraph 32 of Liberty Servicing mailing Villanueva a demand 

letter that presumably occurred before it filed suit. 

3 The statute of limitations for attempting to collect Villanueva’s debt through a lawsuit began to run the day after 

Villanueva discovered the violation, on October 11, 2013. See Hooper v. Capital Credit & Collection Servs., Inc., 

No. CIV. 03-793-JE, 2004 WL825616, at *2 (D Or Jan. 16, 2004) (concluding that the FDCPA time limit is 

procedural and subject to FRCP 6(a)). As indicated in Hooper, there is still no Ninth Circuit decision addressing 

whether the FDCPA statute of limitations is jurisdictional or procedural, and circuits are split on the issue. See also

Clark v. Bonded Adjustment Co., 176 F Supp2d 1062, 1065 (ED Wash 2001). Liberty Servicing does not object to 

computing the one year beginning on October 11, 2013.
7 – OPINION AND ORDER

Consistent with these other circuit decisions, the Naas court reasoned that commencing the 

statute of limitations when the debtor had the “last opportunity to comply with the [Act]” was 

consistent with the purpose of the FDCPA to regulate the actions of debt collections. Id at 893, 

quoting Maloy v. Phillips, 64 F3d 607, 608 (11th Cir 1995), Mattson v. U.S. W. Commc’ns, 967 

F2d 259, 261 (8th Cir 1992). 

Naas predates Magnum and did not consider or analyze whether the plaintiff’s discovery 

of the violation was relevant or prudential to the issue of when the FDCPA statute of limitations 

began. Unlike here, Naas was not faced with deciding between the date of service and the filing 

of the complaint for triggering the statute of limitations. The debtor in Naas did not argue that 

the limitations period began at filing because his action would be time-barred, but instead argued 

that the limitations period did not run until the collection suit judgment was upheld by the 

appeals court. As characterized by the Tenth Circuit, the Naas court “never discussed, and 

apparently never considered, the possibility that the claim accrued upon service” because “the 

choice between accrual upon filing and accrual upon service was not before the court in Naas.” 

Johnson v. Riddle, 305 F3d 1107, 1113-14 (10th Cir 2002). Furthermore, the alleged violation in 

Naas was initiating the lawsuit against the debtor. In contrast here, the alleged violation is 

making false representations in the substance of the complaint. While the debtor in Naas could 

have discovered the violation on the date the lawsuit was filed, Villanueva could not have 

discovered the false representations until he received a copy of the complaint through service and 

read the allegations. Because Naas is factually distinguishable, its holding is not binding. The 

court finds the reasoning in Johnson persuasive and concludes that, as here, where an alleged 

violation arose with the filing of a debt collection lawsuit, the statute of limitations accrued when 

the debtor was served. 
8 – OPINION AND ORDER

Even if Villanueva’s claim against Liberty Servicing for filing suit against him in state 

court is barred by the statute of limitations, he has alleged various other unlawful attempts to 

collect interest on his debt that support independent claims under the FDCPA, all of which 

occurred within the statute of limitations. As mentioned above, Liberty Servicing garnished

Villanueva’s wages and filed a Full Satisfaction of Money Award on September 15, 2014. In 

Johnson, the Tenth Circuit observed that the filing of the debt collection lawsuit, in the absence 

of service, is only “half [of] an actionable wrong,” i.e. an “attempt to collect” the debt within the 

meaning of the statute. Id. Because the various statutes of limitations relative to Villanueva’s 

FDCPA claims were triggered as early as October 11, 2013, and as late as September 15, 2014, 

these claims are not time-barred.

As for the other factors relevant to adding a new party — undue delay, bad faith, and 

prejudice — Liberty Servicing does not present any substantive arguments. The only evidence 

of delay is as a result of actions by Liberty Servicing. Upon its request, the court stayed 

discovery twice in this case (docket ## 17 & 41). Similarly, Liberty Servicing will not suffer any 

undue prejudice. Villanueva has not been deposed, the class has not been certified, and 

discovery has been stayed. For these reasons, Villanueva may be substituted as the name 

plaintiff and class representative.

III. Adding Liberty Holdings as New Defendant

Jenkins-Brown proposes to add Liberty Holdings, the sole member of Liberty Servicing, 

as a named defendant under the alter ego theory of liability for alleged debt collection violations. 

The Proposed FAC alleges that Liberty Servicing acted on behalf of Liberty Holdings in its 

collection practices and that Liberty Holdings oversaw through its advisory board the collection

that resulted in the alleged FDCPA violations. Proposed FAC, ¶¶ 5, 7, 31. Because the statute 
9 – OPINION AND ORDER

of limitations period expired before the Proposed FAC was filed on December 17, 2015, the 

relation-back doctrine is the only procedural tool to add Liberty Holdings as a defendant to the 

FDCPA claim.

Under FRCP 15(c), an amendment to a pleading that changes the party against whom a 

claim is asserted relates back to the date of the original pleadings if: (1) the claim “arose out of 

the same conduct, transaction or occurrence set out . . . in the original pleading;” (2) within 120 

days after the original complaint was filed, the new defendant “received such notice of the action 

that it will not be prejudiced in defending on the merits;” and (3) the new defendant “knew or 

should have known that the action would have been brought against it, but for a mistake 

concerning the proper party’s identity.” Each element is met in this case. 

First, the amended FDCPA claim against the Liberty Parties arises out of the exact 

conduct underlying Jenkins-Brown’s original claim. 

Second, Liberty Holdings had notice of the FDCPA claim because the original defendant, 

Liberty Servicing, is its wholly-owned subsidiary. “If the proposed new defendants have an 

identity of interest with the named defendant, notice will be imputed to the former.” Brink v. 

First Credit Res., 57 F Supp2d 848, 853-54 (D Ariz 1999), citing Korn v. Royal Caribbean 

Cruise Line, Inc., 724 F2d 1397, 1401 (9th Cir 1984). Here, the parties have a parent-subsidiary 

relationship. “When a person owns most or all of the shares in a corporation and controls the 

affairs of the corporation, it is presumed that in litigation involving that corporation the 

individual has sufficient commonality of interest.” In re Gottheiner, 703 F2d 1136, 1139 (9th Cir 

1983). The Eleventh Circuit applies a similar definition under FRCP 15(c), holding that “when a 

complaint naming a corporation as the defendant is later amended to add the corporation’s 

owner, the latter may be deemed to have had notice in light of his or her identity of interests with 
10 – OPINION AND ORDER

the original defendant.” Brink v. First Credit Res., 57 F Supp2d 848, 854 (D Ariz 1999), citing 

Intel Capital Corp. v. Cups Coal Co., 707 F2d 1253, 1258 (11th Cir 1983).

Finally, Liberty Holdings should have known that Jenkins-Brown would allege an 

FDCPA claim against it had she known that Liberty Servicing carried out the unfair debt 

collection on behalf of Liberty Holdings. Another district court in this circuit allowed the 

addition of new, related defendants in FDCPA cases whose existence was not known to the 

debtor prior to filing the action. See, e.g., Brink, 57 F Supp2d at 858 (court allowed addition of 

corporate officers of the collection agency whose names the plaintiff did not know when filing 

the complaint); c.f. Kilkenny v. Arco Marine Inc., 800 F2d 853, 857 (9th Cir 1986) (denying 

addition of new party whose identity was disclosed to plaintiff after the original complaint was 

filed but before the three-year statute of limitations had run). 

At the time of filing the Complaint, Jenkins-Brown was aware that Liberty Holdings 

existed. The Corporate Disclosure Statement filed with the court did not disclose Liberty 

Holdings because it is not a publically owned company and because jurisdiction is not based on 

diversity of citizenship. See Local Rule 7.1-1 (requiring disclosure of all members of limited 

liability corporations). It is not clear when Jenkins-Brown learned of the existence of Liberty 

Holdings. However, it is highly unlikely that she discovered the identity of Liberty Holdings 

prior to the expiration of the statute of limitations which expired the day she filed the Complaint. 

IV. Proposed Fraudulent Transfer and Breach of Fiduciary Duties Claims

Both proposed, new claims for fraudulent transfer (Second Claim) asserted against all 

proposed defendants and breach of fiduciary duty (Third Claim) asserted against the Liberty 

Parties involve new parties and rest on the same allegations of activities that transpired after the 

filing of the original Complaint. 
11 – OPINION AND ORDER

A. Proposed Allegations Regarding Transferred Debt

On December 19, 2014, the Liberty Parties sold substantially all of their assets to 

Jefferson Capital for a combination of the cash and equity. Proposed FAC, ¶ 34. The Liberty 

Parties transferred approximately $7.6 million to the Javlin Parties for an antecedent debt 

allegedly owed to Javlin One by Liberty Acquisitions II, which is also a wholly-owned 

subsidiary of Liberty Holdings and sold Jenkins-Brown’s debt to Liberty Servicing. Id, ¶¶ 14,

35, 55. At the time of the transfer the Javlin Parties knew this class action had been filed 

because at least one member of Liberty Holdings’s advisory board, namely Thomas Scott, served

on the board of Javlin Capital. Id, ¶ 36. The Javlin Parties knew or had reasonable cause to 

know that the transfer would render the Liberty Parties insolvent and unable to pay Liberty 

Servicing’s outstanding debts, including monetary damages that might be awarded class 

members in this litigation. Id, ¶ 37. 

B. Adding New Claims and Javlin Parties

Again Liberty Servicing centers its opposition on the futility of the new claims based on 

the relation-back doctrine. FRCP 15(c). Liberty Servicing is correct that the new claims rely on 

different allegations than the FDCPA claim. However, the claims accrued no earlier than 

December 19, 2014, when the Liberty Parties sold substantially all of their assets to Jefferson 

Capital, which is less than one year prior to the filing the motion to amend. Liberty Servicing 

may come forward at a later time with evidence that the operative allegations are time-barred. 

But at this juncture, it has failed to produce any such evidence.

These additional claims advance different legal theories and require proof of different 

facts involving the circumstances of the purchase of the debt and the asset transfer to the Javlin 

Parties, with corresponding expense and delay. See Kaplan v. Rose, 49 F3d 1363, 1370 (9th Cir 
12 – OPINION AND ORDER

1995) (noting that “[e]xpense, delay, and wear and tear on individuals and companies” counts 

towards prejudice). The limited discovery so far has revealed a complex corporate structure set 

up by the Liberty Parties and Javlin Parties. Of even greater concern is the addition of a new 

party. See McNally v. Eye Dog Found. for the Blind, Inc., No. 1:09-cv-01184-AWI-SKO, 2010 

WL 4723073, at *11 (ED Cal Nov. 15, 2010) (holding proposed amendment was “highly 

prejudicial” because “adding new parties at this date will protract the litigation further”); Wells 

Fargo Bank, N.A. v. Renz, No. C 08-02561-SBA, 2010 WL 2867615, at *3 (ND Cal July 20, 

2010) (“The act of simply adding a party is an indicator of prejudice.”).

However, Liberty Servicing has indicated its intent to defend the FDCPA claim and class 

certification on a theory of poverty because it purportedly sold all its assets (docket #69, ¶ 5). 

The ability to assert these claims against Liberty Holding and obtain the relief it seeks —

namely, avoiding the transfer of assets from the Liberty Parties to the Javlin Parties and all 

distributions made by the Liberty Parties from the proceeds of the asset sale to the extent 

necessary to satisfy any monetary damage awarded or allowing Jenkin-Brown to levy execution 

of any judgment against the transferred funds — may be the only chance for the class to obtain a 

monetary award. Proposed FAC, Prayer for Relief, ¶¶ E-F. 

It is unknown why this motion to amend was not filed earlier. However, the delay is 

likely in large part due to the stays in discovery requested by Liberty Servicing. Each time, 

Jenkins-Brown opposed the requests for a discovery extension. Whatever the cause of the delay, 

there is no evidence it was undue or that it has created prejudice to Liberty Servicing. Discovery 

is ongoing and the class has yet to be certified allowing plenty of time for discovery. C.f. 

Lockheed Martin Corp. v. Network Solutions, Inc., 194 F3d 980, 986 (9th Cir 1999) (finding 

prejudice where the amendment would require the court to reopen discovery and delay the 
13 – OPINION AND ORDER

proceedings). For these reasons, the amendments to add the Javlin Parties and the new claims 

for fraudulent transfer (Second Claim) and breach of fiduciary duty (Third Claim) are allowed.

ORDER

Jenkins-Brown’s Motions for Leave to File First Amended Class Action Allegation 

Complaint (dockets #76 & #78) are GRANTED. Villanueva must file a First Amended 

Complaint on or before March 14, 2016.

DATED February 26, 2016.

s/ Janice M. Stewart

Janice M. Stewart

United States Magistrate Judge