Eighth Circuit Concludes that Post-Judgment Actions are not Subject to the FDCPA's Venue Provision and Equitable Tolling does not Apply to FDCPA's Statute of Limitations

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Hageman v. Barton, No. 14-3665, 2016 WL 1212235 (8th Cir. Mar. 29, 2016)

In Hageman v. Barton, the U.S. Court of Appeals for the Eighth Circuit held that registration of a foreign judgment and related garnishment proceedings are not legal actions against the consumer, and therefore, do not trigger the FDCPA's venue provision. Due in large part to the U.S. Court of Appeal for the Seventh Circuit's holding in Suesz v. Med-1 Sols., LLC, 757 F.3d 636 (7th Cir.), cert. denied, 135 S. Ct. 756, 190 L. Ed. 2d 628 (2014), there has been a recent increase in FDCPA ligation alleging violations of §1692i's venue provision, which provides:

Any debt collector who brings any legal action on a debt against any consumer shall ... (2) in the case of an action not [to enforce an interest in real property securing the consumer's obligation], bring such action only in the judicial district or similar legal entity (A) in which such consumer signed the contract sued upon; or (B) in which such consumer resides at the commencement of the action.

15 U.S.C. §1692i.  Debtors have brought 1692i claims not only based upon the filing of collection lawsuits, but also the filing of post-judgment enforcement proceedings.

In November 2012, defendant collection attorney filed a collection action against plaintiff debtor in Missouri state court. On December 5, 2012, defendant obtained a default judgment. Thereafter, on March 26, 2013, the collection attorney filed the judgment in Madison County, Illinois to register the foreign judgment. Plaintiff debtor neither worked nor resided in Madison County. Instead, he worked in a different Illinois county. The creditor was located in Missouri. Finally, defendant attorney initiated garnishment proceedings, again in Madison County, Illinois. On December 4, 2013, the court entered a Wage Deduction Order authorizing deductions from the debtor's wages.

On December 19, 2013, plaintiff debtor brought an FDCPA suit pursuing claims under 1692i as well as the following theories: defendant attempted to collect interest and costs above the amounts authorized by the Missouri judgment, and defendant misrepresented himself as the attorney for plaintiff's creditor. 

The Eighth Circuit further held that the Rooker–Feldman doctrine did not apply, reasoning that the debtor did not seek relief from the either the Missouri judgment or the Illinois garnishment order. Instead, he asserted statutory claims based upon defendant's actions in the process of obtaining this judgment and order. Therefore, the Court had jurisdiction over these federal claims.

The Eighth Circuit held that Section "1692i's venue restriction does not apply to the simple act of registering a foreign judgment in Illinois or to proceedings pursuant to Illinois law to obtain a garnishment order against a debtor's employer." The court reasoned that the FDCPA's venue provision applies only to legal actions "on a debt against any consumer."

In addressing the debtor's argument that the defendant's improper ongoing conduct following entry of the Missouri judgment tolled the FDCPA's one year statute of limitations, the court followed its earlier decision in Mattson v. U.S. W. Comm'ns, Inc., 967 F.2d 259 (8th Cir.1992). There, the Eighth Circuit established that the FDCPA's statute of limitations is jurisdictional, and therefore, is not subject to equitable tolling. Consequently, the debtor's claims based upon conduct prior to the Illinois proceedings was time-barred.

This decision strengths the defense to venue claims based upon post-judgment proceedings in Illinois courts. The Eighth Circuit also adhered to its previous holding that the FDCPA's statute of limitations is jurisdictional, despite many courts' criticism of this approach, including the U.S. Cout of Appeals for the Seventh and Ninth Circuit.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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