Dove v. Educap Inc.
Civil Action No. 2015-2274
| D.D.C. | Jul 20, 2016Background
- Dove was defendant in a student-loan collection action filed in D.C. Superior Court by EduCap (on behalf of HSBC) and counsel Weinstock; that Superior Court case was later dismissed with prejudice.
- Dove sued EduCap and Weinstock in federal court asserting FDCPA, D.C. Debt Collection Law, D.C. Consumer Protection Procedures Act, and abuse of process claims, all premised on the collection suit being time-barred.
- The Promissory Note disclosed a loan with 46 monthly payments of $399.87 beginning January 6, 2011, followed by 192 payments of $388.86 beginning January 6, 2015; the note contained an acceleration clause and a Delaware choice-of-law clause.
- The Superior Court collection action was filed October 9, 2015; Dove made two small telephone payments in 2015 (July 2: $50; Oct 16: $10).
- Central legal question: whether the collection suit was timely under the applicable statute of limitations (D.C.’s three-year rule asserted by Dove) given installment obligations and the note’s acceleration clause.
- The district court concluded EduCap exercised the acceleration clause by filing suit on October 9, 2015, so the statute of limitations began to run on that date; because the suit was filed on that date, the collection action was timely and Dove’s federal claims failed as a matter of law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether D.C.’s 3-year statute of limitations barred the collection suit | Dove: statute of limitations is procedural under D.C. law and a 3-year limitations period applied; collection suit was filed after the 3-year period | EduCap: even under a 3-year rule the collection suit was timely because acceleration was exercised only when suit was filed (and/or partial 2015 payments would toll) | Court: suit was timely — acceleration was exercised on Oct 9, 2015, so limitations ran from that date; Dove’s claims fail |
| Whether the installment-obligation rule or a single cause (total repudiation) controls accrual | Dove: asserts a ‘‘total repudiation’’ creating a single cause of action, not separate accruals | EduCap: loan payments are installment obligations; each installment accrues separately absent acceleration | Court: installment rule applies; no adequate allegation of repudiation, so separate installments govern |
| Effect of acceleration clause on accrual of limitations period | Dove: implied challenge that limitations ran earlier on each installment | EduCap: when acceleration clause is exercised, statute runs from date of exercise (i.e., filing) | Court: follows controlling authority — statute runs from exercise of acceleration clause, so accrual began Oct 9, 2015 |
| Whether dismissal should be with prejudice | Dove: not argued to permit amendment | EduCap: claims fail as a matter of law; dismissal appropriate | Court: dismissed all claims with prejudice because amendment could not cure the statute-of-limitations defect |
Key Cases Cited
- Keefe Co. v. Americable Int’l, 755 A.2d 469 (D.C. 2000) (installment-obligation rule applies when debt payable in independent instalments)
- Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp. of California, 522 U.S. 192 (1997) (statute of limitations on an accelerated debt runs from date creditor exercises acceleration)
- Eastbanc, Inc. v. Georgetown Park Associates II, L.P., 940 A.2d 996 (D.C. 2008) (repudiation requires clear anticipatory breach to affect accrual)
- Worrel v. Farmers Bank of State of Delaware, 430 A.2d 469 (Del. 1981) (Delaware rule that statute runs from exercise of acceleration)
- Rudder v. Williams, 666 F.3d 790 (D.C. Cir. 2012) (standard for dismissal with prejudice)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standards)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)