Prof'l Collection Consultants v. Lujan
233 Cal. Rptr. 3d 211
| Cal. Ct. App. 5th | 2018Background
- Lujan, a long-time San Francisco resident, used a Chase credit card governed by a cardmember agreement that specified "federal law and the law of Delaware" and included an attorney-fees provision.
- Chase assigned Lujan's unpaid 2007 account through several assignees, ultimately to Professional Collection Consultants (PCC). PCC sued in California in 2011 seeking $8,831.90 on common counts (open book account and account stated).
- Lujan answered and brought a cross-complaint under the FDCPA and California RFDCPA claiming PCC unlawfully attempted to collect a time-barred debt.
- The trial court granted summary judgment for Lujan on PCC’s complaint, applying Delaware’s 3-year statute of limitations via the cardmember agreement’s choice-of-law clause, and granted summary judgment to Lujan on his cross-claims against PCC (but not the individual or other cross-defendants).
- The trial court awarded Lujan attorney’s fees and costs, denied fees to some cross-defendants, and entered final judgment; PCC appealed and Lujan cross-appealed portions of rulings.
Issues
| Issue | PCC's Argument | Lujan's Argument | Held |
|---|---|---|---|
| Which state statute of limitations governs PCC’s collection suit? | The complaint pleads common counts (open book/account stated) so California’s 4-year statute applies. | Cardmember agreement (accepted by use) contains a Delaware choice-of-law clause; the gravamen is breach of the credit agreement so Delaware’s 3-year statute governs. | Delaware law applies; PCC’s claim is time-barred under Delaware’s 3-year limitations period. |
| Does Delaware’s non-resident tolling (§ 8117) apply to indefinitely toll the limitation because Lujan never lived in DE? | Tolling applies under Delaware law, extending limitations while defendant is outside Delaware. | Applying DE non-resident tolling here would abolish the defense and offend California fundamental policy; tolling should not be applied by California courts to non-residents. | California courts decline to adopt Delaware’s indefinite non-resident tolling here; tolling not applied. |
| Is the unsigned cardmember agreement (and its terms) enforceable or does lack of signature void choice-of-law/enforcement? | Unsigned agreement cannot waive statute of limitations or enforce other terms; card use doesn’t create enforceable contract terms. | Use of the card formed assent to the agreement; unsigned issuance plus use creates enforceable contract and choice-of-law governs. | Use of the card can form the contract; lack of signature did not defeat enforcement of the agreement or its choice-of-law clause here. |
| Can PCC offset any judgment against it by the time-barred debt under CCP § 431.70? | If Lujan obtains judgment on cross-claims, PCC can offset that award by the amount of the underlying debt. | § 431.70 only applies when both cross-demands were timely at some point; here Lujan’s cross-claims arose after the debt claim was already time-barred. | § 431.70 does not permit offset because Lujan’s claims arose after the debt became time-barred. |
Key Cases Cited
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (discusses summary judgment burdens)
- Lauron v. Professional Collection Consultants, 8 Cal.App.5th 958 (addressed similar choice-of-law and tolling issues in PCC collections context)
- Washington Mutual Bank v. Superior Court, 24 Cal.4th 906 (California choice-of-law principles)
- City of Vista v. Robert Thomas Securities, Inc., 84 Cal.App.4th 882 (statute of limitations governed by gravamen)
- Tsemetzin v. Coast Federal Savings and Loan Assn., 57 Cal.App.4th 1334 (limits treating written contract debt as open book to evade limitations)
- Saudi Basic Industries Corp. v. Mobil Yanbu Petrochemical Co., 866 A.2d 1 (Delaware decision describing DE tolling application)
- Construction Protective Services, Inc. v. TIG Specialty Ins. Co., 29 Cal.4th 189 (purpose and application of CCP § 431.70)