Andrew Panico v. Portfolio Recovery Associates

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 16-3852
___________
ANDREW PANICO,
Appellant
v.
PORTFOLIO RECOVERY ASSOCIATES, LLC
____________________________________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 3-15-cv-01566)
District Judge: Honorable Brian R. Martinotti
____________________________________
Argued: March 30, 2017
Before: VANASKIE, KRAUSE, and RESTREPO, Circuit
Judges
(Opinion Filed: January 2, 2018)
_____________
PHILIP D. STERN, ESQ. [ARGUED]
ANDREW T. THOMASSON, ESQ.
Stern Thomasson
150 Morris Avenue
2nd Floor
Springfield, NJ 07081
Counsel for Appellant Andrew Panico
DAVID N. ANTHONY, ESQ. [ARGUED]
STEPHEN C. PIEPGRASS, ESQ.
Troutman Sanders
1001 Haxall Point
P.O. Box 1122
15th Floor
Richmond, VA 23219
AMANDA L. GENOVESE, ESQ.
Troutman Sanders
875 Third Avenue
New York, NY 10022
CINDY D. HANSON, ESQ.
Troutman Sanders
600 Peachtree Street, N.E.
Suite 5200
Atlanta, GA 30308
Counsel for Appellees Portfolio Recovery
Associates, LLC
___________
OPINION OF THE COURT
2
RESTREPO, Circuit Judge.
In this putative class action, Plaintiff-Appellant Andrew
Panico, who resides outside of the state of Delaware but signed
a contract with a choice-of-law provision specifying
application of Delaware state law, asserts that Defendant-
Appellee Portfolio Recovery Associates (“PRA”) violated the
Fair Debt Collection Practices Act (“FDCPA”) and the New
Jersey Consumer Fraud Act (“NJCFA”) by suing to collect
debts after the applicable Delaware statute of limitations had
run. The District Court granted Defendant’s motion for
summary judgment, after finding that a Delaware tolling
statute served to prevent the Delaware statute of limitations
from running as to a party residing outside the state of
Delaware through the pendency of the credit relationship,
default, collections attempts, and ensuing litigation. For the
reasons that follow, we will reverse the District Court’s grant
of summary judgment and remand the case for further
consideration.
I1
Panico is a resident of the state of New Jersey, who, by
early 2010, allegedly incurred substantial debt on a credit card
account with MBNA America Bank (“MBNA”). As it arose
from spending for personal or household purposes, Panico’s
obligation qualifies as “debt” under 15 U.S.C. § 1692a(5) of
the FDCPA. On June 18, 2010, MBNA regarded Panico as
delinquent on his then-outstanding balance. MBNA assigned
the rights to the debt to Appellee PRA, a debt collector.
1
For purposes of summary judgment in the District
Court, the parties stipulated to all of the facts as related here.
3
Although PRA engaged in attempts to collect the debt, it did
not succeed.
On October 20, 2014—more than three but fewer than
six years after the cause of action for debt collection accrued—
PRA sued Panico in New Jersey Superior Court to recover the
balance. New Jersey’s relevant statute of limitations barred
collection of such debts after six years; Delaware’s statute of
limitations, by contrast, proscribed collection of such debts
after only three years. The credit agreement governing the
relationship between Panico and MBNA provided for
application of “the laws of the State of Delaware, without
regard to its conflict of laws principles, and by any applicable
federal laws.” App. 54. Panico moved for summary judgment,
on the ground that the collections action was time-barred.
Rather than litigate the issue of whether Delaware’s tolling
statute applied to stop the state’s three year statute of
limitations from running as to defendants residing outside the
state, PRA agreed to a stipulated dismissal.
In March 2015, Panico filed this putative class action in
the District Court for the District of New Jersey. The class
action alleged violations of the FDCPA and the NJCFA, on the
grounds that PRA had sought to collect on a time-barred debt.
PRA moved for summary judgment on the basis that the debt
it had sought to collect was not time-barred. That motion
presented squarely the issue of whether the Delaware tolling
statute would apply to abrogate the statute of limitations that
would otherwise have barred the collection of the underlying
debt. The parties agreed to address that issue before addressing
class certification, and ultimately, the District Court granted
PRA’s motion for summary judgment on September 14, 2016.
Panico timely appealed.
4
II
The District Court had jurisdiction under 15 U.S.C.
§ 1692k(d)—the relevant section of the FDCPA—and 28
U.S.C. § 1331. We have jurisdiction over an appeal from a
final decision of a District Court under 28 U.S.C. § 1291. Our
review of a District Court’s grant of summary judgment is
plenary. NAACP v. City of Philadelphia, 834 F.3d 435, 440
(3d Cir. 2016). Summary judgment is appropriate when “the
movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(a).
III
The parties agree, for the purpose of this appeal, that
under New Jersey conflict-of-law rules, Delaware law governs
this action.2 They disagree, however, as to the interaction of
Delaware’s statute of limitations and statutory tolling
provision. Delaware’s statute of limitations for actions to
recover debts based on a credit relationship between two
parties bars filing against defendants “after the expiration of
3 years from the accruing of the cause of such action.” Del.
Code Ann. tit. 10, § 8106a. PRA’s suit, filed in October of
2
PRA’s memorandum of law in support of its motion
for summary judgment before the District Court acknowledged
that, “[f]or the purposes of this motion only, PRA will presume
that [Panico]’s allegation as to the applicable state law and
statute of limitation is correct.” Supp. App. 1. PRA confirmed
at oral argument that it agreed to so presume, rather than
litigate the issue of conflict of laws, based on PRA’s firm belief
that it would prevail even if Delaware law applies.
5
2014 to collect an alleged debt regarded as delinquent as of
June 2010, falls outside the applicable statute of limitations.
PRA asserts, however, that the Delaware tolling statute applies
to stop the statute of limitations from running because Panico
resided outside of Delaware during the entirety of the credit
relationship, the debt collection efforts, and the period of time
preceding the commencement of litigation. The Delaware
tolling statute provides that:
If at the time when a cause of action accrues
against any person, such person is out of the
State, the action may be commenced, within the
time limited therefor in this chapter, after such
person comes into the State in such manner that
by reasonable diligence, such person may be
served with process. If, after a cause of action
shall have accrued against any person, such
person departs from and resides or remains out
of the State, the time of such person’s absence
until such person shall have returned into the
State in the manner provided in this section, shall
not be taken as any part of the time limited for
the commencement of the action.
Del. Code Ann. tit. 10, § 8117.
Our role is to apply the law of the appropriate
jurisdiction. City of Philadelphia v. Lead Indus. Ass’n, 994
F.2d 112, 123 (3d Cir. 1993). Contrary to PRA’s argument,
Delaware courts have interpreted the state’s tolling statute not
to abrogate the statute of limitations against defendants within
reach of the state’s long-arm statute. See, e.g., Hurwitch v.
Adams, 155 A.2d 591 (Del. 1959); Sternberg v. O’Neil, 550
6
A.2d 1105, 1114 (Del. 1988). In Hurwitch, the Delaware
Supreme Court noted that applying the tolling statute literally
“would result in the abolition of the defense of statutes of
limitations in actions involving non-residents.” Hurwitch, 155
A.2d at 594. Rather than countenance such a result, the Court
held that the tolling statute “has no tolling effect . . . when the
defendant in the suit is subject to personal or other service to
compel his appearance.”3 Id. at 593. As such, the limitations
period “runs continuously without interruption when there is
available to the plaintiffs throughout the period an acceptable
means of bringing the defendant into court.” Id. at 594(citation omitted). Within Delaware, Hurwitch has guided
state courts to find that statutory tolling does not stop the
statute of limitations from running as to defendants who would
have been amenable to service. See, e.g., Sternberg, 550 A.2d
at 1114 (confirming, in the context of an Ohio corporation, that
there “is no tolling effect on the applicable statute of limitations
in any action when the nonresident defendant in the suit is
subject to substituted service of process.”).
PRA points to Saudi Basic Industries Corp. v. Mobil
Yanbu Petrochemical Co., where the Delaware Supreme Court
applied statutory tolling to an out-of-state entity so as to
abrogate an otherwise-applicable statute of limitations. 866
A.2d 1 (Del. 2003). But Saudi Basic only underscores that the
lynchpin of the analysis is whether the defendant could
reasonably be served. In that case, the court held that “the
purpose and effect of [the tolling statute] is to toll the statute of
3
Since Hurwitch, the tolling statute has been re-
codified at Del. Code Ann. tit. 10, § 8117, as cited above. At
the time, the tolling statute was codified at Del. Code Ann. tit.
10, § 8116.
7
limitations as to defendants who, at the time the action accrues,
are outside the state and are not otherwise subject to service of
process in the state.” Id. at 18. In those circumstances, the
statute of limitations is tolled until the defendant “becomes
amenable to service of process.” Id. The defendant in Saudi
Basic was a corporation based in Saudi Arabia, and could not
have been served even under Delaware’s long-arm statute.4
There is no dispute that the tolling statute applies in such a
case—but serving a resident of New Jersey differs
substantially from serving a Saudi Arabian corporation.
Indeed, PRA had no trouble serving Panico when it sued him
in New Jersey state court.5
The Hurwitch line of cases has guided out-of-state
courts in answering the question that Delaware courts cannot
sit in a posture to answer: whether Delaware’s tolling statute
4
That statute provides that “[a]ny person . . . submits
to the jurisdiction of the Delaware courts” when he or she,
among other things, “[t]ransacts any business . . . in the State.”
Del. Code Ann. tit. 10, § 3104(b)-(c). The same statute
provides for “service of process outside the State” in a variety
of ways—including personal delivery as prescribed for service
within Delaware, or personal delivery as prescribed for service
within the jurisdiction of the person to be served—so long as it
is “reasonably calculated to give actual notice.” Id. § 3104(d).
5
The parties stipulated at the summary judgment stage
that Plaintiff was not amenable to service of process in
Delaware, App. 47; however, while it may have been true that
Plaintiff was not subject to process while physically located in
Delaware, it is beyond peradventure that Plaintiff was subject
to service of process, even out of state.
8
stops the Delaware statute of limitations from running in suits
commenced, as here, in out-of-state jurisdictions against out-
of-state parties based on agreements governed by Delaware
law. Out-of-state courts have uniformly declined to apply the
Delaware tolling provision to stop the statute of limitations
from running in perpetuity. E.g., Portfolio Recovery Assoc.,
LLC v. King, 927 N.E.2d 1059, 1062 (N.Y. 2010) (concluding
the Delaware tolling provision did not extend the Delaware
statute of limitations in an action by the same party in this suit
to collect a debt against a non-resident of Delaware);
McCorriston v. L.W.T., Inc., 536 F. Supp. 2d 1268, 1276 (M.D.
Fla. 2008) (finding that an argument that the Delaware tolling
statute stopped the Delaware statute of limitations from
running, “although wrong . . . was a good faith mistake”);
Resurgence Fin., LLC v. Chambers, 173 Cal.App. 4th Supp. 1,
6 (2009) (finding that the Delaware tolling statute “can be most
reasonably read to apply only to actions that are actually filed
in a Delaware court or actions that could have been filed in a
Delaware court”).6
6
See also Izquierdo v. Easy Loans Corp., No. 2:13-cv-
1032-MMD-VCF, 2014 WL 2803285, *7 (D. Nev. June 19,
2014) (finding that the Delaware tolling statute only stopped
the Delaware statute of limitations from running when the
action was or could have been filed in a Delaware court);
Lehman Bros. Holdings, Inc. v. First Cal. Mortg. Corp., No.
13-cv-02113-CMA-KMT, 2014 WL 1715120, *4 (D. Colo.
April 30, 2014) (rejecting the argument that Delaware’s tolling
statute stops the statute of limitations from running when such
application would result in “an absurd result: tolling the
limitations period in perpetuity”).
9
The only courts that have accepted arguments
analogous to PRA’s here—that the Delaware tolling statute
stops the Delaware statute of limitations from running—have
done so in contexts where doing so would not create “the
‘absurd’ result of a claim surviving in perpetuity” or result in
“the abolition of a statute of limitations affirmative defense.”
Unifund CCR Partners v. Sunde, 260 P.3d 915, 925 (Wash.
App. 2011); see also CACV of Colorado, LLC v. Stevens, 274
P.3d 859 (Or. Ct. App. 2012). In both of those cases, the courts
applied the forum state’s limitations period to preserve the
availability of a statute of limitations defense. Unifund, 260
P.3d at 915 (applying Washington’s limitations period);
CACV, 274 P.3d at 859 (applying Oregon’s limitations period).
No court, then, has accepted the argument that PRA makes
here—that the Delaware tolling statute may stop the Delaware
statute of limitations from running in perpetuity as to the many
out-of-state consumers who sign contracts of adhesion with
Delaware corporations without ever setting foot in the state.
We believe those courts have the correct reading of the
interaction of the Delaware tolling and limitations statutes as
to such out-of-state defendants. For decades, the Delaware
tolling statute has abrogated the State’s statute of limitations
only as to defendants not otherwise subject to service of
process. We have heard no evidence that the Delaware
legislature intended to export the state’s tolling statute into out-
of-state forums so as to substantially limit the application of
the Delaware statute of limitations. Departing from that
precedent would also have the effect of eliminating the
protections of the FDCPA, NJCFA, and other state statutes
intended to protect debtors and regulate debt collection. We
see no reason to predict that the Delaware Supreme Court
would reject the Hurwitch line of cases in contravention of
10
federal and out-of-state consumer protection law in a manner
that would result in indefinite tolling of the state statute of
limitations. Accordingly, we decline to do so.
IV
For the foregoing reasons, we reverse the order of the
District Court, and remand for further proceedings consistent
with this opinion.
11