Expert: Creditwrench - 10/30/2008

Question
QUESTION: I'm being sued by Discover card. I'm supposed to appear in court in about two weeks.  I'm trying to come up with a defense.  The information they've included in the petition is scanty.  I question whether the debt has exceeded Missouri's 5-year statutory limitation as I believe I last paid in April 2003.

The petition includes two copies of my account summary.  The first is dated Sept 25, 2004 and it says I owed $7,798.96 (I do not remember owing this much) and that a late fee and over the limit fee of $70.00 was added, bringing the total to $8022.44.  

But I'd quit paying long before that.  Surely they can't use charges they've added to the account as a means of extending the statute of limitations.  Right?

The second copy of my account summary is dated September 30, 2004 and it shows the $8,002.44 as the beginning balance and then it shows a $8,002.44 payment (at the bottom of the statement under transactions it says the $8002.44 is an "internal charge-off").  Finally, it shows an account balance of Zero.

Neither of these statements were ever mailed to me. In fact, they have the wrong address on them.

They've also included a copy of the cardmember agreement, but have included nothing that I've signed.

I'm going to try to get the case dismissed on the grounds that the statutory limits have expired, that there's no signed proof that I agreed to their terms, that I dispute the amount they claim I owe and they're offered no proof otherwise of the amount of the debt, and also that I had their AccountGuard Service.  AccountGuard should have paid the debt after I lost my job and home.  I did write to Discover in 2003 and tell them about my financial hardship but received no response.

Do you think I could possibly win the case?  Any other suggestions?

Thanks,
Betty


ANSWER: If you can't prove when you made your last payment by some means then you will have to go with their statement date which is actually the chargeoff date so that would be a few months after you made your last payment. Using a 6 month figure then your last payment probably would have been sometime around April of 2004. If you use the Missouri statute that would put the end of the SOL in Sept of 2009 so you will lose using that argument. But the real statute of limitations may not be 5 years as stated in Missouri law. It may be much shorter than that depending on what you argue and how you argue it. I'm sure that you have only considered the Missouri law which isn't the only law which in fact may not apply at all.

Even if you lose and they get a judgment and you have applied the correct statute of limitations but the judge insists on applying the Missouri law you would still have two options. One would be to appeal the judge's decision and the other to file a federal case for misrepresenting the legal status of the debt.

Although it is doable if you take a court reporter with you (never go to court without having a court reporter present) I don't recommend that course of action because you may end up having to put up a bond in the full amount of the judgment which the plaintiff will get immediately if you lose. You would have a much better chance in federal court and you don't even need to hire a lawyer to do it. Furthermore, it isn't nearly as scary as local courts because you will do everything over the internet using PACER and by U.S. Mail and maybe by phone. In local court you will face a judge who is likely to be all in favor of the plaintiff's motions and pleas.

Of course, you will want to use your discovery tools to the max. I like to send demand for admissions first then demand for production of documents based on the responses to your demand for admissions and finally interrogatories based on what you got back from the first two demands. Needless to say, you are going to need help getting that all worded properly.

You should be glad they included a copy of the agreement with their complaint. The agreement will be key in getting the court to see and understand your arguments.

Can you win the case? I think so but you are going to have to present the proper arguments in the right way or you will most assuredly lose.
Even so it probably won't be all that easy because the court will want to impose the Missouri statute and they are apparently in time with that.







---------- FOLLOW-UP ----------

QUESTION: Thank you for your helpful answer.  I've been doing a lot of legal research these past few days, and I've gone through the Cardmember Terms that the plaintiff provided, and it states under Governing Law: “This Agreement and any claim arising out of this agreement will be governed by applicable federal law and, to the extent, state law applies, Delaware law." So I'm going to ask for a motion to dismiss the case based on the grounds that according to the contract terms, Delaware is the governing state for disputes, etc. and it's outside of Missouri's jurisdiction. I'm also going to claim that Delaware's 3-year SOL has passed as the last payment was made in April 2004. I'm attaching copies of Delaware's statute with my motion to the court.  I don't know if I will win, but I'm hopeful.

I don't know if Missouri will dismiss the case on these grounds or not. I also found this in Missouri's Statute 509, pleadings: "In every action or proceeding wherein the pleading states that the law of another state is relied upon, the courts of this state shall take judicial notice of the public statutes and judicial decisions of said state."

If I do lose, I will do as you suggest and file a federal case. Thanks again!


Answer
You can't logically claim that it is outside of Missouri's jurisdiction because that simply isn't true. The plaintiff has brought his case in Missouri and you live there so that gives IN PERSONAM jurisdiction in any case. Furthermore FDCPA also gives the local court jurisdiction since you live there. Trying to argue that Missouri courts don't have jurisdiction because of that clause will get you nowhere and may irritate the judge a bit. There are no legal conflicts in the applicable laws here so don't go into jurisdiction. Missouri law isn't the only law that backs up the position that in the instant case Delaware law should be the applicable law. There is lots of other case law to back that up as well. State and appellate courts have ruled in favor of that position as well so there is an abundance of case law to use as well.

But what about that term "judicial notice"? What are you going to do about that?

And what will you use as your causes of action in a federal case? And why would you want to file a federal case if you lose? If you have  valid causes of action to use in a federal court case why would you condition it on loss of the local court case? Why not file it anyway win,lose or draw in local court? Timing is important because you would not want to file prematurely and then have to amend your complaint to add more causes of action later but I believe you should file the federal case whether you lose in local court or not.