A legal case involving a default on an Internet payday loan was settled Monday when the Fifth Circuit Court of Appeals ruled the statute of limitations on bringing a Fair Debt Collection Practices Act (FDCPA) case starts when a consumer is notified of the violation rather than when a company takes the action.

Rolando Serna v. Law Office of Joseph Onwuteaka, et al, concerned a loan sold to the defendants who filed a collections lawsuit in July 2010 in the Harris County (Texas) Justice of the Peace Court. Serna was served  month later and Onwuteaka ultimately won a default judgment.

Serna filed a lawsuit in August 2011 arguing that the case was brought in an incorrect venue and that the defendants violated the FDCPA's venue requirement, since he did not reside in Harris County nor did he enter the loan agreement there.

The defendants filed for summary judgment arguing that the lawsuit was past the one-year statute of limitations for FDCPA cases. The district court ruled in favor of the defendants and Serna appealed to the circuit court, ultimately leading to the reversal of that decision Monday by a three-judge panel.

The appeals court ruling stated that the FDCPA's verbiage of bringing an action cannot be considered the same as filing the original lawsuit. Instead, the terminology should mean the date when both parties learned of it.

One of the judges dissented, concluding Serna’s action was untimely. That judge wrote that the majority spent too much time interpreting the FDCPA’s intent rather than looking at the facts of the case. He argued that Congress should not need to specifically use the word “file” rather than “bring,” and that the accepted definition of the word is clear.

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