An Illinois appeals panel found that collection agency HBLC may have broken federal collection laws by suing a man over a contested debt after the statute of limitations had expired.
Danny Egan claimed someone had fraudulently charged more than $2,500 on a credit card opened in his name without his knowledge. A three-judge panel of the Illinois First District Appellate Court ruled in favor of Egan, stating that a lower court had erred in dismissing his countersuit against HBLC over his claims the agency should be held to account for waiting too long to bring a debt collection action against him.
HBLC, based in Cary, Ill, a Chicago suburb, filed a lawsuit in Cook County (Ill.) Circuit Court against Egan in 2012. The suit alleged Egan failed to make payments on a Credit One Bank credit card account, owing $2,545, plus accumulating interest and legal fees. Egan replied that he didn't opened the account and that someone had hijacked his personal information to do so.
Egan lodged a class-action suit, alleging HBLC and its Chicago attorney, Steven J. Fink, disregarded the Fair Debt Collection Practices Act and the Illinois Collection Agency Act by suing him in January 2012, even though they were aware the five-year statute of limitations had expired. Egan claimed the five years began running with the last activity on the account, which was in September 2006.
HBLC and Fink then filed a motion to toss Egan’s counter-suit, which Cook County Judge Kathleen Kennedy granted in 2014. Egan then appealed.
The issue before the appellate court was whether HBLC and Fink breached the FDCPA by knowing the statute of limitations had expired, but still filing the suit. The appellate court found that, although the U.S. Supreme Court hasn't ruled on the question, numerous federal courts have done so.
The appellate opinion was authored by Justice Robert E. Gordon, with concurrence from Justice Jesse Reyes and Justice Bertina E. Lampkin.
One such ruling came in 2013 from the Seventh Circuit Court of Appeals, which quoted from a 1987 Alabama federal district decision that in turn the Illinois First Appellate Court cited:
"Few unsophisticated consumers would be aware that a statute of limitations could be used to defend against lawsuits based on stale debts, such consumers would unwittingly acquiesce to such lawsuits. And, even if the consumer realizes [they] can use time as a defense, [they] will more than likely still give in rather than fight the lawsuit because [they] must still expend energy and resources," the Alabama district court observed.
The appellate court was satisfied that earlier rulings established that a time-barred collection lawsuit could violate the FDCPA. With that in mind, the appellate court addressed the contention no violation occurred, because there were no misrepresentations in the suit itself. The appellate justices weren't moved, pointing to rulings from other courts, especially the nation’s high court, which said earlier this year, "The suggestion that the 'mere filing of a lawsuit' cannot be abusive is either naive or disingenuous."
The appellate court continued, “The knowing filing of a time-barred lawsuit would be improper where, as here, HBLC and Fink have not attempted to argue that there is a reason why their claim is still viable.”
As a result, the appellate court reversed the circuit court’s dismissal, bringing Egan’s case back to life.
Egan had argued that HBLC and Fink filed more than 1,000 consumer debt collection suits between 2011 and 2012 in Cook County Circuit Court.