Ask Not for Whom the Bell Tolls at Your Own Peril: Fraudulent-Concealment Doctrine and the Tolling of Statute of Limitations
By Unifund is a general partnership specializing in debt collection. In July 2007, Unifund sued Ruth in an Ohio court to collect a debt Ruth allegedly owed CitiBank. Ruth received her summons on August 29. In November, after retaining counsel, she raised Unifund’s lack of capacity to sue as an affirmative defense. At the same time, she filed a counterclaim, alleging Unifund violated the Fair Debt Collection Practices Act (FDCPA), by misrepresenting Ruth’s debt to Citibank. A month later, on December 12, apparently as a result of Ruth’s affirmative defense, Unifund registered its name with the Hamilton County Recorder.
In late 2007 or early 2008, in connection with her defenses to Unifund’s action and with her counterclaim, Ruth served Unifund with several interrogatories and document requests. Unifund apparently ignored the requests until June 2008, when the state court threatened to impose sanctions. On August 12, 2008, after receiving Unifund’s discovery responses, Ruth moved to add an additional counterclaim, alleging Unifund violated the FDCPA by misrepresenting its capacity to file debt-collection suits in Ohio and bringing the counterclaim on behalf of a class of similarly situated individuals. The state court denied the motion because it was filed one month before trial. Ruth voluntarily dismissed her counterclaims without prejudice on September 5, 2008, and Unifund voluntarily dismissed its claims with prejudice on September 23.
In October 2008, Ruth sued Unifund again in state court in Ohio. She reasserted her counterclaims from the previous suit and her claim that Unifund violated the FDCPA by misrepresenting its capacity to sue. Her complaint also raised the claims on behalf of a class of similarly situated Ohio consumers.
Unifund removed the case to federal court and successfully moved to dismiss Ruth’s complaint on statute-of-limitations grounds. The district court reasoned that Ruth’s October 2008 suit came after the FDCPA’s one-year limitations period, which accrued at the latest on August 29, 2007, when she was served with Unifund’s original debt-collection complaint. And it rejected Ruth’s claim that Unifund had tolled the statute of limitations by fraudulently concealing its lack of capacity to sue.
In affirming the dismissal, the Sixth Circuit noted that the general rule is that statute of limitations periods will not be extended “by even a single day.” But there are exceptions to the rule, one of which applies to defendants who fraudulently conceal their wrongdoing and prevent a plaintiff from filing suit during the limitations period.
The fraudulent-concealment doctrine triggers three questions: (1) Did defendant actively conceal its wrongful conduct from plaintiff? (2) Did that concealment prevent plaintiff from discovering defendant’s wrongdoing during the limitations period? And (3), did plaintiff exercise diligence in trying to uncover defendant’s conduct?
Here, the Court held that the fraudulent concealment doctrine did not apply because, in a prior suit between the same parties, the plaintiff (then-defendant) had pleaded an affirmative defense based on the same wrongful conduct she now claimed had been “fraudulently concealed” from her by the defendant. Therefore, although the defendant may have concealed its wrongful conduct, plaintiff had either discovered it on her own or been put on inquiry notice. Further, the plaintiff did not exercise diligence in trying to uncover the defendant’s conduct. Had the plaintiff put minimal effort into searching public sources during the limitations period, she would have discovered all she needed to know.
Ruth v. Unifund CCR Partners, N.A., 2010 WL 1850321 (6th Cir. May 11, 2010).
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