Aged Account Comes Back to Haunt Collections Firm: Federal District Court Revives Time-Barred FDCPA Claims

A recent federal district court opinion highlights the potential pitfalls associated with renewals of unsatisfied default judgments. The case, Sarah Pitera v. Asset Recovery Group Inc., No. 2:22-cv-00255-TL (W.D. Wash.), serves as a reminder that judgment creditors must still tread carefully when seeking to collect on, or revive, judgments from yesteryear. Read on for more analysis.

In January 2012, Asset Recovery Group, Inc. (ARG) filed an action in Washington state court to collect on a medical debt owed by Sarah Pitera. After she was served the complaint, Pitera sent two letters to ARG’s collections counsel. The first — sent in January 2012 — disputed the debt, demanded validation, and requested documentation substantiating the debt. Unsatisfied with ARG’s response, Pitera sent a second dispute letter in February 2012, seeking the same documentation. ARG’s collections counsel responded on February 27, 2012, providing the original creditor’s name and address only and inviting Pitera to contact counsel by March 12 if she wanted to resolve the debt. “Otherwise,” the letter stated, ARG would “proceed as provided by the law.” That same day, and unbeknownst to Pitera, ARG collections counsel moved for a default judgment, which the court granted on March 5 — seven days before the deadline set forth in the February 27 letter. After contacting the original creditor, Pitera believed the debt was no longer owing. Confident that ARG could not collect on a debt that she had paid, Pitera had no further communication with ARG until February 7, 2022, when she received notice that ARG had renewed the unsatisfied 2012 default judgment.

Pitera filed suit, claiming violations of the Fair Debt Collection Practices Act (FDCPA) and the Washington Consumer Protection Act. Specifically, Pitera alleged that ARG, through counsel, failed to provide her five days’ notice of the hearing on its motion for default, despite her “appearance” in the case, which violated Washington State Superior Court Rule 55(a)(3). Pitera also alleged that the February 27 letter was deceptive because it presented an opportunity for resolution of the debt on the sameday ARG moved for default. According to Pitera, ARG collection counsel’s assertion that ARG would “proceed as provided by law” was manifestly untrue given its failure to provide notice mandated by Rule 55(a)(3).