PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 10-2532
___________
HECTOR L. HUERTAS,
Appellant
v.
GALAXY ASSET MANAGEMENT, f/k/a Galaxy Asset
Purchasing;
CAPITAL MANAGEMENT SERVICES, L.P.;
ASSET MANAGEMENT PROFESSIONALS, LLC;
EXPERIAN INFORMATION SOLUTIONS;
TRANSUNION, LLC; APPLIED CARD BANK, f/k/a Cross
Country Bank
____________________________________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 09-cv-02604)
District Judge: Honorable Robert B. Kugler
____________________________________
Submitted Pursuant to Third Circuit LAR 34.1(a)
April 1, 2011
Before: BARRY, JORDAN and GARTH, Circuit Judges
(Opinion filed April 11, 2011)
___________
Hector L. Huertas
2205 Sewell Street
P.O. Box 448
Camden, NJ 08101
Appearing Pro Se
William J. Martin, Esq.
Martin, Gunn & Martin, P.A.
216 Haddon Avenue, Suite 420
Westmont, NJ 08108
Counsel for Appellee Asset Management
Professionals, LLC
James W. Gicking, Esq.
Marshall, Dennehey, Warner, Coleman & Goggin, PC
1845 Walnut Street
Philadelphia, PA 19103
Counsel for Appellee Applied Card Bank
___________
OPINION OF THE COURT
___________
PER CURIAM.
Hector Huertas appeals pro se from the District
Court‟s dismissal of his claims against Asset Management
Professionals (“AMP”) and Applied Card Bank f/k/a Cross
Country Bank (“ACB”).1 For the following reasons, we will
affirm.
I.
In addition to AMP and ACB, Huertas brought this
lawsuit against four other defendants – Galaxy Asset
Management f/k/a Galaxy Asset purchasing (“Galaxy”);
Capital Management Services, L.P.; Experian Information
Solutions; and TransUnion, LLC. Huertas incurred credit
card debt owed to ACB, which sold the debt obligation to
Galaxy, which ultimately retained AMP to collect on the debt.
Huertas‟s claims are primarily based upon ACB‟s transfer of,
and AMP‟s attempts to collect, a “false” debt, i.e., a debt
1
ACB changed its name to Applied Bank; however,
we will use ACB for ease of reference.
2
upon which the six-year statute of limitations had run under
New Jersey law.2 Specifically, Huertas alleged that AMP
violated the Fair Debt Collection Practices Act (“FDCPA”)
by sending him a letter in February 2009 in an attempt to
collect on the time-barred debt, and violated the Fair Credit
Reporting Act (“FCRA”) by acquiring his credit information
from TransUnion in connection with its improper debt
collection efforts. Huertas also alleged that both ACB and
AMP breached their duties of good faith and fair dealing,
violated the New Jersey Consumer Fraud Act (“NJCFA”),
N.J. Stat. Ann. §§ 56:8-1 to -20, and violated the Racketeer
Influenced and Corrupt Organizations Act (“RICO”), 18
U.S.C. §§ 1961-1968.
AMP and ACB moved to dismiss the claims against
them, pursuant to Federal Rule of Civil Procedure 12(b)(6),
for failure to state a claim. Huertas responded with a “Motion
for Judgment on the Pleadings and for Sanctions In Response
to Defendant‟s Applied Bank and Asset Management
Professionals Motions to Dismiss.” The District Court
granted AMP‟s and ACB‟s motions and denied Huertas‟s
motion. The District Court reasoned that expiration of the
statute of limitations makes a debt unenforceable, but does
not extinguish the debt itself, such that neither ACB‟s
assignment of Huertas‟s debt nor AMP‟s attempt to collect on
the debt violated the law or breached any duty.
Despite having rejected Huertas‟s claims to the extent
that they were based on a time-barred debt, the District Court
2
The complaint also alleged that the statute of
limitations had expired under Pennsylvania law, presumably
because ACB‟s predecessor was a Pennsylvania Corporation.
See 42 Pa. Cons. Stat. Ann. § 5525 (four year statute of
limitations). However, since Huertas lives in New Jersey,
brought his state claims under New Jersey law, repeatedly
refers to New Jersey‟s six-year statute of limitations, see N.J.
Stat. Ann. § 2A:14-1, and was contacted by AMP at his New
Jersey address, we will assume that New Jersey‟s statute of
limitations applies. The complaint suggests that Huertas had
incurred the debt by 2001.
3
recognized that Huertas‟s filings indicated that he had
previously filed for bankruptcy. Since it was unclear to the
District Court whether Huertas was alleging that the
defendants had attempted to collect a debt extinguished by
bankruptcy proceedings, the District Court allowed Huertas to
amend his complaint to assert such a theory.
Huertas did not file an amended complaint within the
time period prescribed by the District Court. Instead, he
dismissed his claims against the remaining defendants, and
timely appealed to this Court. On appeal, Huertas explained
that he did not amend his complaint because his debt had not,
in fact, been discharged in bankruptcy.
II.
The District Court‟s jurisdiction arose under 28 U.S.C.
§§ 1331 & 1367. Our jurisdiction is based on 28 U.S.C. §
1291.3 Our review of the District Court‟s decision to grant
AMP and ACB‟s motions to dismiss is plenary. Grier v.
Klem, 591 F.3d 672, 676 (3d Cir. 2010). “[W]e accept as true
all well-pled factual allegations in the complaint and all
reasonable inferences that can be drawn from them, and we
affirm the order of dismissal only if the pleading does not
plausibly suggest an entitlement to relief.” Fellner v. Tri-
Union Seafoods, L.L.C., 539 F.3d 237, 242 (3d Cir. 2008).
We may also consider documents attached to the complaint.
Pension Benefit Guar. Corp. v. White Consol. Indus., Inc.,
998 F.2d 1192, 1196 (3d Cir. 1993). Furthermore, we must
3
Huertas‟s failure to amend his complaint in the time
frame allotted by the District Court reflects his intention to
stand on his complaint, which renders the District Court‟s
order final as to ACB and AMP for purposes of § 1291. See
Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 n.5 (3d Cir.
1992). Furthermore, his appeal is timely because the District
Court‟s order granting the motions to dismiss was not
appealable until the claims against all defendants were
resolved. See DeJohn v. Temple Univ., 537 F.3d 301, 306-07
(3d Cir. 2008).
4
construe Huertas‟s complaint liberally because he is
proceeding pro se. Erickson v. Pardus, 551 U.S. 89, 94
(2007). The same standard of review applies to a motion for
judgment on the pleadings. Leamer v. Fauver, 288 F.3d 532,
535 (3d Cir. 2002).
III.
A. Validity of the Debt
Huertas‟s primary contention on appeal is that the
District Court erred in concluding that the expiration of the
statute of limitations did not extinguish his debt. We agree
with the District Court, however, that, under New Jersey law,
Huertas‟s debt obligation is not extinguished by the
expiration of the statute of limitations, even though the debt is
ultimately unenforceable in a court of law.4 See R.A.C. v.
P.J.S., Jr., 927 A.2d 97, 106 (N.J. 2007) (“When a procedural
statute of limitations runs its course, only the remedy is
barred, not the common law right.”); Hollings v. Hollings, 73
A.2d 755, 757 (N.J. Super. Ct. Ch. Div. 1950) (observing that
a statute of limitations “is a bar to the remedy only, and does
not extinguish, or even impair, the obligation of the debtor”),
aff‟d, 78 A.2d 919 (N.J. Super. Ct. App. Div. 1951). In other
words, Huertas still owes the debt – it is not extinguished as a
matter of law – but he has a complete legal defense against
having to pay it. Having reached that conclusion, we agree
with the District Court that Huertas has failed to state claims
against AMP and ACB for the reasons below.
4
The authorities upon which Huertas relies, Davis v.
Mills, 194 U.S. 451 (1904), and Sebring Associates v. Coyle,
790 A.2d 225 (N.J. Super. Ct. App. Div. 2002), are not to the
contrary. Davis does not govern how New Jersey treats a
time-barred debt under state law and concerned the running of
the statute of limitations on a statutory cause of action as
opposed to a common law obligation. Sebring concerned
how a time-barred loan owed to the bank should be treated as
between a partnership and a partner who had defaulted on the
loan.
5
B. FDCPA claim
Huertas‟s FDCPA claim against AMP turns on
whether a debt collector may attempt to collect upon a time-
barred debt without violating the statute. The FDCPA
prohibits a debt collector from “us[ing] any false, deceptive,
or misleading representation or means in connection with the
collection of any debt,” 15 U.S.C. § 1692e, including falsely
representing “the character, amount, or legal status of any
debt,” id. § 1692e(2)(A). The FDCPA also prohibits debt
collectors from using unfair or unconscionable means of
collecting a debt. Id. § 1692f.
Although our Court has not yet addressed the issue, the
majority of courts have held that when the expiration of the
statute of limitations does not invalidate a debt, but merely
renders it unenforceable, the FDCPA permits a debt collector
to seek voluntary repayment of the time-barred debt so long
as the debt collector does not initiate or threaten legal action
in connection with its debt collection efforts. Compare
Freyermuth v. Credit Bureau Servs., Inc., 248 F.3d 767, 771
(8th Cir. 2001) (“[I]n the absence of a threat of litigation or
actual litigation, no violation of the FDCPA has occurred
when a debt collector attempts to collect on a potentially
time-barred debt that is otherwise valid.”), Wallace v. Capital
One Bank, 168 F. Supp. 2d 526, 527-29 (D. Md. 2001) (debt
validation notices that were silent as to whether debt was time
barred and which did not threaten collection action did not
violate FDCPA), and Shorty v. Capital One Bank, 90 F. Supp.
2d 1330, 1331-33 (D.N.M. 2000) (sending of debt validation
notice regarding time-barred debt did not violate the
FDCPA), with Larsen v. JBC Legal Grp., P.C., 533 F. Supp.
2d 290, 302-03 (E.D.N.Y. 2008) (threatening legal action on
time-barred debt violated FDCPA), Beattie v. D.M.
Collections, Inc., 754 F. Supp. 383, 393 (D. Del. 1991)
(“[T]he threatening of a lawsuit which the debt collector
knows or should know is unavailable or unwinnable by
reason of a legal bar such as the statute of limitations is the
kind of abusive practice the FDCPA was intended to
eliminate.”), and Kimber v. Fed. Fin. Corp., 668 F. Supp.
6
1480, 1487 (M.D. Ala. 1987) (“[A] debt collector‟s filing of a
lawsuit on a debt that appears to be time-barred, without the
debt collector having first determined after a reasonable
inquiry that that limitations period has been or should be
tolled, is an unfair and unconscionable means of collecting
the debt.”). We agree with the logic underlying those
decisions and conclude that Huertas‟s FDCPA claim hinges
on whether AMP‟s February 11, 2009, letter threatened
litigation.
Whether a debt collector‟s communications threaten
litigation in a manner that violates the FDCPA depends on the
language of the letter, which “should be analyzed from the
perspective of the „least sophisticated debtor.‟”5 Brown v.
Card Serv. Ctr., 464 F.3d 450, 453 (3d Cir. 2006) (quoting
Wilson, 225 F.3d at 354). AMP‟s letter indicates that
Huertas‟s account has been reassigned, requests that Huertas
call “to resolve this issue,” includes a privacy notice
informing him that Galaxy would be accessing his private
consumer information, and, as required by 15 U.S.C. §
1692g(a), indicates that, if Huertas does not dispute the debt
within thirty days of receiving the letter, AMP will assume
the debt is valid. (App. 33.) At the bottom, the letter states,
in bold, capital letters, “THIS IS AN ATTEMPT TO
COLLECT A DEBT.” (Id.)
Even the least sophisticated consumer would not
understand AMP‟s letter to explicitly or implicitly threaten
litigation. Furthermore, the FDCPA requires debt collectors
to inform a debtor “that the debt collector is attempting to
collect a debt.” 15 U.S.C. § 1692e(11). Since it is
appropriate for a debt collector to request voluntary
repayment of a time-barred debt, see Freyermuth, 248 F.3d at
771, it would be unfair if debt collectors were found to violate
5
In this Circuit, such an analysis is appropriately
undertaken on a Rule 12(b)(6) motion, see Wilson v.
Quadramed Corp., 225 F.3d 350, 353 n.2 (3d Cir. 2000), or a
motion for judgment on the pleadings, see Rosenau v.
Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008).
7
the FDCPA both if they include the mandated language
(because inclusion would threaten suit) and if they do not
(because failure to include a mandatory notice violates the
statute). Accordingly, Huertas has not stated a claim under
the FDCPA based upon AMP‟s letter, and we will affirm the
District Court‟s dismissal of that claim.6 See Walker v. Cash
Flow Consultants, Inc., 200 F.R.D. 613, 615-16 (N.D. Ill.
2001) (following Freyermuth and granting motion to dismiss
when the complaint did not allege that debt collector
implicitly or explicitly threatened litigation and claim was
based solely on the fact that debt collector sent collection
letter after limitations period expired).
C. FCRA claim
Huertas‟s FCRA claim asserts that AMP obtained his
credit report from TransUnion, a credit reporting agency,
“without any FCRA-sanctioned purpose.” (App. 12.) The
FCRA imposes civil liability upon a person who willfully
obtains a consumer report for a purpose that is not authorized
by the FCRA. 15 U.S.C. §§ 1681b(f), 1681n(a). However,
the statute expressly permits distribution of a consumer report
to an entity that “intends to use the information in connection
with a credit transaction involving the consumer on whom the
information is to be furnished and involving the extension of
credit to, or review or collection of an account of, the
consumer.”7 Id. § 1681b(a)(3)(A) (emphasis added). Huertas
6
In his complaint, Huertas also alleged that AMP‟s
failure to “reinvestigate” the debt violated the FDCPA.
However, he appears to have abandoned that claim since he
did not clarify or even mention it in his briefing before the
District Court or this Court.
7
Huertas‟s assertion that § 1681b(a)(3)(A) only
permits the use of consumer information in connection with
an extension of credit is premised on a misreading of the
provision, which, when read properly, clearly authorizes use
of a consumer report (1) “in connection with a credit
transaction involving the consumer on whom the information
is to be furnished,” and (2) involving either (a) the extension
8
sought credit from ACB, which he received, and accumulated
credit card debt. It was that consumer transaction which
ultimately resulted in AMP‟s accessing of Huertas‟s credit
report to collect on his delinquent accounts. Section
1681b(a)(3)(A) authorizes the use of consumer information
under such circumstances. See Phillips v. Grendahl, 312 F.3d
357, 366 (8th Cir. 2002), abrogated on other grounds, Safeco
Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007); see also
Stergiopoulous v. First Midwest Bancorp, Inc., 427 F.3d
1043, 1046-47 (7th Cir. 2005).
In his brief, Huertas points out that the FCRA prohibits
a consumer reporting agency from making a consumer report
containing “[a]ccounts placed for collection or charged to
profit and loss which antedate the report by more than seven
years,” measured from 180 days after the account is placed in
collection or charged off by the creditor. 15 U.S.C. §
1681c(a)(4), (c)(1). Even if we were to consider this
argument, which was not raised before the District Court, it is
TransUnion, the consumer reporting agency, and not AMP,
that created the consumer report of which Huertas complains.
Accordingly, even assuming that this provision of the FCRA
was violated, Huertas cannot state a claim against AMP on
that basis. See D‟Angelo v. Wilmington Med. Ctr., Inc., 515
F. Supp. 1250, 1253 (D. Del. 1981) (collection agency that
provided information to consumer reporting agency regarding
a debt was not a consumer reporting agency under the
FCRA). Furthermore, Huertas cannot base his claim on 15
U.S.C. § 1681s-2(a)(1)(A), because no private right of action
exists under that provision. See 15 U.S.C. § 1681s-2(c), (d);
Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057,
1059 (9th Cir. 2002). Accordingly, we will affirm the District
Court‟s dismissal of Huertas‟s FCRA claim against AMP.
of credit to that consumer, or (b) “review or collection” of the
consumer‟s account.
9
D. Remaining claims
We will also affirm the dismissal of Huertas‟s RICO
and state law claims against AMP and ACB. Huertas has
failed to state a claim under the NJCFA because his
complaint is not based on AMP or ACB‟s marketing or sale
of merchandise or services to him. See Del Tufo v. Nat‟l
Republican Senatorial Comm., 591 A.2d 1040, 1042 (N.J.
Super. Ct. Ch. Div. 1991) (“[T]he reach of the [NJCFA] is
intended to encompass only consumer oriented commercial
transactions involving the marketing and sale of merchandise
or services.”); see also J&R Ice Cream Corp. v. Cal.
Smoothie Licensing Corp., 31 F.3d 1259, 1272-73 (3d Cir.
1994). Instead, he seeks to recover for ACB‟s transfer of his
debt to third parties and AMP‟s attempts to collect the
account – actions that do not fall within the NJCFA. Cf. Joe
Hand Promotions, Inc. v. Mills, 567 F. Supp. 2d 719, 723-24
(D.N.J. 2008) (holding that letter from attorney fraudulently
accusing plaintiff of violating defendant's exclusive licensing
rights was not actionable under the NJCFA because letter did
not involve a sale of merchandise). Huertas‟s CFA claims
also fail because the fact that defendants sought payment on a
valid, even if unenforceable, debt does not equate to fraud
absent allegations indicating that they made false or
misleading representations. See N.J. Stat. Ann. § 56:8-2.
Finally, we fail to see how AMP‟s attempts to collect
on a time-barred debt or ACB‟s transfer of that debt to a third
party violates RICO or breaches the duty of good faith and
fair dealing. See 18 U.S.C. §§ 1962(c) (prohibiting “any
person employed by or associated with any enterprise
engaged in, or the activities of which affect, interstate or
foreign commerce, [from] conduct[ing] or participat[ing],
directly or indirectly, in the conduct of such enterprise‟s
affairs through a pattern of racketeering activity or collection
of unlawful debt”), 1961(1) (defining “racketeering activity”
as certain criminal activity), 1961(6) (defining “unlawful
debt” as a debt incurred in connection with gambling activity
or which is usurious); see also Brunswick Hills Racquet Club,
Inc. v. Route 18 Shopping Ctr. Assocs., 864 A.2d 387, 396
(N.J. 2005) (“The party claiming a breach of the covenant of
10
good faith and fair dealing must provide evidence sufficient
to support a conclusion that the party alleged to have acted in
bad faith has engaged in some conduct that denied the benefit
of the bargain originally intended by the parties.”) (quotations
omitted). Although Huertas may have had a credit card
contract with ACB, he has not alleged facts that would
support a conclusion that he was deprived of the benefit of his
bargain under that contract. See Seidenberg v. Summit Bank,
791 A.2d 1068, 1077 (N.J. Super. Ct. App. Div. 2002) (“The
guiding principle in the application of the implied covenant of
good faith and fair dealing emanates from the fundamental
notion that a party to a contract may not unreasonably
frustrate its purpose.”)
Accordingly, we will affirm the dismissal of the
remaining claims against ACB and AMP.
IV.
In sum, we will affirm the District Court‟s dismissal of
Huertas‟s claims against AMP and ACB and its denial of
Huertas‟s motion for judgment on the pleadings.
Huertas also filed a motion for leave to file the second
volume of the joint appendix under seal. Although it would
have been preferable for Huertas to file a redacted appendix
for the public file and provide an unredacted version for the
Court, we recognize that Huertas is proceeding pro se and
will grant the motion to seal because the second volume of
the joint appendix contains personal identifying information,
including Huertas‟s social security number and bank
accounts. See 3d Cir. LAR 113.12.
11