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Subsequent to an arbitration in which a credit collector had prevailed, a federal court in Colorado denied the credit collector’s multiple motions to dismiss a cardholder’s Fair Debt Collection Practices Act (FDCPA) claims in light of new allegations of fraud, but granted its motion to dismiss the credit card holder’s Colorado Consumer Protection Act (CCPA) claim.
In Kelly v. Wolpoff & Abramson, L.L.P., No. CIVA 07CV00091 EWNKL, 2007 WL 2381536 (D. Colo. Aug. 17, 2007), Kelly had an allegedly delinquent account with MBNA. MBNA wrote off the alleged debt and then sold the debt to Wolpoff. After purchasing the debt from MBNA, Wolpoff filed for arbitration asserting that MBNA remained the real party in interest.
Despite Kelly’s written objection to the arbitration, it proceeded. An award was issued in favor of MBNA, and then confirmed by a district court. Kelly filed complaint, alleging that Wolpoff and the arbitration administrator conspired together to obtain an illegal arbitration award. The Court did not address the alleged involvement of the arbitration administrator.
Wolpoff moved to dismiss Kelly’s FDCPA claims on several grounds and also moved to dismiss her CCPA claims.
The Court denied Wolpoff’s motions to dismiss Kelly’s FDCPA claims based on the Rooker-Feldman doctrine, failure to state a claim for which relief can be granted, statute of limitations, and res judicata and collateral estoppel.
First, the Rooker-Feldman doctrine did not divest the Court of federal subject matter jurisdiction because Kelly’s claims did not require the Court to engage in appellate review of the state court judgment confirming the arbitration award. Any argument that the Court would interfere with the state court judgment must be addressed under preclusion principles rather than under Rooker-Feldman.
Next, the Court found that Kelly met the necessary burden to state a claim upon which relief may be granted. Considering all facts in Kelly’s favor, Kelly’s complaint suggested that Wolpoff perjured itself by telling the court that MBNA owned the alleged debt and therefore met the low burden required by the FDCPA at this stage of the litigation.
The Court also rejected Wolpoff’s contention that Kelly’s FDCPA claims were barred by the one year statute of limitations for the claim. In accordance with the “traditional discovery rule,” the Court agreed with Kelly that the statute of limitations did not toll until she became aware or had reason to become aware of Wolpoff’s alleged fraud. See TRW Inc. v. Andrews, 534 U.S. 19, 25-27 (2001). Thus, Kelly’s complaint was timely filed.
Further, the Court rejected Wolpoff’s assertion that res judicata and collateral estoppel barred Kelly’s claims. It was not possible for Kelly to litigate her claims in arbitration because she hadn’t yet discovered the alleged fraud, which was the basis for her FDCPA and CCPA claims. Without a demonstration that Kelly litigated these claims in arbitration, the claims cannot be barred based on res judicata or collateral estoppel. Accordingly, the motions to dismiss Kelly’s FDCPA claim were denied.
However, the Court agreed with Wolpoff that Kelly’s CCPA claim must be dismissed because the intent of the CCPA is not to provide further remedy to private individuals.
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