Florida Statute of Limitations on Credit Card Lawsuits

If a creditor waits too long to sue, the creditor can be barred from ever bringing suit.  The purpose of having a statute of limitations is so that lawsuits are brought when the matter is still fresh:  before documents are destroyed and memories fade.  If they can no longer bring a lawsuit, then there is no way to legally enforce the debt.  Each state has their own laws as to how long the statute of limitations is and it varies tremendously by state and also by the type of action.  In Florida, the statute lasts five years for a written contract and four years for a credit card account.  While this seems simple, it is often amazingly difficult for a lay person to analyze because a contract may provide that a different state law applies, even a state that neither party has anything to do with.  The answer may also vary depending upon whether it is a procedural or substantive question of law or how complete the writing was.  The Florida Statute of Limitations on this is contained in Section 95.11:

Actions other than for recovery of real property shall be commenced as follows:

(2) Within five years.–

(b) A legal or equitable action on a contract, obligation, or liability founded on a written instrument…

(3) Within four years.–

(k) A legal or equitable action on a contract, obligation, or liability not founded on a written instrument, including an action for the sale and delivery of goods, wares, and merchandise, and on store accounts.

A key case bringing out the types of questions and analysis is Delrey v. Capital One Bank, No. 08-514 AP, 2009 WL 5103229, at *1 (Fla. Cir. Ct. July 7, 2009).  The following excerpt shows the analysis the Court made when ruling that the debt was barred and no longer enforceable.

This appeal arises from a credit card collection action between Appellee/Plaintiff Capital One Bank (USA) NA of Virginia (“Capital One”) and Florida resident Appellant/Defendant Magaly Delrey (“Delrey”). Delrey appeals final summary judgment in favor of Capital One, arguing that the court incorrectly applied Florida’s statute of limitations and incorrectly found the Customer Agreement to be a written contract.

Here, the Customer Agreement indicates that the choice of law is Virginia and federal law, A choice of law provision applies only to substantive law, not procedural law. Siegel v. Novack, 920 So.2d 89, 93 (Fla. 4th DCA 2006). For causes of action arising in contract, Florida adheres to the doctrine of lex loci contractus. See Lanoue v. Rizk, 987 So.2d 724, 727 (Fla. 3d DCA 2008). Lex loci contractus looks to the place where the contract was executed. Id. For contract cases, lex loci contractus will determine the applicable statute of limitations. Id. Florida courts apply the substantive law of the state set forth in a choice of law provision and Florida’s procedural law. Siegel, 920 So.2d at 93. Accordingly, Virginia’s substantive law applies and Florida’s procedural law applies.

Whether the application of the statute of limitations involves substantive or procedural law for choice of law purposes is determined by Florida law because Florida is the forum state. See Siegel, 920 So.2d at 93, “[S]ubstantive law prescribes duties and rights and procedural law concerns the means and methods to apply and enforce those duties and rights.” See Alamo Rent-A-Car, Inc. v. Mancusi, 632 So.2d 1352, 1358 (Fla.1994).

Because the applicable statute of limitations involves the application of a substantive right under Florida law, it is the substantive law of Virginia which must be examined concerning the application of the appropriate statute of limitations.

Since an analysis of the applicable statute of limitations involves a substantive right, the Virginia statute of limitations applies. There are two sections of the Virginia statute of limitations which may have relevance in the instant case. Subsection 8.01-246(2) of the Code of Virginia provides that any action on a written contract must be brought within five years of the accrual of the action. Subsection 8.01-246(4) provides that actions on an unwritten contract must be brought within three years of the accrual of the action. Finally, section 8.01-248 provides that any action for which no limitation is otherwise specified shall be brought within two years after the accrual of the action. Va.Code Ann. § 8.01-246 (2008) (personal actions based on contracts); Va.Code Ann. § 8.01-248 (2008) (personal action for which no other limitation is specified).

In the instant case, the breach of contract action is based upon a breach of the Customer Agreement attached to the complaint. Under Virginia law, for the “Customer Agreement” to comply with the writing requirement for the five year statute of limitation, it would have to “show on its face a complete and concluded agreement between the parties.” Newport News, H. & O Dev. Co. v. Newport News, St. Ry. Co., 97 Va. 19, 32 S.E. 789 (Va.1899); Digital Support Corp. v. Avary, 1999WL796745 (Va. Cir. Ct. My 13, 1999)(holding, “In order to constitute a written contract, the essential terms of the agreement must be obvious on the face of the writing without recourse to parol evidence.”); Marley Mouldings, Inc. v. Syat, 970 F.Supp. 496 (W.D.Va.1997); In re: Nelco, Ltd., 264 B.R. 790 (Bkrtcy.E.D.Va.1999); Capital One Bank v. Gelsey, 15 Fla. L. Weekly Supp. 64a (Fla. 4th Cir.Ct. July 3, 1999), Virginia courts have also held contracts to be oral agreements where certain elements are missing from the writing. In Dodge v. Trustees of Randolph-Macon Woman’s College, 276 Va. 1, 661 S.E.2d 801, 803 (Va.2008), the court held that “a contract is not valid and it is unenforceable if the terms of the contract are not established with reasonable certainty.” In Tsillis v. Wade, 2008WL 1972952 (Va.Cir.Ct.2002), the court held that if no date of repayment is present on a written contract, claim of breach is subject to the three year statute of limitation.

Here, the Customer Agreement does not “show on its face a complete and concluded agreement between the parties.” For example, it fails to set out the applicable interest rate governing the account and it is not signed by either party. This action is not founded upon a signed contract. The Customer Agreement, which by the terms of the complaint is the document which Capital One is relying upon for its breach of contract count, does not satisfy the requirements of a written contract. Thus, the particular statute of limitations, which would permit the initiation of a contract action to enforce the terms of a written contract within five years of its signing, is not applicable. Therefore, this contract action is time barred by § 8.01-246(4) of the Virginia Statutes. See also Mohammed, et al v. Capital One Bank, 16 Fla. L. Weekly Supp. 616a (Fla. 11th Circ. Ct. April 29, 2009).

We reverse the lower court’s final judgment and remand with instructions to dismiss the action. Capital One’s action is time barred by the statute of limitations. Appellant’s motion for attorney’s fees is granted with directions for the trial court to determine same.

For further information please contact Arkovich Law  If a creditor continues to assert a debt is owed in collection letters after the SOL has run, they are often violating the law and can be sued.  If a debtor files bankruptcy and a creditor asserts a claim past the SOL, they also can be sued.  Not only will this stop the debt collection, but it would also entitle you to statutory damages of $2,000 under the applicable consumer laws – The Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act.

Also one other note, just because a debt is listed on a credit report, does not mean that it is still legally enforceable.  Debts can remain on credit reports for seven years after they first become delinquent.  However, the creditor may be barred from enforcing the debt through a lawsuit or garnishment years before the debt comes off the credit report.