4th Circuit: Olson v. Midland Funding- FDCPA Statute of Limitations, Non-collection Notices, and Unsucessful Debt Collection Suits

Olson raised FDCPA claims in federal court against Midland, which had brought a debt collection action in state court. These claims were asserted within a year of when Olson first appeared in the state court debt collection action, but more than a year after the alleged violations. The 4th Circuit found that the one-year statute of limitation barred Olson’s FDCPA suit, as the Statute of Limitations ran from the violation date, especially as Olson had been on notice and participated in the state court action for longer than one year.

Olson further contended that privacy notices sent directly to him, after Midland was aware he was represented by counsel, violated § 1692c(a)(2). The Court of Appeals, however, held that the objective purpose of the privacy notices was not “in connection with the collection of any debt”, as required by the FDCPA, but regarded his privacy protections.

Lastly, as Midland was ultimately denied an affidavit judgment, apparently without any supporting evidence of the debt, Olson argued that such failed lawsuit violated the Maryland Consumer Debt Collection Act (“MCDCA”) and the Maryland Consumer Protection Act (“MCPA”), by “claim[ing], attempt[ing], or threaten[ing] to enforce a right with knowledge that the right does not exist.” Md. Code Ann., Com. Law § 14-202(8). As Olson never alleged he did not owe the debt or that Midland owned the debt, the Court of Appeals held that Olson could not “plausibly allege that [Midland] knew or should have known that Midland Funding did not have the right to file the state court debt collection lawsuit or to seek an affidavit judgment.” An unsuccessful debt collection lawsuit is not, by itself, sufficient to show an “action that cannot legally be taken.” Heintz v. Jenkins, 514 U.S. 291, 296 (1995).


Olson may have been more successful had he raised the his FDCPA claims raised defensively as counterclaims in the state court action. Even if asserted more than one-year after the alleged violations, recoupment may be asserted, depending on state law, if the claims arose out of the same transaction as the debt. See NCLC Collection Actions §5.5.3.

This case also supports the holdings that notices required under other state and federal laws, such as N.C.G.S. § 45-91, are not prohibited when a debtor is represented or even in a bankruptcy, if the objective intent of those communications is not to collect a debt. See for example, In re Hillmon, 2011 Bankr. LEXIS 5536 (Bankr. M.D.N.C. Oct. 26, 2011), where Judge Aron addressed the requirement under NCGS 45-91 of sending the homeowner notice of fees. The mortgage servicer defended its failure by arguing that the automatic stay precluded sending the notice. Judge Aron rejected this stating that “[s[tanding alone, the sending of an informative statement by a creditor to a debtor as prescribed by N.C. Gen.Stat. § 45-91(1) does not violate the automatic stay.” She relied on this citing cases that held that sending debtors escrow analyses, monthly statements, etc. did not violate the stay.
This case may also cut against the recent Crawford v. LVNV decision from the 11th Circuit, which held that a Proof of Claim filed in a bankruptcy for a stale debt, violated the FDCPA, as a Statute of Limitations is an affirmative defense that does not preclude a lawsuit, unless raised in such lawsuit. At the same time, one would hope that the strict application here of the Statute of Limitations in favor of a debt collector would be similarly applied against one.
For a copy of the opinion, please see:

Olson v. Midland Funding- FDCPA Statute of Limitations, Non-collection Notices, and Unsucessful Debt Collection Suits



1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

Tagged with: , ,

Leave a Reply