The opinion of the court was delivered by: BERLE M. SCHILLER, District Judge
This case arises out of the alleged unauthorized use of credit
cards by Defendant Debra Hunter Null while she was employed by
Pickering Valley Landscape, Inc. ("Pickering Valley"). Plaintiffs
Pickering Valley and One Beacon Insurance Co. (collectively
"Plaintiffs") bring claims against Defendants Null, Douglas
Romanczuk, American Express Travel Related Services Co., and MBNA
America, N.A. ("MBNA") alleging violations of state law and the
federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1601-1677.
Presently before the Court is Defendant MBNA's motion to dismiss
Plaintiffs' TILA claim as barred by the statute of limitations.
For the reasons that follow, Defendant's motion is granted.
Plaintiffs seek $312,000.00 in damages for Defendant MBNA's
alleged violation of § 1643, which limits cardholder liability
for charges that are made by third parties without actual,
implied, or apparent authority. 15 U.S.C. § 1643 (2004); (Compl.
¶¶ 44-53.) Although Null allegedly began stealing from Plaintiffs
in February 1998, Plaintiffs became aware of Defendant Null's
thefts on or around October 23, 2001, when Null admitted her
actions to Pickering Valley management. (Compl. ¶¶ 8, 26.) Nonetheless, Plaintiffs did not initiate suit in the
Court of Common Pleas for Chester County until October 21, 2003,
approximately two years later. (Pls.' Resp. at 3.) On February
12, 2004, the case was removed to this Court.
In considering a motion to dismiss for failure to state a claim
upon which relief may be granted, courts must accept as true all
of the factual allegations pleaded in the complaint and draw all
reasonable inferences in favor of the non-moving party. Bd. of
Trs. of Bricklayers & Allied Craftsmen Local 6 of N.J. Welfare
Fund v. Wettlin Assocs., Inc., 237 F.3d 270, 272 (3d Cir. 2001).
A motion to dismiss will only be granted if it is clear that
relief cannot be granted to the plaintiff under any set of facts
that could be proven consistent with the complaint's allegations.
Hishon v. King & Spalding, 467 U.S. 69, 73 (1984) (citing
Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). As it appears on
the face of Plaintiffs' complaint that their TILA claim may be
barred by the applicable statute of limitations, the limitations
defense is properly raised at this stage of the proceedings.
Oldroyd v. Assocs. Consumer Discount Co., 863 F. Supp. 237, 240
(E.D. Pa. 1994).
The statute of limitations period provided in § 1640(e) runs
from the date of the violation. 15 U.S.C. § 1640(e) (2004); see
Canty v. Equicredit Corp. of Amer., No. Civ. A. 01-5804, 2003 WL
21243268, at *2, 2003 U.S. Dist. LEXIS 8819, at *6 (E.D. Pa. May
8, 2003) (noting that the statute of limitations for TILA
violation runs from "date of the occurrence of the violation").
However, as Plaintiffs admit that they became aware of Null's
activities in October 2001, it is assumed, for purposes of the instant motion only, that the limitations period
began to run in October 2001. (Compl. ¶ 26; Def.'s Mot. to
Dismiss at 5). Accordingly, the parties agree that this action
was commenced more than one year after Plaintiffs became aware of
the alleged TILA violation. Therefore, the only dispute between
the parties, and the only issue relevant to the instant motion,
is whether the one year statute of limitations contained in §
1640(e) applies to violations of § 1643. This dispute is readily
resolved by analysis of the statutory text.
Section § 1640 provides for civil liability for violations of
§ 1640. Civil Liability
(a) Individual or class action for damages; amount
of award; factors determining amount of award
Except as otherwise provided in this section, any
creditor who fails to comply with any requirement
imposed under this part, including any requirement
under section 1635 of this title, or part D or E of
this subchapter with respect to any person is liable
to such person . . .
. . .
(e) Jurisdiction of courts; limitations on actions;
. . .
Any action under this section may be brought in any
United States district court . . . within one year
from the date of the occurrence of the violation.
15 U.S.C. § 1640(a)-(e). By its very terms, § 1640 applies to
"any requirement imposed under this part." The term "this part"
refers to Title 15 of the United States Code, chapter 41,
subchapter I, part B, which includes §§ 1631-1649. As Plaintiff
seeks monetary damages for Defendant's alleged violation of §
1643, the statue of limitations provided by § 1640(e) applies.
Accordingly, Plaintiffs' action is barred by the one year statute
Although there are no cases within the Third Circuit
specifically applying the one-year limitations period to a
violation of § 1643, there is abundant authority that claims for
actual and statutory damages for violation of TILA's requirements are
governed by the one year limitations period of § 1640(e). See,
e.g., Ramadan v. Chase Manhattan Corp., 156 F.3d 449, 500-01 (3d
Cir. 1998) (holding that violation of TILA's disclosure
provisions subject to one-year limitations period); Canty, 2003
WL 21243268 at *2, 2003 U.S. Dist. LEXIS 8819 at *7 (applying
one-year limitations period to claim for damages arising from
violation of § 1635(b)); Oldroyd, 863 F. Supp. at 240 (applying
one year limitations period to violations of TILA disclosure
requirements). Furthermore, the only federal court to
specifically address § 1643 found that the one-year limit is
applicable. Draiman v. Amer. Express Travel Related Servs. Co.,
892 F. Supp. 1096, 1098 (N.D. Ill. 1995). The cases Plaintiff
cites do not require a contrary result. See Crisomia v. Parkway
Mortgage, Inc., No. 00-35085, 2002 WL 31202722, *5, 2002 Bankr.
LEXIS 1112, *19 (Bankr. E.D. Pa. Sept. 13, 2002) (acknowledging
that one year limitations period applies to actions for actual
and statutory damages, but recognizing statutory exception under
which debtor may raise TILA violations defensively after the
limitations period in action to collect debt); Littlefield v.
Walt Flanagan & Co., 498 F.2d 1133, 1136 (10th Cir. 1974)
(finding that § 1640(e) limitations period, which applies to
actions for actual and statutory damages, does not apply to
action seeking rescission under § 1635).
In conclusion, for the reasons discussed above, Defendant
MBNA's motion to dismiss is granted because Plaintiffs' claims
are barred by the applicable statute of limitations. An
appropriate Order follows. ORDER
AND NOW, this 19th day of July, 2004, upon
consideration of Defendant MBNA America, N.A.'s Motion to
Dismiss, Plaintiff's response thereto, and Defendant's reply
thereon, and for the foregoing reasons, it is hereby ORDERED
1. Defendant MBNA America, N.A.'s Motion to Dismiss
(Document No. 4) is GRANTED. Plaintiffs' complaint
against Defendant MBNA America, N.A. is DISMISSED.
3. By August 2, 2004, the parties are directed to
brief whether this ruling similarly applies to
Plaintiff's TILA claim against Defendant American
Express Travel Related Services, Co. and, if so,
whether this ...