9th Cir. Applies Discovery Rule in FDCPA Case; Plaintiff’s FDCPA Claim Arising from Litigation Misconduct Accrues from Service, Not Filing, of Offending Debt Collection Complaint

In Lyons v. Michael & Associates, 2016 WL 3192623 (9th Cir. 2016), the Court of Appeals applied the discovery rule to an FDCPA case.

Deborah Lyons appeals the district court’s dismissal of her case against Lina Michaels and Michael & Associates on the ground that it was time-barred. Lyons alleges that the defendants are debt collectors who violated the Fair Debt Collection Practices Act (“FDCPA”) when they sued her in the wrong judicial district to collect a debt that had been transferred to them. The district court concluded that the FDCPA’s one-year statute of limitations began to run on the date that the debt collection action was filed, and because Lyons failed to bring this case within one year of that date, her claim is time-barred. Relying on Naas v. Stolman, 130 F.3d 892 (1997), the district court rejected Lyons’ argument that, under the discovery rule, her complaint was timely filed within one year of the date that the defendants served her with process, which is when she first learned of the collection action. Instead of Naas, the district court should have applied Mangum v. Action Collection Service, Inc., 575 F.3d 935 (9th Cir. 2009). In that case, we held that the discovery rule applies in an FDCPA action.