4 Year Statute of Limitations on Store Branded Credit Cards in New Jersey

By: Robert J. Nahoum

A man in suit and tie with his arms crossed.

As reported by the New Jersey Law Journal, a three-judge Appellate Division panel ruled that “credit cards issued for a specific retailer are governed by N.J.S.A. 12A:20-725, which deals with the sale of good, rather than N.J.S.A. 2A:14-1, which governs most contractual claims and has a six-year statute of limitations.

‘[W]e hold that the claims arising from a retailer customer’s use of a store-issued credit card—or one issued by a financial institution on a store’s behalf—when the use of which is to make purchases from the issuing retailer are subject to the four-year statute of limitations,’ said Appellate Division Judge Garry Rothstadt in Midland v. Thiel.

The consolidated ruling involves three consumers—Bruce Thiel, Luisa Acevedo and Alisha Johnson—who obtained credit cards from different stores and defaulted on their debts. The assignee, Midland Funding, filed collection lawsuits against all three after the four-year statute of limitations expired but within six years.

A Passaic County Superior Court judge dismissed the claims against Acevedo and Johnson, finding the four-year statute of limitations applied, and awarded them damages and counsel fees. A Somerset County Superior Court judge also dismissed the claim against Thiel but declined to award damages or fees.

Midland appealed all three rulings. The appeals court affirmed the Passaic County judge’s decisions but remanded the Somerset County judge’s ruling for a determination as to whether damages and fees should be awarded.

‘[P]laintiff knew or at least should have known the claims were time-barred,’ Rothstadt said. He said the defendants were allowed to collect damages and counsel fees under the terms of the federal Fair Debt Collection Practices Act.

Midland Funding’s attorney, Lawrence McDermott Jr. of Pressler and Pressler in Parsippany, said the ruling was disappointing. ‘It appears the Appellate Division misinterpreted existing law or created new law,’ McDermott said.

Thiel obtained a credit card from Home Depot, issued by Citibank, and defaulted on a debt of $2,340.77. Acevedo obtained a credit card from the Children’s Place, also issued by Citibank, and defaulted on a debt of $824.90. Johnson received a credit card from JCPenney, issued by GE Money Bank, and defaulted on a debt of $747.05.

The Passaic County judge awarded Acevedo and Johnson $1,000 in damages under the terms of the Fair Debt Collection Practices Act, and then awarded Acevedo $4,250 in counsel fees and Johnson $7,632.50 in fees.

‘[T]he fact that a third-party creditor provided the financing for a sale of goods did not change the nature of the transaction as a sale of goods,’ Rothstadt said. The purpose of the Fair Debt Collection Practices Act, the judge said, is to protect consumers from ‘abusive debt collection practices by debt collectors.’

If you need help settling or defending a debt collection law suit, stopping harassing debt collectors or suing a debt collector, contact us today to see what we can do for you.  With office located in the Bronx, Brooklyn and Rockland County, the Law Offices of Robert J. Nahoum defends consumers in debt collection cases throughout the Tristate area including New Jersey.

The Law Offices of Robert J. Nahoum, P.C
Phone: (845) 232-0202

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