[Cite as Jarvis v. First Resolution Mgt. Corp., 2012-Ohio-5653.]
STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )
SANDRA J. TAYLOR JARVIS C.A. No. 26042
Appellant
v. APPEAL FROM JUDGMENT ENTERED IN THE FIRST RESOLUTION INVESTMENT COURT OF COMMON PLEAS CORP., et al. COUNTY OF SUMMIT, OHIO CASE No. CV 2010 03 1627 Appellees
DECISION AND JOURNAL ENTRY
Dated: December 5, 2012
CARR, Judge.
{¶1} Appellant Sandra Jarvis appeals the judgment of the Summit County Court of
Common Pleas. This Court reverses and remands.
I.
{¶2} First Resolution Investment Corporation filed a complaint against Ms. Jarvis in an
attempt to collect the charged off sum plus interest accrued to date on credit card debt, the
interest in which it purchased from Chase Bank. Investment Corp. also sought future interest at a
rate of 24 percent. After Ms. Jarvis failed to file a timely answer, Investment Corp. moved for
default judgment. The trial court granted default judgment to Investment Corp. in the amount of
$16,832.88, plus 24 percent future interest. Six weeks later, Ms. Jarvis moved to vacate the
default judgment. The parties and judge signed a stipulated entry granting the motion to vacate.
{¶3} Ms. Jarvis filed an answer in which she raised several affirmative defenses,
including the defense that Investment Corp.’s claim for money due was barred by the applicable 2
statute of limitations. She also filed counterclaims premised on the Fair Debt Collection
Practices Act, the Ohio Consumer Sales Practices Act, and common law abuse of process. She
alleged these claims on her own behalf and as class action claims. Ms. Jarvis later filed a “first
amended class action counterclaim,” in which she alleged claims against Investment Corp., First
Resolution Management Corporation, Attorney Parri Hockenberry, and Cheek Law Offices,
LLC. She alleged three class action claims under the Fair Debt Collection Practices Act, to wit:
a claim against Investment Corp., Management Corp., and Cheek Law arising out of letters
threatening legal action to collect a debt when such legal action was barred by the applicable
statute of limitations; a claim against Investment Corp., Attorney Hockenberry, and Cheek Law
arising out of the filing of a complaint to collect money due when such legal action was barred
by the applicable statute of limitations; and a claim against Investment Corp., Attorney
Hockenberry, and Cheek Law arising out of the filing of a complaint seeking post-judgment
interest in excess of the statutory rate in the unjustified absence of a written contract supporting
such a claim. Ms. Jarvis alleged a class action claim against all four parties under the Ohio
Consumer Sales Practices Act arising out of the same circumstances alleged above. Finally, she
alleged a class action common law abuse of process claim against Investment Corp., Attorney
Hockenberry, and Cheek Law. Ms. Jarvis further moved for class certification.
{¶4} Investment Corp. dismissed without prejudice its complaint against Ms. Jarvis
pursuant to Civ.R. 41(A)(1)(a). The four counterclaim defendants subsequently moved to
realign the parties to designate Ms. Jarvis as the plaintiff, as hers were the only claims pending.
The trial court granted the motion over Ms. Jarvis’ objection.
{¶5} All parties filed motions for summary judgment. The trial court held the motion
for class certification in abeyance pending its resolution of the motions for summary judgment. 3
The trial court ultimately granted summary judgment in favor of Investment Corp., Management
Corp., Ms. Hockenberry, and Cheek Law on all of Ms. Jarvis’ claims. Ms. Jarvis appealed and
raises two interrelated assignments of error, which we consolidate to facilitate review.
II.
ASSIGNMENTS OF ERROR
THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT TO APPELLEES. THE TRIAL COURT ERRED IN DENYING SUMMARY JUDGMENT TO APPELLANT.
{¶6} Ms. Jarvis argues that the trial court erred by granting summary judgment in favor
of Investment Corp., Management Corp., Ms. Hockenberry, and Cheek Law on her claims and
by denying summary judgment in her favor. This Court agrees in part.
{¶7} This Court reviews an award of summary judgment de novo. Grafton v. Ohio
Edison Co., 77 Ohio St.3d 102, 105 (1996). This Court applies the same standard as the trial
court, viewing the facts in the case in the light most favorable to the non-moving party and
resolving any doubt in favor of the non-moving party. Viock v. Stowe-Woodward Co., 13 Ohio
App.3d 7, 12 (6th Dist.1983).
{¶8} Pursuant to Civ.R. 56(C), summary judgment is proper if:
No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party.
Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327 (1977).
{¶9} To prevail on a motion for summary judgment, the party moving for summary
judgment must be able to point to evidentiary materials that show that there is no genuine issue
as to any material fact and that the moving party is entitled to judgment as a matter of law.
Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996). Once a moving party satisfies its burden of 4
supporting its motion for summary judgment with sufficient and acceptable evidence pursuant to
Civ.R. 56(C), Civ.R. 56(E) provides that the non-moving party may not rest upon the mere
allegations or denials of the moving party’s pleadings. Rather, the non-moving party has a
reciprocal burden of responding by setting forth specific facts, demonstrating that a “genuine
triable issue” exists to be litigated for trial. State ex rel. Zimmerman v. Tompkins, 75 Ohio St.3d
447, 449 (1996).
{¶10} The non-moving party’s reciprocal burden does not arise until after the moving
party has met its initial evidentiary burden. To do so, the moving party must set forth evidence
of the limited types enumerated in Civ.R. 56(C), specifically, “the pleadings, depositions,
answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written
stipulations of fact[.]” Civ.R. 56(C) further provides that “[n]o evidence or stipulation may be
considered except as stated in this rule.”
{¶11} Under the Fair Debt Collection Practices Act (“FDCPA”), a debt collector is
prohibited from using “any false, deceptive, or misleading representation or means in connection
with the collection of any debt.” 15 U.S.C. 1692e. This includes any false representation of the
character, amount, or legal status of a debt; any threat to take action that cannot be taken legally;
and the use of any false representation or deceptive means to collect or attempt to collect a debt.
15 U.S.C. 1692e(2)(A), (5), and (10). Moreover, a debt collector is prohibited from using
“unfair or unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. 1692f.
This includes the “collection of any amount (including any interest, fee, charge, or expense
incidental to the principal obligation) unless such amount is expressly authorized by the
agreement creating the debt or permitted by law.” 15 U.S.C. 1692f(1). A “debt collector”
includes “any person who uses any instrumentality of interstate commerce or the mails in any 5
business the principal purpose of which is the collection of any debts, or who regularly collects
or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due
another.” 15 U.S.C. 1692a(6). Within this context, a “consumer” is “any natural person
obligated or allegedly obligated to pay any debt.” 15 U.S.C. 1692a(3).
{¶12} Under the Ohio Consumer Sales Practices Act (“OCSPA”), “[n]o supplier shall
commit an unfair or deceptive act or practice in connection with a consumer transaction.” R.C.
1345.02(A). Moreover, “[n]o supplier shall commit an unconscionable act or practice in
connection with a consumer transaction. Such an unconscionable act or practice by a supplier
violates this section whether it occurs before, during, or after the transaction.” R.C. 1345.03(A).
A “consumer transaction” is any “sale, lease, assignment, award by chance, or other transfer of
an item of goods, a service, a franchise, or an intangible, to an individual for purposes that are
primarily personal, family, or household, or solicitation to supply any of these things.” R.C.
1345.01(A). A “supplier” is “a seller, lessor, assignor, franchisor, or other person engaged in the
business of effecting or soliciting consumer transactions, whether or not the person deals directly
with the consumer.” R.C. 1345.01(C). In this context, a “consumer” is a “person who engages
in a consumer transaction with a supplier.” R.C. 1345.01(D). The Ohio Consumer Sales
Practices Act has been held to apply to debt collectors and to litigation activities. Hartman v.
Asset Acceptance Corp., 467 F.Supp.2d 769, 780 (S.D.Ohio 2004).
{¶13} The interrelationship between the FDCPA and OCSPA is well established.
“‘[V]arious violations of the FDCPA constitute a violation of the CSPA…[T]he purpose of both
acts is to prohibit both unfair and deceptive acts and this court holds that any violation of any one
of the enumerated sections of the FDCPA is necessarily an unfair and deceptive act or practice in
violation of R.C. 1345.02 and/or 1345.03.’” Kelly v. Montgomery Lynch & Associates, Inc., 6
N.D.Ohio No. 1:07-CV-919, 2008 WL 1775251, *11 (Apr. 15, 2008), quoting Becker v.
Montgomery, Lynch, N.D.Ohio No. 1:02CV874, 2003 WL 23335929, *2 (Feb. 26, 2003).
{¶14} To prevail on a claim for abuse of process, Ms. Jarvis must establish “(1) that a
legal proceeding was properly initiated and supported by probable cause, (2) that same legal
proceeding was perverted by the nonmoving party in order to achieve ‘an ulterior motive for
which it was not designed,’ and (3) that the moving party has incurred damages as a result of the
nonmoving party’s wrongful use of process.” Gugliotta v. Morano, 161 Ohio App.3d 152, 2005-
Ohio-2570, ¶ 47 (9th Dist.), quoting Levey & Co. v. Oravecz, 9th Dist. No. 21768, 2004-Ohio-
3418, ¶ 8, citing Yaklevich v. Kemp, Schaeffer & Rowe Co., L.P.A., 68 Ohio St.3d 294, 298
(1994).
{¶15} The trial court granted summary judgment in favor of all four defendants on Ms.
Jarvis’ FDCPA and OCSPA claims arising out of their representation of the legal status of the
credit card debt during their attempts to collect it. The trial court did so based on its finding that
R.C. 2305.03(B), Ohio’s borrowing statute, was not applicable in this case, so the applicable
statute of limitations was either the 15-year or 6-year period under Ohio law. The borrowing
statute provides in relevant part: “No civil action that is based upon a cause of action that
accrued in any other state, territory, district, or foreign jurisdiction may be commenced and
maintained in this state if the period of limitation that applies to that action under the laws of that
other state, territory, district, or foreign jurisdiction has expired or the period of limitation that
applies to that action under the laws of this state has expired.” R.C. 2305.03(B). Specifically,
the trial court found that the cause of action (to collect on the credit card debt) accrued in Ohio,
precluding application of the borrowing statute. Moreover, it found that the cause accrued prior 7
to the April 7, 2005 effective date of the borrowing statute, thereby precluding retroactive
application of the statute.
{¶16} The trial court also granted summary judgment in favor of Investment Corp., Ms.
Hockenberry, and Cheek Law on Ms. Jarvis’ abuse of process claim. It did so in part after
concluding that Investment Corp.’s claim against Ms. Jarvis to collect credit card debt was
initiated with probable cause which could only have existed if the claim was not time-barred.
Applicability of Ohio’s borrowing statute
{¶17} The determination as to whether R.C. 2305.03(B) applied to this matter was of
paramount importance because the statute of limitations (at the time relevant to this matter) to
bring an action to collect such a debt was (1) in Ohio, 15 years where the contract was in writing,
former R.C. 2305.05; (2) in Ohio, 6 years where the contract was not in writing, R.C. 2305.07;
and (3) in Delaware, 3 years, 10 Del.C. 8106(a). There is no dispute that Investment Corp. filed
its complaint against Ms. Jarvis on March 9, 2010. Accordingly, if the Delaware statute of
limitations was applicable, the cause of action to collect on the debt must have accrued no earlier
than March 9, 2007, lest Investment Corp.’s claim be time-barred. Most of Ms. Jarvis’ claims
under the FDCPA and OCSPA, as well as her abuse of process claim, were premised on the
allegation that Investment Corp.’s claim was time-barred when Management Corp. and Cheek
Law sent a letter in an attempt to collect on the debt and when Investment Corp. through Ms.
Hockenberry and Cheek Law filed the complaint.
Where the claim accrued
{¶18} Ohio’s borrowing statute does not clarify how to determine where a cause of
action accrues, and case law has not offered a definitive answer. While we disagree with the
Sixth Circuit’s ultimate determination regarding the place where certain breaches of contract 8
have accrued for purposes of Kentucky’s borrowing statute, we agree with the circuit court’s
sentiment that “[t]he elements of time and place of accrual are inextricably intertwined: The time
when a cause of action arises and the place where it arises are necessarily connected, since the
same act is the critical event in each instance.” (Internal quotations omitted.) Swanson v.
Wilson, 423 Fed.Appx. 587, 593 (2011). We may disagree regarding the interpretation of the
“act” that implicates the breach, but we agree that the time and place of the breach are
interdependent.
{¶19} The trial court found that the claim accrued in Ohio because that was where Ms.
Jarvis resided, primarily used her credit card, and decided to stop making the minimum required
payments. While admitting that it could not find any controlling authority directly on point, the
trial court was persuaded by the reasoning of the United States District Court for the Eastern
District of Kentucky, which held that for a breach of a contract for money due, “the cause of
action accrues where the decision to deny payment was made.” Combs v. Internatl. Ins. Co., 163
F.Supp.2d 686, 692 (2001).
{¶20} Combs involved an insurance company’s refusal to indemnify its insured and
implicated Kentucky’s borrowing statute. After consideration of the law in several other
jurisdictions, the federal district court adopted the “final significant event” test after predicting
that the Kentucky Supreme Court would find the reasoning of Wisconsin state and federal courts
persuasive. Id. at 694. The Combs court reasoned that the insured’s cause of action against the
insurance company accrued where the insurance company “rejected the demands for payment,”
as evidenced by the mailing of a letter to the insured to that effect. Id.
{¶21} The Sixth Circuit Court of Appeals affirmed the district court’s decision in a
lengthy decision that considered the reasoning and law enunciated by the states of Wyoming, 9
New York, Missouri, Illinois, and Florida. Combs v. Internatl. Ins. Co., 354 F.3d 568 (6th
Cir.2004). After rejecting the “most significant relationship” test adopted by other states and
enunciated in Section 188 of the Restatement of Law 2d, Conflict of Laws, and narrowing its
focus to situations involving anticipatory repudiation, the circuit court held that “an anticipatory
breach occurs where the breaching party posts its letter of renunciation[,]” rather than where the
other party received the letter. Id. at 602. This Court rejects the reasoning of the Combs courts
and their adoption and application of the “final significant event” test to determine where the
cause of action accrued. Accordingly, the trial court’s reliance on such reasoning was misplaced.
{¶22} The Ohio Supreme Court has thoughtfully considered the issue of the choice of
law in regard to actions sounding in contract. This Court finds the reasoning and test adopted by
the high court relevant to determining where a cause of action for breach occurred. The parties
here agree that Ms. Jarvis’ alleged failure to pay money due arose out of her alleged breach of a
credit card agreement.
{¶23} Unlike the Sixth Circuit, which rejected the “most significant relationship” test
enunciated in the Restatement of Law 2d, Conflict of Laws, the Ohio Supreme Court has long
embraced that test. In Schulke Radio Productions, Ltd. v. Midwestern Broadcasting Co., 6 Ohio
St.3d 436 (1983), the high court reiterated the general rule that the law of the state where the
contract is to be performed governs on the theory that the place of performance bears the most
significant relationship to the contract. Id. at 438. In considering whether to apply the law of the
state chosen by the parties in their contract, the Schulke court held that the contractual choice of
law provision would govern “unless either the chosen state has no substantial relationship to the
parties or the transaction and there is no other reasonable basis for the parties’ choice, or
application of the law of the chosen state would be contrary to the fundamental policy of a state 10
having a greater material interest in the issue than the chosen state and such state would be the
state of the applicable law in the absence of a choice by the parties.” (Emphasis added.) Id. at
syllabus.
{¶24} A year later, the Ohio Supreme Court considered the question of the choice of law
applicable to contract disputes where the parties had not provided for such in the contract. Gries
Sports Ents., Inc. v. Modell, 15 Ohio St.3d 284 (1984). The high court formally adopted Section
188 of the Restatement of the Law 2d, Conflict of Laws, and held: “In the absence of an effective
choice of law by the parties, the contacts to be taken into account to determine the law applicable
to an issue include: (a) the place of contracting, (b) the place of negotiation of the contract, (c)
the place of performance, (d) the location of the subject matter of the contract, and (e) the
domicile, residence, nationality, place of incorporation and place of business of the parties.”
Gries Sports at syllabus.
{¶25} Since that time, the Ohio Supreme Court has applied the “most significant
relationship” test in various types of contractual disputes to resolve choice of law issues. See,
e.g., Ohayon v. Safeco Ins. Co. of Illinois, 91 Ohio St.3d 474, 481 (2001) (referring to the
Restatement’s test as a needed “predictable methodology * * * to choose the applicable law if
neither the parties nor the statutory scheme make that choice for them.”). Moreover, the Sixth
Circuit Court of Appeals has recognized Ohio’s adoption and application of the “most significant
relationship” test in these circumstances. Natl. Union Fire Ins. Co. v. Watts, 963 F.2d 148, 150
(6th Cir.1992) (“Ohio choice of law rules mandate that the law of the state with the more
significant relationship to the contract should govern disputes arising from it. To determine
which state has the more significant relationship to the contract, Ohio law has adopted the test set
forth in the Restatement (Second) of Conflict of Laws Section 188.”) The test embraced by the 11
Ohio courts in determining choice of law issues in contract disputes guides our decision in
determining where any breach of the contract occurred and, consequently, where the cause of
action accrued.
{¶26} The trial court found that the cause of action accrued in Ohio because that is
where Ms. Jarvis “resides, primarily used the credit card, and decided to stop making the
minimum required payments[.]” The trial court further found that Ms. Jarvis “could have also
chosen to make her payments on the Internet, by telephone, or to a Chase bank branch” rather
than to the remittance address in Delaware. Ms. Jarvis did not dispute that she resided in Ohio at
all times relevant to this matter. However, the defendants did not present any evidence to
demonstrate where Ms. Jarvis primarily used her card, that she was in Ohio at the moment she
decided not to pay amounts owed on her account, or that she could have made her payments in
any way but by check to the payment address in Wilmington, Delaware.
{¶27} On the other hand, the evidence demonstrates that Ms. Jarvis sent her credit card
invitation to Delaware and that her offer was accepted in Delaware, thereby creating a contract in
Delaware. Ms. Jarvis’ obligation was to be performed by making payments on her account. Her
performance was not completed merely by depositing her check in the mail, but rather upon
timely receipt of a valid check in Delaware.
{¶28} Moreover, the defendants did not present any affidavits or deposition testimony to
show that they attempted to collect the credit card debt from Ms. Jarvis in the belief that their
claim accrued in Ohio and was, therefore, not time-barred. Ms. Jarvis, on the other hand,
attached a copy of Management Corp.’s procedures provided during discovery, which indicated
that the company recognized that Chase Manhattan accounts are subject to Delaware’s 36-month
(3-year) statute of limitations in Ohio. 12
{¶29} Viewing each party’s evidence in a light most favorable to the non-moving party,
this Court concludes as a matter of law that Investment Corp.’s cause of action for breach of the
credit card agreement accrued in Delaware where the most significant relationship regarding the
contract existed.
When the claim accrued
{¶30} Even though Investment Corp.’s claim accrued in Delaware, R.C. 2305.03(B)
would not be effective to require the application of the three-year Delaware statute of limitations
if Investment Corp.’s claim accrued prior to the statute’s April 7, 2005 effective date. In the
absence of express intent by the legislature that a statute that is not merely remedial be applied
retroactively, the statute will only be applied prospectively. Smith v. Smith, 109 Ohio St.3d 285,
2006-Ohio-2419, ¶ 6; see also Ohio Constitution, Article II, Section 28.
{¶31} The trial court found that the claim accrued prior to April 7, 2005, thereby
precluding the application of R.C. 2305.03(B). Significantly, because the defendants failed to
produce a copy of the credit card agreement governing Ms. Jarvis’ account, there was no
evidence of the parties’ agreement to describe under which circumstances a default or breach
would occur, whether Chase possessed remedies for default in the absence of legal action, and
whether it must pursue such remedies prior to pursuing legal action.
{¶32} The trial court appears to have premised its finding regarding when Investment
Corp.’s claim accrued on events that occurred on three dates prior to the effective date of the
statute. First, the court twice noted that Ms. Jarvis last used her credit card in 2004. This Court
is at a loss as to why the last date of use of the card was relevant to determining when any claim
accrued. Second, the trial court found that Ms. Jarvis “first failed to make the minimum required
monthly payment on January 1, 2005.” Although the trial court cited Ms. Jarvis’ response to 13
request for admission number 8, Ms. Jarvis only admitted that she did not make the minimum
payment due on January 1, 2005, not that that was the first time she failed to pay the minimum
due. On the other hand, Ms. Jarvis presented copies of credit card statements that indicated that
she carried a past due amount and was assessed a late fee on a statement covering the period of
December 10, 2003, to January 9, 2004, almost a full year earlier. Ms. Jarvis remained
delinquent on her account for another six months, made a payment that cured her deficiency,
failed to make required minimum payments in September and October 2004, made appropriate
payments in November and December 2004, and again failed to make her minimum payment in
January 2005. If this Court accepted, which we do not, the legal proposition that the claim
accrued when Ms. Jarvis “first” failed to pay the monthly minimum due, it is unclear how her
“first” failure occurred on January 1, 2005. Finally, the trial court found that Ms. Jarvis’ account
“was marked delinquent on February 7, 2005.” Certainly, Chase was the entity that would have
marked the account delinquent at that time, as Chase did not sell its interest in the account until
February 13, 2008. Investment Corp. did not purchase its interest in the debt until June 19, 2008.
The trial court did not cite any authority for finding that a claim for the payment of credit card
debt accrues when the account is marked delinquent, and this Court does not adopt any such
proposition of law. Significantly, Ms. Jarvis attached Management Corp.’s admissions that Ms.
Jarvis made her last payment on the account on June 28, 2006, and that Chase wrote off the debt
on January 31, 2006. The trial court did not note either event, implicitly finding neither event
relevant to the inquiry.
{¶33} The issue of when a claim accrues regarding credit card debt is unsettled, in part
because courts have not consistently categorized credit card accounts. We reject Ms. Jarvis’
argument that they are analogous to installment contracts. See R.C. 1317.01(A). This Court 14
concludes that credit card accounts are more properly categorized as open accounts. The
legislature has broadly defined “account” to include “a right to payment of a monetary
obligation, whether or not earned by performance, * * * (vii) arising out of the use of a credit or
charge card or information contained on or for use with the card * * *.” R.C. 1309.102(A)(2)(a).
{¶34} The Court of Appeals of Indiana has thoughtfully considered the nature of credit
card accounts, distinguishing them from promissory notes and installment loans in which the
total amount of indebtedness and a repayment schedule are fixed. Smither v. Asset Acceptance,
LLC, 919 N.E.2d 1153, 1159 (Ind.App.2010), citing Portfolio Acquisitions, LLC v. Feltman, 909
N.E.2d 876 (Ill.App.2009). The Smither court concluded that credit card accounts closely
resemble “open accounts” in that “the precise amount of indebtedness that a customer may incur
is unknown and fluctuating and the account is kept open in anticipation of future transactions,
unless one of the parties decides to close it.” Id. at 1160. The common law definition of “open
account” is instructive:
An “open account” is an account with a balance which has not been ascertained and is kept open in anticipation of future transactions. An open account results where the parties intend that the individual transactions in the account be considered as a connected series, rather than as independent of each other, subject to a shifting balance as additional debits and credits are made, until one of the parties wishes to settle and close the account, and where there is but one single and indivisible liability arising from such series of related and reciprocal debits and credits. This single liability is fixed at the time of settlement, or following the last entry in the account, and such liability must be mutually agreed upon between the parties, or impliedly imposed upon them by law. Thus, an open account is similar to a line of credit.
Observation: Openness of an account, for purposes of an action on an open account, is indicated when further dealings between the parties are contemplated and when some term or terms of the contract are left open and undetermined.
The continuity of an account is broken where there has been a change in the relationship between the parties, or where the account has been allowed to become dormant. 15
Id. at 1159-1160, quoting 1 American Jurisprudence 2d, Accounts and Accounting, Section 4
(2005). The Smither court, therefore, applied the statute of limitations applicable to open
accounts to the claim against Smither for credit card debt. Smither, 919 N.E.2d at 1160, quoting
1 American Jurisprudence 2d, Accounts and Accounting, Section 22 (2005) (“The general rule is
that the statute of limitations for an action on an open account ‘commences from the date the
account is due.’”). Accordingly, the Indiana appellate court concluded that the cause of action
on the open account accrued either as of the date of Smither’s last payment on the account or,
because Asset sent another statement the following month, on the next payment due date. Id. at
1160.
{¶35} This Court is persuaded by the reasoning of Smither and its reliance on the
common law definition of an “open account” in determining that the statute of limitations begins
to run after the last activity on the account. See also Barnets, Inc. v. Johnson, 12th Dist. No.
CA2004-02-005, 2005-Ohio-682, ¶ 18 (concluding that the cause of action on an open account
secured by a mortgage accrued for statute of limitations purposes when the last item was posted
on the account, in that case, a returned check). In this case, Jarvis’ “single liability” for the
balance of her credit card account arose “following the last entry in the account” which would
have been her $50 payment on June 28, 2006. Chase accepted that payment and there is no
evidence that Jarvis attempted to make a subsequent payment that was rejected. Moreover,
because the defendants did not attach any evidence to demonstrate the next due date after the
June 28, 2006 payment, this Court concludes that a question of fact exists as to whether the
statute of limitations began to run on June 29, 2006, or on some date in July 2006. However,
that does not create a genuine issue of material fact because both time periods are after the
effective date of the borrowing statute. Accordingly, the trial court erred by finding that the 16
defendants met their burden to show that Investment Corp.’s cause of action accrued prior to the
effective date of Ohio’s borrowing statute. On the other hand, Ms. Jarvis met her burden by
demonstrating that, given the parties’ agreement that the last payment was posted to the account
on June 28, 2006, Investment Corp.’s cause of action accrued after R.C. 2305.03(B) became
effective.
{¶36} For the above reasons, the trial court erred by granting summary judgment to the
defendants upon finding that Ohio’s borrowing statute was not applicable and that Investment
Corp.’s cause of action was not time-barred. Accordingly, this matter is remanded to the trial
court for resolution of Ms. Jarvis’ claims pursuant to the FDCPA and OCSPA and her claim for
abuse of process, as this Court will not determine those issues in the first instance. See Harris-
Coker v. Abraham, 9th Dist. No. 26053, 2012-Ohio-4135, ¶ 4.
{¶37} Ms. Jarvis also asserted claims against Investment Corp., Ms. Hockenberry, and
Cheek Law pursuant to the FDCPA and OCSPA based on their claims that Investment Corp. was
entitled to post-judgment interest in excess of the statutory rate and efforts to obtain such
interest. The statutory rate of interest was 4 percent at the time the various defendants sought to
obtain it. See R.C. 1343.03. The defendants sought to obtain future interest at a rate of 24
percent. The trial court, relying on a federal district court case out of Massachusetts, found that
Ms. Jarvis failed to show that the defendants violated the FDCPA or OCSPA by merely
requesting interest in excess of the statutory rate because the request was merely a prayer for
relief directed to the court, not Ms. Jarvis. See Argentieri v. Fisher Landscapes, Inc., 15
F.Supp.2d 55, 61-62 (D.Mass.1998). Moreover, the trial court found that, because Investment
Corp. dismissed its complaint against Ms. Jarvis, the issue of future interest was no longer before
it. 17
{¶38} A party is not entitled to interest in excess of the statutory rate in the absence of a
written contract providing for such. Minster Farmers Coop. Exchange Co., Inc. v. Meyer, 117
Ohio St.3d 459, 2008-Ohio-1259, ¶ 26; Capital One Bank (USA), N.A. v. Heidebrink, 6th Dist.
No. OT-08-049, 2009-Ohio-2931, ¶ 37; see also R.C. 1343.03(A). The defendants failed to
attach the credit card agreement relevant to Ms. Jarvis’ account to either the complaint on the
account pursuant to Civ.R. 10(D) or as an exhibit relevant to their motions for summary
judgment or responses in opposition to Ms. Jarvis’ motion for summary judgment. Moreover,
monthly credit card statements are insufficient to constitute a written contract entitling one party
to interest in excess of the statutory rate. Meyer, 2008-Ohio-1259, at ¶ 27. Accordingly, the
defendants did not meet their initial burden of showing that Investment Corp. was entitled to 24
percent interest or any other rate in excess of the statutory rate (4 percent) in effect at the time it
filed its complaint.
{¶39} The Argentieri court opined: “A prayer for relief in a complaint, even where it
specifies the quantity of attorney’s fees, is just that: a request to a third party – the court – for
consideration, not a demand to the debtor himself. A request for attorney’s fees ultimately rests
upon the discretion of the court and a determination of applicability at a later stage of the
litigation. The whole purpose of regulating debt collection was to ‘supervise’ a range of
unsupervised contacts, such as demand letters and late-night telephone calls. In contrast, a
statement in a pleading is supervised by the court and monitored by counsel. The two situations
are drastically different.” Argentieri, 15 F.Supp.2d at 61-62. This Court is not persuaded by the
Massachusetts district court’s opinion and reasoning.
{¶40} The issue of the viability of FDCPA claims based on prayers for relief in
complaints is predominantly raised in regard to requests for attorney fees. This Court finds the 18
instant matter involving a request for interest analogous. The Federal District Court for Montana
rejected the reasoning of Argentieri, noting that, in its case, the complaint clearly demanded
judgment against the defendant for attorney fees. McCollough v. Johnson, Rodenberg &
Lauinger, 587 F.Supp.2d 1170, 1178 (D.Mont.2008). In Ohio, the Federal District Court for the
Southern District of Ohio also found a violation of the FDCPA where a creditor prayed for
attorney fees when it was not entitled to such fees pursuant to law. Foster v. D.B.S. Collection
Agency, 463 F.Supp.2d 783, 802 (S.D.Ohio 2006). The Foster court reasoned that the prayer for
such relief “constitute[d] an absolute entitlement to attorney fees, even though such fees are not
recoverable under Ohio law.” Id. We are persuaded by this line of cases.
{¶41} In this case, Investment Corp. concluded in its complaint against Ms. Jarvis:
“WHEREFORE, Plaintiff demands judgment against [Ms. Jarvis] for the charged off sum of
$8,765.37 plus accrued interest of $7,738.99, plus future interest at 24.00% after March 02, 2010
plus costs of this action.” (Emphasis added.) It was clear under these circumstances that
Investment Corp. was enunciating its absolute entitlement to interest at a rate of 24 percent and
that it was demanding such from Ms. Jarvis, not from the trial court. Accordingly, Ms. Jarvis
established a prima facie claim against the defendants under the FDCPA, and consequently the
OCSPA, as those claims related to the request for interest in excess of the statutory rate. This,
however, does not end our inquiry.
{¶42} “Courts have characterized the FDCPA as a strict liability statute, meaning that a
consumer may recover statutory damages if a debt collector violates the FDCPA even if the
consumer suffered no actual damages.” Fed. Home Loan Mtg. Corp. v. Lamar, 503 F.3d 504,
513 (6th Cir.2007). A very limited exception to the strict liability imposed by the FDCPA is the
bona fide error defense which provides: “A debt collector may not be held liable in any action 19
brought under this subchapter if the debt collector shows by a preponderance of evidence that the
violation was not intentional and resulted from a bona fide error notwithstanding the
maintenance of procedures reasonably adapted to avoid any such error.” Hartman v. Great
Seneca Fin. Corp., 569 F.3d 606, 614 (6th Cir.2009). Because the trial court found that a prayer
in a complaint for interest was not a demand to the debtor, it did not consider whether genuine
issues of material fact existed regarding the existence of a bona fide error defense. This Court
declines to address that issue in the first instance. See Harris-Coker, 2012-Ohio-4135, at ¶ 4.
Accordingly, we remand the matter to the trial court for further consideration.
{¶43} For the reasons enunciated above, Ms. Jarvis’ consolidated assignment of error is
sustained as it assigns error to the trial court’s granting summary judgment in favor of the
defendants. Because we are remanding the matter to the trial court for further consideration of
issues it did not previously address, Ms. Jarvis’ assignment of error is overruled as it assigns
error to the trial court’s denial of her motion for summary judgment.
III.
{¶44} Ms. Jarvis’ consolidated assignment of error is sustained in part. The judgment of
the Summit County Court of Common Pleas is reversed and the cause remanded for further
proceedings consistent with this opinion.
Judgment reversed, And cause remanded.
There were reasonable grounds for this appeal. 20
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellees.
DONNA J. CARR FOR THE COURT
WHITMORE, P. J. CONCURS.
DICKINSON, J. CONCURRING IN PART AND DISSENTING IN PART.
{¶45} I agree that First Resolution Investment Corporation’s claim against Sandra Jarvis
accrued in Delaware after Section 2305.03(B) of the Ohio Revised Code became effective. I
also agree that Ms. Jarvis’s claim that First Resolution Management Corporation and Cheek Law
Offices violated the Fair Debt Collection Practices Act by threatening to file suit on a time-
barred claim and her claim that First Resolution Investment Corporation, Cheek, and Parri
Hockenberry violated the Act by filing suit on a time-barred claim must be remanded so that the
trial court can determine the unresolved issues related to those claims in the first instance. 21
Although I am not convinced that the mere filing of a time-barred claim violates the Act, none of
the parties have made that argument to this Court. Instead, First Resolution Investment
Corporation, Cheek, and Parri Hockenberry have limited their argument to asserting that Ms.
Jarvis cannot demonstrate that they knowingly filed a time-barred claim. Upon review of the
record, I believe there is a genuine issue of material fact regarding whether they acted
knowingly, so a remand to the trial court is an appropriate disposition of that claim.
{¶46} On the other hand, I do not believe that a demand in a complaint for interest in
excess of the statutory rate violates the Fair Debt Collection Practices Act. Under United States
Code Title 15 Section 1692e, “[a] debt collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of any debt.” That includes “[t]he use
of any false representation or deceptive means to collect or attempt to collect any debt or to
obtain information concerning a consumer.” 15 U.S.C. 1692e(10). A debt collector may also
“not use unfair or unconscionable means to collect or attempt to collect any debt.” 15 U.S.C.
1692f. That includes “[t]he collection of any amount (including any interest, fee, charge, or
expense incidental to the principal obligation) unless such amount is expressly authorized by the
agreement creating the debt or permitted by law.” 15 U.S.C. 1692f(1).
{¶47} The Fair Debt Collection Practices Act was enacted in light of “abundant
evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt
collectors.” 15 U.S.C. 1692(a). Congress found that “[a]busive debt collection practices
contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and
to invasions of individual privacy.” Id. The purpose of the act is “to eliminate abusive debt
collection practices by debt collectors, to insure that those debt collectors who refrain from using 22
abusive debt collection practices are not competitively disadvantaged, and to promote consistent
State action to protect consumers against debt collection abuses.” 15 U.S.C. 1692(e).
{¶48} Because the Fair Debt Collection Practices Act is remedial legislation, I agree that
it should be liberally construed in favor of the individuals it is designed to protect. See Dennie v.
Hurst Constr. Inc., 9th Dist. No. 06CA009055, 2008-Ohio-6350, ¶ 8 (explaining that the
Consumer Sales Practices Act should be liberally construed). Nevertheless, I do not believe that
a demand for interest in a complaint is the type of practice that the act prohibits. As the
Honorable Nancy Gernter of the United States District Court of Massachusetts explained, “[a]
prayer for relief in a complaint . . . is just that: a request to a third party—the court—for
consideration, not a demand to the debtor himself.” Argentieri v. Fisher Landscapes Inc., 15 F.
Supp. 2d 55, 61 (D. Mass. 1998). The “whole purpose of regulating debt collection was to
‘supervise’ a range of unsupervised contacts, such as demand letters and late-night telephone
calls. In contrast, a statement in a pleading is supervised by the court and monitored by
counsel.” Id. at 61-62. “The courts have their own system of protections against abusive tactics
that occur during litigation. A grossly exaggerated debt or unfounded claim in a pleading could
represent an abuse of process, and subject the attorney or client to sanctions or other disciplinary
mechanisms. Given these protections, when a claim is made to the court, there is no need to
invoke the protections of a statute designed to protect consumers from unscrupulous,
unsupervised debt collection tactics such as threats of violence and harassing telephone calls.”
Id. at 62; see also B-Real LLC v. Rogers, 405 B.R. 428, 432 (M.D. La. 2009) (“While the
FDCPA’s purpose is to protect unsophisticated consumers from unscrupulous debt collectors,
that purpose is not implicated when a debtor is instead protected by the court system and its 23
officers.”); Cisneros v. Neuheisel Law Firm P.C., No. CV06-1467-PHX-DGC, 2008 WL 65608,
*3 (D. Ariz. Jan. 3, 2008).
{¶49} Not only does an interest demand in a complaint not resemble the type of activity
intended to be protected by the Fair Debt Collection Practices Act, it does not fall within the
Act’s language. Under Ohio law, a court will award interest at a higher-than-statutory rate only
if it is explicitly provided in a written contract. R.C. 1343.03(A). Accordingly, a mere demand
for a higher rate of interest cannot be deemed a “false, deceptive, or misleading representation”
under Section 1692e of Title 15 of the United States Code. Harvey v. Great Seneca Fin. Corp.,
453 F.3d 324, 333 (6th Cir. 2006) (concluding that it is not a deceptive practice for a debt
collector to file a lawsuit “without the immediate means of proving the existence, amount, or true
owner of the debt[.]”). Similarly, asking for a non-statutory rate of interest cannot be considered
an “unfair or unconscionable” practice under Section 1692f because a debt collector will only be
able to recover interest at the requested rate if it establishes that it is contractually entitled to that
rate. I, therefore, believe that the trial court correctly granted summary judgment to First
Resolution Investment Corporation on Ms. Jarvis’s post-judgment-interest-rate claim.
APPEARANCES:
JAMES F. BURKE, JR. and JOHN J. HORRIGAN, Attorneys at Law, for Appellant.
JEFFREY TURNER, BOYD W. GENTRY, and JOHN P. LANGENDERFER, Attorneys at Law, for Appellee.