| Indiana Court of Appeals Clarifies What Limitations Period Applies to Suits Brought on Credit Card Debts |
| Posted: January 25, 2010 |
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In Smither v. Asset Acceptance, LLC, the Indiana Court of Appeals clarified what statute of limitations applies to suits based on credit card agreements and when a cause of action under credit card agreements accrues. ___ N.E.2d ___, No. 55A04-0902-CV-70, 2010 WL 97999 (Ind. Ct. App. Jan. 12, 2010). The court held that the six-year limitations period provided by Indiana Code section 34-11-2-7(1), which governs “[a]ctions on accounts and contracts not in writing” applies to such claims. A cause of action under a credit card agreement accrues when the card holder misses a payment that comes due.
Jason Smither obtained a Mastercard from Providian Bank. Smither made his last payment on the card in February 2000. He did not make any payment when he received his next statement in March, and in September 2000, Providian charged off Smither’s account. Providian continued sending Smither statements until December 2000. Providian sold his account Asset Acceptance, LLC the following December.
Asset Acceptance did not file suit until May 2006. The trial court entered summary judgment in Asset Acceptance’s favor, but the Court of Appeals reversed, holding that Asset Acceptance’s claim was time barred. The court began its analysis by noting that even though the credit card agreement included a New Hampshire choice-of-law clause, Indiana law would provide the applicable statute of limitations because statutes of limitations are procedural matters governed by the law of the forum.
The court rejected Asset Acceptance’s argument that the applicable limitations period was that governing “[a]n action upon promissory notes, bills of exchange, or other written contracts for the payment of money . . . .” Ind. Code § 34-11-2-9.. The court reasoned that although Smither had entered into a written credit agreement with Providian, that written credit agreement did not form the basis for Asset Acceptance’s cause of action. Rather, credit card transactions are like an “open account,” and the statute of limitations on such accounts “commences from the date the account is due.” Since the balance Asset Acceptance sought to recover became due in March 2000, its suit in May 2006 was untimely.
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