Pub. 3 2012 Issue 3

www.wvbankers.org 12 In a case that will have a significant impact on consumer litigation in West Virginia, the Fourth Circuit Court of Appeals upheld the dismissal of a purported class action based on illegal debt collection claims as time-barred. I n Delebreau v. Bayview Loan Servicing, LLC , the Court found that the one-year statute of limitations under the West Virginia Consumer Credit and Protec- tion Act (WVCCPA) begins to run on the date the loan is accelerated. The case is particularly important because the West Virginia Supreme Court of Appeals may now consider and adopt the analysis ap- plied by the federal court when it decides certified questions in a pending state case involving the identical issue. The circumstances giving rise to the Delebreau case date back to 1999. In December 1999, the borrowers refinanced their home mortgage by executing a note payable to the lender for the principal amount of the loan and a deed of trust securing the note on the property. The deed of trust gave the lender the option to ac- celerate the loan in the event of the borrowers’ default. In March, 2004, the borrowers began making late payments and continued making late payments for the next two years. Facing foreclosure in 2006, the borrowers entered into a loan modi- fication agreement with the lender which increased the principal amount of the loan and extended the loan maturity date to June 1, 2030. The following year, the borrowers again fell behind in their payments. The company servicing the loan sent the borrower a letter advising them that they were in default and exercising its right to accelerate the loan effec- tive June 5, 2007. The borrower did not pay. In 2009, while in bankruptcy proceedings, the borrowers filed a pur- ported class action lawsuit claiming that the lender improperly added fees to the borrower’s accounts in violation of the West Virginia Consumer Credit and Protection Act. The loan servicer challenged the claims as time-barred by the WVCCPA statute of limitations. Under Section 46A-5-101(1) of the WVCCPA, the statute of limitation is one year from “the due date of the last scheduled payment of the agreement.” Based on this statutory language, the District Court granted a motion for summary judgment, finding the borrowers’ claims were time-barred. The borrowers appealed the Court’s decision. The issue on appeal was whether “the due date of the last scheduled payment of the agreement” is the loan acceleration date or, as the borrower argued, one year after the maturity date of the loan (in this case, effectively, a 31-year statute of limitations). Under plaintiffs’ Fourth Circuit Court Gets It Right: Court Holds Claims Are Time-Barred Under the West Virginia Consumer Credit and Protection Act By Sandra M. Murphy, Bowles Rice McDavid Graff & Love LLP Q Fourth Circuit Court — continued on page 17