Pennsylvania Appellate Court Rejects Claim That Dunning Letter Sent Post-Expiration of The Statute of Limitations Violated Law

On March 30, 2023, a three-judge panel of the Superior Court of Pennsylvania held in a precedential opinion that debt collectors can send collection letters to debtors after the expiration of the statute of limitations without violating federal or Pennsylvania law, so long as the debt collector does not file suit in court.

The panel rejected plaintiff Starleen Matteo’s appeal of an Erie County judge’s decision to sustain preliminary objections filed by defendant EOS USA, Inc. on the grounds that its dunning letter did not violate the Fair Debt Collection Practices Act (FDCPA) or the Pennsylvania Fair Credit Extension Uniformity Act (FCEUA).

Matteo claimed that the EOS letter was false, misleading, and deceptive because “it offered financial freedom even though such freedom had already been obtained by virtue of the statute of limitations” and because it stated that EOS “was there to ‘help’ and ‘assist’ the debtor,” but did not advise her that the statute of limitations had already expired on her past due Verizon bill.

The court disagreed, opining that the expiration of a statute of limitations does not invalidate a debt, but simply makes it legally unenforceable: “As long as the debt collector does not initiate or threaten legal action on a time-barred debt, it is permitted to seek voluntary repayment without advising that the statute of limitations has run.” 

The court also rejected Matteo’s argument that the letter constituted a settlement offer because the letter did not use the word “settle” or imply that it was referring to settlement of the debt.  However, the court reasoned, in dicta, that even if the letter had contained such language, “this, standing alone, would not render the letter false, deceptive or misleading because there is nothing improper about a settlement offer.”  To that end, the court concluded, “the phrases, ‘willingness to work with you’ and ‘discuss other options’ cannot reasonably be read to imply a threat of litigation.”

Finally, the court upheld the trial judge’s ruling that Matteo did not plead an “ascertainable loss” by receiving the letter, as required by the FDCPA and FCEUA.

The Matteo opinion is a welcome outcome for the industry in Pennsylvania, but is not likely to have seen its last day in the news: Matteo’s counsel told Law360 he will request rehearing en banc and, if that fails, appeal to the Supreme Court of Pennsylvania.

Read the opinion here