Banking and Finance Law Daily Catch-all limitations period applies for SCRA action
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Monday, July 30, 2018

Catch-all limitations period applies for SCRA action

By Nicole D. Prysby, J.D.

The catch-all limitations period in 28 U.S.C. § 1658(a) applied to a consumer’s claim for damages under the Servicemembers Civil Relief Act, held the U.S. Court of Appeals for the Ninth Circuit. Six years after a foreclosure sale, the consumer brought an action under the SCRA, asserting that his property had been placed in foreclosure proceedings within nine months of his military service. The district court used a state consumer law limitations period of four years to determine that the claim was time-barred. The Ninth Circuit found that the district court had erred in looking to state law and that the four-year catch-all provision in 28 U.S.C. § 1658(a) applied, because the consumer’s claim was made possible by a post-1990 enactment. Although servicemembers had been protected against foreclosure for many years, there was no private right of action for damages until Congress added it in 2010. The court rejected the consumer’s argument that there was an implied private right of action before the 2010 amendment, because the methods used to enforce violations of the statute included equitable relief and criminal sanctions. Those methods precluded a finding that Congress intended to create a private right of action, and the court found no other evidence that such a right was intended by Congress (McGreevey v. PHH Mortgage Corporation, July 26, 2018, Antoon, J.).

Background. The consumer, a Marine, refinanced the mortgage on his house in Washington in 2006. In 2009, the mortgage company initiated foreclosure proceedings. Four months later, the consumer was recalled to active duty and served abroad for about one year. Following his release from the Marines, the consumer advised the mortgage company about his service and requested an opportunity to refinance his mortgage. The request was denied and a foreclosure sale took place. Six years after the sale, the consumer brought an action under the SCRA, asserting that his property was foreclosed upon within nine months of his military service, in violation of the statute. The district court found that the claim was time-barred, using what it found to be the closest state-law statute of limitations period: the Washington Consumer Protection Act (CPA), which has a four-year limitations period. The consumer appealed.

Appropriate statute of limitations. The consumer argued that rather than the CPA limitations period, the court should have used either the state breach of contract limitations period (six years) or should have looked to the Uniformed Services Employment and Reemployment Rights Act (USERRA), under which there would be no limitations period. The mortgage company argued that the SCRA claim was time-barred under the catchall four-year limitations period of 28 U.S.C. § 1658(a).

The court noted that if the consumer’s claim was made possible by a post-1990 enactment, the catch-all provision in 28 U.S.C. § 1658(a) would apply and there would be no need to look to state law. The mortgage company argued that the private right of action did not exist under the SCRA until 2010, thus the catch-all provision should apply. The court considered the SCRA and found that although servicemembers have been protected against foreclosure for decades, a private right of action did not exist until Congress added a section to the SCRA in the Veterans’ Benefits Act of 2010. The consumer argued that although there was no express right of action before 2010, there was an implied right. The court rejected that argument because the consumer presented no authority establishing a pre-2010 private right of action to pursue damages for a wrongful foreclosure under the SCRA or its predecessor, the Soldiers’ and Sailors’ Civil Relief Act (SSCRA), and the court found no such right to be implied, because there was no evidence that Congress intended to create a private right of action for damages, attorney’s fees, and costs within the pre-1990 SSCRA’s foreclosure protections. The methods used to enforce violations of the SSCRA included equitable relief and criminal sanctions and those methods precluded a finding that Congress intended to create a private right of action. Therefore, there was no private right of action for damages until the 2010 amendments to the SCRA, and the four-year catch-all limitations period applied and barred the consumer’s claim.

The case is No. 16-36045.

Attorneys: Sean J. Riddell (Law Office of Sean J. Riddell) for Jacob McGreevey. Jaime Ann Santos (Goodwin Procter LLP) for PHH Mortgage Corp.

Companies: PHH Mortgage Corp.; Northwest Trustee Services, Inc.

MainStory: TopStory EnforcementActions SCRA WashingtonNews

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