Andy Simmons

Cap One v. Gregorich

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In Capital One v. Gregorich, a Florida small claims court case, a defendant beat Cap One on a statute of limitations defense, even though the lawsuit was filed within the deadline under Florida's statute of limitations.

The defendant argued that Virgnia's shorter three year statute of limitations should apply and if so, the case was time-barred. The defendant pointed to Cap One's own contract, which said that Virginia and Federal law applied. This kind of contract provision is called "choice of law." The defendant argued that Under Cap One's contract, the court should apply Virginia law, including its statute of limitations.

The court explained that a choice of law provision applies only to the substantive law of a state. A court that is hearing the lawsuit will still apply the procedural laws of the state where the court is located.

(Most states consider the statute of limitations to be a procedural law, not substantive. Thus, in most cases, a statute of limitations on a debt or a contract is going to be governed by the state where the lawsuit is filed, and not the state whose substantive law is chosen by the choice of law provision in the contract.)

In this case, the court observed that Florida considers all statutes of limitations to be substantive law. Therefore, under the choice of law provision, Virginia's three year statute of limitations is substantive law and would apply. Therefore, it dismissed the case because it was filed more than three years after the default on the credit card.

This case has caused some excitement in this forum and is being cited as precedent to be used in all Cap One cases, but I am afraid the outcome might be different in many other states. Before you rely upon this case, you need to determine whether the state where you are being sued considers statute of limitations to be procedural or substantive. Unless the state where you are being sued considers the statute of limitations to be substantive law, as Florida did, you are not going to be able to get the court to apply Virginia's 3 year statute of limitations in place of a longer statute of limitations in your home state.

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Andy,

Thank you for taking the time to explain this nuance to us here at CIC.

I have a question regarding substantive vs. procedural law.

How would one determine if one's own state considers a certain law one or the other?

Edit

From how I understand it, the cake could be sliced either way. SOL could be considered substantive in that it is what grants the creditor the right to file suit. It could also be considered procedural in that it is through the SOL that the action becomes enforceable.

Gotta love legal paradox...

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Where can you find if your state view there law as substantive or procedural on sol? I am in Georgia and I used the applicable law that cap 1 listed on there contract and the judge denied my msj. He state it was not in the proper form in order to make a ruling on the sol and it is set for the next schedule calendar non jury trial.

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In most instances, a statute of limitations (SOL) is just a procedural law. The creditor's right to sue the debtor does not arise out of the statute of limitations, contrary to your suggestion. The right to sue for a debt arises out of common law or some codification of common law. The SOL is traditionally viewed as just a procedural limit on how much time you have to bring the suit.

Now, there are some causes of action that are created by a statute (by an act of the legislature) and which did not exist under common law. If those same statutes that create the cause of action also contain within the statute a SOL for that cause of action, then that SOL is probably going to be considered substantive. Then, it is not just a procedural limit, but rather, is part of the law that granted the right in the first place.

That is not the case on credit card debt.

Now, apparently, some states like Florida have decided that all statutes of limitation are substantive law. I don't know Florida law and so I don't know what to make of that.

To answer the question of how you would find out what your own state law says about substantive versus procedural, you are going to have to do some legal research or consult an attorney. I don't know of any handy website that spells it out, state by state.

Choice of law is an entire separate legal subject, can be very complex, and is often not well understood by the average lawyer and even some judges.

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I am guessing in Ohio because of the link below you can argue choice of law if being sued by Capital One

http://codes.ohio.gov/orc/1304.85

Correct me if I am wrong

You posted a link to chapter 4 of the Uniform Commercial Code, as adopted under Ohio law. That pertains only to banking law. It does not apply to credit cards.

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Now, apparently, some states like Florida have decided that all statutes of limitation are substantive law.

I don't quite read that with the same certainty as some of you guys seem to.

I've read the cases this judge relied on in making this decision and I'm not so sure that this argument would have much influence outside the borders of Dade County. Then again, maybe so ... but I'm not quite ready to cite a Florida small claims case in another jurisdiction.

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You posted a link to chapter 4 of the Uniform Commercial Code, as adopted under Ohio law. That pertains only to banking law. It does not apply to credit cards.

It said Bank Law and Collections.

Cap One is trying to collect and is a Bank and payments to them are in their capacity as a bank.

How is banking law different from Credit Card law if the bank is the one trying to collect?

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Here's what I've been able to find under TN Code

47-4-111. Statute of limitations. —

An action to enforce an obligation, duty, or right arising under this chapter must be commenced within three (3) years after the cause of action accrues.

[Acts 1995, ch. 397, § 3.]

But here we get:

28-3-109. Rent — Official misconduct — Contracts not otherwise covered — Title insurance — Demand notes. —

(a) The following actions shall be commenced within six (6) years after the cause of action accrued:

(1) Actions for the use and occupation of land and for rent;

(2) Actions against the sureties of guardians, executors and administrators, sheriffs, clerks, and other public officers, for nonfeasance, misfeasance, and malfeasance in office; and

(3) Actions on contracts not otherwise expressly provided for.

(B) The cause of action on title insurance policies, guaranteeing title to real estate, shall accrue on the date the loss or damage insured or guaranteed against is sustained.

But this is what it says about foreign statutes:

28-1-112. Application of foreign statutes. —

Where the statute of limitations of another state or government has created a bar to an action upon a cause accruing therein, while the party to be charged was a resident in such state or such government, the bar is equally effectual in this state.

[Code 1858, § 2783; Shan., § 4480; Code 1932, § 8607; T.C.A. (orig. ed.), § 28-114.]

At this point I guess it depends on whether or not such provisions would be applicable due to the choice of law provision governing the contract.

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