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Any Arizona caselaw defining when a cause of action begins on CC debts?


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Here:

Statute of Limitations

A ) General. Unless otherwise noted, all claims must be brought within four (4) years of when the cause of action accrues. A.R.S. § 12-550 (2008).

B ) Oral contracts. No statute specifically addresses the statute of limitations for all oral contracts. However, A.R.S. § 12-543 (2008) provides that the statute of limitations for debts from oral contracts between merchants and their creditors is three years.

C ) Written contracts. A.R.S. § 12-548 (2008) determines actions arising out of a written contract must commence within six (6) years after the cause of action accrued. However, insurance contract clauses specifying a different time by which an action must commence are enforceable so long as they allow at least a one-year statute of limitations for property and marine actions and two years for all other actions. A.R.S. § 20-1115(A)(3) (2008); Nangle v. Farmers Ins. Co. of Arizona, 205 Ariz. 517, 519, 73 P.3d 1252, 1254 (App. 2003).

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Okay, let's try this:

Krumtum v. Burton

"The statute of limitations begins to run on an open account from the date of the last item, in the instant case 18 November 1965. Therefore the last item charged on the open account was more than three years before the action was commenced and the statute of limitations having been pled is a bar to the suit."

They defined the term "open account" using language from:

Connor Livestock Co. v. Fisher

"It is apparent that the services furnished by the plaintiff to the partnership were furnished on an open account as defined by this court. Connor Livestock Co. v. Fisher, supra."

And, for an appellate decision in Maricopa County, try:

DSS Financial Group LTD v. Deborah Walrod

Hope that helps shed some light.

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JDB says the clock starts at charge-off. I say it starts at default.

I'd apprecate anything either way, but of course would like some in my favor. :=)

 

Generally, a cause of action accrues when the contract is breached. A.R.S. § 47-2725(c ). When an installment contract contains an optional acceleration clause, though, an action as to future installments does not accrue until the holder exercises the option to accelerate. See Navy Fed. Credit Union v. Jones, 187 Ariz. 493, 495, 930 P.2d 1007, 1009 (App.1996) (claim for balance due accrues when creditor exercises optional acceleration clause, not when first payment is missed); Wheel Estate Corp. v. Webb, 139 Ariz. 506, 508, 679 P.2d 529, 531 (App.1983) (cause of action accrues when holder exercises option to accelerate). Baseline Financial Services v. Madison, 278 P.2d 321 (Ariz. Ct. App. 2012)(emphasis added)

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@hotwheels I kept turning up Krumtum in my searches and it seems to be the best thing out there. The problems are "open account" and "last item". Open account is not settled, even on this board. Walrod does help support my theory, and I am in Maricopa JC so that's a plus, but I the Plaintiff is arguing this is a written contract. Krumtum was a two-party credit account. The credit was extended directly by a vendor/merchant to a buyer. It seems like this and the fact there is a written contract would be the sticking points for rejecting the "open account" theory in the trial courts. Then there is "last item". In Krumtum it was the date that merchandise was last provided on credit, so on a credit card, this moves the cause of action back to the last purchase made. I'm ok making that argument, but this to me is the not the same thing as "default".

@nascar From what I can tell, It looks like CC companies don't accelerate until charge-off, but I don't see how it could be argued that CCs are installment account. Am I on the right track?

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@nascar From what I can tell, It looks like CC companies don't accelerate until charge-off, but I don't see how it could be argued that CCs are installment account. Am I on the right track?

 

Correct that they are not an installment account; no fixed payment for fixed time. The better argument here is to take the position that once an event takes place which permits the creditor to demand payment of the balance in full (i.e., one of the bazillion ways to "default" as stated in the card holder agreement), the statute of limitations begins to tick off.

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@Harry Seaward

As a general matter, a cause of action accrues, and the statute of limitations commences, when one party is able to sue another. Sato v. Van Denburgh, 123 Ariz. 225, 227, 599 P.2d 181, 183 (1979); Norton v. Steinfeld, 36 Ariz. 536, 544, 288 P. 3, 5 (1930).

"Arizona has long followed the rule that the cause of action accrues when the plaintiff knows, or in the exercise of reasonable diligence should have known, of the defendant's negligent conduct, Morrison v. Acton, 68 Ariz. 27, 198 P.2d 590 (1948); Nielson v. Arizona Title Insurance and Trust Co., 15 Ariz. App. 29, 485 P.2d 853 (1971), or when the plaintiff is first able to sue. Cheatham v. Sahuaro Collection Service, Inc., 118 Ariz. 452, 577 P.2d 738 (App. 1978); Griesmer v. Griesmer, 116 Ariz. 512, 570 P.2d 199 (App. 1977)."

Beaudry Motor Co. v. New Pueblo Constructors, Inc., 128 Ariz. 481, 482-83, 626 P.2d 1113, 1114-15 (App. 1981) (breach of contract occurred and claim accrued when contractor abandoned repair of a leaking roof); Cheatham v. Sahuaro Collection Serv., Inc., 118 Ariz. 452, 454, 577 P.2d 738, 740 (App. 1978) (breach of contract occurred and claim accrued when debtor failed to pay on the date specified in a promissory note).

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I see no evidence that Arizona follows something other than the rule at common law: the SOL accrues when the debtor first defaults. There is no case law suggesting it should accrue only when a creditor opts to charge off a debt. "A party's failure to assert a cause of action does not mean that the cause of action has not accrued." Cheatham v. Sahuaro Collection Service, Inc., 118 Ariz. 452, 454, 577 P.2d 738, 740 (Ct. App. 1978).

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@nascar

Generally, a cause of action accrues when the contract is breached. A.R.S. § 47-2725(c ). When an installment contract contains an optional acceleration clause, though, an action as to future installments does not accrue until the holder exercises the option to accelerate. See Navy Fed. Credit Union v. Jones, 187 Ariz. 493, 495, 930 P.2d 1007, 1009 (App.1996) (claim for balance due accrues when creditor exercises optional acceleration clause, not when first payment is missed); Wheel Estate Corp. v. Webb, 139 Ariz. 506, 508, 679 P.2d 529, 531 (App.1983) (cause of action accrues when holder exercises option to accelerate). Baseline Financial Services v. Madison, 278 P.2d 321 (Ariz. Ct. App. 2012)(emphasis added)

I just had a chance to look into A.R.S. § 47-2725.  It's for UCC contracts for sale, and subsection A sets a 4-year statute of limitation.  I'm concerned about referencing this statute when I'm trying to argue a 3-year SOL from Delaware on a credit card debt.  Could I cite one subsection without calling the other subsections into action?

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@nascar

I just had a chance to look into A.R.S. § 47-2725.  It's for UCC contracts for sale, and subsection A sets a 4-year statute of limitation.  I'm concerned about referencing this statute when I'm trying to argue a 3-year SOL from Delaware on a credit card debt.  Could I cite one subsection without calling the other subsections into action?

 

 

@Harry Seaward, your initial question dealt with "when does a cause of action accrue," now it appears to be, what statute of limitations applies. You indicate you're "trying to argue" a 3-year SOL from Delaware. Have you been sued, or are you merely wasting your time arguing with a debt collector? 

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@nascar

@Harry Seaward, your initial question dealt with "when does a cause of action accrue," now it appears to be, what statute of limitations applies. You indicate you're "trying to argue" a 3-year SOL from Delaware. Have you been sued, or are you merely wasting your time arguing with a debt collector?

My question was actually specific to cause of action on credit cards per the thread title.

I have been sued and am preparing a response to a MSJ. The UCC statue confused me because it seemed to not govern credit cards.

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@hotwheels

It's not enough to have a governing law that changes the SOL in the underlying contract. Your state must also allow for borrowing of that lesser SOL.

I was not aware of this so this helps clear up some of the confusion. What seems strange is if there is a contract, it should be implied that the parties agree on a choice of law. Why would a court rule against that?

Edit: we've veered off topic so it's mostly a rhetorical question.

I think about things a lot and these questions go through my mind. I'm sorry if it comes across like I'm being argumentative. I really just want to understand how it all works and you guys are the experts so I'm hoping you can explain it.

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Plus, as far as I'm aware, Arizona does NOT have a borrowing statute.

Can anybody comment on this?

 

I also have a question about ARS 12-548:

 

12-548. Contract in writing for debt; six year limitation; choice of law

A. An action for debt shall be commenced and prosecuted within six years after the cause of action accrues, and not afterward, if the indebtedness is evidenced by or founded on either of the following:

 

1. A contract in writing that is executed in this state.

 

2. A credit card as defined in section 13-2101, paragraph 3, subdivision (a).

B. If there is a conflict between another jurisdiction and this state relating to the statute of limitations for a debt action as described in subsection A of this section, this section applies.

 

What happens when the contract in question is executed in OTHER STATE, like Florida, where SOL for written contracts is 5 years ?

 

How the "Choice of Law", "Forum Shopping" and "Borrowing Statute"  would work in this scenario ?

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I also have a question about ARS 12-548: 12-548. Contract in writing for debt; six year limitation; choice of lawA. An action for debt shall be commenced and prosecuted within six years after the cause of action accrues, and not afterward, if the indebtedness is evidenced by or founded on either of the following: 1. A contract in writing that is executed in this state. 2. A credit card as defined in section 13-2101, paragraph 3, subdivision (a).B. If there is a conflict between another jurisdiction and this state relating to the statute of limitations for a debt action as described in subsection A of this section, this section applies. What happens when the contract in question is executed in OTHER STATE, like Florida, where SOL for written contracts is 5 years ? How the "Choice of Law", "Forum Shopping" and "Borrowing Statute"  would work in this scenario ?

Not sure if this is what you're asking...

ARS 12-506

Action barred by foreign statute of limitation, bankruptcy or insolvency

A. No action shall be maintained against a person removing to this state from another state or foreign country to recover upon an action which was barred by the law of limitations of the state or country from which he migrated.

B. No action shall be brought to recover money from an immigrant who was released from its payment by the bankruptcy or insolvency laws of the state or country from which he migrated.

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Can ARS 12-506 be used to dismiss a case. I seem to have the same issue.

 

Had credit card that was signed in California 2004, moved to Arizona 2007, and then moved to Florida where the account went default March 2008. Since then moved again to Texas 2009 and now living back in Arizona 2011to present. My argument is that Arizona has no jurisdiction in the case because the contract was not signed in Arizona but in California and the account went default in Florida. In both instances the Statute of Limitations has expired.

 

Being also that they have no written contract with signature in their possession then the unwritten contract rule would apply where the statute of limitations has expired also. 

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