In Midland Funding LLC v. Thiel, involving three consolidated matters, the Appellate Division firmly announced that N.J.S.A. 12(a):2-725, with its four-year statute of limitation, rather than N.J.S.A. 2(a):14-1, with its six-year period, applies to a claim regarding a retail customer’s use of a store-issued credit card for purchases made at that store. The rule also applies if a third-party financial institution issues the card on behalf of the retailer. Furthermore, unless a plaintiff can demonstrate a “bona fide error,” the filing of a stale action is an automatic violation of the Fair Debt Collection Practice Act (FDCPA), 15 U.S.C.A. §§ 1692 to 1692(p), with its attendant award of attorney’s fees and statutory damages.

All three of these actions were filed more than four years after the first default of each defendant, but within six years of the contract statute of limitations. The Appellate Division—in finding the transaction was a sale of goods, with a four year statute of limitation—affirmed prior case law, published and unpublished, and noted that the “court must examine the whole transaction between the parties and look to the essence or main objective of the parties’ agreement.” A prior Supreme Court case, Sliger v. R.H. Macy & Co., had affirmed such a transaction as a sale of goods with the shorter statute of limitations. Financing by a third-party creditor did not change the nature of the transaction. The Appellate Division made short shrift of plaintiff’s argument that the consumer’s partial payments tolled the running of the statute of limitation, commenting that the cause of action accrued when the first breach occurred, and the creditor had the immediate right to sue.

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