Elimination of Statute of Limitations Is Not Due Process Violation

The abrogation of the six-year statute of limitations on government actions to collect student loan debts paid by loan guaranty agency was not a due process violation. United States v. Falcon, No. 13-16588 (9th Cir. Nov. 9, 2015) (per curiam).

Mark Falcon obtained $47,900 in Stafford Loans during the years 1983 to 1991. In October of 1990, Falcon obtained a guaranteed loan from the Higher Education Loan Plan (HELP) in the amount of $4,000. The loans were guaranteed by a guaranty agency which was reinsured by the U.S. Department of Education (DOE). Between 1993 and 1997 Mr. Falcon defaulted on the loans. The guaranty agency paid the lenders and was reimbursed by the DOE. In May, 2005, the rights and title to Mr. Falcon’s unpaid loans were assigned to the DOE. In January, 2011, the DOE sued Mr. Falcon in district court for the unpaid loans plus interest. The court found in favor of the DOE and denied the debtor’s motion for reconsideration.

On appeal, Mr. Falcon challenged the constitutionality of the Higher Education Technical Amendments of 1991 (HETA) which eliminated all statutes of limitations on actions to recover on defaulted federally guaranteed student loans. 20 U.S.C. § 1091a(a)(2). He argued that the elimination of the six-year statute of limitations violates due process by creating eternal indebtedness for a class of borrowers. Mr. Falcon pointed to language in Chase Securities Corp. v. Donaldson, 325 U.S. 304 (1945), for support. In that case, the Court rejected the notion that applying legislative action eliminating a statute of limitations during the pendency of an action violated due process. In so holding the Court found that the change in the limitations period did not work “special hardships” on the defendant because his “conduct would [not] have been different if the present rule had been known and the change foreseen.”

Mr. Falcon argued that the “special hardships” language in Chase Securities leaves open the possibility that if abrogation of a statute of limitations causes “special hardships or oppressive effects” it may be unconstitutional notwithstanding cases finding no due process violation even where abrogation of a statute of limitations has revived a previously precluded action.

The Ninth Circuit disagreed. It noted that elimination of a statute of limitations has historically been upheld against constitutional challenge. Citing Campbell v. Holt, 115 U.S. 620, 629–30 (1885); In re Lewis, 506 F.3d 927, 932–33 (9th Cir. 2007); United States v. Distefano, 279 F.3d 1241, 1244 (10th Cir. 2002); United States v. Hodges, 999 F.2d 341, 342 (8th Cir. 1993). The circumstances of this case presented no cause for diverging from that trend. Having found no due process violation by reason of the elimination of the statute of limitations the court went on to find that Mr. Falcon had not presented any evidence to counter the government’s claim that he was indebted to it on the loans. [It did not help Mr. Falcon’s case that the timing of the government’s collection suit would have fallen within the six-year limitations period.]

Falcon 9th Cir opinion