Opinion ID: 609208
Heading Depth: 2
Heading Rank: 1

Heading: the limitations period

Text: 11 No federal statute imposes a limitations period specifically on actions for post-foreclosure deficiency judgments brought by the United States. Nor have the courts resolved what, if any, limitations period should apply. In the absence of a federal statute expressly imposing or adopting one, the United States is not bound by any limitations period. United States v. Summerlin, 310 U.S. 414, 416, 60 S.Ct. 1019, 1020, 84 L.Ed. 1283 (1939). When a statute does limit the time in which the government may bring a cause of action, moreover, the court strictly construes the statute in favor of the government. Badaracco v. Commissioner, 464 U.S. 386, 391, 104 S.Ct. 756, 760, 78 L.Ed.2d 549 (1984); Federal Deposit Ins. Corp. v. Former Officers & Directors of Metro Bank, 884 F.2d 1304, 1309 (9th Cir.1989), cert. denied sub nom., Lee v. F.D.I.C., 496 U.S. 936, 110 S.Ct. 3215, 110 L.Ed.2d 662 (1990). These rules protect public rights from injury or losses incurred through the negligence of public officers. Guaranty Trust Co. v. United States, 304 U.S. 126, 132, 58 S.Ct. 785, 788, 82 L.Ed. 1224 (1938) (citation omitted). 12 Federal law does, however, limit to six years after the right of action accrues the time in which the government may bring a suit for money damages founded on a contract. 28 U.S.C. § 2415(a) (1978 & Supp.1992). Actions brought by the United States to establish title to, or the right of possession of, real or personal property are exempt from the limitations period. Id. § 2415(c). In applying these provisions, the courts have drawn a distinction between actions for contract damages and actions to foreclose on mortgages and deeds of trust, holding that the power of sale contained in a mortgage or deed of trust survives regardless of whether the statute of limitations has extinguished the underlying obligation. United States v. Freidus, 769 F.Supp. 1266, 1273 (S.D.N.Y.1991). 1 We agree with the reasoning of these courts. The government's suit to foreclose on the deed of trust constituted an action to establish title to, or right of possession of, real or personal property. 28 U.S.C. § 2415(c); Curry, 679 F.Supp. at 969-71; accord Freidus, 769 F.Supp. at 1273; Copper, 709 F.Supp. at 908; Gerrard, 656 F.Supp. at 574. The foreclosure action itself was not subject to any limitations period. 13 This determination, however, does not resolve the question of whether a statute of limitations cuts off the time in which the United States may bring an action to recover a deficiency judgment following foreclosure on a deed of trust. The government asserts that the individual defendants' liability for the deficiency arises not from the promissory notes but, rather, from the deed of trust itself, which provides that in the event of a default the government has the right to bring an action to foreclose and obtain a deficiency judgment. Therefore, the government argues, because obtaining a deficiency judgment is an incident of foreclosure, and because foreclosure actions are not subject to a limitations period, no statute of limitations should apply. 14 We disagree with both the starting point and ending point of the government's argument. A deficiency following foreclosure is neither meaningful nor measurable without reference to the underlying debt. It is that obligation, arising from contract, that is being enforced when a deficiency judgment is obtained. We conclude, therefore, that a suit to recover a deficiency debt is an action for money damages founded upon a contract subject to the six-year limitations period provided in 28 U.S.C. § 2415(a).