Court Opinion

ID: 4350442
Source: CourtListenerOpinion
Date Created: 2018-12-13 21:08:52.569475+00
Date Added: 2024-06-11T13:33:34.982500
License: Public Domain

The summaries of the Colorado Court of Appeals published opinions
  constitute no part of the opinion of the division but have been prepared by
  the division for the convenience of the reader. The summaries may not be
    cited or relied upon as they are not the official language of the division.
  Any discrepancy between the language in the summary and in the opinion
           should be resolved in favor of the language in the opinion.

                                                                 SUMMARY
                                                          December 13, 2018

                               2018COA174

No. 17CA0156, Bank of New York v. Peterson — Creditors and
Debtors — Foreclosures — Forcible Entry and Detainer;
Limitation of Actions — When a Cause of Action Accrues

     Defendants-Appellants assert that the 2015 foreclosure and

the resulting judgment of possession cannot be legally enforced

because the six-year statute of limitations (for an action for default

on a promissory note) had already expired. In particular, they claim

that Bank of New York Mellon, formerly known as Bank of New York

(the Bank), triggered the statute of limitations in 2008 when it

accelerated the obligation on the note.

     The Bank admits that it accelerated the note in 2008 by

initiating foreclosure proceedings but argues that it abandoned the

acceleration in 2010 by withdrawing the foreclosure and providing

defendants-appellants another opportunity to cure the default. The
Bank asserts that the abandonment restored the note’s original

maturity date for purposes of accrual. A division of the court of

appeals agrees and therefore affirms.
COLORADO COURT OF APPEALS                                    2018COA174

Court of Appeals No. 17CA0156
Archuleta County District Court No. 15CV10
Honorable Gregory G. Lyman, Judge

Bank of New York Mellon, f/k/a Bank of New York, as Trustee, on behalf of the
Holders of the Alternative Loan Trust 2007-16CB Mortgage Pass Through
Certificates, Series 2007-16-CB, its Successors and Assigns,

Plaintiff-Appellee,

v.

Timothy Peterson and Dyan Frances Parker,

Defendants-Appellants.

                            JUDGMENT AFFIRMED

                                  Division V
                      Opinion by JUDGE LICHTENSTEIN
                       Román and Furman, JJ., concur

                         Announced December 13, 2018

Akerman, LLP, Justin D. Balser, Taylor T. Haywood, Denver, Colorado, for
Plaintiff-Appellee

Blair K. Drazic, Loma, Colorado, for Defendants-Appellants
¶1    Plaintiff-Appellee, Bank of New York Mellon, formerly known

 as Bank of New York (the Bank), filed an unlawful detainer action

 after acquiring title to a house through foreclosure. Defendants-

 Appellants, Timothy Peterson and Dyan Frances Parker, appeal the

 district court’s judgment granting the Bank possession.

¶2    Peterson and Parker assert that the 2015 foreclosure and the

 resulting judgment of possession cannot be legally enforced because

 the six-year statute of limitations (for an action for default on a

 promissory note) had already expired.1 In particular, they claim

 that the Bank triggered the statute of limitations in 2008 when it

 accelerated the obligation on the note.

¶3    The Bank admits that it accelerated the note in 2008 by

 initiating foreclosure proceedings, but it argues that it abandoned

 the acceleration in 2010 by withdrawing the foreclosure and

 providing Peterson’s son (the borrower) another opportunity to cure

 the default. The Bank asserts that the abandonment restored the

 note’s original maturity date for purposes of accrual. We agree with

 the Bank and, therefore, we affirm.

 1 We do not address the propriety of challenging an underlying
 foreclosure in a subsequent forcible entry and detainer action.

                                    1
                           I.   Background

¶4    On May 14, 2007, the borrower obtained a $261,000 loan

 evidenced by a promissory note for a house in Archuleta County,

 Colorado. The promissory note required monthly payments through

 June 1, 2037, and contained an optional acceleration clause. The

 borrower secured the loan with a deed of trust on the property, and

 the Bank was the holder of the note and deed of trust. Peterson is

 the borrower’s attorney-in-fact.

¶5    The borrower soon thereafter stopped making payments. On

 October 17, 2007, he received a letter from the Bank titled “NOTICE

 OF DEFAULT AND ACCELERATION.”2 The letter provided that the

 borrower had the “right to cure the default,” but that if he did not

 cure by November 16, 2007,

           the mortgage payments will be accelerated
           with the full amount remaining accelerated
           and becoming due and payable in full, and
           foreclosure proceedings will be initiated at that
           time.

 (Emphasis in original.)

 2The letter was sent by mortgage servicer, Countrywide Home
 Loans, on behalf of the Bank (the holder of the promissory note).

                                    2
¶6    The borrower received another letter, this time demanding that

 he cure the default by December 16, 2007. The borrower did not

 respond to either letter.

¶7    The Bank did not take any action on the default until October

 2008. Meanwhile, the borrower and his father, Peterson, executed

 an “Option to Purchase” agreement stating that Peterson would

 make the monthly payments due on the note. The agreement

 purported to grant Peterson “full power of attorney,” including

 “negotiating refinancing, payment plans, financial, and all legal

 issues” for the property.

¶8    After executing the agreement, Peterson and Parker began

 occupying the property.

¶9    Then, in October 2008, the Bank initiated foreclosure

 proceedings (the 2008 foreclosure). On December 5, 2008, the

 Bank moved for a court order authorizing the sale of the property

 pursuant to C.R.C.P. 120. But later that month, the Bank

 approved the borrower’s request for a loan modification, whereby

 the borrower would owe a $2017.97 monthly payment. That same

 month, Peterson remitted a $2017.97 check on the borrower’s

                                   3
  behalf. But neither Peterson nor the borrower made any more

  payments.

¶ 10   Even so, on March 26, 2010, the Bank withdrew the 2008

  foreclosure. It subsequently sent the borrower a new acceleration

  warning letter providing him another opportunity to cure the

  default.

¶ 11   Nearly five years later, in January 2015, the Bank initiated

  and pursued foreclosure proceedings (the January 2015

  foreclosure) and the district court authorized the property’s sale.3

  The Bank purchased the property in the foreclosure sale.

¶ 12   Two months later, the Bank commenced the present action to

  acquire possession and evict Peterson and Parker from the

  property.

¶ 13   Peterson and Parker filed an answer and affirmative defense

  and counterclaims. They asserted that they had superior title to

  the property, contending that the statute of limitations expired

  3 On appeal, the Bank filed a motion requesting this court to take
  judicial notice of a 2008 notice of election and demand for sale, the
  2010 withdrawal of this notice, and a 2015 notice of election and
  demand for sale—all of which were recorded with the Archuleta
  County Clerk and Recorder. We take judicial notice of the fact that
  these documents were recorded. See Doyle v. People, 2015 CO 10, ¶
  8.

                                    4
  before the January 2015 foreclosure. They argued that the Bank

  accelerated the loan in 2008, which triggered the six-year statute of

  limitations, and, thus, the January 2015 foreclosure was void. They

  moved to preliminarily enjoin the Bank from expelling them.

¶ 14   The Bank moved to dismiss the counterclaims pursuant to

  C.R.C.P. 12(b)(5). The Bank argued that it did not accelerate the

  loan in 2008.4 But even if it did, it argued its withdrawal of the

  foreclosure in 2010 abandoned any prior acceleration. Either way,

  it contended that the six-year limitations period had not expired by

  the time of the January 2015 foreclosure.

¶ 15   The district court agreed with the Bank and concluded as

  follows:

              The Bank “ma[de] a persuasive argument” that the

               documents it filed and sent to the borrower did not

               accelerate the loan.

              Even if the loan was accelerated prior to January 8,

               2009, the acceleration was abandoned when the Bank

               withdrew the 2008 foreclosure.

  4On appeal, the Bank now admits that it accelerated the loan in
  2008.

                                      5
¶ 16   The court concluded that the foreclosure was conducted

  lawfully and the Bank had the “superior right to possession of the

  Property.” It ordered Peterson and Parker to vacate, but stayed the

  order conditioned on monthly payments of $1000 into the court

  registry. The court subsequently entered judgment for the Bank on

  its claim and on the defendants’ counterclaims. It awarded the

  Bank $45,624.40 in attorney fees and costs.

¶ 17   Peterson and Parker now appeal the judgment and the

  attorney fee and cost award.

                              II.   Standing

¶ 18   Because Peterson and Parker assert a possessory interest in

  the property that secured the note, we conclude they have standing

  in the current action.

¶ 19   Traditional standing principles do not apply to defendants who

  raise an affirmative defense in response to a complaint as there is

  little concern that defendants will advance claims in which they

  have no stake. Mortg. Invs. Corp. v. Battle Mountain Corp., 70 P.3d

  1176, 1182, 1182 n.7 (Colo. 2003). Indeed, “a defendant may

  assert an affirmative defense in response to a complaint, which

  asserts that the defendant has an interest in the action.” Id.

                                     6
  (emphasis added); see also Sandstrom v. Solen, 2016 COA 29, ¶¶

  14-20 (if a party’s claim to a parcel of land injures a defendant’s

  claim to that same property, the defendant has established an

  injury-in-fact to a legally protected interest).

       III.     Statute of Limitations and the January 2015 Foreclosure

¶ 20      Peterson and Parker argue that the 2015 foreclosure was

  barred by the six-year statute of limitations. They contend that the

  statute was triggered in 2008 when the Bank accelerated the loan.

¶ 21      The Bank now admits that it accelerated the loan in 2008,5

  but argues that it abandoned the acceleration in 2010, thereby

  restoring the note’s original maturity date for purposes of accrual.

  We agree with the Bank, and therefore conclude its 2015

  foreclosure was timely.

                              A.   Standard of Review

¶ 22          “Whether a statute of limitations bars a particular claim is a

  question of fact.” Trigg v. State Farm Mut. Auto. Ins., 129 P.3d

  5 The Bank concedes it accelerated the loan in October 2008 when
  it initiated foreclosure proceedings by “deliver[ing] its first notice of
  election and demand to the public trustee.” See Hassler v. Account
  Brokers of Larimer Cty., Inc., 2012 CO 24, ¶ 22 (holding that
  acceleration requires a clear, unequivocal act evincing an intent to
  invoke the creditor’s contractual option to accelerate).

                                          7
  1099, 1101 (Colo. App. 2005). “However, if undisputed facts

  demonstrate that the plaintiff had the requisite information as of a

  particular date, then the issue of whether the statute of limitations

  bars a particular claim may be decided as a matter of law.” Id.

                           B.    Relevant Law

¶ 23   There is a six-year statute of limitations for the recovery of a

  debt under a security agreement. §§ 13-80-103.5(1)(a), -108(4),

  C.R.S. 2018; Hassler v. Account Brokers of Larimer Cty., Inc., 2012

  CO 24, ¶¶ 13-15. The statute is triggered whenever the debt

  “becomes due” by the terms of the agreement. See Hassler, ¶ 22.

¶ 24   As pertinent here, the statute is triggered on the day after the

  date of maturity of a promissory note. Rossi v. Osage Highland

  Dev., LLC, 219 P.3d 319, 321 (Colo. App. 2009) (citing Nagy v.

  Landau, 807 P.2d 1227, 1228-29 (Colo. App. 1990)).

¶ 25   However,

            if an obligation that is to be repaid in
            installments is accelerated either automatically
            by the terms of the agreement or by the
            election of the creditor pursuant to an optional
            acceleration clause — the entire remaining
            balance of the loan becomes due immediately
            and the statute of limitations is triggered for all
            installments that had not previously become
            due.

                                     8
  Hassler, ¶ 22 (emphasis added); see also § 4-3-118(a), C.R.S. 2018

  (If a due date is accelerated, an action must be brought “within six

  years after the accelerated due date.”).

¶ 26    Once the statute of limitations has expired, any lien created by

  the instrument is extinguished. § 38-39-207, C.R.S. 2018; see

  Rossi, 219 P.3d at 322 (“By its plain terms, this statute does not

  merely affect a creditor’s ability to enforce a lien. It destroys the

  lien.”).

                            C.   Abandonment

¶ 27    Several jurisdictions recognize that a lender may abandon the

  acceleration of a note, which has the effect of restoring the note’s

  original maturity date for purposes of accrual. See, e.g., Boren v.

  U.S. Nat’l Bank Ass’n, 807 F.3d 99, 1104 (5th Cir. 2015).

¶ 28    Peterson and Parker argue that Colorado law does not

  recognize “abandonment” of an acceleration. They rely on language

  in Hassler that states that “the creditor’s course of conduct

  following acceleration is irrelevant.” ¶ 36. But this language is

  taken out of context.

¶ 29    The issue in Hassler was whether a creditor bank sufficiently

  manifested its intent to invoke an acceleration of a car loan, given

                                      9
  that a “clear, unequivocal act is necessary to invoke an optional

  acceleration clause.” Id. at ¶ 25.

¶ 30   There, the creditor bank repossessed a car and sent the debtor

  a letter demanding that he repay the entirety of his debt. Id. at ¶ 5.

  But it was still sending the debtor monthly billing statements for

  the loan. Hassler held that because there was “some act of the

  creditor [that] amounted to a clear manifestation of its intent to

  accelerate,” this “conduct following acceleration is irrelevant,”

  because:

             [F]ollowing repossession and receipt of the
             repossession letter, [the debtor] was on notice
             that he could only retake possession by
             repaying the entire amount owed on the loan.
             Any contradictory action that [the creditor
             bank] may have later taken was insufficient to
             un-ring this bell.

  Id. at ¶ 36.

¶ 31   Thus, the language cited by Peterson and Parker was limited

  by its context; it applied only to the determination whether a

  creditor bank’s invocation of an acceleration clause was

  unequivocal.

¶ 32   In fact, no Colorado case has directly addressed whether a

  creditor may subsequently abandon its acceleration of a loan.

                                       10
  Because Colorado has not yet had the opportunity to address the

  issue of abandonment, we will do so here.

¶ 33   Other jurisdictions have recognized that lenders may abandon

  the right to accelerate a note after it has already exercised its option

  to accelerate. See Boren, 807 F.3d at 1104; Paggen v. Bank of Am.,

  N.A., No. 17-CV-012410RBJ, 2018 WL 4075881, at *5 (D. Colo.

  Aug. 27, 2018) (citing cases); Mitchell v. Fed. Land Bank, 174

  S.W.2d 671, 676 (Ark. 1943).

¶ 34   The concept of abandonment is based on the principle of

  waiver. Boren, 807 F.3d at 1105. Waiver is the intentional

  relinquishment of a known right or privilege. Dep’t of Health v.

  Donahue, 690 P.2d 243, 247 (Colo. 1984). Thus, to abandon (or

  waive) an acceleration, a lender must manifest its intent to abandon

  acceleration by a clear affirmative act. See, e.g., Boren, 807 F.3d at

  104-06.

¶ 35    The acceleration of a note can be abandoned “by agreement or

  other action of the parties.” Id. (holding that a lender abandoned

  acceleration by sending notice to the borrower that the lender is no

  longer seeking to collect the full balance of the loan and will permit

  the borrower to cure its default); Bartram v. U.S. Bank Nat’l Ass'n,

                                     11
  211 So. 3d 1009, 1021 (Fla. 2016) (stating that “the dismissal of the

  foreclosure action had the effect of revoking the acceleration”);

  Andra R Miller Designs v. US Bank NA, 418 P.3d 1038 (Ariz. Ct. App.

  2018) (holding that a creditor’s recorded cancellation of the

  trustee’s sale was an affirmative act sufficient to revoke an

  acceleration); see also Paggen, 2018 WL 4075881, at *5 (citing

  cases); Deutsche Bank Nat’l Tr. Co. Ams. v. Bernal, 59 N.Y.S.3d 267,

  273 (N.Y. Sup. Ct. 2017).

¶ 36   The great weight of authority recognizes this right of

  abandonment. And because our supreme court already recognizes

  that the doctrine of waiver applies to acceleration, see, e.g.,

  Goodwin v. Dist. Court, 779 P.2d 837, 843-44 (Colo. 1989), we

  conclude that, in Colorado, a lender may abandon the acceleration

  of a note.

¶ 37   Here, the Bank abandoned its previous acceleration of a loan

  by not only withdrawing the foreclosure but also by communicating

  its abandonment to the borrower. Indeed, the borrower and the

  Bank negotiated a loan modification after the Bank sent the

  borrower a new acceleration warning letter providing him another

  opportunity to cure the default.

                                     12
¶ 38   On this record, we conclude that the district court correctly

  determined that acceleration was abandoned.

¶ 39   As pertinent here, abandonment restores the note’s original

  maturity date for purposes of accrual of the statute of limitations.

  See Boren, 807 F.3d at 104; Mitchell, 174 S.W.2d at 676-77 (holding

  that the bank had the right, by its unilateral act, to waive its

  acceleration and restore all the terms of the mortgages as originally

  executed).

¶ 40   Thus, when the Bank abandoned its acceleration of the loan

  prior to the January 2015 foreclosure, the loan was restored to its

  original nature as an installment loan with a maturity date of June

  1, 2037. Accordingly, we conclude the limitations period had not

  expired when the Bank foreclosed on the property.

¶ 41   Because of our resolution above, we need not address the

  Bank’s alternative arguments in support of the timeliness of the

  January 2015 foreclosure.

                      IV.   Attorney Fees and Costs

¶ 42   After granting the Bank possession of the property, the district

  court awarded attorney fees to the Bank pursuant to section 13-40-

  123, C.R.S. 2018. The statute provides for an award of attorney

                                    13
  fees and costs to the prevailing party in a forcible entry and

  detainer action. Because the Bank was the prevailing party, we

  decline to disturb the award.

                            V.    Conclusion

¶ 43   We affirm the judgment and the award of attorney fees.

       JUDGE ROMÁN and JUDGE FURMAN concur.

                                    14