Court Opinion

ID: 5157017
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:24:14.387395+00
Date Added: 2024-06-11T08:25:24.812072
License: Public Domain

MARQUEZ, J.,
concurring in part and dissenting in part.
41 I agree with the majority that a party's cause of action on installment debt accrues on the date the debt "becomes due" under the parties' agreement, and not when the debt was liquidated or became determinable. See Maj. op. 44, 16-21; § 13-80-108(4), C.R.S. (2011) (stating that a cause of action on a "debt, obligation, money owed, or performance" shall "accrue on the date such debt, obligation, money owed, or performance becomes due"); see also § 4-3-118, C.R.S. (2011). I further agree that the debt for each installment becomes due when an installment payment is missed, unless the entire debt obligation is validly accelerated under the parties' agreement. Maj. op. 194, 22; see also § 4-8-118; Currigan v. Stone, 136 Colo. 326, 331, 817 P.2d 1044, 1047 (1957) (stating that causes of action accrue separately on the dates when each missed installment payment became due); In re Church, 833 P.2d 813, 815 (Colo.App.1992). Finally, I agree with the majority that to invoke an optional acceleration provision, a creditor must perform some clear, unequivocal affirmative act evidencing the creditor's intention to accelerate a debt. Maj. op. 1124-25; see also Padilla v. Ghuman, 183 P.3d 653, 659 (Colo.App.2007) ("Where an acceleration provision is exercisable at the option of the [creditor], the [creditor] must perform some clear, unequivocal affirmative act evidencing the [creditor's] intention to take advantage of the acceleration provision." (emphasis added)).
T 42 I write separately because I disagree with the majority's conclusion in Part IILB that, as a matter of law, Norlareo acted unequivocally to accelerate all future installment payments owed under the loan by (1) exercising its right as a secured party to repossess the car pursuant to Colorado's version of the Uniform Commercial Code {(U.0.C.), coupled with (2) sending notice to Hassler of its intent to dispose of the collateral, as required by section 4-9-614, C.R.S. (2011) of the U.C.C., using language adopted by the General Assembly as sufficient to inform a consumer debtor of the right to redeem collateral under section 4-9-6283, C.R.S. (2011). See Maj. op. 126. The majority's conclusion is unsupported by the parties' loan agreement, and ignores that a consumer loan and a lien give rise to distinct legal rights that can be enforced independently under separate statutory schemes. Even where, as here, an entity is both a creditor and a secured party in a particular transaction, the entity's mere exercise of its legal remedies under Article 9 of the U.C.C. as a secured party does not, without more, establish as a matter of law that it has simultaneously invoked an independent contractual right as a creditor to accelerate the debt in accordance with Colorado's Consumer Credit Code. Seq, eg., Rogers v. Assocs. Commercial Corp., 129 Ariz. 499, 632 P.2d 1002, 1003, 1007 (Ariz.Ct.App.1981).
T 43 I believe the relevant inquiry for determining whether Account Brokers' cause of action is time-barred is not whether Norlarco did or did not exercise its option to accelerate Hassler's debt, see Maj. op. 123, but rather, whether it did so on or before May 7, 2002 (or six years before it filed its claim in this case on May 7, 2008), and if not, whether Account Brokers' claim seeks to recover any unaccelerated debt that had "become due" on or before May 7, 2002. In my view, the record supports the district court's conclusion that Norlarco proceeded solely as a secured party under the U.C.C. and never exercised its right as a creditor to accelerate *559the loan. See Dist. Court Order ("Although the loan did have an acceleration clause that would have made the entire amount due on the date of default, Appellee Account Brokers' assignor Norlareo was acting in accordance with the Uniform Commercial Code, C.R.S. 4-9-601 et seq. when it mitigated its damages by disposing of the collateral in a 'commercially reasonable manner' and attempting to collect only the deficiency debt rather than the entire loan amount."). I further believe the record clearly establishes that Account Brokers' claim does not seek to recover any debt that had "become due" on or before May 7, 2002. Therefore, I would hold that Account Brokers' claim was timely filed.
1.
T44 The "Loanliner" open-end voucher and security agreement that Hassler entered into contained both loan and security interest provisions. Paragraph 10 of the agreement set forth the consequences of default. Specifically, this paragraph permitted Norlarco to accelerate all future installment payments owed under the loan without notice to Has-sler so long as Norlareo complied with applicable state law to cure:
When you are in default and after expiration of any right you have under applicable state law to cure your default, we can require immediate payment of your outstanding balance under the Plan without giving you advance notice.
(Emphasis added.) Under section 5-5-111(1), C.R.S. (2011), of Colorado's Consumer Credit Code, Norlareo could not accelerate the debt under this contractual provision until twenty days after giving Hassler a notice of the right to cure in section 5-5-110. Seetion 5-5-110 expressly requires such notice to conspicuously state the "name, address and telephone number of the creditor to which payment is to be made, a brief identification of the credit transaction, the right to cure the default, and the amount of payment and date by which payment must be made to cure the default." § 5-5-110(2), C.R.S. (2011) (emphasis added). The record here does not reflect that Norlareo ever sent Hassler such notice.
T45 Paragraph 10 also provided that if Hassler defaulted on the loan, Norlareo could take possession of the car, sell it, and then "apply the money [from the sale] to any amounts you owe us."1 Before disposing of the collateral, the U.C.C. required Norlarco to send Hassler a notice substantially similar to the one contained in section 4-9-614, informing him how to regain possession of the collateral (the "safe-harbor" notice). Upon sale of the collateral, the parties' agreement and section 4-9-615(a) of the U.C.C. required Norlareo to apply the sale proceeds to the amount Hassler owed Norlareo under the loan agreement.
'I 46 The district court concluded that Nor-lareo proceeded merely as a secured party by exercising its rights under the secured transaction provisions of the U.C.C. and did not accelerate the debt. The record supports this conclusion. Specifically, Norlareo repossessed the car pursuant to section 4-9-609. Then, in an undated letter that tracked virtually verbatim the safe-harbor notice provided in section 4-9-614, Norlarco informed Has-sler of his legal rights to redeem the repossessed collateral. See §§ 4-9-614, -623, C.R.S. (2011). Upon the sale of the car, the June 2002 month-end account statement re-fleets that, as required by the parties' agreement and section 4-9-615(a) of the U.C.C., Norlareo applied the sale proceeds to reduce the loan balance, which necessarily included the "delinquent amount" (e., the unpaid portion of the loan balance then delinquent) and the "repayment amount" (Le., the unpaid portion of the loan balance currently due but not yet delinquent).
47 The majority nevertheless interprets Norlarco's efforts to exercise its remedies under the U.C.C.-repossession coupled with sending the safe-harbor notice required prior to disposition of the collateral-as acts that unequivocally invoked Norlareo's separate contractual right under the loan agreement to accelerate all future installment payments. *560Nothing in the loan agreement, the U.C.C., or the Consumer Credit Code, states that the mere act of repossessing collateral automatically results in the acceleration of the debt obligation secured by that collateral. Moreover, a secured party's use of the U.C0.C. statutory safe-harbor notice regarding a debtor's right to redeem repossessed collateral does not evince an unequivocal intent to accelerate the entire debt obligation.
€ 48 In this case, Norlareo's undated letter to Hassler was titled "NOTICE OF OUR PLAN TO SELL PROPERTY." It then tracked, almost verbatim, the statutory safe-harbor language2 provided in section 4-9-614 for the required notification before disposition of collateral:
We will sell the collateral [the 1994 Porsche] at private auction sometime after November 10th 2001.
The money that we get from the sale (after paying our costs) will reduce the amount you owe. If we get less money than you owe, you will still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else.
You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call ws at [Norlareo's phone numbers].
(Second emphasis added.)
149 The majority holds that a secured party's use of the recommended statutory language emphasized above serves, as a matter of law, as the party's unequivocal invocation of a wholly independent contractual right to accelerate the entire debt obligation. This language, however, was adopted by the General Assembly as recommended standard form language that satisfies the notice requirements of section 4-9-614 before disposition of collateral. It is purposefully ambiguous as to whether acceleration of all future loan payments has in fact occurred, allowing it to be used in a variety of factual situations (and thus rendering it a useful safe harbor). The critical phrase "full amount you owe" does not necessarily mean "the entire balance of the loan," Maj. op. TN 14, 30-31, as the majority incorrectly infers. Rather, this phrase can cover situations in which the entire debt has not been accelerated. For example, depending on the parties' agreement, the phrase "full amount you owe" can refer to the debtor's missed monthly payments plus the presently due monthly payment; the missed monthly payments plus the expenses associated with repossession; the missed monthly payments plus other monies owed by the debtor under the parties' loan agreement (eg., taxes, fees, insurance premiums);3 or some combination of the foregoing. Importantly, the statutory safe-harbor language under section 4-9-614 does not require the secured party to specify the amount the consumer debtor owes. Rather, it directs the consumer debtor to contact the secured party "to learn the exact amount you must pay." By contrast, before a debt obligation under a consumer eredit transaction may be accelerated under the Consumer Credit Code, the creditor must provide the actual "amount of payment and date by which payment must be made to cure the default." § 5-5-110(2) (emphasis added). Al*561though the undated notice to Hassler does not specify any particular "amount of payment" due (as would be required by the Consumer Credit Code), the majority leaps to the conclusion that the purposefully ambiguous phrase "full amount you owe" can mean nothing other than the entire debt obligation under the parties' agreement, and that therefore, as a matter of law, the use of this statutory phrase constitutes a clear and unequivocal act invoking the optional acceleration provision under the loan agreement. I disagree with the majority's conclusion because it distorts the intent of the safe-harbor notice under section 4-9-614; moreover, the critical phrase relied on by the majority can be readily interpreted to cover factual see-narios that do not involve acceleration.
€50 In my view, any possible doubt that the safe-harbor notice contained in section 4-9-614 does not automatically accelerate the debt is eliminated by official comment to section 4-9-6238. Section 4-9-6283 provides that to redeem repossessed collateral, the debtor "shall tender ... [flulfillment of all obligations secured by the' collateral." Official comment 2 elaborates: >
To redeem the collateral a person must tender fulfillment of all obligations secured, plus certain expenses. If the entire balance of a secured obligation has been accelerated, it would be necessary to tender the entire balance.
(Emphasis added.) This comment clarifies that the phrase "[flulfillment of all obligations secured by the collateral" can encompass situations in which the underlying debt has not been accelerated; otherwise the comment regarding acceleration would not be written in the conditional. Thus, the mere use of the corresponding safe-harbor language in section 4-9-614 to inform a debtor of his right to redeem the collateral under section 4-9-623 by "paying us the full amount you owe," does not necessarily mean that the entire debt, in fact, has been accelerated. The majority's conclusion to the contrary imports a meaning into the safe-harbor language of section 4-9-614 that is wholly unsupported by the statutory language and scheme.4
T51 Finally, I note that the series of monthly statements received by Hassler after the car was repossessed and the safe-harbor notice issued further undermine the majority's conclusion that Norlareo unequivocally accelerated the entire debt obligation. None of these subsequent monthly account statements suggested that either the "delinquent amount" on the loan (e., the amount of the loan that has become past due) or the "repayment amount" owed (e., the amount of the loan that has "become due" but not yet delinquent) equaled the entire outstanding loan balance. Rather, these statements continued to reflect a "delinquent amount" based on installment payments missed to that point, and a "repayment amount" of the $523 monthly installment under the agreement.
T 52 For these reasons, I disagree with the majority's conclusion that Norlareo's mere act of repossessing the collateral pursuant to section 4-9-609, coupled with sending the safe-harbor notice required by section 4-9-614(a)(3), unequivocally invoked its independent contractual right under the loan agreement to accelerate the entire debt obligation secured by the collateral.
IL.
[53 I now turn to whether Account Brokers' cause of action, filed on May 7, 2008, is barred by the applicable six-year statute of limitations. § 13-80-108.5(1)(a); § 4-8-118. Account Brokers' claim would be time-barred to the extent it includes any debt that had "become due" (ie., the cause of action ac-erued) on or before May 7, 2002. See § 13-80-108(4), C.R.S. (2011). In other words, if Norlareo accelerated the debt on or before that date, or alternatively, if Account Brokers' claim seeks to recover any installment payments that had become due on or before May 7, 2002, then any claim for such debt is time-barred. The record shows that neither is true.
*562[ 54 As discussed in detail above, Norlarco did not act unequivocally to accelerate all future installment payments at any time before May 7, 2002. Contrary to the majority's conclusion, Norlareo acted as a secured party to exercise remedies under the U.C.C., and such action cannot, without more, automatically and unequivocally invoke a party's separate contractual right to accelerate all future installment payments under the parties' loan agreement.
T55 Because Norlarco did not accelerate the debt on or before May 7, 2002, Account Brokers' claim would be time-barred, and only partially so, only if the claim seeks to recover any installment payments that had "become due" on or before May 7, 2002. The uncontroverted record evidence establishes, however, that Account Brokers' claim does not include any such payments. The June 2002 month-end account statement shows that as of June 1 the "delinquent amount" (Le., the missed payments that had "become due") was at most $6035. The same statement reflects, however, that on June 4, following the sale of the collateral, Norlarco applied the $17,500 in proceeds to reduce the loan balance, which necessarily included the full amount that had "become due."5 Because the sale proceeds paid off in full the amount that had "become due" as of May 7, 2002, under the loan (e., $6035), Account Brokers' claim for the deficiency amount does not seek to recover any debt that had "become due" on or before May 7, 2002.
156 Accordingly, I would affirm the district court's order that Account Brokers' lawsuit was not barred by the statute of limitations.

. Before repossessing the car, section 5-5-111 required Norlarco to give Hassler notice of an opportunity to cure his defaults. § 5-5-111(1). The record does not reflect whether this notice to cure was provided; however, Hassler does not raise this issue.

. Section 4-9-614(a)(3) provides that the following statutory language provides sufficient notice in a consumer-goods transaction:
We will sell [describe collateral ] at private sale sometime after [date]. A sale could include a lease or a license.
The money that we get from the sale (after paying our costs) will reduce the amount you owe. If we get less money than you owe, you [will or will not, as applicable ] still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else.
You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call us at [telephone number ] or write us at [secured party's address ].
§ 4-9-614(a)(3) (Fourth emphasis added.)

. For example, the parties' agreement in this case provided, ""If you do not pay the taxes or fees on the property when due or keep it insured, we may pay these obligations, but we are not required to do so. Any money we spend for taxes, fees or insurance will be added to the unpaid balance of the advance [ie., the original loan amount] and you will pay interest on those amounts at the same rate you agreed to pay on the advance."

. The majority's suggestion that a secured party could simply deviate from the safe-harbor language to avoid invoking acceleration, see Maj. op. 1 30, undercuts the very purpose behind safe-harbor language. Under today's holding, a secured party who seeks refuge in the safe-harbor language now risks unintentionally invoking any separate contractual right to accelerate the debt.

. The majority suggests that, if acceleration did not occur, Norlarco violated the U.C.C. by not giving Hassler the proceeds from the collateral sale in excess of the amount that had "become due" when the sale occurred. Maj. op. 126 n. 8. Hassler has never raised such an argument. Moreover, as the majority correctly notes, under Paragraph 10 of the parties' agreement, Hassler remained liable for any remaining deficiency after application of the sale proceeds to the amount that had "become due." Maj. op. 17. Account Brokers seeks to recover only this deficiency amount, which did not become due (ie., under the parties' agreement, Hassler did not become liable for this deficiency) until after the sale of the collateral, or within the six-year statute of limitations period.