Bank of New York v. Peterson , 442 P.3d 1006 ( 2018 )

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