205 A.3d 518
Vt.2018Background
- Trustee (Annette Besaw) holds a security interest in 50 shares of Champlain Bridge Marina stock securing a 1998 promissory note owed by Bryan Giroux's father (the borrower). Trustee succeeded as noteholder after the original holder's death.
- The note allowed a 45-day cure period: if the noteholder declared default, the noteholder had to give written notice and permit the borrower 45 days to cure before accelerating the debt and exercising secured-party remedies.
- Borrower made no payments; trust demanded payment in 2008 but did not declare a default or invoke the 45-day cure in that letter. In August 2013 trustee sent a letter declaring default and demanding payment within 45 days; borrower did not pay.
- Trustee sued borrower in 2015 and obtained a judgment for the debt. Trustee then demanded delivery of the share certificate from the borrower’s son (the current holder of the stock) and sued him in May 2016 for delivery of the collateral under the security agreement.
- Defendant moved for summary judgment arguing the claim was time-barred under the six-year statute of limitations because accrual occurred earlier (at the original default or after the 2008 demand). The trial court originally denied summary judgment, then granted it on reconsideration, holding the six-year period had run. Trustee appealed.
Issues
| Issue | Plaintiff's Argument (Besaw) | Defendant's Argument (Giroux) | Held |
|---|---|---|---|
| When did trustee’s cause of action to recover collateral accrue (i.e., when did statute of limitations begin)? | Accrual occurred in 2013 — when trustee declared default and gave the 45-day cure notice, and borrower failed to cure. | Accrual occurred earlier — either when borrower first failed to pay per the note (as early as 1999) or at latest after the 2008 demand (one year thereafter). | Accrual occurred in 2013 after trustee declared default and the 45-day cure period lapsed without payment; suit filed May 2016 was timely. |
| Whether trustee preserved the argument about 2013 accrual for appeal | Trustee contends she repeatedly urged 2013 accrual in district-court briefing and post-judgment motions. | Giroux contends the 2013-accrual theory was not preserved until late. | Court held Besaw adequately preserved the argument for appeal. |
| Whether the security agreement’s default provision independently triggered immediate right to collect collateral without notice-and-cure | Besaw: security agreement must be read with the note; the note’s notice-and-cure condition governs enforcement of collateral based on nonpayment. | Giroux: security agreement defines default as failure to pay the note in accordance with its terms, so default (and right to collect) occurred earlier. | Court read note and security agreement together; the 45-day notice-and-cure in the note applies before pursuing collateral for nonpayment. |
| Proper interpretive approach to related instruments executed for the same transaction | Besaw: instruments should be read together to effectuate parties’ intent; typewritten note terms control generic security form if conflict exists. | Giroux: (implicitly) security agreement wording should independently suffice to trigger remedies. | Court applied standard contract interpretation, harmonized the two instruments, and gave controlling effect to the note’s customized default-and-cure terms. |
Key Cases Cited
- C & T Disc. Corp. v. Sawyer, 185 A.2d 462 (Vt. 1962) (limitations do not run when the instrument contemplates actual demand or delay before suit)
- Blanche S. Marsh Inter Vivos Tr. v. McGillvray, 67 A.3d 943 (Vt. 2013) (statute runs when a party can first sue on the cause of action)
- Furlon v. Haystack Mountain Ski Area, Inc., 388 A.2d 403 (Vt. 1978) (limitations run from when plaintiff can first sue and recover)
- Rounds v. Malletts Bay Club, Inc., 157 A.3d 1101 (Vt. 2016) (contract interpretation reviewed de novo)
- Southwick v. City of Rutland, 35 A.3d 113 (Vt. 2011) (court seeks to effectuate parties’ intent according to plain contract language)
- In re Verderber, 795 A.2d 1157 (Vt. 2002) (interpretation should harmonize all parts of an agreement)