Armed Forces Bank, N.A. v. Hicks
365 P.3d 378
Colo. Ct. App.2014Background
- In December 2006, Glenwood Commercial, LLC borrowed $6 million from Bank Midwest to build a condominium project, secured by a deed of trust on the property, with Hickses providing separate but identical personal guaranties.
- Two loan modifications increased the principal and extended maturity; a forbearance agreement delayed default remedies until October 2009.
- A third modification extended the loan to December 21, 2009, with a balance of $7,552,500 and a default condition requiring final approval and recording of a condominium plat by January 1, 2010.
- The plat had not been approved or filed by the deadline, and by June 2010 the bank filed suit seeking foreclosure and related relief; a receiver was appointed but Glenwood Commercial later filed for bankruptcy, staying proceedings.
- Foreclosure occurred with a March 2012 sale; the bank bid $3,705,000 and the resulting deficiency was about $6.1 million; Hickses argued the bank’s bid violated good faith and other defenses, while the bank contended waivers in guaranties barred those defenses.
- The Hickses sought to amend to assert a counterclaim for bad faith; the bank opposed, arguing the court could repudiate the forbearance and remedies; discovery motions were also raised and resolved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waivability of section 38-38-106(6) defenses | Bank Midwest argued the Hicks guaranties waived 38-38-106(6) defenses. | Hickses argued the statute cannot be waived and that their guaranties do not expressly waive it. | Waiver permitted; guaranties unambiguously waived 38-38-106(6) defenses. |
| Effect of waiver on summary judgment | Bank contends no genuine issue exists because waiver defeats defenses. | Hickses contend waiver does not bar all defenses and dispute factual matters. | Summary judgment proper; defenses foreclosed by waiver. |
| Motion to amend answer to add counterclaim | Bank argues amendment would be futile due to lack of viable theory. | Hickses maintain good faith and fair dealing claim should be allowed. | Amendment properly denied as futile. |
| Motion to compel document production | Hickses sought emails about leasing; not requested under CRCP 34 or 26. | Requests were improperly broad or outside pleadings scope. | District court honored discovery limits; no abuse of discretion. |
Key Cases Cited
- Chew v. Acacia Mut. Life Ins. Co., 165 Colo. 48 (Colo. 1968) (foreclosure bid must be in good faith to avoid invalid sale)
- Bonk of Am. v. Kosovich, 878 P.2d 65 (Colo. App. 1994) (good faith bid defense may adjust deficiency; sale validity not attacked by failure to bid)
- First Nat'l Bank of Se. Denver v. Blanding, 885 P.2d 324 (Colo. App. 1994) (deficiency determined with good faith bid as baseline)
- Martines v. Cont'l Divide Ins. Co., 730 P.2d 308 (Colo. 1986) (waiver of statutory rights allowed in contracts)
- Denner Enters. Inc. v. Barone, Inc., 87 P.3d 269 (Colo. App. 2004) (contractual waiver of statutory protections permissible; public policy limits absent)