2012 COA 125
Colo. Ct. App.2012Background
- Bank loaned Team Transit $100,000 on Dec 18, 1996, with installments and a final payment due Dec 18, 2006.
- Bank loaned Spooner $75,000 on Apr 9, 1998, with installments and a final payment due Apr 9, 2005.
- March 1, 2001, both loans were modified: new notes issued with co-borrowers and additional collateral; Team Transit final payment due Dec 18, 2006; Spooner final payment due Apr 9, 2005.
- Zinna made two payments in May/Jul 2001, then ceased payments; a $5,000 pay-down from home sale was applied to Team Transit in Aug 2002.
- Bank filed suit on Jun 5, 2009, asserting breach of contract; Zinna asserted statute of limitations as a defense.
- Trial court held the Bank’s claims timely; Zinna appealed; supreme court cited Hassler in supplemental briefing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does accrual begin for installment promissory notes not accelerated? | Zinna argues accrual starts at default or earlier; Bank argues maturity governs. | Zinna asserts accrual should be earlier based on default or other events. | Accrual begins at the notes' maturity dates for these notes. |
| Did the Bank accelerate the notes by its actions (CD liquidation or home sale pay-down)? | Bank never declared default; acceleration not exercised by the Bank. | Bank’s actions to liquidate assets and apply proceeds show acceleration. | Bank did not clearly and unequivocally accelerate the notes. |
| Are the Bank’s claims timely under a six-year statute for debt under a promissory note? | Claims timely if filed within six years after due date. | If acceleration or default dates trigger earlier accrual, suit may be time-barred. | Suit timely; accrual began on maturity dates December 18, 2006 and April 9, 2005. |
Key Cases Cited
- Hassler v. Account Brokers of Larimer County, Inc., 274 P.3d 547 (Colo. 2012) (framework for installment-secured debt and acceleration)
- Mortgage Investments Corp. v. Battle Mountain Corp., 70 P.3d 1176 (Colo. 2003) (accrual on promissory notes; default/maturity timing)
- Church v. Related Entities, 883 P.2d 814 (Colo. App. 1994) (installment contracts and accrual principles)
- Tivoli Ventures, Inc. v. Bumann, 870 P.2d 1244 (Colo. 1994) (maturity vs. default accrual guidance for promissory notes)
- Anton A. Vreede, P.C. v. Koch, 380 S.E.2d 615 (N.C. App. 1989) (exception allowing deferred accrual where final performance remains possible)
- First Nat'l Bank v. Park, 86 P. 106 (Colo. 1906) (policy supporting creditor remedies when delinquency occurs)
- Newflower Market, Inc. v. Cook, 229 P.3d 1058 (Colo. App. 2010) (contract interpretation and accrual principles (stated in context))
- Church v. 883 P.2d 814, 883 P.2d 814 (Colo. App. 1994) (installment contracts and accrual principles)