115 N.E.3d 1275
Ind. Ct. App.2018Background
- In 2007 Alialy executed a $60,000 promissory note (12% interest) secured by a mortgage; he stopped paying after July 28, 2008.
- Wells Fargo, the senior lienholder, obtained a default foreclosure decree against Alialy on July 28, 2008.
- The note was transferred to Collins Asset Group, LLC (CAG) on December 31, 2014; CAG notified Alialy in June 2016 and sent a notice of acceleration on October 24, 2016.
- CAG filed suit on the note on April 26, 2017. Alialy moved to dismiss arguing the claim was time-barred by the six-year statute of limitations for written contracts.
- The trial court dismissed CAG’s complaint; the court and parties relied on materials outside the pleadings, converting the motion to one for summary judgment.
- The court found CAG’s delayed exercise of an optional acceleration clause (in 2016) could not revive a claim that became time-barred in 2014, and dismissed the action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CAG’s claim on the promissory note is barred by the six-year statute of limitations | The limitations period began to run only when CAG exercised acceleration (Oct 2016), so the April 2017 suit is timely | Cause of action accrued at last payment (July 28, 2008); six-year limitations expired July 28, 2014, so CAG’s suit is time-barred | Held: Claim barred. Optional acceleration invoked in 2016 cannot revive a claim already barred in 2014; dismissal affirmed. |
Key Cases Cited
- Arflack v. Town of Chandler, 27 N.E.3d 297 (Ind. Ct. App. 2015) (standard of review and scope of Rule 12(B)(6) dismissal)
- Imbody v. Fifth Third Bank, 12 N.E.3d 943 (Ind. Ct. App. 2014) (cause of action accrual is generally a question of law)
- Cooper Indus., LLC v. City of South Bend, 899 N.E.2d 1274 (Ind. 2009) (discovery rule: accrual when claimant knows or should know of injury)
- Smither v. Asset Acceptance, LLC, 919 N.E.2d 1153 (Ind. Ct. App. 2010) (optional acceleration clause generally starts limitations only when exercised, but invoking it after the limitations period has expired is impermissible)
- Doe v. Adams, 53 N.E.3d 483 (Ind. Ct. App. 2016) (conversion of a Rule 12(B)(6) motion to summary judgment when court considers matters outside the pleadings)
- Holt v. LVNV Funding, LLC, 147 F. Supp. 3d 756 (S.D. Ind. 2015) (applying Indiana law: action to recover debt must be commenced within six years of last payment)