501 P.3d 362
Kan.2021Background
- In June 2005 David and Linsay Buehne executed a commercial promissory Note with First Security Bank (FSB), secured by a security agreement and a mortgage on real property.
- The Note included a "Waiver of Certain Rights" clause stating the borrowers "waive any applicable statute of limitations to the full extent permitted by law" and a checked box indicating the obligation was "payable on demand."
- The Buehnes made no payments; FSB began sending overdue notices in 2006 and intermittently thereafter.
- FSB filed a foreclosure action on May 21, 2014; the district court granted FSB summary judgment in 2019, concluding FSB had not clearly accelerated the loan before 2014.
- The Kansas Court of Appeals affirmed on the alternative ground that the Note’s prospective waiver of the statute of limitations was enforceable; the Kansas Supreme Court granted review and affirmed, holding the waiver was not void as against public policy and declining to decide exactly when the limitations period began to run.
Issues
| Issue | Plaintiff's Argument (FSB) | Defendant's Argument (Buehne) | Held |
|---|---|---|---|
| Validity of a contractual prospective waiver of the statute of limitations | Waiver in the Note is enforceable; parties contracted to allocate risk and the clause included a limiting phrase. | The prospective, indefinite waiver violates public policy and is void; borrowers cannot be stripped of the limitations defense. | The waiver was not void as against public policy because it was limited "to the full extent permitted by law," the loan was commercial, and borrowers showed no prejudice or asserted a common-law defense. |
| Whether the statute of limitations began running in 2006 (acceleration/payable-on-demand) | Even if accelerated in 2006, the Note’s enforceable waiver prevents a successful limitations defense. | The loan was payable on demand or otherwise accelerated in 2006, making FSB’s 2014 suit time-barred. | Court did not decide the timing issue; because the waiver is enforceable, the court affirmed the judgment without resolving when the limitations period began. |
Key Cases Cited
- Bolz v. State Farm Mut. Auto. Ins. Co., 274 Kan. 420 (Kan. 2002) (definition and role of public policy)
- Nat'l Bank of Andover v. Kansas Bankers Sur. Co., 290 Kan. 247 (Kan. 2010) (burden on party challenging contract legality)
- Pfeifer v. Fed. Exp. Corp., 297 Kan. 547 (Kan. 2013) (statutes of limitations as expressions of public policy to avoid stale claims)
- Hornick v. First Cath. Slovak Union, 115 Kan. 597 (Kan. 1924) (historic rejection of contractual modification of limitations under a now-repealed statute)
- Younger v. Younger's Estate, 198 Kan. 547 (Kan. 1967) (cases addressing agreed extensions of limitations periods)
- Barnes v. Gideon, 224 Kan. 6 (Kan. 1978) (treatment of agreed extensions of limitations)
- E. River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (U.S. 1986) (commercial contracts and limited judicial intrusion into bargaining allocations)