390 P.3d 812
Ariz. Ct. App.2017Background
- Alberto and Arlene Santos opened a Washington Mutual credit‑card account; by August 2007 they had a $14,642.07 balance and stopped making regular minimum payments.
- The account was intermittently paid once ($50 in Aug. 2008) and then charged off later in 2008 with a $17,066.91 unpaid balance.
- Washington Mutual assigned the debt to Mertola, LLC, which sued the Santoses in July 2014 for the full charged‑off balance, costs, and fees.
- The superior court granted summary judgment for the Santoses, holding the six‑year statute of limitations had run because the claim accrued when they first missed a minimum payment.
- Mertola appealed, arguing the limitations period for the full balance did not begin until the creditor exercised an optional acceleration or otherwise demanded payment in full.
Issues
| Issue | Plaintiff's Argument (Mertola) | Defendant's Argument (Santoses) | Held |
|---|---|---|---|
| When does a claim for the entire unpaid credit‑card balance accrue for limitations purposes? | Accrual for the full balance does not occur until creditor accelerates or demands full payment. | Accrual occurs when the cardholder first defaults by missing a minimum monthly payment. | The court held accrual for the full balance occurs only if/when the creditor accelerates or demands full payment; mere missed minimum payments give rise only to claims for those installments. |
Key Cases Cited
- Walk v. Ring, 202 Ariz. 310 (discussing summary judgment review standards)
- Montano v. Browning, 202 Ariz. 544 (standard for de novo accrual questions)
- Logerquist v. Danforth, 188 Ariz. 16 (statute of limitations legal review)
- Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 182 Ariz. 586 (when a cause of action accrues)
- Baseline Financial Servs. v. Madison, 229 Ariz. 543 (charge‑off is an accounting entry; optional acceleration must be exercised)
- Navy Federal Credit Union v. Jones, 187 Ariz. 493 (installment claims accrue at due date; future installments accrue on acceleration)
- League of Arizona Cities & Towns v. Martin, 219 Ariz. 556 (laches as an equitable defense)