274 P.3d 547 | Colo. | 2012
Lead Opinion
delivered the Opinion of the Court.
I. Introduction
T1 In this appeal, we review the order of the Jefferson County District Court upholding the county court's determination that the six-year statute of limitations contained in section 18-80-108.5(1)(a), C.R.S. (2011), did not bar respondent Account Brokers of Lar-imer County, Inc.'s claim against petitioner Daniel Shane Hassler. Account Brokers v. Hassler, No. 2009CV444 (Jefferson Cnty. Dist. Court May 19, 2009).
T2 Hassler financed the purchase of a vehicle by entering into a security agreement with Account Brokers' predecessor-in-interest, Norlarco Credit Union, in which the vehicle served as collateral. The security agreement provided that the balance of the loan plus the attendant interest would be repaid in monthly installments. When Has-sler later defaulted on his loan, Norlarco first repossessed the vehicle and then later sold it at auction. Norlareo applied the proceeds of the auction to the balance of the loan. The proceeds, however, were insufficient to cover the balance, and thus Hassler remained indebted for the deficiency. Norlareo eventu
I3 We reverse. The relevant legal inquiry under the statute of limitations is the date that the debt was made liquidated or determinable but rather the date that the debt accrued, which section 13-80-108, C.R.S. (2011), entitled "When a cause of action accrues," defines as the date that the debt became due. § 18-80-108(4). We hold that under Colorado law and the express terms of the parties' security agreement, the present debt became due when it was accelerated following Norlarco's repossession of the vehicle and demand for full payment on the debt, which occurred more than six years before the initiation of the present suit. Accordingly, the action is barred by the statute of limitations.
T4 Construing sections 13-80-108.5(1)(a) and 13-80-108(4), we conclude that the six-year statute of limitations for an action based upon the rights set forth in a security agreement begins to run on the date that the cause of action accrues, which is the date that the debt first becomes due. For a security agreement that is to be repaid in installments, the debt for each installment becomes due on the date that each installment is missed. Once an installment security agreement is validly accelerated, however, the entirety of the remaining balance becomes due and therefore the cause of action to collect the entire debt accrues.
T5 In this case, Norlarco invoked the seeu-rity agreement's optional acceleration clause by repossessing Hassler's vehicle on October 30, 2001, and sending him a letter shortly thereafter demanding that he repay the entirety of his debt. Because Account Brokers, Norlareo's successor-in-interest, filed its claim to collect the remainder of the debt on May 7, 2008, which was more than six years later, we hold that the present claim is barred by the statute of limitations. Thus, we remand the case to the district court to be returned to the county court for proceedings consistent with this opinion.
II. Facts and Procedural History
T6 In October 2000, Hassler financed the purchase of a vehicle for $28,565.25 through Norlarco Credit Union. A security agreement, entitled "Open-End Voucher and Security Agreement," set forth the terms of the parties' agreement. The security agreement obligated Hassler to pay monthly installments of $5283.00 beginning on November 19, 2000, and gave Norlareo a security interest in the vehicle Hassler purchased.
T7 The security agreement defined default as "break[ing] any promise you make under this agreement." Paragraph 10 of the security agreement, entitled "What Happens if You Are in Default," specified the consequences of default to borrowers in different states. For Colorado borrowers, the security agreement authorized Norlarco to accelerate the loan and to require immediate payment of the outstanding balance at its option after the expiration of any statutory right to cure the default, stating:
When you are in default and after expiration of any right you have under applicable state law to cure your default, we can require immediate payment of your outstanding balance under the Plan without giving you advance notice.
(Emphasis added.) Paragraph 10 of the security agreement also included a reposses
You agree [Norlareo] has the right to take possession of the property without judicial process if this can be done without breach of the peace.... After we have possession of the property, we can sell it and apply the money to any amounts you owe us.... If you have agreed to pay the advance, you will also have to pay any amount that remains unpaid after the sale money has been applied to the unpaid balance of the advance and to what you owe under the agreement.
18 Hassler made his last payment on the loan on April 21, 2001. He attempted to make payments in May 2001 and June 2001, but Norlareo reversed these credits in July 2001 because Hassler had insufficient funds to cover the payments. Norlareo repossessed the vehicle on October 30, 2001. At or around the time that Norlareo repossessed the vehicle, Norlarco sent Hassler an undated letter, entitled "NOTICE OF OUR INTENT TO SELL PROPERTY," which gave notice that it had repossessed the vehicle and that it intended to sell the vehicle sometime after November 10, 2001. The letter stated that the amount obtained from the vehicle's sale would reduce the amount Hassler owed and that Hassler would be liable for any deficiency remaining after the sale. The letter also notified Hassler that he could get his vehicle back before it was sold by paying Norlarco the full amount owed on the loan. It stated, "You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses." (Emphasis added.) The wording used in the letter was identical to the model language set forth in the "safe-harbor" provision found in section 4-9-614, C.R.S. (2011), which requires a creditor to provide a debtor with notice of the right to redeem the repossessed collateral before disposing of it.
T9 After a failed attempt to sell the vehicle through a consignment agreement with a car dealership, Norlarco sold the vehicle at auction on June 4, 2002. The vehicle sold for $17,500, and those proceeds were applied to the outstanding balance, which resulted in a deficiency of $11,637.11. In a letter dated June 4, 2002, Norlarco notified Hassler that he owed a deficiency balance in the amount of $11,637.11 and that this amount was due to Norlarco within five days, unless Hassler contacted Norlareco and agreed to a new installment plan.
110 Hassler did not pay, and in March 2008, Norlareo assigned Hassler's debt to Account Brokers for collection.
1 11 In its December 2008 order, the county court magistrate ruled that the statute of limitations did not bar Account Brokers' action because the cause of action did not accrue until June 5, 2002, the day after the vehicle was sold, which was less than six years before Account Brokers filed its complaint. The court reasoned that the debt, which in this case was the deficiency balance, was not liquidated or determinable until the vehicle was sold or, alternatively, that Has-sler made his last payment on the debt when the vehicle was sold. The court found for
[12 On appeal, the district court affirmed the county court's judgment, also concluding that the cause of action accrued the day after the vehicle was sold because, until then, the debt was not liquidated or determinable:
Although the loan did have an acceleration clause that would have made the entire loan amount due on the date of default, Appellee Account Brokers' assignor Nor-lareo was acting in accordance with the [UCC], CRS. § 4-9-601 et. [sic] seq., when it mitigated its damages by disposing of the collateral in a "commercially reasonable manner" and attempting to collect only deficiency debt rather than the entire loan amount. Therefore, the debt was not liquidated or of a determinable amount until the deficiency amount was determined after the car was sold on June 4, 2002, making June 5, 2002 the date that the cause of action accrued.
Based on this reasoning, the district court concluded that Account Brokers timely filed its claim within the six-year statute of limitations contained in section 18-80-108.5(1)(a).
113 Hassler petitioned this court for further review, and we granted certiorari.
III. Analysis
14 Upon review, we disagree with the district court and hold that this action was time-barred because the balance sought by Account Brokers became due when Norlar-co unilaterally accelerated the debt by repossessing the vehicle and demanding repayment in full in the undated repossession letter. We reach this conclusion by first interpreting the six-year statute of limitations in section 183-80-108.5, which in turn is defined in part by section 13-80-108(4) (defining when a cause of action for a debt accrues), and hold that the statute of limitations for the recovery of a debt under a security agreement is triggered whenever the debt "becomes due" by the terms of the agreement. Next, we hold that, pursuant to the parties' security agreement, the remaining balance of Hassler's debt became due when Norlareo invoked its option to accelerate the debt, as evidenced through the unequivocal act of repossessing the vehicle and demanding repayment in full. Under both the relevant statutes and the express terms of the parties' security agreement, Norlarco was entitled to invoke its unilateral option to accelerate the present debt and did so when it informed Has-sler that he could only retake possession of his repossessed property by paying the entire balance of the loan-and not merely the outstanding balance of the lapsed monthly installments. Accordingly, because this acceleration occurred more than six years before the initiation of the present action, we hold that the present claim is time-barred.
A. The Statute of Limitations
"15 Initially, we must interpret the statutory scheme to determine when the relevant statute of limitations was triggered in the instant case. Statutory interpretation involves a question of law, which we review de novo. Smith v. Exec. Custom Homes, Inc., 230 P.3d 1186, 1189 (Colo.2010). When construing a statute, our goal is to determine and give effect to the intent of the General Assembly. People v. Perez, 238 P.3d 665, 669 (Colo.2010). Before resorting to canons of statutory interpretation, we look to the plain and ordinary meaning of the words in a statute. Id. If the statutory provisions are
1 16 Of the several statutes relevant to this case, we begin with the statute of limitations set forth in section 18-80-108.5(1)(a). That section applies a six-year statute of limitations to specified types of actions to recover a debt, including all actions to enforce the rights set forth in an instrument securing the payment of debt:
(1) The following actions shall be commenced within six years after the cause of action accrues and not thereafter:
(a) All actions to recover a liquidated debt or an unliquidated, determinable amount of money due to the person bringing the action, all actions for the enforcement of rights set forth in any instrument securing the payment of or evidencing any debt, and all actions of replevin to recover the possession of personal property encumbered under any instrument securing any debt....
§ 183-80-108.5(1)(a) (emphasis added). By its terms, section 18-80-108.5(1)(a) states that the six-year statute of limitations for an action based upon the rights set forth in an instrument securing the repayment of a loan is triggered on the date that "the cause of action accrues." Id.; see also Nagy v. Landau, 807 P.2d 1227, 1228 (Colo.App.1990) (stating that section 18-80-108.5 requires "all actions of debt founded upon any contract ... to be commenced within six years after the cause of action accrued").
T17 To determine when the present cause of action acerued, we next turn to section 13-80-108, which sets forth multiple provisions that establish the acerual date for different types of civil actions. Pertinent here, subsection 13-80-108(4) applies to causes of action to recover a "debt, obligation, money owed, or performance" and states that such actions "shall be considered to accrue on the date such debt, obligation, money owed, or performance becomes due." § 13-80-108(4) (emphasis added).
$18 Hence, construing sections 13-80-108.5(1)(a) and 13-80-108(4) together, the statute of limitations for a debt owed pursuant to the rights set forth in a security instrument for the repayment of debt begins to run when the action acerues, which occurs on the date that the debt becomes due. Therefore, in order to determine when the statute of limitations began to run in the present matter, we must ascertain when the remaining balance of the debt that Hassler owed to Norlarco became due.
119 Here, our analysis departs from that of the district court. The district court correctly held that section 13-80-108.5(1)(a) is the appropriate statute for determining when the present statute of limitations period began to run. However, in determining when this "cause of action acerue{d]," rather than look to section 13-80-108(4), the district court erroneously applied the first clause of section 13-80-108.5(1)(a), which pertains to "[all actions to recover a liquidated debt or an unliquidated, determinable amount of money due." Thus, instead of asking when the present debt "became due," the district court incorrectly looked to see when the present debt became either liquidated or determinable. This was in error because the present action was not one to recover a liquidated or determinable debt, but was instead an action to enforce a debt secured under an instrument, as contemplated by the second clause of section 18-80-108.5(1)(a).
€ 20 Although no Colorado appellate court has ever explicitly parsed the clauses of seetion 183-80-108.5(1)(a), the plain meaning of the statutory text indicates that this action is one "for the enforcement of rights set forth in [an] instrument securing the payment of or evidencing [a] debt" and thus falls under the category of actions included in the second clause. See § 13-80-108.5(1)(a). This claim is an attempt by Account Brokers to recover the debt that Hassler incurred to purchase the vehicle under the parties' loan and security agreement. This instrument was executed contemporaneously with the purchase of the vehicle to memorialize the total amount that Hassler owed to Norlarco. See Mortg. Invs. Corp. v. Battle Mountain Corp., 70 P.3d 1176, 1184-85 (Colo.2003) (applying, with no discussion, the second clause of seetion 18-80-108.5(1)(a) to a debt secured un
121 Thus, the date on which the present action accrued does not depend on whether Hassler's debt was liquidated or determinable.
B. Acceleration of the Debt and Accrual of the Claim
1 22 Accordingly, we now turn to the question of when the portion of Hassler's debt that is now sought by Account Brokers "became due." As the framework for our analysis, we begin by acknowledging the manner in which a statute of limitations must be applied to obligations that are to be repaid in installments. The general rule provides that "[a] separate cause of action arises on each installment, and the statute of limitations runs separately against each." 31 Richard A. Lord, Williston on Contracts § 79:17 (4th ed. updated 2011); see also In re Church, 833 P.2d 813, 814-15 (Colo App.1992); Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U.S. 192, 208-09, 118 S.Ct 542, 189 LEd.2d 553 (1997). However, if an obligation that is to be repaid in installments is accelerated either automatically by the terms of the agreement or by the election of the creditor pursuant to an optional acceleration clause-the entire remaining balance of the loan becomes due immediately and the statute of limitations is triggered for all installments that had not previously become due. See Lord, supra, at §§ 79:17,;18; In re Church, 888 P.2d at 815; Bay Area Loundry, 522 U.S. at 208-09, 118 S.Ct. 542.
123 Both Hassler and Account Brokers agree that the security agreement contained an optional acceleration clause that could be unilaterally invoked by the creditor following default and the expiration of the debtor's right to cure. Thus, the relevant inquiry for determining when the present action accrued is whether Norlarco exercised its option to accelerate Hassler's debt. If Norlarco did accelerate the debt, then the ultimate issue becomes on what date did this occur and trigger the statute of limitations governing the present action. Hassler argues that Norlareo invoked the optional acceleration clause by repossessing the vehicle and demanding full payment on the entire balance of the loan in its undated repossession letter. Conversely, Account Brokers contends that acceleration did not occur until the repossessed vehicle was sold and Norlar-co sent Hassler a demand for the deficiency balance.
$24 "In the case of an acceleration provision exercisable at the option of the [creditor], the [creditor] must perform some clear, unequivocal affirmative act evidencing his intention to take advantage of the accelerating provision." Moss v. McDonald, 772 P.2d 626, 628 (Colo.App.1988). Colorado appellate courts have only considered this issue on two prior occasions, and in each instance the actions of the creditor were held not to amount to an unequivocal act of acceleration. In Moss v. MeDonald, a panel of the court of appeals held that, despite the fact that that case involved an acceleration provision that by its own terms allowed for the debt to be accelerated "without demand or notice," some affirmative act was still required on the part of the creditor to put the debtor on
1 25 Although neither Moss nor McDonald contained significant analysis of why a clear, unequivocal act is necessary to invoke an optional acceleration clause, this principle is consistent with that adopted by a majority of other states. See, eg., Am.Jur.2d, Bills and Notes § 170; U.S. v. Feterl, 849 F.2d 354, 357 (8th Cir.1988); KIXX, Inc. v. Stallion Music, Inc., 610 P.2d 1385, 1388-89 (Utah 1980); State See. Sav. Co. v. Pelster, 207 Neb. 158, 296 N.W.2d 702, 706 (1980). These jurisdictions require that the "exercise of the option ... be made in a manner so clear and unequivocal as to leave no doubt as to the holder's intention and to apprise the maker effectively of the fact that the option has been exercised." 5 A.L.R.2d 968, § 4[al.
126 At the county court, the parties stipulated that Norlareo repossessed the vehicle on October 30, 2001, and sent Hassler an undated letter on or shortly after the date of repossession.
T 27 Account Brokers makes three alternative arguments as to why Norlareo's repossession and demand for full payment did not amount to acceleration: (1) the undated letter merely parroted the sample "safe-harbor" language provided in section 4-9-614(a)(8) and, thus, its adherence to this legal obligation cannot be used to evince a subjective intent to accelerate; (2) any attempt to accelerate could not have been valid because the record does not contain evidence that Norlar-co first provided Hassler with notice of the right to cure as required by the Uniform Consumer Credit Code (UCCC) and the terms of the parties' security agreement; and (8) even if the repossession and the undated letter evinced an intent to accelerate, Norlareo's actions were equivocal as evidenced by the monthly statements that it
128 First, Account Brokers argues that the demand for full payment on Hassler's debt in the undated repossession letter cannot be considered a manifestation of its unequivocal intent to accelerate because the language in the letter was copied from seetion 4-9-614(a)(8). Section 4-9-614(a)(8) sets forth sample language that a ereditor may use to fulfill its duty under the UCC to provide a debtor with notice of his or her right to redeem before a creditor may dispose of collateral. In contrast to the right to cure, which we discuss below, the right to redeem requires that a debtor be given the opportunity to pay off any outstanding balance and retake possession of repossessed collateral before the creditor sells it. § 4-9-614(a)(1). As explained in official comment 8 to section 4-9-614, this so-called "safe-harbor" language does not need to be included in a valid notice of the right to redeem; instead, the language is merely included in the statute as an aid to creditors to provide certainty that the form of notice they use will not later be found to have been insufficient. See § 4-9-614(a)(2) ("A particular phrasing of notification is not required.").
{29 Account Brokers argues that the inclusion of the "safe-harbor" language in the undated letter to Hassler cannot be viewed as evidence of Norlareo's subjective intent to accelerate Hassler's debt because Norlarco included the language solely to comply with its UCC duty to provide Hassler with notice of his right to redeem. Account Brokers contends that the letter did not amount to a demand for full payment, but instead merely informed Hassler of his right to redeem.
130 Irrespective of Norlareo's unknown subjective intent, we fail to see a distinction between a demand for full payment and notice that Hassler could only retake possession of his vehicle by paying the entire amount owed on the loan. With respect to the invocation of an optional acceleration clause, nothing in our case law nor the persuasive authority from other jurisdictions suggests that acceleration turns on the subjective intent of the creditor. Instead, whether acceleration is unequivocal should be viewed from the perspective of the debtor. See 5 AL.R2d 968, § 4[a] (explaining that the act must be so clear and unequivocal as "to leave no doubt" in the mind of the debtor that the creditor has elected to accelerate the debt).
I 31 Account Brokers claims that this is an unfair result because Norlareo was merely complying with its statutory duty to provide Hassler with notice of his right to redeem the repossessed collateral. Account Brokers contends that if providing notice of the right to redeem amounts to acceleration, then no creditor can ever foreclose on collateral without first accelerating the underlying debt, which it claims is antithetical to the flexibility that the UCC provides a creditor in selecting its remedy. This argument, however, ignores the fact that the "safe-harbor" language in section 4-9-614(a)(8) is merely provided as a model, and thus there is no statutory prohibition precluding a ereditor from fulfilling its obligation of providing notice of the right to redeem under section 4-9-614 without acceleration.
1 32 Second, Account Brokers argues that even if Norlarco attempted to accelerate the debt, any attempt to do so was improper under the terms of the parties' agreement and the UCCC requirement that a debtor receive notice of the right to cure at least twenty days before a debt repayable in installments may be accelerated. The acceleration clause in the parties' security agreement, found in Paragraph 10, stated: "When you are in default and after expiration of any right you have under applicable state law to cure your default, we can require immediate payment of your outstanding balance under the Plan without giving you advance notice." (Emphasis added). Thus, under the express terms of the parties' security agreement, Norlarco could not require payment of the remaining balance that had yet to become due until (1) Hassler defaulted and (2) Has-sler's statutory right to cure the default expired. In other words, although the parties stipulate that Hassler was in default in May 2001, the remaining installments that had yet to become due could not be validly accelerated and would not become due until Hassler's statutory right to eure had expired.
188 The requirement that Hassler be afforded an opportunity to cure his default prior to acceleration, as set forth in the parties' acceleration clause, is consistent with Colorado law, which requires that all consumer debtors receive such protection. § 5-5-111, C.RS. (2011). Under the UCCC, which applies in this case,
Thus, Account Brokers argues that Norlarco could not have validly accelerated Hassler's debt because the record does not reflect whether Norlareo provided Hassler with notice of his right to cure his default, as required by section 5-5-111(1), before repossessing the vehicle or accelerating the debt. This unknown fact, however, is irrelevant to the resolution of the present matter because, irrespective of whether Norlarco provided Hassler with notice of his right to cure, Account Brokers' present claim would be barred by the statute of limitations. If Nor-lareo did provide Hassler with notice of his right to cure, then Norlarco would have been entitled, under Colorado law and the terms of the parties' agreement, to accelerate the remaining debt when it did so in its undated letter. Conversely, if Norlareo failed to provide Hassler with notice of his right to cure, any subsequent attempt to accelerate was wrongful under both section 5-5-111(1) and the explicit terms of the parties' security agreement, and it would be improper to allow Norlareo's successor-in-interest to benefit from such wrongful conduct by now claiming that the debt was never properly accelerated and thus never accrued.
$85 Moreover, because this issue was not raised by Account Brokers before the county court, we hold that it was not preserved for appeal and accordingly decline to address it. Paine, Webber, Jackson & Curtis, Inc. v. Adams, 718 P.2d 508, 514
T36 Finally, Account Brokers argues that even if Norlarco's repossession and mailing of the undated foreclogure letter evinced an intent to invoke its contractual option to accelerate, the monthly statements that it continued to send Hassler showing that it had not accelerated rendered any prior attempt to accelerate equivocal-and thus legally ineffective. While the county court was presented with evidence that Norlarco sent monthly loan statements to Hassler following repossession for billing on the missed monthly installments, we hold that this later conduct was insufficient to reverse Norlarceo's prior acceleration. To determine whether the invocation of the acceleration clause was unequivocal, we look to see whether some act of the creditor amounted to a clear manifestation of its intent to accelerate. Moss, 772 P.2d at 628 ("[The obligee must perform some clear, unequivocal affirmative act evidencing his intention to take advantage of the accelerating provision."). Accordingly, the creditor's course of conduct following acceleration is irrelevant. Again, following repossession and receipt of the repossession letter, Hassler was on notice that he could only retake possession of his vehicle by repaying the entire amount owed on the loan. Any contradictory action that Norlareo may have later taken was insufficient to un-ring this bell.
T 37 Thus, we hold that Norlareo accelerated the remaining balance on the loan by demanding full payment in the repossession letter that it sent to Hassler shortly after repossessing his vehicle on October 80, 2001.
(38 Having determined the approximate date that Norlarco accelerated the remaining balance of the loan, we decline to address whether Norlareo's claim for the accelerated debt accrued on the date that the debt was accelerated or on the date that Norlarco was first permitted to accelerate the debt. This issue is irrelevant to the resolution of the present matter because the undated letter was sent more than six years before the initiation of the present action on May 7, 2008. Therefore, because either date was more than six years prior to the filing of the present action, we need not determine the precise date on which the present action accrued. Consequently, we reserve this issue for another day.
IV. Conclusion
140 For these reasons, we reverse the district court's order. We remand the case to the district court to return it to the county court for proceedings consistent with this opinion.
. As we explain infra in footnote 11, with respect to when an accelerated debt "becomes due," prevailing Colorado case law, which predates Colorado's adoption of the Uniform Commercial Code (UCC), is potentially at odds with the rule that a majority of states have adopted following their implementation of the UCC. However, as also explained infra, because under either rule the date that the accelerated debt became due in this case was more than six years before the present claim was filed, we decline to address whether this prevailing Colorado case law remains good law in light of Colorado's subsequent adoption of the UCC.
. Hassler does not challenge the validity of this assignment.
. Account Brokers elected to limit its damages to $15,000 to keep the claim within the jurisdiction of the county court.
. We granted certiorari on the following issue:
Whether the district court erred in upholding the county court magistrate's order finding that the six-year statute of limitations set forth in section 13-80-103.5(1)(a), C.R.S. (2009), began to run the day after the sale of a repossessed vehicle rather than the day after the default of the contract to purchase the vehicle occurred.
Following an initial round of briefing and oral arguments, we requested additional supplementary briefing on the following issues:
1. Under the parties' agreements, did Account Brokers accelerate future payments owed on the car such that they became due immediately, and if so, on what date did this acceleration occur.
2. Under the six-year statute of limitations defined in section 13-80-103.5(1), C.R.S. (2011), what would be the accrual date on which the debt claimed in this case became due, pursuant to section 13-80-108(4), C.R.S. (2011).
. By its very terms, a debt instrument like the one at issue here is always determinable because the precise value of the debt is stipulated in the agreement itself. The fact that the parties' agreement authorized Norlarco to mitigate its potential damages by foreclosing on the vehicle in the event of default did nothing to impact the deter-minability of the amount that Hassler owed under the instrument. Accordingly, the disposition of the collateral was not an act by Norlarco that liquidated the debt. Instead, the auction proceeds were merely available, by the terms of the agreement, to be used as a setoff for the debt that the parties agreed to at the execution of the security agreement. While Norlarco is correct that the UCC mandates that the disposition of repossessed property be carried out in a commercially reasonable manner, the reasonableness of the sale and the corresponding amount of the setoff are only relevant to determining the deficiency balance and do not impact when the debt became due and when Norlarco's claim accrued under the terms of the parties' security agreement.
. The undated letter stated that the repossessed vehicle would be sold sometime after November 10, 2001.
. At oral argument, Account Brokers argued that, before the county court, Hassler effectively waived any claim that the debt was accelerated prior to the sale of the vehicle. After reviewing the record, however, we find that this contention is unsupported. On the contrary, the record indicates that Hassler argued that the debt was accelerated when Norlarco repossessed the vehicle.
. Although we hold that acceleration occurred at or around the time of repossession, we also note that if, as held by the district court, acceleration did not occur prior to Norlarco's disposition of the vehicle and the sale was merely intended "to collect only the deficiency debt rather than the entire loan amount," Norlarco should have returned any surplus from the auction. Account Brokers argues that at the time of the auction, Norlarco had not accelerated the debt and therefore Hassler only owed $6,035 as a result of the lapsed monthly installments. If this were the case, however, once Norlarco received $17,500 for the repossessed collateral at auction, it would have only been authorized to apply the proceeds to the outstanding $6,035 and would have immediately been required to return $11,465 (as the surplus) to Hassler.
. Official comment 2 to section 4-9-623, C.R.S. (2011) (the section that sets forth the right to redeem), makes clear that a debt need not be accelerated before collateral is foreclosed upon and that, if a debt has not been accelerated, redemption prior to disposition only requires repayment of the outstanding balance: "To redeem the collateral a person must tender fulfillment of all obligations secured, plus certain expenses. If the entire balance of a secured obligation has been accelerated, it would be necessary to tender the entire balance."
. The UCCC and the rights and remedies thereunder apply generally to "consumer credit transactions," which are statutorily defined to include consumer credit sales. See § 5-1-301(12), CRS. (2011). Further, a "consumer credit sale" is defined as a sale of consumer goods on credit by a commercial creditor to a non-organizational buyer, where the amount financed is no more than $75,000. Id.
In the present matter, Hassler is an individual who purchased a car for personal use pursuant to a security agreement from Norlarco, a commercial creditor, for $28,565.25 in financing. Consequently, the transaction was a "consumer credit sale" and is therefore subject to the regulations and protections set forth in the UCCC, including the statutory right to cure.
. Although we decline to address this issue, we note that prevailing Colorado case law, decided prior to Colorado's adoption of the UCC, is at odds with the rule adopted by a majority of states in determining the accrual date for the cause of action to recover a debt that is accelerated at the option of the creditor,. See Lovell v. Goss, 45 Colo. 304, 101 P. 72 (1909). Typically, a security agreement will provide that a creditor may elect to accelerate at any time after the debtor defaults. William H. Lawrence et al., Understanding Secured Transactions § 17.01[B] (4th ed. 2007). Under such terms, there may be a period of time between the date on which the creditor could accelerate and the date on which the creditor elects to accelerate.
Under the majority rule, the cause of action for such accelerated debt accrues on the date that the creditor elects to accelerate. See, eg., Bay Area Laundry, 522 U.S. at 209 n. 5, 118 S.Ct. 542 (interpreting federal law to hold that "[the statute of limitations on an accelerated debt runs from the date the creditor exercises its acceleration option, not earlier"); United States v. Agri Servs., Inc., 81 F.3d 1002, 1005 (10th Cir.1996) (interpreting New Mexico law to hold that "accrual occurs upon acceleration"). In contrast, in 1909, we held that, where a creditor elects to accelerate the entire debt, the accrual of the cause of action relates back to the date that the creditor was first lawfully permitted to accelerate the debt. Lovell, 101 P. at 74-75.
Under both the statutory scheme and the terms of the parties' agreement, following default, Nor-larco would have been entitled to accelerate at any time following twenty days after providing Hassler with notice of his right to cure under section 5-5-111(1) of the UCCC. Of course, in the present matter, because the record does not contain any evidence of whether Norlarco provided Hassler with notice of his right to cure, the date on which Norlarco was first entitled to accelerate the present debt is unknown. However, because the date that Norlarco was first entitled to accelerate the loan necessarily occurred before Norlarco did in fact accelerate the loan, which we hold occurred shortly after October 30, 2001, the statute of limitations for the present action would have expired under either the Lo-vell rule or the rule applied by a majority of jurisdictions in the wake of their adoption of the UCC.
Concurrence in Part
concurring in part and dissenting in part.
41 I agree with the majority that a party's cause of action on installment debt accrues on the date the debt "becomes due" under the parties' agreement, and not when the debt was liquidated or became determinable. See Maj. op. 44, 16-21; § 13-80-108(4), C.R.S. (2011) (stating that a cause of action on a "debt, obligation, money owed, or performance" shall "accrue on the date such debt, obligation, money owed, or performance becomes due"); see also § 4-3-118, C.R.S. (2011). I further agree that the debt for each installment becomes due when an installment payment is missed, unless the entire debt obligation is validly accelerated under the parties' agreement. Maj. op. 194, 22; see also § 4-8-118; Currigan v. Stone, 136 Colo. 326, 331, 817 P.2d 1044, 1047 (1957) (stating that causes of action accrue separately on the dates when each missed installment payment became due); In re Church, 833 P.2d 813, 815 (Colo.App.1992). Finally, I agree with the majority that to invoke an optional acceleration provision, a creditor must perform some clear, unequivocal affirmative act evidencing the creditor's intention to accelerate a debt. Maj. op. 1124-25; see also Padilla v. Ghuman, 183 P.3d 653, 659 (Colo.App.2007) ("Where an acceleration provision is exercisable at the option of the [creditor], the [creditor] must perform some clear, unequivocal affirmative act evidencing the [creditor's] intention to take advantage of the acceleration provision." (emphasis added)).
T 42 I write separately because I disagree with the majority's conclusion in Part IILB that, as a matter of law, Norlareo acted unequivocally to accelerate all future installment payments owed under the loan by (1) exercising its right as a secured party to repossess the car pursuant to Colorado's version of the Uniform Commercial Code {(U.0.C.), coupled with (2) sending notice to Hassler of its intent to dispose of the collateral, as required by section 4-9-614, C.R.S. (2011) of the U.C.C., using language adopted by the General Assembly as sufficient to inform a consumer debtor of the right to redeem collateral under section 4-9-6283, C.R.S. (2011). See Maj. op. 126. The majority's conclusion is unsupported by the parties' loan agreement, and ignores that a consumer loan and a lien give rise to distinct legal rights that can be enforced independently under separate statutory schemes. Even where, as here, an entity is both a creditor and a secured party in a particular transaction, the entity's mere exercise of its legal remedies under Article 9 of the U.C.C. as a secured party does not, without more, establish as a matter of law that it has simultaneously invoked an independent contractual right as a creditor to accelerate the debt in accordance with Colorado's Consumer Credit Code. Seq, eg., Rogers v. Assocs. Commercial Corp., 129 Ariz. 499, 632 P.2d 1002, 1003, 1007 (Ariz.Ct.App.1981).
T 43 I believe the relevant inquiry for determining whether Account Brokers' cause of action is time-barred is not whether Norlarco did or did not exercise its option to accelerate Hassler's debt, see Maj. op. 123, but rather, whether it did so on or before May 7, 2002 (or six years before it filed its claim in this case on May 7, 2008), and if not, whether Account Brokers' claim seeks to recover any unaccelerated debt that had "become due" on or before May 7, 2002. In my view, the record supports the district court's conclusion that Norlarco proceeded solely as a secured party under the U.C.C. and never exercised its right as a creditor to accelerate
1.
T44 The "Loanliner" open-end voucher and security agreement that Hassler entered into contained both loan and security interest provisions. Paragraph 10 of the agreement set forth the consequences of default. Specifically, this paragraph permitted Norlarco to accelerate all future installment payments owed under the loan without notice to Has-sler so long as Norlareo complied with applicable state law to cure:
When you are in default and after expiration of any right you have under applicable state law to cure your default, we can require immediate payment of your outstanding balance under the Plan without giving you advance notice.
(Emphasis added.) Under section 5-5-111(1), C.R.S. (2011), of Colorado's Consumer Credit Code, Norlareo could not accelerate the debt under this contractual provision until twenty days after giving Hassler a notice of the right to cure in section 5-5-110. Seetion 5-5-110 expressly requires such notice to conspicuously state the "name, address and telephone number of the creditor to which payment is to be made, a brief identification of the credit transaction, the right to cure the default, and the amount of payment and date by which payment must be made to cure the default." § 5-5-110(2), C.R.S. (2011) (emphasis added). The record here does not reflect that Norlareo ever sent Hassler such notice.
T45 Paragraph 10 also provided that if Hassler defaulted on the loan, Norlareo could take possession of the car, sell it, and then "apply the money [from the sale] to any amounts you owe us."
'I 46 The district court concluded that Nor-lareo proceeded merely as a secured party by exercising its rights under the secured transaction provisions of the U.C.C. and did not accelerate the debt. The record supports this conclusion. Specifically, Norlareo repossessed the car pursuant to section 4-9-609. Then, in an undated letter that tracked virtually verbatim the safe-harbor notice provided in section 4-9-614, Norlarco informed Has-sler of his legal rights to redeem the repossessed collateral. See §§ 4-9-614, -623, C.R.S. (2011). Upon the sale of the car, the June 2002 month-end account statement re-fleets that, as required by the parties' agreement and section 4-9-615(a) of the U.C.C., Norlareo applied the sale proceeds to reduce the loan balance, which necessarily included the "delinquent amount" (e., the unpaid portion of the loan balance then delinquent) and the "repayment amount" (Le., the unpaid portion of the loan balance currently due but not yet delinquent).
47 The majority nevertheless interprets Norlarco's efforts to exercise its remedies under the U.C.C.-repossession coupled with sending the safe-harbor notice required prior to disposition of the collateral-as acts that unequivocally invoked Norlareo's separate contractual right under the loan agreement to accelerate all future installment payments.
€ 48 In this case, Norlareo's undated letter to Hassler was titled "NOTICE OF OUR PLAN TO SELL PROPERTY." It then tracked, almost verbatim, the statutory safe-harbor language
We will sell the collateral [the 1994 Porsche] at private auction sometime after November 10th 2001.
The money that we get from the sale (after paying our costs) will reduce the amount you owe. If we get less money than you owe, you will still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else.
You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call ws at [Norlareo's phone numbers].
(Second emphasis added.)
149 The majority holds that a secured party's use of the recommended statutory language emphasized above serves, as a matter of law, as the party's unequivocal invocation of a wholly independent contractual right to accelerate the entire debt obligation. This language, however, was adopted by the General Assembly as recommended standard form language that satisfies the notice requirements of section 4-9-614 before disposition of collateral. It is purposefully ambiguous as to whether acceleration of all future loan payments has in fact occurred, allowing it to be used in a variety of factual situations (and thus rendering it a useful safe harbor). The critical phrase "full amount you owe" does not necessarily mean "the entire balance of the loan," Maj. op. TN 14, 30-31, as the majority incorrectly infers. Rather, this phrase can cover situations in which the entire debt has not been accelerated. For example, depending on the parties' agreement, the phrase "full amount you owe" can refer to the debtor's missed monthly payments plus the presently due monthly payment; the missed monthly payments plus the expenses associated with repossession; the missed monthly payments plus other monies owed by the debtor under the parties' loan agreement (eg., taxes, fees, insurance premiums);
€50 In my view, any possible doubt that the safe-harbor notice contained in section 4-9-614 does not automatically accelerate the debt is eliminated by official comment to section 4-9-6238. Section 4-9-6283 provides that to redeem repossessed collateral, the debtor "shall tender ... [flulfillment of all obligations secured by the' collateral." Official comment 2 elaborates: >
To redeem the collateral a person must tender fulfillment of all obligations secured, plus certain expenses. If the entire balance of a secured obligation has been accelerated, it would be necessary to tender the entire balance.
(Emphasis added.) This comment clarifies that the phrase "[flulfillment of all obligations secured by the collateral" can encompass situations in which the underlying debt has not been accelerated; otherwise the comment regarding acceleration would not be written in the conditional. Thus, the mere use of the corresponding safe-harbor language in section 4-9-614 to inform a debtor of his right to redeem the collateral under section 4-9-623 by "paying us the full amount you owe," does not necessarily mean that the entire debt, in fact, has been accelerated. The majority's conclusion to the contrary imports a meaning into the safe-harbor language of section 4-9-614 that is wholly unsupported by the statutory language and scheme.
T51 Finally, I note that the series of monthly statements received by Hassler after the car was repossessed and the safe-harbor notice issued further undermine the majority's conclusion that Norlareo unequivocally accelerated the entire debt obligation. None of these subsequent monthly account statements suggested that either the "delinquent amount" on the loan (e., the amount of the loan that has become past due) or the "repayment amount" owed (e., the amount of the loan that has "become due" but not yet delinquent) equaled the entire outstanding loan balance. Rather, these statements continued to reflect a "delinquent amount" based on installment payments missed to that point, and a "repayment amount" of the $523 monthly installment under the agreement.
T 52 For these reasons, I disagree with the majority's conclusion that Norlareo's mere act of repossessing the collateral pursuant to section 4-9-609, coupled with sending the safe-harbor notice required by section 4-9-614(a)(3), unequivocally invoked its independent contractual right under the loan agreement to accelerate the entire debt obligation secured by the collateral.
IL.
[53 I now turn to whether Account Brokers' cause of action, filed on May 7, 2008, is barred by the applicable six-year statute of limitations. § 13-80-108.5(1)(a); § 4-8-118. Account Brokers' claim would be time-barred to the extent it includes any debt that had "become due" (ie., the cause of action ac-erued) on or before May 7, 2002. See § 13-80-108(4), C.R.S. (2011). In other words, if Norlareo accelerated the debt on or before that date, or alternatively, if Account Brokers' claim seeks to recover any installment payments that had become due on or before May 7, 2002, then any claim for such debt is time-barred. The record shows that neither is true.
T55 Because Norlarco did not accelerate the debt on or before May 7, 2002, Account Brokers' claim would be time-barred, and only partially so, only if the claim seeks to recover any installment payments that had "become due" on or before May 7, 2002. The uncontroverted record evidence establishes, however, that Account Brokers' claim does not include any such payments. The June 2002 month-end account statement shows that as of June 1 the "delinquent amount" (Le., the missed payments that had "become due") was at most $6035. The same statement reflects, however, that on June 4, following the sale of the collateral, Norlarco applied the $17,500 in proceeds to reduce the loan balance, which necessarily included the full amount that had "become due."
156 Accordingly, I would affirm the district court's order that Account Brokers' lawsuit was not barred by the statute of limitations.
. Before repossessing the car, section 5-5-111 required Norlarco to give Hassler notice of an opportunity to cure his defaults. § 5-5-111(1). The record does not reflect whether this notice to cure was provided; however, Hassler does not raise this issue.
. Section 4-9-614(a)(3) provides that the following statutory language provides sufficient notice in a consumer-goods transaction:
We will sell [describe collateral ] at private sale sometime after [date]. A sale could include a lease or a license.
The money that we get from the sale (after paying our costs) will reduce the amount you owe. If we get less money than you owe, you [will or will not, as applicable ] still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else.
You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call us at [telephone number ] or write us at [secured party's address ].
§ 4-9-614(a)(3) (Fourth emphasis added.)
. For example, the parties' agreement in this case provided, ""If you do not pay the taxes or fees on the property when due or keep it insured, we may pay these obligations, but we are not required to do so. Any money we spend for taxes, fees or insurance will be added to the unpaid balance of the advance [ie., the original loan amount] and you will pay interest on those amounts at the same rate you agreed to pay on the advance."
. The majority's suggestion that a secured party could simply deviate from the safe-harbor language to avoid invoking acceleration, see Maj. op. 1 30, undercuts the very purpose behind safe-harbor language. Under today's holding, a secured party who seeks refuge in the safe-harbor language now risks unintentionally invoking any separate contractual right to accelerate the debt.
. The majority suggests that, if acceleration did not occur, Norlarco violated the U.C.C. by not giving Hassler the proceeds from the collateral sale in excess of the amount that had "become due" when the sale occurred. Maj. op. 126 n. 8. Hassler has never raised such an argument. Moreover, as the majority correctly notes, under Paragraph 10 of the parties' agreement, Hassler remained liable for any remaining deficiency after application of the sale proceeds to the amount that had "become due." Maj. op. 17. Account Brokers seeks to recover only this deficiency amount, which did not become due (ie., under the parties' agreement, Hassler did not become liable for this deficiency) until after the sale of the collateral, or within the six-year statute of limitations period.