Peterson v. Texas Commerce Bank-Austin, National Ass'nPeterson v. Texas Commerce Bank-Austin, National Ass'n
Hartwin Ray Peterson, Jr., appeals an adverse summary judgment rendered against him in a deficiency suit on a promissory note. Peterson sought to avoid liability for the debt by pleading the affirmative defense of limitations. At issue is whether, under Texas common law, the pendency of a federal bankruptcy proceeding tolls the applicable state statute of limitations. Holding that it does, we will affirm the district-court judgment.
FACTS
Peterson executed a promissory note that Texas Commerce Bank-Austin, N.A. (the “Bank”), came to own and hold. The note had a final maturity date of April 21, 1986. Peterson defaulted in payment of the note upon maturity and thereafter filed for bankruptcy on July 31, 1986. On October 29, 1990, the bankruptcy court rendered its judgment declaring that Peterson had obtained credit from the Bank under false pretenses and that the note debt was nondischargeable. From July 31, 1986, to October 29, 1990, the Bank was legally prevented from suing on the debt by virtue of the automatic stay imposed by section 362(a) of the Bankruptcy Code.
After considering the pleadings, motions, and arguments of counsel, the court granted the Bank’s motion for summary judgment and denied Peterson’s. Having perfected his appeal, Peterson advances four points of error.
DISCUSSION
Although hе alleges the trial court erred in granting the Bank summary judgment, Peterson’s argument in this Court focuses on the denial of his own motion for summary judgment and finds error in the trial court’s ruling that limitations did not bar the Bank’s suit. In his first point of error, Peterson maintains the Bank was required to plead the suspension of the statute of limitations because suspension is in the nature of a plea of confession and avoidance. He contends the Bank’s pleadings are insufficient to raise the matter of suspension and, therefore, the Bank waived the defense. We disagree.
The Bаnk specifically pleaded in its motion for summary judgment facts showing that Peterson had filed for bankruptcy. An automatic consequence of filing for bankruptcy is the imposition of a stay of any suits against the debtor.
Before proceeding to Peterson’s three remaining points of error, we provide some background. The Bankruptcy Code addresses the interaction between
In his second point of error, Peterson relies on
Martindale Mortgage Co. v. Crow,
During the period of the pendency of this bankruptcy, under the terms of the law, there was no court where, as a mаtter of right, the appellant might institute suit seeking to recover against appellee on this claim. No court, without appellant [having] obtained the consent of the bankruptcy court, could entertain this suit.
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We have no doubt that the filing of the petition interrupted the running оf the statute.
Id.
Despite the clarity of this holding, Peterson argues that the court’s “rationale” inescapably leads to a different result in the instant case. Peterson distills this rationale from the court’s discussion relating to the absence of tolling statutes:
At the time of the pendency of the bankruptcy proceeding we have under consideration, we have been cited to no statutes of the United States providing for such suspension. It is true that Sec. 11 of the Bankruptcy Act known as11 U.S.C.A. ,[ 2 ] specifically provides for the situation we have here.... Bеfore [section 29] went into effect the bankruptcy proceeding in question had been dismissed.§ 29
Id. at 870. We understand Peterson to argue that the Martindale court would have held differently had section 29 been in effect. The facts in Martindale reveal, however, that even if section 29 had been in effect, the creditor would not have cоme within its protection because he filed suit more than 30 days after dismissal of the bankruptcy petition. Id. at 872. Thus, the court would still have had to rely on Texas common law to hold that the creditor’s suit was not time-barred.
The
Martindale
court neither expressed nor implied any desire to limit the hоlding or make its application turn on the existence of independent federal suspension statutes. We therefore reject Peterson’s interpretation of
Martindale.
Furthermore, Texas common law since
Martindale
has recognized that the Bankruptcy Code’s automatic-stay provision interrupts the running of applicable limitations periods.
See Howard v. Howard,
Finally, the Texas Supreme Court recently reaffirmed that, “[w]here ‘a person is prevented from exercising his legal remedy by the pendency of legal proceedings, the time during which he is thus prevented should not be counted against him in determining whether limitations have barred his right.’ ”
Hughes v. Mahaney & Higgins,
By his third point of error, Peterson urges that federal law interpreting section 108(c)(1) recognizes suspension only by specialized statutes and thus preempts Texas common-law tolling doctrines. According to Peterson, section 108(c) provides that a limitations period that expires during the pendency of a bankruptcy proceeding can be extended only by the 30-day allowance of section 108(c)(2) or by a state’s specialized suspension statutes. However, section 108(c) does not itself restrict the source of the suspension to specialized statutes. Thus, Peterson relies on federal bankruptcy case law to argue that only state statutory law, as opposed to common law, can toll the statute of limitations in the bankruptcy context.
See In re Pettibone Corp.,
In
Pettibone,
tort claimants filed suit against a corporation in bankruptcy in violation of the automatic stay. Three of these claimants failed to refile their actions within 30 days after termination of the stay, as section 108(c)(2) permits. The bankruptcy court stated that the continued viability of the state tort suits depended on the existence of speciаlized suspension statutes tolling the statute of limitations.
In re Pettibone,
[T]he only obstacles to the continuation of the tort suits are the statutes of limitations — Michigan’s for two cases and Louisiana’s for the third. Whether Michigan or Louisiana would treat a case filed in violation of the automatic stay as a non-event for limitations рurposes is a question of state law. No federal interest is in play; the bankruptcy court authorized the continued prosecution of these cases when it confirmed the plan of reorganization. Federal law assured the plaintiffs 30 days in which to pick up the baton; if states wаnt to give plaintiffs additional time, that is their business. Some states do — e.g., Illinois, which tolls its statute of limitations during the entire bankruptcy proceeding, Ill.Rev.Stat. ch. 110 1113-216. No one believes that these states are violating federal law.
Pettibone Corp. v. Easley,
As in
Pettibone,
the bankruptcy court in this case held a claim nondischargeable. The above excerpt reveals that the federal interest does not thereafter extend to whether or how state law, through statutes of limitations or the suspension thereof, allows suit on such claims. Although the Seventh Circuit offers the Illinois suspension statute as an example of one state’s method for tolling its statute of limitations, the court makes clear that the issue of tolling is left wholly to the states, free of any overriding federal interest.
See also Ambrose Branch Coal Co., Inc. v. Tankersley,
Peterson also cites other bankruptcy cases interpreting section 108(c).
See In re Baird,
In his final point of error, Peterson characterizes the trial court’s holding as an application of the equitable doctrine of tolling and complains that resort to equitable principles was error because the Bank had an adequаte remedy at law — the 30-day window of section 108(c)(2). The 30-day window, Peterson claims, adequately substitutes for the lost time during which the Bank could have sued but for the legal barrier imposed by
We believe this argument misses the point. Peterson would have us tell the Bank that, despite the assurаnces of state common law that the statute of limitations was tolled when Peterson filed for bankruptcy, only section 108(c)(2) effectively preserved its claim, and preserved it for a mere 30 days. We have discovered no federal preemptive principlеs that would limit the Bank’s remedy to the restrictive 30-day window. After the automatic stay has been lifted, a claimant should benefit from the tolling of the statute of limitations for the period the stay was imposed and be permitted to bring suit during the remaining period granted by the statute of limitations. 3 We overrule Peterson’s fourth point of error.
CONCLUSION
Fоr the foregoing reasons, we affirm the judgment of the district court in all respects.
Notes
. Section 108(c) provides, in pertinent part:
(c) [I]f applicable nonbankruptcy law ... fixes a period for commencing or continuing a civil action in a court other than a bankruptcy court on a claim against a debtor ... and such period has not expired before the date of the filing of the petition, then such period does not expire until the later of—
(1) the end of such period, including any suspension of such period occurring on or after the commencement of the case; or
(2) 30 days after notice of the termination or expiration of the stay undersection 362 ... with respect to such claim.
. A predecessor of
. For example, in this case, Peterson filed for bankruptcy roughly three months after the note matured. Therefore, when the bankruptcy court lifted the stay, the Bank retained approximately three years and nine months within which to file its suit.