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Mountain States Adjustment v. Cooke

Court of Appeals of Colorado, Second Division

May 19, 2016

Mountain States Adjustment, assignee of Bank of the West, Plaintiff-Appellee,
Jason Cooke, Defendant-Appellant.

         City and County of Denver District Court No. 14CV32774 Honorable Michael J. Vallejos, Judge

          Brammer Law Office, P.C., Jay M. Brammer, Ray Ann Brammer, Sterling, Colorado, for Plaintiff-Appellee

          Pelz & Associates, P.C., Aaron C. Acker, Denver, Colorado, for Defendant-Appellant



         ¶ 1 In this debt collection action, defendant, Jason Cooke, appeals from the summary judgment in favor of plaintiff, Mountain States Adjustment (MSA), assignee of Bank of the West. He also appeals from the court's denial of his cross-motion for summary judgment. Because we conclude that the district court erred by not applying the law of the state chosen in the debt instrument, we reverse the judgment and remand with directions for entry of judgment in favor of Cooke.

         I. Background and Procedural History

         ¶ 2 In August 2004, Cooke signed a note (the Note) with Commercial Federal Bank (CFB) for a home equity loan. Cooke resided in Colorado, and the home which was the collateral for the Note (subject property) was in Colorado. CFB was headquartered in Nebraska and the terms of repayment for the Note state, "[t]his agreement is governed by federal law, and to the extent applicable, the laws of Nebraska."

         ¶ 3 The record shows that CFB merged into Bank of the West, a California bank, in December 2005. Cooke's repayment terms under the Note did not change as a result of the merger nor was Cooke asked to sign a new loan agreement naming Bank of the West as the lender on the Note or successor in interest to CFB.

         ¶ 4 In April 2009, the company holding the first mortgage on the subject property commenced foreclosure proceedings. Bank of the West did not participate in the foreclosure proceedings, nor did it attempt to recover any funds from the foreclosure. However, on June 19, 2009, Bank of the West sent a "30 Day Notice of Demand and Intent to Accelerate" letter to Cooke, stating that Cooke had failed to make the March, April, and May 2009 payments on the Note, and that it may accelerate the sums due under the Note without further demand. The record does not reflect any further communication between Bank of the West and Cooke.

         ¶ 5 On February 14, 2014, Bank of the West assigned Cooke's Note to MSA. On July 15, 2014, MSA filed this collection action against Cooke in Denver District Court seeking recovery of amounts due under the Note. Cooke answered the complaint and admitted that he signed the Note; as pertinent here, he alleged as an affirmative defense that MSA's claim was barred by the applicable statute of limitations.

         ¶ 6 In January 2015, MSA filed a motion for summary judgment, arguing that Cooke admitted to being the signatory under the Note and that the facts were undisputed that he was in default and had not paid the amounts due and owing under the Note. Cooke filed a cross-motion for summary judgment, asserting that, as a matter of law, MSA's claim was barred by the applicable statute of limitations.

         ¶ 7 As relevant here, in his cross-motion for summary judgment, Cooke asserted that Nebraska law applied pursuant to the Note's choice of law provision and that the Nebraska limitations period to bring suit for an alleged breach of a written contract is five years. Further, Cooke alleged Bank of the West had knowledge of his default by April 1, 2009, after he missed his March payment. Thus, he argued, Bank of the West or its assignee should have filed for recovery of the monies due under the Note by April 1, 2014, but failed to do so.

         ¶ 8 Regarding the choice of law issue, MSA responded by arguing that (1) the choice of law provision in the Note was ambiguous; (2) Colorado law should apply because of the significant relationship between Colorado and the Note; (3) under the Restatement (Second) of Conflict of Laws section 187 (Am. Law Inst. 1971), the Note held no significant relationship with the state of Nebraska and was not enforceable; and (4) under the plain language of the choice of law provision, federal law should first apply and that a federal court sitting in diversity would apply the law of the forum state in which it is sitting (here, Colorado).

         ¶ 9 In a written order, the district court agreed with MSA and entered summary judgment in its favor for the amounts due and owing under the Note; the court also denied Cooke's cross-motion for summary judgment. As pertinent here, the court concluded that Colorado law applied rather than Nebraska law, and that, accordingly, MSA's claim was not barred by Nebraska's statute of limitations. In making its findings, the court emphasized and heavily relied on the number of contacts and relationships MSA and Cooke have had with Colorado.

         ¶ 10 This appeal followed.[1] The sole issue on appeal is whether the district court erred by ruling that Colorado law applies here, rather than Nebraska law as stated in the choice of law provision in the Note. The parties appear to agree that resolution of the choice of law issue is dispositive of this case. Thus, if Colorado law applies, MSA's claim is not barred by Colorado's six-year statute of limitations, and summary judgment was properly entered in favor of MSA. However, if Nebraska law applies, the facts in the record are undisputed that MSA's claim would be barred by Nebraska's five-year statute of limitations, and judgment should be entered, as a matter of law, for Cooke. For the reasons discussed below, we conclude that Nebraska law applies. Accordingly, we reverse the judgment for MSA and remand the case for entry of judgment in favor of Cooke.

         II. Standard of Review

         ¶ 11 We review the grant of a summary judgment motion de novo. W. Elk Ranch, L.L.C. v. United States, 65 P.3d 479, 481 (Colo. 2002).

         ¶ 12 Summary judgment is appropriate when the pleadings and supporting documentation show that no genuine issue of material fact exists, and that the moving party is entitled to judgment as a matter of law. C.R.C.P. 56; McDonald v. Zions First Nat'l Bank, N.A., 2015 COA 29, ¶ 45. However, summary judgment is a drastic remedy and should be granted only if it has been clearly established that the moving party is entitled to a judgment as a matter of law. McDonald, ¶ 45.

         ¶ 13 Enforceability of a choice of law provision and a court's decision regarding choice of law are reviewed de novo. Shoen v. Shoen, 2012 COA 207, ¶ 11; see Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 956 (10th Cir. 1992); see also Adams Reload Co., Inc. v. Int'l Profit Assocs., Inc., 143 P.3d 1056, 1058 (Colo.App. 2005) (issues regarding forum selection clauses are subject to de novo review).

         III. Applicable Law

         ¶ 14 A court must interpret a contract in its entirety, harmonizing and giving effect to all provisions so that none will be rendered meaningless. Hoff v. Indus. Claim Appeals Office, 2014 COA 137M, ¶ 37 (cert. granted on other grounds Sept. 8, 2015). In the case of any doubt with respect to a contract term, it should be construed most strongly against the drafter. Valdez v. Cantor, 994 P.2d 483, 486 (Colo.App. 1999).

         ¶ 15 Choice of law provisions are ordinarily given effect as they are considered a clear manifestation of the parties' intentions. Pirkey v. Hosp. Corp. of Am., 483 F.Supp. 770, 773 (D. Colo. 1980). The absence of words such as "shall, " "exclusive, " or "only" in such a contract provision does not necessarily make it permissive. Vanderbeek v. Vernon Corp., 25 P.3d 1242, 1247-48 (Colo.App. 2000) (considering a forum selection provision). "No specific language is required for a provision to be mandatory." Id. ...

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