United States District Court, D. Colorado
TROY D. PAGGEN, Plaintiff,
BANK OF AMERICA, N.A. and PUBLIC TRUSTEE'S OFFICE OF ARAPAHOE COUNTY, and any and all other parties who may have an interest in the subject property, Defendants.
Brooke Jackson, United States District Judge.
order addresses defendant's motion for summary judgment
[ECF No. 38]. For the reasons given below, the motion is
case involves a dispute over the accrual date of the six-year
statute of limitations period for promissory notes per Colo.
Rev. Stat. § 13-80-103.5(1)(a). In 2003, Plaintiff Troy
Paggen obtained a loan for $520, 000. ECF No. 38 at 2. The
loan required him to make monthly payments beginning in 2003
and ending in 2033. Id. He secured the loan with a
deed of trust on his Aurora, Colorado property. Id.
Mr. Paggen's last loan payment was for the January 1,
2009 payment period. ECF No. 4 at 2. After missing his
February 1, 2009 payment, Mr. Paggen's loan went into
default status on February 2, 2009. Id.
response to the missed payments, Defendant Bank of America,
N.A. (BANA) (through BANA's former loan servicer,
Countrywide Home Loans Servicing) sent Mr. Paggen a letter on
March 19, 2009, notifying Mr. Paggen of his default and
providing him an opportunity to cure his default of $7, 886
by April 18, 2009. ECF No. 38-2 at 26, Ex. 3. Mr. Paggen did
not cure. ECF No. 4 at 3. BANA then initiated foreclosure by
delivering a notice of election and demand for sale (NED) to
the Arapahoe County public trustee on June 30, 2009; the
county recorded the NED on July 9, 2009. Id. at 29,
Ex. 4. The public trustee set an initial sale date for
November 4, 2009. ECF No. 39 at 7, Ex. 2. BANA then obtained
an order authorizing sale of the Aurora property on August
12, 2009. ECF No. 38-2 at 31, Ex. 5. However, Mr. Paggen
applied for a short sale with BANA in 2009 and continued to
request short sale approval through November 2010. ECF No.
38-1 at ¶ 11, Ex. A. This prevented BANA from proceeding
with a foreclosure sale through November 2010. Id.
In addition to the request for a short sale, a federally
mandated foreclosure hold (based on the Making Home
Affordable program) also prevented BANA from proceeding with
foreclosure in 2009. Id. BANA withdrew the 2009 NED
on July 28, 2011. ECF No. 38-3 at 4, Ex. 8.
initiated a second NED on October 14, 2011, which Arapahoe
County recorded on October 19, 2011. Id. at 6, Ex.
9. Like before, the public trustee set an initial sale date,
this time for February 15, 2012. ECF No. 39 at 11, Ex. 4. On
February 4, 2012, Mr. Paggen filed for Chapter 7 bankruptcy.
ECF No. 29-4 at 3, Ex. F. In his Chapter 7 Individual
Debtor's Statement of Intention form-a statement made
under penalty of perjury-Mr. Paggen indicated that he would
surrender his Aurora property. ECF No. 29-4 at 48-50, Ex. G.
The U.S. Bankruptcy Court granted a discharge on May 4, 2012.
Id. at 52, Ex. H. BANA placed the foreclosure on
hold on June 11, 2012, due to a settlement with the
Department of Justice. It then removed the hold on December
16, 2013. ECF No. 38-1 at ¶ 17, Ex. A. BANA withdrew the
2011 NED on July 5, 2012. ECF No. 38-3 at 20, Ex. 13.
2014, BANA's new loan servicer (Ocwen Loan Serving, LLC)
notified Mr. Paggen that he had until July 30, 2014, to bring
the account current. ECF No. 38-3 at 22-23, Ex. 14. At the
time, Mr. Paggen owed $218, 138. Id. The letter
stated that “[f]ailure to bring your account current
may result in our election to exercise our right to foreclose
on your property. Upon acceleration, your total obligation
will be immediately due . . . .” Id. In 2016,
Mr. Paggen's loan transferred again to a third loan
servicer (now Shellpoint Mortgage Serving). Id. at
30, Ex. 16. On February 15, 2016, Shellpoint sent a similar
letter as Ocwen. It stated that Mr. Paggen owed $287, 051,
and that if he failed to cure the default by the end of
March, “Shellpoint will accelerate the maturity date of
the Note and declare all outstanding amounts under the Note
immediately due and payable.” Id. When Mr.
Paggen did not cure, BANA initiated its third NED on January
9, 2017. Id. at 34, Ex. 17. At the present time, the
loan remains in default. ECF No. 38 at 4.
Troy Paggen initiated this action on April 24, 2017, in the
District Court of Arapahoe County, Colorado. ECF No. 4 at 1.
In his complaint, Mr. Paggen sought a Determination of
Interests Pursuant to C.R.C.P. 105 and Declaratory Relief.
Specifically, he asserted that the six-year statute of
limitations began to run on February 2, 2009, the day he
first defaulted on his loan, thus expiring on February 3,
2015. ECF No. 4 at 4. Mr. Paggen also sought a determination
that the deed of trust was extinguished and unenforceable,
and the underlying debt evidenced by the promissory note held
by BANA was time-barred and uncollectable. Id. at 5.
BANA responded with a motion for summary judgment, arguing
that it timely initiated foreclosure because the six-year
statute of limitations begins to run on acceleration as
opposed to default. ECF No. 38 at 1. Then, BANA argued it
effectively abandoned its 2009 and 2011 foreclosures by
withdrawing those actions, thus restoring the loan's
installment status and its original 2033 maturity date.
Id. at 2.
STANDARD OF REVIEW
moves for judgment on the pleadings and summary judgment. The
Court will use the summary judgment standard of review in
ruling on this matter.
Court may grant summary judgment if “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). The moving party has the burden to show that there is
an absence of evidence to support the nonmoving party's
case. Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986). The nonmoving party must “designate specific
facts showing that there is a genuine issue for trial.”
Id. at 324. A fact is material “if under the
substantive law it is essential to the proper disposition of
the claim.” Adler v. Wal-Mart Stores, Inc.,
144 F.3d 664, 670 (10th Cir. 1998) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A
material fact is genuine if “the evidence is such that
a reasonable jury could return a verdict for the nonmoving
party.” Anderson, 477 U.S. at 248. The Court
will examine the factual record and make reasonable
inferences therefrom in the light most favorable to the
nonmoving party. Concrete Works of Colorado, Inc. v. City
& Cty. of Denver, 36 F.3d 1513, 1517 (10th Cir.
preliminary matter, the Court notes that federal question
jurisdiction is absent in this case. Therefore, the Court
must have diversity of citizenship jurisdiction over the
parties. The Court has diversity of citizenship jurisdiction
if (1) the matter in controversy exceeds $75, 000, exclusive
of interest and costs, and (2) the dispute is between
citizens of different states. 28 U.S.C. § 1332(a)(1). In
this case, the amount in controversy exceeds $75, 000 because
the deed of trust secures a loan in the original principal
amount of $520, 000 and the current unpaid principal is $516,
737. ECF No. 1 at 3; ECF No. 38-1 at ¶ 23. Second, there
is complete diversity between the parties because Mr. Paggen
is a Colorado citizen and BANA is a North Carolina citizen.
ECF No. 1 at 2. Because the parties satisfy the amount in
controversy requirement and complete diversity exists, the
Court finds that diversity of citizenship jurisdiction exists
in this lawsuit and subject matter jurisdiction is proper.
The Court will apply Colorado law. See Erie R. Co. v.
Tompkins, 304 U.S. 64, 79-80 (1938).
two motions, BANA makes four primary arguments: First, that
loan acceleration, not default, triggers the six-year statute
of limitations. Second, that Mr. Paggen cannot demonstrate
acceleration. Third, that even if BANA did accelerate, the
NED withdrawals restored the loan to pre-acceleration status.
And fourth, that equity should prevent Mr. Paggen from
challenging foreclosure. ECF Nos. 29 and 38.
Acceleration, not default, triggers the six-year statute
a statute of limitations bars a particular claim is a
question of fact.” Trigg v. State Farm Mut. Auto.
Ins., 129 P.3d 1099, 1101 (Colo.App. 2005).
“However, if undisputed facts demonstrate that the
plaintiff had the requisite information as of a particular
date, then the issue of whether the statute of limitations
bars a particular claim may be decided as a matter of
case, the parties agree that Colo. Rev. Stat. §
13-80-103.5(1)(a), which provides for a six-year statute of
limitations period for the enforcement of any instrument
securing the payment of a debt, governs in this case. ECF
Nos. 38 and 40. They also agree on the facts. However, the
parties disagree as to the legal date of accrual for the
statute of limitations. BANA argues the statute of
limitations begins when the lender ...