Bank of New York Mellon v. Peterson

          Archuleta County District Court No. 15CV10 Honorable Gregory G. Lyman, Judge

          Announced December 13, 2018 Akerman, LLP, Justin D. Balser, Taylor T. Haywood, Denver, Colorado, for Plaintiff-Appellee

          Blair K. Drazic, Loma, Colorado, for Defendants-Appellants

          OPINION

          LICHTENSTEIN JUDGE

         ¶ 1 Plaintiff-Appellee, Bank of New York Mellon, formerly known as Bank of New York (the Bank), filed an unlawful detainer action after acquiring title to a house through foreclosure. Defendants-Appellants, Timothy Peterson and Dyan Frances Parker, appeal the district court's judgment granting the Bank possession.

         ¶ 2 Peterson and Parker assert that the 2015 foreclosure and the resulting judgment of possession cannot be legally enforced because the six-year statute of limitations (for an action for default on a promissory note) had already expired.^[1] In particular, they claim that the Bank triggered the statute of limitations in 2008 when it accelerated the obligation on the note.

         ¶ 3 The Bank admits that it accelerated the note in 2008 by initiating foreclosure proceedings, but it argues that it abandoned the acceleration in 2010 by withdrawing the foreclosure and providing Peterson's son (the borrower) another opportunity to cure the default. The Bank asserts that the abandonment restored the note's original maturity date for purposes of accrual. We agree with the Bank and, therefore, we affirm.

         I. Background

         ¶ 4 On May 14, 2007, the borrower obtained a $261, 000 loan evidenced by a promissory note for a house in Archuleta County, Colorado. The promissory note required monthly payments through June 1, 2037, and contained an optional acceleration clause. The borrower secured the loan with a deed of trust on the property, and the Bank was the holder of the note and deed of trust. Peterson is the borrower's attorney-in-fact.

         ¶ 5 The borrower soon thereafter stopped making payments. On October 17, 2007, he received a letter from the Bank titled "NOTICE OF DEFAULT AND ACCELERATION."^[2] The letter provided that

the borrower had the "right to cure the default," but that if he did not cure by November 16, 2007, the mortgage payments will be accelerated with the full amount remaining accelerated and becoming due and payable in full, and foreclosure proceedings will be initiated at that time.

(Emphasis in original.)

          ¶ 6 The borrower received another letter, this time demanding that he cure the default by December 16, 2007. The borrower did not respond to either letter.

         ¶ 7 The Bank did not take any action on the default until October 2008. Meanwhile, the borrower and his father, Peterson, executed an "Option to Purchase" agreement stating that Peterson would make the monthly payments due on the note. The agreement purported to grant Peterson "full power of attorney," including "negotiating refinancing, payment plans, financial, and all legal issues" for the property.

         ¶ 8 After executing the agreement, Peterson and Parker began occupying the property.

         ¶ 9 Then, in October 2008, the Bank initiated foreclosure proceedings (the 2008 foreclosure). On December 5, 2008, the Bank moved for a court order authorizing the sale of the property pursuant to C.R.C.P. 120. But later that month, the Bank approved the borrower's request for a loan modification, whereby the borrower would owe a $2017.97 monthly payment. That same month, Peterson remitted a $2017.97 check on the borrower's behalf. But neither Peterson nor the borrower made any more payments.

         ¶ 10 Even so, on March 26, 2010, the Bank withdrew the 2008 foreclosure. It subsequently sent the borrower a new acceleration warning letter providing him another opportunity to cure the default.

         ¶ 11 Nearly five years later, in January 2015, the Bank initiated and pursued foreclosure proceedings (the January 2015 foreclosure) and the district court authorized the property's sale.^[3]The Bank purchased the property in the foreclosure sale.

         ¶ 12 Two months later, the Bank commenced the present action to acquire possession and evict Peterson and Parker from the property.

         ¶ 13 Peterson and Parker filed an answer and affirmative defense and counterclaims. They asserted that they had superior title to the property, contending that the statute of limitations expired before the January 2015 foreclosure. They argued that the Bank accelerated the loan in 2008, which triggered the six-year statute of limitations, and, thus, the ...