United States District Court, D. Colorado
OPINION AND ORDER GRANTING MOTION FOR SUMMARY
S. Krieger Chief United States District Judge
MATTER comes before the Court pursuant to the
Defendant's (“BNY”) Motion for Summary
Judgment (# 31), the Plaintiffs'
response (# 32), and BNY's reply
Jurisdiction and Material Undisputed Facts
pertinent facts are simple and undisputed. In 2006, Plaintiff
David Parker purchased a parcel of real property located in
Colorado Springs, Colorado. Mr. Parker financed that purchase
with a note in the amount of roughly $480, 000 secured by a
Deed of Trust. At some point in time, BNY became the holder
of the note and beneficiary of the Deed of Trust. (For
purposes of simplicity, the Court will treat BNY as having
been the initial lender and beneficiary, as doing so does not
change the analysis herein in any way.)
Parker defaulted on the note in December 2008 and has made no
payments on it since then. On June 25, 2010, BNY commenced
proceedings to foreclose its Deed of Trust in the District
Court for El Paso County, Colorado. Although BNY ultimately
obtained C.R.C.P Rule 105 authorization to sell the property,
it entered into discussions with Mr. Parker about the
possibility of refinancing the loan. Those discussions
consumed most of 2011 but were unsuccessful, and on December
21, 2011, BNY withdrew its petition in the foreclosure
commenced a second foreclosure action in March 13, 2012. Once
again, this filing triggered a spate of negotiations and
discussions. On July 13, 2013, BNY again withdrew its
foreclosure petition. Then in 2013, Mr. Parker formed
Plaintiff Sea Breeze, LLC, and without consideration
transferred his interest in the property to Sea
Breeze. BNY filed a third foreclosure petition on
April 13, 2016. That petition remains pending.
30, 2017, the Plaintiffs commenced the instant action in the
District Court for El Paso County, Colorado. They assert two
claims: (i) declaration of the rights of the parties in the
real property, but specifically requesting a determination
that BNY's current foreclosure proceeding is untimely -
this appears to be in the nature of a quiet title action
under C.R.Civ.P 105(a); and (ii) declaration that Mr.
Parker's “personal obligation to satisfy the
promissory note is also time barred.” BNY removed the
action to this Court pursuant to 28 U.S.C. § 1332, and
now moves (# 31) for summary judgment in its
favor, arguing that its current foreclosure action is timely.
claims in this action are governed by Colorado law. It
provides for a six-year limitation period to enforce a
written instrument. C.R.S. § 13-80-103.5(1)(a). When a
note calls for installment payments, a new cause of action
for breach of its terms accrues each time a payment is due
and unpaid. However, if the lender accelerates the
indebtedness and demands payment in full, the claim accrues
immediately as to all remaining installment payments.
Hassler v. Account Brokers of Larimer County, Inc.
274 P.3d 547, 553 (Colo. 2012). The commencement of a
foreclosure action constitutes acceleration of the underlying
promissory note. Kirk v. Kitchens, 49 P.3d 1189,
1192 (Colo.App. 2002). Thus, commencement of a foreclosure
action begins the running of the six-year limitation period
in C.R.S. § 13-80-103.5(1)(a). Measuring from BNY's
first foreclosure action initiated on June 25, 2010, the
limitations period on Mr. Parker's note expired on June
25, 2016. Because BNY commenced the current foreclosure
action on April 13, 2016, such action would be timely. The
Plaintiffs concede this much.
the Plaintiffs argue that the statute of limitation on
enforcement of the underlying note began running even before
the filing of the first foreclosure action. They contend that
the limitation period begins to run “from the date of
default upon which the election to accelerate is based, not
from the election itself”. They contend that the
limitation period began running as of December 2008. They
rely upon Lovell v. Goss, 101 P. 72 (Colo. 1909)
which so held. If it is applied here, it would render
BNY's current foreclosure proceeding
untimely. Thus, the sole question presented in this
case is whether the statute of limitation on BNY's right
to enforce the note and Deed of Trust accrued and began
running as of Mr. Parker's first default on the note in
December 2008 (under Lovell) or upon BNY's
filing of the first foreclosure action in June 2010 (under
the general rule discussed in Hassler).
numerous authorities applying Colorado law have called
Lovell's continuing vitality into question. Most
significantly, the Colorado Supreme Court in Hassler
explained that Lovell was “decided prior to
Colorado's adoption of the UCC [and] is at odds with the
rule adopted by a majority of states in determining the
actual date for the cause of action to recover a debt that is
accelerated at the option of the creditor.” However,
Hassler did not have to, and therefore did not,
resolve whether Lovell remained viable. 274 P.3d at
557 n. 11. The Colorado Court of Appeals has also criticized
Lovell's reasoning or application as outdated.
See Green Tree Financial Servicing Corp. v. Short,
10 P.3d 721, 723 (Colo.App. 2000) (refusing to apply
Lovell because it “was decided long before the
enactment in 1975 of [provisions of the UCC], which create
the notice requirement applicable here”); see also
Application of Church, 833 P.2d 813, 815 (Colo.App.
1992) (purportedly “distinguishing”
Lovell, but effectively refusing to apply it).
Judges of this court have similarly expressed doubts about
Lovell's rule. Paggen v. Bank of America,
N.A., 2018 WL 4075881 (D.Colo. Aug. 27, 2018)
(“The issue with Lovell is that it appears to
be ripe for reconsideration by the Colorado Supreme Court . .
. The overwhelming weight of case law supports the
proposition that the statute of limitations begins running at
acceleration as opposed to default”); Davis v.
Wells Fargo Bank, N.A., 2017 WL 4516830 (D.Colo. Oct.
10, 2017) (on essentially identical facts to the instant
case, rejected the application of Lovell and finding
foreclosure action commenced in in April 2014, on a default
that began in February 2008 and was first accelerated via a
withdrawn foreclosure action in June 2008, to be timely). In
contrast, the Plaintiffs have offered no contemporary case
authority nor has this Court found any published authority
from Colorado's appellate courts applying the holding of
Lovell - that the statute of limitation for
enforcing a written instrument runs from the date of the
first default, not from the date of acceleration.
sitting in diversity, this Court applies state law - here the
law of Colorado as established by the Colorado Supreme Court.
When there is no authoritative precedent from the Colorado
Supreme Court, this Court must attempt to predict how the
Supreme Court would rule. Sundance Energy Oklahoma, LLC
v. Dan D Drilling Corp., 836 F.3d 1271, 1277
(10th Cir. 2016). Here, this Court finds that the
Colorado Supreme Court in Hassler has expressed its
doubt about Lovell's continuing viability and
its inconsistency with “the majority rule.” This
Court predicts that, if the issue were to come before it, the
Colorado Supreme Court would abandon the rule announced in
Lovell and adopt the accrual-upon-acceleration rule
suggested in Hassler.
this Court finds that the statute of limitation began running
upon the commencement of BNY's first foreclosure action
in June 2010, not upon Mr. Parker's initial default in
2008. Therefore, BNY's current foreclosure proceeding,
commenced in April 2016, is timely under C.R.S. §
13-80-103.5(1)(a). Because the alleged untimeliness of the
foreclosure proceeding is the basis for the Plaintiffs'
claims herein, BNY is therefore entitled to judgment in its
favor on those claims.
these reasons, the Court GRANTS BNY's
Motion for Summary Judgment (# 31). The
pertinent facts being undisputed, BNY is entitled to judgment
in its favor on the Plaintiffs' claims that BNY's
attempts to enforce the note and Deed of Trust via the
pending foreclosure action are time ...