County District Court No. 17CV30328 Honorable Brian J. Flynn,
Coleman & Associates, LLC, Joseph Coleman, Isaiah Quigley,
Grand Junction, Colorado, for Plaintiff-Appellee.
& Blake, P.C., Thomas W. Blake, Grand Junction, Colorado, for
This case centers on which statute of limitations applies to
two payable-on-demand promissory notes, one of which is
secured by a deed of trust on real property. Citing
Mortgage Investments Corp. v. Battle Mountain Corp.,
70 P.3d 1176 (Colo. 2003), the district court applied the
general six-year statute of limitations, not the one
applicable to negotiable instruments under the Uniform
Commercial Code (UCC). Based on this, and its conclusion that
a claim to enforce a payable-on-demand promissory note
accrues when the note is executed, the district court granted
summary judgment in favor of plaintiff, Jerry Gunderson.
Defendants, William Weidner and Weidner Holdings, LLC, appeal
the district court's order for summary judgment. Because
we conclude that the UCC applies and that under the UCC's
limitations period Weidner Holdings' claim to enforce the
promissory notes is not time barred, we reverse the district
Jerry Gunderson and his wife, Kimberly Gunderson, asked
Kimberly's father, William Weidner, to provide them with
money to purchase a home. Through his limited liability
company, Weidner Holdings, Mr. Weidner disbursed two lump
sums to the couple in order to fund the real estate purchase.
On June 19, 2009, the Gundersons executed two promissory
notes in the amounts of $739,000 and $150,000, respectively.
The promissory notes were explicitly payable on demand and
bore a nominal annual interest rate of 0.75 percent. The
$739,000 note was secured by a deed of trust; the $150,000
note was unsecured. The promissory notes did not require any
periodic payments of interest or principal. And the
Gundersons made none.
Later, the Gundersons asked Mr. Weidner to forgive the notes
so that they could sell the property encumbered by the larger
note and purchase property in Montana. Mr. Weidner declined
the request. But he did agree to release the deed of trust on
the property the Gundersons were selling and take a
subordinated security interest in the Montana property. The
Gundersons then moved to Montana. Soon after, the Gundersons
separated and began dissolution of marriage proceedings.
After the Gundersons filed for divorce in Montana, Mr.
Weidner, on behalf of his limited liability company, called
the two notes due against Mr. Gunderson. Mr. Weidner demanded
payment on March 9, 2017, almost
eight years after the notes were executed. After Mr. Weidner
demanded repayment, Mr. Gunderson sued in Colorado district
court, seeking a declaratory judgment that the money was a
gift, never to be repaid. Mr. Gunderson also contended that
the statute of limitations barred Mr. Weidner's and his
limited liability company's efforts to enforce the notes.
On July 19, 2017, Weidner Holdings asserted counterclaims,
seeking a declaratory judgment that the disbursed funds were
loans and not gifts and that its enforcement action was not
time barred. Weidner Holdings also sought to enforce the
promissory notes against Mr. Gunderson. Mr. Gunderson then
moved for summary judgment, seeking application of the
statute of limitations to preclude enforcement of the notes
and to extinguish the deed of trust.
Mr. Gunderson contends the general statute of limitations,
section 13-80-103.5, C.R.S. 2019, applies to the notes, while
the Weidner defendants contend that the statute of
limitations under Colorado's UCC, section 4-3-118, C.R.S.
2019, applies to the notes.
The district court granted Mr. Gunderson's motion for
summary judgment, concluding that Colorado's general
six-year statute of limitations applied to the notes, that
any claim on the notes accrued when they were executed, and
therefore that Weidner Holdings' claim for enforcement of
the notes is time barred. Mr. Weidner and his limited
liability company appeal.
Applicable Statute of Limitations
We review an order granting a motion for summary judgment de
novo. Salas v. Grancare, Inc., 22 P.3d 568, 571
(Colo.App. 2001). Summary judgment is only appropriate when
there is no genuine issue of material fact. C.R.C.P. 56(e).
In reviewing a motion for summary judgment, "the
nonmoving party is entitled to any favorable inferences that
may reasonably be drawn from the facts, and all doubts must
be resolved against the moving party." Clementi v.
Nationwide Mut. Fire Ins. Co., 16 P.3d 223, 225-26
Which statute of limitations applies is a question of law
that we review de novo. Castle Rock Bank v. Team Transit,
LLC, 2012 COA 125, [¶1]6, 292 P.3d
1077. A statute of limitations prescribes the time during
which an action must be brought. The purposes of statutes of
limitation are to promote justice, discourage unnecessary
delay, and preclude the prosecution of stale claims.
Sulca v. Allstate Ins. Co., 77 P.3d 897, 899
(Colo.App. 2003). The statute of limitations is an
affirmative defense, C.R.C.P. 8(c), that must be pleaded and
proved by the defendant. Zertuche v. Montgomery Ward &
Co., 706 P.2d 424, 426 (Colo.App. 1985); cf. Drake
v. Tyner, 914 P.2d 519, 523 (Colo.App. 1996) (concluding
that the defense adequately raised a statute of limitations
defense in its summary judgment motion).
So, which statute of limitations controls a cause of action
to enforce the promissory notes? Mr. Gunderson contends (and
the district court agreed) that section 13-80-103.5(1)(a),
the general statute of ...