Castle Rock Bank v. Team Transit, LLC

Decision Date03 October 2012
Docket NumberNo. 11CA1926.,11CA1926.
Citation292 P.3d 1077
PartiesCASTLE ROCK BANK, Plaintiff–Appellee, v. TEAM TRANSIT, LLC, d/b/a Team Transit, a Colorado limited liability company, Defendant, and Michael L. Zinna, Defendant–Appellant.
CourtColorado Court of Appeals

OPINION TEXT STARTS HERE

Gubbels Law Office, P.C., Peter B. Goldstein, Castle Rock, Colorado, for PlaintiffAppellee.

Robinson Waters & O'Dorisio, P.C., Steven L. Waters, Kimberly A. Bruetsch, Denver, Colorado, for DefendantAppellant.

Opinion by Judge LOEB.

¶ 1 In this case brought to recover on two promissory notes, defendant, Michael L. Zinna, appeals the judgment entered in favor of plaintiff, Castle Rock Bank (the Bank), after a trial to the court. Specifically, Zinna appeals the trial court's ruling that the Bank's action was timely filed under the applicable statute of limitations.

¶ 2 As a matter of first impression, we conclude that the statute of limitations begins to run on a promissory note's maturity date where, as here, the note is to be repaid in installments, is not accelerated by the creditor, and provides that a “final payment of the unpaid principal balance plus accrued interest is due and payable” on the note's maturity date. Accordingly, we affirm and remand the case for a determination of the Bank's reasonable attorney fees on appeal.

I. Background

¶ 3 On December 18, 1996, the Bank loaned Team Transit, LLC, $100,000 (the Team Transit loan), pursuant to a promissory note signed by Michael L. Zinna, then president of Team Transit, LLC. Under the terms of the note, Team Transit was required to pay the Bank $1,378 per month beginning one month from December 18, 1996, with “the balance of the principal and interest payable 10 years from date [t]hereof.”

¶ 4 On April 9, 1998, the Bank loaned Kelly A. Spooner $75,000 (the Spooner loan), pursuant to a promissory note signed by her. Under the terms of the note, Spooner was required to pay the Bank $1,295 per month beginning one month from April 9, 1998, with “the balance of the principal and interest payable 7 years from date [t]hereof.”

¶ 5 On March 1, 2001, the terms of both loans were modified and new promissory notes were executed by Zinna and Spooner, who had since married. Regarding the Team Transit loan, the principal amount on the new note was $75,671.39, Zinna and Spooner were added as co-borrowers in their personal capacities, and Spooner pledged additional collateral as security for the loan, consisting of a third deed of trust on their family home. Further, the monthly repayment schedule was changed as follows:

67 payments of $757.00 beginning May 18, 2001 and continuing at monthly time intervals thereafter. A final payment of the unpaid principal balance plus accrued interest is due and payable on December 18, 2006.

¶ 6 Regarding the Spooner loan, the principal amount on the new note was $48,959.15, Zinna was added as a co-borrower in his personal capacity, and the monthly repayment schedule was changed as follows:

47 payments of $1,243.00 beginning May 09, 2001 and continuing at monthly time intervals thereafter. A final payment of the unpaid principal balance plus accrued interest is due and payable on April 09, 2005.

¶ 7 According to testimony at trial, Zinna made two monthly installment payments on both the Team Transit and Spooner loans on May 14, 2001, and July 2, 2001, and then stopped making payments. Thereafter, the Bank received a “pay-down” of $5,000 from the proceeds of the sale of Zinna and Spooner's family home, which the Bank applied to the Team Transit loan on August 2, 2002. The Bank did not receive any further payments on either loan. At some point later, Zinna and Spooner divorced, and Spooner filed for bankruptcy.

¶ 8 On June 5, 2009, the Bank filed its complaint in this action alleging two claims for breach of contract. Regarding the Team Transit loan, the Bank alleged breach of contract against Team Transit and Zinna. Regarding the Spooner loan, the Bank alleged breach of contract against Zinna.

¶ 9 A clerk's default was entered against Team Transit, LLC, for failing to answer. Zinna answered the complaint and, as pertinent here, asserted the statute of limitations as an affirmative defense.

¶ 10 Before trial, the Bank filed a motion for summary judgment in which it argued that it was entitled to judgment as a matter of law against Zinna for the amount allegedly due on the two notes. The Bank attached documents to its motion evidencing the existence of the two loans, as well as transaction histories showing the amount still owed. In its motion, the Bank represented that the Team Transit loan went into “default” on September 20, 1997, and that the Spooner loan went into default on January 8, 2002, both for failure to make payments.

¶ 11 In response, Zinna argued that questions of material fact existed and attached an affidavit in which he stated it was his “understanding that each of the loans” had been paid “by virtue of proceeds from a loan made to [another entity in which Zinna was an investor],” the “proceeds from the sale of [Zinna and Spooner's] family home,” and the “proceeds from a certificate of deposit.”

¶ 12 In reply, the Bank argued that the transaction histories showed that Zinna had received credit for the proceeds from the other loan and from the sale of the family home, but there were outstanding balances still owed under both the Team Transit and Spooner loans. Regarding the certificate of deposit (CD), the Bank stated that a [CD] was liquidated to pay a third loan obligation of Zinna which is not the subject of this action.” The trial court denied the Bank's motion for summary judgment in a written order, finding that genuine issues of material fact existed.

¶ 13 On August 8, 2011, a one-day trial to the bench was held. The parties stipulated to the admissibility and authenticity of all the loan documents, including the original and modified promissory notes and the transaction histories described above. After the Bank presented testimony from its president, Zinna moved for judgment as a matter of law on the basis of the statute of limitations. In an oral ruling, the court rejected Zinna's statute of limitations defense. Zinna then testified, focusing mostly on his belief that his loan obligations had been fully satisfied. At the conclusion of the testimony and after considering the parties' closing arguments, the court orally ruled in favor of the Bank. As pertinent here, the court concluded that Zinna owed $69,108.77, plus interest, on the Team Transit loan, and $45,036.69, plus interest, on the Spooner loan, and entered judgment in those amounts against Zinna on August 9, 2011.

¶ 14 This appeal followed. Shortly before briefing was completed in this appeal, the supreme court issued its opinion in Hassler v. Account Brokers of Larimer County, Inc., 2012 CO 24, 274 P.3d 547, in which the court discussed at length the specific statute of limitations at issue here. Accordingly, we requested supplemental briefing from the parties on the applicability of Hassler to this case.

II. Statute of Limitations

¶ 15 Zinna contends that the trial court erred by ruling that the Bank's claims were timely filed under the applicable statute of limitations. We disagree.

A. Standard of Review

¶ 16 In determining whether the trial court properly applied the statute of limitations here and properly determined the accrual dates for the Bank's claims, we must look to sections 13–80–103.5 and 13–80–108, C.R.S.2011, and give effect to their provisions. Matters of statutory interpretation, such as this, raise questions of law that we review de novo. Hassler, ¶ 15, 274 P.3d at 551.

¶ 17 When construing a statute, our goal is to determine and give effect to the intent of the General Assembly. Id. To do so, we give the words of the statute their plain and ordinary meaning, reject interpretations that render words or phrases superfluous, and harmonize potentially conflicting provisions, if possible. Id.;Hygiene Fire Prot. Dist. v. Bd. of Cnty. Comm'rs, 205 P.3d 487, 490 (Colo.App.2008), aff'd,221 P.3d 1063 (Colo.2009).

¶ 18 Similarly, because our analysis also turns on the language of the promissory notes at issue, we are guided by principles of contract interpretation. Promissory notes are subject to the principles of interpretation and construction that govern contracts generally. Cache Nat'l Bank v. Lusher, 882 P.2d 952, 956–57 (Colo.1994). Our primary goal in interpreting the promissory notes is to determine and give effect to the intention of the parties. Id. at 957. In determining the parties' intent, we accord the terms of the notes their plain and ordinary meaning. Id.

¶ 19 Because this case was tried to the court, our review of the trial court's findings of fact is highly deferential. Citywide Banks v. Armijo, ––– P.3d ––––, ––––, 2011 WL 4837501 (Colo.App.2011). Accordingly, we will “defer to the court's credibility determinations and will disturb its findings of fact only if they are clearly erroneous and not supported by the record.” Lawry v. Palm, 192 P.3d 550, 558 (Colo.App.2008). On appeal, we may uphold a correct result on any ground supported by the record, even if we do not accept the trial court's reasoning in reaching such result. Newflower Mkt., Inc. v. Cook, 229 P.3d 1058, 1061 (Colo.App.2010).

B. Law

¶ 20 The parties do not dispute that the six-year statute of limitations for actions to recover a debt, found in section 13–80–103.5, applies here. That section provides:

(1) The following actions shall be commenced within six years after the cause of action accrues and not thereafter:

(a) ... [A]ll actions for the enforcement of rights set forth in any instrument securing the payment of or evidencing any debt....

§ 13–80–103.5(1)(a); seeHassler, ¶ 20, 274 P.3d at 552 (applying the statutory language quoted above to an action brought to recover on a security agreement); Mortg. Invs. Corp. v. Battle Mountain Corp., 70 P.3d 1176, 1184–85 ...

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