In re Koyle, Case No. 2:15-CV-00239

CourtUnited States District Courts. 10th Circuit. United States District Court of Utah
Writing for the CourtMagistrate Judge Dustin B. Pead
Docket NumberCase No. 2:15-CV-00239
Decision Date08 March 2016

SHERWIN V. KOYLE, Plaintiff,

Case No. 2:15-CV-00239


March 8, 2016


Magistrate Judge Dustin B. Pead


The parties in this case have consented to United States Magistrate Judge Dustin B. Pead conducting all proceedings in this matter, including entry of final judgment, with appeal to the United States Court of Appeals for the Tenth Circuit.1 Currently pending is defendants Sand Canyon Corporation and Wells Fargo Bank National Association's (collectively "Wells

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Fargo") motion for summary judgment2 and plaintiff Sherwin V. Koyle's ("Koyle") cross motion for summary judgment.3

This litigation arises out of an attempt by Wells Fargo to foreclosure on Koyle's located at 389 East 1090 North in Orem, Utah, known by legal description "Lot 1, Plat MOUNTAIN GREEN SUBDIVISION" (the "Property").4 Koyle originally brought his action in the Fourth Judicial District Court for the State of Utah, with Wells Fargo the matter to the United States District Court for the District of Utah.5 Thereafter, Wells Fargo brought a motion to dismiss6 and Koyle filed a motion for summary judgment.7 A hearing was held on September 29, 2015, at which time Wells Fargo agreed to convert its motion to dismiss to a cross motion for summary judgment.8 During argument, Koyle also confirmed that despite asserting six causes of action,9 he was only pursuing summary judgment on his fifth claim for expiration of the statute of limitations period.10 At the hearing's conclusion, the court requested additional briefing and supplemental memorandum were filed by both parties.11

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Now, after carefully considering the parties' briefs, arguments and relevant legal authorities, the court rules as follows and GRANTS Wells Fargo's motion for summary judgment and DENIES Koyle's cross motion for summary judgment.


The following facts are not in dispute for purposes of the motions under consideration:

1. On February 7, 2003, Koyle executed a Deed of Trust13 secured by a Promissory Note (the "Note")14 in the amount of $139,400.00.15

2. Koyle subsequently failed to make timely payments on the Note, and on October 16, 2003, a Notice of Default and Election to Sell ("Notice Of Default") was recorded against the Property.16

3. In part, the Notice Of Default stated:

Under the provisions of the promissory note and trust deed, the unpaid principal balance is accelerated and now due, together with accruing interest, late charges, costs and trustee's and attorney fees.17

4. On March 24, 2004, Koyle filed a Chapter 13 proceeding in the Utah Bankruptcy Court.18

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5. On October 19, 2004, U.S. Bankruptcy Judge Judith A. Boulden signed an Order and Payment Plan as agreed to and signed by the parties. 19 Under the plan, the parties agreed that the bankruptcy court's automatic stay would remain in effect subject to Koyle making specific monthly payments pursuant to the terms of the Note and Trust Deed.20

6. Based upon non-compliance,21 the court dismissed Koyle's Chapter 13 Bankruptcy proceedings on December 20, 2004 for failure to make payments22

7. On February 17, 2005, Koyle filed a second Chapter 13 bankruptcy.23

8. On July 18, 2005, U.S. Bankruptcy Judge William T. Thurman signed an Order and Payment Plan ("Agreed Order") as agreed to and signed by the parties.24 Under the plan, the parties agreed that the bankruptcy court's automatic stay would remain in effect subject to Koyle making specific monthly payments pursuant to the terms of the Note and Trust Deed.25

9. Based upon non-compliance, the court dismissed Koyle's second Chapter 13 bankruptcy proceeding on October 7, 2005.26

10. Subsequently, on September 27, 2011, Wells Fargo filed a "Cancellation of Notice of Default" ("Cancellation") which stated "the undersigned hereby cancels the Notice of Default filed for record October 16, 2003."27

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11. Afterwards, on December 19, 2014, Wells Fargo filed a second "Notice of Default and Election to Sell"28 accelerating collection of the debt, with a trustee sale scheduled for April 20, 2015.


Summary judgment is appropriate "if the movant shows that 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). When considering a motion for summary judgment, the court views "all facts [and evidence] in the light most favorable to the party opposing summary judgment." S.E.C. v. Smart, 678 F.3d 850, 856 (10th Cir. 2012)(quoting Grynberg v. Total S.A., 538 F.3d 1336, 1346 (10th Cir. 2008)(alterations in the original). A fact dispute is considered "material if it might affect the outcome of the suit under governing law." Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir. 1997)(citing Anderson v. Liberty Lobby, Inc., 477 U.S 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).


Although the facts are not in dispute, the parties vigorously disagree about the significance of the dates and the effect, if any, the actions and agreements of the parties have on the relevant statute of limitations period.

Koyle asserts Wells Fargo is time barred from enforcing the Note and foreclosing the Deed of Trust because the six year statute of limitations period has expired.29 Koyle

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contends the limitations period began on October 16, 2003, when the Notice of Default was issued and the underlying debt was accelerated. As a result, the limitations period expired six years later on October 16, 2009, and any attempt to foreclose after that date is barred.

Wells Fargo, on the other hand, argues the limitations period was extended by Koyle's acknowledgement of the debt, stayed under the automatic stay provisions of his Chapter 13 bankruptcy and decelerated pursuant to the Cancellation of the Notice of Default. Accordingly, under Wells Fargo's time line, the election to sell is timely because the limitations period triggered by the initial Notice of Default was extended, decelerated and started running anew on December 19, 2014, when the second Notice of Default was issued. In the alternative, Wells Fargo contends that as beneficiary of the trust, Utah law allows foreclosure on a security interest more than six years after default.

In order to resolve the parties' competing interpretations of relevant dates, the court examines the following issues: (1) Did Koyle acknowledge the debt and in doing so renew the statute of limitations period? (2) Did Koyle's bankruptcy filing toll the statute of limitations period? (3) Is Wells Fargo entitled to unilaterally decelerate the debt? and (4) Assuming the six year statute of limitations period expired, is Wells Fargo still entitled to foreclose on the Deed of Trust?

1. Koyle Renewed The Statute Of Limitations By Acknowledging The Debt During Bankruptcy

Under Utah law, a written acknowledgement of debt or a promise to pay restarts the relevant statute of limitations period on collection of a debt.

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Utah Code Ann. §78B-2-113(1) states:

(1)An action for recovery of a debt may be brought within the applicable statute of limitations from the date:

(a) the debt arose;

(b) a written acknowledgment of the debt or a promise to pay is made by the debtor; or

(c) a payment is made on the debt by the debtor

UCA §78B-2-113 (2015). Under the statute a "bar of the statute of limitations is effective against the debt, where the statute has run, and it is sought to avoid the effect by a new promise or acknowledgment, such promise [to be effective] must be in writing and designed by the party to be bound because it in effect revives or creates a new legal liability which could not otherwise be asserted or established." McGrath v. Fogarty, 2015 U.S. Dist. LEXIS 86897, *21 (citing Bracklein v. Realty Ins. Co., 95 Utah 490, 80 P.2d 471, 478 (Utah 1938).

Thus, in order to start the limitations period running anew, a party's written acknowledgment of the debt must be "clear, distinct, direct, unqualified, and [amount to an] intentional admission of a present, subsisting debt on which a party is liable." Wells Fargo Bank, N.A. v. Temple View Investments, 2003 UT App 441 ¶9, 82 P.3d 655 (referencing UCA §78-12-44 (2002), amended by UCA §78-B-2-113 (Feb. 7, 2008). Such affirmation must be "more than a hint, a reference, or a discussion of an old debt; it must amount to a clear recognition of the claim and liability as presently existing." Beck v. Dutchman Coalition Mines Co., 2d Utah 2d 104, 269 P.2d 867, 870 (1954)(citation omitted).

Here, Koyle acknowledged the debt during his second Chapter 13 bankruptcy resulting in a renewal of the six year statute of limitations period.30 On July 18, 2005, Koyle signed an

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"Agreed Order Conditioning the Automatic Stay" ("Agreed Order") and affirmed his debt predicated on the Note and Trust Deed. Under the terms of that agreement, the parties determined that the bankruptcy's automatic stay provisions would remain in effect in exchange for Koyle's agreement to pay specific sums, including regular monthly and arrearage payments, due under the Note. In part, the Agreed Order states:

The debtor shall make all regular monthly mortgage payments due to the Creditor pursuant to the terms of the Note and Trust Deed attached to Creditor's Motion, beginning with the payment due on August 1, 2005. The amount of each such payment is presently $1,244.78. The amount is subject to change to reflect escrow requirements and any other adjustments provided by the terms of the Note and Trust Deed.31

Koyle argues the Agreed Order was merely a reservation of his right to contest payments in his state court action and does not amount to an acknowledgment of the debt. The court disagrees. The issues in Koyle's state court action are irrelevant to a determination of whether the bankruptcy court order was an acknowledgment of Koyle's liability....

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