Lpp Mortg. Ltd. v. Hotaling
Decision Date | 19 July 2007 |
Docket Number | Civil No. 06-cv-00602-REB-MEH. |
Citation | 497 F.Supp.2d 1217 |
Parties | LPP MORTGAGE LTD, f/k/a Loan Participant Partners, Ltd, a Texas limited partnership, Plaintiff, v. William H. HOTALING and Ada E. Hotaling, Defendants. |
Court | U.S. District Court — District of Colorado |
Audris G. Hampton, Britney Diane Beall — Eder, Castle, Meinhold & Stawiarski, LLC, Denver, CO, for Plaintiff.
Arthur Lindquist-Kleissler, Lindquist-Kleissler & Company, LLC, Denver, CO, for Defendants.
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
This matter is before me on Plaintiff LPP Mortgage Ltd. f/k/a Loan Participant Partners, LTD., A Texas Limited Partnership's Motion for Summary Judgment [# 50], filed May 15, 2007. The defendants filed a response [# 77], and the plaintiff filed a reply [# 78]. I grant the motion.1
I have subject matter jurisdiction over this case under 28 U.S.C. § 1332(a)(1) (diversity).
The plaintiff is the assignee of a promissory note and deed of trust initially owned by the United States Small Business Administration (SBA). The note and deed of trust were executed by the defendants and are based on money loaned to the defendants' corporation by the SBA. As an assignee of the SBA, the plaintiff asserts that this court also may have jurisdiction under 15 U.S.C. § 634(b), which provides that any United States District Court has jurisdiction over a suit filed by the SBA administrator. As the plaintiff notes, the SBA Administrator's rights to sue under § 634, including the jurisdictional provision of § 634(b), may not be assignable. Amended Complaint, ¶ 4. Because I have jurisdiction under 28 U.S.C. § 1332, I need not address the applicability of § 634(b) to this case.
Under FED.R.Civ.P. 56(c), summary judgment is proper only if the evidence, viewed in a light most favorable to the nonmoving party, demonstrates that there is no genuine issue as to any material fact, and the moving party is entitled to summary judgment as a matter of law. Farthing v. City of Shawnee, Kan. 39 F.3d 1131, 1134 (10th Cir.1994). A "material" fact is one "that might affect the outcome of the suit under the governing law," Id. at 1135 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)), and a "genuine" issue is one where "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. (citing Anderson, 477 U.S. at 248, 106 S.Ct. 2505).
On September 14, 1993, Contract Furniture Installers, Inc., (CFI) obtained a loan of $152,000 from the SBA. The defendants, William and Ada Hotaling, executed a deed of trust to secure the note. The deed of trust encumbered the house owned by William and Ada Hotaling, located at 10444 W. 83rd Ave, Arvada, Jefferson County, Colorado (the Property). The house was and is owned by William and Ada Hotaling personally, and was not owned by the corporation, CFI. On April 26, 1994, the SBA, CFI, and the Hotalings executed a modification of the deed of trust. The modification reflected an increase in the principal balance of the note from $152,000 to $216,700.
On April 11, 1995, the SBA sent letters to William H. Hotaling and to William H. Hotaling, as President of CFI. The letters declared the note, as modified, to be in default and declared that the entire balance of the note was due and payable immediately. CFI made no payments on the SBA note after February, 1995.
On April 24, 2001, the SBA assigned the note and deed of trust to the plaintiff, LPP Mortgage Limited (LPP). The Hotalings are the record owners of the property that is subject to the deed of trust. LLP attempted to complete a public trustee foreclosure on the deed of trust, but a Colorado state court concluded that foreclosure of the deed of trust was barred, apparently applying state law. LLP now seeks to judicially foreclose the deed of trust in this action, which was filed in this court on March 31, 2006.
The facts outlined above are undisputed. The sole issue in this case presents a question of law: what period of limitations is applicable to the plaintiffs claim. LPP argues that it is entitled to the benefit of the federal statute of limitations applicable to foreclosures under 28 U.S.C. § 2415(c). Section 2415(c) was applicable to the claim when it was held by the SBA, and LPP claims that the benefit of § 2415(c) was included in the SBA's assignment of the claim to LPP.
The Hotalings argue that the period of limitations applicable to the SBA under § 2415(c), is not assignable, and that the law of the State of Colorado defines the applicable limitations periods. The Colorado period of limitations applicable to the enforcement of the deed of trust has expired. Thus, the Hotalings argue that LPP is time barred from enforcing the deed of trust. In addition, the Hotalings argue that LPP is time barred from enforcing the promissory note, and, therefore, also is barred from enforcing the deed of trust.
28 U.S.C. § 2415 is titled "Time for commencing actions brought by the United States." Section 2415(c) provides:
Nothing herein shall be deemed to limit the time for bringing an action to establish the title to, or right of possession of, real or personal property.
Section 2415(c) governs foreclosure actions. See, e.g., U.S. v. Ward, 985 F.2d 500, 502-503 (10th Cir.1993). LPP argues that it acquired the benefit of this statute when the SBA assigned the deed of trust to LPP. LPP is correct.
The United States Court of Appeals for the Fifth Circuit has held that a private assignee of a note previously held by a federal agency stands in the shoes of the assigning federal agency and receives the benefit of an expanded period of limitations applicable to the federal agency. Federal Deposit Insurance Corporation v. Bledsoe, 989 F.2d 805, 810 (5th Cir.1993). In Bledsoe, the FDIC received a defaulted note that had been transferred repeatedly between failed savings and loan entities and the Federal Savings and Loan Insurance Corporation (FSLIC), a federal agency. When the FDIC sued on the note, Bledsoe argued that the FDIC's action was barred under Texas's four year statute of limitations. The FDIC argued that the expanded six year period of limitations provided in § 2415(a) was applicable because the defaulted note previously had been transferred to the FSLIC, a federal agency, and that subsequent transfers of the note included the benefit § 2415(a)'s expanded period of limitations. The Bledsoe court held that the benefit of § 2415(a)'s expanded period of limitation was included in any transfer of the note from the FSLIC to subsequent private or government transferees. 989 F.2d at 809-811.
Relying on Bledsoe, the Fifth Circuit reached a similar conclusion in Cadle Co. v. 1007 Joint Venture, 82 F.3d 102, 105 (5th Cir.1996). Addressing a related issue, the Tenth Circuit has relied on the holding in Cadle. UMLIC-Nine Corp. v. Lipan Springs Development Corp., 168 F.3d 1173, 1177 n. 3 (10th Cir.), cent denied, 528 U.S. 1005, 120 S.Ct. 499, 145 L.Ed.2d 385 (1999) ( ). The Ninth Circuit has observed that
(w)ith one exception, each of the federal and state courts that has considered the question has concluded that an assignee of the federal government may invoke the six-year statute of limitations in enforcing its right to collect on the debt.
U.S. v. Thornburg, 82 F.3d 886, 890 (9th Cir.1996) (applying § 2415(a)).
The cases discussed above concern the assignment of the six year statute of limitations of § 2415(a). There is no reason that the limitations period of § 2415(c), which controls actions to establish title to real or personal property, including foreclosures, should not also be subject to assignment under the same rationales discussed in the cases cited above. Therefore, I conclude that the SBA's assignment of the deed of trust to LPP included an assignment of the benefit of the limitations period of § 2415(c), which limitations period is applicable to LPP's claim for judicial foreclosure of the deed of trust in this case. Under § 2415(c), LPP's judicial foreclosure claim is timely.
The Hotalings argue also that LPP cannot foreclose on the deed of trust because the deed of trust provided security for a promissory note that no longer is enforceable. It is undisputed that under Colorado law, or under § 2415(a), the statute of limitations for a suit to enforce the promissory note given by the Hotalings to the SBA has expired. Under Colorado law, a lien created by any instrument is extinguished when the right to commence a suit to enforce payment of the indebtedness secured by the lien is barred by any Colorado statute of limitations. § 38-39-207, C.R.S. If LPP were proceeding under state law, then its judicial foreclosure claim would be barred.
Effectively, § 38-39-207, C.R.S. is a period of limitations applicable to a foreclosure on a deed of trust; however, this limitation is not applicable to the United States or its assignees. The United States is not bound by state statutes of limitation in enforcing its rights. U.S. v. Summerlin, 310 U.S. 414, 416, 60 S.Ct. 1019, 84 L.Ed. 1283 (1940). Any limitation on the United...
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