Thurman v. Tafoya
| Decision Date | 22 May 1995 |
| Docket Number | No. 94SC106,94SC106 |
| Parties | Denis F. THURMAN, Petitioner, v. Joseph A. TAFOYA, Therese H. Tafoya, a/k/a Therese H. Thorne, Respondents. |
| Court | Colorado Supreme Court |
Heggemeier & Stone, P.C., Roger A. Jatko, Ronald R. Heggemeier, Parker, for petitioner.
Chris A. Porter, Wheat Ridge, for respondents.
We granted certiorari to review the Colorado Court of Appeals' opinion in Thurman v. Tafoya, 878 P.2d 7 (Colo.App.1993), concluding that a promissory note held by Denis F. Thurman, the petitioner, and executed by Joseph A. Tafoya and Therese H. Tafoya, the respondents, was unenforceable due to the expiration of the applicable statute of limitations period. Thurman argued that 11 U.S.C. § 108(c) (1988) tolled the statute of limitations period for enforcement of the note for a period equal to the amount of time the Tafoyas were under bankruptcy court protection. Alternatively, Thurman claimed that because the Tafoyas had requested subordination of the lien securing the note to a lien securing another debt, they were equitably estopped from asserting a statute of limitations defense. The court of appeals held that 11 U.S.C. § 108(c) did not toll the statute of limitations period and that the Tafoyas were not equitably estopped from raising the statute of limitations defense. We agree with the court of appeals that neither 11 U.S.C. § 108(c) nor the doctrine of equitable estoppel affects the statute of limitations period for enforcement of Thurman's note. We therefore affirm the judgment of the court of appeals.
We derive the following facts from the parties' pleadings and briefs filed in the trial court. On March 20, 1986, Joseph A. Tafoya and Therese H. Tafoya (the Tafoyas) executed a promissory note payable to Denis F. Thurman in the amount of $22,380.00. The note was secured by a deed of trust on property owned by Therese Tafoya. The note provided for scheduled monthly payments in April and May of 1986 and specified that the entire principal and accrued interest would become due and payable on June 20, 1986. The Tafoyas have made no payments on the note and contest the validity of the note.
On September 25, 1987, Therese Tafoya filed for personal bankruptcy. 1 She remained under the protection of the bankruptcy court until April 18, 1988, a period of 204 days. Joseph Tafoya filed for personal bankruptcy on May 3, 1990. He remained under the protection of the bankruptcy court until December 17, 1990, a period of 228 days. During these periods, Thurman did not attempt to enforce his note or deed of trust. On December 30, 1992, approximately two years after Joseph Tafoya's bankruptcy action ended, Thurman filed a complaint in Jefferson County District Court seeking to enforce the note and foreclose the deed of trust.
In response, the Tafoyas filed a motion to dismiss Thurman's complaint. See C.R.C.P. 12(b)(5). They disputed the validity of the note and asserted that Thurman's action was time-barred by the six year statute of limitations period prescribed by section 13-80-103.5, 6A C.R.S. (1987), and section 13-80-108(4), 6A C.R.S. (1987). 2 The Tafoyas argued that Thurman's six year period for bringing suit accrued on June 20, 1986, the date payment was due on the note. Thus, Thurman was required to initiate suit on or before June 20, 1992. Because Thurman did not file his complaint until December 30, 1992, more than six months after the limitations period expired, the Tafoyas argued that Thurman's suit was time-barred.
Thurman filed a response to the Tafoyas' motion to dismiss. Thurman argued that pursuant to 11 U.S.C. § 108(c) (1988) (hereinafter, section 108(c)) of the Federal Bankruptcy Code the six year statute of limitations period was tolled while the Tafoyas were in personal bankruptcy. 3 Thurman argued that the statute of limitations should be extended for 432 days, the sum of the periods of time the Tafoyas were under bankruptcy court protection. Thus, Thurman contended that his claim was not time-barred. 4
In addition, Thurman filed a motion for partial summary judgment pursuant to C.R.C.P. 56 requesting resolution of the statute of limitations issue. In this motion, Thurman again argued that section 108(c) tolled the six year statute of limitations governing his cause of action. In the alternative, Thurman argued that the Tafoyas should be equitably estopped from raising the statute of limitations defense. According to Thurman, in July of 1987, Therese Tafoya asked Thurman to subordinate his lien securing the note encumbering her property to the lien of another debt in order to facilitate refinancing. Thurman claimed that the request for subordination was an acknowledgment by the Tafoyas of the note's validity and equitably estopped them from asserting a statute of limitations defense.
In response to Thurman's motion for partial summary judgment, the Tafoyas argued that section 108(c) did not toll the statute of limitations period for enforcement of the note. Further, they asserted that their personal bankruptcy actions did not prejudice Thurman's enforcement of the note. As evidence thereof, the Tafoyas maintained that Thurman had made no effort to collect on the promissory note or foreclose the deed of trust prior to or during the bankruptcy proceedings. The Tafoyas also opposed Thurman's equitable estoppel claim. The Tafoyas argued that they had never made any representations or promises regarding the validity of the promissory note or the deed of trust. In addition, the Tafoyas reaffirmed that they continually had disputed the validity of these instruments.
Based upon the parties' submissions, the trial court issued its order. First, the court determined that the limitations period on Thurman's action had run and was not tolled by the Tafoyas' personal bankruptcy proceedings. The court reasoned that the bankruptcy proceedings had not adversely affected Thurman's efforts to enforce his rights under the note. The fact that the Tafoyas were in bankruptcy for some portion of the six year period did not automatically toll the running of the statute of limitations. Second, the trial court rejected Thurman's equitable estoppel claim. Accordingly, the court dismissed Thurman's complaint and entered judgment for the Tafoyas. Thurman appealed the judgment to the Colorado Court of Appeals.
The court of appeals upheld the trial court's ruling that Thurman was time-barred from enforcing the note. The court of appeals determined that the limitations period under section 13-80-103.5 expired six years after the note matured and was not tolled by section 108(c). Thurman, 878 P.2d at 9-11. Furthermore, the court of appeals affirmed the trial court's ruling that the Tafoyas' request for subordination did not establish an equitable estoppel claim. It held that "the subordination did not reflect the type of affirmative conduct required to establish an equitable estoppel claim." Id. at 11. Thus, the court of appeals affirmed the trial court's dismissal of the case.
Thurman sought certiorari review by this court and we granted certiorari to address the following two issues:
Whether the court of appeals erred in holding that the Bankruptcy Code, and especially 11 U.S.C. § 108(c) (1988), did not operate to toll [the] Colorado limitations period for the enforcement of notes set forth in section 13-80-103.5, 6A C.R.S. (1987).
Whether the court of appeals erred in affirming the trial court's holding that defendants in an action to foreclose a deed of trust are not equitably estopped from raising the six-year limitations defense when they have, less than six years before the action was filed, demanded and received a subordination of said deed of trust, thereby specifically acknowledging the validity of their debt within the six-year limitation period.
We hold that 11 U.S.C. § 108(c) does not operate to toll the statute of limitations period for a period of time equal to the amount of time a debtor is under bankruptcy court protection. Rather, section 108(c) extends statute of limitations periods that expire while a bankruptcy stay is in effect for thirty days after the creditor receives notice that the stay has been lifted. Because the statute of limitations period for enforcement of Thurman's note did not expire while the Tafoyas were under the protection of the bankruptcy court, section 108(c) did not provide him with any extra time within which to bring a claim. We further hold that the subordination agreement, in and of itself, did not constitute the kind of affirmative act necessary to establish an equitable estoppel claim. Therefore, we affirm the court of appeals' determination that Thurman is time-barred from enforcing his note against the Tafoyas.
When an individual files a bankruptcy petition, 11 U.S.C. § 362 (1988) of the Federal Bankruptcy Code provides an automatic stay of all proceedings against the debtor. This stay prevents claimants from commencing or continuing an action against the debtor. In order to protect claimants from having potential actions expire while a bankruptcy stay is in effect, Congress enacted 11 U.S.C. § 108(c) (1988). Section 108(c) provides:
Except as provided in section 524 of this title , if applicable nonbankruptcy law, an order entered in a nonbankruptcy proceeding, or an agreement fixes a period for commencing or continuing a civil action in a court other than a bankruptcy court on a claim against the debtor ... and such period has not expired before the date of the filing of the petition, then such period does not expire until the later of--
(1) the end of such period, including any suspension of such period occurring on or after the commencement of the case; or
(2) 30 days after notice of the termination or expiration of the stay ... with respect to such claim.
(Emphasis added). Section 108(c) protects claimants by extending any applicable time period for commencing suits...
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