The Colorado Court of Appeals issued its opinion in Mountain States Adjustment v. Cooke on Thursday, May 19, 2016.
Summary Judgment—Debt Collection—Choice of Law Provision.
In August 2004, Cooke signed a note (Note) with Commercial Federal Bank (CFB) for a home equity loan. Cooke resided in Colorado and the home that was collateral for the Note (subject property) was in Colorado. CFB was headquartered in Nebraska and the Note stated that it was “governed by federal law, and to the extent applicable, the laws of Nebraska.”
CFB merged into Bank of the West, a California bank, in December 2005. Cooke’s repayment terms under the Note didn’t change as a result nor was he asked to sign a new agreement. In April 2009, the company holding the first mortgage on the subject property commenced foreclosure proceedings. Bank of the West did not participate, but on June 19, 2009, Bank of the West sent a “30 Day Notice of Demand and Intent to Accelerate” letter to Cooke.
On February 14, 2014, Bank of the West assigned Cooke’s note to Mountain States Adjustment (MSA). On July 15, 2014, MSA filed this collection action against Cooke in Denver District Court. Cooke answered and alleged an affirmative defense that MSA’s claim was barred by the applicable statute of limitations.
In January 2015, MSA filed a motion for summary judgment alleging that Cooke admitted to being the signatory under the Note and that the facts were undisputed that he was in default. Cooke filed a cross-motion for summary judgment asserting that MSA’s claim was barred by the five-year statute of limitations set forth in Nebraska law. The district court decided that Colorado law and its six-year statute of limitations applied and entered summary judgment in MSA’s favor. The sole issue on appeal was whether it was error to hold that Colorado law applied.
The Court of Appeals found the choice of law terms in the Note were clear, express, and unambiguous. As a matter of law, Nebraska law governs the statute of limitations issue because the undisputed record shows both that Nebraska had a substantial relationship to the parties or the transaction and that there was a reasonable basis for the contracting parties’ choice of law. Because it was undisputed that MSA filed its complaint outside of the applicable Nebraska limitations period, MSA’s claim was barred and Cooke was entitled to entry of judgment in his favor.
The judgment was reversed and the case was remanded.
Summary provided courtesy of The Colorado Lawyer.