Supreme Court of West Virginia Holds that Loan Acceleration Date Begins One-Year Statute of Limitation
On June 18, 2013, the Supreme Court of Appeals of West Virginia answered two certified questions from the Circuit Court of Kanawha County regarding the timeliness of claims under the West Virginia Consumer Credit and Protection Act (WVCCPA) and actions to set aside a foreclosure sale. Significantly, the Court held that: (1) the one-year statute of limitation under W. Va. Code § 46A-5-101(1) for WVCCPA claims begins to run on the date the accelerated loan payment is due; and (2) the one-year statute of limitation under W. Va. Code § 38-1-4a, which gives a borrower one-year to challenge the validity of the foreclosure sale, only applies to procedural challenges to the trustee’s sale.
This is the first ruling by the Supreme Court of Appeals of West Virginia regarding the limitations period for WVCCPA claims and will likely limit the scope of claims filed by plaintiff’s counsel under the WVCCPA. Relying on Judge Goodwin’s opinion in Delebreau v. Bayview Loan Servicing, LLC, 770 F. Supp. 2d 813 (S.D.W.Va. 2011), aff’d, Delebreau v. Bayview Loan Servicing, LLC, 680 F.3d 412, 415 (4th Cir. 2012), the Court held that the one-year statute of limitation under § 46A-5-101(1) is triggered by acceleration of the loan. Troutman Sanders lawyers John Lynch and Jason Manning represented Bayview in that case. The Court expressly rejected Plaintiff’s claim that the maturity date, “due decades in the future,” is always the applicable date that the one-year limitations period begins to run. Instead, based on the plain language of the statute, where the loan agreement provides for the final periodic payment upon acceleration, the statute of limitation begins to run when the accelerated payment is due.
Further, the Court held that an unlawful detainer action is not an “action against a consumer” for purposes of § 46A-5-102, which allows a “consumer” to assert a defense, setoff, or counterclaim without regarding to any statute of limitation. An unlawful detainer action rises out of possession of property, rather than the consumer loan, thus a borrower defending an unlawful detainer action is not a “consumer” for purposes of § 46A-5-102. Accordingly, the Court concluded that § 46A-5-102 does not eliminate the statute of limitation for a borrower’s WVCCPA counterclaims in an unlawful detainer action.
Finally, the Court held that the plain language of W. Va. Code § 38-1-4a applies to claims that pertain to the procedural requirements of the trustee’s sale, such as the lender’s failure to properly notify the borrower of the sale date, and not to claims regarding the enforceability of the underlying loan agreement. Thus, claims under the WVCCPA or those challenging the enforceability of the underlying loan agreement, which are not related to the procedural requirements of the trustee’s sale, are not subject to the one-year statute of limitation under § 38-1-4a.
A copy of the Court’s Order is attached here. Tribeca Lending Corp. v. McCormick , No. 12-0150, 2013 W. Va. LEXIS 721 (W. Va. June 18, 2013).
Please do not hesitate to contact John Lynch, David Anthony, Jason Manning, or Liz Flowers if you have questions.
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