Virginia Lawyers Weekly//February 17, 2020
Virginia Lawyers Weekly//February 17, 2020//
A bank’s claims were not barred by the statute of limitations because they were subject to Virginia’s six-year statute of limitations, not the five-year statute of limitations applicable to contracts, as the debtor argued.
This matter comes before the court on the motion of First Community Bank for partial judgment on the pleadings to the complaint filed against it by the debtor, Douglas Ray Hutchinson.
The debtor filed a petition for relief under Chapter 11 of the Bankruptcy Code Dec. 4, 2018. Over a year into this case, no disclosure statement has been approved nor is a Chapter 11 plan actively pending before the court.
The debtor has asserted since early in the case that causes of action or disputes exist against the bank, and those causes of action must be resolved before the main case can proceed. However, the complaint was not filed until Oct. 1, 2019, almost 10 months after the petition was filed.
The motion for partial judgment on the pleadings was timely filed by the bank Oct. 30, 2019, and the debtor filed a two-page response Nov. 16, 2019.
The only issue addressed in the motion for judgment on the pleadings is the statute of limitations issue. The debtor’s allegations only put into question the documents evidencing the obligations to repay set forth in claims one, three and five.
Virginia Code § 8.3A-118(h) provides that it applies to both negotiable and nonnegotiable notes. The obligations set forth in claims one and three are clearly notes covered by § 8.3A-118. Despite being titled a “Credit Agreement,” the repayment obligation supporting claim five, which has the characteristics of a note, will be treated as a note for the purposes of § 8.3A-118 as well.
The debtor argues that the law of contracts applies as to the accrual of the cause of action, and that notwithstanding the express language of § 8.3A-118(a), the statute of limitations began to run when a breach occurred. The court disagrees. Section 8.01-246 is the general provision for statutes of limitation for personal actions based on contracts under Virginia law, and that section sets the five year limitations period the debtor relies upon. By its express terms, § 8.3A-118 makes clear § 8.01-246 does not apply.
The court finds that debtor has applied the wrong statute of limitations, the one for contracts and not for notes, and has made no allegation that any of the events triggering the six-year statute of limitations has occurred. The motion for partial judgment on the pleadings will be granted as to the statute of limitations on claims one, three and five and the debtor’s request for relief on that basis will be dismissed.
Debtor counsel’s litigation conduct
The court would be remiss if it did not address certain litigation conduct by debtor’s counsel in this case to date. Debtor’s counsel stated he had not seen a second set of admissions, and that they were not filed with the court. These latter statements are disingenuous, at best.
Second, debtor’s counsel asserted that he had a 1929 law review article from the University of Virginia Law Review that supported his argument. It was nowhere to be found in the materials, much less something the court could review or that counsel for the bank could prepare to address before the hearing.
Third, debtor’s counsel alleged in his complaint that the debtor has causes of actions under Code § 55-80 and 55-81 against the bank. The debtor conceded he made no specific factual allegations under the requirements of old §§ 55-80 or 55-81 in the complaint, nor did he seek to submit an affidavit from his client to show that such facts existed.
Fourth, debtor’s counsel conceded he had not met with his client in over a month and half since the last hearing in the case, a trial on a contested motion for relief from stay filed by the bank, Nov. 20, 2019.
Debtor’s counsel has dragged his feet in this case and the court expects that debtor’s counsel will right his ship going forward, and conduct this case, and all others, in a more professional manner. Absent such corrective action, the court reserves the right to take such action against counsel as may be necessary, including sanctions.
Hutchinson v. First Community Bank, No. 19-07036, Jan. 30, 2020. WDVA Bankr. at Roanoke (Black). VLW No. 020-4-002, 16 pp.