Where appellant defaulted on a bank loan, the circuit court applied the correct statute of limitations, correctly determined the accrual date for the bank’s claim against him and correctly determined how long the statute of limitations was tolled while appellant was in bankruptcy.
“Appellee Truist Bank is the successor in interest of a $732,000 loan from Branch Banking and Trust.
“In separate financial disclosure statements given to the Bank both before and after receiving the loan, [appellant] Evans provided materially false statements concerning the condition of his finances.
“The Bank was not aware that the financial disclosures provided by Evans substantially overestimated his ability to repay the promissory note. The note’s original maturity date was March 5, 2016. …
“Evans later failed to make the required monthly payments pursuant to the note, the Bank notified him by letter dated October 17, 2013, that he was in default and that the new due date had been accelerated to November 4, 2013.
“On May 23, 2014, Evans filed for Chapter 7 Bankruptcy … seeking discharge of his obligations under the accelerated note. In response, on July 22, 2014, the Bank filed a ‘Complaint Objecting to Discharge and, Alternatively, Seeking Determination that Certain Debts are Nondischargeable’ in the bankruptcy court.
“Evans’ Chapter 7 Bankruptcy discharge was subsequently denied on September 25, 2015, and the bankruptcy case was thereafter concluded.
“Next, on January 25, 2019, the Bank obtained a confession of judgment in the Fairfax County Circuit Court as provided for in the note. The Bank then nonsuited the confession of judgment and refiled its case in the Wythe County Circuit Court on September 25, 2020. …
“In response, Evans filed a plea in bar asserting that the statute of limitations had expired and sought dismissal of the complaint. At a hearing held on August 3, 2021, the parties stipulated to most of the facts, including that the statute of limitations had been tolled for 491 days (one year, four months, and three days) while Evans’ bankruptcy proceeding was pending.
“The trial court subsequently ruled that the promissory note was a negotiable instrument and a six-year statute of limitations applied. The trial court also held that the cause of action for the note accrued on November 4, 2013, which was the accelerated maturity date. The trial court denied Evans’ plea in bar. “Evans appealed.”
Statute of limitations
“Evans contends on appeal that the trial court erred in applying a six-year limitation period instead of a five-year statute of limitations. We disagree.
“The statute of limitations is five years ‘[i]n actions on any contract that is not otherwise specified and that is in writing and signed by the party to be charged.’ Code § 8.01-246.
“However, ‘an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.’ Code § 8.3A-118.
“Although Evans and the Bank entered a written contract, the five-year statute of limitations would only apply if there was no other statute of limitations ‘otherwise specified.’
“Here, the note was a negotiable instrument that was made payable at a definite time on a specific date – March 5, 2016.
“Hence, Code § 8.3A-118 ‘otherwise specifi[es]’ a different statute of limitations. Since Code § 8.3A-118 controls, an action to enforce the note was only required to be commenced within six years (absent tolling) of the date of acceleration – November 4, 2013.
“Thus, the trial court properly applied the six-year statute of limitations found in Code § 8.3A-118 to the facts in this case.”
“Evans next contends that since he provided materially false statements to the Bank before March 1, 2011, he was in breach and the cause of action accrued on the date the promissory note was executed. …
“The legally enforceable obligation between Evans and the Bank was timely repayment of the promissory note. And, interestingly here, there were several breaches.
“For example, when Evans gave the Bank incorrect information in his financial statements he was in default.
“The terms of the note also make clear that each time Evans missed a payment, he was in default. Similarly, when Evans failed to pay the entire sum of the loan after the Bank accelerated the maturity date, Evans was also in default.
“We reject Evans’ argument that the Bank was required to pursue legal recourse in relation to his first default when he made false representations on his financial statements.
“The terms of the note make clear that in the event of default, ‘the Bank may pursue its full legal remedies at law or equity.’ (Emphasis added.)
“The Bank, which affirmed at oral argument that it was primarily concerned about being paid, opted instead to only pursue its full legal remedies in relation to Evans’ last default – when he failed to pay the full amount of the loan on November 4, 2013.
“We will not fault the Bank for waiting until several instances of default had already occurred, and then giving Evans an opportunity to pay his loan off in full, before initiating legal proceedings against him.
“Hence, the trial court did not err by finding that November 4, 2013, was the day the Bank’s cause of action accrued.”
“Evans contends that the trial court erroneously calculated how long the statute of limitations was tolled during his confession of judgment action in Fairfax County Circuit Court. We disagree.
“Both Evans and the Bank stipulated that Evans’ bankruptcy proceeding tolled the statute of limitations for 491 days.
“Therefore, when calculating the time the six-year statute of limitations was tolled, the trial court held that ‘the bankruptcy proceedings tolled the statute of limitations for a total of four hundred ninety-one (491) days.’
“Contrary to Evans’ argument, the trial court did not base its calculation on the nonsuited confession of judgment action in Fairfax County. Instead, the calculation was based on the parties’ stipulated 491-day tolling period related to Evans’ bankruptcy proceeding. Thus, we find no error.”
Evans v. Truist Bank, Record No. 0631-22-3, March 28, 2023. CAV (published opinion) (Athey Jr.). From the Circuit Court of Wythe County (Showalter Jr.). Robert T. Copeland for appellant. Brian H. Richardson for appellee. VLW 023-7-120, 6 pp.