The Indiana Supreme Court on Monday reversed the dismissal of a complaint brought for missed payments on a promissory note, finding the lender’s claim is timely.
In 2007, Alkhemer Alialy entered into a promissory note with GMAC Mortgage whereby Alialy promised to pay GMAC $60,000, plus 12% interest annually in monthly payments for the next 25 years.
Alialy stopped making payments on the note the following year, and the note was transferred to Collins Asset Group, LLC. In October 2016, Collins accelerated the debt, demanding payment in full. When Alialy didn’t pay, Collins sued to recover on the note in April 2017. However, Alialy successfully moved to dismiss the complaint, arguing that it was barred by the six-year statute of limitations under Indiana Code section 34-11-2-9.
The Indiana Court of Appeals affirmed, finding that Collins did not accelerate the debt within six years of Alialy’s initial default and thus waited a per se unreasonable amount of time to invoke the optional acceleration clause. Later on rehearing, the appellate court clarified that Collins waived its argument that the statute of limitations under I.C. 26-1-3.1-118(a) should also apply.
In a Monday decision, Indiana Supreme Court justices reversed the trial court’s order dismissing the lender’s complaint, finding that the lender could assert its claim under either statute of limitations.
“Here, Alialy asserts that CAG waived its argument regarding Section 26-1-3.1-118(a) because CAG failed to reference that specific statute to the trial court and instead focused on the general statute. Alialy further argues that it would be ‘blatantly unfair’ to allow CAG to accelerate the note up to its maturity date. We disagree,” Chief Justice Loretta Rush wrote for the high court, which first concluded that CAG did not waive its argument under that statute.
“Though CAG cited only Section 34-11-2-9 below, the issue before the trial court was whether CAG’s complaint was filed within the six-year limitations period. And, as we explained in (Dean Blair and Paula Blair v. EMC Mortgage, LLC, 19S-MF-530), that time period is identical under either statute. In other words, Alialy was on notice of the timing issue in the trial court and had notice and an opportunity to defend against both statutes on appeal,” the high court wrote.
However, that issue is of no consequence, the justices noted, because CAG’s claim is timely under either applicable statute of limitations.
“Here, the two statutes provide CAG identical paths to relief. CAG brought its claim against Alialy in 2017, well within six years of when it accelerated the debt in 2016. Thus, CAG’s claim to recover the full amount owed on the note is not time-barred,” the high court wrote, reversing and remanding the trial court’s order dismissing CAG’s complaint.