Decided: May 31, 2012
The Delebreaus appealed the district court’s judgment that the one year statute of limitations under the West Virginia Consumer Credit and Protection Act barred their claims against Bayview. The sole issue on appeal was whether, under the statute of limitations, “the due date of the last scheduled payment of the agreement” was the loan acceleration date set by Bayview declaring the entire loan amount due or the loan maturity date designated in the Delebreau’s loan documents. The Fourth Circuit Court of Appeals concluded that the acceleration date was the operative date for purposes of applying the statute of limitations because no further payments were scheduled after that date.
In 1999, the Delebreaus refinanced a home mortgage with Option One Mortgage Corporation, executing a note in the amount of the principal loan amount, $84,500, and a deed of trust securing the note on the property and granting the lender the option to accelerate the loan in the event of a default. In March 2004, Bayview began servicing the loan pursuant to an agreement with Option One. As a result of several late payments, the Delebreaus entered into a loan modification agreement with Bayview in June 2006 which increased the principal balance of the loan and extended the maturity date to June 1, 2030. After the Delebreaus again fell behind on the loan, Bayview sent them a letter in June 2007 advising them that they were in default and exercised their right to accelerate the loan, effective June 5, 2007. The full amount of the loan immediately became due and payable, and no additional payments were scheduled thereafter.
In March 2009, the Delebreaus filed an action on behalf of borrowers whose home mortgage loans were serviced by Bayview, alleging that Bayview improperly added fees to borrowers’ accounts in violation of the Consumer Credit Act. Bayview filed a motion for summary judgment, arguing that the Delebreaus’ claims were barred by the statute of limitations. The district court agreed with Bayview, holding that the claims were barred because the Delebreaus’ did not file the action until more than one year after the acceleration date.
The Delebreaus appealed the judgment, contending that the district court erred in holding that under the terms of the parties’ agreement, the statute of limitations began to run from the acceleration date. The court of appeals first noted that the purpose of a statute of limitation is to ensure that causes of action be brought within a reasonable period of time, encouraging promptness and avoiding stale claims. The determination of the meaning of the statutory phrase “due date of the last scheduled payment of the agreement” begins with considering whether the language is unambiguous. The court concluded that the meaning of the statute was unambiguous because it plainly referred to the last date under the parties’ agreement providing for payment of a specified loan amount. The original schedule of payments ending in 2030 no longer had any effect under the terms of the deed of trust, since the entire amount was due at that time. The court of appeals noted that the Delebreaus’ interpretation was clearly not in keeping with the purpose of statutes of limitation, as it would result in the claims expiring on June 1, 2031, more than twenty years after their default. The court affirmed the district court’s ruling, concluding that since no additional payments were scheduled after the date Bayview exercised the right of acceleration under the deed of trust, that date became the last scheduled payment under the statute of limitation, and the Delebreaus were foreclosed from bringing their claims.