US Bank, N.A. v. Silvernagel, et al.Annotate this Case
In 2006, Respondent Jerome Silvernagel took out a second mortgage on a home. He agreed to make monthly payments to pay down the principal and 10% annual interest, with any remaining balance due in 2036. Silvernagel alone signed the promissory note, agreeing to repay the underlying loan. But both he and Respondent Dan Wu signed the deed of trust securing payment of the note. The deed of trust contained an acceleration clause, giving the lender the power to declare the entire loan immediately due and payable upon default. When exercised, acceleration authorized the lender to foreclose on the property to satisfy the outstanding debt and any related fees. In 2012, a bankruptcy court discharged Silvernagel’s personal liability on the mortgage under Chapter 7 of the Bankruptcy Code. Silvernagel had stopped making payments on the note before the discharge and made no payments since. The discharge prohibited creditors from attempting to collect the debt from Silvernagel directly, but it did not extinguish “the right to enforce a valid lien, such as a mortgage or security interest, against the debtor’s property after the bankruptcy.” In 2019, US Bank allegedly threatened to foreclose on the property if Silvernagel did not make payments on his mortgage. Silvernagel and Wu (hereinafter collectively, “Silvernagel”) filed this case in response, requesting declaratory relief to prevent US Bank’s enforcement of the deed of trust. He argued that US Bank’s interest was extinguished by the six-year statute of limitations on debt collection. Alternatively, he asserted that the doctrine of laches prevented enforcement of the agreement. The trial court dismissed the case, determining that US Bank’s claim had not accrued (meaning that the six-year limitation period hadn’t even commenced). A division of the court of appeals reversed, holding that the statute of limitations began to run upon Silvernagel’s 2012 bankruptcy discharge, barring US Bank’s claim. The Colorado Supreme Court reversed the judgment of the court of appeals: when there is no evidence that the lender accelerated payment on the mortgage agreement, a claim for any future payment doesn’t accrue until that payment is missed under the agreement’s original terms.