The Indiana Supreme Court has reversed a lower court’s decision related to the state’s six-year statute of limitations on accelerating the repayment of a debt when it goes into default, ruling that under the state’s two applicable statutes of limitation, “a cause of action for payment upon a promissory note with an optional acceleration clause can accrue on multiple dates.”
A copy of the ruling in the case of Collins Asset Group v. Alkhemer Alialy can be accessed by clicking here.
The defendant obtained a mortgage in September 2007 and stopped making payments on the loan in July 2008. The loan was transferred to the plaintiff and in October 2016, it accelerated the debt, demanding payment in full, which was one of the options if the loan ever went into default. The plaintiff sued to recover the unpaid debt in April 2017.
The defendant was granted a motion to dismiss because he argued that the plaintiff’s suit was barred by a six-year statute of limitations for a cause of action upon a promissory note. The plaintiff appealed the ruling to the state court of Appeals, who also sided with the defendant, ruling that the plaintiff did not accelerate the debt within six years of the default. The case was subsequently transferred to the state Supreme Court.
The Supreme Court determined that the six year statute of limitations did no start running until the plaintiff exercised the optional acceleration clause in 2016, so it was still well within the six year window when it filed suit to recover the full amount in 2017.
“We find that CAG did not waive its argument under Indiana Code section 26-1-3.1-118(a),” the Supreme Court wrote. “But this issue is of no consequence, because under either applicable statute of limitations, CAG’s claim is timely. We thus reverse the trial court’s order dismissing CAG’s complaint and remand.”