Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Community Financial Services Bank v. Stamper

Supreme Court of Kentucky

October 31, 2019

COMMUNITY FINANCIAL SERVICES BANK, F/D/B/A BANK OF BENTON APPELLANT/ CROSS-APPELLEE
v.
RONNY L. STAMPER APPELLEE/ CROSS-APPELLANT

          ON REVIEW FROM COURT OF APPEALS CASE NO. 2016-CA-001533-MR MARSHALL CIRCUIT COURT NO. 16-CI-00023

          COUNSEL FOR APPELLANT/CROSS-APPELLEE: Stanley Kevin Spees

          COUNSEL FOR APPELLEE/CROSS-APPELLANT: Robert Langston Prince Prince and Brien, PSC Michael D. Risley Stites & Harbison, PLLC

          OPINION

          KELLER, JUSTICE

         In January 2016, Community Financial Services Bank, f/d/b/a Bank of Benton ("Bank") filed suit in Marshall Circuit Court to enforce a promissory note executed by Ronny Stamper in April 1997. Stamper argued that the action was untimely under Kentucky Revised Statute ("KRS") 413.090(2), which provides a fifteen-year statute of limitations for written contracts. The Bank argued that the fifteen-year statute of limitations had not yet expired based on the maturity date listed on the promissory note. The trial court agreed and granted summary judgment in favor of the Bank. On appeal, the Court of

         Appeals concluded that the promissory note qualified as a negotiable instrument and, as a result, applied the six-year statute of limitations under Article 3 of Kentucky's Uniform Commercial Code ("UCC"). See KRS 355.3-118. Neither party had raised the applicability of KRS 355.3-118 to the trial court or the Court of Appeals. We granted discretionary review to consider whether the Court of Appeals properly considered that issue and, if so, whether the Court of Appeals correctly applied KRS 355.3-118.

         I. BACKGROUND

         On April 21, 1997, Stamper obtained a loan from the Bank in the amount of $18, 408.18 and executed a document titled "Note, Disclosure, and Security Agreement" (hereinafter, "Note"). The Note was payable to "The Bank of Benton ('Lender'), or order." Payments on the Note began May 25, 1997 and continued until April 25, 2002, the maturity date listed on the Note. However, the Note also provided, "Upon default, then, at the option of the Lender and without notice or demand, this agreement may be declared and thereupon immediately will become due and payable."

         Stamper eventually defaulted on the loan. Though the exact date of default is unknown, an April 24, 2000 letter from the Bank notified Stamper that, due to default, the Chevrolet Blazer that he used as collateral would be sold at auction. The letter also explained that the remaining balance on the loan was $12, 843.24, exclusive of expenses related to the sale. On August 25, 2000, the Bank's collections officer issued another letter, this time advising Stamper that the Chevrolet Blazer had been sold at auction and his updated balance was $9, 703.16. The letter stated that this balance "must either be paid in full or have a satisfactory repayment schedule established by September 15, 2000. Failure to meet this obligation will result in immediate legal action against you." It does not appear that Stamper took any action related to these letters. Several months later, by letter dated June 5, 2001, the Bank asked Stamper to contact the Bank to "work out a suitable repayment plan." The letter also advised, "In the event that we do not hear from you, we will turn over your account to an attorney or collection agency."

         It does not appear that the Bank took any additional action until approximately seven years later, in March 2008, when it completed a "Litigation Checklist" for Stamper's loan. Counsel for the Bank, Stanley K. Spees, then contacted Stamper by letter dated April 2, 2008. In the letter, Mr. Spees explained that Stamper's loan had been referred for collection, and the amount due was $9, 743.16, exclusive of interest. The letter notified Stamper to pay the full balance within thirty days and that failure to do so would likely result in litigation.

         Apparently, Stamper's wife contacted the Bank and discussed a payment plan that would allow Stamper to begin making payments when his employment "started back up in April." It is unclear when this conversation took place. However, by letter dated April 27, 2010, the Bank contacted Stamper and his wife, referencing that conversation. Nevertheless, Stamper did not make any payments pursuant to the proposed payment plan.

         Approximately five years later, on January 13, 2015, the Bank contacted Mr. Spees and asked that he file for a judgment lien against Stamper's property. Another year passed and on January 25, 2016, the Bank filed suit in Marshall Circuit Court, seeking judgment against Stamper in the amount of $11, 204.63 plus interest and costs. Stamper did not file an answer to the Bank's complaint, and, as a result, the Bank moved for default judgment. Stamper then sought leave to file a late answer, in which he asserted a statute of limitations defense. In his Motion to File Late Answer, he argued that "[t]his claim is barred by the 15-year statute of limitation contained in KRS 413.090(2)." The trial court permitted the late answer, and discovery ensued.

         The Bank then moved for summary judgment. In its motion, the Bank first cited to Stamper's own admission that he incurred the debt, defaulted on the note, and failed and refused to pay the debt, despite the Bank's demands. The Bank then argued that the note did not mature until April 25, 2002, the maturity date listed on the note. Thus, the Bank argued, the cause of action did not accrue until April 25, 2002, and it therefore filed this suit prior to the expiration of the fifteen-year statute of limitations for written contracts. In response, Stamper referred to the Note's "acceleration clause" and the Bank's August 25, 2000 letter, which required Stamper to pay the balance or establish a payment plan by September 15, 2000. According to Stamper, this accelerated the maturity date of the note. As a result, the cause of action accrued no later than September 15, 2000 and was therefore time-barred under KRS 413.090. Neither party asserted that the promissory note qualified as a negotiable instrument, and neither party raised the applicability of KRS 355.3-118.

         The trial court granted summary judgment in favor of the Bank. It first explained that the Note was a written contract subject to the fifteen-year statute of limitations of KRS 413.090. It then concluded that the cause of action accrued when the note matured on April 25, 2002, citing Gould v. Bank of Independence, 94 S.W.2d 991, 993 (Ky. 1936). As a result, the Bank's action was timely. Given Stamper's own admissions that he incurred and defaulted on this debt, the trial court granted judgment in favor of the Bank. Stamper moved the trial court to alter, amend, or vacate its order, arguing only that the cause of action accrued in September 2000. The trial court denied Stamper's motion and an appeal followed.

         On appeal, both parties reasserted their previous arguments related to KRS 413.090(2), and neither party referenced KRS 355.3-118. The Court of Appeals first determined that the cause of action accrued on April 25, 2002, the maturity date listed on the note, also citing Gould. The Court of Appeals then concluded that "[t]he application of KRS 413.090(2) was an error of law." It explained that "[t]he record is clear that the Note at issue is a negotiable instrument" under KRS 355.3-104(1), and, as a result, the applicable statute of limitations was found in KRS 355.3-118. Concluding that the suit was untimely under this statute, the Court of Appeals reversed the trial court and remanded the matter with directions to dismiss the case as time-barred.

         The Bank sought discretionary review, asking that we determine whether the Court of Appeals appropriately considered KRS 355.3-118 when neither party raised that statute of limitations and, if so, whether that statute of limitations applies to bar the Bank's suit. Stamper then filed his own motion for discretionary review on the issue of whether the Bank accelerated his loan via the August 2000 letter. We granted both motions for discretionary review.

         II. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.