FOR PUBLICATION                                                     Jun 27 2014, 9:27 am




APPELLANT PRO SE:                             ATTORNEY FOR APPELLEE:

ROBERT IMBODY                                 FRANKLIN S. YUDKIN
Indianapolis, Indiana                         Franklin S. Yudkin and Associates, PSC
                                              Louisville, Kentucky




                              IN THE
                    COURT OF APPEALS OF INDIANA

ROBERT IMBODY,                                )
                                              )
       Appellant-Defendant,                   )
                                              )
              vs.                             )      No. 49A05-1307-CC-322
                                              )
FIFTH THIRD BANK,                             )
                                              )
       Appellee-Plaintiff.                    )


                    APPEAL FROM THE MARION SUPERIOR COURT
                         The Honorable David J. Dreyer, Judge
                           Cause No. 49D10-1206-CC-22570



                                     June 27, 2014


                              OPINION - FOR PUBLICATION


NAJAM, Judge
                             STATEMENT OF THE CASE

         Robert Imbody appeals the trial court’s judgment in favor of Fifth Third Bank

(“the Bank”) on the Bank’s complaint alleging breach of a promissory note secured by a

motor vehicle. The Bank repossessed the vehicle, charged off the balance of the note,

and ultimately sold the vehicle at auction. The Bank sued Imbody for the deficiency

balance. The question presented on appeal is whether the Bank’s complaint is barred by

the applicable statute of limitations.   We hold that the Bank’s repossession of the

collateral accelerated payment on the note, which triggered the six-year statute of

limitations, and that the Bank’s complaint is time-barred.

         We reverse.

                       FACTS AND PROCEDURAL HISTORY

         On July 23, 2004, Imbody obtained a loan from the Bank for the purchase of a

2004 Chevrolet Trailblazer (“the truck”).        The Simple Interest Note and Security

Agreement (“the Agreement”) executed by Imbody provided in relevant part that the

purchase price for the truck was $35,906.28, and Imbody agreed to make eighty-four

monthly payments of $541.38 each beginning September 6, 2004. The Agreement also

provided that, in the event of a default, the Bank had the option “to accelerate without

notice or demand the final maturity of all of the obligations secured.” Appellant’s App.

at 21.

         Imbody made scheduled payments according to the terms of the Agreement until

March 3, 2006, when his payment made on that date was returned for insufficient funds.




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On May 31, 2006, the Bank repossessed the truck and charged off1 the remaining balance

of $31,396.32. The Bank then sold the truck at auction for $16,500. The deficiency

balance was $14,896.32 plus various accrued fees, and Imbody agreed to pay the Bank

$100 per month toward the debt.2             But Imbody made only about fourteen of those

payments, and he made his final payment on the deficiency balance on February 29,

2008.

        On June 5, 2012, the Bank filed its complaint against Imbody alleging breach of

contract and seeking damages of $24,940.57, pre-judgment interest, and attorney’s fees.

Following a bench trial, the trial court entered judgment in favor of the Bank in the

amount of $24,939, plus court costs. Imbody filed a motion to correct error, which the

trial court denied. This appeal ensued.

                                DISCUSSION AND DECISION

        Imbody contends that the Bank’s complaint is time-barred. In particular, Imbody

maintains that the Bank’s cause of action accrued, and the statute of limitations began to

run, on May 31, 2006, when the Bank repossessed the truck and charged off the principal

balance. Thus, Imbody asserts, the Bank’s complaint, which was filed on June 5, 2012,

was not timely under the six-year statute of limitations applicable to written contracts for

the payment of money. See Ind. Code § 34-11-2-9. The Bank maintains that the cause of



        1
           A “charge off” is defined generally as “[t]o treat (an account receivable) as a loss or expense
because payment is unlikely; to treat as a bad debt.” Black’s Law Dictionary 227 (7th ed. 1999). Here, at
trial, a Bank representative testified that “the loan was charged off” on May 31, 2006, which meant that
the Bank had “repossessed the vehicle” and subsequently “sold it at auction” and the loan was “not on
[the Bank’s] books anymore.” Transcript at 23.
        2
           The evidence shows that the parties had an informal agreement regarding payments on the
deficiency balance. There is no evidence that the parties entered into a forbearance agreement.
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action accrued, and the statute of limitations began to run, on February 29, 2008, when

Imbody made his last payment on the deficiency balance. Thus, the Bank contends that

its complaint was timely and within the six-year statute of limitations.

       Statutes of limitation seek to provide security against stale claims, which in turn

promotes judicial efficiency and advances the peace and welfare of society. Cooper

Indus., LLC v. City of South Bend, 899 N.E.2d 1274, 1279 (Ind. 2009). The party

pleading a statute of limitation bears the burden of proving the suit was commenced

beyond the statutory time allowed. Id. The determination of when a cause of action

accrues is generally a question of law. Warrick Cnty. v. Hill, 973 N.E.2d 1138, 1143

(Ind. Ct. App. 2012), trans. denied. Thus, here, our review is de novo. See Siwinski v.

Town of Ogden Dunes, 949 N.E.2d 825, 828 (Ind. 2011).

       First, we determine when the statute of limitations began to run. Where, as here,

an installment contract contains an optional acceleration clause, by which the creditor

may declare all installments in the loan immediately due and payable after default, the

statute of limitations to collect the entire debt does not begin to run immediately upon the

debtor’s default. See Smither v. Asset Acceptance, LLC, 919 N.E.2d 1153, 1160 (Ind.

Ct. App. 2010). Instead, the statute generally begins to run only when the creditor

exercises its option to accelerate. See id.

       At trial, the parties did not present evidence that the Bank ever formally exercised

the optional acceleration clause in the Agreement. But under the Agreement, the Bank

could elect “to accelerate without notice or demand the final maturity of all the

obligations secured.” Appellant’s App. at 21. The Arizona Court of Appeals recently


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observed that, “[u]nder the majority view, notwithstanding a creditor’s contractual ability

to accelerate a debt without notice, it must undertake some affirmative act to make clear

to the debtor it has accelerated the obligation.” Baseline Fin. Servs. v. Madison, 278 P.3d

321, 322 (Ariz. Ct. App. 2012) (citing case law from five other jurisdictions). And the

court stated that Arizona courts “have deemed a variety of actions, including repossession

of property, sufficient to demonstrate a creditor’s exercise of an optional acceleration

clause.” Id. at 323. We agree. A secured creditor repossesses its collateral to liquidate

the underlying debt. Thus, a repossession is an affirmative act, which in its operation and

effect accelerates the final maturity of the debt when a secured note calls for periodic

payments.

       Here, the evidence shows that the Bank repossessed the truck on May 31, 2006,

which triggered the statute of limitations. See id. And because the Bank waited more

than six years from the date of repossession to file the complaint, it is time-barred. See

I.C. § 34-11-2-9. The trial court erred when it concluded that the Bank’s complaint was

timely filed. We reverse the trial court’s judgment in favor of the Bank and instruct the

court to enter judgment in favor of Imbody.

       Reversed.

VAIDIK, C.J., and BROWN, J., concur.




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