Baker et al v. The Bank of New York Mellon as Trustee, by and thr

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
HOWARD G. BAKER and
FANNIE M. BAKER,
No. 09-12997 t13
Debtors.
HOWARD G. BAKER and
FANNIE M. BAKER,
Plaintiffs,
v. 	Adv. No. 11-1131
THE BANK OF NEW YORK
MELLON AS TRUSTEE, and
VANDERBILT MORTGAGE AND
FINANCE, INC.,
Defendants.
MEMORANDUM OPINION ON DEFENDANTS’
MOTION FOR JUDGMENT ON THE PLEADINGS
This matter is before the Court on defendants’ Motion for Judgment on the Pleadings,
filed November 3, 2011 (the “Motion”), the plaintiffs’ response thereto, filed January 2, 2012
(the “Response”), and the defendants’ reply in support of the Motion, filed January 11, 2012 (the
“Reply”).
This is a core matter, and the Court may enter a final order. 	The Court received and
reviewed briefs of the parties in support of their positions. The Court has considered the matter
and has made an independent inquiry into applicable case law. 	Being sufficiently advised, the
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Court hereby issues the following Memorandum Opinion. 	For the reasons set forth below, the
Motion is denied.
PROCEDURAL HISTORY
Plaintiffs filed this Chapter 13 case on July 10, 2009, and filed this adversary proceeding
on August 16, 2011. 	The pending case is the third bankruptcy case filed by the plaintiffs.
Plaintiffs filed their first case, a Chapter 7 case, on April 4, 2005, and obtained a discharge on
August 1, 2005. 	Plaintiffs then filed a Chapter 13 case on August 22, 2005, which was
dismissed February 10, 2009.
PLAINTIFFS’ ALLEGATIONS
In 	the 	adversary 	proceeding, 	plaintiffs 	seek 	money 	damages 	for 	alleged 	wrongs
committed by defendants in connection with a mortgage on plaintiffs’ mobile home and real
property. For the purposes of ruling on the Motion only,1 the Court assumes that the following
(somewhat paraphrased) allegations in the plaintiffs’ complaint are true:
1. 	On or about October 27, 1997, plaintiffs executed and delivered an
$85,748.61 promissory note, at a 9% fixed rate of interest, to Oakwood Acceptance
Corporation (“Oakwood”).
2. 	As collateral for the note, plaintiffs executed a mortgage in favor of
Oakwood on their real property and a 1998 Golden West mobile home.
3. 	The note and mortgage were assigned to defendant Bank of New York
Mellon, as trustee, with defendant Vanderbilt Mortgage and Finance, Inc. (“VMF”) as
the servicer.
4. 	The note calls for monthly payments of $689.95. 	Plaintiffs made all
payments as required.
5. 	On or about April 13, 2004, Oakwood notified plaintiffs in writing that the
servicing of the loan had been transferred to VMF. 	Oakwood’s letter also advised
plaintiffs that VMF would provide them with a payment coupon book. 	The plaintiffs
never received this coupon book.
1 See the discussion of Fed.R.Civ.P. 12(c) below.
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6. 	On or about May 24, 2004, plaintiffs sent check #6050, in the amount of
$720, to VMF in payment of the May 2004 installment due. VMF refused to accept the
payment.
7. 	Thereafter the plaintiffs attempted to make payments to VMF by other
means. 	The plaintiffs sent the May payment and additional payments, after being
instructed to do so, by certified mail. For unknown reasons, these payments were also
returned to the plaintiffs.
8. 	In August 2004, VMF filed a foreclosure action. VMF ultimately obtained
a summary judgment against the plaintiffs and a foreclosure sale was set for August 23,
2005.
9. 	After the foreclosure was initiated, the plaintiffs filed the bankruptcy cases
outlined above to save their home and to dispute the “arrearage” of the debt owed to
VMF.
10. 	VMF has been ordered several times to provide a payment history to the
plaintiffs, by both a state district court and this Court.
11. 	After numerous requests, some sort of itemized statement was provided to
the plaintiffs on or about October 28, 2008 by defendants’ counsel. Another transactional
history was produced by VMF on June 29, 2009.
12. 	Neither of these loan histories dated back to the inception of the loan.
13. 	It was only after these loan histories were produced in 2008 and 2009 that
the plaintiffs finally learned that the entire problem was a result of inaccurate information
regarding the loan status provided to VMF by Oakwood upon transfer of the loan
servicing.
14. 	VMF failed to investigate and properly correct the error.
15. 	As a result, the plaintiffs have expended an enormous amount of money,
time, effort and mental anguish in their fight to maintain and keep their primary
residence.
Based on the allegations, plaintiffs asserted claims against the defendants for breach of
contract, including breach of the implied covenant of good faith and fair dealing; violation of
New Mexico’s Unfair Trade Practices Act; and intentional infliction of emotional distress.
THE MOTION AND THE RESPONSE
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By the Motion, defendants seek to dismiss plaintiffs’ claims pursuant to Fed.R.Civ.P.
12(c), arguing that the claims are barred by applicable statutes of limitation. Motion, p. 3. For
example, plaintiffs’ first claim is for breach of contract. 	Arguably, the first alleged breaches
occurred in May, 2004. Under New Mexico’s six year statute of limitations for claims based on
written contracts, the statute could have run in May, 2010. The statutes for the other two claims
could have run even sooner.
Plaintiffs respond to the Motion with three arguments. 	First, they assert that the
applicable statute of limitations was tolled by 11 U.S.C. §108(a) until July 10, 2011 (i.e. two
years after the petition date). 	They also assert that the “gap” between July 10, 2009 and the
complaint filing date of August 16, 2012 was explicitly or tacitly agreed to by defendant, so the
complaint was timely. Response, p. 1.
Second, plaintiffs argue that the applicable limitations periods were extended by the
doctrine of equitable tolling. Response, pp. 1-3.
Finally, plaintiffs argue that the defendants are incorrect about when the limitations
period began to run, and that the alleged wrongful conduct triggering the claims occurred much
later than May, 2004, perhaps as late as October 28, 2008. Response, p. 4.
RULE 12(c) STANDARDS
The Motion is brought under Bankruptcy Rule 7012 and Fed.R.Civ.P. 12(c). Rule 12(c)
provides: 	“After the pleadings are closed-but early enough not to delay trial-a party may move
for judgment on the pleadings.”
Rule 12(c) is designed to provide a means of disposing of cases when the material facts
are not in dispute. 	See Kruzitis v. Okuma Mach. Tool, Inc., 40 F.3d 52, 54 (3rd Cir. 1994)
(“Under Rule 12(c), we will not grant judgment on the pleadings unless the movant clearly
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establishes that no material issue of fact remains to be resolved and that he is entitled to
judgment as a matter of law.”) (internal quotation marks omitted); Park Univ. Enterprises, Inc. v.
Am. Cas. Co. of Reading, Pa., 442 F.3d 1239, 1244 (10th Cir. 2006) (a “[j]udgment on the
pleadings should not be granted ‘unless the moving party has clearly established that no material
issue of fact remains to be resolved and the party is entitled to judgment as a matter of law.’”);
Ramirez v. Wal-Mart Stores, Inc., 192 F.R.D. 303, 304 (D.N.M. 2000) (“Any party may move
for judgment on the pleadings if no material facts are in dispute and the dispute can be resolved
on both the pleadings and any facts of which the Court can take judicial notice.”). See generally
Selman v. Delta Airlines, 2008 WL 6022017, at *7 (D.N.M. 2008) (thorough discussion of
general Rule 12(c) principles).
The same standards that govern a motion to dismiss under Rule 12(b)(6) also govern a
motion for judgment on the pleadings under Rule 12(c). 	See Atl. Richfield Co. v. Farm Credit
Bank, 226 F.3d 1138, 1160 (10th Cir. 2000). 	“The nature of a Rule 12(b)(6) motion tests the
sufficiency of the allegations within the four corners of the complaint after taking those
allegations as true.” Mobley v. McCormick, 40 F.3d 337, 340 (10th Cir. 1994). The sufficiency
of a complaint is a question of law, and when considering and addressing a Rule 12(b)(6)
motion, a court must accept as true all well-pleaded factual allegations in the complaint, view
those allegations in the light most favorable to the non-moving party, and draw all reasonable
inferences in the plaintiff's favor. See Moore v. Guthrie, 438 F.3d 1036, 1039 (10th Cir. 2006);
Hous. Auth. of Kaw Tribe v. City of Ponca City, 952 F.2d 1183, 1187 (10th Cir. 1991), cert
denied, 504 U.S. 912 (1992)
Courts ruling on Rule 12(c) motions should “accept all facts pleaded by the non-moving
party as true and grant all reasonable inferences from the pleadings in favor of the same.” Park
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Univ. Enterprises, Inc., 442 F.3d at 1244. 	The court must view the facts presented in the
pleadings, and draw the inferences therefrom, in the light most favorable to the nonmoving party.
Ramirez, 192 F.R.D. at 304. All of the nonmoving parties' allegations are deemed to be true, and
all of the movants' contrary assertions are taken to be false. Nat'l Metro. Bank v. United States,
323 U.S. 454, 456-57, 65 S. Ct. 354, 89 L. Ed. 383 (1945); Ramirez v. Dep't of Corr., 222 F.3d
1238, 1240 (10th Cir. 2000); Freeman v. Dep't of Corr., 949 F.2d 360, 361 (10 th Cir. 1991).
If the basis for a defendant’s Rule 12(c) motion is that the claim is precluded by an
applicable statute of limitations, but there are material disputed facts that could undermine the
statute of limitations defense, the motion should be denied. See Accardi v. United States, 356 F.
Supp. 218, 222 (S.D.N.Y. 1973) (Rule 12(c) motion denied because there were fact issues
concerning statute of limitations defense); Tamayo v. Hamer, 256 F.R.D. 175 (N.D. Ill. 2009)
(same); Southwestern Bell Telephone Co. v. Iverson, 2012 WL 652040 (N.D. Tex. 2012) (same).
DISCUSSION
1. 	Plaintiffs’ 	§108(a) 	Argument. 	There 	are 	unresolved 	fact 	issues 	regarding
defendants’ statute of limitations defense and plaintiffs’ assertion that 11 U.S.C. §108(a) tolled
some or all of the limitations periods, making the claims timely. Section 108(a) provides:
If applicable nonbankruptcy law, an order entered in a nonbankruptcy proceeding, or an
agreement fixes a period within which the debtor may commence an action, and such
period has not expired before the date of the filing of the petition, the trustee may
commence such action only before the later of—
(1) 	the end of such period, including any suspension of such period, including
any suspension of such period occurring on or after the commencement of the case; or
(2) 	two years after the order for relief.
The plaintiffs argue that some or all of the applicable limitations periods had not expired on the
petition date (July 9, 2009), so the statutes did not expire until July 11, 2011. 	Response, p. 1.
Furthermore, the plaintiffs argue that the defendants explicitly or tacitly agreed to an extension
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of time between July 11, 2011 and the complaint filing date of August 16, 2011. 	Id. 	These
assertions raise fact issues that prevent granting the Rule 12(c) Motion.
Defendants argue that a chapter 13 debtor does not get the benefit of §108. Reply, p. 4.
The Court acknowledges the issue and has reviewed the case law. 	Compare In re Ranasinghe,
341 B.R. 556 (Bankr. E.D. Va. 2006) and Roach v. Option One Mortg. Corp., 598 F.Supp.2d 741
(E.D. Va. 2009), with In re McConnell, 390 B.R. 170 (Bankr. W.D. Pa. 2008), In re Johnson,
2009 WL 2259088 (Bankr. S.D. Ill. 2009), and In re Dawson, 411 B.R. 1 (Bankr. D.D.C. 2008).
The argument is not trivial. However, given the Court’s ruling on the Motion, it is not necessary
or appropriate to rule on the argument at this time.
2. 	Plaintiffs’ 	Equitable 	Tolling 	Argument. 	Next, 	plaintiffs 	assert 	that 	under
principles of equitable tolling, the applicable statutes of limitation2 were tolled, so the complaint
was timely. 	Response, pp. 1-2. 	The parties have not submitted evidence about whether New
Mexico law applies to limitations issues, although both parties apparently assume it does.3 If so,
there is case law in New Mexico recognizing various equitable tolling principles.4 If the laws of
2 New Mexico’s statute of limitations provides the following deadlines that may apply (although the Court does not
hereby rule) to the asserted claims:
- written contract breach claims, six years (NMSA 1978, §37-1-3);
- violation of the Unfair Trade Practices Act, four years (§37-1-4); and
- intentional infliction of emotional distress, three (§37-1-8) or four years (§37-1-4).
3 See the Response, p. 2 and the Reply, p. 2.
4 There are a number of New Mexico cases relating to equitable or other tolling. See, e.g. Southwestern Inv. Co. v.
Cactus Motor Co., 355 F.2d 674, 677 (10 th Cir. 1966) (fraudulent concealment of a cause of action tolls a statute of
limitations); Jones v. Ford Motor Co., 599 F.2d 394, 399 (10th Cir. 1979) (limitations period for tort claims
commences on discovery of fraud or upon discovery of such facts as would, on reasonable diligent investigation,
lead to knowledge of fraud); Brown v. Behles & Davis, 2004-NMCA-028, 135 N.M. 180, 86 P.3d 605, after remand
2004 WL 5000294 (same); Porcell v. Lincoln Wood Products, Inc., 2010 WL 1541264, at *5 (D.N.M. 2010) (claim
under New Mexico Unfair Practices Act accrued when buyer first knew or should have known of wrongful action);
Tiberi v. Cigna Corp., 89 F.3d 1423, 1430 (10th Cir. 1996) (discussing and recognizing the “continuing wrong
doctrine” and equitable estoppel); Martinez v. Martinez, 2004-NMCA-007, ¶13, 135 N.M. 11, 14, 83 P.3d 298, 301
(in the context of a fiduciary relationship, party with superior knowledge has a duty to disclose material facts, and
failure to do so tolls statute of limitations); Village of Angel Fire v. Board of County Com’rs of Colfax County,
2010-NMCA-038, ¶19, 148 N.M. 804, 809, 242 P.3d 371, 376 (discussing the application of the equitable estoppel
doctrine to statutes of limitation); Drummond v. Drummond, 1997-NMCA-094, 123 N.M. 727, 732, 945 P.2d 457,
462 (party may be equitably estopped from asserting statute of limitations if that party’s conduct has caused plaintiff
to refrain from filing action). Blea v. Fields, 2005-NMSC-029, ¶20, 138 N.M. 348, 356, 120 P.3d 430, 438
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another state apply to the equitable tolling issue, it seems very likely that such laws would
include equitable tolling principles. Either way, there are fact issues concerning equitable tolling
that require denial of the Motion.
3. 	Plaintiffs’ Argument About When the Statutes of Limitation Began to Run.
Finally, there are unresolved fact issues about when the applicable statutes of limitation began to
run in this matter. As set forth above, plaintiffs argue that the complaint was timely because the
statutes did not begin to run until October 28, 2008. 	If true, the complaint would be timely.
Without ruling on the issue, the Court observes that there is case law support for the proposition
that if there are multiple breaches of contract, each successive breach begins the running of the
statute of limitations anew. 	See Commercial Union Ins. Co. v. Porter Hayden Co., 	116 Md.
App. 605, 698 A.2d 1167, 1192 (1997), citing Singer Co. v. B.G.&E., 79 Md. App. 461, 558
A.2d 419 (1989). See also Dameron v. Sinai Hospital of Baltimore, Inc., 815 F.2d 975, 982 (4th
Cir.1987); Bulova Watch Co. v. Celotex Corp., 46 N.Y.2d 606, 612, 415 N.Y.S.2d 817, 389
N.E.2d 130, 133 (1979); Indian Territory Illuminating Oil Co. v. Rosamond, 190 Okla. 46, 120
P.2d 349, 351 (1941); Airco Alloys Div., Airco, Inc. v. Niagara Mohawk Power Corp., 76 A.D.2d
68, 80, 430 N.Y.S.2d 179, 186 (1980); Barker v. Jeremiasen, 676 P.2d 1259, 1261-62 (Colo.
App. 1984); Sims v. Falvey, 234 S.W.2d 465 (Tex.Civ.App. 1950). The Court does not rule on
the legal issue, but does find that there are material disputed facts relevant to plaintiffs’
argument, so the Motion must be denied.
CONCLUSION
Based upon the arguments and assertions made by plaintiffs, the Court concludes that
there are disputed facts in this matter. The case law cited above, and in particular the Park Univ.
Enterprises and Ramirez v. Wal-Mart cases, require denial of the Motion in such an event.
(recognizing equitable estoppel doctrine in the statute of limitations context).
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The Motion will be denied. This matter will be set for pre-trial discovery and trial on the
merits. By denying the Motion, the Court is not ruling on the merits of the defendants’ statute of
limitations defense or any tolling or similar arguments plaintiffs’ may assert with respect thereto.
This Memorandum Opinion shall constitute the Court's findings of fact and conclusions
of law under Rule 7052, Fed.R.Bankr.P. Appropriate orders will be entered.
Honorable David T. Thuma
United States Bankruptcy Judge
Entered on docket: September 27, 2012
Copies to:
R Trey Arvizu, III
P.O. Box 1479
Las Cruces, NM 88004-1479
Attorney for Plaintiffs
Susan P Crawford
150 Washington Ave Suite 220
Santa Fe, NM 87501
Attorney for Defendants
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