Collection agency waited too long to file complaint for repayment, COA says

The Indiana Court of Appeals has affirmed the dismissal of a complaint brought by a collection agency for failing to file its complaint for repayment within the six-year statute of limitations.

In June 2007, Alkhemer Alialy entered into a promissory note with GMAC Mortgage whereby Alialy promised to pay GMAC $60,000, plus 12 percent interest annually in monthly payments of $631.93 from Sept. 1, 2007 through Aug. 1, 2032. At the same time, Alialy entered into a mortgage as the nominee of GMAC.

One year later, a foreclosure was filed on the mortgage against Alialy, and the Hancock Superior Court entered a default judgment against him and a decree of foreclosure. Alialy made no further payments toward the GMAC promissory note after July 2008.

Then eight years later, Alialy was informed the note had been transferred to Collins Asset Group, LLC in Dec. 2014 and that he should begin making payments to CAG on the outstanding balance due on the loan starting Sept. 1, 2016. Alialy made no payments, and after CAG accelerated payments due from September 2016 to the maturity date of the loan, it filed a complaint on the note. Alialy moved to dismiss the complaint, arguing that it was barred by the six-year statute of limitations.

The Hamilton Superior Court ultimately dismissed CAG’s complaint for failure to state a claim upon which relief can be granted. On appeal, CAG argued the trial court erred in dismissing its complaint against Alialy pursuant to Indiana Trial Rule 12(B)(6), while Alialy countered that CAG’s cause of action accrued, and the statute of limitations began to run, on the date of the last payment in July 2008.

The appellate court found that even with an optional acceleration clause, CAG waited an unreasonable amount of time to invoke it, according to Smither v. Asset Acceptance, LLC, 919 N.E.2d 1153, 1160 (Ind. Ct. App. 2010).

“In the case at bar, CAG waited to accelerate the note until October 24, 2016, and did not filed its Complaint until April 26, 2017. Accordingly, CAG’s acceleration option was exercised a full two years after CAG’s cause of action was barred by the statute of limitation,” Judge Patricia Riley wrote for the court. “As CAG’s attempt to exercise the acceleration clause did not prevent the six-year statute of limitation from taking effect and expiring, CAG’s acceleration clause cannot be given effect and its Complaint is barred.”

The case is Collins Asset Group, LLC v. Alkhemer Alialy, 18A-CC-1160.