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Mertola, LLC v. Santos

Court of Appeals of Arizona, First Division

March 2, 2017

MERTOLA, LLC, Plaintiff/Appellant,
v.
ALBERTO J. SANTOS, et al., Defendants/Appellees.

         Appeal from the Superior Court in Maricopa County No. CV2014-051213 The Honorable Aimee L. Anderson, Judge

         REVERSED AND REMANDED

          Law Office of James R. Vaughan PC, Scottsdale By Brian K. Partridge, Melissa R. Greaves, Eric W. Logvin, James R. Vaughan Counsel for Plaintiff/Appellant

          Carl Retter Attorney at Law, Scottsdale By Carl R. Retter Counsel for Defendants/Appellees

          Presiding Judge Diane M. Johnsen delivered the opinion of the Court, in which Judge Margaret H. Downie and Judge James P. Beene joined.

          OPINION

          JOHNSEN, Judge:

         ¶1 We hold in this case that, absent agreement to the contrary, a cardholder's failure to make a minimum monthly credit-card payment does not trigger the statute of limitations on a claim for the entire unpaid balance on the account. Absent contrary terms in the account agreement, the lender's claim for the balance does not accrue, and limitations does not begin to run, until the lender accelerates the debt or otherwise demands payment in full.

         FACTS AND PROCEDURAL HISTORY

         ¶2 Alberto and Arlene Santos accepted a credit card from Washington Mutual Bank. By the time they first missed a minimum monthly payment, in August 2007, the outstanding balance on the account was $14, 642.07. Thereafter, the Santoses paid only intermittently; they made a payment of $50 in August 2008, but nothing after that. When the bank finally charged off the account later in 2008, the unpaid balance was $17, 066.91.

         ¶3 The bank eventually assigned the debt to Mertola, LLC, which sued the Santoses in July 2014, alleging breach of contract. Mertola's complaint sought damages in the amount of the charge-off, costs and fees. The superior court granted the Santoses' motion for summary judgment, reasoning the claim was barred by the applicable six-year statute of limitations because it accrued when the Santoses first breached by failing to make a minimum monthly payment, more than six years before Mertola sued.

         ¶4 Mertola timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(A)(1) (2017).[1]

         DISCUSSION

         ¶5 Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. 56(a). On review from a grant of summary judgment based on limitations, we "view the facts and all legitimate inferences in the light most favorable to [the party] against whom summary judgment was granted." Walk v. Ring, 202 Ariz. 310, 312, ¶ 3 (2002). We "independently review any questions of law relating to the statute of limitations defense." Logerquist v. Danforth, 188 Ariz. 16, 18 (App. 1996).

         ¶6 An action for breach of a credit-card agreement must be brought within six years after it accrues. A.R.S. § 12-548(A)(2) (2017). The Santoses argue, and the superior court ruled, that the lender's claim on their unpaid balance accrued when they first failed to make a minimum monthly payment and thereby defaulted under the terms of the credit-card agreement. Mertola contends, however, that because the lender did not exercise its option to accelerate the debt, the Santoses' repeated failures to pay as agreed only gave rise to a series of claims for the unpaid minimum monthly payments. Mertola argues that the limitations period does not begin to run on a claim for the outstanding balance owed on a credit card unless and until the lender exercises its power to accelerate the debt. We consider de novo "the determination ...


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