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Hi Cat, and All:</div>
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I wrote a summary of that case—here it is in case it's helpful to anyone: </div>
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<b><i><span lang="EN-CA" style="font-size:14pt;font-family:Helvetica;color:black">Umpqua Bank v. Gunzel</span></i></b><span lang="EN-CA" style="font-size:14pt;font-family:Helvetica;color:black">, No. 37400-9-III, 2021 WL 1134956 (Wash. Ct. App. Mar. 25, 2021)</span><span lang="EN-CA" style="font-size:14pt;font-family:Helvetica"><o:p> </o:p></span></p>
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<span lang="EN-CA" style="font-family:Helvetica"><o:p> </o:p></span></p>
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<i><span lang="EN-CA" style="font-family:Helvetica;color:black;background-color:white">Applying Oregon law, the court held that a claim against the guarantor of a commercial loan was barred by the statute of limitations. The court held that the statute of limitations
commenced on the first default by the borrower and, unlike the statute of limitations for the promissory note itself, was not extended by periodic payments on the obligation that were made after the first default.</span></i><i><span lang="EN-CA" style="font-family:Helvetica;background-color:white"><o:p> </o:p></span></i></p>
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<span lang="EN-CA" style="font-family:Helvetica;background-color:white"><o:p> </o:p></span></p>
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<b><span lang="EN-CA" style="font-family:Helvetica;color:black;background-color:white">FACTS</span></b><span lang="EN-CA" style="font-family:Helvetica;color:black;background-color:white">: Cornerstone, a corporation, obtained a loan from Umpqua. Mr. Gunzel,
the president and owner of Cornerstone, guaranteed the loan and signed a guaranty. The maturity date passed, and the note was not paid in full. The corporation dissolved, but some partial payments continued for approximately 4 years after the maturity date.
Umpqua brought suit on the guaranty 9 years after the maturity date/first default passed. The guaranty provided that Oregon law governed.</span><span lang="EN-CA" style="font-family:Helvetica;background-color:white"><o:p> </o:p></span></p>
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<span lang="EN-CA" style="font-family:Helvetica;background-color:white"><o:p> </o:p></span></p>
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<b><span lang="EN-CA" style="font-family:Helvetica;color:black;background-color:white">ANALYSIS</span></b><span lang="EN-CA" style="font-family:Helvetica;color:black;background-color:white">: Oregon has a 6-year statute of limitations for breach of contract.
Another statute provides that the<span class="Apple-converted-space"> </span></span><span lang="EN-CA" style="font-family:Helvetica">limitation period on a debt owed does not commence until the last payment made by the borrower. The court stated that the accrual
date on the statute of limitations on the promissory note versus the guaranty are different. The court discussed that a guarantor's liability generally arises at the time of the default of the borrower on the obligations which the guaranty covers.</span><span lang="EN-CA" style="font-family:Helvetica"><span class="Apple-converted-space"> </span></span><span lang="EN-CA" style="font-family:Helvetica">The
court further stated that it is the majority, if not universal, rule that a payment by a principal debtor will not toll the statute of limitations as to a guarantor.</span><span lang="EN-CA" style="font-family:Helvetica"><o:p> </o:p></span></p>
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<span lang="EN-CA" style="font-family:Helvetica"><o:p> </o:p></span></p>
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<span lang="EN-CA" style="font-family:Helvetica">The guaranty provided the statute of limitations was waived in the event that<span class="Apple-converted-space"> </span>“there was an outstanding Indebtedness not barred by any applicable statute of limitations.”
The court noted that, as a general proposition, parties can agree to a statute of limitations different from that provided by statute, but whether to enforce the waiver turns on Oregon public policy. In analyzing public policy, the court, along with a discussion
of the general rule in other jurisdictions, relied upon an Oregon supreme court case from 1886 that<span class="Apple-converted-space"> </span>analogized a waiver of the statute of limitations to an agreement forgoing the defense of usury. As written, the
court held<span class="Apple-converted-space"> </span><span style="color:black;background-color:white">the partial waiver of the protection of the statute of limitations was unenforceable. The court also discussed alternative language that would result in
expanding the time to enforce the guaranty to match the enforceability of the promissory note.</span><span class="Apple-converted-space"> </span>The court also awarded attorney’s fees and costs to Gunzel.<o:p> </o:p></span></p>
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<div class="PlainText">All:<br>
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This is an interesting case on statutes of limitation and defaults on loans under Oregon law and suit on the personal guarantee.<br>
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Mar. 25, 2021 - 37400-9 - Umpqua Bank v. Charles A. Gunzel III, et al <br>
<a href="https://www.courts.wa.gov/opinions/?fa=opinions.disp&filename=374009MAJ">https://www.courts.wa.gov/opinions/?fa=opinions.disp&filename=374009MAJ</a><br>
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Catherine “Cat” Clark<br>
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Mar. 25, 2021 - 37400-9 - Umpqua Bank v. Charles A. Gunzel III, et al <br>
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