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Work v. Allgier

Supreme Court of South Dakota

July 11, 2018

CODY WORK, Plaintiff and Appellant,
v.
RUSS ALLGIER, Defendant and Appellee.

          CONSIDERED ON BRIEFS ON MAY 21, 2018

          APPEAL FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT PENNINGTON COUNTY, SOUTH DAKOTA THE HONORABLE ROBERT A. MANDEL Judge

          MICHAEL S. BEARDSLEY of Beardsley, Jensen & Lee, Prof. LLC Rapid City, South Dakota Attorneys for plaintiff and appellant.

          JASON M. SMILEY of Gunderson, Palmer, Nelson & Ashmore, LLP Rapid City, South Dakota Attorneys for defendant and appellee.

          SEVERSON, RETIRED JUSTICE.

         [¶1.] In this breach of contract case by a creditor to recover unpaid installments under a promissory note, the debtor moved for summary judgment. The debtor relied on an acceleration provision in the note and asserted that the statute of limitations had expired on the creditor's claim six years after the debtor defaulted. The creditor resisted summary judgment, asserting that a jury must determine whether the debtor's conduct following default warranted a different limitation period. After a hearing, the circuit court granted the debtor summary judgment. We reverse and remand.

         Background

         [¶2.] In February 2009, Cody Work entered into a stock purchase agreement for the sale of 1, 500 shares of Premier Home Mortgage, Inc. stock to Russell Allgier for $375, 000. Under the parties' agreement, Allgier agreed to: (1) assume Work's $40, 000 loan obligation to the company; (2) pay Work $75, 000 at closing, $15, 000 on March 15, 2009, and $15, 000 on April 1, 2009; and (3) pay the remaining balance ($230, 000) plus interest in 54 monthly installments. Allgier executed a promissory note in favor of Work for $230, 000. The note set forth that Allgier would pay Work $4, 977.54 per month for 54 months beginning on May 15, 2009, and ending on October 15, 2013. The promissory note contained an automatic acceleration provision, rendering the entire obligation due in full upon default in payment of any installment or default in payment of interest due.

         [¶3.] This appeal concerns Allgier's payments under the promissory note. It is undisputed that Allgier made the first payment late, which Work accepted. He also made untimely or partial payments from November 2009 through November 2010, which payments Work accepted. Allgier did not make a payment for the installment due on December 15, 2010, and made no other payments under the note. The parties treated December 15, 2010 as the date of default. It is arguable, however, that Allgier defaulted under the note when he failed to timely make the first payment on May 15, 2009.

         [¶4.] Nevertheless, the parties agree that following Allgier's failure to make the payment due in December 2010, the two discussed alternate ways Allgier could satisfy his debt to Work. The parties continued their discussions into 2015. The parties dispute whether they came to a new agreement. According to Allgier, he and Work reached a new agreement, although they did not reduce it to writing. Allgier relied on copies of emails as evidence of the agreement.

         [¶5.] Ultimately, Work brought suit against Allgier for breach of contract under the note. He commenced suit on April 4, 2017. Allgier answered and moved for summary judgment. He argued that the statute of limitations had expired on Work's cause of action in December 2016 because more than six years had elapsed from Allgier's December 2010 default under the note. According to Allgier, Work's cause of action accrued on December 15, 2010 based on the fact that the automatic acceleration provision in the note rendered Allgier's debt due in full upon default.

         [¶6.] In response, Work asserted that his claim did not accrue until Work elected to enforce the acceleration provision against Allgier. Under this view, because Work did not elect to accelerate the debt, Work claimed he is entitled to recover for the unpaid installments that came within the limitation period. Work alternatively claimed that the parties' negotiations and discussions following default created a question of fact on Allgier's right to assert that the debt accelerated. In Work's view, it would be unjust to allow Allgier to use the acceleration provision against Work when Work continually exercised leniency toward Allgier despite Allgier's late, partial, or absent payments under the note.

         [¶7.] After a hearing, the circuit court granted Allgier summary judgment. The court concluded that Work's cause of action accrued in December 2010, and therefore, the statute of limitations had expired in December 2016. Work appeals, asserting that the circuit court erred when it granted Allgier summary judgment.

         Standard ...


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