UMLIC VP LLC, Successor in Interest v. Aretha Matthias, Individually

1
PRECEDENTIAL
IN THE UNITED STATES COURT OF
APPEALS
FOR THE THIRD CIRCUIT
_______________
NO. 03-1140
UMLIC VP LLC, Successor in Interest
and Assignee of the UNITED STATES
OF AMERICA (Small Business
Administration)
v.
ARETHA MATTHIAS,
INDIVIDUALLY AND AS PERSONAL
REPRESENTATIVE OF THE ESTATE
OF WESLEY MATTHIAS; CARLTON
PARSON; ELECIA PARSON;
OSWALD C. VENZEN; ALICE
VENZEN; GOVERNMENT OF THE
VIRGIN ISLANDS, BUREAU OF
INTERNAL REVENUE;
DEPARTMENT OF FINANCE;
UNITED STATES OF AMERICA
INTERNAL REVENUE SERVICE;
MICHAEL A. MATTHIAS;
ROSEMARIE WEBSTER; BRUCE W.
MATTHIAS; ELIZABETH
OLIVACCE; LAURIE THOM AS;
CARRIE EDDY, AND ALL PERSONS
CLAIMING AN INTEREST IN
REMAINDER OF PARCEL NO.7
SORGENFRIM a/k/a NOS. 7B AND 7C
ESTATE SORGENFRI;
Carlton Parson, Elecia Parson, and
Oswald C. Venzen,
Appellants
______________________
NO. 03-1239
UMLIC VP LLC, Successor in Interest
and Assignee of the UNITED STATES
OF AMERICA (Small Business
Administration)
v.
ARETHA MATTHIAS,
INDIVIDUALLY AND AS PERSONAL
REPRESENTATIVE OF THE ESTATE
OF WESLEY MATTHIAS; CARLTON
PARSON; ELECIA PARSON;
OSWALD C. VENZEN; ALICE
VENZEN; GOVERNMENT OF THE
VIRGIN ISLANDS, BUREAU OF
INTERNAL REVENUE;
DEPARTMENT OF FINANCE;
UNITED STATES OF AMERICA
INTERNAL REVENUE SERVICE;
MICHAEL A. MATTHIAS;
ROSEMARIE WEBSTER; BRUCE W.
MATTHIAS; ELIZABETH
OLIVACCE; LAURIE THOMAS;
CARRIE EDDY, AND ALL PERSONS
CLAIMING AN INTEREST IN
REMAINDER OF PARCEL NO.7
SORGENFRIM a/k/a NOS. 7B AND 7C
ESTATE SORGENFRI
Aretha Matthias, Michael A. Matthias,
Rosemarie Webster, Bruce W. Matthias,

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Elizabeth Olivacce, Laurie Thomas, and
Carrie Eddy,
Appellants
On Appeal From The District Court Of
The Virgin Islands
(D.C. No. 01-cv-00098)
District Judge:
Honorable Thomas K. Moore
_________________________________
Argued December 8, 2003
Before: NYGAARD, BECKER, and
STAPLETON, Circuit Judges.
(Filed April 5, 2004)
ARCHIE JENNINGS, JR. (Argued)
Archie Jennings, P.C.
8A&B Bjerge Gade
P.O. Box 442
Charlotte Amalie, St. Thomas,
USVI 00804
Attorney for Appellants in No. 03-1239
ROBERT L. KING (Argued)
Law Offices of Robert L. King
Windward Passage Hotel
P.O. Box 9768, Veterans Drive
Charlotte Amalie, St. Thomas,
USVI 00801
Attorney for Appellants in No. 03-1140
CAROL A. RICH (Argued)
Campbell, Arellano & Rich
4A&B Kongens Gade
P.O. Box 11899
Charlotte Amalie, St. Thomas,
USVI 00801
Attorney for Appellee UMLIC VP LLC
______________________
OPINION
______________________
BECKER, Circuit Judge.
This appeal in a diversity-based
mortgage foreclosure action stemming
from a default on a loan guaranteed by the
U n i t e d S t a t e s S m a l l B u s i n e s s
Administration (the “SB A”), which
ultimately transferred to the plaintiffs in
foreclosure, UMLIC VP LLC (“UMLIC”),
the mortgages which secured the loans,
presents three important questions. First,
is the right to foreclose on a Virgin Islands
mortgage extinguished at the time the right
to collect an in personam judgment
expires? We conclude that it is not.
Second, is an action brought by a
successor in interest of the United States
(as UMLIC was) governed by federal
limitations periods or state/territorial (here,
Virgin Islands) limitations periods? We
hold that federal law supplies the statute of
limitations in cases where the plaintiff is a

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successor in interest to the United States.
Third, is there a federal limitations period
applicable to mortgage foreclosure
actions? Applying the maxim that “time
does not run against the sovereign,” and
finding no federal statute to the contrary,
we conclude that there is not. We
therefore affirm the District Court’s order
for a foreclosure sale and vacate the stay
that this Court entered pending appeal.1
I. Facts and Procedural History
A. The Loan
The defendants in this case are the
fee owners, respectively, of three parcels
of land on St. Thomas, and a variety of
lienholders on those properties. Only the
fee owners are participating in this appeal,
and we shall refer to them as the
defendants. They are Aretha Matthias and
the heirs of Wesley Matthias (Michael A.
Matthias, Rosemarie Webster, Bruce W.
Matthias, Elizabeth Olivacce, Laurie
Thomas, and Carrie Eddy); Carlton and
Elecia Parson; and Oswald Venzen.
Because the defendants rest their case
primarily on statute of limitations grounds,
some chronology of the events is
important.
Pursuant to a federal loan guarantee
program for small businesses, a loan was
made on April 12, 1988 by Barclays Bank
PLC (“Barclays”) to Matthias Enterprises,
a corporation run by the various
defendants that owned and operated a
bakery and convenience store on St.
Thomas. The loan carried an interest rate
of 2.75% above prime, variable quarterly.
The principal amount of the loan was
$550,000, of which 85% was guaranteed
by the SBA. The loan was secured by the
personal guarantees of Aretha and Wesley
1Some appellants also claimed that the
District Court erred in certain respects in
computing the sum owing on the
mortgages. Based on our independent
examination of the entire record before
the District Court, we conclude that these
issues were not timely presented to the
District Court—not in the pleadings, not
on counsel’s own initiative, and not even
in response to UMLIC’s motion for
summary judgment. “As a general rule,
we do not consider on appeal issues that
were not raised before the district court.”
Appalachian States Low-Level
Radioactive Waste Comm’n v. Pena, 126
F.3d 193, 196 (3d Cir. 1997) (quoting
Tabron v. Grace, 6 F.3d 147, 153 n.2 (3d
Cir. 1993)). There are exceptional
circumstances that call for departure
from this rule, see id., but none are
present here. Thus we hold these issues
waived and will not address them.
We note too, based upon the
colloquy at oral argument, that it is
highly doubtful that resolution of these
collateral matters in a manner favorable
to defendants mortgagees would make a
difference: It appears that the sum of the
liens (both UMLIC’s and those of junior
lienholders who are not participating in
this appeal) on the properties so far
exceeds the probable foreclosure sale
prices of the properties that the
mortgagors have no chance of recovering
a residue from the foreclosure sale.

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Matthias, Carlton and Elecia Parson, and
Oswald and Alice Venzen.2 The
Matthiases, Parsons, and Venzens secured
their personal guarantees by granting
mortgages in favor of Barclays on their
own real property using the following
language:3
WITNESSETH, that to
secure the guaranty of
payment by MATTHIAS
E N T E R P R I S E S ,
I N C OR P O R A TE D (the
“ B o r r o w e r ” ) o f a n
i n d e b t e d n e s s t o t h e
Mortgagee to be paid with
interest according to a
certain promissory note (the
“Note”), bearing even date
herewith, executed by
Borrower pursuant to the
terms of a certain Loan
Agreement of even date
herew ith betw een th e
B o r r o w e r a n d t h e
Mortgagee [i.e., Barclays]
(the “Loan Agreement”), the
terms of which are hereby
made a part of this
instrument, and further to
secure the performance by
the Borrower of the terms of
the Loan Agreement and
related loan documents
executed of even date
herewith, and also to secure
any and all sums now or
from time to time hereafter
owing by Borrower and for
which Borrower may be
liable, solely or jointly, the
M o r t g a g o r [ i . e . , t h e
Matthiases] hereby grants
and gives to the Mortgagee
a Second Priority Mortgage
in the principal sum of ONE
H U N D R E D F I F T Y
THOUSAND DOLLARS
$150,000.00 plus interest on
[description of property
follows].
Judging from an SBA document
captioned “Lend er’s Transcript of
Account,” Matthias Enterprises defaulted
on the loan as early as the fall of 1988.
Matthias Enterprises was certainly in
default when it filed a Chapter 11
bankruptcy petition in 1992. This petition
was later converted to a Chapter 7
liquidation. Effective February 15, 1994
(less than six years from the time of
default, under any reading), the SBA made
good on its guarantee and repurchased the
loan from Barclays, ending Barclays’
involvement. Through a series of
assignments in 1999 and 2000, the loans
came to rest with UM LIC, which, on April
28, 2000 advised the defendants that the
loan was in default. This proceeding
2The record suggests that Alice
Venzen no longer owns or resides on the
parcel mortgaged by her and Oswald
Venzen. She is not a party on appeal.
3This language is taken from the note
executed by the Matthiases, but the same
language, mutatis mutandis, was used in
the notes executed by the Parsons and by
the Venzens.

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followed.4
B. Foreclosure Proceedings in the
District Court
UMLIC commenced this action in
the District Court on June 1, 2001, seeking
a declaratory judgment of the amount
owed under the Matthias Enterprises note,
a judgment of foreclosure on the three
properties, and an award of costs and
attorneys fees. Originally, UMLIC had
also sought an in personam judgment
against the Matthiases, Parsons, and
Venzens (i.e., a deficiency judgment for
the amount owing on the notes but
unsatisfied by foreclosure on the
mortgages), but later amended its
complaint to drop those counts (apparently
because the statute of limitations had
clearly run on any in personam contract
claims).
On June 4, 2002, the District Court
held a hearing on what UMLIC’s counsel
styled as a “motion for summary judgment
of foreclosure.” The moving papers on
both sides were captioned as cross-motions
for summary judgment. On December 5,
2002, the District Court filed a
memorandum opinion and order granting
summary judgment to UMLIC. On
December 20, 2002, the District Court
entered a declaratory judgment and
ordered the U.S. Marshal to conduct a
foreclosure sale of the properties. The
defendants filed a notice of appeal, and
moved the District Court to stay the sale.
The District Court refused, but this Court
granted the stay pending appeal.
The District Court of the Virgin
Islands had 28 U.S.C. § 1332 diversity
jurisdiction under 48 U.S.C. § 1612(a).
The plaintiff, UMLIC, is a citizen of North
Carolina, and none of the defendants are
citizens of North Carolina. The order of
the District Court was entered on
December 20, 2002. The defendants filed
timely notices of appeal. This Court has
jurisdiction under 28 U.S.C. § 1291.
Our review of a grant of summary
judgment is plenary. See Anderson v.
Conrail, 297 F.3d 242, 246-47 (3d Cir.
2002). Summary judgment must be
granted “if the pleadings, depositions,
answers to interrogatories, and admissions
on file, together with the affidavits, if any,
show that there is no genuine issue as to
any material fact and that the moving party
is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(c). In considering the
motion, “we must grant all reasonable
inferences from the evidence to the non-
moving party.” Knabe v. Boury Corp.,
4As part of its preparation to begin
foreclosure, UMLIC discovered that real
property records showed that Barclays
had assigned its mortgage interest to
Treadstone Carribean Partners LLC
(“Treadstone”). This seems to have been
an error on Barclays’ part, since this
assignment was recorded after Barclays
had transferred the loan to the SBA. For
the reasons given by the District
Court—which we need not revisit—even
though Barclays’ transfer to the SBA was
not recorded, it was valid. To uncloud
the titles, Treadstone, the SBA, and
UMLIC executed a series of corrective
assignments recorded May 29, 2001.

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114 F.3d 407, 410 n.4 (3d Cir. 1997). The
chronology recounted above is not in
dispute. The only questions before us are
legal.
II. Discussion
A. The Mortgage and the Personal
Guarantee
The defendants contend that the
mortgages are no more than security for
their personal guarantees, and that, absent
an ability to sue in contract for
enforcement of those guarantees, UMLIC
cannot recover on the mortgages. Because
the Virgin Islands statute of limitations for
contract claims, 5 V.I. Code § 31(3)(A),
and the federal statute of limitations for
contract claims, 28 U.S.C. § 2415(a), both
provide for a six-year limitations period,
and the lawsuit was filed outside that
period, the defendants assert that
irrespective of which statute applies, a suit
on the security for the guarantees (i.e., the
mortgages) is barred along with an in
personam suit on the guarantees.5
The strongest authority that the
defendants cite for this proposition is an
Alaska case which held as they would
have us hold.6 Dworkin v. First National
Bank of Fairbanks, 444 P.2d 777, 781-82
(Alaska 1968), acknowledged that opinion
was divided over whether a suit to recover
security could be maintained even after the
statute had run on collection of the
underlying debt. Authority is still divided
today. See 55 Am. Jur. 2d Mortgages §§
680, 683 (2003). The Dworkin Court
ultimately held that “the sounder result is
reached by those authorities which hold
that in the absence of a controlling statute
the foreclosure action is subject to the
same period of limitations as the
underlying debt.” 444 P.2d at 782. The
only authority supplied by the Court was a
discussion from a contemporary treatise on
real property that discussed the contrary
5The question whether federal or
territorial law provides the statute of
limitations—noted in the text—is but
one facet of a larger choice-of-law
question here. One could well ask
whether federal or territorial law governs
a claim to relief on a mortgage granted
pursuant to a federal loan guarantee
program after suit on the principal
obligation is barred. We do not address
this in detail, however, for two reasons.
First, the papers of both parties assume
that Virgin Islands law provides the rule
of decision. Second, it appears that a
full analysis under United States v.
Kimbell Foods, Inc., 440 U.S. 715
(1979), would demonstrate either that
Virgin Islands law applies of its own
force, or that federal law applies but
looks to local law to provide the rule of
decision.
6It is not unreasonable to look to
decisions from Alaska in this case,
because the limitations laws of the Virgin
Islands were borrowed from Alaska’s
laws. See James v. Henry, 157 F. Supp.
226, 227 (D.V.I. 1957) (Maris, J.). Thus,
Alaska court decisions that postdate the
Virgin Islands’ adoption of Alaska law,
while not binding, may be persuasive.

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a p p r o a c h , a n d p r o n o u n c e d i t
“undesireable.”
But there is an equally compelling
rationale supporting decisions from
jurisdictions that adopt the contrary
rule—i.e., those that permit recovery on
the mortgage even after the statute of
limitations has expired. It is this:
“The time limit set for the
c o m m e n c e ment of an
equitable action to foreclose
is frequently longer than the
period prescribed for a law
action on debt and, in some
states, is unlimited except
by the rule of laches. This
difference interposes a
p r o b l e m w h e r e t h e
mortgagee has permitted the
time to run out within which
he could bring an action
upon the debt, yet wishes to
enforce his lien. Since the
debt is not usually regarded
as extinguished by any
passage of time, but only the
remedy is barred by the
statute of limitations, there
is no application here of the
rule applied in other
situations, that the mortgage
cannot stand independently
of the obligation which it
p u r p o r t s t o s e c u r e .
Accordingly, it is generally
accepted that the lien is not
thereby destroyed, and that,
in the absence of a statute
providing otherwise, the
mortgagee may proceed to
foreclose, either by action
for foreclosure, or by
advertisement pursuant to a
reserved power of sale,
being barred only from the
obtaining of a deficiency
judgment.”
Id. at 782 n.24 (quoting 3 R. Powell, The
Law of Real Property 461, at 682-83
(1967)). This persuasive logic undermines
the position of the defendants. Accord
Bank of Nova Scotia v. St. Croix Drive-In
Theatre, Inc., 552 F. Supp. 1244, 1251
(D.V.I. 1982) (holding that “the law is
clear that separate actions are available in
actions for debt and against a mortgage.”),
aff’d on other grounds 728 F.2d 177 (3d
Cir. 1984).
We reject the defendants’ argument
and endorse the view adopted by the
District Court in St. Croix Drive-In.7 The
great benefit in using a mortgage on real
property as security is the certainty it
affords: The property will not go away.
The legal complement to the physical
stability of real property is the long statute
of limitations for actions on real property.
Adopting the rule proposed by defendants
7This holding, of course, has no effect
on UMLIC’s inability to collect a
deficiency judgment from the
defendants; as we have noted, such a
contract suit is clearly time-barred, and
UMLIC has dismissed that cause of
action.

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would sap real property in the Virgin
Islands of its appeal as a security under
certain guarantee structures, and would
likely deter offshore real estate investment.
Moreov er, we believe that this
interpretation is in line with the settled
expectations of parties that have entered
into transactions secured by mortgages on
real property in the Virgin Islands.
We also think the rule we adopt is
superior because it can be applied
uniformly to this situation, and to the
situation where a mortgage stands alone
without a personal guarantee, while the
rule that defendants propose cannot. See
Hilpert v. Commissioner, 151 F.2d 929,
932 (5th Cir. 1945). Finally, the Virgin
Islands Legislature is free to overrule by
statute this part of our decision. Indeed,
one treatise notes that the rule barring
foreclosure when the statute of limitations
has run on the secured note is “frequently
the result of express statutory provision.”
55 Am. Jur. 2d Mortgages § 683 (2003).
Thus we conclude that UMLIC may
foreclose on the mortgages irrespective of
whether it may sue in personam to enforce
the defendants’ personal guarantees.
B. Federal Versus Virgin Island
Limitations Period
Having settled that mortgage
foreclosure is an independent action under
Virgin Islands law, we must determine the
statute of limitations applicable to such an
action when it is brought by an assignee of
the United States. UMLIC claims that an
assignee stands in the shoes of the
assignor— here the United States—and
thus that the federal limitations periods
apply to it as they would if the United
States itself brought a foreclosure action.
We agree, and join every other appellate
court to consider the issue. Three cases in
particular command our attention: Tivoli
Ventures, Inc. v. Bumann, 870 P.2d 1244
(Colo. 1994); United States v. Thornburg,
82 F.3d 886 (9th Cir. 1996); and FDIC v.
Bledsoe, 989 F.2d 805 (5th Cir. 1993).
We briefly discuss each of them.
In Tivoli Ventures, the question
arose in the context of whether an assignee
could sue on the U nited States’
(unexpired) cause of action, or was limited
to an antecedent (and now-expired) cause
of action. There, the FDIC as receiver of
a failed bank had assigned to a private
party a note held by the bank. The parties
did not dispute that the FDIC’s cause of
action accrued only when the bank was
placed in receivership, not when the note
first came overdue, hence the FDIC’s
claim expired later. The private party sued
to collect on the note, and was met with
the argument that the action was barred by
Colorado’s six-year limitations period,
which started to run from the date the note
was overdue. The private party plaintiff
argued that as the assignee of the FDIC, it
was entitled to the six-year limitations
period in 28 U.S.C. § 2415 that started to
run from the time the bank was put into
receivership. The Colorado Supreme
Court agreed, holding that the private-
party assignee of the FDIC stood in the
shoes of the United States.
Like the case before us, Thornburg
involved the guarantor-mortgagor’s
liability when a corporation defaulted on

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an SBA-backed loan. The guarantee and
mortgage were first assigned to a private
party, and then assigned back to the SBA
which brought the case. The mortgagor
argued that the state statute of limitations
ran out on the note while it was in the
hands of the private party, and thus that the
action by the SBA was time barred as well
because a transfer (back) to the United
States cannot revive a time-barred cause of
action. See FDIC v. Hinkson, 848 F.2d
432, 434 (3d Cir. 1998) (“If the state
statute of limitations has expired before
the government acquires a claim, it is not
revived by transfer to a federal agency.”).8
The Court of Appeals for the Ninth Circuit
held that the federal statute applied. After
discussing (and approving) cases that hold
that an assignee of the United States stands
in the shoes of the United States, the
Thornburg Court ultimately rested its
holding on the fact that the assignment to
the private party was only for collection
purposes (referred to by some courts as a
“consignment”), and the United States
never divested itself of the note. See
Thornburg, 82 F.3d at 891-92. This may
make Thornburg a more compelling case
for application of federal limitations law
than this case, because in the case before
us now, title to the mortgage has passed to
UMLIC.
Bledsoe’s facts are between Tivoli
Ventures and Thornburg. Like Tivoli
Ventures, Bledsoe involved a note that first
came to the United States as receiver (the
FSLIC) in an S&L insolvency. The note
was assigned to a private party (unlike
Thornburg, this seems to have been a true
sale, and not a consignment) and then (via
another insolvency) back to the United
States as receiver. Like Thornburg, the
defendant asserted that the four-year state
statute of limitations ran on the note while
it was in private hands, and could not
thereafter be resuscitated by transfer to the
United States. The Court of Appeals for
the Fifth Circuit held that the six-year
federal statute applied to the note while it
was in the hands of the assignee of the
United States, and thus concluded that the
cause of action had not expired.
Thornburg lists as adhering to this
rule a number of state courts and federal
district courts, in addition to the Courts of
Appeal for the Fifth and Ninth Circuits; it
notes only one contrary decision, Wamco,
III, Ltd. v. First Piedmont Mortgage Corp.,
856 F. Supp. 1076 (E.D. Va. 1994). See
Thornburg 82 F.3d at 890-91. Since 1996,
when Thornburg was decided, the Court of
Appeals for the Tenth Circuit has joined
this group. See UMLIC-Nine Corp. v.
Lipan Springs Dev. Corp., 168 F.3d 1173
(10th Cir. 1999). We too now join the
majority view.
In view of the thorough discussions
in Tivoli Ventures, Bledsoe, and
Thornburg, we simply summarize what we
regard as the best doctrinal and public
8Hinkson does not apply here because
the earliest date of default was late 1988,
and the note was transferred to the SBA
in early 1994, a period of less than six
years. No party proposes as pertinent to
this case any statute of limitations,
federal or Virgin Islands, shorter than six
years.

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policy reasons for the rule that the assignee
of the United States stands in the shoes of
the United States and is entitled to rely on
the limitations periods prescribed by
federal law. Doctrinally, an assignee stood
in the shoes of the assignor at common
law, and the Uniform Commercial Code
provides that “[t]ransfer of an instrument
. . . vests in the transferee any right of the
transferor to enforce the instrument.”
UCC § 3-203(b). Moreover, the
Restatement (Second) of Contracts § 336
cmt. b, ex. 3 explains that “A lends money
to B and assigns his right to C. C’s right is
barred by the Statute of Limitations when
A’s right would have been.” We see no
reason that the inverse should not hold as
well. In public policy terms, affording
assignees of the United States the same
rights as the United States is desirable
because it improves the marketability of
instruments held by the United States,
thereby giving the United States greater
flexibility in monetizing its claims.
C. The Applicable Federal Limitations
Period
Having settled that federal law
should govern the limitations period in this
case, the question now becomes what that
limitations period is. We start with 28
U.S.C. § 2415(c), which concerns
“action[s] to establish . . . title to . . . real .
. . property.” That section provides:
“Nothing herein shall be deemed to limit
the time for bringing an action to establish
the title to, or right of possession of, real
or personal property.” At the threshold,
we note that the literal language of §
2415(c) does not affirmatively establish a
limitations period (or preempt any existing
state limitations period). Rather it seems
to clarify that the other subsections of §
2415—w hich we shall come to
shortly—do not extend to certain actions
involving real property. That said, we do
not think § 2415(c) applies to this action.
At common law, a mortgage was
“title to . . . real . . . property,” § 2415(c),
because under the common law, a
mortgage granted an estate in land. See
Black’s Law Dictionary 1009-10 (6th ed.
1990):
Mortgage. . . . At common
law, an estate created by a
conveyance absolute in its
form, but intended to secure
the performance of some
act, such as the payment of
money . . . and to become
void if the act is performed
. . . . The mortgage operates
as a conveyance of the legal
title to the mortgagee, but
such title is subject to
defeasance on payment of
the debt . . . .
The Virgin Islands, however, is a “lien
theory” jurisdiction. See BA Props. v.
Gov’t of V.I., 299 F.3d 207, 218-20 (3d
Cir. 2002) (citing Royal Bank of Canada v.
Clarke, 373 F. Supp. 599, 601 (D.V.I.
1974)); see also 28 V.I. Code § 290 (“A
mortgage of real property shall not be
deemed a conveyance so as to enable the
owner of the mortgage to recover
possession of the real property without a
foreclosure and sale according to law, and
a judgment thereon.”). As Black’s Law

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Dictionary explains, “in many . . . states, a
mortgage is regarded as a mere lien, and
not as creating a title or estate. It is a
pledge or security of particular property
for the payment of a debt . . . but is not
now regarded as a conveyance in effect.”
Black’s Law Dictionary at 1010 (citations
omitted).
The implication of all this is that an
action to foreclose on a mortgage in the
Virgin Islands would not be “an action to
establish the title to . . . real . . . property”
under § 2415(c), because Virgin Islands
law would recognize no interest in real
property from the mortgage.9 Since §
2415(c) does not apply to this action, we
next consider whether the six-year
limitations period provided in § 2415(a)
applies. Our inquiry is guided by the rule
of construction that “[s]tatutes of
limitations sought to be applied to bar
rights of the Government, must receive a
strict construction in favor of the
G o v e r n m e n t . ” B a d a r a c c o v .
Commissioner, 464 U.S. 386, 391 (1984)
(quoting E.I. Dupont de Nemours & Co. v.
Davis, 264 U.S. 456, 462 (1924)).
Section 2415(a) provides:
(a) [Subject to exceptions
not pertinent here,] every
action for money damages
brought by the United States
or an officer or agency
thereof which is founded
upon any contract express or
implied in law or fact, shall
be barred unles s the
complaint is filed within six
years after the right of
action accrues or within one
year after final decisions
have been rendered in
applicable administrative
proceedings required by
c o n tr a c t o r b y l a w ,
whichever is later. . . .
Every Court of Appeals to consider the
question whether § 2415(a) sets a
limitations period on mortgage foreclosure
actions has concluded that it does not.
This has been the consistent result in both
lien theory and title theory jurisdictions,
and has held irrespective of how the court
has interpreted § 2415(c). See Westnau
Land Corp. v. SBA, 1 F.3d 112, 114-16 (2d
Cir. 1993) (§ 2415(a) does not apply)
(citing cases); FmHA v. Muirhead, 42 F.3d
964 (5th Cir. 1995) (neither § 2415(a) nor
(c) applies); United States v. Omdahl, 104
F.3d 1143, 1145-46 (9th Cir. 1997) (Ҥ
2415(c) applies to a mortgage foreclosure
action”); United States v. Ward, 985 F.2d
500 (10th Cir. 1993) (Oklahoma is a lien
theory state; § 2415(a) does not apply);
United States v. Alvarado, 5 F.3d 1425,
1429 (11th Cir. 1993) (§ 2415(a) does not
apply).
We join these courts in holding that
§ 2415(a) does not apply to mortgage
foreclosure actions. Two related
rationales—one or both of which is present
in each of the cases cited above—convince
us of this. First, foreclosure was a
9We express no view on the
applicability of § 2415(c) in a title theory
jurisdiction.

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historically equitable remedy. Since §
2415(a) speaks in terms of “damages,” a
traditionally legal remedy, foreclosure
actions are not encompassed by § 2415(a).
Second, foreclosure is an in rem
proceeding, and money damages are not
acquired through in rem proceedings.
Since no party contends that any of
the other limitations periods in other
subsections of § 2415 apply, we are left
with the result that there is no federally
provided statute of limitations for
mortgage foreclosure actions. Like the
Muirhead, Alvarado, Westnau, and Ward
Courts, we turn to federal common law to
fill the gap.
The gap is filled by what the Court
of Appeals for the Tenth Circuit
characterized as:
[t]he maxim, time does not
run against the sovereign,
combined with the principle
that the United States is not
bound by a statute of
limitations unless Congress
has explicitly expressed one,
United States v. John
Hancock Mut. Life Ins. Co.,
364 U.S. 301 (1960)
Ward, 985 F.2d at 502; see also United
States v. Kimbell Foods, Inc., 440 U.S.
715, 725 (1979) (federal law governs
issues involving the rights of the United
States arising under nationwide federal
programs, though absent Congressional
directives to the contrary, state law can
provide the federal rule of decision). Thus
there is no statute of limitations on
UMLIC’s action, and the District Court
was correct to rule again st the
defendants.10
The order of foreclosure will be
affirmed, and the stay will be vacated.
10We note that the use of a federal
limitations period in federal lending
transactions has been subject to forceful
criticism. In Muirhead, Judge Edith
Jones wrote:
[W]e are troubled by
the federal government’s
insistence that it may
enforce ancient mortgages
outstanding in numerous,
long-lived and often
default-prone federal
lending programs
essentially forever. The
continued existence of
these mortgages may cloud
titles to property all over
the country, and in so
doing will engender
confusion, higher real
property transaction costs,
and commercial instability.
If federal agencies simply
conformed their lending
practices to the dictates of
state law, as every private
lender must, they would act
more promptly upon
defaulted mortgages and
would not prejudice the
alienability of reality [sic].
Muirhead, 42 F.3d at 967.

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