n v. Weidner Holdings, LLC

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.

SUMMARY
December 26, 2019

2019COA186

No. 18CA2261, Gunderson v. Weidner Holdings, LLC — Uniform
Commercial Code — Negotiable Instruments — Statute of
Limitations

A division of the court of appeals considers the applicable

statute of limitations for two payable-on-demand promissory notes.

The division concludes that because the promissory notes are

negotiable instruments, the more specific statute of limitations

under Colorado’s Uniform Commercial Code (UCC) applies, not the

general six-year statute of limitation applied by the trial court. And

because the promissory notes are demand notes on which no

principal or interest has been paid and because suit was filed

within ten years of execution of the notes and within six years of

demand being made, the action is not time-barred.
Accordingly, the division reverses the trial court’s summary

judgment.
COLORADO COURT OF APPEALS 2019COA186

Court of Appeals No. 18CA2261
Mesa County District Court No. 17CV30328
Honorable Brian J. Flynn, Judge

Jerry Gunderson,

Plaintiff-Appellee,

v.

Weidner Holdings, LLC and William Weidner,

Defendants-Appellants.

JUDGMENT REVERSED AND CASE
REMANDED WITH DIRECTIONS

Division VI
Opinion by JUDGE WELLING
Berger and Martinez*, JJ., concur

Announced December 26, 2019

Joseph Coleman & Associates, LLC, Joseph Coleman, Isaiah Quigley, Grand
Junction, Colorado, for Plaintiff-Appellee

Dackonish & Blake, P.C., Thomas W. Blake, Grand Junction, Colorado, for
Defendants-Appellants

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2019.
¶1 This case centers on which statute of limitations applies to two

payable-on-demand promissory notes, one of which is secured by a

deed of trust on real property. Citing Mortgage Investments Corp. v.

Battle Mountain Corp., 70 P.3d 1176 (Colo. 2003), the district court

applied the general six-year statute of limitations, not the one

applicable to negotiable instruments under the Uniform

Commercial Code (UCC). Based on this, and its conclusion that a

claim to enforce a payable-on-demand promissory note accrues

when the note is executed, the district court granted summary

judgment in favor of plaintiff, Jerry Gunderson. Defendants,

William Weidner and Weidner Holdings, LLC, appeal the district

court’s order for summary judgment. Because we conclude that the

UCC applies and that under the UCC’s limitations period Weidner

Holdings’ claim to enforce the promissory notes is not time barred,

we reverse the district court’s judgment.

I. Background

¶2 Jerry Gunderson and his wife, Kimberly Gunderson, asked

Kimberly’s father, William Weidner, to provide them with money to

purchase a home. Through his limited liability company, Weidner

Holdings, Mr. Weidner disbursed two lump sums to the couple in

1
order to fund the real estate purchase. On June 19, 2009, the

Gundersons executed two promissory notes in the amounts of

$739,000 and $150,000, respectively. The promissory notes were

explicitly payable on demand and bore a nominal annual interest

rate of 0.75 percent. The $739,000 note was secured by a deed of

trust; the $150,000 note was unsecured. The promissory notes did

not require any periodic payments of interest or principal. And the

Gundersons made none.

¶3 Later, the Gundersons asked Mr. Weidner to forgive the notes

so that they could sell the property encumbered by the larger note

and purchase property in Montana. Mr. Weidner declined the

request. But he did agree to release the deed of trust on the

property the Gundersons were selling and take a subordinated

security interest in the Montana property. The Gundersons then

moved to Montana. Soon after, the Gundersons separated and

began dissolution of marriage proceedings.

¶4 After the Gundersons filed for divorce in Montana, Mr.

Weidner, on behalf of his limited liability company, called the two

2
notes due against Mr. Gunderson.1 Mr. Weidner demanded

payment on March 9, 2017, almost eight years after the notes were

executed. After Mr. Weidner demanded repayment, Mr. Gunderson

sued in Colorado district court, seeking a declaratory judgment that

the money was a gift, never to be repaid. Mr. Gunderson also

contended that the statute of limitations barred Mr. Weidner’s and

his limited liability company’s efforts to enforce the notes.

¶5 On July 19, 2017, Weidner Holdings asserted counterclaims,

seeking a declaratory judgment that the disbursed funds were loans

and not gifts and that its enforcement action was not time barred.

Weidner Holdings also sought to enforce the promissory notes

against Mr. Gunderson. Mr. Gunderson then moved for summary

judgment, seeking application of the statute of limitations to

preclude enforcement of the notes and to extinguish the deed of

trust.

¶6 Mr. Gunderson contends the general statute of limitations,

section 13-80-103.5, C.R.S. 2019, applies to the notes, while the

Weidner defendants contend that the statute of limitations under

1Weidner Holdings seeks to enforce the notes against Jerry
Gunderson, but not Mr. Weidner’s daughter, Kimberly Gunderson.

3
Colorado’s UCC, section 4-3-118, C.R.S. 2019, applies to the

notes.2

¶7 The district court granted Mr. Gunderson’s motion for

summary judgment, concluding that Colorado’s general six-year

statute of limitations applied to the notes, that any claim on the

notes accrued when they were executed, and therefore that Weidner

Holdings’ claim for enforcement of the notes is time barred. Mr.

Weidner and his limited liability company appeal.

II. Applicable Statute of Limitations

A. Legal Principles

¶8 We review an order granting a motion for summary judgment

de novo. Salas v. Grancare, Inc., 22 P.3d 568, 571 (Colo. App.

2001). Summary judgment is only appropriate when there is no

genuine issue of material fact. C.R.C.P. 56(e). In reviewing a

motion for summary judgment, “the nonmoving party is entitled to

any favorable inferences that may reasonably be drawn from the

facts, and all doubts must be resolved against the moving party.”

2 Neither party disputes that Colorado law applies.

4
Clementi v. Nationwide Mut. Fire Ins. Co., 16 P.3d 223, 225-26 (Colo.

2001).

¶9 Which statute of limitations applies is a question of law that

we review de novo. Castle Rock Bank v. Team Transit, LLC, 2012

COA 125, ¶ 16. A statute of limitations prescribes the time during

which an action must be brought. The purposes of statutes of

limitation are to promote justice, discourage unnecessary delay,

and preclude the prosecution of stale claims. Sulca v. Allstate Ins.

Co., 77 P.3d 897, 899 (Colo. App. 2003). The statute of limitations

is an affirmative defense, C.R.C.P. 8(c), that must be pleaded and

proved by the defendant. Zertuche v. Montgomery Ward & Co., 706

P.2d 424, 426 (Colo. App. 1985); cf. Drake v. Tyner, 914 P.2d 519,

523 (Colo. App. 1996) (concluding that the defense adequately

raised a statute of limitations defense in its summary judgment

motion).

B. Analysis

¶ 10 So, which statute of limitations controls a cause of action to

enforce the promissory notes? Mr. Gunderson contends (and the

district court agreed) that section 13-80-103.5(1)(a), the general

5
statute of limitations applicable to liquidated debts, applies. That

section provides:

(1) The following actions shall be commenced
within six years after the cause of action
accrues and not thereafter:

(a) All actions to recover a liquidated debt or
an unliquidated, determinable amount of
money due to the person bringing the action,
[and] all actions for the enforcement of rights
set forth in any instrument securing the
payment of or evidencing any debt . . . .

§ 13-80-103.5.

¶ 11 The Weidner defendants, on the other hand, contend that the

two promissory notes are negotiable instruments, and that as

payable-on-demand negotiable instruments, an action to enforce

them is subject to the limitations period in section 4-3-118, which

provides:

[I]f demand for payment is made to the maker
of a note payable on demand, an action to
enforce the obligation of a party to pay the
note must be commenced within six years after
the demand. If no demand for payment is
made to the maker, an action to enforce the
note is barred if neither principal nor interest
on the note has been paid for a continuous
period of ten years.

§ 4-3-118(b).

6
¶ 12 The key, undisputed facts affecting the statute of limitations

analysis are:

• The promissory notes were executed on June 19, 2009.

• The promissory notes are payable on demand and

payments of principal and interest have never been

made.

• Demand for payment wasn’t made until March 9, 2017

(just shy of six years and nine months after the

promissory notes were executed).

• Suit to enforce the promissory notes was initiated on July

19, 2017 (eight years and one month after the promissory

notes were executed).

¶ 13 Based on the undisputed facts, it is uncontested that if section

13-80-103.5(1)(a) applies (and assuming that a claim on a payable-

on-demand promissory note accrues when it is executed), then

Weidner Holdings’ action to enforce the promissory notes is time

barred. This is so because demand for payment was not made until

more than six years after the promissory notes were executed. See

§ 13-80-103.5(1)(a). It is also uncontested that if section 4-3-118(b)

applies instead, then the Weidner Holdings’ action to enforce the

7
promissory notes is not time barred. This is so because demand for

payment was made within ten years of the notes being executed

and because suit was filed within six years after demand was made.

See § 4-3-118(b). Simply put, whether the district court properly

granted summary judgment turns on which statute of limitations

applies.

¶ 14 To resolve this question, we must first address whether the

promissory notes are negotiable instruments. If they are, we must

next determine whether securing them with a deed of trust defeats

negotiability. Answering both of these questions in favor of

negotiability, we then consider whether the supreme court case on

which the district court relied — Mortgage Investments Corp. v.

Battle Mountain Corp., 70 P.3d 1176 (Colo. 2003) — controls; we

conclude that it does not control the disposition of this case. Based

on this analysis, we finally conclude that the UCC’s statute of

limitations, section 4-3-118(b), governs and that the district court’s

application of the general statute of limitations, section 13-80-

103.5, was erroneous.

8
1. The Promissory Notes Are Negotiable Instruments

¶ 15 Article 3 of the UCC governs the issuance, transfer,

enforcement, and discharge of negotiable instruments. Liberty

Mortg. Corp. v. Fiscus, 2016 CO 31, ¶ 13. Whether a promissory

note is a negotiable instrument is a question of law that we review

de novo. Cf. Reid v. Pyle, 51 P.3d 1064, 1067 (Colo. App. 2002)

(appearing to treat the question of whether a promissory note is a

negotiable instrument as a question of law); DBA Enters., Inc. v.

Findlay, 923 P.2d 298, 303 (Colo. App. 1996) (same).

¶ 16 Under the UCC, a negotiable instrument is an “unconditional

promise or order to pay a fixed amount of money, with or without

interest or other charges described in the promise or order” if it:

(1) Is payable to bearer or to order at the time
it is issued or first comes into possession of a
holder;

(2) Is payable on demand or at a definite time;
and

(3) Does not state any other undertaking or
instruction by the person promising or
ordering payment to do any act in addition to
the payment of money [with exceptions that
are not applicable here].

§ 4-3-104(a), C.R.S. 2019.

9
¶ 17 We conclude that the two promissory notes here meet the

definition of a negotiable instrument under the UCC. First, the

notes contain plain language describing an unconditional promise

to pay a fixed amount of money with interest. Cf. Bank of Kimball v.

Rostek, 161 Colo. 584, 586, 423 P.2d 579, 580 (1967) (“In order for

a promissory note to be negotiable . . . it must contain both an

unconditional promise to pay and a fixed or determinable date of

payment.”). Specifically, both notes contain the following language:

“In return for the loan that I have received, I promise to pay [the

principal amount] . . . plus interest, to the order of the Lender.”

Second, the notes were payable to order at the time they were

issued; the language of both notes specifically makes payment due

to an identified legal entity — namely, Weidner Holdings (which

continues to be the holder of the notes). Third, the notes are

payable on demand and due at the lender’s call, providing: “I will

pay principal and interest by making a payment upon demand.”

Fourth, the notes do not state any additional undertakings,

conditions, or promises.

¶ 18 Because the promissory notes satisfy the conditions set forth

in section 4-3-104(a), they are negotiable instruments. See Haberl

10
v. Bigelow, 855 P.2d 1368, 1372-73 (Colo. 1993). Still, Mr.

Gunderson contends that the promissory notes are not negotiable

instruments because they are secured by a deed of trust.3 We turn

to that contention next.

2. Securing a Promissory Note With a Deed of Trust Does Not
Defeat the Negotiability of the Promissory Note

¶ 19 As noted earlier, the larger of the two promissory notes is

secured by a deed of trust in real property. Mr. Gunderson argues

that the conditions of the deed of trust constitute “further

undertakings,” rendering the promissory note non-negotiable. We

agree that if a written agreement makes an obligation to pay subject

to an express condition, the instrument is not payable on demand,

but is payable only upon the happening of the express condition.

See Roa v. Miller, 784 P.2d 826, 829 (Colo. App. 1989) (holding that

defendant’s promise to pay was not unconditional because it was

expressly conditioned upon her “transfer of title,” and therefore, the

3 In his briefing, Mr. Gunderson appears to contend that both
promissory notes are secured by a deed of trust. But the record
reflects that only the larger of the two notes is secured. Because we
conclude that whether a note is secured does not have a bearing on
negotiability, see Part II.B.2, infra, we don’t need to resolve this
discrepancy.

11
document could not be a negotiable instrument). But here, any

additional conditions are solely required by the deed of trust and

are not incorporated into the promissory notes. And Mr.

Gunderson does not cite any case law, and we know of none, that

holds that a promissory note secured by a deed of trust cannot be a

negotiable instrument under the UCC.

¶ 20 Instead, the promissory notes here are similar to the

promissory note that the supreme court found to be a negotiable

instrument in Haberl. In that case, the supreme court held that the

promissory note at issue, despite being secured by a deed of trust,

was still a negotiable instrument because it contained “both an

unconditional promise to pay and a fixed date of payment.” Haberl,

855 P.2d at 1372. Here too, the promissory notes satisfy the

conditions of a negotiable instrument, and the fact that one is

secured by a deed of trust does not defeat its negotiability. See id.

at 1372-73 (collecting cases from other jurisdictions that stand for

the proposition that a promissory note is not stripped of its

character as a negotiable instrument simply because it is secured

by a deed of trust or mortgage). Accordingly, we conclude that both

12
promissory notes are negotiable instruments, notwithstanding the

fact that one is secured by a deed of trust.

3. The Colorado Supreme Court’s Decision in Battle Mountain Is
Inapposite

¶ 21 The district court relied on Battle Mountain to conclude that

the general six-year statute of limitations applies to a payable-on-

demand promissory note secured by a deed of trust. Mr.

Gunderson urges us to do the same. We, however, are not

persuaded that Battle Mountain controls this case. To understand

why, a close examination of Battle Mountain is warranted.

¶ 22 The underlying claim in Battle Mountain was a foreclosure on a

deed of trust. 70 P.3d at 1179. Eight years before filing the

foreclosure action giving rise to Battle Mountain, the lender sued the

borrower for default on a promissory note, and instead of

immediately foreclosing on the property, simply obtained a

judgment. Id. at 1179-80. In an effort to collect on the judgment,

the lender filed the Battle Mountain litigation, seeking to foreclose

on the deed of trust that originally secured the promissory note

(and, at the time of filing, secured the judgment). Id. at 1180.

Because eight years had passed between the lender obtaining its

13
judgment and initiating the foreclosure action, the borrower

contended that the lender’s foreclosure action was barred by the

six-year statute of limitations contained in section 13-80-103.5. Id.

A division of our court agreed, and the lender sought certiorari

review. Id. at 1181.

¶ 23 The supreme court granted certiorari to determine whether the

six-year statute of limitations barred foreclosure on a lien of a deed

of trust.4 Id. at 1178. The supreme court reversed a decision of the

court of appeals, holding that an action to foreclose on a deed of

trust is governed by the fifteen-year limitations period applicable to

deeds of trust, so long as the action to reduce the promissory note

to judgment was timely pursued. Id. at 1179, 1183. In so holding,

the supreme court stated as follows:

We conclude that the six-year statute of
limitations, section 13–80–103.5, 5 C.R.S.
(2002), is a general statute of limitations on
the enforcement of debts, including those
evidenced by a promissory note secured by a
deed of trust. When, as here, a party brings an

4The court also granted certiorari to address whether certain
defendants had standing to assert a statute of limitations defense in
a foreclosure action. See Mortg. Invs. Corp. v. Battle Mountain Corp.,
70 P.3d 1176, 1179 n.1 (Colo. 2003). This second issue has no
bearing on the issues presented in this case. And neither party
contends otherwise.

14
action for default on a promissory note within
the six-year limitations period and thereafter
reduces the note to judgment, the more
specific six and fifteen-year limitations periods
apply to the resulting judgment lien and the
deed of trust respectively. The action before us
is for foreclosure on a deed of trust, not
execution upon a judgment lien, and the
fifteen-year statute of limitations of section 38–
39–205, 10 C.R.S. (2002), applies.

Id. at 1183 (emphasis added).

¶ 24 It is the italicized language that the district court seized upon

to conclude that regardless of whether a promissory note is a

negotiable instrument, the general statute of limitations in section

13-80-103.5 controls.5 We are not persuaded, however, that this

language supports that conclusion, for two reasons.

5 In addition to determining that the applicable statute of
limitations is the six-year general statute of limitations, the district
court also relied on Wasinger v. Reid, 705 P.2d 533, 534 (Colo. App.
1985), to conclude that Mr. Weidner’s claim accrued when the
promissory notes were executed. Id. (“When a promissory note is
payable on demand, the statute of limitations begins to run on the
date the note is executed.” (citing Kirby v. Bourg, 165 Colo. 500, 440
P.2d 151 (1968))). When Wasinger was decided, however, the
Colorado UCC specified that a cause of action on a demand note
accrues on the date of issuance. See § 4-3-122(1)(b), C.R.S. 1985
(“A cause of action against a maker or an acceptor accrues . . . [i]n
the case of a demand instrument upon its date or, if no date is
stated, on the date of issue.”). But in 1994, portions of the
Colorado UCC — including article 3 — were repealed and reenacted;
in this process, section 4-3-122(1)(b) was eliminated and section 4-

15
¶ 25 First, the court in Battle Mountain was not presented with the

issue of what statute of limitations applied to the claim to enforce

the promissory note. The case reducing the defaulted promissory

note to judgment had been resolved eight years earlier without any

apparent issue regarding the applicable statute of limitations being

raised. Id. at 1179-81. Indeed, even if the action to reduce the

promissory note to judgment had been subject to a valid statute of

limitations defense, the proper time to raise and resolve the issue

was in the earlier case, not in the foreclosure case. This is so

because an alleged violation of a statute of limitations is a waivable

affirmative defense, not a jurisdictional defect subject to collateral

attack. Put differently, even if the court in the promissory note case

misapplied the statute of limitations, Battle Mountain — the

foreclosure case — was not the proper setting to remedy it. Thus,

3-118 was enacted, dramatically changing the accrual of a cause of
action on a demand note. See Ch. 159, sec. 1, 1994 Colo. Sess.
Laws 839-50. Because of the statutory change and our
determination that the promissory notes are negotiable
instruments, Wasinger has no bearing on this case. But because
we do not reach the issue of when a non-negotiable payment-on-
demand promissory note would accrue, we offer no opinion on
whether Wasinger has continuing viability under such
circumstances.

16
the applicable statute of limitations that applied to enforcement of

the promissory note was not at issue in Battle Mountain. So any

discussion of the statute of limitations applicable to the

enforcement of the promissory note was outside of the scope of the

grant of certiorari in Battle Mountain. See id. at 1179 n.1 (listing

the issues that the court granted certiorari to review).

¶ 26 Second, the question of whether the promissory note at issue

was a negotiable instrument was not raised, much less resolved in

Battle Mountain. In other words, we are confronted with a question

that was not before the court in Battle Mountain — whether a

payable-on-demand promissory note that is a negotiable instrument

is subject to the UCC’s statute of limitations.6

¶ 27 In summary, two things that were necessary to the court’s

holding in Battle Mountain regarding the promissory note was the

fact that the promissory note had been reduced to judgment and

6 Mr. Weidner also points out an additional distinction: that the
promissory note at issue in Battle Mountain was not a payment-on-
demand note. While this is true, this strikes us as a distinction
without a difference when it comes to evaluating whether Battle
Mountain sheds any light on the applicable statute of limitations. If
this distinction were to have any relevance to our analysis it would
be with respect to the issue of accrual under the general statute of
limitations, an issue that we do not reach. See supra note 5.

17
when that occurred. And the Battle Mountain court’s discussion of

the statute of limitations applicable to the action to enforce the

promissory note was not necessary to its holding. Accordingly, we

conclude that Battle Mountain does not shed any light on — much

less control — what statute of limitations applies to a suit to enforce

the promissory notes at issue in this case.

4. The UCC’s Statute of Limitations Applies and the Claims Are
Not Time Barred

¶ 28 Having resolved the threshold issues of whether the

promissory notes are negotiable instruments and whether Battle

Mountain controls, we now turn to the question of which statute of

limitations applies to Weidner Holdings’ claim to enforce promissory

notes against Mr. Gunderson.

¶ 29 Section 13-80-103.5 is a general statute of limitations on the

enforcement of debts, while section 4-3-118(b) is a more specific

statute of limitations, reserved for negotiable instruments. Battle

Mountain, 70 P.3d at 1184 (observing that section 13-80-103.5 is a

“general limitations provision that is broad in scope and includes

many types of instruments that secure a debt”). Where there is a

conflict over the applicable statute of limitations, courts should

18
apply the more specific statute of limitations over a more general

statute of limitations. See Persichini v. Brad Ragan, Inc., 735 P.2d

168, 172-73 (Colo. 1987) (holding that in the absence of a clear

legislative intent to the contrary, a statute of limitations specifically

addressing a particular class of cases will control over a more

general or catch-all statute of limitations); see also Battle Mountain,

70 P.3d at 1183. This leads us to the conclusion that section 4-3-

118(b) — the UCC’s statute of limitations for payable-on-demand

negotiable instruments — applies, and not the general statute of

limitations applied by the district court.

¶ 30 In case any doubt lingers over whether the legislature

intended the UCC’s statute of limitations to apply to circumstances

like those presented here, official comment 2 to section 4-3-118

confirms our conclusion. See West v. Roberts, 143 P.3d 1037, 1041

(Colo. 2006) (“Comments to a statute are relevant in its

interpretation.”). That official comment provides as follows:

The second sentence of subsection (b) bars an
action to enforce a demand note if no demand
has been made on the note and no payment of
interest or principal has been made for a
continuous period of 10 years. This covers the
case of a note that does not bear interest or a
case in which interest due on the note has not

19
been paid. This kind of case is likely to be a
family transaction in which a failure to
demand payment may indicate that the holder
did not intend to enforce the obligation but
neglected to destroy the note.

§ 4-3-118 cmt. 2.

¶ 31 For these reasons, we conclude that section 4-3-118(b) — and

not section 13-80-103.5 — applies to Weidner Holdings’ effort to

collect on the promissory notes executed by the Gundersons. And

because it is undisputed that the promissory notes are demand

notes on which no principal or interest has been paid and because

suit was filed within ten years of execution of the notes and within

six years of demand being made, the action is not time barred.

Accordingly, we reverse the summary judgment.

¶ 32 There’s one more issue that we need to address. Having

concluded that Weidner Holdings’ claim to enforce the promissory

notes are time barred, the district court also concluded that its

claim to enforce the deed of trust is similarly time barred. The

district court was certainly correct in its legal analysis that if a

claim on a promissory note is time barred, so too is a claim to

foreclose on the collateral securing the note. See § 38-39-207,

C.R.S. 2019 (“The lien created by any instrument shall be

20
extinguished, regardless of any other provision in this article to the

contrary, at the same time that the right to commence a suit to

enforce payment of the indebtedness or performance of the

obligation secured by the lien is barred by any statute of limitation

of this state.”). But because we reverse the district court’s statute

of limitations ruling on the promissory notes, we also reverse its

ruling dismissing the foreclosure claim, as it is wholly derivative of

the reversed ruling.

III. Conclusion

¶ 33 For the foregoing reasons, the district court’s order granting

summary judgment in favor of Mr. Gunderson is reversed, and the

case is remanded for further proceedings. Nothing in this opinion,

however, should be construed as addressing the merits of any other

defense to the enforcement of the notes or deed of trust, including

that they were a gift; such issues were not before us and should be

addressed by the district court on remand.

¶ 34 JUDGE BERGER and JUSTICE MARTINEZ concur.

21