Present: All the Justices
LONG, LONG & KELLERMAN, P.C., et al.
OPINION BY JUSTICE LEROY R. HASSELL, SR.
v. Record No. 020033 November 1, 2002
STEVEN L. WHEELER, ET AL.
FROM THE CIRCUIT COURT OF THE CITY OF HAMPTON
Wilford Taylor, Jr., Judge
I.
In this appeal, we consider whether an assignee of a deed
of trust is subject to the 20-year statute of limitations
contained in Code § 8.01-242 even though the assignor of the
deed of trust is a federal agency which, had it sought to
enforce the deed of trust, would not have been subject to this
statute of limitations.
II.
The relevant facts are not in dispute. On September 30,
1980, Steven L. Wheeler and Myrna C. Wheeler conveyed certain
real estate by deed of trust to secure their personal guaranty
of payment of a promissory note between Southern Furniture
Warehouse, Inc., and the Administrator of the Small Business
Administration. The deed of trust does not contain a maturity
date of the debt that it secures, and paragraph 16 of the deed
of trust states that the "instrument is to be construed and
enforced in accordance with applicable Federal law." The deed
of trust was recorded in the Clerk's Office of the Circuit
Court for the City of Hampton on that date.
An event of default occurred regarding payment of the
promissory note. The Small Business Administration made a
demand upon the Wheelers to honor their guaranty in 1982. The
agency made a second demand and threatened to foreclose on the
deed of trust in April 2000. Subsequently, the Small Business
Administration assigned the deed of trust to LPP Mortgage,
Ltd., which substituted Long, Long & Kellerman, P.C., as
trustee of the deed of trust (hereinafter "the trustee"). The
trustee notified the Wheelers by letter dated July 20, 2001,
that it intended to initiate foreclosure proceedings.
Subsequently, the trustee initiated a foreclosure proceeding
in 2001, more than 20 years after the date of the Wheelers'
deed of trust.
The Wheelers initiated a proceeding to enjoin the sale of
the property under the deed of trust. The circuit court
entered a decree temporarily enjoining the sale of the
property, and the court ultimately ruled that the trustee's
action to enforce the deed of trust was barred by the statute
of limitations provided in Code § 8.01-242. The court
subsequently entered a decree that permanently enjoined the
trustee from selling the property. The trustee appeals.
III.
2
Title 28 U.S.C. § 2415 (2002) describes the limitation
period that governs specified causes of action filed by the
United States or its agencies. 1 Section 2415(a) provides that
a contract action for money damages filed by the United States
or its agencies is barred unless the contract action is filed
within six years after the right of action accrues. Section
2415(b) requires, among other things, that the United States
or its agencies file a tort action for money damages within
three years after the right of action first accrues. Section
2415(c) states that "[n]othing herein shall be deemed to limit
1
Title 28 U.S.C. § 2415 states in part:
"(a) Subject to the provisions of section 2416
of this title, and except as otherwise provided by
Congress, 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 unless 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 contract or
by law, whichever is later . . . .
"(b) Subject to the provisions of section 2416
of this title, and except as otherwise provided by
Congress, every action for money damages brought by
the United States or an officer or agency thereof
which is founded upon a tort shall be barred unless
the complaint is filed within three years after the
right of action first accrues . . . .
"(c) 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."
3
the time for bringing an action to establish the title to, or
right of possession of, real or personal property."
In contrast, Code § 8.01-242 enacted by the General
Assembly states in part:
"No deed of trust or mortgage given to secure
the payment of money, other than credit line deeds
of trust described in § 55-58.2, and no lien
reserved to secure the payment of unpaid purchase
money, in which no date is fixed for the maturity of
the debt secured by such deed of trust, mortgage, or
lien, shall be enforced after twenty years from the
date of the deed of trust, mortgage, or other lien."
The trustee contends that the federal government and its
agencies are immune from statutes of limitations unless
Congress has explicitly provided a limitations period. We
agree.
We recognize that Code § 8.01-242 cannot bar a federal
agency, such as the Small Business Administration, from
initiating foreclosure proceedings on real property. The
federal government and its agencies are not bound by statutes
of limitations unless Congress explicitly states otherwise.
The rationale for this doctrine arises from the common law
rule – nullum tempus occurrit regi – that the sovereign is
immune from the operations of statutes of limitations. This
rule is necessary because it insures that property rights
vested in the government are not vitiated due to the
negligence of the government's agents or employees upon whom
government must rely. Government should not lose its
4
ownership rights in real and personal property simply because
a government employee or agent neglects to take legal action
to protect the government's property interests. As the
Supreme Court has observed:
"The true reason [for the rule nullum tempus
occurrit regi] is to be found in the great public
policy of preserving the public rights, revenues,
and property from injury and loss, by the negligence
of public officers. And though this is sometimes
called a prerogative right, it is in fact nothing
more than a reservation, or exception, introduced
for the public benefit, and equally applicable to
all governments."
Guaranty Trust Co. v. United States, 304 U.S. 126, 132 (1938)
(quoting United States v. Hoar, 26 F. Cas. 329, 330 (1821)).
See Brock v. Pierce County, 476 U.S. 253, 260 (1986); Stanley
v. Schwalby, 147 U.S. 508, 515 (1893); United States v.
Nashville, Chattanooga & St. Louis Ry. Co., 118 U.S. 120, 125
(1886); see also United States v. Alvarado, 5 F.3d 1425, 1427-
28 (11th Cir. 1993); United States v. City of Palm Beach
Gardens, 635 F.2d 337, 339-40 (5th Cir.), cert. denied, 454
U.S. 1081 (1981).
The trustee argues that Congress has established a
federal statute of limitations for foreclosures in 28 U.S.C.
§ 2415(c). The trustee relies upon the following language in
this statute: "Nothing herein shall be deemed to limit the
time for bringing an action to establish the title to, or
5
right of possession of, real or personal property." We
disagree with the trustee.
Contrary to the trustee's contention, this language does
not create a statute of limitations for foreclosure
proceedings. A statute of limitations for a civil case is
commonly defined as a "statute establishing a time limit for
suing in a civil case, based on the date when the claim
accrued." Black's Law Dictionary 1422 (7th ed. 1999).
Generally, a statute of limitations prescribes a period of
time in which the person with a cause of action must file
pleadings to enforce that cause of action or the right of
action may be defeated if the party against whom the cause of
action has been filed asserts the statute of limitations as a
bar.
We hold that Title 28 U.S.C. § 2415(c) is not a statute
of limitations for the United States and its agencies.
Rather, the statute makes clear that the United States' and
its agencies' rights to file proceedings to establish title
to, or right of possession of, real or personal property are
not affected by the six- and three-year statutes of
limitations provided in § 2415(a) and (b). Furthermore,
§ 2415(c) does not establish a time limit within which the
federal government or its agencies must assert any rights
against another entity. Indeed, federal courts have concluded
6
that Congress has not enacted in § 2415 a statute of
limitations that bars the United States or its agencies from
instituting foreclosure proceedings. Alvarado, 5 F.3d at
1429-30; United States v. Thornburg, 82 F.3d 886, 894 (9th
Cir. 1996); Farmers Home Admin. v. Muirhead, 42 F.3d 964, 966
(5th Cir. 1995); Westnau Land Corp. v. U.S. Small Bus. Admin.,
1 F.3d 112, 115-17 (2d Cir. 1993); United States v. Ward, 985
F.2d 500, 501 (10th Cir. 1993).
The trustee argues at length in its brief that "[t]he
federal law of limitations, not state law, controls" the
resolution of this appeal. However, as we have already
concluded, there is no federal statute of limitations that
prescribes a time period in which the federal government or
its agencies must file a proceeding to foreclose on a deed of
trust. 2 We note that the trustee correctly admitted in his
memorandum filed in the circuit court that "Congress has not
explicitly declared any federal statute of limitations for
cases of this nature."
2
The Supreme Court held in United States v. Kimbell
Foods, Inc., 440 U.S. 715, 726-27 (1979), that federal law,
not state law, governs disputes concerning the federal
government's rights arising out of its participation in
nationwide loan programs. In this case, however, the rights
of the federal government are not implicated. Rather, the
issue we consider is whether a private entity that is an
assignee of a deed of trust that was formerly owned by an
agency of the federal government, may be subjected to a state
statute of limitations.
7
The trustee, relying upon our decision in Union Recovery
Ltd. P'ship v. Horton, 252 Va. 418, 477 S.E.2d 521 (1996),
cert. denied, 520 U.S. 1167 (1997), argues that as an assignee
of a federal agency, the trustee "stands in the shoes of the
federal assignor and is not barred from foreclosing by virtue
of any Virginia statute of limitations." Therefore, the
trustee argues that the circuit court erred by applying Code
§ 8.01-242, a state statute of limitations, to bar the claim
of an assignee of a federal agency. We disagree.
In Union Recovery, we considered whether an assignee of a
promissory note from the Resolution Trust Corporation was
entitled to the benefit of the statute of limitations
available under federal law to the Resolution Trust
Corporation. The Resolution Trust Corporation was a receiver
of an insured depository institution that originally held the
note, and the assignee argued that it was not required to
comply with the state statute of limitations that was shorter
than the federal statute of limitations. We held that the
assignee was entitled to rely upon the federal statute of
limitations. We explained that
"[t]he extended statute of limitations is
merely a mechanism for providing the receiver with
an adequate time to pursue those claims which the
financial institution could not successfully pursue
prior to its failure. As such, the receiver's right
to sue within the statute of limitations period is
inherent in its possession of the instruments at
issue and would thus be among the 'rights, remedies
8
and benefits which are incidental to the thing
assigned,' and not merely a right 'personal to the
assignor and for [its] benefit only.' "
252 Va. at 424, 477 S.E.2d at 524 (quoting WAMCO, III, Ltd. v.
First Piedmont Mortgage Corp., 856 F. Supp. 1076, 1086 (E.D.
Va. 1994)).
Unlike the circumstances in Union Recovery, in which
Congress specifically created a federal statute of
limitations, in the case presently before this Court, Congress
has not created an applicable federal statute of limitations
that governs a foreclosure proceeding initiated by the federal
government or its agencies. Additionally, in this case, the
rationale underlying the rule that the federal government is
immune to the operation of statutes of limitations would not
be served by permitting a private assignee to enjoy perpetual
immunity from a statute of limitations for a purely private
benefit. Thus, we hold that the trustee is not entitled to
the immunity afforded to the federal government and its
agencies from statutes of limitations.
We further hold that the 20-year statute of limitations
contained in Code § 8.01-242 is controlling in this case. The
deed of trust at issue in this case did not contain a maturity
date and was executed by the Wheelers on September 30, 1980.
The trustee initiated foreclosure proceedings more than 20
9
years from the date of the deed of trust and, therefore, the
trustee's action is barred.
IV.
In view of the foregoing, and finding no merit in the
trustee's remaining contentions, we will affirm the decree of
the circuit court.
Affirmed.
CHIEF JUSTICE CARRICO, with whom JUSTICE KINSER and JUSTICE
LEMONS join, dissenting.
I would reverse the judgment of the trial court. The
deed of trust in this case states that it "is to be construed
and enforced in accordance with applicable Federal law."
(Emphasis added.) The majority opinion notes that the
substituted trustee under the deed of trust correctly stated
the applicable federal law when it said in its memorandum
filed in the circuit court that "'Congress has not explicitly
declared any federal statute of limitations for cases of this
nature, and thus, time does not run against the sovereign, or
its assignees.' " Slip op. at 7. (Emphasis added.) LPP
Mortgage, Ltd., an appellant here, is the assignee of the
Administrator of the Small Business Administration, the
beneficiary under the deed of trust.
"[A]n assignee obtains his rights from the assignor, and,
thus, he is said to 'stand in the shoes' of the assignor when
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pursuing an action on the contract or instrument assigned."
Union Recovery Ltd. P'ship v. Horton, 252 Va. 418, 423, 477
S.E.2d 521, 523 (1996). The right to enforce the contract or
instrument is one of the "'rights, remedies and benefits which
are incidental to the thing assigned' . . . and not merely a
right 'personal to the assignor and for [its] benefit only.'"
Id. at 424, 477 S.E.2d at 524 (quoting WAMCO, III, Ltd. v.
First Piedmont Mortgage Corp., 856 F.Supp. 1076, 1086 (E.D.
Va. 1994)).
In Horton, the assignee of a promissory note in favor of
the Resolution Trust Corporation sought a money judgment
against the makers. This Court considered whether the
assignee was entitled to the benefit of the longer federal
statute of limitations available to Resolution Trust or was
subject to the shorter state statute of limitations. This
Court held that the assignee was entitled to the "longer
limitations period." 252 Va. at 424, 477 S.E.2d at 524.
The majority seeks to distinguish Horton on two grounds.
First, the majority says that in the circumstances reviewed in
Horton, Congress specifically created a federal statute of
limitations in 12 U.S.C. § 1821(d)(14)(A) and (B) on a
contract claim while, here, Congress has not created an
applicable federal statute of limitations that governs a
foreclosure proceeding initiated by the federal government or
11
its agencies. However, Congress has specifically declared
that "[n]othing [in 28 U.S.C. § 2415] 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," § 2415(c),
and the parties to this litigation agree that § 2415(c)
applies to foreclosure proceedings brought by the federal
government or its agencies.
It cannot make any possible difference legally or
logically that § 2415(c) may not qualify as a statute of
limitations. The fact that Congress has prescribed no
limitation on the right of a federal agency to foreclose on a
deed of trust but has imposed a limitation upon such an
agency's right to recover a money judgment on a contract claim
should not affect the right of an assignee to step into the
shoes of the assignor in either case. Just as the assignee in
Horton was entitled to benefit from the longer period
prescribed in 12 U.S.C. § 1821, so too is the assignee in this
case entitled to the benefit of the non-limitation provision
of 28 U.S.C. § 2415(c).
The majority also seeks to distinguish Horton on the
ground that permitting a private assignee to enjoy perpetual
immunity from a statute of limitations for a purely private
benefit would not serve the rationale underlying the rule that
the federal government is immune to the operation of statutes
12
of limitations. However, this involves a public policy matter
that is solely within the province of Congress, and it has
seen fit to enact § 2415(c) without any restriction upon those
who may benefit from the absence of a limitation period
applicable to federal foreclosures.
Moreover, we crossed the public policy bridge in Horton.
We said there that, even without reference to the public
policy that might be promoted, application of the common law
permitting an assignee to stand in the shoes of the assignor
"mandates the application of the longer [federal] limitations
period," 252 Va. at 424, 477 S.E.2d at 524, which certainly
benefited the private assignee involved in that case. While
the benefits to the private parties involved in Horton and
this case might differ, the difference is in degree only, not
in principle, and public policy is not implicated. And, at
this point, I repeat that this Court said in Horton that the
right to enforce an instrument assigned by a federal agency to
a private party is "among the rights, remedies, and benefits
which are incidental to the thing assigned and not merely a
right personal to the assignor and for [its] benefit only."
Id. (Emphasis added) (internal quotation marks and citation
omitted).
I find no principled distinction between Horton and the
case at hand. Accordingly, I would reverse the judgment of
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the trial court and let the assignee stand in the shoes of the
assignor to foreclose the deed of trust in question.
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