NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal
revision before publication in the Vermont Reports. Readers are requested to notify the Reporter
of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109
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before this opinion goes to press.
2018 VT 138
No. 2018-085
Annette M. Besaw, Trustee of the Revocable Supreme Court
Living Trust of Ernest P. Giroux
On Appeal from
v. Superior Court, Chittenden Unit,
Civil Division
Bryan Giroux September Term, 2018
Robert A. Mello, J.
Kevin E. Brown of Langrock Sperry & Wool, LLP, Middlebury, and Joseph D. Fallon,
Hinesburg, for Plaintiff-Appellant.
James W. Runcie of Ouimette & Runcie, Vergennes, for Defendant-Appellee.
PRESENT: Reiber, C.J., Skoglund, Robinson, Eaton and Carroll, JJ.
¶ 1. ROBINSON, J. Trustee appeals from the superior court’s ruling on summary
judgment that her suit to recover collateral under a security agreement is time-barred. The central
issue in this case is when the trustee’s right to sue accrued, starting the statute-of-limitations clock.
We conclude that trustee’s right to sue under the security agreement accrued in 2013 when the
borrower failed to pay the balance due on the note within forty-five days of trustee’s notice of
default and borrower’s right to cure. Accordingly, we hold that her suit is not time-barred and
reverse and remand.
¶ 2. The relevant facts are not in dispute. Trustee Annette Besaw is the holder of a
security interest in fifty shares of stock of the Champlain Bridge Marina, Inc. She acquired the
interest previously held by Ernest Giroux upon his death, in her capacity as trustee of his living
trust. Champlain Bridge Marina is a family business in Addison, Vermont. Ernest (defendant
Bryan Giroux’s grandfather) and Raymond Giroux (defendant’s father) started it in 1987. In the
beginning, grandfather and father each owned fifty of the Marina’s 100 shares. On December 30,
1998, grandfather sold his fifty shares to father in exchange for the promissory note in which father
promised to pay grandfather $272,000 plus interest. The associated January 1, 1999 security
agreement gave grandfather a security interest in the fifty shares of Marina stock to secure payment
on the note.
¶ 3. The promissory note required father to make monthly payments for thirty years
until a maturity date of January 1, 2028, at which point any remaining indebtedness was to become
due. It provided generally that “failure to make monthly payments in accordance with the
amortization schedule . . . shall not be considered an event of default, and shall not cause any
penalty to accrue.” However, if at the end of any year father owed more under the note than was
due under the amortization schedule, that overdue balance triggered a penalty. If the overdue
balance and penalty were not repaid before the end of the following year, the agreement provided
that the nonpayment would constitute a default under the note.
¶ 4. The note further provided that “[i]n the event default is declared by the Noteholder,
Noteholder shall provide written notice to Borrower of the facts and circumstances constituting
any such default and shall permit Borrower to cure any such default within forty-five (45) days
after Borrower’s receipt of said notice of default.” It then provided that if the borrower failed to
cure, the “Noteholder may, in his sole discretion, declare the amounts due under this Secured
Promissory Note immediately due and payable without any further notice or demand, and
Noteholder shall then have . . . the rights and remedies of a secured party under the common law
and the Uniform Commercial Code of Vermont.” The security agreement defined default,
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triggering the noteholder’s right to accelerate the debt on the note and to pursue the collateral, to
include “[f]ailure to pay the Note in accordance with its terms.”
¶ 5. Father never made any payments on his debt under the promissory note. In 2005,
father transferred to his son (Ernest’s grandson), defendant Bryan Giroux, the fifty shares he had
bought from grandfather—the collateral for father’s debt to grandfather. The stock certificate
issued to grandson states that it is “subject to a chattel mortgage” to grandfather. Grandfather died
in 2007, after which trustee held the promissory note and associated security agreement in her
capacity as trustee for grandfather’s revocable living trust.
¶ 6. On September 11, 2008, trustee sent father a letter stating that no payments had
been made under the note, and $207,440 was due. In the letter the trustee offered to restructure the
indebtedness, and concluded by saying it was trustee’s “hope and expectation to be able to work
with [father] with respect to the repayment of the indebtedness” but that “if something cannot be
worked out, [trustee would] resort to the remedies provided in the Secured Promissory Note.”
Father made no payments.
¶ 7. On August 20, 2013, trustee sent father a second letter. This letter recounted that
“[b]y letter dated September 11, 2008 . . . you were notified of interest and penalties due and owing
under your Secured Promissory Note to your father’s trust dated December 30, 1998.” It went on
to say that “you are now in default under the terms of such Promissory Note. Demand is hereby
made that all sums due and owing as set forth in the September 11, 2008 letter be paid in full within
forty-five (45) days of your receipt of this notice of default.” It concluded that if father failed to
cure in that time, trustee would declare all amounts due under the note “immediately due and
payable without further notice or demand.”
¶ 8. Shortly after the forty-five-day cure period expired without any payments by father,
trustee brought suit against father for the entire indebtedness under the note. In 2015, the superior
court entered judgment in favor of trustee, ordering father to pay the trust $540,453.
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¶ 9. Soon afterward, trustee sent a letter to grandson, citing the court’s judgment against
father on the note and demanding that grandson give the trust the share certificate that had secured
the indebtedness. Grandson did not deliver the share certificate. In May of 2016, trustee filed this
lawsuit against grandson, seeking an order compelling delivery of the share certificate, as well as
attorney’s fees and costs as provided by the security agreement.
¶ 10. Grandson moved for summary judgment, arguing, among other things, that
trustee’s claim was barred by the general six-year statute of limitations under 12 V.S.A. § 511
because the clock had started running in 2001, when father had first accrued and failed to pay an
overdue balance and penalty. Trustee opposed grandson’s motion for summary judgment, arguing,
among other things, that the fourteen-year statute of limitations under 12 V.S.A. § 508 for
witnessed promissory notes applied, and that the statute did not start running until 2013, when
trustee sent father the letter declaring him to be in default and offering him forty-five days to cure.
¶ 11. The trial court denied grandson’s motion for summary judgment in November
2017. The court concluded that the statute of limitations began to run when trustee sent father the
September 2008 letter notifying him of his overdue balance and penalties due. It applied the eight-
year statute of limitations for specialties to the security agreement, see 12 V.S.A. § 507, and
concluded that trustee’s May 2016 suit was not time-barred.
¶ 12. Grandson moved to reconsider, arguing that the court had erred in applying the
eight-year statute of limitations for specialties instead of the general six-year limitations period
pursuant to 12 V.S.A. § 511. Upon reconsideration, the court concluded that the eight-year
limitation for specialties did not in fact apply. Applying the general six-year statute of limitations,
and maintaining its already-stated position that the statute began running with trustee’s September
2008 letter, the court concluded that the statute did in fact run before trustee’s May 2016 lawsuit.
It granted summary judgment to grandson.
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¶ 13. Trustee moved to reconsider the court’s new ruling. She did not challenge the
holding that 12 V.S.A. § 511 governed the action, but argued that trustee’s cause of action against
grandson did not accrue until forty-five days after trustee’s October 2013 letter to father declaring
a default and notifying him of his opportunity to cure. The court denied trustee’s motion. It
reasoned that trustee had failed to properly preserve the argument, and also rejected trustee’s
argument on the merits. Citing the provision in the promissory note that failure to repay the
overdue balance and penalty within a year would constitute a default, the court ruled that the six-
year limitations period began running one year after the trustee’s September 2008 letter to father
when father failed to pay the sums due. This one-year shift in the trial court’s determination of
the starting point for the six-year limitations period did not save trustee’s May 2016 suit against
grandson. Accordingly, the court denied trustee’s motion to reconsider and left its summary
judgment for grandson in place.
¶ 14. On appeal, neither party challenges the trial court’s ultimate application of the six-
year general statute of limitations for civil actions. See 12 V.S.A. § 511. Instead, they disagree
about when the statute began to run.
¶ 15. Trustee argues that under the terms of the promissory note and accompanying
security agreement, her right to sue to enforce the chattel mortgage did not accrue until 2013, when
trustee formally declared a default and demanded payment and father failed to pay within the forty-
five-day cure period. Because the six-year statute did not begin to run until 2013, trustee contends
her May 2016 action to collect the collateral was timely.
¶ 16. Grandson argues that trustee did not properly preserve the argument that the statute
did not begin to run until 2013, asserting that trustee did not make that argument until the second
post-judgment motion for reconsideration. On the merits, grandson argues that the right to bring
an action to collect collateral accrues when there is a default. Because, under the security
agreement, a default was defined as “[f]ailure to pay the Note in accordance with its terms,” he
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argues father’s default in this case—and thus grandfather’s and later the trust’s right to sue for the
collateral—accrued as early as 1999, when father failed to begin making payments pursuant to the
terms of the note. Grandson contends that the latest time the statute could have begun running was
following father’s failure to make any payments on the note after the trustee’s September 2008
formal demand for payment. Even starting the clock at the latest possible time—one year from
the September 2008 demand for payment—he argues the six-year limitations period had run before
trustee filed this action in May 2016.
¶ 17. This Court reviews summary judgment decisions without deference, applying the
same standard as the trial court. Lyons v. Chittenden Cent. Supervisory Union, 2018 VT 26, ¶ 12,
__ Vt. __, 185 A.3d 551. Summary judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
V.R.C.P. 56(a). The issues in this appeal turn on the meaning of the terms in the promissory note
and security agreement, and whether under those terms trustee’s claim to recover the collateral is
barred by the applicable statute of limitations. These are questions of law that we review without
deference to the trial court. See Rounds v. Malletts Bay Club, Inc., 2016 VT 102, ¶ 16, 203 Vt.
473, 157 A.3d 1101 (“Generally, the proper interpretation of a contract is a question of law, which
we review without deference.”).
¶ 18. We conclude that trustee’s claim is not time-barred. The statute of limitations
begins to run when a party’s right to sue accrues—an event that is not always the same as the date
of default. In assessing when trustee’s right to sue for return of the collateral accrued in this case,
we consider in tandem the plain language of the security agreement and the promissory note to
which it was closely tied. We conclude that a cause of action under the security agreement for
return of the collateral did not arise until the noteholder declared a default and provided notice of
the forty-five-day cure period, and the borrower then failed to pay. Applying the contractual
requirements to the facts in this case, the trustee’s right to sue to enforce the security agreement
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accrued in 2013 when father failed to make any payments on the note after the trustee declared the
default and gave father forty-five days to cure.1
¶ 19. The statute of limitations begins to run when a party can sue on a cause of action.
See Blanche S. Marsh Inter Vivos Tr. v. McGillvray, 2013 VT 6, ¶ 15, 193 Vt. 320, 67 A.3d 943
(“The statute of limitations begins to run when a party can first sue on the cause of action.”
(alterations omitted) (citing White v. White, 136 Vt. 271, 273, 388 A.2d 386, 388 (1978))); see
also Furlon v. Haystack Mountain Ski Area, Inc., 136 Vt. 266, 270, 388 A.2d 403, 406 (1978)
(“The statute of limitations runs from the time when a plaintiff can first sue and recover [a]
demand.”).
¶ 20. The date the cause of action accrues is not necessarily the date of default; if the
parties agree to make a default actionable only upon certain conditions, the statute of limitations
will not start to run until those conditions are satisfied. See C & T Disc. Corp. v. Sawyer, 123 Vt.
238, 241–42, 185 A.2d 462, 465 (1962). In C & T Discount Corp., we considered when the statute
of limitations began running on a payee’s right to sue for nonpayment on a note. Much of the
Court’s discussion focused on when the right to sue arose under the specific language of the note
in question. We explained, “[e]ven in the case of a demand note, limitations do not run if there is
something in the note or in the circumstances under which it was given showing that actual demand
or delay for payment was contemplated by the parties.” Id. at 240-41; 185 A.2d at 464.
1
We reject grandson’s claim that trustee did not preserve the argument that the statute of
limitations did not begin running until 2013. In briefing the summary-judgment motion below,
the parties both focused primarily on the applicable statute of limitations. The trial court’s initial
decision denying grandson’s motion for summary judgment, and its first decision on
reconsideration granting that motion, likewise focused primarily on the applicable limitations
period. But the date the statute began to run was also a point of contention throughout the briefing.
In opposition to grandson’s motion for summary judgment and thereafter, trustee consistently
argued that the statute of limitations began running in 2013 after trustee declared a default and
father failed to pay within the forty-five-day cure period. If “a litigant’s argument is clear enough
for the trial court to evaluate it and for an opponent to respond to it, the claim is adequately
preserved for appeal.” Avery v. Avery, 2018 VT 59, ¶ 9 n.3, __ Vt. __, 192 A.3d 1250. Trustee
preserved the argument for appellate review.
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Accordingly, we must consider when, given the particular note and security agreement at issue in
this case, trustee’s actual cause of action to recover the collateral arose—a question that may or
may not be the same as when father was in default under the terms of the note.
¶ 21. We interpret the promissory note and security agreement as we do all contracts; our
goal is to effectuate the parties’ intent as expressed in their writing, according, whenever possible,
to the plain meaning of the contract language. See Southwick v. City of Rutland, 2011 VT 53, ¶ 4,
190 Vt. 106, 35 A.3d 113.
¶ 22. Moreover, where parties execute multiple instruments at the same time for the same
purpose, such as a promissory note and a security agreement, we read them together to discern the
parties’ intent. Island Pond Nat. Bank v. Lacroix, 104 Vt. 282, 294-95, 158 A. 684, 690 (1932)
(“When . . . the original note and mortgage were made at the same time, and in relation to the same
subject, they are to be construed together as if they were parts of the same instrument . . . .”); see
also Rounds, 2016 VT 102, ¶ 20 (“Instruments executed as part of the same transaction should be
read together to discern the intent of the parties.”); O’Brien Bros.’ P’ship v. Plociennik, 2007 VT
105, ¶ 15, 182 Vt. 409, 940 A.2d 692 (“[T]wo instruments dealing with the same subject matter
[which] are executed at the same time by the same parties . . . should be construed together.”); 11
R. Lord, Williston on Contracts § 30:26 (4th ed. 2018) (“[A]bsent anything to indicate a contrary
intention, written instruments executed at the same time, by the same contracting parties, for the
same purpose, and in the course of the same transaction will be considered and construed together
as one contract . . . .”).
¶ 23. Reading the promissory note and security agreement together, and according to
their plain language, we conclude that the right to sue for return of the collateral securing the note
does not accrue until the borrower fails to pay the amounts due under the note forty-five days after
trustee’s declaration of default and notice of the right to cure. This conclusion follows from the
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plain terms of the promissory note, and our construction of the associated security agreement in
light of the terms of the promissory note.
¶ 24. The promissory note does not confer on the noteholder a right to sue, or collect the
collateral, solely on the basis of a default by the borrower. Instead, the note defines default to
include failure to pay all sums due at maturity; failure to pay an overdue balance and penalty within
a year from the date they are established;2 initiation of bankruptcy proceedings; and default under
a security agreement. The note then expressly provides:
In the event default is declared by the Noteholder, Noteholder shall
provide written notice to Borrower of the facts and circumstances
constituting any such default and shall permit Borrower to cure any
such default within forty-five (45) days after Borrower’s receipt of
said notice of default. In the event Borrower fails to cure any such
default within the time period provided herein, Noteholder may, in
his sole discretion, declare the amounts due under this Secured
Promissory Note immediately due and payable without further
notice or demand, and Noteholder shall then have in any jurisdiction
where enforcement hereof is sought, in addition to all other rights
and remedies, the rights and remedies of a secured party under the
common law and the Uniform Commercial Code of Vermont.
[Emphasis added].
Accordingly, it is clear that trustee could not have sued father on the note merely on the basis of a
default under the note. Before suing, trustee, as the noteholder, was first required to declare a
default and to give father, as the borrower, notice of the default and the right to cure within forty-
five days. Any suit before these conditions were satisfied would have been premature. This
arrangement may be less common than a regime in which the cause of action for nonpayment
accrues upon default, but it makes sense in the context of this intra-family deal. The parties’
2
As set forth above, the note provided that the failure to pay according to the amortization
schedule was not itself a default, but that the failure to pay an overdue balance that existed as of
January 1 of each year, and the associated penalty, by January 1 of the following year did constitute
a default. The parties disagree as to whether this provision is self-executing such that the default
arises automatically from the fact of nonpayment without any action by the noteholder, or whether
it requires an action of the noteholder to affirmatively “establish” the outstanding balance and
penalty as of a particular January 1. Because our analysis does not turn on whether and when
father was “in default” under the note, we need not resolve this dispute.
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arrangement provides extra protection for both parties—giving the noteholder the discretion to
decide whether and when to declare a default and trigger the cure period, and giving the borrower
an opportunity to cure.
¶ 25. The declaration, notice, and opportunity-to-cure conditions apply equally to a suit
pursuant to the security agreement to collect the collateral that is predicated on a failure to pay
sums due under the note. The security agreement identifies seven events that constitute defaults
under the security agreement, and the form language provides that upon default the secured party
may accelerate the note and exercise the rights with respect to the collateral that are afforded a
secured party under the Uniform Commercial Code. The only event of default (as defined in the
security agreement) that is potentially applicable here is “[f]ailure to pay the Note in accordance
with its terms.” We conclude that the right to sue to recover the collateral under the security
agreement pursuant to this provision is subject to the same notice-and-opportunity-to-cure
requirement set forth in the note. We base our conclusion on several considerations.
¶ 26. First, the provision in the security agreement defining default as it relates to
nonpayment on the note essentially incorporates by reference the requirements of the note itself,
defining default as failure to pay the note “in accordance with its terms.” (Emphasis added). The
definition of “default” under the security agreement as it relates to a failure to pay on the note is
thus informed by the terms of the note.
¶ 27. Second, the note requires the notice and opportunity to cure not only as a condition
of the noteholder’s right to sue on the note, but also as a prerequisite to exercise of “the rights and
remedies of a secured party under the common law and the Uniform Commercial Code of
Vermont.” The plain language of the note expressly requires the forty-five-day notice and
opportunity to cure before the noteholder can pursue the security under the note. Grandson’s
reading, pursuant to which the security agreement independently affords a right to accelerate the
sums due under the note and collect the collateral upon a failure to pay, without any notice and
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opportunity to cure, would create a square conflict between the terms of the note and the terms of
the security agreement.3 In interpreting contracts, we try to “form a harmonious whole from the
parts,” recognizing that “an interpretation which harmonizes all parts of the contract is preferable
to an interpretation which focuses on one provision heedless of context.” In re Verderber, 173 Vt.
612, 615, 795 A.2d 1157, 1161-62 (2002) (mem.) (quotation omitted). We will not read one
provision of the security agreement out of context as creating conflict with the note when we can
read them as “a harmonious whole.” Id. 173 Vt. at 615, 795 A.2d at 1161.
¶ 28. Third, given the language of these instruments, where the action to collect the
collateral is based on nonpayment of the note, as contrasted with, for example, an action impairing
the collateral, the more reasonable interpretation is that a noteholder’s right to sue for payment on
the note and the noteholder’s right to initiate an action to recover the collateral accrue at the same
time. Otherwise, the borrower’s right to notice and opportunity to cure would be meaningless.
The noteholder could seize the collateral without giving the borrower any time to cure, and without
even establishing a default as defined under the note. This scenario defies a straightforward
reading of the note and security agreement.
¶ 29. Applying these considerations to the undisputed evidence here, we conclude that
the statute of limitations did not begin to run until 2013, when father failed to pay the balance due
forty-five days after the trustee declared a default and gave father notice of his opportunity to cure.
We reject grandson’s argument that trustee’s 2008 letter served as the requisite notice of default
and opportunity to cure, such that father’s failure to pay after forty-five days triggered the statute
3
For the reasons set forth above, we do not believe the requirements in the two documents
actually conflict. If they did, however, the terms of the customized typewritten promissory note
would trump the generic provision in the form security agreement. See 5 T. Murray, Corbin on
Contracts § 24.24 (2018) (explaining that where parties’ agreement is laid out in both a
standardized preprinted form and handwritten or typewritten provisions, they should be interpreted
together, but if there is conflict or inconsistency between them, “handwritten provision prevails
over a typewritten or printed term, and a typewritten provision prevails over a printed term”).
11
of limitations. Trustee’s 2008 letter simply stated that no payment had been made under the
promissory note, laid out the amounts currently due at that time, and offered to restructure the debt.
It did not declare default or notify father that he had forty-five days to cure. In contrast, the 2013
letter declared “you are now in default . . . . Demand is hereby made that all sums due and owing
as set forth in the September 11, 2008 letter be paid in full within forty-five (45) days of your
receipt of this notice of default.” This fulfilled each of the preconditions to suit laid out in the
promissory note—written notice outlining the facts underlying the default and providing a forty-
five-day cure period. Under the parties’ agreement, once trustee sent her 2013 letter declaring
default and providing a forty-five-day cure period, and father failed to cure, trustee gained “the
rights and remedies of a secured party.”
¶ 30. As trustee filed this case in May 2016, less than three years after father’s failure to
pay the balance within forty-five days of trustee’s 2013 letter, the action is not time-barred.
Reversed and remanded for further proceedings not inconsistent with this opinion.
FOR THE COURT:
Associate Justice
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