Thursday, September 25, 2008

Statute of Limitations—Student Loans—6 years under Section 3-118

When enforcing or defending an action on a promissory note, remember that the UCC may specify a longer statue of limitations. A student borrower tried to block enforcement of her student loans by asserting the basic 4-year statute of limitations for breach of written contracts (California Code of Civil Procedure Section 337)*. She appealed the judgment against her and lost. In an unpublished decision, the California Court of Appeal, Section District (Los Angeles) found that the 6-year statute of limitations of Ca. Comm. Code Section 3118 (UCC 3-118) applied. The promissory notes were considered “negotiable instruments” covered by the longer statute of limitations. Under Section 3-106, reference to the “disclosure statement” in the notes did not make them “conditional” and therefore non-negotiable. Education Resources Institute v. Yokoyama, 2008 WL 3906834 (Aug. 26, 2008).

(*with thanks to Anonymous for correcting our mistaken reference to the Civil Code.)


mayamasha said...

Thank you for this post. Love finding actual citations to cases when reading blogs about law.

Anonymous said...

Just to be specific, it's the Code of Civil Procedure Section 337 not the California Civil Code.