Successful Laches Defense Becoming Commonplace in Colorado
By: Neal McConomy
Boiler plate language in responsive pleadings often includes “Plaintiff’s claims are barred by the doctrine of laches” (or “The doctrine of laches bars Plaintiff’s claims” if you prefer the active voice). However, litigation of a laches defense is fairly rare, and a defendant successfully arguing a laches defense is something of a legal Haley’s Comet, only less reliable. Often, courts refuse to consider a laches defense if a statute of limitations applies. See e.g., Ivani Contracting Corp. v. City of New York, 103 F.3d 257 (2d Cir. 1997); and Lyons P’ship v. Morris Costumes, Inc., 243 F.3d 789 (4th Cir. 2001). Some more theoretical practitioners believe the equitable defense of laches cannot apply to legal claims like breach of contract or wrongful death. However, in January 2014, the Colorado Supreme Court issued its opinion in Hickerson v. Vessels, 316 P.3d 620 (Colo. 2014), and gave new life to the long established, if rarely successful, laches defense; at least, it might have.
The Hickerson Court’s opinion rapidly disabused the Colorado legal community of the belief that equitable defenses cannot succeed against legal claims stating, “[t]he parties devote considerable attention to the development of law and equity court in England pre-dating Colorado’s statehood, but we need not explore that history in this case. Law and equity have been merged in our state since the earliest times of statehood.” Id. at 623. And, because “[s]ince the merger, there are very few issues that remain distinguished based on a claim’s historical roots” the Hickerson Court turned to whether a laches defense could render a claim untimely when the plaintiff brought the claim within the applicable statute of limitation. Id. The Hickerson Court went on to hold that “laches is available as a defense in some circumstances, even though the claim has been timely filed within a legislatively prescribed statute of limitations period” and laches has been so available “[s]ince the early days of statehood.” Id. at 624.
This holding caught the attention of Colorado’s plaintiffs’ bar. Earlier this year, Colorado Senator Chris Holbert (R) and Representative Daneya Esgar (D) sponsored HB15-1272 which was titled “Timely Filed Claims Not Barred by Laches.” The bill sought to clarify that “a court may not apply the doctrine of laches to bar a claim that is timely filed within the applicable statute of limitation.” However, the legislature was apparently more concerned with red light cameras, firearm background checks, and their own salaries because HB15-1272 is now postponed indefinitely and the legislature finished its year earlier this week.
Okay, so laches has been a viable defense to all types of claims since the nineteenth century, and laches remains a viable defense to all types of claims in the twenty-first century. Good post, but what about real property litigation?
While the housing market is currently concerned with selling homes and the consistent rise of home values, the reality is that foreclosure happens in good times and in bad. Moreover, as development increases, hard money lenders are emerging from beneath their rocks to loan money at rates just south of usury plus ten percent. Inevitably, parties are always trying to collect unpaid debts secured by real property.
Under Colorado law, these parties have six years to bring suit on a note. C.R.S. § 13-80-103.5. And the period to bring a claim under a deed of trust is fifteen years. C.R.S. § 38-39-205. When you add the amount of time for the underlying note to mature, parties can bring claims sixteen or even forty-five years after the transaction at issue took place. If, like in Hickerson, the terms of the note are ambiguous, a defendant’s ability to marshal evidence proving a favorable interpretation of the terms becomes difficult at best. Afterall, “witnesses [] die[] or their memories become dim or time and long acquiescence [] obscure[] the nature and character of the claim or the acts of the parties or other circumstances.” Hickerson, 316 P.3d at 625. Yet, the plaintiff’s claim will be timely filed under the applicable statute of limitations and able to go forward.
Enter laches. If the defendant can establish 1) the plaintiff’s full knowledge of the facts, 2) the plaintiff’s unreasonable delay in asserting the available remedy, and 3) intervening reliance by and prejudice to another, the defendant may have a viable laches defense to the plaintiff’s claim. For example, in Hickerson, one party to the transaction was dead and the other had virtually no memory of the deal. Id. at 622; and Vessels v. Hickerson, No. 09CV532, slip op. at 14 (Denver Dist. Ct. December 28, 2010). While the note in Hickerson matured and was unpaid in 1999, partial payments made during and after the term of the note continued to resurrect the statute of limitations through the filing of the lawsuit in 2009. Hickerson, 316 P.3d at 622. Yet, the defendant had not made a full payment as contemplated by the terms of the note since sometime in 1992, so the plaintiff could have called the note into default and filed suit seventeen years earlier. Vessels, No. 09CV532, slip op. at 13. With these facts, the Colorado Supreme Court affirmed the trial court and held laches worked to bar the plaintiff’s claims despite the plaintiff filing the claims within the applicable statute of limitations time period.
The issue now is whether the Hickerson Court’s highlighting of the viability of laches under Colorado law—even when the plaintiff files its claim within the applicable statute of limitations—will result in an increase in successful assertions of the defense, or whether laches will remain an often pled, but rarely successful, piece of boilerplate language. Or, perhaps the Colorado legislature will decide it wants to prevent Colorado courts from meddling with their statutes of limitations all together. Until then, one dull, rusty arrow in Colorado defense lawyers’ quivers may have gotten just a touch sharper.