Bankr. L. Rep. P 75,305 United States of America v. Dos Cabezas Corp., an Arizona Corporation State of Arizona Department of Economic Security

The United States appeals the district court’s ruling that, in an action brought by the United States for a deficiency judgment on a promissory note that was secured by a deed of trust, the United States is subject to a six-year limitations period. In addition the United States challenges the district court’s determination that, because the government’s cause of action accrued on the date the defendant defaulted on the obligation, rather than on the date that the government accelerated the date payment was due, the government’s action to recover a deficiency judgment is time-barred.

We affirm the district court’s judgment.

BACKGROUND

The issues in this case revolve around the timing of the events giving rise to the government’s cause of action. In May 1979, defendants-appellees Dos Cabezas Corporation (the Corporation) and six individuals received from the Farmers Home Administration four emergency installment loans. The Corporation and the six individuals evidenced these loans by signing promissory notes and the Corporation executed a deed of trust, which the individuals acknowledged, conveying, several parcels of real estate to secure the loans.

Under the terms of the loan…