In Baseline Financial Services v. Madison, — P.3d —-, 2012 WL 1999690 (Ariz. App. 2012), the Arizona Court of Appeals held that an automobile finance company’s internal ‘charge off’ of the obligation for non-payment did not commence the statute of limitations on the debt. Rather, based on a survey of out-of-state cases, the Court of Appeals held that repossession is the “affirmative act” by the creditor that triggers the statute.
The question thus becomes at what point Baseline (or, more accurately, its predecessor in interest) exercised the option to accelerate. Under the majority view, notwithstanding a creditor’s contractual ability to accelerate a debt without notice, it must undertake some affirmative act to make clear to the debtor it has accelerated the obligation. See, e.g., In re Crystal Props., Ltd., 268 F.3d 743, 749–50 (9th Cir.2001) (citations omitted) (state and federal courts hold that, even when notice is not required before accelerating a note, the creditor must take affirmative action to notify the debtor it has exercised the option to accelerate); Greene v. Bursey, 733 So.2d 1111, 1115 (Fla.Dist.Ct.App.1999) (citation omitted) (although contract waived notice, creditor still must take affirmative action to alert debtor it has exercised option to accelerate); Moss v. McDonald, 772 P.2d 626, 628 (Colo.App.1988) (citations omitted) (even if contract permits acceleration without notice, holder “must perform some clear, unequivocal affirmative act” demonstrating it has exercised option to accelerate); Indus. Inv. Co. v. Vondersmith, 104 S.W.2d 553, 555 (Tex.Civ.App.1937) (citations omitted) (“[E]lection to accelerate … must be exercised … in a manner to evidence an intention … to effect that result ….”); see also 16 Causes of Action 391 § 10 (“[U]nder an optional acceleration provision, the defendant’s default does not, by itself, accelerate the debt; an overt act by the plaintiff is required to accomplish acceler-ation.”); but see Fulton Nat’l Bank v. Horn, 238 S.E.2d 358, 360 (Ga.1977) (when the parties agree that a creditor may accelerate without notice to the debtor, an affirmative act sufficient to constitute notice is not necessary). ¶ We have deemed a variety of actions, including repossession of property, sufficient to demonstrate a creditor’s exercise of an optional acceleration clause. See, e.g., Jones, 187 Ariz. at 495, 930 P.2d at 1009 (creditor exercised acceleration option by demanding full payment before all installments fell due); Wheel Estate, 139 Ariz. at 508, 679 P.2d at 531 (citations omitted) ( repossession of property is sufficient exercise of option to accelerate); Frei v. Hamilton, 123 Ariz. 544, 547, 601 P.2d 307, 310 (App.1979) (citation omitted) (filing suit to collect entire debt is a sufficient affirmative act). ¶ ¶ 10 Madison cites no legal authority for the proposition that an internal charge off of a debt is an act sufficient to exercise an option to accelerate, and we are aware of none. Other courts have rejected such a claim. ¶ In Central Home Trust Co. of Elizabeth v. Lippincott, 392 So.2d 931 (Fla.Dist.Ct.App.1980), the borrowers signed an installment note payable to Central Home Trust Company of Elizabeth (“Central”). Id. at 932. The note gave Central the option to accelerate, without notice, in the event of a default. Id. The borrowers defaulted in October 1973, and the debt was charged off in March 1974. Id. Central filed suit in September 1979. Id. The trial court granted summary judgment to the borrowers, concluding the cause of action accrued when the debt was written off. Id. As such, Florida’s five-year statute of limitations barred the claim. Id. ¶ The Florida court of appeals reversed. Id. at 934. It held that writing off a loan as a bad debt does not accelerate the remaining balance for statute of limitations purposes. Id. at 933. The court reasoned that a charge off merely manifests the creditor’s opinion that the instrument can no longer be regarded as an asset and that such an accounting procedure “has nothing to do with … demanding the total debt be paid.” Id. Although we are not bound by appellate decisions from other states, we find the reasoning in Lippincott both persuasive and consistent with Arizona precedent. . . And as we explained in Jones, “the rule of future installments subject to acceleration gives the parties flexibility ‘to continue to work toward amicable and fair resolutions between themselves rather than immediately drawing litigation swords and marching off to a courthouse,’ “ 187 Ariz. at 495–96, 930 P.2d at 1009–10 (citation omitted). The record here reflects that the parties communicated after the Bank’s charge off, but before the Cadillac was re-possessed, in an apparent attempt to “work toward amicable and fair resolution[ ].” Id. at 495, 930 P.2d at 1009. As in Lippincott, the internal write off was simply an “accounting procedure within the bank” and not an affirmative exercise of the optional acceleration clause. 392 So.2d at 933. ¶ Repossession of the Cadillac in December 2007, on the other hand, was an affirmative act sufficient to exercise the acceleration clause. See Wheel Estate, 139 Ariz. at 508, 679 P.2d at 531 (cita-tion omitted) (“[T]he assignees exercised the option to accelerate by taking possession of the mobile home.”); see also Markle v. Columbia Union Nat’l Bank & Trust Co., 483 S.W.2d 682, 685 (Mo.Ct.App.1972) (describing repossession as “a sufficient overt act” to exercise option to accelerate). ¶ We reverse the judgment of the superior court and remand for further appropriate proceedings, which may include consideration of Madison’s laches claim. The superior court has not yet considered that issue given its dismissal on statute of limitations grounds.