How Long Do You Have to Sue on a Promissory Note in California?

A private lender makes a $250,000 loan to a couple opening a restaurant. The note comes due at the end of 2012. Nothing is paid. Years later small checks start arriving, not from the borrowers, but from a company they own. The lender finally sues in 2022, almost a decade after the due date, and the trial court throws the case out as too late. On September 28, 2026, the Court of Appeal reversed, and in doing so answered two questions that come up constantly in business lending: what the statute of limitations on a promissory note in California actually is, and what it takes to restart it.

The short answers are six years, not four, and a payment on the note made before the deadline runs. The details decide real cases, so they are worth getting right.

The statute of limitations on a promissory note in California is six years

Most people, and many lawyers, reach for Code of Civil Procedure section 337, which gives four years to sue on "any contract, obligation or liability founded upon an instrument in writing." A promissory note is certainly a written contract. But it is also something more specific. When the note is a negotiable instrument payable at a definite time, California Uniform Commercial Code section 3118, subdivision (a) applies, and it says the action "shall be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date."

In MLA Capital, LLC v. Keagle (Sept. 28, 2026, D086592) ___ Cal.App.5th ___, the Fourth Appellate District, Division One, held that the six year statute controls. Both statutes arguably applied, so the court used the settled rule that the more specific and more recent statute wins. Section 3118 applies only to one kind of contract, a note payable at a definite time, and it dates from the Legislature's 1992 revision of the Commercial Code. Section 337 traces back to 1850.

The court applied the same six years to the lenders' common counts for money had and received, open book account, and account stated. The borrower had argued that money had and received carried only two years. The court looked at the substance rather than the label: every count was really a claim that she had not paid the notes, so every count took the notes' limitations period.

When the six years starts running

For a note with a fixed maturity date, the clock starts on that date. If the lender accelerates the debt after a default, it starts on the accelerated due date instead. Demand notes work differently. Under section 3118, subdivision (b), once demand for payment is made on the maker of a demand note, the lender has six years from the demand. If no demand is ever made, the note is barred only when neither principal nor interest has been paid for a continuous period of 10 years.

Two cautions. First, MLA Capital turned on the notes being negotiable instruments payable at a definite time, which the borrower did not dispute. A loan agreement that is not a negotiable instrument, for example because it contains undertakings beyond the promise to pay money, is not squarely covered by the decision, and the four year statute may govern it. Second, installment notes can have more than one due date, and each missed installment can carry its own deadline. Read the note before you count.

What happened in MLA Capital v. Keagle

In 2007 Linda and Charles Keagle borrowed $250,000 from MLA Capital on a note due December 31, 2012. In 2008 they borrowed $200,000 from Frank and Encarnacion Alvarez on a note due May 15, 2013. Both loans financed a restaurant venture in Corona. Nothing in the record showed any payment before either maturity date.

In December 2016 Charles wrote to MLA Capital on the letterhead of the C&C Organization, a company connected to the couple's restaurant businesses in which Linda held an ownership interest. He apologized "for taking so long to address the issue of the loan" and said "we" could begin payments of at least $2,000 a month by December 2018.

In August 2018 the lenders started receiving monthly checks from C&C: $1,000 to the Alvarezes and, with one exception, $1,250 to MLA Capital. The exception was a $20,000 check signed by Charles in March 2019 and marked "Note principal reduction." Charles died in September 2019. The checks kept coming until March 2020.

The lenders sued Linda in February 2022. She moved for summary judgment, arguing the claims expired years earlier and that the checks were not hers. They came from a company, she said, they did not mention the notes, she did not sign them, and she declared that she never authorized them. The San Bernardino County Superior Court agreed and entered judgment for her.

How a partial payment restarts the clock

The key statute is Code of Civil Procedure section 360. Its first clause requires a signed writing for an acknowledgment or promise to extend a limitations period. Its second clause carves out promissory notes: "any payment on account of principal or interest due on a promissory note made by the party to be charged" is enough, by itself, to stop the running of the time to sue and "to start the running of a new period of time." No signed writing is needed. As the court explained, quoting the California Supreme Court in Eilke v. Rice (1955) 45 Cal.2d 66, the statute was amended in 1947 to reject the requirement of a writing to prove an acknowledgment by part payment.

The borrower argued that section 360, in the Code of Civil Procedure, could not extend a limitations period set by the Commercial Code. The court disagreed. It noted that it could not find a published California decision applying section 360 to section 3118, and then held that it applies. The official comment to the Uniform Commercial Code says tolling is "left to other law," Commercial Code section 1103 preserves general principles of law and equity unless displaced, and courts in Utah, Massachusetts, Montana, Oklahoma and New York have applied their own partial payment rules to the UCC limitations period. California lenders now have published authority on the point.

A payment by a company can count as the borrower's payment

Section 360 requires a payment "made by the party to be charged." That did not end the case just because the checks came from C&C. California courts read the phrase to include payments by the debtor's authorized agent, and the court found enough evidence for a factfinder to conclude that C&C was paying on Linda's behalf:

• The 2016 letter said "we." Charles promised that he and Linda would begin paying by December 2018, and the checks began shortly before then.
• Linda owned part of the payor. She held an ownership interest in C&C the entire time the checks were being sent.
• One check said what it was for. The $20,000 check was marked "Note principal reduction."
• The checks outlived Charles. Payments continued for months after his death, when Linda was the only remaining borrower.
• Nothing pointed anywhere else. There was no evidence the checks were sent for any purpose other than repaying the loans.

Against that, Linda's declaration that she never authorized the payments created a dispute, not a defense. If the factfinder decides the checks were partial payments on her behalf, the six year period restarted with each one and ran to March 2026, six years after the last check. The February 2022 lawsuit would be timely. The Court of Appeal reversed and ordered the trial court to deny summary judgment. It also rejected, in a footnote, the borrower's argument that a 10 year outside limit applied; that provision, subdivision (c) of section 3118, governs unaccepted drafts, not notes.

Note what the court did not decide. It did not hold that Linda owes the money. It held that the question of whether the checks were hers has to be tried.

The trap: a payment cannot revive a claim that has already expired

Section 360 ends with a limit that matters as much as the rule: "no such payment of itself shall revive a cause of action once barred." A payment restarts a clock that is still running. It does nothing for a claim that already died.

That is why the timing in MLA Capital was so close. The six years on the MLA note ran to December 31, 2018, and on the Alvarez note to May 15, 2019. The first checks arrived in August 2018, a few months before the earlier deadline. Had the borrowers waited until 2019 to start paying MLA Capital, those same checks would not have saved its claim under this rule.

What lenders should do

Calendar the real deadline, not the one you assume. For a negotiable note payable at a definite time, count six years from maturity or acceleration. If you are unsure whether the instrument qualifies, file within four years and avoid the argument.

Document every payment and who made it. Keep copies of checks, wire confirmations, memo lines and any cover letters. In MLA Capital the memo line on one check and the word "we" in a letter were central to getting the case to trial. If a payment comes from an affiliate, a spouse or a company, write down what you know about why.

Ask for a signed acknowledgment. A borrower who is paying in small amounts is often willing to sign a short writing confirming the balance. Section 360 treats a signed written acknowledgment as sufficient on its own, and it removes the fight over whether a third party's checks count.

Do not rely on payments that start after the deadline. They may be welcome money, but by themselves they do not revive the right to sue.

Consider securing the claim early. On a contract claim for a fixed sum, a prejudgment writ of attachment can freeze assets while the case proceeds.

What borrowers and guarantors should know

Four years is not the safe harbor it looks like. A defense built on Code of Civil Procedure section 337 will likely fail against a negotiable note payable at a definite time.

Paying through a company is still paying. Routing payments through a business you own does not keep them from restarting the clock if a court finds the business was acting for you. Each payment made before the deadline can give the lender a fresh six years.

Timing is the real defense. If the limitations period expired before any payment or signed acknowledgment, section 360 says a later payment does not revive the claim. The dates on the note, the checks and any letters are where these cases are won and lost. For general background on contract claims and defenses, see our breach of contract FAQ, and if the debt grew out of a settlement, our article on stipulated judgments and settlement default clauses.

A note on scope: MLA Capital is a newly published decision and could be reviewed further. It reversed a summary judgment, so the facts still have to be decided at trial.

Talk to a Los Angeles business litigation attorney

The Darvish Firm's Los Angeles business litigation attorneys and breach of contract lawyers represent private lenders collecting on unpaid notes and borrowers and guarantors defending against them. If you are holding a note that went unpaid years ago, or have been sued on one, call (310) 677-3512 or request a consultation.

This article is general information about California law, not legal advice, and reading it does not create an attorney-client relationship. Every case depends on its facts. Consult an attorney about your specific situation.