Alan Keiran v. Home Capital, Inc.
720 F.3d 721
| 8th Cir. | 2013Background
- Two consolidated appeals (Sobieniak and Keiran) challenge denials of rescission and seek money damages under the Truth in Lending Act (TILA) related to home-mortgage closings where plaintiffs allege insufficient TILA disclosure copies were provided.
- In both matters borrowers sent written notices of rescission within three years of closing; assignee banks (BAC/BNYM) denied rescission and plaintiffs later sued for rescission, damages, and declaratory relief. District courts granted summary judgment for the banks.
- Plaintiffs preserved timely money-damages claims for alleged refusals to rescind (brought within one year of denial), but not claims for disclosure defects at closing (those were time-barred by TILA’s one-year statute for disclosure claims).
- Central factual record: loan files contained borrower acknowledgements indicating receipt of required TILA materials (two copies of the notice of right to cancel and one TILA disclosure), and assignees received those loan files upon assignment.
- On appeal the Eighth Circuit addressed (1) whether a borrower must file suit within TILA’s three-year §1635(f) repose period (or whether written notice to the creditor suffices) and (2) whether assignee banks are liable for money damages when defects are not apparent on the face of assigned loan documents.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether written notice to lender within 3 years preserves right of rescission under 15 U.S.C. §1635(f) | Written notice to creditor (per Reg Z) is sufficient to exercise and preserve rescission | Borrower must file suit within 3 years; mere notice does not preserve right of rescission | Court held borrower must file suit within 3 years to preserve rescission right under §1635(f) |
| Whether Regulation Z’s rescission-by-notice conflicts with §1635(f) repose | Reg Z expressly allows exercise by written notice; that fulfills §1635(a) and (f) | §1635(f)’s statute-of-repose and Beach require judicial filing to effectuate rescission and protect title repose interests | Court reconciled Reg Z and statute by treating written notice as necessary but not sufficient; filing suit is required to accomplish rescission within §1635(f) period |
| Whether assignee banks are liable for damages for alleged TILA defects when defects are not apparent on face of assigned documents (15 U.S.C. §1641(a)) | Plaintiffs argued rescission-based damages should not be barred by §1641(a) limitation | Assignees contend liability attaches only when violations are apparent on the face of disclosed documents | Court held §1641 limits assignee liability; because loan files contained borrower acknowledgements, defects were not facially apparent and assignees are not liable for damages |
| Whether plaintiffs’ money-damages claims for banks’ refusal to rescind were timely | Plaintiffs’ failure-to-rescind damages accrued when banks denied rescission; those claims are timely | Banks argued assorted procedural/time defenses and assignee protections | Court held money-damages claims for banks’ refusals to rescind were cognizable but failed on §1641 assignee-face-of-docs defense; summary judgment for banks affirmed |
Key Cases Cited
- Beach v. Ocwen Fed. Bank, 523 U.S. 410 (1998) (§1635(f) is a statute of repose that extinguishes the federal right to rescind after three years)
- Gilbert v. Residential Funding, 678 F.3d 271 (4th Cir. 2012) (holding written notice to creditor suffices to exercise rescission under §1635)
- Rosenfield v. HSBC Bank, USA, 681 F.3d 1172 (10th Cir. 2012) (holding suit must be filed within three years to preserve rescission right)
- Sherzer v. Homestar Mortg. Servs., 707 F.3d 255 (3d Cir. 2013) (aligning with Gilbert on notice but clarifying interplay with §1635(f))
- Ofor v. Ocwen Loan Servicing, LLC, 649 F.3d 808 (8th Cir. 2011) (applying objective standard under TILA and treating loan-file acknowledgements as evidence for assignee liability analysis)
- Davis v. U.S. Bancorp, 383 F.3d 761 (8th Cir. 2004) (standard of review for summary judgment)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standards)
- Rand Corp. v. Moua, 559 F.3d 842 (8th Cir. 2009) (TILA construed broadly for consumers)