Anand v. O'Sullivan
168 A.3d 1030
| Md. Ct. Spec. App. | 2017Background
- In 2007 the Anands refinanced their home with Saxon; a $500,000 promissory note secured by a first‑lien deed of trust was later assigned to Deutsche Bank. The Anands defaulted in 2008.
- The Anands mailed two notices purporting to rescind the loan under TILA: March 4, 2009 (alleging failures of TILA disclosures) and August 19, 2009 (asserting various fraud/usury grounds).
- The Anands filed multiple lawsuits (2008, 2010, 2013) challenging the lien and seeking to enjoin foreclosure; earlier suits were dismissed with prejudice and affirmed on appeal.
- In December 2015 new substitute trustees filed an order to docket foreclosure; the Anands moved to dismiss and for injunctive relief in 2016 asserting the 2009 rescissions voided the lien.
- The trial court denied relief, holding the Anands’ rescission claims were barred by res judicata; the Court of Special Appeals affirmed, concluding the rescission theory arose from the same facts and could have been litigated earlier.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Anands’ 2009 notices of rescission under TILA/Reg Z immediately voided the deed of trust lien | Notice of rescission (within three‑year TILA period) effected rescission when mailed; lien became void immediately | A mere unilateral notice does not automatically void the lien if the borrower lacks a valid right to rescind; lender may contest rescission | Court treated merits as unnecessary to decide because rescission claim was barred by res judicata; noted case law that rescission is effective only when right to rescind exists or is judicially/otherwise determined |
| Whether Jesinoski precludes application of res judicata to a TILA rescission claim | Jesinoski means borrowers need not sue within three years and thus rescission cannot be precluded later by res judicata | Jesinoski did not eliminate claim‑preclusion principles; borrowers who litigate must raise all claims that could have been litigated | Court held Jesinoski did not preclude res judicata; prior final judgments barred the Anands’ present rescission claims |
| Whether parties/privity and claim identity requirements for res judicata are satisfied | Argued rescission claim is distinct and can be raised anytime because the lien is "void" | Defendants argued same parties/privity and that rescission claims arose from same nucleus of facts litigated previously | Court found privity (successor trustees) and that the rescission theory arose from facts that were or could have been litigated earlier; final judgments existed — res judicata applies |
| Whether a void lien/judgment exception allows collateral attack now | Claimed a void lien is not subject to res judicata and can be attacked anytime | Defendants argued the Anands challenge a lien, not a void judgment, and prior adjudications preclude relitigation | Court rejected the void‑judgment escape; this is a claim about lien validity already litigated — res judicata bars it |
Key Cases Cited
- Anderson v. Burson, 424 Md. 232 (Maryland 2011) (standard of review for injunctive relief in foreclosure actions)
- Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (U.S. 2015) (rescission effected by borrower’s written notice; borrower need not sue within three years)
- Yamamoto v. Bank of N.Y., 329 F.3d 1167 (9th Cir. 2003) (lender may contest rescission; lien does not automatically vanish on notice alone)
- Large v. Conseco Financing Corp., 292 F.3d 49 (1st Cir. 2002) (mere assertion of rescission does not automatically void security interest; validity must be determined)
- Gilbert v. Residential Funding, LLC, 678 F.3d 271 (4th Cir. 2012) (unilateral notice of cancellation does not automatically void loan contract)
- Pohl v. U.S. Bank for Merrill Lynch First Franklin Mortg., 859 F.3d 1226 (10th Cir. 2017) (Jesinoski does not bar application of res judicata to later rescission attempts)