780 F. Supp. 2d 460
E.D. Va.2011Background
- Plaintiff filed suit in Norfolk Circuit Court in August 2010; defendants removed to federal court in September 2010.
- Plaintiff, proceeding pro se after withdrawing counsel, challenged a Deed of Trust securing a note executed July 31, 2007.
- Plaintiff alleges she was not advised of TILA rescission rights and that coercion occurred to sign the Deed of Trust.
- Property was used as collateral for the note; foreclosure occurred after defa ult by the obligor.
- Court sua sponte considered whether TILA rescission rights apply to non-obligors and whether the claim is time-barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff has TILA rescission rights as an non-obligor | Plaintiff seeks rescission of Deed of Trust under TILA. | TILA rescission rights extend only to obligors; plaintiff not a party to the note. | Rescission rights do not apply to plaintiff as non-obligor. |
| Whether rescission would be equitable to permit relief | If entitled, plaintiff should be allowed to rescind and retain property. | Equitable circumscription can deny rescission where it would cause inequity to lender. | Even if entitled to rescind, court would deny relief due to potential inequity to lender. |
| Whether the claims are time-barred by the TILA statute of limitations | Timeliness not clearly determined due to forma pauperis denial in state court. | Three-year statute of limitations (15 U.S.C. § 1635(f)) runs from consummation; complaint untimely. | Face of complaint supports timeliness issue; court declines ruling on timeliness due to record gaps. |
Key Cases Cited
- Randall v. United States, 30 F.3d 518 (4th Cir.1994) (tests legal sufficiency of complaint under Rule 12(b)(6))
- Loe v. Armistead, 582 F.2d 1291 (4th Cir.1978) (pro se complaints should be liberally construed)
- Twombly, 550 U.S. 544 (2007) (factual allegations must state plausible claim)
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) (reaffirms plausibility pleading standard)
- Estelle v. Gamble, 429 U.S. 97 (1976) (contemplates dismissal when legal theory unsupported by facts)
- Powers v. Sims & Levin, 542 F.2d 1216 (4th Cir.1976) (rescission is an equitable remedy subject to equitable considerations)