844 F.3d 1002
8th Cir.2017Background
- On October 5, 2009, John and Christina Dunn obtained a loan from Bank of America secured by a mortgage on 2355 Sequoyah Dr., Rogers, Arkansas; the mortgage and a warranty deed were recorded in Benton County in October 2009.
- On February 28, 2011, the Dunns sent a notice purporting to rescind the loan under TILA § 1635, claiming they were not given completed "Notice of Right to Cancel" forms.
- Bank of America responded it had forwarded the request and that the loan remained in effect; the mortgage was later assigned to Nationstar, which foreclosed in 2013.
- The Dunns sued Bank of America and Nationstar in 2015 alleging TILA violations (failure to provide rescission notices), wrongful foreclosure, and seeking declaratory relief, quiet title, and damages.
- Defendants moved for judgment on the pleadings, attaching a notarized, recorded warranty deed showing the Dunns acquired the property the same day the loan and mortgage were executed; the district court took judicial notice and dismissed, holding the loan was a purchase-money residential mortgage exempt from § 1635 rescission and any damages claim was time-barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1635(a) rescission applies | Dunns: Bank failed to provide required Notice of Right to Cancel, so rescission valid | Defendants: Loan is a purchase-money residential mortgage exempt from § 1635 | Court: Loan is a residential mortgage; § 1635 rescission does not apply |
| Whether judicial notice/authentication of deed was improper | Dunns: District court relied on facts outside pleadings; deed could be inadmissible hearsay | Defendants: Deed is notarized, recorded, judicially noticeable and authenticated | Court: Deed properly noticed/authenticated; supports finding of purchase-money mortgage |
| Effect of alleged rescission notice after assignment/foreclosure | Dunns: Notice rescinded loan; defendants failed to honor rescission, so wrongful foreclosure and quiet title relief appropriate | Defendants: No legal effect because rescission rights never existed; foreclosure valid | Court: Notice had no legal effect because § 1635 did not apply; related claims fail |
| Damages and declaratory relief availability | Dunns: Seek damages and declaratory relief despite limitations | Defendants: TILA damages one-year statute bars damages; declaratory relief unavailable if § 1635 inapplicable | Court: Damages time-barred; declaratory relief not available because rescission right does not apply |
Key Cases Cited
- Porous Media Corp. v. Pall Corp., 186 F.3d 1077 (8th Cir. 1999) (standard for judgment on the pleadings)
- Merritt v. Countrywide Fin. Corp., 759 F.3d 1023 (9th Cir. 2014) (TILA does not apply to purchase-money residential mortgages)
- Miller v. Redwood Toxicology Lab., Inc., 688 F.3d 928 (8th Cir. 2012) (courts may consider public records on motions to dismiss/judgment on the pleadings)
- Illig v. Union Elec. Co., 652 F.3d 971 (8th Cir. 2011) (same)
- Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790 (U.S. 2015) (clarified what an obligor must do to effect rescission within § 1635's three-year limitation)
- Beach v. Ocwen Fed. Bank, 523 U.S. 410 (1998) (refinance loans secured by primary residence can be rescindable under § 1635)