Khalsa v. U.S. Bank National Association
681 F. App'x 707
| 10th Cir. | 2017Background
- In 2005 Khalsa obtained a $166,500 home loan secured by a mortgage on his New Mexico residence; he defaulted in 2009.
- Loan originated at New Century, later acquired by Bank of America and ultimately U.S. Bank; Ocwen is the servicer.
- In May 2015 Khalsa sent a written notice purporting to rescind the loan under TILA § 1635.
- Defendants did not respond to the rescission notice; U.S. Bank filed a state foreclosure action in October 2015.
- Khalsa filed a pro se federal complaint seeking declaratory relief and statutory damages under 15 U.S.C. § 1640(a); district court dismissed for untimeliness.
- Tenth Circuit affirmed, holding Khalsa’s rescission attempt was time-barred and estoppel did not apply; denial of reconsideration was not an abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of rescission under 15 U.S.C. § 1635 | Khalsa argued his May 2015 written notice was timely under Jesinoski because written notice (not lawsuit) is sufficient | Defendants argued rescission right expired three years after consummation (or three years after required disclosures), so notice was untimely | Court held rescission was time-barred: right lasts up to three years and Khalsa’s notice came well after that period |
| Effect of failure to deliver rescission disclosures | Khalsa suggested nondelivery extended rescission indefinitely as long as he gave written notice | Defendants maintained any extended period still expires three years after consummation per § 1635(f) | Court rejected perpetual rescission theory; Jesinoski does not abolish § 1635(f)’s three-year limit |
| Equitable estoppel based on defendants’ silence | Khalsa contended defendants’ silence in response to his notice estopped them from denying rescission | Defendants argued no duty to speak and thus no basis for estoppel by silence | Court held estoppel by silence inapplicable absent a duty to speak, which Khalsa did not identify |
| Denial of reconsideration | Khalsa implied reconsideration was warranted after dismissal | Defendants argued district court’s dismissal was proper so reconsideration denial was within discretion | Court found no abuse of discretion in denying reconsideration |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: plausibility required to survive motion to dismiss)
- Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. 259 (Supreme Court: written notice can suffice but rescission right is limited to three years)
- Dutcher v. Matheson, 840 F.3d 1183 (10th Cir. 2016) (standard of review for dismissal reviewed de novo)
- James v. Wadas, 724 F.3d 1312 (10th Cir. 2013) (liberal construction of pro se filings)
- Continental Potash, Inc. v. Freeport-McMoran, Inc., 858 P.2d 66 (N.M. 1993) (estoppel by silence requires a duty to speak)
- Butler v. Kempthorne, 532 F.3d 1108 (10th Cir. 2008) (standard for review of denial of reconsideration)