Lucore v. Wells Fargo Bank, N.A.
3:18-cv-02382
S.D. Cal.Jun 5, 2019Background
- Plaintiff Paul Lucore obtained a mortgage on August 31, 2006, later executed a loan modification on March 2, 2010, and sent a rescission notice on July 21, 2010 asserting TILA violations for missing disclosures.
- Notices of default were recorded in 2010 and again in 2018; a Notice of Trustee’s Sale was recorded in October 2018. Wells Fargo recorded an assignment asserting beneficial interest in 2013.
- Plaintiff sued Wells Fargo (and others) alleging (1) an FDCPA violation based on attempted nonjudicial foreclosure on a supposedly voided note/deed after rescission under TILA, and (2) cancellation of instruments.
- Wells Fargo moved to dismiss the first amended complaint for failure to state a claim under Rule 12(b)(6); Barrett (trustee) joined the motion.
- Central legal dispute: whether Plaintiff’s 2010 rescission was timely — i.e., whether TILA’s disclosure/rescission rules apply to the 2010 loan modification (which would reset the 3-year rescission period) or only to the original 2006 loan.
- Court held the modification was not a refinancing/new credit for TILA purposes; Plaintiff’s rescission (July 2010) was untimely under 15 U.S.C. § 1635(f), so both FDCPA and cancellation claims fail, and dismissal with prejudice was appropriate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TILA rescission was timely | Rescission measured from the 2010 loan modification execution, so within three years | TILA does not apply to modifications; rescission period measured from 2006 original loan, so untimely | Rescission untimely; measured from 2006 consummation date (dismissed) |
| Whether TILA disclosure/rescission provisions apply to the modification | The modification changed principal and thus required new disclosures / is a refinancing | Modification was not a refinancing or new credit; it merely altered payment terms and rolled arrearages into balance | Modification is not a refinancing; TILA does not apply to it |
| FDCPA claim premised on attempted foreclosure on a void instrument | Note/deed void because of valid rescission; foreclosure threats violated FDCPA §1692f(6) | Rescission was ineffective/untimely, so instruments were not void; no FDCPA violation | FDCPA claim fails because rescission was ineffective/untimely |
| Cancellation of instruments claim | Instruments are void due to rescission, so cancellation is warranted | Instruments are not void because rescission expired; claim lacks merit | Cancellation claim fails for same reason as FDCPA claim |
Key Cases Cited
- Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015) (rescission occurs upon borrower’s notice; 3-year statute in §1635(f) applies)
- Beach v. Ocwen Fed. Bank, 523 U.S. 410 (1998) (§1635(f) completely extinguishes right of rescission after three years)
- Dowers v. Nationstar Mortg., LLC, 852 F.3d 964 (9th Cir. 2017) (FDCPA §1692f(6) applies to nonjudicial foreclosure/security enforcers)
- McKinney v. Bank of Am., N.A., [citation="713 F. App'x 637"] (9th Cir. 2018) (loan modifications generally exempt from TILA disclosure requirements)
- Hartmann v. California Dep't of Corr. & Rehab., 707 F.3d 1114 (9th Cir. 2013) (leave to amend may be denied as futile)