Mavis Hartman v. Brian Smith
734 F.3d 752
| 8th Cir. | 2013Background
- Hartmans owned property in Carver County, Minnesota; Mavis held title, later quitclaimed to Maul Lee Hartman; Roger not a signatory.
- Between Feb 2007 and Nov 2007, Smiths and Hartmans engaged in a contract-for-deed/loan scheme, with Prime financing a portion and securing it by a mortgage on the property.
- Several transactions increased the principal: $280,000 loan via Anchor Bank; later $495,500 then $664,000; contracts for deed amended accordingly; Prime held mortgage security.
- In 2008, Hartmans defaulted; Smiths issued a statutory notice of cancellation; Hartmans sent an August 2008 rescission notice claiming multiple 2007 transactions were rescindable.
- Foreclosure occurred in Feb 2009, sheriff's sale in Feb 2009; six-month redemption expired Aug 2009; Hartmans sued in June 2009 seeking TILA rescission and related state claims.
- District court granted summary judgment on TILA rescission to Prime; dismissed TILA damages and certain state-law claims; Hartmans later dismissed as parties; trial on remaining claims yielded for defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether notice alone can exercise TILA rescission | Hartman argued notice within three years triggers rescission. | Prime argued notice is not sufficient; requires action in court to exercise rescission. | Notice not sufficient; rescission expired at sale. |
| Whether Hartmans had ownership to exercise rescission | Hartmans claim they had ownership interests at relevant times. | Court found Maul Lee sole owner post-2007; Hartmans lacked standing. | Hartmans lacked ownership; rescission rights barred. |
| Whether TILA damages against Prime are viable as assignee | Damages could be pursued against Prime as assignee under 15 U.S.C. § 1641(e)(1). | Prime was not an assignee; damages dismissed against Prime. | Damages claim against Prime barred; assignee theory rejected. |
| Whether Hartmans remain parties for remaining claims | Hartmans should remain plaintiffs to pursue rescission-related issues. | Hartmans no longer parties due to lack of ownership; dismissal proper. | Hartmans properly dismissed as parties. |
Key Cases Cited
- Rand Corp. v. Yer Song Moua, 559 F.3d 842 (8th Cir. 2009) (addressed whether three-year rescission period applies; not controlling for notice sufficiency)
- Beach v. Ocwen Fed. Bank, 523 U.S. 410 (1998) (right to rescind requires notice and disclosures; 1635(a) and (f) timing)
- Keiran v. Home Capital, Inc., 720 F.3d 721 (8th Cir. 2013) (holding that notice alone is not sufficient to exercise rescission; filing in court required)
- Rosenfield v. HSBC Bank, USA, 681 F.3d 1172 (10th Cir. 2012) (remedial economy of rescission; need to file suit to invoke rescission rights)
- McOmie-Gray v. Bank of America Home Loans, 667 F.3d 1325 (9th Cir. 2012) (discusses whether notice within three years suffices; conflict among circuits)
- Miguel v. Country Funding Corp., 309 F.3d 1161 (9th Cir. 2002) (notice to lender's agent not sufficient; timing and notice requirements analyzed)