May v. SunTrust Mortgage, Inc.
7 N.E.3d 1036
Mass.2014Background
- In 2005, May and Corbin-May refinanced their home with Summit Mortgage for $300,000, creating a mortgage later held by SunTrust.
- In 2010, they filed for Chapter 13 bankruptcy and SunTrust asserted a claim for amounts owed on the mortgage note.
- On June 4, 2010, the plaintiffs notified SunTrust of their election to rescind the loan transaction.
- SunTrust did not terminate the security interest, leading the plaintiffs to file an adversary proceeding in bankruptcy seeking rescission and damages on June 28, 2010.
- SunTrust moved for summary judgment in July 2012, arguing the plaintiffs’ claim was time barred by § 10(f) of the MCCCDA.
- Massachusetts bankruptcy court-certified the question whether a borrower can rescind via defensively by recoupment after four years, under § 10(i)(3).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May rescind via recoupment after four years? | May contends § 10(i)(3) preserves recoupment rights without time limit for rescission. | SunTrust contends rescission is not a form of recoupment and § 10(i)(3) does not permit late rescission. | No; rescission cannot be exercised as recoupment after four years. |
| Are recoupment and rescission separate remedies under the MCCCDA? | Plaintiffs argue recoupment can include rescission features via § 10(i)(3). | SunTrust argues recoupment and rescission remain distinct, with no rescission via recoupment allowed. | They are separate remedies; § 10(i)(3) does not render rescission a form of recoupment. |
Key Cases Cited
- Beach v. Ocwen Fed. Bank, 523 U.S. 410 (U.S. 1998) (TILA rescission framework referenced for comparison)
- Bose Corp. v. Consumers Union of U.S., Inc., 367 Mass. 424 (Mass. 1975) (recoupment origin and scope in Massachusetts)
- Carey v. Guillow, 105 Mass. 18 (Mass. 1870) (early treatment of recoupment and rescission concepts)
- Bellefeuille v. Medeiros, 335 Mass. 262 (Mass. 1957) (rescission principles and restoration requirements)
- J.C. Penney Co. v. Schulte Real Estate Co., 292 Mass. 42 (Mass. 1935) (status quo restoration in rescission analysis)
- DiVittorio v. HSBC Bank USA, NA, 670 F.3d 273 (1st Cir. 2012) (MCCCDA/TILA interpretation informing Massachusetts reading)