Pohl v. U.S. Bank
2017 U.S. App. LEXIS 10687
| 10th Cir. | 2017Background
- In 2007 the Pohls refinanced their Denver home with a deed of trust; they defaulted in 2009. In March 2010 they sent their lender a notice of intent to rescind under TILA, which the lender rejected.
- U.S. Bank acquired the deed of trust in 2011 and initiated foreclosure; the Pohls filed Chapter 7 and obtained a discharge, and the bankruptcy stay was lifted to allow foreclosure to proceed.
- In August 2012 the Pohls sued in Colorado state court seeking quiet title and reconveyance, alleging a tendered instrument and seeking reconveyance; the state court dismissed that action for failure to state a claim.
- The Pohls’ property was sold at foreclosure in January 2013 (U.S. Bank was the high bidder). The Pohls sued in federal court in 2014 asserting, among other claims, that the 2013 foreclosure should be rescinded because their 2010 TILA notice effected rescission.
- The district court granted summary judgment to U.S. Bank on the rescission claim, concluding claim preclusion barred the Pohls from relitigating matters they raised or could have raised in the 2012 state action. The Tenth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claim preclusion bars the Pohls’ rescission claim | Pohl: Rescission claim challenges the 2013 foreclosure, which had not occurred in 2012, so it could not have been litigated then | U.S. Bank: The same TILA-related facts (2010 notice, lender rejection, foreclosure proceedings) were known in 2012; Pohls could have raised rescission | Affirmed: claim preclusion applies because the claims arise from the same transaction and could have been raised in the 2012 action |
| Whether Jesinoski prevents a lender from contesting a tendered rescission notice | Pohl: Jesinoski means a written notice within three years effects rescission and becomes incontestable if lender doesn’t file suit | U.S. Bank: Jesinoski only holds suit is not required to effect rescission; it does not preclude a lender from arguing a notice is invalid | Held: Jesinoski does not bar a lender from challenging the validity of a rescission notice; notice may be disputed |
| Whether a tendered notice of rescission constitutes a "claim" for purposes of preclusion | Pohl: The 2010 notice was not itself a legal claim and thus could not preclude later litigation | U.S. Bank: Once lender rejected the notice, Pohls had an existing claim for rescission and TILA violations that could be litigated | Held: A rescission demand constitutes a claim (an assertion of an existing right) and could have been asserted in the 2012 action |
Key Cases Cited
- Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015) (holding rescission is effected by timely written notice and suit within three years is not required)
- Sanders v. Mountain Am. Fed. Credit Union, 689 F.3d 1138 (10th Cir. 2012) (describing creditor obligations and practical difficulties of post-3-day rescission)
- Beukes v. GMAC Mortg., LLC, 786 F.3d 649 (8th Cir. 2015) (affirming lender judgment where disclosures were legally accurate and right to rescind expired)
- MACTEC, Inc. v. Gorelick, 427 F.3d 821 (10th Cir. 2005) (standard of review for claim preclusion reviewed de novo)
- Argus Real Estate, Inc. v. E-470 Pub. Highway Auth., 109 P.3d 604 (Colo. 2005) (Colorado law on claim preclusion elements and requirement to raise claims affecting title)