Rader v. Citibank N.A.
700 F. App'x 817
10th Cir.2017Background
- In 2003 Steven Rader borrowed $630,000 from GreenPoint; note and deed of trust were signed and recorded and Raders made payments from 2003–2008.
- Raders stopped payments in 2008; Citibank (holder) foreclosed and sold the property in August 2015; Raders sent rescission letters in October 2015 and filed suit in December 2015 seeking rescission under TILA § 1635.
- TILA § 1635(f) provides a three‑year statute of repose for rescission measured from consummation of the transaction; plaintiffs argued consummation did not occur at the 2003 closing because GreenPoint was not the true lender/competent party.
- Defendants moved to dismiss under Rule 12(b)(6) arguing the loan was consummated in 2003 and the rescission claim was time‑barred; the district court dismissed, concluding plaintiffs’ allegations were implausible and untimely.
- On appeal the Tenth Circuit reviewed de novo, considered documents central to the complaint and matters subject to judicial notice, and affirmed dismissal as the complaint failed to plausibly allege non‑consummation and equitable tolling was unavailable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the loan was "consummated" in 2003 for purposes of TILA § 1635(f) | Rader: transaction not consummated because GreenPoint was not the true lender, lacked competence, and provided no consideration | Citibank/Ocwen: signed loan documents, disbursement, and performance show contractual obligation at 2003 closing | Court: Loan was consummated in 2003; documents and payments demonstrate mutual assent, competency, and consideration |
| Whether the district court improperly considered documents outside the complaint on a 12(b)(6) motion | Rader: district court should have accepted allegations as true and not rely on extra‑pleading evidence | Defendants: documents were central and authentic; judicial notice appropriate | Court: Proper to consider central documents and judicially noticeable facts; no conversion to summary judgment |
| Whether factual allegations that contradict documentation must be accepted | Rader: their allegations that GreenPoint did not lend funds should be accepted | Defendants: well‑pleaded facts cannot contradict the loan documents showing disbursement | Court: Allegations contradicted by documents are not accepted as true (Iqbal/GFF) |
| Whether equitable tolling saves the untimely rescission claim | Rader: tolling applies because true lender identity was discovered later | Defendants: § 1635(f) is an absolute bar extinguishing the right after three years | Court: § 1635(f) extinguishes rescission right; equitable tolling does not apply (Beach controls) |
Key Cases Cited
- Gee v. Pacheco, 627 F.3d 1178 (10th Cir. 2010) (standard of review for Rule 12(b)(6) dismissal)
- United States ex rel. Conner v. Salina Reg'l Health Ctr., Inc., 543 F.3d 1211 (10th Cir. 2008) (limits on consideration of materials outside the complaint)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (court need not accept legal conclusions as true)
- GFF Corp. v. Assoc. Wholesale Grocers, Inc., 130 F.3d 1381 (10th Cir. 1997) (allegations contradicting properly considered documents are not well‑pleaded)
- Beach v. Ocwen Fed. Bank, 523 U.S. 410 (1998) (§ 1635(f) completely extinguishes right of rescission after three years)
- Ellis v. Gen. Motors Acceptance Corp., 160 F.3d 703 (11th Cir. 1998) (distinguishing tolling for § 1640 claims from § 1635)
- King v. California, 784 F.2d 910 (9th Cir. 1986) (recognizing § 1635 three‑year absolute limitation on rescission actions)
- Tal v. Hogan, 453 F.3d 1244 (10th Cir. 2006) (distinguishing 12(b)(6) from summary judgment conversion when considering outside materials)