Smith v. Wells Fargo Bank, N.A.
666 F. App'x 84
| 2d Cir. | 2016Background
- Plaintiff Allyson Smith refinanced her mortgage with Wells Fargo and received a Mortgage Kit on March 9, 2012, which included TILA rescission notices stating the rescission period expired 3/29/12 because the "date of the transaction" was 3/26/12.
- The Mortgage Kit instructed Smith to return signed documents by 03/26/12; Smith signed on March 13, 2012 and alleges she mailed the documents "several days" later.
- Smith claimed consummation occurred on March 30–31 (after Wells Fargo’s March 30 funding call), making the rescission date in Wells Fargo’s notice inaccurate and her attempted rescission timely under 15 U.S.C. § 1635(f).
- Wells Fargo argued consummation occurred when Smith became contractually obligated by signing and returning the documents (on or before March 26), so the rescission deadline in the notice was correct.
- The district court dismissed Smith’s TILA and CUTPA claims; Smith appealed the TILA dismissal. The Second Circuit affirmed, holding consummation occurred no later than March 26 and the rescission notices were sufficiently clear.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When did the transaction "consummate" for TILA rescission timing? | Consummation was March 30–31 (when loan funding was confirmed), so rescission deadline in notice was incorrect. | Consummation occurred when Smith became contractually obligated by signing and returning the loan documents (on or before 3/26). | Consummation occurred by March 13 (or soon after transmission), and at latest by the 3/26 return deadline; notice date was correct. |
| Were the rescission notices "clear and conspicuous" about the expiration date? | The notice mis-stated the transaction date and therefore was unclear. | The notice clearly stated the three triggering events and the expiration (3/29/12) based on the latest event (3/26). | Notices were sufficiently clear; rescission period began to run on 3/26. |
| Could extraneous communications (March 5 instruction to keep paying) alter consummation date? | March 5 instruction delayed consummation until final approval/funding. | The written loan documents the borrower executed govern; verbal instruction cannot override written acceptance. | Prior verbal instruction did not change consummation; contractual obligation controlled. |
| Did Smith waive or forfeit statute-of-frauds argument by raising it in reply? | (Raised only in reply) statute-of-frauds prevents enforcement. | Argument waived by being raised first in reply; also Wells Fargo is the party enforcing a signed agreement. | Argument waived; alternatively fails on the merits because Smith signed the agreement. |
Key Cases Cited
- Biro v. Condé Nast, 807 F.3d 541 (2d Cir. 2015) (standard of review for Rule 12(b)(6) dismissal)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleading factual content)
- Bragg v. Bill Heard Chevrolet, Inc., 374 F.3d 1060 (11th Cir. 2004) (consummation can be when consumer becomes contractually obligated upon signing)
- Nigh v. Koons Buick Pontiac GMC, Inc., 319 F.3d 119 (4th Cir. 2003) (same principle on contractual obligation and consummation)
- BG Group, PLC v. Republic of Argentina, 134 S. Ct. 1198 (2014) (distinction between condition precedent affecting performance vs. contract validity)
- Bishop v. Wells Fargo & Co., 823 F.3d 35 (2d Cir. 2016) (issues raised first in a reply brief are waived)