U.S. Bank National Ass'n v. Manzo
2011 IL App (1st) 103115
Ill. App. Ct.2011Background
- Manzos sought TILA rescission and damages in defense to a foreclosure on their Chicago home stemming from a 2005 loan from BNC Mortgage; U.S. Bank later foreclosed asserting ownership of the loan and mortgage.
- Manzos sent multiple letters (2007) and a March 2008 motion for leave to file a counterclaim indicating intent to rescind under TILA, but never clearly and unconditionally stated present, unequivocal rescission.
- Counterclaim and third-party complaint were filed November 19, 2008, more than three years after consummation of the loan (March 2005).
- Circuit court dismissed the rescission claim as untimely under 1635(f)’s three-year repose; damages claim under 1640(e) remained for remand.
- Court concludes rescission is timely only if notice unequivocally communicates present intention to rescind, which the letters did not; recoupment under Illinois law does not save the rescission claim; damages claim remanded for separate consideration.
- Ultimate holding: affirm dismissal of rescission but remand on damages; affirm in part, reverse and remand in part for damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether rescission was timely under TILA §1635(f). | Manzos contend notices within three years sufficed. | U.S. Bank argued only unequivocal rescission notices suffice. | No; notices did not unambiguously rescind within three years. |
| Whether rescission in recoupment survives under Illinois law despite §1635(f) timing. | Recoupment and §13-207 permit post-time-limit rescission as defense. | Beach precludes recoupment extension; Illinois law does not preserve such right. | Agreed with Beach; recoupment does not save untimely rescission. |
| Whether damages claim under §1640(e) can be pursued after one-year limit via §13-207 recoupment defense. | Damages claim should survive under Illinois recoupment; §13-207 allows it. | Damages claim untimely under §1640(e) and not saved by recoupment. | Damages claim remanded for further proceedings. |
Key Cases Cited
- Beach v. Ocwen Federal Bank, 523 U.S. 410 (1998) (TILA rescission right extinguished after three years; recoupment unclear)
- Terry, Wells Fargo Bank, N.A. v., 401 Ill. App. 3d 18 (2010) (Illinois district rejects recoupment extension of §1635(f))
- Limer v. Lyman, 241 Ill. App. 3d 125 (1993) (IL limitations vs. repose distinctions cited in recoupment context)
- Jain v. Johnson, 398 Ill. App. 3d 135 (2010) (recoupment/limitations context in IL appellate decisions)
- Mt. Vernon Memorial Estates, Inc. v. Wood, 88 Ill. App. 3d 666 (1980) (older recoupment/limitations discussion relevant to IL practice)
- National Boulevard Bank of Chicago v. Thompson, 85 Ill. App. 3d 1145 (1980) (statutory recoupment considerations in IL)