2020 IL App (1st) 191029
Ill. App. Ct.2020Background
- In July 2007 the Millers refinanced a condo loan for $210,000. U.S. Bank (successor trustee) filed foreclosure in August 2009 and served the Millers by publication in Nov. 2009.
- The Millers answered in Nov. 2011 asserting TILA and RESPA-based claims and alleged they mailed a written notice of rescission on June 30, 2010.
- The case was administratively stricken in June 2013; U.S. Bank moved to dismiss the Millers’ counterclaims in May 2014 as time‑barred.
- The Millers moved for substitution of judge in Oct. 2014; the court denied that motion and dismissed (later iterations of) the Millers’ rescission counterclaim.
- The Millers filed a third amended counterclaim (Oct. 27, 2016) seeking rescission under TILA §1635; U.S. Bank moved under 735 ILCS 5/2‑619 in March 2017 arguing the claim was untimely.
- The trial court dismissed the rescission counterclaim with prejudice as untimely; a foreclosure sale was later confirmed and the Millers appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Denial of substitution of judge as of right | Millers waited and thus should get a substitution | Millers entitled to one substitution as of right because no substantial ruling had been made | Denial affirmed — prior substantive rulings (denials of dismissal/default) made the substitution untimely |
| Applicable statute of limitations for a §1635 rescission‑enforcement claim | One‑year limitations from §1640(e) (or at least the claim is time‑barred) | No one‑year limit for §1635 equitable rescission; three‑year rule pre‑Jesinoski or state analogue should apply | Court applied one‑year limitations approach and held Millers’ §1635 enforcement claim untimely |
| §1640 damages claim (attorneys’ fees/costs) | §1640(e)’s one‑year limitations bars damages claim | Millers argued counterclaim not barred; relied on savings clause/other tolling theories | §1640 damages claim is barred — one‑year limitations applies and Millers’ damage claim was untimely |
| Denial of leave to amend to assert rescission as affirmative defense | Opposing party would be prejudiced / previous opportunities to amend | Amendment should be allowed as liberal rule favors amendments | Denial of leave to amend affirmed (appellants failed to supply record of trial court’s reasons; presumption order was proper) |
Key Cases Cited
- Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. 259 (2015) (Supreme Court: rescission is effected when borrower gives timely notice; suit to enforce not required within three years)
- Fendon v. Bank of America, N.A., 877 F.3d 714 (7th Cir. 2017) (applying §1640 one‑year limit to TILA damages where only damages remedy remained after state‑court foreclosure)
- Hoang v. Bank of America, 910 F.3d 1096 (9th Cir. 2018) (borrowed state contract limitations for §1635 rescission enforcement; rejected using §1640(e)’s one‑year limit)
- U.S. Bank Nat’l Ass’n v. Gerber, 380 F. Supp. 3d 429 (M.D. Pa. 2018) (district court applying §1640(e) one‑year period to rescission enforcement suits)
- DelCostello v. Int’l Bhd. of Teamsters, 462 U.S. 151 (1983) (federal courts borrow state statutes of limitations for federal causes of action absent a contrary directive)
- County of Oneida v. Oneida Indian Nation of N.Y. State, 470 U.S. 226 (1985) (same principle on borrowing state limitation periods)
- Reed v. United Transp. Union, 488 U.S. 319 (1989) (federal limitations borrowing may be displaced if state period would frustrate federal policy)