Velardi v. Countrywide Bank (In re Velardi), 547 B.R. 147

Debtor (pro se) filed Chapter 7 and an adversary complaint seeking rescission of a 2008 mortgage under TILA and criminal penalties against lenders/servicers; mortgage and note (Jan 8, 2008) and a rescission notice (May 15, 2015) were attached to the complaint.
Debtor received Chapter 7 discharge; adversary commenced Aug 13, 2015; BOA group filed a timely, served Motion to Dismiss; Rushmore filed a Motion to Dismiss that was not served on Debtor.
BOA argued the rescission claim is time-barred under 15 U.S.C. § 1635(f) and advanced res judicata and Rooker–Feldman defenses; BOA also argued no private right to pursue criminal penalties under TILA § 1611.
Court treated the rescission claim as a core bankruptcy proceeding and concluded it could enter final judgment despite lack of consent from some defendants.
Court found Rushmore’s motion procedurally defective (no service) and denied it without prejudice; BOA’s motion was considered on the merits.
Court dismissed Debtor’s rescission claim with prejudice as time-barred (right to rescind expired three years after consummation) and dismissed the purported private criminal-action claim with prejudice as futile.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Timeliness of rescission under TILA § 1635(f)	Debtor mailed rescission May 15, 2015 and claims rescission right remains viable	BOA: rescission right expired three years after consummation (Jan 8, 2008); action untimely	Dismissed with prejudice — right to rescind expired Jan 8, 2011 (statute of repose)
Service of defendant’s dispositive motion	Debtor argued motions filed after summons reply date waived defenses	Rushmore filed motion but did not serve Debtor	Rushmore’s motion denied without prejudice for lack of service; Rushmore given 30 days to refile or answer
Private right to seek criminal penalties under TILA § 1611	Debtor seeks fines/imprisonment remedies against defendants	BOA: §1611 provides criminal penalties but no private civil right to prosecute	Dismissed with prejudice — no private right to pursue criminal penalties under TILA
Court authority to enter final judgment (core vs. non-core)	Debtor consented to bankruptcy court entry of final judgment; also argued proceeding is core	Defendants did not consent (BOA, Rushmore)	Court concluded adversary to avoid mortgage is a core proceeding under §157(b)(2)(E) and could enter final judgment without consent

Beach v. Ocwen Fed. Bank, 523 U.S. 410 (1998) (§1635(f) limits duration of right to rescind)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (facial plausibility and treatment of legal conclusions)
Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009) (accept well-pleaded facts, disregard conclusions)
Robinson v. Johnson, 313 F.3d 128 (3d Cir. 2002) (statute-of-limitations defense may be raised in Rule 12(b)(6) where claim facially time-barred)
Pension Benefit Guaranty Corp. v. White Consolidated Industries, Inc., 998 F.2d 1192 (3d Cir. 1993) (courts may consider attached exhibits and public records on motion to dismiss)
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950) (due-process notice principles)
Lorenz v. CSX Corp., 1 F.3d 1406 (3d Cir. 1993) (standards for dismissal with prejudice/futility of amendment)